The Defense Strategy – Jason Buck & Taylor Pearson
Summary
Defense Focus: The guests introduce a new Defense Strategy designed to complement offensive assets by combining long volatility/tail risk with commodity trend following.
Sequence Risk: They stress the danger of sequencing risk and prolonged drawdowns, noting how identical average returns can yield vastly different outcomes depending on timing.
60/40 Limitations: The traditional 60/40 portfolio can suffer when stock-bond correlations turn positive, as seen in 2022, necessitating true defensive diversifiers.
Commodity Trend Following: A broad commodities basket with a trend overlay is pitched as a superior inflation hedge versus gold alone, while also providing protection in deflationary shocks.
Long Volatility & Tail Risk: Long optionality is positioned to perform in liquidity cascades, providing convex gains to rebalance into sold-off offensive assets.
Ensemble Construction: They advocate diversified ensembles across lookback horizons and strategies (long optionality, relative value vol, intraday trend) to manage path dependency and carry.
Rebalancing & Capital Efficiency: Systematic rebalancing is essential to harvest defense payoffs, and futures/options enable capital-efficient pairing with illiquid offensive assets.
Transcript
[Music] we have a bit of an unusual podcast for you today this is Jason Buck the CIO at muty funds and I'm sitting here with my co-founder uh Taylor Pearson the CEO at muty funds and we would like to talk a little bit about our new defense strategy um why we thought it was a good idea to launch defense strategy what's entailed in the defense strategy and how it can be useful uh for everybody out there so Taylor let's just start with you know why defense um and I think the interest most interesting way to start is always through stories and one of your favorite stories I think that we originally found in taleb or maybe it comes from previous to that is how you can drown in a river that's two feet deep yeah this is a a tbis right so the the idea is you you have a River that is uh 2 feet deep on average but if it's very flat and shallow along the sides and it has a deep Channel you can still drown in it right so 95% of the river is one feet deep and uh one foot deep and 5% of the river is a 20 foot deep fast moving channel right so you can weit in through the sides and it's fine but you step in the middle uh and it's dangerous so it's I guess it's a more relatable analogy but sort of the the investing analog is you know the average returns over time time saying oh over this 30-year period this asset returned 8% 10% or whatever is it necessarily useful to the individual right because it depends on the order in which those Returns come so uh the Dow Jones Industrial Average from 1966 to 1997 returned about 75% roughly 8% per year but the order of those returns is very skewed so up until about 1982 66 82 the return were roughly flat there are basically no returns the returns from 1982 to 1997 uh were something like 15 16% a year right so over that 30-year period uh you had an 8% average annual return give or take but the order of those returns was very different and that matters so example that uh the folks over at resolve Asset Management use that we really like is you know you take a couple that's retiring say they're 63 years old they've saved $3 million in their retirement account um the order in which those Returns come is very consequential if they get the bad return period first they get that period of flat returns from 66 82 um you know and they're spending their five six% year whatever it is they can draw down to zero if they get the period of good returns first you know the 1982 19997 period their 3 million appreciates considerably to you know I think I want to say 10 million even as they're drawing it down and then you know they can live to 120 and still have plenty of money so from the individual's perspective it's not very helpful to say you know this has 8% returns uh on average and this is equally applicable to you know the 35y old that if you go through a period and it's interesting we we ran this um internally just because I was curious but if you have a period of very strong returns relatively early in your career um uh say 20s 30s 40s and then a period of very flat returns later it's a lot more challenging than the inverse right so when your income is relatively low your savings relatively low you have very good returns um but then as your savings start to accumulate you go through this period of of challenging return so doing the same sort of Dow Jones example you take a 31y old uh if they get the period of strong returns first so they start with $100,000 they're adding $1,000 per month um into their retirement account they finish with about a million dollars if you get the inverse right you get the flat period first you're able to accumulate some savings um and then it starts to compound you get the strong returns later uh you finish with $3 million right so the average return over that period is eight% but the ending point for both of those investors is very different right retiring with a million dollars for retiring with $3 million is you know there's there's a huge difference in like what that implies um lifestyle wise and I think you've even brought up like you have three or four per rule rights the difference between 30 to 40,000 or 120 to 150,000 a year and we all know that's that can be very different Lifestyles uh it really matters at that at that specific amounts like that that's a pretty large Delta for you know what you cost rent foodwise everything to that's a quite a dramatic difference one of the other you know unique pekadills that I usually like to harp on is like how you know we we really don't know that we're just in kind of the first Innings or the first iteration of this experiment with like 401ks you know and Target date funds and everything and and because we like to harp on this you know fancy word ergodicity or what what you're really talking about is sequencing risk or timing risk is that we are not the average you know everybody looks at a a stock market chart and goes it's up into the right but they're not looking at those underwater periods so as you were referencing is like if you have one of those underwater periods in stocks or or 6040 portfolios during your Peak earning years or in your retirement years when you have to take those forced uh distributions those can be uh unbelievably negative to your compounding rate and to your lifestyle changes and so I don't think people really think about that too much and that's one of the things we try to primarily focus on um and one of those things is you know obviously 6040 is what everybody's accustomed to or these Target date funds that are now creeping up into like the 7030 range um these days but why you know 60 40s work for 40 years you know why can't it work for the next 40 years what do we know yeah I think Cory our friend Cory hopstein likes rebalance timing lock there are like birth timing luck as well right it's like you know you work equally hard but it's it's when you're born can matter a lot and where you're born can matter a lot um you know to the point about 6040 I think very strong return sort of in most people's investing lifetimes sort of post 1980 um period you know people have probably heard these examples but you know you go back further you look at other markets and that's not always the case um you know in in real terms 6 40 was down 45% from Peak and was basically flat from 1968 to 1987 right so roughly 21 years um you know looking at S&P index and 10year Government Bond so I think it's interesting like obviously the GFC was very painful for many people you know the dotc com crash coid but we haven't really in most people's lifetimes had something that prolonged right I think in in real terms the S&P recovered to its all-time highs in 2013 or something from the bottom in 29 right it was relatively shortlived um compared to historical draw downs but it's not unprecedented that you have these 10 15 20 year periods where uh you know basically things go nowhere and then obviously you start to look at Global markets um outside the US there's the super dramatic examples Uh Russian Civil War China World War II um but then even you know the UK in the early 1900s you know had almost A50 % draw down in sort of a classic 6040 and so these things aren't aren't totally unprecedented yeah I was listening to an interview with Howard marks the other day and he was saying you know who what money manager really came um you know came into the game in the 1970s like none you know like besides him and like a few others like nobody has that experience anymore and even you know me I'm pushing into that deep into middle age here and I I graduated high school in the late 90s you know and so like we haven't had the experience of like what it that I I can can't almost almost can't even imagine what it's like to go through multi-decade periods of being underwater or getting nothing out of your investment returns and so that could be incredibly frustrating incredibly new experience for a lot of people and I think I talk about Jason Zig said it best is like you know I can throw a I could show a picture of snake or I could throw a snake in your lap right and those lived experiences are much harder to deal with than we realize and that's what I was saying about looking at a 100-year chart of the S&P and you're like oh it's up and to the right but