“This go anywhere fund beats 99% of its peers,” proclaims this week’s headline in Barrons.
How does it do it?
Basically by trading everything under the sun from Mag 7 stocks to Treasury bills to floaters to high yield bonds. Unlike other mutual funds which pigeonhole themselves into a single asset or even a single asset category the Allspring Diversified Capital Builder can buy anything it wants and that flexibility has paid off in spades. Its total return for the past 15 years is 12.0% per annum..
The time horizons are very different but I think there is a lot to learn from the Allspring record if you are trying to day trade.
Specialization is overrated.
As day traders we are taught to focus on one set up, one instrument, one time frame. And that advice works great as long as you choose the right setup, the right instrument and the right time frame. But it's also the reason why so many successful traders including most traders in the Market Wizard series fail miserably over the long run. They are mostly a set of lucky individuals who happened to have chosen the right idea and stuck to it long enough to have made a fortune.
Don’t get me wrong, that is still a singular achievement worth celebrating. Very few people could have achieved even that level of success. But in the end none of them could maintain their performance over the long run.
Not Richard Dennis who managed to blow up $200 million I helped raise for him when I was Drexel.
Not Tudor Jones who hasn’t been able to make a double digit return in this century
Not Ray Dalio whose Bridgewater fund barely made money for a decade from 2010 to 2020.
In fact I can only think of four money managers who have made money consistently over the past 50 years. Peter Lynch, who like the true champ that he is left the game at the top and hasn’t really traded since. George Soros who finally retired but even in his eighties could run circles around most macro fund managers half his age. Warren Buffett whose track record needs no introduction and Jim Simmons whose secrets to money making will probably go with him to his grave.
Yet as different as they all were in style - these masters of the markets are very similar in their approach. Although Lynch restricted himself to stocks he would buy anything and everything under the sun. Soros hoped from European equities to shorting housing stocks to breaking the Bank of England's in his famous $1 Billion GBPUSD trade. Buffett, contrary to his folksy image, is very adept at buying convertibles, derivatives and making massive profits from the “insurance vig” which is his primary financing vehicle.
But perhaps the most interesting to us as traders is Jim Simmons who has managed to compound at 66% - a number so mind numbingly outside the norm that it boggles the mind.
Although we don’t know the secret sauce that drives Simmons’s money machine we do know the general recipe - namely that he trades a LOT of strategies. And isn’t that what we do as day traders? We don’t really trade stocks or options or forex or futures or CFDs - we actually just trade strategies. And strategies as we all know are only as good as the market environment they are in.
So trading just one strategy makes you very vulnerable to regime change. It doesn’t matter how good you are at trend trading, if the market goes into a prolonged period of chop you will lose money on every trade.
Past performance is not indicative of future results. Trading forex carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade any such leveraged products you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading on margin, and seek advice from an independent financial advisor if you have any doubts.
Editors’ Picks
EUR/USD stays in positive territory above 1.0850 after US data
![EUR/USD stays in positive territory above 1.0850 after US data](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/EURUSD/money-euro-and-dollar-banknotes-17371247_XtraSmall.jpg)
EUR/USD clings to modest daily gains above 1.0850 in the second half of the day on Friday. The improving risk mood makes it difficult for the US Dollar to hold its ground after PCE inflation data, helping the pair edge higher ahead of the weekend.
GBP/USD stabilizes above 1.2850 as risk mood improves
![GBP/USD stabilizes above 1.2850 as risk mood improves](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/GBPUSD/strong-pound-weak-dollar-17536259_XtraSmall.jpg)
GBP/USD maintains recovery momentum and fluctuates above 1.2850 in the American session on Friday. The positive shift seen in risk mood doesn't allow the US Dollar to preserve its strength and supports the pair.
Gold rebounds above $2,380 as US yields stretch lower
![Gold rebounds above $2,380 as US yields stretch lower](https://editorial.fxstreet.com/images/Markets/Commodities/Metals/Gold/gold-gm187363896-28836378_XtraSmall.jpg)
Following a quiet European session, Gold gathers bullish momentum and trades decisively higher on the day above $2,380. The benchmark 10-year US Treasury bond yield loses more than 1% on the day after US PCE inflation data, fuelling XAU/USD's upside.
Avalanche price sets for a rally following retest of key support level
![Avalanche price sets for a rally following retest of key support level](https://editorial.fxstreet.com/images/Avalanche/Avalanche_XtraSmall.jpg)
Avalanche (AVAX) price bounced off the $26.34 support level to trade at $27.95 as of Friday. Growing on-chain development activity indicates a potential bullish move in the coming days.
The election, Trump's Dollar policy, and the future of the Yen
![The election, Trump's Dollar policy, and the future of the Yen](https://editorial.fxstreet.com/images/Macroeconomics/Events/US%20Elections/Donald_Trump_closeup_XtraSmall.jpg)
After an assassination attempt on former President Donald Trump and drop out of President Biden, Kamala Harris has been endorsed as the Democratic candidate to compete against Trump in the upcoming November US presidential election.
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