OI21: The Hidden Edge in Markets No One Is Trading ft. Tom Babbedge
Top Traders Unplugged
Niels Kaastrup-Larsen
4.8 • 712 Ratings
🗓️ 8 April 2026
⏱️ 48 minutes
🧾️ Download transcript
Summary
What if the real edge in markets is not in adding more assets, but in choosing fundamentally different ones? In this episode, Moritz Siebert speaks with Tom Babbedge about why alternative commodity markets offer a distinct source of diversification and trend. They explore how structural supply and demand imbalances create persistent price moves, why many financial markets behave as one during stress, and how capacity constraints shape portfolio construction. The conversation also examines how markets are selected, how execution differs from traditional CTAs, and why understanding who trades a market may matter more than any backtest.
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Episode TimeStamps:
00:00 - Introduction to the episode and guest
02:04 - Why focus only on commodity markets
03:59 - The myth of diversification through more markets
05:01 - Structural differences within commodity markets
06:22 - Why financial markets behave as one in crises
07:57 - Capacity constraints and portfolio construction
11:18 - Adding and removing markets from the portfolio
13:28 - How to identify truly alternative markets
16:40 - Trend quality vs trend quantity explained
19:11 - Structural drivers behind commodity trends
20:01 - Case study European carbon and trend persistence
26:59 - Execution as an edge in systematic trading
32:42 - Reducing trading costs through patience
40:09 - Why investors allocate to alternative commodity strategies
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Transcript
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| 0:00.0 | So we put it in, and I think it was one of our best performing markets that the next couple of years. |
| 0:06.5 | And it's continued to be a pretty good trender over the history of in trading. |
| 0:10.8 | Actually, for us, we feel that's a bit too financialised. |
| 0:14.1 | So it's not one we trade, but 2024, after 20 years of no trend, that was probably the biggest commodity trend there was. |
| 0:22.6 | Welcome to Top Traders Unplugged. |
| 0:25.4 | In markets, success doesn't come from predicting what happens next. |
| 0:29.3 | It comes from being prepared for what you can't predict. |
| 0:33.0 | In each episode, we go deep with some of the world's most thoughtful minds in investing, |
| 0:38.0 | economics and beyond to understand how they think, how they prepare and how they decide, |
| 0:43.3 | and the experiences that shaped how they see the world. |
| 0:46.8 | No noise, no shortcuts, just real conversations to help you think better and invest with confidence. |
| 0:55.7 | Hello and welcome to another episode of the Open Interest series on Top Traders on Plucked. |
| 1:01.1 | This is episode number 21 and I'm your host, Moritz Seward. |
| 1:05.5 | Today I'll be speaking with Tom Babbage from Cresham Quantum in London, |
| 1:09.1 | which is a unit of Cresham Investment Management LLC, |
| 1:11.6 | a firm with a 35 year history in the commodity markets and more than $8.1 billion of assets under management. |
| 1:19.6 | Greshel Quant was founded in 2016 and specializes in the systematic trading of alternative and niche commodity markets, a topic which I find |
| 1:28.7 | very interesting, and I hope you will do too. I should note that this is the second time I'm |
| 1:33.8 | inviting someone from Grasium to the show. The first time was with Scott Carson about 2.5 years ago |
| 1:39.2 | in December of 2023. Scott started Gresham Quant in 2016 and launched the ACAR program in 2017. |
| 1:47.0 | ACA is short for Alternative Commodity Absolute Return Program, and it has one of the longest |
| 1:54.0 | I've tracked records in the alternative markets trend following space. |
... |
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