TTU46: The Benefits of Negative Correlation ft. Roy Niederhoffer of R. G. Niederhoffer Capital Management – 2of2

Top Traders Unplugged

Niels Kaastrup-Larsen

News, Investing, Business News, Business

4.8 • 715 Ratings

🗓️ 20 November 2014

⏱️ 84 minutes

🔗️ Recording | iTunes | RSS

🧾️ Download transcript

Summary

In our continued conversation with Roy Niederhoffer, we discuss risk management, drawdowns, why negative correlation is so important to Roy, and what gets him out of bed every morning (and what keeps him awake at night). Learn more about how to create a balanced and diversified portfolio or what it takes to be a manager.

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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:

What has changed by the fact that more and more trading decisions are made by computers instead of humans.
The issue of model decay in Roy’s field.
Why he has constructed his trading program the way that he has.
His ten-step process from idea generation to putting it into the system. The research process laid out.
How his firm does research.
How position sizing plays a role in the short term space.
How he keeps model slippage to a minimum.
Risk management and how Roy deals with it.
When to use discretion to reduce risk.
What he learns from going through a drawdown.
How he keeps investors in the firm during a tough time.
How he personally deals with drawdowns.
How he measures the effectiveness of his research.
If his risk tolerance went down once he had more money under management.
What the biggest challenge is for Roy in the short term management space.
What investors are not asking him during due diligence.
What makes him go into work everyday.
Books that Roy recommends reading for managers and investors.
How the office environment affects how investors perceive a firm.
About downside protection and negative correlation.

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Resources & Links Mentioned in this Episode:

Roy mentions the Extraordinary Popular Delusions and the Madness of Crowds.
He recommends Reminiscences of a Stock Operator.
Roy highly recommends Thinking, Fast and Slow.

Follow Niels on Twitter, LinkedIn, YouTube or via the TTU website.

IT’s TRUE ? – most CIO’s read 50+ books each year – get your FREE copy of the Ultimate Guide to the Best Investment Books ever written here.

And you can get a free copy of my latest book “Ten Reasons to Add Trend Following to Your Portfolio” here.

Learn more about the Trend Barometer here.

Send your questions to info@toptradersunplugged.com

And please share this episode with a like-minded friend and leave an honest Rating & Review on iTunes or Spotify so more people can discover the podcast.

Follow Roy Niederhoffer on Linkedin.

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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

Disclaimer

Transcript

Click on a timestamp to play from that location

0:00.0	I can pretty much play any song on the piano from memory in any key and sing it.
0:08.4	And so I'm a, I think if I, if the hedge fund thing doesn't work out, I'm going to play piano in a piano bar.
0:17.6	If you want to stand out from the crowd, it requires a unique approach to life and business.
0:24.7	An approach that is aligned with your personality and that goes against the herd or the trend.
0:32.5	At times it will expose you and make you vulnerable to the public and at times it will make you look like a hero.
0:41.3	Deep down, it's about being a contrarian,
0:45.0	and that's what we're talking about in today's episode of Top Taders Unplugged.
0:51.6	Welcome back to Top Taders Unplugged,
0:53.8	where the best traders in the world come to share
0:56.2	their experiences, their successes, and their failures.
0:59.6	Let's rejoin the conversation with your host, veteran hedge fund manager, Niels Kastra Plarsen. worse than chance at helping you predict the future.
1:18.8	Very interesting.
1:20.4	Now, I picked up somewhere that kind of your general philosophy that you talk about
1:26.6	is that when people trade using their instincts,
1:30.2	that behavior becomes predictable,
1:32.1	and that's what you can then exploit.
1:35.1	But my question is, in the last five or 10 years,
1:38.7	more and more computers get involved in trading.
1:43.4	And I just wonder whether this, these instincts and behavior and predictability of trading
1:52.4	and markets, are they impacted with less and less decisions possibly being made by humans
1:59.8	and more and more being made by computers
2:01.7	who obviously behave differently?
	...

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