What Frank Costanza’s Manssiere Can Teach Us About Investing

Imagine two investors looking at the same market chart. Both are studying price, using historical data, and trying to make informed decisions. From a distance, their approaches may look nearly identical. Up close, however, they may be solving two very different problems:

1. The first – let’s call him Kramer – is trying to account for what the market will do based on recognizable past patterns and personal knowledge.
2. The second – die-hard fans of the “Seinfeld” TV show already know his name will be Jerry – is focused on what the market is doing now and applying a pre-defined set of rules to decide how to respond.

In investing, this distinction – prediction versus reaction – helps separate discretionary technical analysis from systematic trend following. In “Seinfeld” lore, it’s also what distinguishes a man who chases schemes and hastily launches consumer products like the the manssiere from one who stays disciplined to a single profession and adapts based on what is making audiences laugh right now.

The distinction matters because a signal is not the same thing as a process. Seeing something on a chart may suggest an opportunity. A repeatable process goes further by answering questions about what action to take, whether to take a step or a leap, timing, a plan for reducing risk, etc.

Technical Analysis: Interpreting the Market

Technical analysis is a broad field, and it would be unfair to reduce every practitioner to a fortune-teller with a chart.

At its best, technical analysis offers a structured way to study supply, demand, momentum, and market psychology through price and volume. Practitioners may analyze formations such as head-and-shoulders patterns, double tops, and triangles. Or they may use indicators such as RSI, MACD, and moving averages.

The potential weakness is not the use of price data. Rather, it arises when the process depends heavily on interpretation or the expectation that a familiar setup will produce a particular future outcome. Kramer may see a breakout while Frank Costanza sees an exhausted move. Both can make a persuasive case, but the portfolio still needs a decision.

That subjectivity can become especially challenging when markets are moving quickly and emotions are running high. A chart pattern may identify a possible entry, but what happens if it fails? How large should the position be? At what point is the thesis invalid? When should exposure be restored? Without pre-defined answers, an investor can be left improvising at precisely the moment when discipline matters most.

A lighthearted way to think about it is that technical analysis can resemble trying to predict tomorrow’s traffic by studying last week’s commute. The information may be useful, but an accident, road closure, or sudden storm can change the route. Markets have their own versions of all three.

Trend Following: Responding to What Price Is Saying

Trend following takes a different posture toward uncertainty.

Rather than trying to predict the next turn, it seeks to identify and participate in sustained price movements as they unfold. If prices are rising and the trend persists, the strategy can increase or maintain exposure. If prices fall and an established downtrend develops, it can reduce exposure. The focus is not on explaining why the market must move. It is on responding consistently to the movement that can be observed.

At Blueprint Investment Partners, we often say price is king. It is our chief input for decision-making because price absorbs the competing opinions, expectations, fears, and incentives of market participants into one observable fact. Narratives can be convincing. Forecasts can be confident. But price tells us what buyers and sellers are actually doing with capital.

This does not mean trend following is clairvoyant. Quite the opposite. It begins with the humility to admit that markets are difficult to predict. Trend followers will not sell at every exact top or buy at every exact bottom, and false signals are part of the tradeoff. The objective is not perfection at the turning points. It is to participate in the meaningful middle of durable trends while seeking to sidestep the most damaging phase of prolonged declines.

Think of the difference between forecasting the weather and preparing for it. One approach studies the clouds and predicts when rain might begin. The other notices that it is raining, reaches for an umbrella, and has rules for when to put the umbrella away. Trend following does not need to know why the storm formed. It simply needs a disciplined response to changing conditions.

The Signal Is Only the Beginning

For us, the strongest distinction between technical analysis and trend following is completeness.

We think a systematic investing process should be sophisticated yet straightforward, something a financial advisor can explain to a client in plain English. The rules should answer every important portfolio question, including:

• What to buy or sell
• How much to allocate
• When to enter
• When to reduce or exit
• If and when to re-enter

Moreover, these repeatable rules should:

• Be transparent: The investing process can be tested, explained, and applied repeatedly across different assets and market environments.
• Help financial advisors keep clients rooted to their financial plans: Absolute return may be the destination, but the journey matters. Managing the depth and duration of drawdowns can create a more tolerable investor experience, one that may help keep clients in their seats during emotionally charged environments.

Trend following is sometimes dismissed because its central idea sounds simple: increase exposure when prices rise and reduce it when prices fall. But simple is not the same as easy. The hard part is building sensible rules, accepting occasional whipsaws, and executing without overriding the process because the latest headline, forecast, or market narrative feels unusually persuasive.

Put differently, identifying a trend is only one piece of the job. Risk management, implementation, and consistent execution matter just as much.

This is where discipline earns its keep.

A solid process does not need to make the investor feel brilliant every day. It needs to be clear enough to follow, robust enough to apply repeatedly, and adaptive enough to recognize that yesterday’s leaders may not keep shining tomorrow. In stock portfolios, for example, trend following can systematically overweight strength and underweight weakness in order to tilt the index in the investor’s favor without relying on a forecast about which company or sector is expected to lead next.

It’s also hard to argue with 220 years of data that makes a compelling case for the long-term effectiveness of trend following.

Final Thoughts: Process Over Prediction

Just like Jerry and Kramer could be counted on to react differently to the same set of circumstances, technical analysis and trend following respond uniquely to the same set of facts. This is despite sharing a common raw material: market price.

Technical analysis (i.e., Kramer) can react unpredictably, while systematic trend following seeks to provide more predictable and consistent behavior (i.e., Jerry).

With trend following, there’s no need to be like Kramer, burst through the front door, and exclaim a prediction that might miss the mark. Trend following does not predict; rather, it executes according to a pre-determined process.