then when you get that granularity of those draw downs and what's that lived experience like it's always much more difficult than we realize so you know we're talking about 604s really just two asset classes stocks and bonds we'd like to call those you know offensive asset classes but let's try to broaden our our scope our Horizon a little bit you know we always love permanent portfolio uh you know more modern versions are all weather dragons cockroaches awesome portfolios those sorts of things but let's go back to you know why do we think the permanent portfolio is cool if you want to give a recap on on Harry Brown yeah I think people there listening may know were big fans of Harry Brown but he was the financial advisor in the 70s and 80s Maybe started in the 60s um and obviously had a very different perspective you know these in there's all these newspaper articles from the late 70s early 80s calling bonds certificates of confiscation right and uh you know of course the post sort of 1980 experiences they were this magical thing with extremely low volatility that had fantastic returns um but Harry lived through that that period of stocks and bonds and that led him to develop uh he called the permanent portfolio which is uh simple and elegant it is equal parts stocks bonds gold and cash and I think the main lesson we sort of Drew from that is this idea as you said of offense and defense so you have your stocks and bonds your offensive that's that's lated for this sort of deflationary growth environment that we've been in for a lot of the last 30 years but then you also have your defensive assets that are more prepared for sort of a recessionary um or inflationary period like uh what was living through and that you know he called it the permanent portfolio because by rebalancing between these different aspects you were trying to have something that was always you know helping do well you had you know gold performing very well in the 1970s in inflation um cash to help offset some of those um draw downs and stocks and um recessions and also I mean cash T bills were one of the better performing assets of the 1970s right the uh real rates were slightly positive so as you had stocks and bonds going down you know cash actually wasn't a bad thing um to be holding and so we we took you know that impetus from that Harry Brown's per portfolio we're like What if you know Harry was alive these days you know what changes could he potentially make and so if you have you know stocks for growth and bonds for a disinflation or deflationary environment you know maybe instead of cash for a a uh you know recession or liquidity event we think it's much better to maybe use long volatility and tail risk so you have much more like a comvex like cash position to really offset that stock exposure and then instead of gold like Harry Brown had and obviously coming off the gold standard was a unique time for gold in in the 1970s we'll maybe touch on that in a little bit later um but we feel like commodity Trend following where you have the broad exposure to commodity markets with a trend following overlay um seems to give a much higher beta uh historically uh whether that happens in the future or not remains to be seen to an inflationary environment which that position helps Offset you know hopefully the the bonds a little bit better than just goldwood it gives you it gives you much more um you know different strategies and overlays and different commodity markets to attenuate for that sort of environment so that's like the modern version of the way we view you know Harry Brown's permanent portfolio and kind of putting those all together in a unique way like we've done with the our cockroach strategy um but let's dive into you know on the defensive side you know like we said we we look at at the world as just offense and defense sometimes it's called you know short volatility versus long volatility on the offensive side um we look at stocks and bonds are very offensive assets right there when GDP is you know up and to the right when liquidity is a wash when you know credit is abundant those sorts of things tend to do well but we also along with stocks and bonds we also tend to pair in there in the offensive assets uh we view PE VC real estate all those things are still you know offensive assets or or long liquidity that's what we consider our offense on the defensive side of the portfolio that we look to to kind of offset those linear offensive assets we try to find combat instruments that we used in in Long volatility tail risk and commodity Trend following and we VI those are you know the defensive side of the portfolio and this is why we think it's going to be interesting to to launch a product that really combines those defensive assets for our clients so let's kind of break down the the defensive side of the portfolio and talk about uh commodity Trend following first you know why why Trend following why is Trend following interesting to us so you and we sort of connected initially when we started working on Mutiny over long volatility and you introd roduced me to Trend following so uh I'm I guess you know compared to the grizzle veterans I'm I'm more naive to it I think it's interesting we were talking before we hit record why isn't Trend following more popular um because there's so many things that are interesting about it you know I think one thing as you said that is I feel like doesn't get as much discussion as it deserves is you know just using gold as sort of an inflation hedge uh worked very well in the 1970s you had the US come off the gold standard I want to say like a 24 24 200% gain for gold or something in the 1970s you had this sort of period of price Discovery and this huge runup um but sort of the research you know we've looked at over the longer history is it's it's Gold's reliability and sort of mild to moderate inflation you know call it you know um Mid single into you know 10 something percent inflationary period where you're not having runaway hyperinflation but you're having really significant periods of inflation that's impacting the performance um hasn't been as great right so I think the first obvious place is like well what if we did a basket of Commodities uh instead of just gold and you know there's a number of people that do that approach um the data we've seen seems to say you know uh that does seem to do better a basket of Commodities and inflationary periods there's we're looking at one paper something like 14% um and sort of periods they categorize 14% returns and peers they categorize as high inflation right so um that's that's very nice the challenges in sort of Commodities and growth also do tend to go together right when you have these Peri to strong growth and um people are building stuff they need to build stuff with commodities right they need uh Lumber and steel and um all this kind of stuff so the commod sort of taking a trend following approach to Commodities is really interesting because when you have these inflationary shocks you know because the trend followers are basically you know buying what goes up and selling what goes down they can be long the Commodities as they're going up as you have these big grow shocks but then also short the Commodities in these deflationary periods like 2008 or um much further back the the 1930s so you know the the idea of trend following and particularly Trend following sort of our implementation of it is more focused on Commodities than I think a lot of other Trend following approaches are these days um is trying to to capture those inflation moves and commodity markets to help protect against uh inflationary periods um but then also to offer some of that deflationary sort of prolonged recession um risk that you can see in sort of a 2008 or again like a a 1930 situation yeah the the interesting part why like you brought up why isn't it po more popular the way I always think about it is that I think in in finance or investing people usually come up one of two ways most people come up like reading buffet and value investing and that's usually where their their entree is into this whole entire world and then I think there's a bunch of weirdos like me that their first books were like the market Wizards and so you you come up with Trend following and like those are like again the two different worlds and they're almost like diametrically opposed to each other right like I think a lot of people we intuitively understand value investing right I want to buy cigar butts I want to buy things for pennies on the dollar you know if we go to a flea market we're all going to understand that's what we're trying to do and then you flip that around and say um you know when a when a commodity like when we is breaking out higher I want to buy high and sell even higher and you're like wait value investment taught me to buy low sell high and so it's counterintuitive and then vice versa like you were saying is you can also short these markets relatively easy compared to the stock market or individual equities is you want to uh you know sell low and buy even lower and so you're just following these Trends but what's always interesting to me is then they're agnostic to their fundamental views or their macro views of the world you know hopefully they'll stay out of their investment strategies so so for example in late uh 2020 when you had oil go negative this is why I love Trend following they were following that Trend even lower everybody else in the world is saying oil can't go