SI348: The Quiet Cost of Overfitting ft. Andrew Beer

[00:00:01] Intro

You’re about to join Niels Kaastrup-Larsen. On a raw and honest journey into the world of systematic investing and learn about the most dependable and consistent yet often overlooked investment strategy. Welcome to the Systematic Investor Series.

[00:00:23] Niels

Welcome and welcome back to this week’s edition of the Systematic Investor series with Andrew Beer and I Niels Kaastrup-Larsen.

Where each week we take the polls of the global market through the lens of a rules based investor. Andrew, it is wonderful to be back with you, and I really look forward to our conversation today. How are you doing?

[00:00:41] Andrew

I’m doing okay, thank you. It is great to be back. I love doing these. They always give me the opportunity to you know, kind of sit back and reflect on where things are, and what we talked about last time and how the world has changed or hasn’t changed. So, thank you so much for having me back.

[00:00:57] Niels

Absolutely. And you’re right. I mean, I think there is a lot of reflection that’s taking place right now. There’s a lot of things happening in the world that’s also having quite a major impact on the managed Futures or CTA space. So, I think it’s a great time to study it.

It’s usually during the difficult times that you learn something new or see things in a different light. So, I really, really look forward to our conversation today.

Now we had a little bit of a conversation before I pressed record so I kind of know where we’re going with this, but I will ask you anyways, what’s been on your mind lately?

[00:01:32] Andrew

Okay. Well, it’s on the personal front. So, we have a 15 year old dog who is on his last days and so, we, I’m in the midst of a family wide vigil and the world will be a much, much, much darker place. But those who know me, it’s sort of a funny story. He came to me in 2022. I spoke at ETF Conference – Exchange ETFs, and I made a hoodie for him. He’s a golden retriever, and I made a hoodie with him with a DBMF logo and I was speaking on the alternatives panel. So, if you look at my LinkedIn page and you look at the picture he’s lying on stage in front of me.

It was Corey Hofstein who was moderating it and it was great because he was just kind of sitting there looking at the audience for a long period of time. And then when the conversation finally turned to us and DBMF, he kind of sighed and rolled and turned his back with the DBMF logo right to the audience.

[00:02:36] Niels

Well trained.

[00:02:36] Andrew

So, he was our secret weapon in 2022.

[00:02:40] Niels

Absolutely. Yeah.

Well, I can tell you, because I shared with the audience, I think last week, no, last year, last summer when we had to say goodbye to our golden retriever. I know there are a lot of dog lovers in our audience because they send a lot of very sweet messages and I’m sure they will do the same and think of you while you go through this time. It’s not a pleasant time to go through at all.

Now, what’s been on my mind is very diverse. And I don’t really know where to start, but I’m just going to throw it at you because I find it interesting. Maybe there’s a comment from you or not, but I just find it interesting. The first thing is a new book that has just come out.

It’s written by a journalist called Patrick McGee and he basically have been covering Apple for the last four or five years, and he’s been covering other big companies previously and has built up this knowledge, you know, about supply chains and all of that. So, this book, it’s a story about how Apple essentially supercharged the Chinese tech revolution.

And essentially, you could say if you’re maybe a little bit cynical, that they might be responsible for China being more technical, logically advanced than the west today because they send hundreds of their best engineers over many, many years to basically train all the Chinese and other companies in the Far east to basically be able to build the Apple products. Which, by the way, according to the author, Apple still builds everything in China. Even if they say, oh, now some of it is being done in India, well, it’s only really the last part of it and all the material is being produced in China, etc. etc. I mean, I was shocked when I heard this.

And the other thing that shocked me was that they apparently, between 2016 and 2021, invested or pledged to invest something like $275 billion in China. I mean, that is more money per year than the CHiPS Act. And this is just going to one country. So, people should go and buy the book.

I think the book is called Apple in China: the Capture of the World’s Greatest Company. I think it puts a lot of things in perspective for me at least, also how I view Apple, frankly.

[00:05:33] Andrew

I mean it’s fascinating. I don’t know anything about it and it doesn’t surprise me. Actually, in the 2000s I started one of the earlier hedge funds that was focused on the greater China region. And what was fascinating to me about it was just (it’s a long and very different conversation) the cultural differences between our expectations as Westerners (as to how China would evolve) and, at the time the view was that China was more like Russia. It was transforming from a state controlled economy to something that was going to look more different, or that it would kind of end up looking more like the US.

And just from the limited experience that I had (most of our people were actually in, in Hong Kong), it was a sense of just, as I got to know more about it, it’s a very different approach. So, there was much more of an explicit ends-justifies-the-means approach to things. I have a lot of great stories about it which are outside the scope of this.

But I think, as it relates to what we do in our day jobs, you know, there is something very profound going on. A lot of the cannons that we’ve lived with, and just accepted for a long time, are being challenged for good or bad.

And you know, the question that we can talk about today is, is that something that’s going to create opportunities or is it going to create these maddening whipsaws like we’ve seen recently? So, think there is actually connection there.

[00:07:04] Niels

Sure, sure. And two other things I want to mention that really stood out to me. One is there were some individuals, on the Chinese side, that were just so smart in seeing that, actually, even if they made just a 1% profit margin, that wasn’t really the value. The value was that they were getting all their engineers trained by the best Apple engineers in the world. And then they were actually allowed, by the agreements they had with Apple, to use those engineers for other things that they could build for other companies. I mean, when you think about it, it’s like completely crazy.

But then the other thing that does tie it back to now, for me at least, is when you hear all of the things that’s going on with Trump and the trade war, it is completely, as far as I can tell from, from listening to the author, it is completely unrealistic that you can move pretty much any of the Apple production back to the US or any other country for that matter. Maybe over a very long period of time you can develop the technologies. But frankly it’s really shocking, frankly, when I heard this.

[00:08:23] Andrew

Well, this reminds me of something that I probably haven’t thought about in at least 20 years, maybe 25 years, which was (and, and I may be getting the facts in this wrong), as I recall, the largest investor in Long-Term Capital Management was either a Chinese bank or a Chinese government entity. And the condition of the investment was that they could have people on site to learn.

One of the things that, that I found is people thought in 100 year increments. I mean, there was this sense, when I started the fund in 2003, there was a sense of almost wouldn’t it be great if China was more like America within the Hong Kong people that we were working with. Within several years later it was more of a manifest destiny about China. This was China’s century. And I think that sense of purpose, I mean, there is state planning, but it is how do you extract these things and deliver long-term value and position the country for 50, 100 years from now?

