SI164: Compounding - The 8th Wonder of the World ft. Richard Brennan

Top Traders Unplugged

Niels Kaastrup-Larsen

Business, Business News, Investing, News

4.8 • 670 Ratings

🗓️ 31 October 2021

⏱️ 66 minutes

🔗️ Recording | iTunes | RSS

🧾️ Download transcript

Summary

This week, Richard Brennan joins us on the show to discuss how people can benefit from the effects of compounding while others end up a paying a price for it. We also cover some thoughts on ‘path dependency,' why those invested in stocks should diversify using Trend Following strategies, why stable returns can only be correctly judged over long time periods, how to analyse fund performance without being influenced by the effects of compounding, some thoughts on what is known as ‘geometric returns’, and we explain the term ‘ergodicity’.

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50 YEARS OF TREND FOLLOWING BOOK AND BEHIND-THE-SCENES VIDEO FOR ACCREDITED INVESTORS - CLICK HERE

In this episode, we discuss:

How to stay on the right side of the effects of compounding
How many strategies can be limited by the make-up of their previous versions
The profitable & negative correlation of Trend Following to equities when stocks are falling
The need to zoom-out when judging performance
The terms 'ergodicity' and 'path dependency'

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Episode TimeStamps:

00:00 – Intro

01:37 – A Thank you to Shane, our website developer, for his great work in creating the new Top Traders Unplugged website. We hope you all enjoy the new user interface

02:09 – A huge thank you to listeners of the show, such as Dave W, for leaving your 5-star reviews on iTunes, and feel free to share this link with 3 of your like-minded friends:

Transcript

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0:00.0	You're about to join Jerry Parker, Maritz Siebert, and Nealz Kastrup Larson on their
0:06.3	raw and honest journey into the world of systematic investing and learn about the most dependable
0:11.6	and consistent yet often overlooked investment strategy. Welcome to the systematic investor
0:16.7	podcast series.
0:26.5	Welcome and welcome back to this week's edition of the Systematic Investor series with Richard Brennan and I, Niels Kastel Larsen, where each week we take the pulse of the global
0:30.4	market through the lens of a rules-based investor.
0:33.7	Now, for those of you who are regular listeners, our conversations are intended to give you
0:38.0	as much of the nurture and encouragement as the turtles got back in the 1980s, as Jerry likes
0:43.2	to put it.
0:44.1	And if you're new to the show, we hope that today's episode will trigger your appetite
0:47.6	to learn more by diving into the back catalog and listen to all of the past episodes that
0:52.8	you may have missed.
0:54.0	Like last week's episode with Mark, where we discussed and explained the importance of narrative
0:59.9	and storytelling within our industry, I love when we get the chance to dissect some of these
1:05.9	topics that Mark brings along, and I invite you to check it out if you missed it.
1:11.6	Rich, as ever, always great to see you this week.
1:14.3	How are you doing down under?
1:15.8	Very good, Neals.
1:17.0	A bit shaken this week with a few of my moves in the portfolio,
1:21.2	but apart from that, all good.
1:22.7	It's getting very hot here.
1:24.3	And climate change or just the typical summer, not quite sure yet. Right. Shaken but not
	...

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