negative it's going to bounce here off zero and everything Trend followers just you know followed that down to like negative3 ne40 on you know at one point during the day there and I think it was at September 2020 and so it's been it's it's always fascinating to me um how hard it is sometimes for people to wrap their heads around Trend falling but I think like as you and I have talked over the years I think it's we're much more philosophical aligned with Trend followers right having you know lots of bets you could trade 60 to 80 commodity markets depending on you know liquidity issues or the size of your fund um and that's not even getting into the Alternatives or synthetic forms of of of commodity markets and Trend following you can also trade the financials FX all these sorts of different things you can do with commodity Trend following and you're agnostic necessarily to the directions of markets right you're just following those Trends up or down um and you're trading you know a multitude of markets and you're waiting for Trends to break out and it creates this unique uncorrelated kind of like absolute returns type strategy that's very complimentary to portfolios but like you're saying it's hasn't been more popular even though every time somebody shows a a back test for you know adding Trend following to a portfolio it us usually suggests anywhere from like 30 to 60% should be the portfolio size for Trend following and yet nobody will ever do it and and very few people hold more than like five to 10% of trend following if they hold any at all um so it's one of those things like why is it more popular I still have no idea um but you know this is this is kind of the we live in but I think it's been interesting a lot of our private conversations of like how once you start learning more and more about it you start really coming around to the philosophy ideas and I think it makes a lot of sense for people like us and I think part of the other part is it's um you know we come up understanding stocks and bonds and 6040 portfolios and hitting those buy buttons where you know you have to you there's a little bit of learning curve I think with the Futures industry and you start you know we're all usually typically taught to be afraid of Leverage but there's just it's much more Capital efficient in the Futures Market where you only have to put up a a small Market margin or performance bond to get exposure to larger contract sizes and I think that's scary for people too right and and thinking that Mark to Market on a daily basis and seeing how your pnl moves around so that can be that can prohibit some people from doing it but as I've been studying these you know commodity Trend followers forever one of the things you start to notice about the space and in these strategies is there's a huge dispersion of returns kind of across different managers and what we find is that dispersion is really based on time Cycles once again getting back to Cory hofstein rebalancing timing luck the way we think about building a a a trend following Ensemble of managers and strategies is on the look back periods you know short medium long-term look backs that's also that given their trading Styles you know they fast medium slow kind of trading Styles and what that does is that starts to harness kind of dispersion between returns you see in the space you know like if you have a a sharp liquidity event like a March 2020 sometimes those those short-term managers can catch it medium-term might get whipsawed and the long-term managers might not be in it at all just depends on what side of the trend they're on um and then if if you have a a 2008 or a 2022 events um they're much more slow and protracted maybe the the medium to longer term is going to do better and the short term won't do as well they might get whips saw a lot so that's that's kind of the downside to Trend folling strategies as you can get whips saw as you look for those breakouts or those Trends to happen and they they mean revert um so that's the that's the trade-offs you have now I think what in I think one of the studies you we're going to show on this white paper that we'll have links to in the show notes is that you know historically if you look at trending across all assets most people tend to jump into that why wouldn't I just use it on all asset classes well as I said it's an uncorrelated strategy so you for it to be uncorrelated you want to actually pair it with things like Buy and Hold equities or Buy and Hold bonds um because that's going to give you that differentiation or that diversification you're actually looking for um instead of doing Trend following across the entire um entire portfolio so I think it's an interesting uh diversification you get from that uncorrelated trade that you get out of the commodity Trend following um is there anything else you want to add to that before before we move on to Long volatility in tail risk yeah I I think that that covered all the main points I've been calling this um you know hersel Walker syndrome there was the sort of famous trade actually sort of Circa 1990 Walker Hershel Walker was playing for the Cowboys and the Vikings wanted him they thought this was you know this was the final piece they needed for the Super Bowl and um I think it's kind like it's like the great highway robbery it's got some great nickname and sort of sports lore and uh basically the Vikings just gave up the farm to get herel Walker they give up all these great um draft picks and sort of all that laid the foundation for you know the Cowboys sort of dominant uh early to mid 1990s three Super Bowl runs um you know that those those teams were sort of the the product of of that trade and I think you know it's this this line out of myopia you know we have to have hersel Walker we like this one thing and I think you know trend is sort of the opposite of that in many ways right it's as you said you know what's most interesting is not its Standalone performance it's how it can be additive to a broader portfolio and right get you said like what's interesting about Trend as you know having some more Commodities in there is it might actually make it worse on a standalone basis right if you just look at it in that way but if you're looking at as part of portfolio where you have bonds um and you want some sort of inflationary hedge inflationary protection in there having more Commodities in there is uh is important I think that is is you know it's just counterintuitive on some level and then the way I put it more colloquially is uh every time you know I as you know I live in Northern California every time we see those gas prices just going up and up and up over the years uh you know my girlfriend looks at me and then we go that's why we have uh that's why we have Trend following in our commodity Trend following it the the the returns hopefully paired in an inflation environment helps so for me at least I always thinking about it helps offset hopefully the the cost of gas prices rising at the pump um so it's nice to have something in portfol folio that's you know zigging with others or zagging so that way uh you're not you know you can you can hopefully you know time well or be part or participate in the rising cost of of your Commodities that you have to put into like your gas tank or or food or orever we look at it so let's move on to the next one and that is our our long volatility and tail risk like we said Harry Brown used cash for that bucket we tend to like long volatility and tail risk you know why do we like uh using those um maybe instead of cash like the permanent portfolio did so you know the way I sort of understand the role of cash in the permanent portfolio was it was this um sort of recessionary protection right that you know if you have a liquidity event uh give keep giving Corey hat Ty she liquidity Cascade whatever you want to call it um where you have this sell off across Market and I think like March 2020 I remember I went to the uh finv dashboard one day and you know it shows like all the the sort of daily price movage and it's just all dark red you know the whole dashboard Commodities all the major Bond indices stock indices um everything's just readed right and you had this rush for cash um that everyone everyone had to have cash and they were selling whatever they could get in their portfolio um and so you know that was the role of cash and the Perman portfolio when you had those sort of liquidity events all the correlations go to one you had something to help rebalance that you know in March 2020 if you were sitting on a significant cash position that was a pretty nice place to be in that you could redeploy that into things that had sold off um pretty substantially so the logic behind a long volatility and tail risk component is the same right instead of just trying to sort of have something that is um staying flat during those periods you're hoping uh to have something that's sort of providing its most substantial gains in that period so you're able to to rebalance you know even more aggressively right that you have you have profits from that long volatil and tail risks and you're able to use those to um purchase know stocks bonds some of the other offensive assets that are in that um selloff perod so again you know the defensive strategy in general like Trend following as a standard alone it doesn't necessarily make much sense you know putting your whole portfolio in a long volatility and tail risk investment strategy would not be prudent