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Trend Following: Plan for the Next Bear Market with Market Breadth

January 07, 2020

Read Time 1 MIN


Trend following provides a game plan for when the next bear market inevitably comes. It is a simple, yet effective, approach that may allow portfolios to both participate in the returns of the equity market and protect them from significant market corrections. Trend followers aim to be invested during the good times, when the market is going up, and to sit it out during the bad times, when the market is falling.

Separating the good times from the bad is hard. Unless there is something wrong, historically, the natural bias of the market is upwards. The key to successful trend following is the ability to differentiate between bumps in the road (dips and moderate corrections) and systemic risk-off events (severe corrections and bear markets).

Trend followers want to ignore the small corrections, which typically recover quickly, in order to protect against the big corrections. We believe a strategy based on market breadth, an alternative form of trend following, may improve performance by better differentiating between small and large market corrections.

Download the full whitepaper, Trend Following: Plan for the Next Bear Market with Market Breadth, to learn more.


Please note that Van Eck Securities Corporation (an affiliated broker-dealer of Van Eck Associates Corporation) offers investment products that invest in the asset classes discussed herein.

This is not an offer to buy or sell, or a solicitation of any offer to buy or sell any of the securities mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal or tax advice. Certain statements contained herein may constitute projections, forecasts and other forward looking statements, which do not reflect actual results, are valid as of the date of this communication and subject to change without notice. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. The information herein represents the opinion of the author(s), but not necessarily those of VanEck.

All investing is subject to risk, including the possible loss of the money you invest. As with any investment strategy, there is no guarantee that investment objectives will be met and investors may lose money. Diversification does not ensure a profit or protect against a loss in a declining market. Past performance is no guarantee of future results.