We Study Billionaires - The Investor’s Podcast Network TIP308: Trend Following Investing w/ Niels Kaastrup-Larsen (Business Podcast)
Aug 2, 2020
Niels Kaastrup-Larsen, a hedge fund veteran with over 25 years of experience, dives into the nuances of trend-following investing. He discusses why this strategy is essential in a diversified portfolio and how it complements value investing. Niels emphasizes the importance of adapting trading rules to evolving market conditions and highlights commodities as the top sector for trend followers. With insights on market volatility, he shares the psychological aspects of trading and advocates for rule-based strategies to enhance investment decisions.
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Richard Dennis and the Turtles
- Richard Dennis, a legendary futures trader, reportedly turned a few thousand dollars into $200 million.
- He believed trading success could be taught, leading to his famous 'Turtle' experiment.
Trend Following Challenges
- The hardest part of trend following is risk management and exit strategies, not identifying trends.
- Dunn Capital made key changes around 2006 and 2013, improving risk-adjusted returns without increasing overall returns.
Diversification and Trend Following
- Trend following, using a diversified portfolio of markets, offers powerful diversification benefits because it is generally uncorrelated with stocks and bonds.
- Non-correlation is more important than excess return when diversifying a portfolio.
