ALO01: Adapting to Market Cycles ft. Phil Huber
Top Traders Unplugged
Niels Kaastrup-Larsen
4.8 • 712 Ratings
🗓️ 9 February 2022
⏱️ 66 minutes
🧾️ Download transcript
Summary
Alan Dunne is joined today by Phil Huber, in the first of our new Allocator Series, to discuss the education gap that needs to be filled regarding efficient capital allocation, the typical clients and types of portfolios that Phil deals with, adjusting portfolios to accommodate for changing market cycles, defining ‘alternative investments’, the extent to which a portfolio should be actively managed, traditional versus alternative investments, the challenges of manager selection, cultivating a behavioural edge as an allocator, and how to manage difficult conversations with clients.
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In this episode, we discuss:
- Better education around capital allocation
- Allocating capital throughout various market cycles
- How to define an ‘alternative investment’
- How actively we should manage a portfolio
- Traditional versus alternative investments
- The difficulties in the manager selection process
- Being a great behavioural investor as an allocator
- Difficult conversations with clients
- Advice for aspiring capital allocators
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Episode TimeStamps:
00:00 - Intro
02:44 - How 2022 has been for allocators so far
03:13 - Phil Huber’s journey into investing
05:46 - Why Phil wrote a book on capital allocation
09:00 - The typical clients, and types of portfolios that Phil deals with
12:07 - The 60 / 40 portfolio and how it became so popular
18:49 - Adjusting portfolios to accommodate for changing market cycles
22:37 - Defining ‘alternative investments’
30:27 - Choosing which strategies to invest in, and when to choose these strategies
37:45 - The extent to which a portfolio should be actively managed
39:36 - Traditional versus alternative investments
40:04 - The challenges of manager selection
49:51 - Cultivating a behavioural edge as an allocator
53:09 - The importance of courage
54:55 - Managing difficult conversations with clients
01:01:68 -Advice for aspiring asset allocators
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Transcript
Click on a timestamp to play from that location
| 0:00.0 | By the very active diversifying, you're eliminating the potential of being over-exposed to the worst-performing asset class, but you're also limiting your ability to be exposed to the best-performing asset class. |
| 0:19.0 | The challenge, though, is we can't know without the benefit of hindsight what the best-performing asset class is going to be exposed to the best performing asset class. The challenge, though, is we can't know without |
| 0:21.6 | the benefit of hindsight what the best performing asset class is going to be over the next one year, |
| 0:26.3 | three or five years, ten years. I think as human beings, we have very short memories. And we had |
| 0:32.4 | an incredible decade for U.S. large cap stocks. And in hindsight, yes, of course, it would have made more sense to own more of them. |
| 0:40.0 | You know, 100% in hindsight would have been probably the right move. We have no way of knowing that without, you know, the benefit of hindsight. |
| 0:47.3 | And so I think the, I think you just need to remind people that that's not always been the case. |
| 0:51.2 | We only have to look a decade prior to the 2000s, where you had a |
| 0:55.5 | negative 10-year period for the S&P 500. |
| 1:00.1 | Imagine spending an hour with the world's greatest traders. Imagine learning from their |
| 1:05.0 | experiences, their successes, and their failures. Imagine no more. Welcome to Top Traders Unplugged, |
| 1:12.6 | the place where you can learn from the best hedge fund managers in the world |
| 1:16.1 | so you can take your manager, due diligence, or investment career to the next level. |
| 1:21.0 | Before we begin today's conversation, |
| 1:23.0 | remember to keep two things in mind. |
| 1:25.0 | All the discussion we'll have about investment performance is about |
| 1:27.8 | the past, and past performance does not guarantee or even infer anything about future performance. |
| 1:33.7 | Also understand that there's a significant risk of financial loss with all investment strategies, |
| 1:38.4 | and you need to request and understand the specific risks from the investment manager about their |
| 1:43.0 | product before you make |
| 1:44.3 | investment decisions. |
| 1:45.9 | Here's your host, veteran hedge fund manager, Niels Kostrup Larson. |
... |
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