So, a lot of that’s coming to a head now.

[00:09:36] Niels

But you know what, it’s actually not that far from our industry because I remember, many years ago when I was CEO of another company and where we were fortunate enough to have a very large sovereign wealth fund as a client that a lot of the other trend followers did, that company would ask you to host employees from their company to come and be in your offices for a few weeks every year. And lo and behold, around 2007, they simply started to redeem, from all these external trend followers, and built the whole capacity internally.

Now I can’t say if it’s been as profitable as if they had stayed with the external managers, but it just shows you that if you train people or teach people how to do these things, maybe at some point they will actually do them themselves.

[00:10:35] Andrew

I mean, I see this now with people on the institutional side with the space is do they do it in house or do they… And that can also mean doing it with QIS swaps as opposed to doing it with funds. But I think there’s a belief that if you internalize it… On the fun side, it’s not just about whether it’s marginally, economically better for them, or cheaper for them to do it. It’s also often in the interest of the people who are involved. It’s elevated responsibilities.

They want to move from being somebody who just mails money to somebody else, to having responsibility for and moving from an analyst to a PM role. So, it’s the corporate social dynamics of it anytime you have a large investor. I mean, when hedge funds seeded other hedge funds, you know, Soros used to give money around, but you’d have to show them all your trades and all your positions that they could double or triple up on.

Even in the early days of replication, in the equity long/short space, you would have people who would give money to an equity long/short manager with the expectation that they could see their positions and therefore double up or triple up on trade. So, they weren’t paying 1.5 and 20 on the dollars that were invested.

So, I just think what you’re seeing now is people are shining a light on ways in which it’s been happening, that people haven’t wanted to talk about for 20 years. And so, it’s not going to be a dull few years.

[00:11:58] Niels

No, no, no. Speaking of Trump, speaking of the markets, of course, the other things I couldn’t help noticing was the fact that he’s probably now the sharpest analyst on the street because when he gives advice about buying stocks, you tend to make a lot of money. At least now he gives it publicly and from the Oval Office and not just to a select few.

But that’s something that I just find extraordinary and fits quite well into a conversation that I had recently with Cem and Demetri Kofinas, which if people haven’t listened to it, they really should. I find these topics so important.

Then I found something completely different that came across my inbox. And that is now there’s an insurance policy if you shoot someone in self-defense. I thought that was extraordinary that you can get yourself insured for that.

And, of course, we know about the tariffs and all of that. I’m sure people have noticed the fact that it’s okay to get a $400 million Boeing jumbo jet, you know, given to you by a Middle Eastern state, and then pass it on to your library.

But then I found something about AI, something that I haven’t really thought about, but it makes a lot of sense. So, British Airways just came out and said that for the first quarter this year, 86% of BA’s flights from Heathrow departed on time, according to the data from the airline. And this is the best performance on record. And this is thanks to AI, apparently. So, you travel a lot. I travel a lot. I’m not sure I’ve quite completely felt these improvements. Maybe it’s just British Airways and not the airlines I fly, but that’s a useful use of AI.

[00:13:51] Andrew

Yeah, well, I’ll resist going too much down the Trump rabbit hole because…

[00:13:56] Niels

I know.

[00:13:58] Andrew

Look, the world is full of change right now. I mean, again, staying neutral on Trump and all this stuff and what it means, there are cannons that we have just lived with for 50 years that are being upended weekly. And AI is, every time I use AI, I’m kind of blown away. And I think that, you know, there’s also… So, we’re in a world where change is not slowing down and, again, the question is, is that a great money making opportunity for guys who do what we do? Or are we going to see the kinds of frustrations we’ve seen over the past 12 months? Which has been, if not the worst, among the worst periods for the overall strategy. And what does that mean for the industry? What does it mean for individual funds? And who are the winners and losers and how does it all play out?

It’s going to be really interesting and really exciting.

[00:15:07] Niels

Well, let’s move slowly into that. Of course, the reason I mention these things is not to make political statements. It’s more because it is actually what’s driving the markets and what’s making this challenging, as you rightly say.

So, my own trend barometer finished yesterday at 25. That’s exceptionally weak. I mean, it doesn’t get much lower than that. So clearly showing, from that perspective, that we’re in a difficult time. The performance numbers are confirming it. The BTOP 50 for May, down 2.18% so far, down 5.25% for the year. The SocGen CTA index down about 2% for May, down 8.69% so far this year. This is excluding yesterday and we’re recording on Thursday. So, this is, as of Tuesday night. SocGen Trend down about 3%, down 12% for the year. And the Short-Term Traders index, obviously doing much better, up 5 basis points and down less than 1% so far this year.

Of course, you wouldn’t think that there had been an equity crisis, because now we have the MSCI up almost 5% in May and up 3.3% for the year. The US aggregate bond index is down 1.45% in May, but up 1.5% for the year. And the S&P 500 up almost 6% in May, and up now 65 basis points for the year. So clearly a challenging period.

So, from my perspective, I think, if we just look at sort of May as a month, a lot of the challenges that I see is coming from the fixed income sector. We can, we can talk about that. But of course, also some of the precious metals have basically given up some of their recent gains.

So, that’s where I see a lot of the challenges at the moment. And also, for the year, very, very few markets that have given any kind of trends that can be traded. There are lots of markets that have basically reversed, one, maybe even two times already this year. So, challenges all around.

But I want to go into your topics and we’ll move around from that. And one of the first things you wanted to bring up is this, as we already alluded to, , is this Trump policy or politics that he stands for, Is it untradable? That was kind of your big headline.

[00:17:45] Andrew

Trump is different. Right? And Trump, from a policy perspective, I was quoted in Bloomberg as basically saying, “One of the problems for allocators right now is it’s very hard to distinguish the signal when sometimes the policy is about noise.”

And I think if I was talking to a macro hedge fund after Liberation Day and the placards with all of these reciprocal tariffs, and it was just coming to light that there was no analysis behind it other than just picking a number. I’ve been telling this story and I said, “The thing about Trump” (and I told the same story when I was on the board of a nonprofit about the New York real estate business), I said, “It is culturally a very, very, very different thing than probably anything you’ve seen on the business front.”

And I tell the story, about 20 years ago, I had an opportunity to buy a company that had a great piece of land in New York. And so, I knew a guy who was considered the top real estate lawyer in New York. And I asked him, I said, “Look, I need to partner with somebody. I have no idea what to do with this. I know how to buy the company. I don’t know what to do with this land.” And he introduced me to a guy who was an A player in the New York real estate world.

