Don’t recall who said that, but it seems to be so true. Trend following/momentum investing, like so many other favored theories of investing (diversification–”It works until it doesn’t.”), is being found inadequate to cope with a “fat tail” economic and market scenario.

To me, it just points to the extreme difficulty of seeing around the corner of major economic or market trends. If a trend is established, it is easy to follow that trend (like $145/bbl oil going to a projected $200/bbl as GS projected), but it is virtually impossible to see the forces that will undercut the trend, no matter how sophisticated the modeling.

As a big fan of David, frankly the only thing I don’t like about him is his occasional nice comment about Cramer!! David is just much nicer than I am.

Having researched and learned about the many ways of investing and speculating, the conclusion I come to is that most people should not even attempt it. This has nothing to do with _methodologies_. It is just that most people simply do not have the temperament and psychology to follow _any_ investment/speculating methodology patiently and persistently. The majority is simply better off saving 6% of their income in a FDIC bank savings account and let compound interest do its work for them slowly. Forget equities and bond mutual funds. Forget stocks. Most of all, forget about finding the holy grail to getting rich through investing and/or speculating.

…