and I you know that I don't think that makes sense but using it again as part of a you know sort of complimenting these offensive assets um is really interesting and then do you want to talk a little bit about sort of our particular approach to Long Vol inist like how how how do you think about constructing um a long volatility portfolio sure and part of that it it this whole goes back to our discussions in 2018 when we were looking at at forming you know our our business and what we what we really wanted to do for ourselves and for eventually for clients is you know we talked about you know stocks and bonds and all these other offensive asset classes and then what I brought up before is that Trend followings uncorrelated so they pair well together but then you can get that structural negative correlation that you can get from tail risk and long volatility and I remember in 2018 we have these long discussions about you know you could have stocks and bonds you know trending higher so therefore you know Trend following managers may not have a lot of Trends and commodities and then they're they're riding this trend as stocks and bonds higher and then you could have a liquidity Cascade uh TM Cory hofstein and then you know what would you do in that scenario where none of your strategies would potentially work out and that we used to talk about that prior to March 20120 and that's exactly what happened in March 2020 like you said everybody's throwing out the baby with the bath water and that's why Harry Brown want to go uh cash and we we prefer to have that that comat like like instruments with tail risk and long volatility so that way we can buy maybe some of those offensive assets at that lower nav Point um so the way we think about constructing our our long volatility Ensemble once again we think about everything in ensembles because there's a lot of path dependencies to these strategies and more importantly both in the long volatility and in the commodity Trend advisor side is you know these are very Niche type strategies because these are typically built for institutional investors and the way institutional investors work is they like to construct their own portfolios so they like very narrow Niche type managers that do very specific things um it's quite different than I think we typically think about construction portfolio at the retail level but we like that because what it allows us to do is find all these Niche managers trading very specific strategies and put them together into ensembles and so in our long volatility book you know we're buying options that classical tail risk uh that's very much like car insurance or house insurance um where you have you know a little bit of that insurance premium then you're deductible and then you get that payout to cover your risks um that's what classical tail risk is is the best analogy for it so we like classical tail risk the problem is just like most insurance is you're paying that premium bleed every year and you know a lot of people they don't mind it on their house car or life insurance or health insurance but they they tend to mind it on their portfolio insurance so the way we thought about that is let's let's pair you know that that tail risk options with what we call Long volatility managers or long optionality and these are are managers that trade opportunistically those options on both you know puts and calls side and what they're trying to do is maybe lower the cost of that insurance premium over time but really capture that move when it does happen so the analogy we always use is a forest fire right they're looking for you know when's winds start to pick up you know what's the humidity levels you know what's been the you know the dryness or drought conditions in that environment is this a a particular Force that's susceptible to lightning strikes all of those things kind of add up to then opportunistically buy that insurance instead of having that permanent tail risk kind of always rolling and always paying that premium so we combine kind of those two long optionality strategies but like we said once again you have that that premium cost of it so we look to cover that premium cost a little bit with what we call our our relative value uh volatility managers and those managers are are trading a lot of spread trades on on both the you know the vix the S&P um and other potential option markets and the idea there is if with a stereotypical pairs trade is you're trying trying to offset those pairs to give you a little bit of income um and so as long as you're trading those fairly Market neutral and you may buy the taals as Extra Protection we view that those kind of uh implicitly you know mean reversion type strategies should hopefully provide a little bit of income that helps offset that premium bleed that we that we're getting on that long optionality side the other thing that we like to layer in there is after that like March 2020 scenario if you go to roll those options forward the implied volatility of those options going to be higher it just means they're more expensive the premium has gone up because we have a recency bias of the most recent event and so we use like intraday Trend following that can short those market indices around the world using Futures where they don't have to pay up for the implied volatility it's just a directional kind of bet and so by having kind of those three to four different markets and multiple strategies within each you know we're up to 14 managers or 14 and actually more strategies than just the 14 because a lot of our managers have even sub strategies inside of there is we're trying to build out that Ensemble approach to capture all those path to dependencies to a selloff and so you know we think about the paths of moneyness from at the money to out of the money to deep out of the money and we try to Overlay and overlay those paths with our optionality as well but the general idea is you know we're trying to keep the carry over the longer term um carry the the cost of that premium insurance as as low as we can as close to zero as possible over the long term but still trying to capture those major sell-offs if they happen every 1 to five 10 years that sort of thing and the idea is we try to think about you know anything less than NE 10% draw down is kind of a noise to us it would cost too much to cover that uh we look to start really seeing that convexity start to kick in and like that negative 20% draw down in the S&P markets um so that's the kind of the way we think about kind of building out that that long volatility piece um so we have our long volatility Ensemble our commodity Trend Ensemble and so with this new defense strategy what we really want to do is we want to pair those together now why do we want to pair those together hopefully it's becoming clear that that long volatility and tail risk uh tends to do really well in these liquidity crunches or these liquidity crisis like when we brought up March 2020 where all your other strategy and portfolio like Taylor said can be thrown out baby with a bath water like even March 2020 people are selling off gold and and crypto they did not want to sell them they really did not want to sell them but everybody had to go to cash and so these are what happens in those liquidity crunches or those liquidity Cascades and that's what long volatil and tail risk is great about and once again it's that that convexity that you can get from optionality that we really like that has those kind of exponential returns that you can't get elsewhere um and then you know what happens in a more protracted recession or a inflationary environment like 2008 or 2022 um those are when you're going to have your commodity Trend followers hopefully they they have a higher beta to those type of environment are hopefully going to do well in those environments so if we're trying to think about you know your defense is like where does all your offensive assets get hurt they get hurt in liquidity Cascades protracted recessions inflationary environments and so if we can pair those two strategies together we're hoping to cover more of those paths for our clients and so that's the idea around kind of pairing those together and offering that in a package deal and then by offering that package hopefully you know we're increasing the diversification and in decre in I'm sorry increasing the diversification increasing that Ensemble exposure uh which we we hope helps bring a a more positive carry or a better carry with a maybe reduce volatility and reduce draw down over time um and then have still trying to maintain that PO you would get when you really need that defense to to jump out from behind the curtain and really help you um I'm sure I said some things in there you might want to correct or expand on um so go ahead please no that was great I think the um I think the other just practical thing you know sort of the core of our you know investment philosophy and how we think about things is sort of this idea of the Cockroach which is our sort of modern version of the permanent portfolio so that that same four quadrant model um just looking at you know we call it fractal diversification how can we diversify even within each of these buckets you know you talked about within Trend following um looking across those different timing you know short versus long-term uh Trends and I think you know it's easy to look at oh Trend following quote unquote does well in this or doesn't do well in this um but you know once