In this episode of Excess Returns, Jerry Parker joins us for a deep dive into the philosophy and practice of trend following. As one of the original Turtle Traders, Jerry shares lessons from Richard Dennis and Bill Eckhardt, explores how trend following has evolved over the decades, and offers timeless wisdom on markets, psychology, and risk management. From his early days in the Turtle Trading program to running Chesapeake Capital today, Jerry explains what it takes to survive and thrive as a systematic trader in an uncertain world.
Topics covered:
• The origins of the Turtle Trading program and what Jerry learned from Richard Dennis and Bill Eckhardt
• How trend following has evolved from short-term to longer-term systems
• Why trading psychology is harder than following the rules
• The role of discomfort and doing “hard things” in successful investing
• The design and diversification of a robust trading universe
• Risk management, drawdowns, and letting profits run
• Why trend following belongs alongside a 60/40 portfolio
• How ETFs are expanding access to managed futures strategies
• Incorporating crypto and new markets into trend following systems
• The internal truths of trend following and why smooth returns can be dangerous
Timestamps:
00:00 Trading should be hard
02:00 The origins of the Turtle Trading program
08:00 Evolution of trend following systems
12:00 The psychology of following rules
16:00 The famous Turtle Trader true/false test
20:00 Could the Turtle program work today?
23:00 Building a diversified trading universe
28:00 Risk management and position sizing
32:00 How trend following complements 60/40 portfolios
38:00 Managed futures, stocks, and diversification
41:00 The rise of trend-following ETFs
45:00 Incorporating crypto and futures
48:00 Where the strongest trends are now
52:00 AI and systematic investing
53:30 The internal truths of trend following
56:00 The belief Jerry holds that most investors would disagree with
