free4now said:
Eventually I realized that buy and hold worked better most of the time, and is infinitely less hassle. <snip>
So don't expect the smart people on this board to be able to point out in detail the actual problems with "trend trading" or any other system they don't know. The best source for finding the problems might be to look for the smart people who tried the system and bailed. Now that you can search for "____ sucks" on google you have a chance of finding them.
I can tell you are a smart person yourself, who likes to find your own answers. So you are probably aware that buy and hold is also a trading system, unless you are only buying stocks with secure dividends sufficient to cover your current and anticipated cash needs. The problem with buy and hold is that it is an inadequately studied system. Say you are buying and holding today. Say that further, the market value of your portfolio starts down. What do you do? Well, as a buy and holder there is only one thing to do. Hold, and if you have the cash, the courage, and a wife who will put up with it, buy some more.
But it may continue going down. What do you do now? And on, and on. So while you discovered the vulnerability of the Fabian system to be a flat or non-trending market, you have not been at this game long enough to have discovered the vulnerability of buy and hold-- which is of course a downward trending market.
Buy and hold when it is a thoughtful approach, and not just a mantra is intellectually based on regression to the mean. Without regression to the mean, you are going to be scared any time your portfolio value starts down. I do accept regression to the mean in US stock aggregates, based upon past history. But it is admittedly a short history, with very few separate trials. And the world is a dynamic, ever-changing system.
Personally, I will never have a portfolio that is not at least partially hedged, unless equities become washout cheap.
Ha