in terms of return/risk ratio, AL WEISS may well have the single best long term track record for commodity trading advisor. since he began trading in 1982 as AZF Commodity Management, Weiss has averaged 52% annually. One thousand dollars invested with Weiss in 1982 would have been worth almost $53,000 at the end of 1991.However returns are only half the story. The truly impressive element in Weiss's track record is that these high gains were achieved with extremely small equity drawdowns...How did you end up becoming a trader?
It was not an overnight process. I spent four years of solid research before doing any serious trading. After literally thousands of hours of poring over charts, going back as far in history as I could, I began to recognize certain patterns that became the basis of my trading approach.
Precisely how far back did you go in your chart studies?
It varied with the individual market and the available charts. In the case of the grain markets I was able to go back as far as the 1840s.
Was it really necessary to go back that far?
Absolutely. One of the keys in long-term chart analysis is realizing that markets behave differently in different economic cycles. Recognizing these repeating and shifting long-term patterns requires lots os history. Indentifying where you are in an economic cycle - say, an inflationay phase versus a deflationary phase - is critical to interpreting the chart patterns evoling at that time.
Why have you chosen a purely technical approach in favor of one that also employs fundamentals?
Many economists have tried to trade the commodity markets fundamentally and have usually ended up losing. The problem is that the markets operate more psychology than on fundamentals . For example, you may determine that silver should be priced at, say $8, and that may be an accurate evaluation. However, under certain conditions - for example, a major inflationary enviroment - the price could temporarily go much higher. In the commodity inflation boom that peaked in 1980, silver reached a high of $50 - a price level that was out of all proportion to any true fundamental value. Of course, eventually the market returned to its base value - in fact, in the history of markets, I can't think of a single commodity that didn't eventually move bak to its base value - but in the interum, anyone trading purely on the fundamentals would have been wiped out.
Do you follow your system absolutely, or do you sometimes override the trading signals?
I follow the system well over 90 percent of the time, but occasionally I try to do better than the system. Since I employ such deviations from the pure system very selectively, they have improved performence overall.
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