Thought Bubbles from the Deep

[DeepState]

Thanks for your responses and thoughts on the issue of stopping out or circuit breaking. Here is where I have progressed to (progress is not arrival at a final destination):

You cannot risk manage your way to making money over the long term. If you've got no idea of how to make money, risk managing that doesn't make you money.

Sometimes, when things go down in value, it just means that they have become cheaper and you should be alright with that. Those with a long term viewpoint should stay involved because the purchasing power of your holdings have not changed...if the underlying value of the holdings have not been seriously impacted.

If you have balls of steel and sufficient foresight to make long term valuation assessments, particularly on diversified portfolios, it may be best just to hold on if you can survive the market to market.

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My mentality is that I am not trying to time the market beyond saying that I am prepared to be exposed to this investment but may need to circuit-break if something goes against my expectations. I see the concept of pulling a trade under this circumstance partly as risk management against an acute thesis breakage and partly to avoid the boiled frog problem.

Last time I walked through an airport metal detector, I believe my balls were on my person at the time and no alarms were triggered. No item by item strip down occurred either. I conclude that my balls, such as they are, are not actually made of steel. That's what the data says anyway. I am not a Marvel comic hero billionaire playboy philanthropist genius with an iron man suit. I am short one iron man suit, and at least one zero, from that list. That puts me at a disadvantage.

It is one thing to have $50bn in net wealth and see it compress to $25bn when everyone else is marked to market. Who cares? It is another when your lifestyle would be compressed if your asset base is cut in half and you had doubts as to whether the underlying value was fully preserved. If the price moved, part of it may be animal spirits, part of it may be bad news and part of it might be something that never crossed your worried mind before.

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I think it is not realistic for me to believe that I can act in that fashion with high confidence. I am not actually in the position that permits, essentially, risk-neutral thinking, for large exposures. I also know that bad outcomes mess with your thinking and it is often best to circuit-break to snap you out of it. Decades of experience have shown me that this is the case even with highly seasoned investors of the mortal variety.

I like this from a book with Ryan_C recommended ("If you can" Bernstein):



We act differently when something big happens and you don't know where that trigger is and how differently you will act ahead of time. Neuro-anatomy and psychology tells you this, unless you have one heck of a well developed Vagal Nerve. You don't even know that you are impaired in those situations.

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Nothing stops you from putting on the trade minutes after you get stopped out. What stopping out does is cuts you away from thoughts about what you bought in at to some degree and resets your mind to a position of taking risk again from a zero position. Mentally, that is a better place to be when making calls. This is something I have seen so many times I cannot ignore it.

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The option replication concept I use is pretty funky stuff. Calculating it and updating the positions takes about 10 minutes per market. All of the calculations are codified.

In more recent times, though, the rapid rise in markets more recently and huge whip-sawing has caught me flat footed. You sell at the lows and buy on highs with this stuff - that's option replication. Buy-hold would have done a lot better in this highly mean-reverting environment. The price of protection has been large recently.

What now?

 

[tech/a]

From reading your dilemma.

I can see your problem if you are placing at risk your $50 to $100 million
The thought and indeed the reality of blowing 90% of it in an extreme case would be daunting.
Only Daunting because you'd have $10 million left.

But my feeling is that you simply have too much at risk.
Trade with a million and who cares if you blow $900,000.

Now if your worth $1 million in excess cash and your traumatized at the thought of dropping $900K
and the Million is your income producing asset---different problem.

Yours is easy to solve.
Regardless of what you decide to do.

Oh and anyone who has 50-100 million wouldn't be asking they'd be way way ahead of the question.

 

[DeepState]

From reading your dilemma.

I can see your problem if you are placing at risk your $50 to $100 million
The thought and indeed the reality of blowing 90% of it in an extreme case would be daunting.
Only Daunting because you'd have $10 million left.

