A career fundamentals man graded my charts for years, then said the verdict out loud.
Every Strategy Has a Season
No method is right or wrong. It is only matched, or mismatched, to the weather you are standing in.
Match your method to the regime, and cut size when it turns.
A strategy is not skill, it is a bet on the weather, so size it to the regime and cut hard when the season turns.
Story
“Surprisingly, charts worked. Especially from 2011 to 2019, then mid 2020 to sept 2021. The bull market zone. Momentum was the most lucrative strategy. Basically, chartists are predicting who will win the beauty contest game tomorrow. … So, I apologetically say, listen to what he says. And ignore the fundamentals. Warren Buffett would not advise what I say, but his horizon is 20 years. Not tomorrow.”
A professor I trade alongside, a man who teaches balance sheets, discounted cash flows, and fair value for a living, watched my charts for years with polite skepticism. When he finally graded my record out loud, he was careful to name exactly when it worked and when it did not.
What stayed with me was not the praise. It was the precision of the boundaries. He did not say charts work. He said charts worked from 2011 to 2019, and again from mid-2020 to September 2021.
Outside those windows, in the chop, the same signals that printed money would whipsaw me out of position. He had drawn the map of when my edge existed and when it was an illusion. And he was right. Think about what 2011 to 2019 actually was.
It was the longest, smoothest bull market most of us had ever traded, rates pinned near zero, every dip bought. Momentum did not just work. It felt like genius. Then the regime changed.
In 2022 the Federal Reserve started raising rates hard, and the same playbook that minted heroes the year before got slaughtered. Traders who knew how to buy strength watched their accounts halve while doing nothing differently. Nothing about their skill had changed. The weather changed.
Meaning
Plain English
Regime is the market's prevailing weather: a long trending bull, a choppy sideways grind, or a falling bear. Momentum means buying what is already going up and betting it keeps climbing. Value means buying cheap relative to a company's underlying worth and waiting. A whipsaw is when price fakes one direction, knocks you out of your trade, then reverses, which is common in chop. Rising interest rates (the Fed making borrowing more expensive) often punish high-flying growth stocks, which is exactly what changed the weather in 2022.
Framework
Name the regime the approach depends on before the next turn, and decide in advance the rule that cuts size when that regime visibly breaks.
- Write one sentence naming the hidden assumption the edge needs, whether a trending market, low rates, or calm volatility, and keep it where you will see it.
- Decide in advance what counts as the break. Rising rates broke momentum in 2022, so set the signal that tells you the weather has turned.
- When that signal fires, follow a rule that cuts position size rather than forcing the old playbook.
- For a genuinely new regime, write temporary rules with strict caps, and retire them the moment the season turns again.
- Grade honestly: separate the years your edge worked from the years the whole market simply rose.