He could have been nicer when I talked to him. He put me in contact with his lieutenants, and I went in to be with him. And it was the most bizarre business meeting I’ve ever had. We start the meeting, and I’m actually with a guy that I’m buying the company from, he’s this very wealthy elderly gentleman. And for 20 minutes, there are three guys in the room and they pound on me, pound on me; like, what are you doing here, are you a broker? I mean, personally insulting. It was absolutely unbelievable.

And so, first off, it’s the only time in life I’ve ever cut a meeting short. At 20 minutes. I said, guys, I’m obviously in the wrong meeting here. It’s not what I expected. And we got up and left. I put the guy into a car and I called the lawyer and I said, “Larry, excuse my French, but what the f*#@ just happened?

And he said, wow, what, what, what? Tell me then what happened? I told him and he said, those three guys were in the room, they’re dying to do the deal. I said, what? And he said, they’re dying to do the deal. And I said, well, Larry, I’m doing a 15 year partnership, after the meeting starts like this, and say, look, just be polite, tell them I’m walking away, it’s not worth it for me. Obviously I’m in over my head here. So, he calls me back the next day and he said, they loved your response. Now they want to sit down and get serious.

And this went on for two weeks. And I was like, Larry, I’m out. I’m not doing the deal. And the more I said that, the more that he was like, you know, now they’re calling you ‘the shark’.

And at the end of the second week, they actually sent me a stuffed shark to my office. And the story was longer than that. But it’s the thing to thing that I told this charity that I was on, when Trump was first elected in 2016, is that unlike other areas of the business world that we’re used to, the negotiation is often the point. And when you translate that into a geopolitical world, it doesn’t matter. There’s no sense of, like, I want people to respect my analysis and it’s going to come around the analysis. It’s purely about power dynamics.

And the other thing about what I found in the New York real estate business, and as I learned more about it, was that these guys could have screaming fights with each other surrounded by lawyers on Thursday and are giggling and hanging out at the Hamptons on Friday. Like, there’s no sense of the cost. There’s no sense of… Again, look, I mean, this is a very, very limited window into it.

And so, to me, the problem with Trump is that he doesn’t need to have policy consistency. He doesn’t need to have the things that we sort of expect. And also, you know, the general political sense of ‘first do no harm’. This idea of this Hippocratic oath of first doing no harm. They’re willing to take a lot more risks with things breaking down. And so, where I think that’s becoming a problem is that I think it’s becoming a problem with short-term models. That, in fact, I think what’s happened in this space (and I don’t have any concrete evidence for this, so, this is something you can ask people when they come on it), but I think there’s been so much talk, as you and I have done this over the past few years, about all these innovations that people are talking about bringing to the core idea of trend following.

You know, it starts with kind of long-term, medium-term, long models and then it’s, let’s enhance that, let’s do vol controls, let’s do short-term models, let’s move into alternative markets. And the problem with short-term models is they’re really gullible.

And when Trump tweets something, and you get a big market move from it, the models believe it. They take it at face value. Whereas, a longer-term model, if you just want to anthropomorphize it says, well, I don’t know, let’s see how he feels next Wednesday.

And so, my guess is that some of the drawdowns that you’ve seen over the past 12 months were, if I was an allocator, I would dig into this. I would say, all right, well, you know, you’ve talked about moving into things that are supposed to protect you from whipsaws. And that seemed rational because, since the peak in 2022, we’ve had five vicious reversals. The first was, wait a second, inflation’s not going to 10%. Then it was SVB, then it was the Powell pivot, then it was the growth fear plus the yen head fake last year, and then Liberation Day.

And so I think what you’re seeing is… And, by the way, the guys who are pitching shorter-term models were getting the assets because it sounded (and I heard people saying, more and more allocators saying this) like, well, the reason we like short-term models is because you get into a trend earlier and you get out sooner once the whipsaw starts. And my counter argument would be, but short-term models, it’s not really how they work.

I mean, yes, you get in early, but then you get head faked out two or three times on the way. So, it’s kind of a zero Sharpe ratio strategy over time. Now, if your goal is to protect yourself in those two weeks around SVB, yes, I understand it, but I think with Trump, and I think you saw this a bit in 2016 through 2020, in the long winter, short-term models may be a huge negative going forward.

So, I think it’s tradable, but I think it may be going back to what’s really worked for 50 years, which is the medium to long-term trend models. And I think there’s an economic rationale for that which I can go into as well.

[00:24:31] Niels

Sure. So, a few things to unpack. I like your thoughts and observations about this. So, I looked at just some internal stuff that we do on our side, just where we take, you know, a model type, and the only thing we change is the look back period. Now of course this will be different from other models, but this is just to keep it to what I see.

And, if I look at year to date, and I look at a 20 day look back, 60 day, 130 days and 260 day look back, that’s the only difference, I actually see (this time around) that the shortest time frame does better than the 60 day time frame, which does better than the 260 day time frame. And the worst time frame is actually the 130 days. So, what I would describe as medium term.

And I think you’re right in the sense that a lot of people gravitated towards, or adding on, short-term because of the exact narrative that you said. Which I’ve also had to deal with and try and explain why we think differently about that. But I also think a lot of people gravitated towards the medium-term because of size. Short-term was a little bit too difficult maybe, so, medium term became…

And, in fact, I would say, in the last year I came across someone, not directly, I didn’t speak to the person directly, but someone who (at a very, very large institution by the way), who was convinced that medium-term was the absolute best time frame and there was no need to look at anything other than medium-term. And, of course, there will be quite a few of the large managers that fits that mold. But I think you’re right, I think you’re onto something.

So, my question, and again based on the experience that we have at Dunn, is that well, yes, there is something about the speed but maybe you also need to try and solve the issue differently. Not actually through speed of models, but it could be through different ways of looking at risk management, for example. So, these are the periods where we will be tested once again. But I do like that.

The other thing, and I saw you put that in your notes so I’m going to bring it up. Maybe it’ll trigger something for you. And that is this thing about, you know, performance. Could it be luck versus unlucky and how does that influence dispersion? I think there’s a lot of that as well. Of course, you know, how are you positioned right before a Trump Tweet or something like that. But I will also say, because I’m sure we’re going to…

Well, let me keep my powder dry. Let me hear your thoughts on some of these observations.

[00:27:42] Andrew

So, it’s entirely possible I’m wrong. That it’s like I can’t see into what everybody else is doing. It’s more of just what I saw on the narrative side. But something’s happened. And, a year ago the SocGen CTA index is down 15%, year over year, through the end of April. That matches or slightly exceeds its largest historical drawdown going back to 2000.