Although it seems like a high class dilemma, perhaps like you, I'd have difficulty cutting out my household staff, maintaining my stables and keeping the boat ship-shape and such if I had to live on $400k per annum. If that position were applicable, $10m in the bank won't get me anything like that! With interest rates at around 2.5% and tax rates as they are, a person in that position would need around $32 million in the bank just to reach your poverty line. Barbados.... Apparently, you might struggle to live on that Tech/A (perhaps the numbers below are pre-tax - still..and a person in this situation may still have kids going through school, say):

I know personally my wife and I draw a healthy salary and always have. One of the biggest mistakes in small business is NOT paying yourself FIRST! My $180k return trading wouldn't come close to covering our yearly living expenses. Would need a return of at learst twice that. So say $400k a year

... so you see, the dilemma is real even for centi-millionaires fully invested in equities without your trading prowess. And that makes no allowance for escalation of living expenses. With real yields on inflation linked bonds at less than a percent, that implies that such a person would need over $50m in busted assets just to make ends meet if the Australian government can actually pay its bills if they simply could not stand to take any more capital loss. Imagine, a $500m equity portfolio busts down to $50m and they are at your poverty line for ongoing expenses just maintaining real value (let alone keeping up with the Ducks!)... $500m doesn't buy what it used to, I guess. Bygones.

But my feeling is that you simply have too much at risk.
Trade with a million and who cares if you blow $900,000.

Now if your worth $1 million in excess cash and your traumatized at the thought of dropping $900K
and the Million is your income producing asset---different problem.

Yours is easy to solve.
Regardless of what you decide to do.

So, the idea is to invest so little it makes no difference? "Who cares" levels of risk on the one hand and vanishingly small on the other? Easy to solve? Seems to have a few holes in the underlying assumptions and basis.

By the way, if trading with stops/circuit-breakers somehow implies that I am taking too much risk, does that mean that when you trade with a stop that you are placing too much at risk? I seem to recall that you placed stops at levels where the idea would be thought busted:

A stop loss is placed where your analysis is proven wrong.

Does that concept cease to have meaning outside of the world according to Tech/A?

Oh and anyone who has 50-100 million wouldn't be asking they'd be way way ahead of the question.

Fair few assumptions in that one....perhaps they (I ?? the number of zeros less than a some [multi?] billionaire figure was not fully expressed) got way way ahead by asking such stupid questions and staying way way ahead of the problems that were avoided as a result. Some call it luck.

 

[skyQuake]

Does that concept cease to have meaning outside of the world according to Tech/A?

At the end of the day, if the price moves against you enough, your analysis is simply wrong. Be it timing or otherwise. eg look at your past trades and set stop loss at a multiple of MAE

 

[systematic]

Love the quote from the Bernstein book...had run into part of that quote recently.

I'm of a similar mind, I believe, when it comes to why you're looking at this.

I come from the thought of just staying invested.
After all, you can quite fairly argue that with the data. Timing when market factors will fire or not via valuation methods or time series data....hang on a sec....I've just violated a goal of mine; let me rephrase that. Timing stuff like value or momentum whether using price or financial statement data ("fundamental" or "technical", ugh, dislike those terms)...can be shown to be a dangerous practice. Best to just stay invested, and ride things through. Let the stats play out.

Plus, the natural skeptic in me sees the danger in the recency bias that seems to have all manner of trading authors talking about "market filters" on their systems...more so than before I believe (post 2008, of course). Anyone selling a system would be crazy to backtest without a market filter - of course it's going to work in the 2000's.
Side note: no one ever seems to talk too much about "price shock" events. That 10 day or 10 month moving average is not going to help you in a 20% overnight price gap.

It was looking at, and really trying to think about the '29 crash followed by the downward slump and road to recovery that had me seriously questioning my former youthful confidence re: drawdowns. Value, Yield Momentum, or just the market, in the US lost 80% or more from peak to 1932 trough. And it was slow going back up from there. Someone about to retire, quite pleased with themselves, with 5 million in todays dollars, suddenly (well, over a 3 year period) has less than 1 million. What's a 70 year old to do? That's real life stuff. It's tough! What was I saying? Oh yeah, I was making myself walk slowly through the data and trying to imagine living through it that gave me some appreciation for at least trying to put in some defensive measures. Ben Graham, even though he did well through the period overall (before and after)...referred to the 1930-1932 period as "trying times." Bet that was a polite way of putting it!

Now, that is the US data. Doesn't mean it couldnt happen here. The all ords recovered very quickly from '29 crash and had a good decade in the '30's. The current slump is one of the worst, by my look at it (just on year to year returns). The basic idea is that anything can happen. Markets can go backwards or even bust.

Anyway, as to the how to...

For me, refining the stock picking side of things won't cut it. Defensive factors (volatility, yield, 'quality') might help, but they won't fix.

For market timing - "Fundamental" based decisions around valuations won't work either. At least not for the downside (and probably not the upside either) from what I've seen.