you've been following these managers for a long time uh as you have you know you you see this big dispersion right that you know you can have short-term Trend followers doing very well and longer term FY struggling and and vice versa and so you know putting those all in an ensemble um really makes a lot of sense right for trying to capture sort of wherever those Trends um are showing up and you know again the same true at the Cockroach level I think you know one of the things we've learned is just you know you have to meet people uh where they're at to some extent and you know there's also a factor outside of just your investment strategy there's you know whatever your tax situation is there's um you know if you own a bunch of real estate that's IL liquid right um and so you know we found that there are a lot of people that maybe are in the position of well I would like to add some more defense to my portfolio but I have all these offensive assets that you know either maybe there's some tax reasons I don't want to get rid of them maybe they're liquid um maybe I really like them you know I think I'm I'm a real estate investor I'm a private Equity investor I'm a VC whatever um and you know I think I have I can do some things here that's better than just sort of um you know a stock Bond index or 6040 portfolio how can I sort of combine defense um into my portfolio so that that's kind of the that was the genis I'm start talking about okay can we can we find some way to structure something that less people say all right I want to manage for whatever reason more of the offensive stuff but I do think I need to combine some defense with that and you know what's what's a way to do that well the other thing you're touching on there that you know we'll have more information in the white paper and and more information on and as we put out more and more on this strategy is the idea is we we really love the Futures and options space P because we're able to implement a lot of capital efficiency and so by combining these kind of strategies together in a very Capital efficient way um it allows our clients to get access to like these defensive strategies in a way that really works for them that they compare with their offensive strategies especially if they're like you said in you know more ill liquid real estate or private Equity or Venture Capital um this is why we love this space because it allows us to build Capital efficient portfolios for ourselves and our clients that are um much more useful than than traditional style of investing that can have like kind of like a cash problem where you're not getting the best usage of of your Capital when you're pairing these kind of strategies together so the other question would be that we started touching on the beginning but there's other ways to look at as like why now why should we have a def why should people add defense to their portfolio now like if I look at a back test 6040 has been great and it's been fairly stocks and buttons have been fairly negatively correlated till recently like why why now why why is defense interesting I think I think to some extent we would answer that question being like well you know you should do it anytime right like it's not that now's particular good or particularly bad necessarily um but I do think you know I think 2022 was a bit of a wakeup call for some people maybe not as much as you would have expected that you know um these periods of stock Bond correlation uh I think we were looking at this internally a week or so ago right like the the the fiveyear moving average of stock Bond correlations turned positive I think in like the last uh in 20123 for the first time since uh you know pre- Doom bubble that that correlation you know when you had these stock sell-offs 2008 um typically you've had this rally in bonds and so that 6040 portfolio has has worked really well you know as we've been in an inflationary period starting to see that well that's not always the case right you can have periods where stocks and bonds um are very correlated I think great you know that's been challenging people like oh you know they drisk and they went you know heavier into bonds and less in the stocks as they were retiring two years ago or something and like that's been a difficult position to be and as you've seen this you know bonds really take a major hit and um and the drw Downs go together so I think you know there's some awareness um sort of the role of Defense in the portfolio that maybe wasn't there as much um a couple years ago and then I think um you know generally you know in our experience the inclination is investors portfolios are always uh fully prepared to fight the previous war right is um you know we've looked at everything bad that happened over the last 10 years and we're prepared for all that bad stuff to happen uh in the future but generally you know the market takes the the path of most pain right it takes the path that people are are are least prepared for and so I think um you know over the last 30 years these sorts of more defensive strategies have been relatively out of favor um and so now it's an interesting time to start thinking about working them back into a portfolio yeah and so the things we always look at when portfolios and we try to share with clients and and for people to take a look at it it's like you know what can you have in your portfolio that does well during like thec bust of of of 2 to 2002 you know the great financial crisis of 0809 or even 07 if you're in real estate the coid crisis of 2020 um the inflationary effects or 2022 whatever you whatever we're going to call 2022 in the future is what can you have in your portfolio that'll hopefully do well during that and that's is why we build things like this defensive strategy that can hopefully do well in whatever that future war is without necessarily attenuating to the Past Wars um and so that's the way we try to think about it um and we you know can try to show you know what it could potentially do in a hypothetical scenario like in the past U but also with an eye towards the future of things we can't imagine um part of that though is what we've been talking about is like we love ensembles we love diversification we talked about rebalancing timing luck but we haven't necessarily talked about rebalancing specifically um and this is what we think about with our cockroach portfolio with this defense strategy or our cockroach strategy versus our defense strategy and other strategies is you have to rebalance these portfolio so maybe you could talk about that a little bit Yeah I think the again you've talked about you know go back to our March 2020 example the advantage there of having some sort of defensive assets but um you know long volatility cash whatever it's performing well is it's only useful if you're deploying that at that point right um You you want to use it to buy sort of the things that have that have sold off rapidly and and and rebalanced the flip site is equally true which is H you know think the the famous story was I believe cpers basically had a tail risk manager they were using for five or six years and they gave up on that manager in January of 2020 because they said oh this is a waste you know we just lose 3% a year or whatever on our tail risk position um let's Let It Go right they stopped rebalancing the tail RIS position and you know then you had the massive selloff in uh in March and they were unprepared so that the defensive strategies really only make sense if you're going to be rebalanced ing them with the rest of your portfolio which means both um you know taking money out of them when they've done exceptionally good over the last period um and also you know putting money back in so you know people whether that's monthly quarterly yearly a lot of people use rebalancing bands they say I want to keep this between 20 and 30% and I'll you know rebalance the portfolio at that point there's there's a bunch of different approaches um but some sort of rebalancing uh is basically prerequisite for this to make any sense the other part of our our industry when we're going back to you know why isn't Trend fallowing more popular I think that's part of it is unfortunately the finance or investing industry talks about stocks and bonds and then everything else falls into this bucket of ss you know like we even go to at the end of January we go down to South Florida for alternative hedge fund week but like what does SS mean to you like does that even is that have any meaning to you how do you think about when people say ults we were talking about this before we turned on the podcast I think everyone has what whatever you know you're an expert in right like you you see all the nuance and you see all the details and you hear other people that don't really that you know aren't involved in the details talk about this at a very high level you know that just makes no sense um but then you know you see it you see it happen somewhere else and you're like it's that kind of thing so I think like Alternatives or um like hedge funds oh hedge funds did good or hedge funds did bad um you know I think is a weird thing you know from our perspective to say because you know the difference between a long you know a value oriented long short Equity hedge fund and a trend follower uh are completely different things right you know it's uh it doesn't make any sense to talking it's like you know the food is good the food is bad and there's 250 things on the menu like what's good