And individual managers who had basically built their thesis around better risk management and risk controls, which again to me were kind of the three headed hydra of short-term models; to be more responsive vol controls, some more active position management, and moving into alternative markets. Some of those funds are having drawdowns that are well outside of the range of expectations – worse than the overall space.

I don’t know exactly what’s going on but back to the point about noise, again, a huge problem right now in any of this analysis is exactly that – timing rebalancings. During April, when we were rebalancing our replication models on Monday, sometimes our feeling was like, God damn it, we rebalance on Mondays. And there were a few times we were like, oh, thank God, we rebalance on Monday. The howitzer shells are landing around us and we happen to have moved into the foxhole at the right time. So, it’s going to be very difficult.

I’ve been talking to friends across the space. Nobody has a really clear explanation about it. And I think you circulated an article that came out on Bloomberg on alternative markets and, again, I think one of the challenges in this space is that sometimes the world doesn’t cooperate. And it’s not really clear whether that’s a new state of the world. And I think we’re all pointing to Trump because he seems to be the instigator of these insane market moves. And the next question is, is there something you can do to configure your strategy to deal with the next nearly four years at this, or eight years, or twelve years, if our democratic process fails us? So it’s hard.

[00:30:15] Niels

Many, many years ago, actually 15 years ago or something like that, I was following a guy that I thought had some interesting observations about cycles, all sorts of cycle work. And one of the things he wrote a lot about, and back then, I mean, these cycles are long term, so you’re not influenced when you read it in the moment. But one of the things he talked about was this cycle where you see, at some point you have strong central banks and weak politicians, and then at some point you have strong politicians and weak central banks. And to me, I can now see it because I saw we experienced the period where the Fed was in control, and all the central banks, perfectly in control. Not much change to inflation, not much change to growth. It was just perfect.

And now it’s just completely… It’s almost like whatever Powell says doesn’t really matter. The only thing that matters is what Trump says. So, I think there’s something that I’ve never sat down and tried to identify, which of these periods you could define as strong central banks and weak politicians or vice versa. But clearly this one feels very like the strong politicians and weak central banks. And we had the opposite only a few years ago. So, I think that’s an interesting observation. I was looking to see if I could look up some of the performance numbers.

You’re right. I have also observed that even managers who’ve been around for a long time, two, three, four decades, some of them are hitting their worst drawdowns ever right now. And I think I spoke with Nick Baltas about this a couple of weeks ago, and maybe he just made the observation that, well, you know, the longer you’re in business, at some point you’re going to hit a period where things are just moving against you on many fronts and so you’re going to hit your worst drawdown.

So, that might be the case, of course. But what’s also interesting to me about this is kind of this intellectual question about, well, we’ve also had three or four or five decades to become the best version of ourselves and yet the markets are still… So, we have to be really humble.

What I do think has worked, though, is that despite this happening, and I don’t know about the trend index, whether it’s at its worst drawdown ever, I I don’t have the numbers in front of me. But I feel absolutely certain that we’re going to go back and we’re going to make new highs. That’s, for me, non-debatable. That will happen. Models will adjust. Markets will start trending again. So, that’s not my concern.

I’m a little bit concerned about how investor reactions will be because they tend to, you know, be emotional, and people will, at some point, probably soon declare trend following dead once again. And it’s usually the best time to, to buy or add to it.

I was kind of reminded about the mindset that we probably should all adopt by, I don’t know if it was from the latest annual general meeting by Berkshire Hathaway, but it was certainly Buffett talking about drawdowns. It could have been a question he got from the audience and just the sheer calmness and that he was talking about these, I think it was like three occasions where Berkshire Hathaway had been down more than 50% and it’s just completely natural for him that these things happen. There’s nothing untoward and, and all of that.

And I think that’s also the kind of mindset I see among the greatest of the greatest of these trend following pioneers, that there is just no emotional reaction in that sense. It’s just business as usual, we follow the process, and so on, and so forth. It doesn’t mean you can’t learn something from these periods, for sure. But I do want to maybe dig a little bit deeper into some of the things you just mentioned, things like, maybe we did that already, short-term models versus long-term. The narrative around that – that this is better, or diversifying strategies, that is better; alternative markets, that is better; trading 500 or 400 markets that is better. Because, as you rightly say, it’s not really what we see in the data. That, I think, is interesting.

[00:35:01] Andrew

I would say, first, in terms of the difference between Buffett and this, is that Buffett views a company as having an intrinsic value and as an anchor. And when stock prices… It’s what Benjamin Graham said about a voting machine versus a weighing machine. So, there’s an argument, an intellectual argument as to the cheaper it gets, the more it will rebound.

The problem with managed… That doesn’t translate well to the managed future space because the whole point of managed futures is you sell your losers. You don’t hold onto them. You don’t double down, you get out of things. And so, the risk management in this space is you don’t hold onto things with a white-knuckle grip, or you don’t hold onto things with an iron spine like Warren Buffett has. So, the question is, how do you talk to investors about this as a period that will be followed by a better period?

And that’s what I find missing right now when I talk to people about it, other than the fact that it was bad luck, it was an act of God, it was things moved too much, this was such an unusual period. The way that I talk about it, and again, from somebody who came at this space, really, starting to think about as an allocator, and we talked about this last time, which is that basically managed futures funds are using price information to detect changes in the world. And, you know, a price on a security, whether it’s heating oil or the S&P 500, is going to move based upon two criteria.

The information is going to change between now and when you next measure it, and the sentiment about that information is going to change as well. And to me, the big wins in the managed future space, are when they get the changes in information correct. And those are often two competing forces.

So, you look back to the beginning of 2024, the space was on fire in the beginning of 2024. Why? Because it picked up on the Trump trade early.

Wherever it was picking up on signals to go overweight equities, again, not having basically being short or negative, or flat equities, for years, it flips to being long equities. It’s still long the US dollar, but maybe it’s yen, maybe it pivots the euro later in the year. Gold starts going up as an allocation, at least in our risk models, and wasn’t buying four rate cuts this year, or five rate cuts this year. And so, the first few months of last year they nailed it, but it was still contrarian, the alpha.

The problem with calling a space trend following is you sound like the dumb guys getting in after the good money’s been made. But what it is, you’re using price signal to detect what are going to be future changes in information. Because if you think about when you’re not doing it from this perspective, but if you’re a fundamental analyst and you know an area well and the price starts moving, what’s the first question you ask? Who knows something? What do they know that I don’t know?