For me it's down to simple stuff:

Trend following. The research seems to show that trend following probably won't hurt (or at least...not too much) and will probably help on the downside. Not to be dismissed (in my opinion)...are the decades where trend following might hurt your returns significantly enough to be disappointed you used it. Can happen where there were no decent bear markets. But if you're an "absolute return" investor (focused on only your own results)...well, who cares...I guess. I like something to compete against though! After deciding on using simple trend following comes the decision of what to do (get out completely, get out in part perhaps harvesting tax losses, introduce stops or tighten if already using, hedge so you don't have to sell your holdings etc)

And the other option? Bonds. Having enough in your portfolio to reduce the volatility to where you're happy. I'm familiar with asset allocation (including tactical) but these days I think "old fashioned" stocks and bonds can still do the trick. In the current fashion of investing in all manner of assets, I know I'm not alone in thinking that way. But yes, if someone wants to go the whole hog of asset classes, fine by me - I get it. I would too, probably, if I was going to be tactical about it.

Oh - one other comment...back to the '29 crash and depression. I forgot to end the story. Looking at inflation adjusted (this was a period of deflation) and dividends included shows the market getting back to peak by around the end of 1936. Not too bad. But what happened then makes it worse. The world war 2 period sent things backwards again, and it wasn't until near the end of the war, some 15 years later that you were truly recovered. But recovery isn't what matters to the investor. Taking it further, I ask - at which point were you finally making 5% or so (real) had you been the unlucky one to inherit or save up a good sum at age 40 and plonk it on market in Sept 1929? Another 15 years (out to 1959). So, our 40 year old investing his nest egg in Sept 1929 took 30 years to age 70 to be able to say that he'd made 5% real. At least at the 15 year mark things were back to break even and slowly going up again.

I've looked at it enough to consider these things real possibilities. I do consider anyone who thinks that something can't happen in the markets is kidding themselves. Even after the GFC...there is no reason the markets have to produce. There's no data driven reason why the markets, over the next 10 - 20 years couldn't go backwards again severely...before ever recovering (in real terms) to new time highs (with decent return). Or that Australia will keep to its great run of the last hundred years.

Scary stuff! Well, I think it is. Nothing I would love more than to think that the market doesn't really suffer massive drawdowns (and maybe even more importantly, take massive times to recover). But they do. I wish this risk was not real!

Trend following does seem to reduce volatility enough to look at using it. I still can't use it as a "get in" or "get out" of the market indicator, as I'm aware (as mentioned) of the periods where this can hurt returns. However, at least a defensive stance can be taken...

May Australia be one of the best performing markets (again) over the next hundred years!

 

[DeepState]

Trend following does seem to reduce volatility enough to look at using it. I still can't use it as a "get in" or "get out" of the market indicator, as I'm aware (as mentioned) of the periods where this can hurt returns. However, at least a defensive stance can be taken...

Thanks for your comprehensive, thoughtful and thought-provoking response.

Imagine if:
- The US was not left as pretty much the only major industrialised country at the end of WWII...
- Australia and Argentina, who shared much in common in the 1900s, swapped places...for reasons of Commonwealth membership and governance.

Scary stuff indeed. Fairly much accidents of history.

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Questions and invitations for Comment:

Stocks AND BONDS can do the trick. I've got to question you on the bonds part. Buy-hold nominal (and/or real) returns are completely visible in the prices. Those are the maximum figures too, assuming no default. These yields are atrocious.

Just because bonds have done well in the post Volcker era does not imply they will continue to do well. They cannot do so without yields compressing heavily into the negative yield space....and you would have to time the exit as the buy/hold returns are set at acquisition. Are you willing to assume that? That's what is required to get something of a decent real return after tax.

At the big end of town, stocks and bonds are gradually being replaced by less liquid assets and market neutral strategies for reasons previously outlined. Short of a sustained productivity surprise, inferred returns to a 'balanced' fund are well below where they had previously been a few years back. Is it not reasonable to adapt?

When we look at long term equity returns from places like Australia and the US, we are loading up on hindsight bias. If Australian equities had not produced good returns, we would not have anything like the equity culture we do. Similarly to the US. Japan, for example, does not have an equity culture, and Europe's is much less so that the US counterpart. There are many defunct markets we ignore. The figures we look at are pretty much the rosiest we can find....and we base decisions on this. Some even use stochastic models or risk-reward calculations, that simply exacerbate any bias, to justify this.

