The Greatest Trend-Following Strategy Ever Invented

The S&P 500 is the greatest trend-following strategy ever invented.

Seriously.

Think about it. All it does, year after year, is kick out the losers and add the winners. It’s systematic. Cold. Unemotional. And this is why, over time, it trends higher.

It’s not magic. It’s math and discipline.

When you consistently cut what isn’t working and replace it with what is, how can you not win over the long run?

And that’s exactly how I try to treat my own portfolio.

In one of the speculative accounts I manage, I’m always pulling weeds. When a position stops working, I cut it. No second-guessing. No hoping it’ll come back. I pull the capital and redeploy it into what I believe is my next best idea. All the while, my winners are just… doing their thing. They don’t need my micromanagement. They don’t need handholding. I just let them run.

If it works for the S&P 500 — arguably the most successful long-term investing mechanism in history — why wouldn’t it work for me (or you)?

So here’s the promise I’m making to myself, and I invite you to join me:

👉 Let our winners breathe.

👉 Watch our losers like a hawk.

Winners don’t need constant attention. They just need space. But losers? The moment they push too far in the wrong direction, they’re gone. Quick. Merciless.

This is the recipe. Not every winner will be a monster. No losers will be a disaster. But if you keep cutting the ones that aren’t working and holding on to the ones that are, you only need a handful of standouts to make your year.

Let’s trade like the S&P.

I talk about this and show you the open positions in one of my portfolios to show you how this plays out in real life in today's episode of What Are My Options?

Sean McLaughlin | Chief Options Strategist, All Star Charts