Somebody must know something otherwise, you know, why would they pay more than I just paid a week ago for this? Or why are they selling it today?

So, what I think, over the past 50 years, I think the trick of managers, the great one trick of this space has been to extract from price information across lots, and lots, and lots of different markets that somehow the world is fundamentally changing – and so, when it gets it right, and gets it early, like inflation.

So, we went short treasuries in September of 2020. Think about how early that was. I mean, 10-year treasury yields had troughed at 50 basis points. They climbed up to 70 basis points. At 50 basis points, a lot of people thought they were going negative. They thought inflation would never come back. But going from 50 to 70, you know, maybe somebody knows something.

So then, since the end of April last year, it’s been a series of sentiment shifts. The information actually hasn’t changed that much. I mean, but it’s rather we go through, you know, there’s going to be a red wave, and then there’s not going to be a red wave. And then we get this whole issue. it’s we’re going to have a recession by the end of the year. There are all these kind of sentiment head fakes.

And so, when you have this 15% drawdown in the SocGen CTA index over that period of time, it’s, it’s because, you’re bouncing from propeller to propeller. Boom, there goes two points. Boom, there goes three points off your returns. So, like us, our worst drawdown was 2022 into 2023. But it was really, it was like a 5% drawdown. Then we didn’t have a chance to recover before we had a 2% drawdown. Then we had a 5% drawdown.

So, in the space, you can have a succession of these drawdowns. Now, the bet that you have to make on the space is that the world is actually going to change, and the change in information is going to drown out the in sentiment – these kind of, you know, short term whipsaws.

I think what’s going to happen, and this is sort of my sunny optimistic chase, I do think the world’s going to change a lot. That, in that we’re not going to be on this kind of, the world doesn’t change very much, but we have this huge volume of noise whipsawing back and forth. But some big things are going to happen. Things are going to break, and one way or the other inflation’s going to go, people are going to lose confidence in the dollar.

This kind of dancing on a ledge, and willing to take risks that most political institutions won’t take will ultimately spiral out of control in some way. And that’s going to be the money-making opportunity.

[00:40:59] Niels

Yeah.

So, I agree with you that it has been, again, I wouldn’t use the word unusual because I don’t remember the last 50 years worth of market exposure and all of that stuff. But yes, you’re right. I mean bonds have, essentially, had something like five reversals in the last 12 months or so, which is a lot. Equities, at least a couple, and some of them kind of just in that length of time where you get tricked, so to speak or most managers get tricked into reducing or even flipping exposure.

Currencies. I mean, the dollar has had its fair share of reversals as well, and energies have been tricky. So, you’re right. In the sense that it’s the perfect storm. And I think we exchanged some emails with Alan yesterday and he also described it as the kind of the perfect storm in the last 12 months. And, of course, this has happened before, and it will happen again, and so on, and so forth.

And the other thing that I’m looking at, and I shared the chart with you yesterday. But one thing that I like to look at is also what are the drawdowns of different managers but also of indices, and benchmarks, and equities, and bonds? What is the max drawdown in relation to its annualized volatility? And people will be surprised, I think, that actually bonds have, by far, the worst ratio of all of these. And you know, equities are not necessarily better. I’m just going back 12 years and it’s not necessarily better than many of the managers we follow and we track.

So again, I’m not overly concerned about it, but I would like to hear your thoughts on at least these narratives. I do believe that there has been, in the last 20 years or so, these three narratives – short-term was better than long-term or medium-term, and alternative markets were trending better.

In fact, Alan was kind enough to share, in a Bloomberg article, with both of us before we went on. And there are some people, even himself, and he’s quoted in the article, but there are some other people being mentioned, and talking about whether it’s the momentum of these alternative markets that’s kind of disappeared because people have crowded into them. They became popular.

The narrative was five, six years ago, as far as I recall, because I was up against it, and that is, oh, these alternative markets, they trend better. And there were a couple of years where they did these alternative trend funds were doing better. But now we’ve had three years or maybe four years where that’s not been the case. And so, you have these different narratives all the time.

And then the last narrative, well, the two more narratives I guess we could talk about. One is the number of markets. So, the hundreds of markets should be better than a hundred markets or less.

And then the, the final one, which I almost don’t dare bring up, but I think it’s safe to do with you, and that’s dynamic position sizing versus static position sizing.

Which of these narratives do you think are most interesting to examine at this stage, and maybe question at this stage?

[00:44:35] Andrew

Well, I think the answer is all of them probably. So, I think, again, my view on this, and it’s not sometimes a welcome view, is that I think the business, I think the core driver, the core beta of managed futures was discovered 50 years ago. It was discovered before people were applying computers to a zillion different markets.

It was basically guys in the pits in Chicago who sensed that things kept moving. And in a sense it was an extension almost of this idea of charting, that this human instinct where people are going to start chasing things.

About a decade ago, this is even before we started doing replication – early 2010s, there was a big trend toward offering like a commoditized version of trend. You know, banks started offering QIS products and GSA came out with their 50 basis point product.

So, the industry, which again, I mean, let’s be quite clear that this was one of the most fee egregious industries in the 1990s. I mean, it was 10 points of fees. This was the multi strats of the 1990s. But instead of being sold to sovereign wealth funds, it was being sold to high net worth investors, you know, guaranteed products…

[00:46:01] Niels

Right. And let me just make that clear. It was actually not so much the managers that had changed their fees, but it was the packaging, that middle man that added, you know, outrageous fees. I completely agree.

[00:46:12] Andrew

Right, yeah, look, Bloomberg, in 2013, wrote about this, I mean, they highlighted funds that had 10 points in them, including 600 basis points of contractual trading commissions for trading futures contracts. And we talked about it, I mean, you know, when Winton kind of… There was this period of time where people basically said, if not quite, trend is dead. It coincided with a very, very bad period of performance in the mid 2015s.

And so you know, you’re somebody who’s earning one and a half and twenty, or whatever, of your fees in your hedge fund and you have somebody, people were showing up. And remember GSA had phenomenal numbers for like five years. So, they’re showing up and saying we can do it at 50 basis points. And, by the way, we’re doing 10 points a year better than those guys who are doing it at 50 basis points. It caused allocators…

And then banks are showing up with QIS products that, at least, appeared to be free because you’re on the receiving end of a swap. And so, it created this sense where the core driver was all of a sudden getting commoditized. And so what do you do to that? The natural commercial response is to say, but look at the other things that we’re doing.

