TTU71: Why You Don’t Want Symmetry in Investing ft. Mike Shell of Shell Capital Management – 1of2
Top Traders Unplugged
Niels Kaastrup-Larsen
4.8 • 712 Ratings
🗓️ 9 February 2015
⏱️ 71 minutes
🧾️ Download transcript
Summary
Most trend following firms have clients that invest somewhere between 2 and 20% of their portfolio with that firm, but Mike Shell’s firm is different. His strategy is tailored to a specific customer, and almost all of his clients have their entire investment portfolios with his firm. We dive into the specifics of Shell Capital Management in this episode, and how Mike grew up in the southern United States with a military background to become the owner of his own firm.
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In This Episode, You’ll Learn:
- The ways that Mike’s firm is different from other firms.
- His upbringing in Tennessee.
- How he started Shell Capital in 2004.
- The books that influenced him in his trend following education.
- What his experience was in the brokerage world.
- Why he left the brokerage world and what gave him the courage to become an entrepreneur.
- His experience in the military and law enforcement.
- What he does when he’s not trading.
- Why symmetry is the last thing he wants when it comes to investing.
- How his asymmetry term came about.
- Why he relishes uncertainty.
- How he structures his firm to compete in his industry.
- How the firm plans to grow and what they outsource.
- The way that people should interpret his track record.
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Resources & Links Mentioned in this Episode:
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Transcript
Click on a timestamp to play from that location
| 0:00.0 | The core essence equation for portfolio management is to have a positive mathematical expectation. |
| 0:10.0 | You know, how much you make you when you win versus how much you lose when you lose. |
| 0:14.0 | Okay, so that's the probability of winning, how often you win, times how much you win when you win, |
| 0:20.0 | and it's the probability of losing times how much you win when you win. And it's the probability of losing |
| 0:21.8 | times how much you lose when you lose. And you minus those things out and you come up with |
| 0:26.2 | mathematical expectation. We want that to be positive. So it's not about trying to make all the |
| 0:31.2 | trades a winner. It's about having the average win be much greater than the average loss. And that |
| 0:37.1 | is a symmetry. |
| 0:39.4 | I was recently asked to write an article about my experience talking to many of the |
| 0:45.5 | world's top traders on my podcast. It was a bit of a challenge because they all come |
| 0:51.3 | at their craft in slightly different ways, |
| 0:54.7 | so I wondered if it was possible to define some things that they have in common. |
| 1:00.7 | And here are some of my observations. |
| 1:03.2 | They all come from very different backgrounds, |
| 1:06.3 | which to me suggests that there is no such thing as the right pedigree. |
| 1:13.2 | They're all human beings like the rest of us and have for the most part had struggles and |
| 1:18.8 | challenges in their lives which they have had to overcome. They clearly love what they do |
| 1:24.7 | and can't see themselves doing any other job. They're incredibly |
| 1:29.6 | focused on their craft and pay little attention to what other people do. They are highly |
| 1:37.0 | diligent and disciplined in their application of their work. They almost without exception mentions |
| 1:43.3 | risk management as the most important part |
| 1:46.0 | of what they do instead of focusing on how much return they can generate. They pay little |
... |
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