The fallacy of value investing - with Neil Woodford

This week, star London-based fund manager Neil Woodford talked about his recent poor performance, mainly as a result of the huge losses suffered in his holding in Provident Financial.

Below is the chart, which tells its own sorry story:

Slave to the system

Whenever a trend follower captures a big winning trade, outsiders often wonder if it down to pure luck, skill or something else?

In a lot of cases, trends can start to develop in spite of the current sentiment and beliefs of many of the market participants.

Trend followers however approach the markets in a unemotional state - if their method tells them to enter a trade at a certain price level, they enter. Similarly, if their method tells them to exit at a certain price level, they exit.

Bill Ackman and Valeant Pharmaceuticals

The big news this week was the bloody nose that Bill Ackman and his Pershing Square fund received regarding their investment in Valeant Pharmaceuticals.

Following a dire update, the stock plunged to levels not seen since 2011, and has dropped almost 90% (yes, you read that correctly) from its all-time highs above $260 back in August.

Oprah Winfrey and Weight Watchers

In my last post, I talked about putting on very few positions recently. Those who have checked out the trade list will have seen that one of the few was US stock Weight Watchers International Inc. 

Having been starved of many trading opportunities due to the market volatility, I was hungry to get back into the market. This came up on my scans a while back and when it triggered an entry I duly entered a position in mid-September (see chart below). As it turns out, my stop got hit triggering a modest loss a few days later.