And I think what’s happened, and again, I’m much more familiar with the US mutual fund and ETF world, but when I look at asset flows in the space, and again, by the way, the dispersion issue and the lack of timing and positioning, again, is… But what I did see was that there was one fund in particular, who’s been on your show, who had a very good March of 2020. A trend follower who happened to have positions that did better than most people, that had a very good 2020, very good 2021. And then they soon had $5 billion in assets.

And so, in a sense, the narrative followed positioning luck, because then, after the money comes in, they have not done nearly as well since then. And that’s happened with a, again, this has been a recurring process.

A fund happens to have certain things… goes through a very good period of time, that the narrative then gets reinforced that it wasn’t luck, it was skill. People buy into it, assets flow, and then other people look at them saying, how are they raising money and what are they saying? And they start adding things to it.

So, you ask the question what should be examined if I was an allocator? And, by the way, I’ve not done a deep dive on the alternative markets and whether they trend more. People that I think are very, very smart and respect have looked at that issue and have not found evidence of it. And I think somebody was even quoted in Justina Lee’s article in Bloomberg basically saying that these markets somehow trend more is a bit overstated. And then it’s supposed to provide diversification.

But look, if I was an allocator, I would be asking the question, what evidence do you have that all this adds value? And if I wanted to be difficult, what I would say is, you’ve been talking about all of these innovations. I’ve been invested with you for three years, and every quarter we talk about and you tell us these new enhancements that you’re making. Go back three years ago, show me the model you had then and how it would have done, and have these things that you’ve done. What’s been the impact of going from 150 to 190 markets? Show me what you would have done. And okay, you added more stringent volume controls, you added more short-term models. Go back and show me what it would have done. And, by the way, go back another three years and do it again, that analysis.

Because the whole thesis of adding this complexity can be tested. And what we talked about last time was when Tom said, everyone’s looking now and when they should be cycling between long-term and short-term models.

And my response was people think about this for 20 years. It’s like everybody now is trying to figure out when you should be in or out of the S&P 500. Guy, we’ve been doing this for 50 years. These aren’t new things.

But this is the kind of dynamic that happens when you have a heterogeneity of products at different price points, with different value propositions. And I think what people will do is there will be, I’m sure in the alts market, look at AQR. I mean AQR basically tore up their old models and rebuilt them and are killing it.

But, in a sense, what they’ve basically done is… But if you’re going to look at AQR you have to also have this question. You know, the same smart guys, from 2014 to 2020 or something, underperformed the other 19 guys in the Soc Gen CTA index by 20%. So, those kinds of modeling decisions can work very, very well, and they can go very, very wrong. And the question is what do you evaluate it against?

[00:51:23] Niels

Can I interrupt here and ask you a question? Because I hear what you’re saying but I, I wonder if it’s a fair question, in a sense, to say, well go back three years and take out all your improvements and see which one have done best. And, in fact, you shouldn’t have made any changes, i.e. the old version was a little bit better.

Is that a fair way of judging people? Because I’m sure they’re not making the… Well, there can be two reasons why you make the changes, right?

But if we’re just strictly talking about it from a performance point of view, I don’t think any of the managers are making changes that they think will be for the worse. I mean they’re doing it because they think this is better.

I’m not such a big fan of saying well let’s just go back and we’ll now start sharing old versions with new versions and all of that. I think that brings investors a little bit too much into the engine room where they have a debate about what’s going on in the engine per se.

You have to trust the firm that you work with. But I think it’s fair to judge firms, which we all get judged from the performance, from the relative performance, I guess. So, I’m more in that camp than I am in trying to ask people to go back and kind of justify a change they made.

[00:52:52] Andrew

Well, look, this is not a question that’s designed to make friends, right? But I’m an allocator, and I have a large drawdown over the past 12 months, and I’m paying you a premium to do things that I could do otherwise on the basis of your argument that your experience and your acumen and that these things are adding value over time, how do you evaluate that?

In general, allocators don’t ask it. The alternative is, okay, you have underperformed expectations, I’m firing you and figuring out what else to do with my money. So, I don’t think they’re unfair questions at all when it’s been put forth because, look, what I want to know is… And this is, again, this is what I think is the real underlying tension in the business is what you should pay for it.

You know, one of the disruptive things about replication is you can compare. You now have an investable, cheaper approach that you can compare to. So, in a sense, if you’re evaluating a manager versus the S&P 500, you don’t evaluate him relative to every other person who’s got it. You look at how do you do relative to the S&P 500.

And so whether it’s a bank trend product that you can invest in that you think is a reliable representation of the industry, whether it’s a replication based strategy, it’s not just us, it’s Alpha Simplex and other people, and do it top down and bottom up. The onus is on the manager to explain why somebody should be paying 170 basis points, not 85 basis points. There’s got to be something better for it.

[00:54:37.220] Niels

Sure. Can I push back a little bit? Okay, but isn’t that the same as a replicator going out and saying, five years ago, we can outperform three to 400 basis points to the index and then five years later you look at the numbers and they outperform by 50 basis points. Isn’t that the same as saying, well, you promised us more, we didn’t give that.

I mean, if it was in your case, you would say, well, we haven’t changed the model. Well, people would then go and say, well, why didn’t you change the model five years ago? I mean, I think this is a hard discussion.

People can look at the numbers, as you rightly say, and then they can make that decision. I just find that this thing about going back and saying, oh, if I didn’t make the change, it becomes very hypothetical because you did make the change or you didn’t make the change. It was a decision you made and, you know, kind of stand by the performance. That what I’m trying to point out.

[00:55:39] Andrew

But the performance isn’t there. Look, as an allocator, I would probably ask much more pointed questions than most other people would ask.

So look, I mean, just when you look at us, and without talking about, about specific numbers, we actually have met those numbers since we started doing it in 2016. The window that you’re looking at encompasses a period that surprised us. We really underperformed in 2023 and from the peak in 2022 and 2023. And I mentioned it was a series of things. It was that we were slow with SVB, we were slow with the second Powell pivot, we missed some things.

And those are absolutely legitimate questions where people can look at us and say… And during that period of time, every single client was saying, why aren’t you changing what you’re doing? And then actually not changing it ended up being the right decision. And I will defend that all day long because now you can look at our track record, that’s almost nine years, and you know that seven years ago we were doing the same thing.

[00:56:48] Niels

I think that is valuable. By the way. I do think that’s very valuable, very valuable, actually.