I'm quite sure you've seen that stats on how much of portfolio risk is dominated by the equity decision. For a balanced fund, it is around 90%. Get this wrong, a lot goes badly. Our economic set-up is pro-cyclic partly for this reason. With increased savings via super etc. which, for the most part, increases the average person's exposure to equities, it is set to become more so. Shouldn't we protect against this possibility even if we might believe in the equity story?


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I am interested in your suggestions about momentum. Are you referring to the cross section or longitudinal?

If longitudinal, where auto-correlation has been found to exist, it does argue for reducing exposures during down swings...a form of position size reduction into falling markets...somewhat like what options would do....which are essentially a series of stops at different prices.

I am not a major fan of tactical asset allocation either. The extent to which I do it is more like asking 'is this ridiculous on a buy-hold basis' rather than 'oooh, this might go up in the next three months for various mystical reasons'. Bonds look utterly ridiculous to me..unless everything else falls over and produces an even worse outcome. Possible, as you say. My figures don't suggest that, even though the outlook for equities is worse than it had been on a long term hold basis. But, what if I am wrong? I am wrong heaps of the time. Just because some decision has much more on the line has not, in the past, meant that I was suddenly bestowed with greater foresight. What if the 'correct' exposure to equities is, say, half of what it happens to be based on our current thinking? Should we not adjust somehow? What would it take for you to realize that the equity/bond concept was actually incorrect (if it were)? Are you not concerned that there is a boiled frog issue here? Given the risk cannot be reasonably eliminated that we are plain wrong and that boiled frog risk is present, shouldn't some sort of circuit-breaker be drawn in the sand?

 

[qldfrog]

I like the two last posts, I indeed think our view of equities is indeed so US/locally biaised;
I see a lot of parallel with the japanese situation;
A real estate bubble ending in deflation and stagnant market for 25 years or so and enormopus gov debt;
where are we now in Australia? Eery similar except we do not have any of the sony and toyota of Japan

Stockmarkets always going up trend is based on the economic growth which is largely based on demographic increase;
What happens when the song stops?
Imnorting demography can only work if you can keep it employed;
importing it to have it join the centerlink benefit queues as we do now in Australia does not, and Australia has lost most of its productive advantage with the mining boom bust;
Do you want to bet your saving on the fact that mining will recover soon enough and here in Oz, and not in Africa, Russia, you name it?
Looking at figures we still have an asx trying to reach 6000, that was the level reached in early 2007 or 8 years ago
With an inflation of 3% or so since 2007. we are still nearly 25% in real term below that level...which was not even the top.
Compare this to the US and we are well worse off.
As i view it , as an australian based investor, we need to get exposure to increasing demographic/real growth markets;
Indonesia, maybe India, some latin america adding a currency risk..not for the faint heart.

On a short term, trend seems the way to go in market based on my limited experience, with Stop Loss on, but in most critical falls, my SL were useless as move are usually sudden and SL were zoomed past.
I also have a trust issue with SL: far too often, i saw my SL triggered by "mini crashes" which really look like insider knowledge.
Lastly, we also have to put this in a context where the western government would REALLY like to get your wealth,
So what is the point of having a doubled portfolio account if we are to be seized by our own government "for our own national good of course" on the next black swan event;
that risk which was so far negligeable is IMHO much much higher now, and should be reflected in your investment choices/spread.
So gold under the mango tree could endup your best ever 'investment " decision....
Hope my rant is not worthless, far less valuable then other inputs..but maybe bringing some issues that are bypassed when dealing too technically.
take a step back...

 

[DeepState]

At the end of the day, if the price moves against you enough, your analysis is simply wrong. Be it timing or otherwise. eg look at your past trades and set stop loss at a multiple of MAE

Thanks. Had to look up MAE. Got to love these euphemisms.

Not being a trader, I don't keep these kinds of stats. So, as usual, amongst the most critical decisions we make, there are those that are simply best guesses. It's like building a watch with high precision on 90% of the mechanism and just guessing at the remaining 10%...makes it hard to tell if the time shown is actually worth anything. Still, walking on the edges of mountains with poor vision is pretty silly if there are no guard rails to prevent unrecoverable loss (falling off it). We can argue about how high the rail should be, how wide a path ought to be allowed.. ultimately, some guard is better than no guard. Of that, I am confident.

I am of the mind that I should stop out at some level where I want to force a re-think from another perspective than being at-risk. This is an effort to avoid boiled-frog issues. Given there is no magic about some level arbitrarily drawn in the sand, I am of the mind that the extent to which we should be taken out of the market is proportional to the 'excursion'. This has concepts of option gamma in it. It tells me that the current practice remains in the ball park.

