SI67: The psychology of predictions

Dec 23, 2019

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This week, we touch on the difference a year makes, how good position sizing can reduce anxiety, the recent article from AQR by Cliff Asness, why a meaningful allocation to Trend Following might be considered a must for any portfolio, the psychology of prediction, and some of the drawbacks of Trading from chart patterns. Questions we cover this week include: Would CTAs want to publish their returns to investors less frequently? Does history always ‘rhyme’? Is the Fibonacci sequence a reliable indicator? How do you differentiate Trend Following from a typical Long Volatility strategy?

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Episode TimeStamps:

00:00 – Intro

01:37 – Macro recap from Niels

03:10 – Weekly review of performance

11:55 – Top tweets (starting with tweet about recent Cliff Asness article from AQR)

50:48 – Announcement of future podcast guest, Andreas Clenow, in January 2020

53:47 – Question 1: Mike; How would you differentiate Trend Following from a typical Long-Volatility strategy?

57:50 – Question 2 Drew; Does the strategy of buying into a Trend Following fund during its drawdowns count as a form of Value Investing, and therefore, hypocritical to Trend Following philosophy?

01:03:37 – Benchmark performance update

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