TTU62: Why Huge Market Shifts Are Great Reminders ft. Scot Billington of Covenant Capital Management
Top Traders Unplugged
Niels Kaastrup-Larsen
4.8 • 712 Ratings
🗓️ 20 January 2015
⏱️ 44 minutes
🧾️ Download transcript
Summary
In this Year End Review, we discuss the major events and unexpected market trends in 2014 as well as the major Swiss Franc move at the start of 2015. Scot Billington discusses his firm’s performance what they learned from their losses and gains, and how they evolved their models. He also talks about why they were able to keep losses low in 2014.
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In This Episode, You’ll Learn:
- An overview of what happened in 2014 and where they made money.
- Which factors contributed to profits in 2014 and which factors were the laggards.
- Dissecting the market effect of sliding oil prices in 2nd half of 2014 and the “un-pegging” of the Swiss Franc to the Euro.
- Evolving perspectives on risk management in response to events of 2014.
- Deconstructing the Optimal Program and how to mitigate risk in higher leverage environments.
- Actions taken to keep a typical program or an Optimal Program from going to zero.
- Changes in client perspectives of a CTA strategy no one predicted would do so well a year ago.
- What Scot Billington would wish for in 2015.
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Resources & Links Mentioned in this Episode:
Listen to 2 hour-long episodes of Scot on this podcast here and here.
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 Scot Billington on Twitter.
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Transcript
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| 0:00.0 | Being trend followers and I mean, we already are cognizant that, hey, our whole method is built on the idea that nobody knows where these markets are going. |
| 0:12.1 | The fact that there can be enormous, unexpected, huge moves. |
| 0:17.6 | Having one like that is a great reminder. |
| 0:20.5 | Even if you made money on that move, you still |
| 0:23.6 | need to go back and say, what if I hadn't? What if I'd had the opposite position? Because you |
| 0:28.8 | could have. And then not only that is, I had the opposite position on, I lost money. What if it was |
| 0:35.8 | worse? |
| 0:46.5 | This is Scott Billington, co-founder and managing partner of Covenant Capital Management, |
| 0:50.3 | and you are listening to my year-in-review on Top Traders Unplugged. |
| 0:54.2 | Imagine spending an hour with the world's greatest traders. |
| 0:58.7 | Imagine learning from their experiences, their successes, and their failures. |
| 1:00.6 | Imagine no more. |
| 1:06.6 | Welcome to Top Traders Unplugged, the place where you can learn from the best hedge fund managers in the world, |
| 1:11.4 | so you can take your manager due diligence or investment career to the next level. |
| 1:15.4 | Here's your host, veteran hedge fund manager, Niels Kastrop Larson. |
| 1:29.7 | Welcome back, Scott, for this review of 2014, where we look at the big events from the point of view of your trading strategy. |
| 1:32.2 | I want to explore the ups and the downs as well as the big takeaway from what can only |
| 1:37.2 | be described as a great year for systematic trading strategies in general. |
| 1:41.7 | But as you know, just because you're systematic in your trading, |
| 1:45.5 | it doesn't necessarily mean that your strategy deals with market events in a similar way. |
| 1:51.6 | So I want to dive right into it and really just ask you to begin with, if you could tell me |
| 1:56.5 | about 2014, from your perspective, how did the year evolve for your firm, but of course in particular |
... |
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