SI333: Convexity - The Trend Following Game Changer! ft. Richard Brennan

Top Traders Unplugged

Niels Kaastrup-Larsen

Business, Business News, Investing, News

4.8 • 670 Ratings

🗓️ 1 February 2025

⏱️ 73 minutes

🔗️ Recording | iTunes | RSS

🧾️ Download transcript

Summary

Most investors focus on returns, but what about the shape of those returns? Today, Rich and I explore the often overlooked concept of convexity - a game-changing principle in trend following that helps us thrive in unpredictable markets. Inspired by insights from our recent guest, Dave Dredge, we break down why mastering convexity is key to cutting losses early, riding big winners, and staying ahead of market turbulence.

If you’re serious about protecting and growing your portfoli - while making smarter, more systematic decisions - this episode is a must-listen. Join us for a deep dive into the mechanics of risk, reward, and the powerful edge convexity can give your portfolio!

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Episode TimeStamps:

01:49 - What has caught our attention recently?

06:20 - Industry performance update

11:10 - Why does convexity matter for trend following?

36:13 - What do we actually mean by convexity?

42:04 - Sharpe world - the pitfalls of today's economy

52:30 - Why risk and volatility can feel like the same thing

56:08 - The core of trend following

58:22 - Why open trade equity makes no sense for managers

01:00:03 - The business of trend following

01:01:37 - The exponential potential of trend following

01:08:05 - The times have changed - why is trend following more important than ever?

01:11:22 - What is up for next week?

Transcript

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0:00.0	You're about to join Neil's Kostrup Larson on a raw and honest journey into the world of systematic investing and learn about the most dependable and consistent yet often overlooked investment strategy.
0:13.2	Welcome to the Systematic Investor Series.
0:26.6	Welcome and welcome back to this week's edition of the Systematic Investor Series with Richard Brennan and I, Niels Karstallasen, where each week we take the pulse of the global
0:31.0	market through the lens of a rules-based investor. And I also want to say a warm welcome
0:36.7	if today is the first time you're joining.
0:39.2	And if someone who cares about you and your portfolio recommended that you tune into the podcast,
0:45.1	I want to say a big thank you for sharing the episode with your friends and colleagues.
0:49.3	It really means a lot to us. Rich, it is so great to be back with you this week. How are you doing down
0:57.1	under? Very good, Neils. I know you've been busy with your travelling, but I've been stuck here
1:01.4	in the heat down in Australia. So we've got the monsoon coming in and into Queensland and
1:06.9	lots of tropical lows about, so impending cyclones coming, and it's miserably hot.
1:13.3	But apart from that, Neil, everything's good.
1:16.0	Okay, that's good to hear.
1:17.7	You know, I was thinking about the big news from your part of the world.
1:21.3	Of course, the big news from my part of the world is still this thing about sort of
1:25.3	Greenland and Denmark, and even in the airport as I was flying back from Miami,
1:30.5	the guy who was checking me and said,
1:32.1	so what's happening with Greenland?
1:33.7	So it's kind of funny.
1:35.2	And I will say one thing, if nothing else,
1:37.4	the PR for small country like that is quite extraordinary.
1:43.5	So anyways, maybe we can have a positive spin on that
	...

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