TTU25: Why a Mechanical, Long-Term Trend Approach is Best ft. Scot Billington – 1of2
Top Traders Unplugged
Niels Kaastrup-Larsen
4.8 • 670 Ratings
🗓️ 25 August 2014
⏱️ 83 minutes
🧾️ Download transcript
Summary
Our next guest takes a mechanical, long-term trend approach to trading to a new level, and you’ll find out why he thinks it is the better option in this episode. He started Covenant Capital with his business partner in 1999 and has grown it into a profitable boutique firm. But in early 2002 after they ended the previous year down 20%, they really had to grind it out and stick to their guns which ultimately paid off in a big way.
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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:
- How Scot started his firm, doing the testing by hand.
- The difference between a discretionary model and a mechanical model and why Scot chose a mechanical one.
- How he met his business partner Brince Wilford and started with 3 accounts in 1999.
- How narrative bias can affect a trader’s decisions.
- How the firm got through a year that ended with them down 20%.
- What made Scot believe in his model and stick to his guns.
- The offerings that the firm currently has, including the differences in the trading models.
- The pitfalls of investing in shorter term models and not allowing managers to see a full cycles with markets.
- Why most allocators and investors are chasing 24-month returns on stocks and why that may not be the right approach.
- About different types of CTA firms, including boutiques, battleships, emerging, and experimental.
- What to look for in a CTA.
- How to get investors to share the long-term horizon with his firm when certain markets do very well in the short term.
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Resources & Links Mentioned in this Episode:
- An article on Covenant and Scot Billington in Futures Magazine.
- Check out Discretionary vs System Trading.
Follow Niels on Twitter, LinkedIn, YouTube or via the TTU website.
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Transcript
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| 0:00.0 | You're listening to Top Traders on Plot, episode number 025, with Scott Billington, co-founder and managing partner of Covenant Capital Management. |
| 0:12.1 | This episode is sponsored by Saxo Bank. |
| 0:15.3 | Imagine spending an hour with the world's greatest traders. |
| 0:18.9 | Imagine learning from their experiences, their successes, and their failures. |
| 0:23.4 | Imagine no more. |
| 0:25.2 | Welcome to Top Traders Unplugged, the place where you can learn from the best hedge fund |
| 0:29.7 | managers in the world so you can take your manager due diligence or investment career |
| 0:34.4 | to the next level. |
| 0:36.0 | Here's your host, veteran hedge fund manager, Niels Kastrop Larson. |
| 0:47.5 | Welcome to another episode of Top Traders on Plot. |
| 0:51.0 | Thanks so much for tuning in today. |
| 0:53.3 | I know how valuable your time is, so I appreciate you |
| 0:56.5 | spending some of it here with me. On today's show, I'm talking to Scott Billington of Covenant |
| 1:02.7 | Capital Management. Covenant is, to say the least, very different to most investment managers |
| 1:09.7 | out there due to the way they approach |
| 1:12.3 | strategy design, investment horizon and trading activity. So I'm sure you will learn a few new |
| 1:19.2 | things that are thought provoking and perhaps will even lead you to reassess the way trading |
| 1:25.1 | success is considered today. Now for those of you who are new to the |
| 1:29.7 | show, I just want to let you know that you can find all of the show notes, including a full |
| 1:34.4 | transcript of today's episode on the top traders onploc.com website. Now let's get started with |
| 1:42.0 | part one of my conversation. I hope you will enjoy it. |
| 1:49.3 | Scott, thank you so much for being with us today. |
... |
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