[00:56:55] Andrew

Again, the window, I just want to say, statistically, the window that you’re looking at, you shift the window length. Now, the last three years, you can probably make a simple argument.

Well, anything that encompasses our very worst period on a relative basis is going to look a lot worse. But look, the question is, what are you trying to get? Active managers in this space who are charging a premium to us should do better than us, meaningfully better than us over time on a Sharpe ratio basis if you view us as the beta, which a lot of people do.

So, in other words, if somebody came to you and said, I’m going to add another 100 basis points in fees to this, what should be your expectation of to how much value they would add to warrant an additional a hundred basis points? To me it’s 300 or 400 basis points, like, fees are when you’re adding additional trading costs. That was always my issue with going into more and more complicated markets. You drive up your trading costs.

Okay, so one of our competitors in the UCITS world, I think our trading costs in UCITS land are 8 basis points, or something like that, because we’re just trading these 10 super liquid contracts. One of our competitors shows 200 basis points of trading costs in part because they’re in much more things (and by the way it’s a much more expensive product).

So, as an allocator, what would I expect you to be able to deliver to justify 190 basis points or more of trading costs because of things you’re investing in plus more fees? You should knock the daylights out of us, the cheaper product, to be able to justify that.

But, as we’ve talked about as well, that is a theoretical discussion around value added and the value of complexity and engineering and stuff. A lot of allocators are really not as interested as we were when we were thinking about getting into this space. Because, I mean, we were sitting on their side of the table. We said, well, we’re going to try to see if we can build a different way of getting at this.

A lot of people are interested in, they’re, my God, you know they’re legends. They’ve been doing this forever. They have an incredible brand name. We have, you know, the long standing, whatever. There are a lot of things that go into that decision making process. But, you asked the question. Yes, these things should be asked. Some people will ask, some other people’s won’t.

[00:59:18] Niels

Yeah, absolutely. Well, I mean as I said, this is a very, very interesting time for us to be talking about these things because it’s happening real time. The last time I was surprised by some of the drawdowns of managers that had been around for, at the time, some of them 20 or 30 years, and suddenly they had their worst drawdown by some margin was actually 2012 or 2013. And when we think back, it’s not like we thought well, maybe there was a crisis, was it the debt crisis in Europe? Or maybe it was.

But it’s not like one of those periods where I thought of some kind of big world crises. That was like more like 2008, 2009, or the tech bubble. But, but actually this was kind of like a little bit of an under the radar period. Yet it was very challenging.

And then of course after the, as you rightly say, very flat boring five years of performance, boom, managers had the best years, or the best period actually, maybe in history at the time. So, as I said, I’m not concerned about the strategies coming back and making new all-time highs.

And, maybe, as you say, maybe these policies, once the noise becomes signal and something breaks… I mean it is interesting, not that I’m a fundamentalist as such, but it is interesting to note how yields keep moving higher all the time. They try to get them down. They would love to get the 10-year down. It just keeps coming back to this 4.5% and we’re a little bit above that.

And, you know, I think interest rates could be where things really break a lot of the other markets. But is it now or is it next year? I have no idea.

[01:01:08] Andrew

We have a president of the United States who, for the first time in history, has an economic interest in an alternative to the dollar. So, I mean, that’s a little odd.

I’m going to elaborate on one thing that I said. So, I think a lot of people in this space, so, I just described an exercise where you say, I want to be invested in this space. How do I want to be invested in the space? Do I want something that, I would argue, is more lower cost efficient and beta like? Or do I want to pay premium for something that should do a lot better than that over time in order to justify those fees? Or do I want something that has a great brand name, whatever?

One of my skepticisms about the alternative market thing which is that I believe the alpha generation space is not zero sum in that, is Man AHL going to do a better job than Pimco? That’s a model that comes from, you know, there’s only so much discount in this stock to its intrinsic value. So, I need somebody to defined it earlier, to identify it, et cetera. It’s kind of this alpha is scarce and finite.

To me, in managed futures, alpha expands and contracts and it goes negative. So, it goes very, very positive, can go very negative, as we’ve just seen, but it’s because the alpha is generated against the rest of the world.

And if you think about who your clients are, and you think about every pension plan, and every wealth manager, and everybody who has a 60/40 portfolio, they are slow on purpose. And they have told their end investors that you should not panic and you should not move fast. So, for them, most of them, April was a noisy blip. Like, what happened intra-month just simply didn’t matter because where you got at the end of the month.

So, the reason this matters is because when the world changes, it’s not that heating oil, it’s not that people don’t change their positions on heating oil (I don’t know why I always use heating oil as an example. It got stuck in my mind 10 years ago and I keep using it – maybe no one trades heating oil anymore), but rather it’s because it’s the end of 2020, and everybody building a model, in order to justify a huge allocation to fixed income, must believe that inflation is never coming back. Because if they believe inflation’s coming back, you are putting 40% of your clients in assets into something that can go nowhere but down.

And so, the structural constraint drives the decision making, drives the justification for it. And so, when the world changes, they can’t change even if they believe that inflation is coming back.

So back to your point, let’s say there’s a dollar collapse. Let’s say people lose faith, they say, look, let’s say Trump starts threatening to defaults, what I’m not going to pay interest to these foreign countries, or whatever. Still people won’t change. And that’s the opportunity. It’s contrarian, it’s early, and managed interest funds will have a field day in that.

The problem is I don’t think being in Malaysian palm oil helps you in that. I don’t think that there are natural investors in Malaysian palm oil who are like, the hell, I’m going to keep my palm oil position no matter what.

So that’s why, in a sense, that’s why replication works so well because, what it picks up on is managed futures against the world. And you can get that in a 10-year Treasury. You don’t need that in 32 different inserts. Anyway, that’s my theory on it.

[01:05:14] Niels

And I think that’s absolutely true, Andrew, especially because the indices that people look at as benchmarks consist of the largest managers who won’t be having meaningful positions in palm oil. But, but we also know that some of the best returns, in the last five years, have come from managers who trade very few markets and have had massive risk on, in some very, I wouldn’t say small markets but smaller markets. So, they have much greater concentration than larger managers could. They’re also paying the price now, of course. You know, that comes back to the way positions are managed.

You can have great outsized gains by having static position size, but you can have great outsized losses by having static position size, as we’re seeing now. So, I mean, lots of things to follow, lots of things to digest along the way.

