Episode 38: Live from CMT 2024 Summit Dubai with FRANK TEIXEIRA, CMT, CFA & DAVID LUNDGREN, CMT, CFA
Fill The Gap: The Official Podcast of the CMT Association
Exploring Institutional Investing and Systematic vs Discretionary Approaches in Trend Following
Institutional investing necessitates a long-term perspective due to the movement of substantial capital. In the face of a turbulent market, risk managers must adhere to their established processes, even if it means enduring short-term losses. An effective investment approach balances systematic and discretionary strategies in trend following. Systematic approaches utilize quantitative frameworks and rules-based methodologies, while discretionary strategies allow for flexibility and qualitative analysis. Discretionary managers can still maintain a rules-based discipline, albeit with modified parameters regarding risk management, suggesting an adaptation of traditional stop-loss measures. Tools like MarketSmith facilitate the identification of investment opportunities through screening for price movements and volume changes, enabling investors to focus on relative and absolute new highs. Regularly monitoring market behavior aids in portfolio adjustments, where investors may reduce exposure to underperforming stocks while seeking alternative opportunities exhibiting stronger performance metrics.
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