 

[DeepState]

Australia of the future?






..... from an article about Lee Kuan Yew in the Economist.

 

[qldfrog]

Australia of the future?

I think so, in the last 20y since moving to Australia, I saw this country follow the ill fate of my birthplace:
France with a 25/30y gap;
Growing sense of entitlement, labour policies mirroring "the french socialists" with appalling results, and the move toward a society where responsabilities are shifted;
"the rich has to pay" and the rich is anyone but me;
With this state of mind and a nanny state mentality coupled with a migration influx, labour will built itself its own majority electorate based on a policy of stealing assets from the well off initially, then the "better off" , acclaimed by a majority of electorate on welfare/pension/government or protected jobs.
Ultimately leading to the rise of Far Right,segmented society, local terrorism floating on an abyss of deficit and economic failure
In politics, a liberal side which at best would mirror Keating's policies if it wants to even have a chance to be elected so no hope will come from there.
I know it is a bit of a Goth vision but time will tell.

To take into account on a 20y +investment window:
wise to avoid real estate for renting. increase overseas exposure ,and local growth in crime/welfare/unemployment and taxation burden/red tape.

PS:
On an earlier post comparing current ASX200 now and historical values, i neglected dividends gathered since 2007 so the current vs historical figures is not as gloomy.
My apologies

 

[DeepState]

First cut FFX majors carry and momentum portfolio:

Long:
USD (67%)
GBP (33%)

Short:
CAD (12%)
EUR (72%)
JPY (16%)

No position in AUD or CHF. Signals aren't particularly strong in short term measures and concentration into EURUSD position calls for limited risk allocation. JPY risk forecast is higher than for background over the last three years.

Implementation for risk management purposes is tough in terms of stops for such a portfolio. Still checking on how to put on a basket hedge.

 

[DeepState]

Central Banker hubris from Bullard of St Louis Fed:





- from FT

 

[DeepState]

First cut FFX majors carry and momentum portfolio

We're off....and having a bad start....erghh I hate this already.

 

[qldfrog]

We're off....and having a bad start....erghh I hate this already.

So are you really worried that the day the fed actually push rates up could trigger a nasty collapse of other currencies?
I am in two views there:
on one side, USD is already quite high (vs euro/yen/aud at least)
-> it is already factored;

on the other hand, we have been served wit "the US rates are going to go up" for so long with nothing happening that we risk being blase and not believing in it , and be shocked when it does arrives;

But in both cases above, having USD is a good move vs keeping local currencies (AUD)

What seems a bit forgotten is the potential for the USD to actually fall sharply;
While the US news are " kind of " good; this is not exactly a booming situation, some figures are quite gloomy actually, and yet we have ultra low energy price;
So a black swan event could easily change that vision and bring us back to a "US economy is failing" view;
The USD would collapse, other currencies would probably try to follow as well to keep some kind of export sales especially in a downtrend world economy.
Pretty hard to protect yourself in such an environment; Gold could be back then....
Am I delusional there?
have all a great day

 

[DeepState]

So are you really worried that the day the fed actually push rates up could trigger a nasty collapse of other currencies?
I am in two views there:
on one side, USD is already quite high (vs euro/yen/aud at least)
-> it is already factored;

on the other hand, we have been served wit "the US rates are going to go up" for so long with nothing happening that we risk being blase and not believing in it , and be shocked when it does arrives;

But in both cases above, having USD is a good move vs keeping local currencies (AUD)

What seems a bit forgotten is the potential for the USD to actually fall sharply;
While the US news are " kind of " good; this is not exactly a booming situation, some figures are quite gloomy actually, and yet we have ultra low energy price;
So a black swan event could easily change that vision and bring us back to a "US economy is failing" view;
The USD would collapse, other currencies would probably try to follow as well to keep some kind of export sales especially in a downtrend world economy.
Pretty hard to protect yourself in such an environment; Gold could be back then....
Am I delusional there?
have all a great day

The market in concerned about the capital flight from EM countries with poor external financing positions in the event of lift-off. They are concerned for a repeat of the taper-tantrum post Bernanke's first discussion about ending QE in May 2013. The market was surprised despite the fact that the program was never supposed to run indefinitely and that the economic data was improving beyond that which justifies a prolonged period of QE expansion.

