Partnering in businesses and building cash flow are key for attaining freedom and flexibility.
Educating clients about the negative aspects and long-term benefits of trend following is crucial.
Diversification, risk control, and a macro investment framework are important strategies for navigating market cycles and capturing growth.
Deep dives
The Philosophy of Entrepreneurship
Clint Sorensen discusses the importance of entrepreneurship and partnering in businesses as a way to attain freedom and flexibility. He emphasizes the need to unify people on a common mission and build cash flow in order to reinvest in assets.
The Eight-Mile Approach to Trend Following
Clint Sorensen employs the 'eight-mile approach' when educating clients about trend following. He starts by addressing all the negative aspects and counterintuitive nature of trend following. Then, he emphasizes the behavioral benefits and long-term objectives achieved through trend following.
Diversification and Risk Control
Clint Sorensen explains the importance of diversification and risk control in his investment strategy. He discusses the allocation of assets to trend following strategies for liquid markets, while diversifying into private market investments like venture capital and commercial real estate. Sorensen emphasizes the use of position sizing and economic trend analysis to manage risk in the absence of stop losses.
Managing Behavioral Components in Investing
One of the challenges in investing is managing the behavioral component of clients. When markets are volatile and risk tolerance decreases, it is crucial to educate clients about the nature of trend-following strategies. Trend-following involves being long at the tops and short at the bottoms, which goes against the traditional idea of buying low and selling high. It is important to help clients understand the long-term benefits of trend-following and avoid making hasty decisions based on short-term performance. Educating clients about the differences in monthly and annual deviations, as well as the importance of focusing on long-term trends rather than day-to-day fluctuations, can help them stay committed to the strategy in the face of market volatility.
Investment Framework and Strategy Diversification
To navigate the current market cycle, a macro investment framework can be useful. This involves considering trends and expected returns, valuations, leading indicators, and the response of the Federal Reserve. By analyzing these factors, advisors can provide clients with a comprehensive understanding of the market environment and guide their allocations. Additionally, strategy diversification is essential for managing risks and capturing opportunities. This can involve investing in long-term trend followers that trade a wide range of markets while keeping risk size low. It may also include tactical exposures to more volatile assets. By combining a macro investment framework with strategy diversification, investors can be better prepared to navigate market cycles and capture long-term growth.
How do the tenets of trend following apply to private equity and venture capital? What does Eminem’s final rap battle in 8Mile have to do with client communications strategies? How could macro volatility be a helpful landscape for active investors over the coming 18 months? Find answers to these and so much more in the latest episode #31 of Fill the Gap!
This month’s featured guest is past CMT board member, author, OCIO, asset allocator and voracious lifelong learner, Clint Sorenson, CMT, CFA. Clint is a Co-Founder of WealthShield LLC and has long been dedicated to innovating and accelerating the investment landscape. His unique system leverages proprietary quantitative strategies, by fusing together behavioral finance, fundamental and technical analysis.
This month’s fast-paced conversation covers a ton of ground, so buckle up and sharpen your pencils for an interview that will impact your way of thinking about every aspect of your investment strategy!
Fill the Gap, hosted by David Lundgren, CMT, CFA and Tyler Wood, CMT brings veteran market analysts and money managers onto a monthly podcast.
For complete show notes of every episode, visit: https://cmtassociation.org/development/podcasts/
Give us a shout: @dlundgren3333 or https://www.linkedin.com/in/david-lundgren-cmt-cfa-63b73b/ @_TBone_Pickens or https://www.linkedin.com/in/tyler-wood-cmt-b8b0902/ @CMTAssociation or https://www.linkedin.com/company/cmtassociation
CMT Association is the global credentialing authority committed to advancing the discipline of technical analysis in the financial services industry. We serve members in over 137 countries. Our mission is to elevate investors mastery and skill in mitigating market risk and maximizing return in capital markets through a rigorous credentialing process, professional ethics, and continuous education. CMT Association formed in the late 1960s with headquarters in lower Manhattan, NY and Mumbai, India.
Learn more at: www.cmtassociation.org
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