SI73: How too much experience can work against your investments

On today’s show, we discuss when having lots of experience can sometimes work against you, why hard and fast rules can be better than making discretionary decisions, the importance of trading in appropriate position sizes, the amount of drawdown that will likely cause you to deviate from your system, the unpopularity of Trend Following strategies, creating an adaptive portfolio that can respond to market conditions, and why Trend Following should play a considerable part in your portfolio.  Questions we answer this week include: Should you use Trend Filters to confirm your entry signals?  Is the 60/40 portfolio usually less volatile than a typical ‘perfect’ Trend Following portfolio?  Do you recommend adding mean-reversion strategies to your Trend Following systems?  How do you define short, medium and long-term?

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50 YEARS OF TREND FOLLOWING BOOK AND BEHIND-THE-SCENES VIDEO FOR ACCREDITED INVESTORS - CLICK HERE

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Episode TimeStamps:

00:00 – Intro

01:11 – Macro recap from Niels

02:41 – Weekly review of performance

14:14 – Top Tweets

55:44 – Mike; Questions 1: Is Trend Following a Dynamic Call Replication strategy?

01:00:39 – Seth; Question 2: Do you use Trend Filters to confirm the entry signal?

01:04:10 – Michael; Question 3: Is the daily volatility of a 60/40 portfolio less than that of the ‘perfect’ Trend Following portfolio?

01:08:12 – Brian; Listener comment regarding the best way to explain why Trend Following should play a considerable part in all portfolios.

01:14:33 – Dave; Question 4: When using multiple lookback periods, should risk per trade always stay the same?

01:16:02 – Yohan;...