I wanted, before we end… Two things, actually, just wanted to ask you whether there’s anything in particular in the ETF space that you wanted to mention? And then the other thing that I kind of want to tie in, if we can, is just one concern that I have, a little bit, that we’ve just gone through this March, April period where essentially, as we started talking about in the conversation, you wouldn’t know what has gone on if you just look at the year-to-date number in terms of performance for equities. You wouldn’t know. Yet, a lot of portable alpha return stack products have been sold very well and have been very popular in the last year or so. But they’re now, obviously, not able to keep up because the alpha is hurting. But the beta is back to where it was.

How do we… I know you’re always interested in growing the pie. So, how do we collectively, how do we try, how do we talk about, how do we educate investors that, actually, both the underlying managers are probably just doing exactly what they should be doing, taking the losses because of the markets, and so on, and so forth? And these return combined products are behaving exactly as they should, I mean, there’s nothing wrong with it. They should be underperforming when you have a period like this.

How do we help investors hold on to their investments in this space during this time? How do we help them, maybe even allocate? I mean, if history is anything to go by, the best time to buy this strategy is in the drawdown.

That’s just the way it is. So, there should be a lot of… We have a lot of evidence, going back on that. And every time the industry has come back and strategies have made new all-time highs. As I said, I have a lot of faith in that, that that’s still the case. So, how do we help people get into that?

[01:08:22] Andrew

Well, so, first thing I would say is that, actually, despite recent performance, the pie will grow. And it’s going to grow a lot because, remember, it’s not just managed futures versus stocks and bonds. There are other things out there. And then there has been… The big thing, that overrides everything, is bonds have failed miserably.

[01:08:43] Niels

Right.

[01:08:43] Andrew

Since, since the end of 2000.

[01:08:44] Niels

Including this year, by the way.

[01:08:47] Andrew

Including this year. I mean, it’s basically, and this is what I mean about people. I mean, in 2020, inflation would never come back. And then, of course, it was a blip and then it was transitory. People don’t have a playbook, and stock and bond correlations are high.

And people cannot talk about it because it was such a destructive investment decision to continue to hold 40% of your portfolio in bonds after a 20 year insane bubble in fixed income. So, I’ve never heard an allocator say, God, that was a huge mistake. We should have gone back to our clients and said, you know what, we thought it was going to work. Because, again, it’s just against the ethos of what they were sold.

So, having met with a lot of allocators recently, Trend will become an allocation in the wealth management space, and despite the bad performance. I think what you’ll see across the space is another round of musical chairs. So, people will fire managers who have underperformed their expectations.

Some people will jettison the space entirely who’ve been in it rather than say, we picked the wrong guy. That’s a lot of what happened in the late 2010s. Others will move from them to the handful of funds that have done well.

So, if you’re AQR you look great right now. Campbell has been on an incredible winning streak and they’re going to take in a lot of assets. In the ETF space, Simplify has done a great job with CTA and they’ll continue to take assets. But the ones that have done well are very different. They’re not 90% correlated to the CTA index, or 80% correlated with like a little bit of enhancements here and there. They’re doing something very different.

So, the flip side of that will be people will look for more beta like exposure, something. And I think that will work well for us. So, look, I think the other thing is that the narrative has to be better. And the narrative that’s used in the CTA space about the statistical obviousness of trend following, it works to a certain degree in the institutional space when you’re dealing with people on the other side who spend their days thinking about these things.

When you move into the wealth management space, the language needs to change the way that I’ve talked about it. It needs to fit in the construct that people have about why this is valuable and why this is going to help people in their portfolios.

To your point about… So, one thing is there’s going to be musical chairs. The second thing is there’s going to be a timeout. And the timeout is going to be around things, strategies like managed futures plus equities, in some fashion. The portable alpha thing.

April called into question whether you could rely on managed futures in a sharp inflection point and because of performance. it’s just, it’s going to make it a lot harder to get people’s attention, to get them to move forward to execute on it. Look, in some of the managed futures plus not fully stacked, but with equities, some of those funds are seeing outflows now.

You know, I mentioned a UCITS fund that looks like they had a $200 million outflow, like really meaningful outflow, in the course of the past week. So, people will be pulling back, people will be disappointed. And then they’ll be kind of… But more and more there will be new people who come into it. But again, as I said a couple years ago and had people chase me around with pitchforks, it’s going to be a 3% allocation.

It’s going to be a 3% allocation because it needs to be big enough that in 2022, next time there’s a 2022, you can point to it and say, look, we’ve got this beacon of green and a sea of red, but it’s got to be small enough that you can hide in the tall grass in a year like this – so, 3%.

[01:12:47] Niels

Good stuff. I’m hoping for more. But even if we get to 3%. That’s certainly better.

[01:12:54] Andrew

That would be 100X in the ETF world, getting to 3% is 100X.

[01:12:59] Niels

Absolutely. Andrew, this was fantastic. I know there has been lots of other things on your mind this week, so, I really appreciate you taking time to share your thoughts on what’s going on right now. And, of course, if people want to show their appreciation, by all means go to your favorite podcast platform, leave a rating and review. And, of course, you’re always welcome to share your thoughts about the best friend of the human, namely dogs, as well.

Next week I’m going to be joined by Mark. It’s been a little while since I spoke with Mark. He seems to always come on when I’m traveling, so he’s been with Alan a few times. But I really look forward to catching up with him. He always has some very interesting insights and big picture views on this, so I’m excited about it.

If you have any questions for Mark, Info@toptradersunplugged.com is the email that you should use. An,d of course, as always from Andrew and me, thanks ever so much for listening. We very much appreciate it and we look forward to being back with you next week.

And, of course, in the meantime, take care of yourself, take care of each other. And in particular to you Andrew, all the best with your challenges with your lovely dog.

[01:14:12] Andrew

Our vigil. Thank you so much.

[01:14:14] Niels

Exactly.

[01:14:14] Andrew

Thank you. Thanks for having me on.

[01:14:16] Niels

All right, take care.

[01:14:18] Ending

Thanks for listening to the Systematic Investor podcast series. If you enjoy this series, go on over to iTunes and leave an honest. Rating and review and be sure to listen to all the other episodes from Top Traders Unplugged.

If you have questions about Systematic investing, send us an email with the word question in the subject line to info@toptradersunplugged.com and we’ll try to get it on the show.

And remember, all the discussion that we have about investment performance is about the past and past performance does not guarantee or even infer anything about future performance. Also, understand that there’s a significant risk of financial loss with all investment strategies and you need to request and understand the specific risks from the investment manager about their products before you make investment decisions. Thanks for spending some of your valuable time with us and we’ll see you on the next episode of the Systematic Investor.