SI173: ‘Trend Following + Nothing’ Part Two ft. Jerry, Moritz, Rob, Mark & Rich
Top Traders Unplugged
Hunting for Outliers
"We're trying to tilt a symmetry towards benefical non linearity with only small, linear sequences of losses that imbeds positive skew into it," says Bas herei lova. "It's exotic, a phonetic world that we operate in high volatility typically."
Today we continue our special Part 2 end-of-year episode featuring all co-hosts of the show, together at the same time, to discuss why you should be invested in numerous different markets, why more Trend Following firms should be trading single stocks, the optimum amount of systems to run at the same time, whether diversifying across markets or diversifying across systems is more important, some thoughts on positive skew, and defining outliers. We also review how 2021 went for each us, including our best and worst markets to trade, the lessons we learned, and the biggest surprises.
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50 YEARS OF TREND FOLLOWING BOOK AND BEHIND-THE-SCENES VIDEO FOR ACCREDITED INVESTORS - CLICK HERE
In this episode, we discuss:
- The reasons for trading different markets
- Why Trend Following firms should trade single stocks
- The optimum amount of systems to run at the same time
- Diversification across markets versus across systems
- Skewness
- How to define outliers
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Episode TimeStamps:
00:00 - Intro
01:20 - Would you rather trade 100 markets with 1 system, using 10 different timeframes? or would you rather trade 50 markets, using 3 different systems, using 5 different timeframes?
08:33 - How much ‘positive skew’ do we need?
27:04 - Diversification as a means of risk control, versus as a method of finding outliers
36:14 - Defining outliers and some thoughts on the number of expected outliers per year
45:03 - Can be momentum traders be placed in the same category as Trend Followers?
48:13 - Should we care that bubbles exist, or just enjoy the profitable trends? Have the markets gotten any smarter over the years?
52:52 - How Trend Following and Systematic Investing narratives & terms have changed over the years
01:12:55 - A review of our best and worst markets to trade during 2021
01:16:10 - The lessons we learned from 2021, the biggest surprises, and our most regrettable decision from the year
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