SI69: Richard Thaler on the perils of overconfidence and how to overcome it

Top Traders Unplugged

Niels Kaastrup-Larsen

Business, Business News, Investing, News

4.8 • 670 Ratings

🗓️ 4 January 2020

⏱️ 77 minutes

🔗️ Recording | iTunes | RSS

🧾️ Download transcript

Summary

In this first episode of 2020, we discuss whether there any investment strategies that can work during all times, the recent Barron’s article featuring Richard Thaler on the perils of overconfidence, how Trend Following helps to prevent being too confident, the inherent negativity bias within most investors, the drawbacks of positivity when investing, and why you should consider the costs of being too cautious just as much as the costs of taking on too much risk. Questions covered this week include: Are CTAs becoming too cautious? Is it really worth diversifying away from developed markets? What causes you to make adjustments to your models?

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Episode TimeStamps:

00:00 – Intro

01:09 – Macro recap from Niels

14:06 – Weekly review of performance

19:18 – Top tweets

49:01 – Question 1: Sam; Is it worth diversifying away from developed markets?

55:22 – Question 2: Edmund; Can you recommend any detailed backtesting software with the ability to test variable position sizes?

58:12 – Question 3: Drew; What causes you to make adjustments to your models?

01:06:14 – Question 4: Sebastian; Why is it so hard to be a successful Trend Follower, when it seems we as Humans innately like to follow trends anyway (ie. fashion, social media, tech)?

01:12:39 – Benchmark performance update

01:14:16 – Send your questions in for our upcoming special guest, Andreas Clenow

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1. eBooks that cover key topics that you need to know about

In my eBooks, I put together some key discoveries...

Transcript

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0:00.0	You're about to join Jerry Parker, Maritz Seberg, and Nealz Kostrup Larson on their raw and honest
0:07.3	journey into the world of systematic investing and learn about the most dependable and consistent
0:12.3	yet often overlooked investment strategy. Welcome to the Systematic Investor podcast series.
0:19.7	Welcome to the first edition in 2020 of the Systematic Investor Series with Jerry Parker,
0:25.0	Mort Siebert and I, Niels Kasper Larsen, where we continue our journey into the world of
0:29.5	rules-based investing and where we do our best to give you practical advice based on our own
0:34.7	experience so that hopefully you can avoid making some of the mistakes
0:38.6	that we have made in our careers. Jerry Moritz, good morning, good afternoon. How are things with
0:43.7	you today? Great, Niels. Thank you. Happy new year and good morning. Good afternoon.
0:48.4	Yeah, things are great here in Florida. It's early in the morning, so quiet. The bird is quiet.
0:53.9	And so I'm looking forward to chatting
0:57.1	it up with you guys yeah no absolutely absolutely and if you're tuning in for the first time uh welcome
1:02.9	we love that you're here and we'll do our very best to make the next hour or so as valuable as
1:07.7	possible for you now um as a quick sort of recap, 2020,
1:14.4	obviously only been really going for a couple of days,
1:17.9	but it did start off with some increased geopolitical tension
1:22.2	following the killing of the Iranian commander.
1:25.2	But even if the stock bulls came under pressure for a little while,
1:28.9	the S&P was only down slightly at the end of the week.
1:32.4	So it does seem to be very difficult to spoil the ongoing bull market.
1:38.7	But one thing I did notice, you know, whenever we start a new year,
1:41.8	it's quite common for economists to make their views clear
	...

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