TTU116: In Pursuit of the Perfect Portfolio ft. Steve Foerster
Top Traders Unplugged
Niels Kaastrup-Larsen
4.8 • 712 Ratings
🗓️ 1 December 2021
⏱️ 67 minutes
🧾️ Download transcript
Summary
If we could gather all of the famous investing pioneers from world history into one room and ask them to build the perfect portfolio, what would it look like? Well Steve Foerster and his co-author (and previous guest on the show) Andrew Lo, set out to do just that, with their new book called 'In Pursuit of the Perfect Portfolio'. I thought I'd invite Steve onto the show to discuss his new book, go through some of the 'golden threads' of investing that he came across, his journey in the world of finance, and of course, get his opinion on how close Trend Following is to 'the Perfect Portfolio'.
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50 YEARS OF TREND FOLLOWING BOOK AND BEHIND-THE-SCENES VIDEO FOR ACCREDITED INVESTORS - CLICK HERE
In This Episode, You’ll Learn:
- Steve's journey to becoming a Professor of Finance and how he ended up co-authoring a book with Professor Andrew Lo
- Some of the concepts from the legendary financial experts they interviewed for the book
- How closely linked the academic world of finance really is
- About some of the most important findings in investment research over the decades
- About the "untold" story of an early 20th-century mathematician, Louis Bachelier
- Harry Markowitz' story
- What Eugene Fama's Perfect Portfolio looks like
- About William Sharpe and his now famous 'Sharpe Ratio'
- How the phrase 'beta' came about
- How computers enabled researchers to access deeper insights into the world of investing
- About the debate between active and passive investing
- Whether volatility should still be considered as a measure of risk
- About the progression of volatility data into today's investment models
- About the story of Eugene Fama
- How Steve views the question of 'what is the perfect portfolio?'
- Whether Steve considers Trend Following investing as, essentially, a perfect portfolio
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PLUS: Whenever you're ready... here are 3 ways I can help you in your investment Journey:
1. eBooks that cover key topics that you need to know about
In my eBooks, I put together some key discoveries and things I have learnt during the more than 3 decades I have worked in the Trend Following industry, which I hope you will find useful. Click Here
2. Daily Trend Barometer and Market Score
One of the things I’m really proud of, is the fact that I have managed to published the Trend Barometer and Market Score each day for more than a decade...as these tools are really good at describing the environment for trend following managers as well as giving insights into the general positioning of a trend following strategy! Click Here
3. Other Resources that can help you
And if you are hungry for more useful resources from the trend following world...check out some precious resources that I have found over the years to be really valuable. Click Here
Transcript
Click on a timestamp to play from that location
| 0:00.0 | What's fascinating when you look into the history is so-called investment products that we think of as fairly recent, like derivative products, have actually been around for centuries. |
| 0:22.6 | Futures contracts go back to 2,400 BCE in various forms. |
| 0:30.6 | Call options go back to 600 BCE at least. |
| 0:36.6 | In the 18th century BCE, |
| 0:40.3 | not only were their personal loans, |
| 0:44.3 | but there was a liquid secondary market |
| 0:47.3 | for these promissory notes. |
| 0:49.3 | So it's fascinating looking at what we think as new inventions are very old. |
| 1:00.7 | Imagine spending an hour with the world's greatest traders. Imagine learning from their |
| 1:05.8 | experiences, their successes, their successes, and their failures. Imagine no more. |
| 1:13.2 | Welcome to Top Traders Unplugged, |
| 1:16.9 | the place where you can learn from the best hedge fund managers in the world, |
| 1:21.3 | so you can take your manager, due diligence, or investment career to the next level. |
| 1:23.5 | Before we begin today's conversation, |
| 1:25.3 | remember to keep two things in mind. |
| 1:28.1 | All the discussion we'll have about investment performance is about the past, and past performance does not guarantee or even infer anything about future |
| 1:33.5 | performance. Also understand that there's a significant risk of financial loss with all investment |
| 1:38.2 | strategies, and you need to request and understand the specific risks from the investment |
| 1:42.9 | manager about their product before you make |
| 1:45.1 | investment decisions. Here's your host, veteran hedge fund manager, Niels Kostrup Larson. |
| 1:55.0 | Hey everyone and welcome to another edition of Top Traders on Block, where today I'm joined by Steve Forrester, |
| 2:00.7 | who's a finance |
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