SI138: The 'Holy Trinity' of Security Selection ft. Rob Carver
Top Traders Unplugged
Niels Kaastrup-Larsen
4.8 • 712 Ratings
🗓️ 3 May 2021
⏱️ 73 minutes
🧾️ Download transcript
Summary
We’re joined today by Rob Carver to discuss the process of selecting single stocks for a Trend Following system, Rob’s holy trinity of security selection, the JP Morgan-backed fund making huge bets, via options, on the market remaining quiet, the knock-on effects from funds who make large, risky bets, the sweet-spot for average holding periods in a Trend Following system, ‘caveman-style’ Trend Following versus scaling in and out of positions, how to hedge against inflation, how Trend Following historically has performed really well in rising interest-rate environments, and thoughts on Tesla’s recent earnings, a lot of which were from government subsidies and selling bitcoin.
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In this episode, we discuss:
- Which stocks to select for a profitable Trend Following system
- Rob's 'Holy Trinity' for selecting securities
- The ripple effects of large funds who make large and risky bets
- The most profitable holding periods in Trend Following systems
- 'Caveman-style' Trend Following
- How to hedge against inflation
- Trend Following's success in rising interest-rate environments
- Tesla's recent earnings
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Episode TimeStamps:
00:00 - Intro
01:36 - Macro recap from Niels
04:27 - Weekly review of returns
09:38 - Discussion on Tesla’s recent earnings
25:13 - Q1; Matt via the Top Traders Unplugged free voicemail service: How do you select single stocks as a Trend Follower?
35:02 - Q2; Alfred: Does backwardation lead to price rallies?
41:10 - The fund who are now nicknamed ‘Gamma Hammer’ for betting on tranquil markets
48:07 - Q3; Riccardo: What does Rob think about mean reversion strategies, and how they can be complimented with Trend Following? What are your thoughts on Systematic Macro strategies, and how do they compare with Trend Following?
57:16 - Q4; Michael: How long would it take to convert a system made in Microsoft Excel, to Python?
01:00:20 - Q5; James: What do you think about exiting winning trades in stages, rather than at once?
01:06:08 - Hedging against inflation
01:11:06 - Benchmark performance update
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Transcript
Click on a timestamp to play from that location
| 0:00.0 | You're about to join Jerry Parker, Maritz Siebert, and Neil's Kostrup Larson on their |
| 0:06.3 | raw and honest journey into the world of systematic investing and learn about the most |
| 0:11.0 | dependable and consistent yet often overlooked investment strategy. |
| 0:15.1 | Welcome to the Systematic Investor podcast series. |
| 0:30.4 | Series with Rob Carver and I, Neil's Kastr Larsen, where each week we take the pulse of the global market through the lens of a rules-based investor. |
| 0:33.9 | If you're new to the show, let me start by saying welcome, with the hope that today's episode |
| 0:38.4 | will trigger your curiosity and hunger for learning, enough to check out the back catalog and |
| 0:43.3 | listen to past episodes that you may have missed, like my conversation with Mark last week, |
| 0:48.1 | where we got into quite a good debate about machine learning and whether this can help |
| 0:53.2 | strategies like trend following. |
| 0:55.0 | And also we did a deep dive into the difference between systematic global macro strategies |
| 0:59.8 | and traditional trend following. So I hope that you will go back and check this out should you |
| 1:04.9 | have missed it. Rob, it's great to be back with you this week, of course, as usual. |
| 1:10.4 | How are you doing how things in the UK? |
| 1:12.6 | Yeah, pretty good. I feel like I should apologise for being unfaithful to this podcast because I was doing another live YouTube session just over a week ago, which I understand that Jerry certainly listened to because I heard some, a few comments from him last week, not last, |
| 1:30.1 | episode before the last week, which were interesting to listen to. |
| 1:33.6 | Well, apology accepted, but let's not talk about that anymore. |
| 1:35.8 | No more discretion from your side, Rob. |
| 1:42.8 | Now, in terms of kind of a market wrap, I mean, of course, there is some historical evidence for the saying, sell in May and go away. |
| 1:46.2 | But it seems like investors not quite ready to give up on the current equity bull market |
| 1:51.5 | with sentiment being wildly optimistic, which is why, of course, stock prices are at a new high |
| 1:58.3 | in many countries, certainly in the US. |
... |
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