what's bad like they're all totally different things um it's hard to talk about them in those in those broad terms so I think yeah I think that's one of you know you know we like these terms offense and defense because a lot of what falls under alternatives we would consider you know Alternative forms of offense which can be great right you know real estate private Equity um Venture Capital Angel Investing private credit all this kind of stuff that are sort of considered Alternatives um those things can be great and they can have an important role um in the portfolio but you know in terms of looking at how they fit in overall we think of them as those are offensive things that you still want to offset um by defense so rather than using sort of stocks bonds alts you know nomenclature I think it's more useful to talk about offense and defense and then you know how you get exposure to each of those things you know you can be strategic within that context yeah I think a lot of times that alternative hedge fund week I'm using quotes is that uh like private credit and those sorts of things are in there and like you just said stocks bonds and SS it makes me laugh because the way we think about it a lot of times they're good they're good diversifiers um and they can have different liquidity premiums but at the at the end of the day they're still offense and most of them are highly levered you know Equity or debt and so they they would still be in the same bucket so calling those things alts that are are just leverage versions or or high-powered versions of equity or debt are still in the same offensive bucket or category that we look at so it's it usually throws us off a little bit um and then there was a I was telling you there's a great story uh just recently uh that David Rubinstein did a interview with Howard Marx and they were talking about in the last kind of year or two some of Howard Marx's letters and um at the end David asked one of his usual questions what do you do at a cocktail party if somebody comes up to you and says hey I have 100 Grand you know how should I invest it should I invest it you know in your funds that sort of thing and he said that's like coming up to a doctor and asking hey do you have any good drugs and so he's like well you know what's your malady you know what is your family history you know what are you trying to accomplish there's a lot more questions to be involved there than just the category of drugs or you know alts is another one that we always hate like when people similarly hate on like hedge funds like hedge funds can be anything that's like saying I hate llc's like it can be any kind of business in that LLC so it's just a it's just an intering category when we try to to simplify things too much uh we lose a lot of context and Nuance that are very important um there's the last last thing kind of want to touch on or talked about is before the fall after the fall so I'll let you kind of Riff on that yeah no I thought this you were talking about you know I I've my background was um running small businesses and working with small business owners I know a lot of people in that um that space and there's sort of um you know what the famous Mike Tyson quote like you know everyone got to plan until you get punched in the face kind of thing and so you know I think there's people that have been punched in the face and there's people that haven't been punched in the face there's some lucky people that haven't been punched in the face but have seen other people got punched in the face and go that doesn't look very fun um I'd like to not get get punched in the face but you know I think you know in practice this sort of defensive approach is probably going to appeal to the people that have been punched in the face uh or seen someone else get punched in the face uh and are thinking you know well getting punched in the face isn't so nice right that it it's not you know when things are going good and everything's great um maybe this isn't so good but uh i' I'd really like to not get punched in the face um too much over the over the course of my lifetime and so I think you know just from the investors we've talked to and sort of psychologically um I think I think there's a bit of that that mindset of you know um have you been through a situation where um things have been rough and and things have gone bad and I think there's also you know we can talk again you know we talked bunch about the even if you're not a that scario right you're the you know the relatively young investor and you're just trying to reduce that path risk or that timing risk that maybe goes you know I think there's a lot of other uses for for defense but you know I think you do have to wrap your head around that to some extent right that you know this is something that can happen there is path risk and it may not happen I don't know um but being prepared for that scenario is is sort of The Prudent thing to do yeah I was I was envisioning cartoons of of You cartoon version of you and I being like punch drunk boxers and like Mike Tyson's punch out that was great like the Tweety Birds around their heads or something but like you said it's like we talk about this all the time we build portfolios exactly for what we wanted right and because we realize you know we want to ride the good times like everybody else but we realize bad stuff does happen right and so we're just kind of agnostic about it but we prepare for it and you know just like everybody we think that you know a lot of people take a lot of concentrated risk to get wealthy and then to stay wealthy you're going to need that diversification but it also applies to like the young person investing you want that diversification to reduce the variance of your path that way you can compound more efficiently and effectively over time and you know just you know betting on one asset class like stocks has a lot of variants to it and like we pointed out you can go through multi-decade periods of being underwater so we try to diversify and kind of pair up offense and defense so no matter what that was the idea of Harry Brown that you can muddle along in kind of whatever Global Mac War environment we're in and all you really want is your savings to kind of like outpace inflation over time and be there when you need it most um and that's the way we think about constructing portfolios uh we'll put links in the in the show notes of both the audio and video uh where you can find out more information about the defense strategy that we'll be launching in the near future here um also you'll be able to find it on our new and improved website it's quite beautiful I I must say myself uh Taylor and everybody else has done an amazing job on it but you can find that at Mutiny fund.com um Taylor anything else at the end no uh yeah good talking to you we'll do it again uh hopefully not too distant future all right thanks everybody this podcast is provided for informational purposes only and should not be relied upon as legal business investment or tax advice all opinions expressed by podcast participants are Solly their own opinions and do not necessarily reflect the opinions of mutually fund their Affiliates or company's futured due 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The Defense Strategy – Jason Buck & Taylor Pearson
Summary
Transcript
[Music] we have a bit of an unusual podcast for you today this is Jason Buck the CIO at muty funds and I'm sitting here with my co-founder uh Taylor Pearson the CEO at muty funds and we would like to talk a little bit about our new defense strategy um why we thought it was a good idea to launch defense strategy what's entailed in the defense strategy and how it can be useful uh for everybody out there so Taylor let's just start with you know why defense um and I think the interest most interesting way to start is always through stories and one of your favorite stories I think that we originally found in taleb or maybe it comes from previous to that is how you can drown in a river that's two feet deep yeah this is a a tbis right so the the idea is you you have a River that is uh 2 feet deep on average but if it's very flat and shallow along the sides and it has a deep Channel you can still drown in it right so 95% of the river is one feet deep and uh one foot deep and 5% of the river is a 20 foot deep fast moving channel right so you can weit in through the sides and it's fine but you step in the middle uh and it's dangerous so it's I guess it's a more relatable analogy but sort of the the investing analog is you know the average returns over time time saying oh over this 30-year period this asset returned 8% 10% or whatever is it necessarily useful to the individual right because it depends on the order in which those Returns come so uh the Dow Jones Industrial Average from 1966 to 1997 returned about 75% roughly 8% per year but the order of those returns is very skewed so up until about 1982 66 82 the return were roughly flat there are basically no returns the returns from 1982 to 1997 uh were something like 15 16% a year right so over that 30-year period uh you had an 8% average annual return give or take but the order of those returns was very different and that matters so example that uh the folks over at resolve Asset Management use that we really like is you know you take a couple that's retiring say they're 63 years old they've saved $3 million in their retirement account um the order in which those Returns come is very consequential if they