📖Paul Tudor Jones
The 200-Day Rule
The 200-day moving average is a critical trend indicator.
Pay attention to the 200-day moving average. When prices break below it, be very cautious. Its one of the most important technical levels.
🏠 Everyday Analogy
📖 Core Interpretation
In The 200-Day Rule, Paul Tudor Jones focuses on the gap between price and value. Returns come from paying less than what a business is worth, not from guessing short-term market moves.
💎 Key Insight：Jones watches the 200-day moving average closely as a long-term trend filter. Prices above the 200-day suggest bullish conditions; below suggests bearish. Bounces off the 200-day in an uptrend are buying opportunities. Breaks below the 200-day signal potential trend change. This simple indicator helps you stay on the right side of major moves and avoid costly trend-fighting.
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❓ Why It Matters
Proven through decades of successful investing
🎯 How to Practice
Apply this principle systematically
🎙️ Master's Voice
At the end of the day, the most important thing is how good are you at risk control.
Jones believes risk control is the ultimate skill. Returns take care of themselves if you manage risk well. The best traders are not the best at picking winners—they are the best at controlling losses.
⚔️ Practical Guide
✅ Decision Checklist
- How good is my risk control?
- Am I managing downside effectively?
- Is risk control my primary focus?
📋 Action Steps
- Make risk control the top priority
- Develop robust risk management systems
- Evaluate yourself on risk control, not just returns
🚨 Warning Signs
- Focusing on returns over risk
- Weak risk management systems
- Ignoring downside management
⚠️ Common Pitfalls
Confusing a low price with true cheapness
Using one metric without business context
Overly optimistic assumptions that erase margin of safety
📚 Case Studies
1
Avoiding the 1987 Crash (1987)
Paul Tudor Jones used the 200-day moving average on the S&P 500. When price broke below, he cut long exposure and increased shorts.
✨ Outcome：Preserved capital and profited during Black Monday while many portfolios suffered deep double-digit losses.
2
Dot-Com Bubble Breakdown (2000)
Tech indices fell below their 200-day moving averages in early 2000, signaling a major trend reversal from the late-1990s boom.
✨ Outcome：Investors who exited as prices broke the 200-day MA avoided much of the subsequent multi-year 70%+ Nasdaq drawdown.
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