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271: Tom Basso - The Sweet Balance Between Risk and Reward
Nov 30, 2023
Tom Basso shares his journey in finding the right balance between risk and reward in the financial markets. He discusses his experience predicting and surviving the 1987 market crash, strategies for handling drawdowns and market conditions, and the relationship between economics and trading. Basso also emphasizes the importance of blending different strategies, managing positions, and using indicators to adjust for inflation and increased volatility.
01:14:02
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Quick takeaways
- Finding the right combination of uncorrelated assets and technical indicators can help hedge risk in financial markets.
- Using futures contracts, such as S&P 500 Index futures, can effectively balance the exposure of a stock portfolio to market risk.
Deep dives
Tom Basso's Multi-Year Quest for Hedging
Tom Basso, a retired money manager and futures currency trader, embarked on a multi-year quest to find the right combination of uncorrelated assets and technical indicators to hedge risk. His goal was to protect the bulk of upside potential while filling in the potholes of equity drawdowns. Basso emphasizes the importance of balancing risk and reward in both financial markets and personal life. By blending different strategies and asset classes in his portfolio, he aims to create a smooth equity curve and maintain a serene disposition in the trading world.
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