Now, the market has been aware of consideration for an increase in interest rates. Balance sheet expansion ended several months ago. The curve reflects tightening yields. Historically, since the GFC onset, the curve has over-estimated the likely path of Fed interest rates.

The impending move is extremely well telegraphed. Increased risk is highly anticipated and portfolio positioning is adjusting to this. From today's FT, for example:



It doesn't tend to be the avoidable risks that are visible that cause mayhem. It is the major events that are not avoidable or were entirely unanticipated that tend to. I think the Taper-Tantrum and the vast amount of stuff written about this suggests that preparation has occurred, which diminishes risk.

Ultimately, I have not conducted a case by case viewpoint of EM debt support.

Shiller also makes an interesting observation relating to bonds:




My main concern is that European incoming data has been much stronger of late and US data has been weaker than expected. This would tend to move EURUSD against my position...at least in theory.

In the event of a black swan, USD would climb for the most part. Even an event like the downgrade of US sovereign debt led to a climb in the USD. An event risk leading to a wholesale weakening of USD might be such that we are talking about some systemic event relating to fiat currencies. Perhaps something which questions the sustainability of debt payments by the US...which would flow to Japan and many European nations. AAA-rated currencies with low debt loads would do very well in that case. Gold and hard assets would probably do well in that environment.

 

[qldfrog]

Thank Deep State;
funny how whatever the scenario, the USD ends up winning (either on common basis: higher interest rate,relative depreciation of other currencies for export market share, but also as a refuge currency when disaster strikes.

 

[DeepState]

Thank Deep State;
funny how whatever the scenario, the USD ends up winning (either on common basis: higher interest rate,relative depreciation of other currencies for export market share, but also as a refuge currency when disaster strikes.

Hi QF

As mentioned previously, there are several scenarios under which the US can depreciate vs RoW. Key amongst those is incoming data which is below expectations. More recently, the data from the EZ has become very positive and the US has ben negative. Some of the recent appreciation of the EUR vs USD in recent times can be attributed to that.

 

[DeepState]

McKinsey recently released a couple of papers on Japan. My take:
- GDP growth at approx. 1% per annum through 2040 by OECD is deemed aggressive by McKinsey given demography and trend productivity growth.
- Efforts to increase productivity can work to reduce the workforce. Hence, it is not simply a matter of increasing productivity per worker.
- Needs some sort of major productivity miracle to dig themselves out if immigration on a large scale is not allowed or otherwise a huge increase in exports needs to take root.
- Needs a huge culture change that could be brought about via increased multi-national presence and importing the kind of culture visible in the US etc. Private sector initiatives are thought of as a potential Fourth Arrow.
- All of this stuff is very aspirational.
- Efforts to increase workforce productivity/flexibility via pushing a greater portion of the workforce into contracts that offer no longer term assurances has served to decrease productivity because these people are not motivated to do well.

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Some combination of:
- Increased workforce participation via the creation of new industries that can be served by the elderly (eg. old people taking care of older people in aged care facilities);
- Weaker Yen to stimulate export competitiveness to very significant levels;
- Productivity miracle of an incredible magnitude which is sustained (like an Emerging Market becoming urbanized)
- Large scale immigration

is required to get through all of this without heading into defaults etc.

In the absence of a Fourth Arrow led productivity miracle and aspirational developments of new industries to absorb older workers, when is left is a much weaker Yen or default....which would lead to a much weaker Yen.

This will be taking place with another large industrial powerhouse, Germany, undergoes its own demographic challenges.

...I'd be short Yen on a long term basis vs USD. It is the greater basket case of the two. Turns out that the current portfolio structure is in line with this. Just need to survive the journey...

 

[skc]

We're off....and having a bad start....erghh I hate this already.

IMO, macro, hedge fund type strategies that require a high degree of conviction to hold are best done by... hedge funds who manage OTHER people's money.

For my own money, I prefer a journey requiring less conviction, especially when the positions go against me.

Then again, I don't have a eight-figure sum to invest and worry about. So different horses and courses.

 

[tech/a]

IMO, macro, hedge fund type strategies that require a high degree of conviction to hold are best done by... hedge funds who manage OTHER people's money.

For my own money, I prefer a journey requiring less conviction, especially when the positions go against me.

Then again, I don't have a eight-figure sum to invest and worry about. So different horses and courses.

I'm with you skc

For most of us with 7 figure sums we can be more agile than
a group of 7/8/9 figure investors in a managed fund.