Asset Class Trend-Following
Hold each broad asset class only when it is in an uptrend (typically above a long moving average); otherwise sit in cash or bills.
Definition
Asset Class Trend-Following refers to hold each broad asset class only when it is in an uptrend (typically above a long moving average); otherwise sit in cash or bills. Keep that definition fixed when comparing series, managers, or regimes — renaming the same tape does not create a new signal.
Why it matters
It is a named object desks use to frame risk, positioning, or process. When hold each broad asset class only when it is in an uptrend (typically above a long moving average); otherwise sit in cash or bills shifts, related hedges, limits, and narratives usually need an explicit update rather than a quiet assumption.
Case
Suppose a desk is positioned for the opposite of what asset class trend-following is saying. If hold each broad asset class only when it is in an uptrend (typically above a long moving average); otherwise sit in cash or bills moves against that book, the first question is not “is the story clever?” but whether size, hedges, and stop logic still match the observation.
How to read it
Keep the definition fixed, then challenge it with cross-checks before sizing. Prefer a short written null hypothesis for Asset Class Trend-Following: what would falsify the current reading in the next window?