get the bad return period first they get that period of flat returns from 66 82 um you know and they're spending their five six% year whatever it is they can draw down to zero if they get the period of good returns first you know the 1982 19997 period their 3 million appreciates considerably to you know I think I want to say 10 million even as they're drawing it down and then you know they can live to 120 and still have plenty of money so from the individual's perspective it's not very helpful to say you know this has 8% returns uh on average and this is equally applicable to you know the 35y old that if you go through a period and it's interesting we we ran this um internally just because I was curious but if you have a period of very strong returns relatively early in your career um uh say 20s 30s 40s and then a period of very flat returns later it's a lot more challenging than the inverse right so when your income is relatively low your savings relatively low you have very good returns um but then as your savings start to accumulate you go through this period of of challenging return so doing the same sort of Dow Jones example you take a 31y old uh if they get the period of strong returns first so they start with $100,000 they're adding $1,000 per month um into their retirement account they finish with about a million dollars if you get the inverse right you get the flat period first you're able to accumulate some savings um and then it starts to compound you get the strong returns later uh you finish with $3 million right so the average return over that period is eight% but the ending point for both of those investors is very different right retiring with a million dollars for retiring with $3 million is you know there's there's a huge difference in like what that implies um lifestyle wise and I think you've even brought up like you have three or four per rule rights the difference between 30 to 40,000 or 120 to 150,000 a year and we all know that's that can be very different Lifestyles uh it really matters at that at that specific amounts like that that's a pretty large Delta for you know what you cost rent foodwise everything to that's a quite a dramatic difference one of the other you know unique pekadills that I usually like to harp on is like how you know we we really don't know that we're just in kind of the first Innings or the first iteration of this experiment with like 401ks you know and Target date funds and everything and and because we like to harp on this you know fancy word ergodicity or what what you're really talking about is sequencing risk or timing risk is that we are not the average you know everybody looks at a a stock market chart and goes it's up into the right but they're not looking at those underwater periods so as you were referencing is like if you have one of those underwater periods in stocks or or 6040 portfolios during your Peak earning years or in your retirement years when you have to take those forced uh distributions those can be uh unbelievably negative to your compounding rate and to your lifestyle changes and so I don't think people really think about that too much and that's one of the things we try to primarily focus on um and one of those things is you know obviously 6040 is what everybody's accustomed to or these Target date funds that are now creeping up into like the 7030 range um these days but why you know 60 40s work for 40 years you know why can't it work for the next 40 years what do we know yeah I think Cory our friend Cory hopstein likes rebalance timing lock there are like birth timing luck as well right it's like you know you work equally hard but it's it's when you're born can matter a lot and where you're born can matter a lot um you know to the point about 6040 I think very strong return sort of in most people's investing lifetimes sort of post 1980 um period you know people have probably heard these examples but you know you go back further you look at other markets and that's not always the case um you know in in real terms 6 40 was down 45% from Peak and was basically flat from 1968 to 1987 right so roughly 21 years um you know looking at S&P index and 10year Government Bond so I think it's interesting like obviously the GFC was very painful for many people you know the dotc com crash coid but we haven't really in most people's lifetimes had something that prolonged right I think in in real terms the S&P recovered to its all-time highs in 2013 or something from the bottom in 29 right it was relatively shortlived um compared to historical draw downs but it's not unprecedented that you have these 10 15 20 year periods where uh you know basically things go nowhere and then obviously you start to look at Global markets um outside the US there's the super dramatic examples Uh Russian Civil War China World War II um but then even you know the UK in the early 1900s you know had almost A50 % draw down in sort of a classic 6040 and so these things aren't aren't totally unprecedented yeah I was listening to an interview with Howard marks the other day and he was saying you know who what money manager really came um you know came into the game in the 1970s like none you know like besides him and like a few others like nobody has that experience anymore and even you know me I'm pushing into that deep into middle age here and I I graduated high school in the late 90s you know and so like we haven't had the experience of like what it that I I can can't almost almost can't even imagine what it's like to go through multi-decade periods of being underwater or getting nothing out of your investment returns and so that could be incredibly frustrating incredibly new experience for a lot of people and I think I talk about Jason Zig said it best is like you know I can throw a I could show a picture of snake or I could throw a snake in your lap right and those lived experiences are much harder to deal with than we realize and that's what I was saying about looking at a 100-year chart of the S&P and you're like oh it's up and to the right but then when you get that granularity of those draw downs and what's that lived experience like it's always much more difficult than we realize so you know we're talking about 604s really just two asset classes stocks and bonds we'd like to call those you know offensive asset classes but let's try to broaden our our scope our Horizon a little bit you know we always love permanent portfolio uh you know more modern versions are all weather dragons cockroaches awesome portfolios those sorts of things but let's go back to you know why do we think the permanent portfolio is cool if you want to give a recap on on Harry Brown yeah I think people there listening may know were big fans of Harry Brown but he was the financial advisor in the 70s and 80s Maybe started in the 60s um and obviously had a very different perspective you know these in there's all these newspaper articles from the late 70s early 80s calling bonds certificates of confiscation right and uh you know of course the post sort of 1980 experiences they were this magical thing with extremely low volatility that had fantastic returns um but Harry lived through that that period of stocks and bonds and that led him to develop uh he called the permanent portfolio which is uh simple and elegant it is equal parts stocks bonds gold and cash and I think the main lesson we sort of Drew from that is this idea as you said of offense and defense so you have your stocks and bonds your offensive that's that's lated for this sort of deflationary growth environment that we've been in for a lot of the last 30 years but then you also have your defensive assets that are more prepared for sort of a recessionary um or inflationary period like uh what was living through and that you know he called it the permanent portfolio because by rebalancing between these different aspects you were trying to have something that was always you know helping do well you had you know gold performing very well in the 1970s in inflation um cash to help offset some of those um draw downs and stocks and um recessions and also I mean cash T bills were one of the better performing assets of the 1970s right the uh real rates were slightly positive so as you had stocks and bonds going down you know cash actually wasn't a bad thing um to be holding and so we we took you know that impetus from that Harry Brown's per portfolio we're like What if you know Harry was alive these days you know what changes could he potentially make and so if you have you know stocks for growth and bonds for a disinflation or deflationary environment you know maybe instead of cash for a a uh you know recession or liquidity event we think it's much better to maybe use long volatility and tail risk so you have much more like a comvex like cash position to really offset that stock exposure and then instead of gold like Harry Brown had and obviously coming off the gold standard was a unique time for gold in in the 1970s we'll maybe touch on that in a little bit later um but we feel like commodity Trend following where you have the broad exposure to commodity markets with a trend following overlay um seems to give a much higher beta uh historically uh whether that happens in the future or not remains to be seen to an inflationary environment which that position helps Offset you know hopefully the the bonds a little bit better than just goldwood it gives you it gives you much more um you know different strategies and overlays and different commodity