Value After Hours S06 E17: Jason C. Buck on the Mutiny Fund, the Cockroach Portfolio and Volatility
Apr 29, 2024
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Financial expert Jason C. Buck discusses the Mutiny Fund, Cockroach Portfolio, and Volatility strategies. They explore defensive investing, portfolio balance, and decision-making parallels between investing and sports. The conversation delves into industry authenticity challenges, Ada Lovelace's AI objections, and struggles in value investing. Gain insights into market conditions, fund management, and faith-based investing in portfolios.
Balancing offense and defense in investing is crucial for managing market conditions and reducing volatility tax.
Diversifying across global markets and asset classes aids in risk management and potential returns through regular portfolio rebalancing.
Volatility trading strategies range from tail risk protection to opportunistic long volatility plays, offering diverse approaches to market movements and risk management.
Deep dives
The Cockroach Fund Approach to Investing
The Cockroach Fund, led by Jason Buck, focuses on both offensive and defensive strategies in investing. While many investors primarily focus on offensive assets, the Cockroach Fund emphasizes the importance of defensive positions like long volatility, tail risk, and commodity trend advisors. By balancing offense and defense, the fund aims to navigate various market conditions successfully and reduce volatility tax.
Importance of Diversification and Rebalancing
Diversification across global markets, including domestic, developed, and emerging markets, is a key strategy for portfolio construction. Balancing different asset classes helps in risk management and potential returns. Regular rebalancing of the portfolio, either through bands or monthly adjustments, aids in maintaining the desired asset allocation and capturing potential returns through mean reversion.
Navigating Volatility Ranges and Tail Risk Trading
Volatility trading encompasses various approaches, from tail risk protection to opportunistic long volatility strategies. Tail risk protection involves buying insurance against significant market drawdowns, akin to having a safety net for extreme events. Long volatility trading can be opportunistic, aiming to capitalize on periods of heightened volatility by strategically positioning option strategies at different moneyness levels to take advantage of potential market movements.
Different Trading Strategies: Rebalancing, Relative Value, and Short Delta Trading
Various trading strategies are discussed in the podcast. These strategies include rebalancing opportunities over time through capturing more realized ball, vault relative value or stat arb in the ball space which involves pairs trading to cover costs and short delta trading using managed futures for intraday trend following. Each strategy offers a different approach to adjusting trading positions based on market conditions.
Impact of AI on Predictions and Decision-Making
The podcast delves into the impact of artificial intelligence (AI) on predictions and decision-making processes. Discussing the book 'Prediction Machines: The Simple Economics of Artificial Intelligence', the episode explores how cheaper predictions from AI technology will lead to more opportunities for judgment and decision-making. By reducing uncertainty and facilitating decisions through cheaper predictions, AI is changing traditional approaches to daily commercial decisions and emphasizing the importance of human judgment alongside machine predictions.
Value: After Hours is a podcast about value investing, Fintwit, and all things finance and investment by investors Tobias Carlisle, and Jake Taylor. See our latest episodes at https://acquirersmultiple.com/podcast
We are live every Tuesday at 1.30pm E / 10.30am P.
About Jake
Jake's Twitter: https://twitter.com/farnamjake1
Jake's book: The Rebel Allocator https://amzn.to/2sgip3l
ABOUT THE PODCAST
Hi, I'm Tobias Carlisle. I launched The Acquirers Podcast to discuss the process of finding undervalued stocks, deep value investing, hedge funds, activism, buyouts, and special situations.
We uncover the tactics and strategies for finding good investments, managing risk, dealing with bad luck, and maximizing success.
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ABOUT TOBIAS CARLISLE
Tobias Carlisle is the founder of The Acquirer’s Multiple®, and Acquirers Funds®.
He is best known as the author of the #1 new release in Amazon’s Business and Finance The Acquirer’s Multiple: How the Billionaire Contrarians of Deep Value Beat the Market, the Amazon best-sellers Deep Value: Why Activists Investors and Other Contrarians Battle for Control of Losing Corporations (2014) (https://amzn.to/2VwvAGF), Quantitative Value: A Practitioner’s Guide to Automating Intelligent Investment and Eliminating Behavioral Errors (2012) (https://amzn.to/2SDDxrN), and Concentrated Investing: Strategies of the World’s Greatest Concentrated Value Investors (2016) (https://amzn.to/2SEEjVn). He has extensive experience in investment management, business valuation, public company corporate governance, and corporate law.
Prior to founding the forerunner to Acquirers Funds in 2010, Tobias was an analyst at an activist hedge fund, general counsel of a company listed on the Australian Stock Exchange, and a corporate advisory lawyer. As a lawyer specializing in mergers and acquisitions he has advised on transactions across a variety of industries in the United States, the United Kingdom, China, Australia, Singapore, Bermuda, Papua New Guinea, New Zealand, and Guam.
He is a graduate of the University of Queensland in Australia with degrees in Law (2001) and Business (Management) (1999).
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