Top Traders Unplugged

SI290: Honey, I Shrunk the Trend Following ft. Andrew Beer

Apr 6, 2024

Financial expert Andrew Beer discusses trend following, performance in Q1 2024, cocoa prices, Model Portfolios, replication strategies, optimal allocation, and challenges in the trend following space. The conversation highlights changing narratives around trend following, the surge in Cocoa prices, and the existential crisis in the Model Portfolio world. Insights on managing unrealistic expectations, replicating strategies, and recommendations for portfolio allocation are shared.

01:15:15

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Episode guests

Andrew Beer

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Quick takeaways

Cocoa prices impact CTAs differently than mainstream reports suggest, highlighting the idiosyncratic nature of commodity investments.

Investor skepticism hinders the adoption of replication strategies, emphasizing the need for educating on diversification benefits.

Advisors shift towards tailored portfolio inclusions based on client objectives, reflecting a trend of sophisticated buyer interactions.

Deep dives

CTA Historical Performance Analysis

The podcast episode delves into the historical performance of CTAs in light of recent market trends and events. It highlights the unpredictability and challenges faced by CTAs in maintaining returns, especially in comparison to traditional asset classes like stocks and bonds. The discussion touches on the evolution of CTAs and their role in diversifying investment portfolios.

Introduction

3min

Cocoa Market Surge: Unprecedented Gains and Trend Following Insights

11min

Navigating Challenges in Managed Futures Space

23min

Navigating the Complexities of Fund Management

10min

Stacking Returns in Investment Strategies

6min

Challenging Traditional Allocation Strategies

20min

Closing Remarks and Invitation for Ratings and Questions

2min

Today, we are joined by Andrew Beer to discuss why the current surge in Cocoa prices really is a big deal for our industry, but how CTAs have been selling it this year, against many main stream media reports. We also dig into how the strong performance in Q1 2024 is helping Trend Following making its way into more Model Portfolios and the existential crisis that we are seeing in the Model Portfolio world. We explain how the narrative around trend following is changing and why replication strategies are becoming less radical. And we wrap up our conversation touching on what the optimal allocation to trend following should be based on the latest publication from Man Institute, the challenges of dealing with unrealistic expectations in the trend following space and much more.

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50 YEARS OF TREND FOLLOWING BOOK AND BEHIND-THE-SCENES VIDEO FOR ACCREDITED INVESTORS - CLICK HERE

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Episode TimeStamps:

01:16 - What has been on our radar recently?

05:38 - Industry performance update

06:49 - What is the big deal with Cocoa?

11:49 - What causes the rising Cocoa prices?

13:56 - A fantastic start to the year for trend following

16:58 - Industry performance update continued

18:12 - Q1, Peter: What percentage of your liquid net worth do you have invested in DBMF?

22:05 - What does Q1 2024 mean for CTAs?

30:51 - A period of normalcy

34:02 - A change in the trend following narrative

42:54 - Are replication strategies becoming less radical?

46:22 - Stacking returns - a good or bad idea?

52:35 - Honey, I Shrunk the Trend-Following (paper from Man Institute)

57:08 - Finding the optimal allocation

01:04:27 - Niels' different perspective on a trend following allocation

01:07:11 - Different allocations for different situations?

01:11:10 - Too old for unrealistic expectations

Resources discussed in this Episode:

LINK SI290: Honey, I Shrunk the Trend-Following | Man Institute

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