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26 “The Most Repeatable Method of Trading Ever Invented” with Scot Billington of Covenant Capital – 2of2

“Trend following is the most repeatable method of trading ever invented.” – Scot Billington (Tweet)

Welcome back to the second part of our interview with Scot Billington of Covenant Capital Management.

In this episode, Scot delves into the practice of trend following and why it is a great model to follow. He also discusses tips for beginning traders and investors, and advice for those who wants to start a firm. Thank you for listening to Part 2 of our conversation with Scot Billington.

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In This Episode, You’ll Learn:

  • The story of Scot’s childhood obsession with mathematically based, but unknown future outcomes.
  • The discipline required to follow a mathematical model.
  • The advantages of trend-following and why the media reports that “Trend Following is Dead” every few years.

“Your largest drawdown is always in front of you. But there will always be a winning period bigger than we’ve seen because it is over a longer period” – Scot Billington (Tweet)

  • Scot’s philosophy on position sizing.

“I would rather have a small edge with proper position sizing then vice versa” – Scot Billington (Tweet)

  • How every sector in the market is highly correlated.
  • Getting comfortable with taking risks: they exist and it is impossible to avoid them.
  • The Barbell strategy: have very little money at risk, but the money that is at risk is in the most aggressive things that it can be.
  • The biggest mistake that allocators make.

“I’m a big believer that the handling of the large moves is sort of all that matters.” – Scot Billington (Tweet)

  • How Scot conducts research for Covenant Capital.
  • Why he is based in Nashville and how he overcomes the challenge of asking investors to buy into the long time-frame.
  • Finding your niche as a boutique firm.

“As a boutique firm you are going to attract some people and some people will never be attracted to you.” – Scot Billington (Tweet)

  • Advice for managers wanting to start firms today.

Resources & Links Mentioned in this Episode:

This episode was sponsored by Saxo Bank:

Connect with Covenant Capital Management:

Visit the Website:

Call Covenant Capital: +1 (615) 678-6742

E-Mail Covenant Capital:

Follow Scot Billington on Twitter.

“Any new business is like a small tree: it cannot take a tire swing yet” – Scot Billington (Tweet)