markets to attenuate for that sort of environment so that's like the modern version of the way we view you know Harry Brown's permanent portfolio and kind of putting those all together in a unique way like we've done with the our cockroach strategy um but let's dive into you know on the defensive side you know like we said we we look at at the world as just offense and defense sometimes it's called you know short volatility versus long volatility on the offensive side um we look at stocks and bonds are very offensive assets right there when GDP is you know up and to the right when liquidity is a wash when you know credit is abundant those sorts of things tend to do well but we also along with stocks and bonds we also tend to pair in there in the offensive assets uh we view PE VC real estate all those things are still you know offensive assets or or long liquidity that's what we consider our offense on the defensive side of the portfolio that we look to to kind of offset those linear offensive assets we try to find combat instruments that we used in in Long volatility tail risk and commodity Trend following and we VI those are you know the defensive side of the portfolio and this is why we think it's going to be interesting to to launch a product that really combines those defensive assets for our clients so let's kind of break down the the defensive side of the portfolio and talk about uh commodity Trend following first you know why why Trend following why is Trend following interesting to us so you and we sort of connected initially when we started working on Mutiny over long volatility and you introd roduced me to Trend following so uh I'm I guess you know compared to the grizzle veterans I'm I'm more naive to it I think it's interesting we were talking before we hit record why isn't Trend following more popular um because there's so many things that are interesting about it you know I think one thing as you said that is I feel like doesn't get as much discussion as it deserves is you know just using gold as sort of an inflation hedge uh worked very well in the 1970s you had the US come off the gold standard I want to say like a 24 24 200% gain for gold or something in the 1970s you had this sort of period of price Discovery and this huge runup um but sort of the research you know we've looked at over the longer history is it's it's Gold's reliability and sort of mild to moderate inflation you know call it you know um Mid single into you know 10 something percent inflationary period where you're not having runaway hyperinflation but you're having really significant periods of inflation that's impacting the performance um hasn't been as great right so I think the first obvious place is like well what if we did a basket of Commodities uh instead of just gold and you know there's a number of people that do that approach um the data we've seen seems to say you know uh that does seem to do better a basket of Commodities and inflationary periods there's we're looking at one paper something like 14% um and sort of periods they categorize 14% returns and peers they categorize as high inflation right so um that's that's very nice the challenges in sort of Commodities and growth also do tend to go together right when you have these Peri to strong growth and um people are building stuff they need to build stuff with commodities right they need uh Lumber and steel and um all this kind of stuff so the commod sort of taking a trend following approach to Commodities is really interesting because when you have these inflationary shocks you know because the trend followers are basically you know buying what goes up and selling what goes down they can be long the Commodities as they're going up as you have these big grow shocks but then also short the Commodities in these deflationary periods like 2008 or um much further back the the 1930s so you know the the idea of trend following and particularly Trend following sort of our implementation of it is more focused on Commodities than I think a lot of other Trend following approaches are these days um is trying to to capture those inflation moves and commodity markets to help protect against uh inflationary periods um but then also to offer some of that deflationary sort of prolonged recession um risk that you can see in sort of a 2008 or again like a a 1930 situation yeah the the interesting part why like you brought up why isn't it po more popular the way I always think about it is that I think in in finance or investing people usually come up one of two ways most people come up like reading buffet and value investing and that's usually where their their entree is into this whole entire world and then I think there's a bunch of weirdos like me that their first books were like the market Wizards and so you you come up with Trend following and like those are like again the two different worlds and they're almost like diametrically opposed to each other right like I think a lot of people we intuitively understand value investing right I want to buy cigar butts I want to buy things for pennies on the dollar you know if we go to a flea market we're all going to understand that's what we're trying to do and then you flip that around and say um you know when a when a commodity like when we is breaking out higher I want to buy high and sell even higher and you're like wait value investment taught me to buy low sell high and so it's counterintuitive and then vice versa like you were saying is you can also short these markets relatively easy compared to the stock market or individual equities is you want to uh you know sell low and buy even lower and so you're just following these Trends but what's always interesting to me is then they're agnostic to their fundamental views or their macro views of the world you know hopefully they'll stay out of their investment strategies so so for example in late uh 2020 when you had oil go negative this is why I love Trend following they were following that Trend even lower everybody else in the world is saying oil can't go negative it's going to bounce here off zero and everything Trend followers just you know followed that down to like negative3 ne40 on you know at one point during the day there and I think it was at September 2020 and so it's been it's it's always fascinating to me um how hard it is sometimes for people to wrap their heads around Trend falling but I think like as you and I have talked over the years I think it's we're much more philosophical aligned with Trend followers right having you know lots of bets you could trade 60 to 80 commodity markets depending on you know liquidity issues or the size of your fund um and that's not even getting into the Alternatives or synthetic forms of of of commodity markets and Trend following you can also trade the financials FX all these sorts of different things you can do with commodity Trend following and you're agnostic necessarily to the directions of markets right you're just following those Trends up or down um and you're trading you know a multitude of markets and you're waiting for Trends to break out and it creates this unique uncorrelated kind of like absolute returns type strategy that's very complimentary to portfolios but like you're saying it's hasn't been more popular even though every time somebody shows a a back test for you know adding Trend following to a portfolio it us usually suggests anywhere from like 30 to 60% should be the portfolio size for Trend following and yet nobody will ever do it and and very few people hold more than like five to 10% of trend following if they hold any at all um so it's one of those things like why is it more popular I still have no idea um but you know this is this is kind of the we live in but I think it's been interesting a lot of our private conversations of like how once you start learning more and more about it you start really coming around to the philosophy ideas and I think it makes a lot of sense for people like us and I think part of the other part is it's um you know we come up understanding stocks and bonds and 6040 portfolios and hitting those buy buttons where you know you have to you there's a little bit of learning curve I think with the Futures industry and you start you know we're all usually typically taught to be afraid of Leverage but there's just it's much more Capital efficient in the Futures Market where you only have to put up a a small Market margin or performance bond to get exposure to larger contract sizes and I think that's scary for people too right and and thinking that Mark to Market on a daily basis and seeing how your pnl moves around so that can be that can prohibit some people from doing it but as I've been studying these you know commodity Trend followers forever one of the things you start to notice about the space and in these strategies is there's a huge dispersion of returns kind of across different managers and what we find is that dispersion is really based on time Cycles once again getting back to Cory hofstein rebalancing timing luck the way we think about building a a a trend following Ensemble of managers and strategies is on the look back periods you know short medium long-term look backs that's also that given their trading Styles you know they fast medium slow kind of trading Styles and what that does is that starts to harness kind of dispersion between returns you see in the space you know like if you have a a sharp liquidity event like a March 2020 sometimes those those short-term managers can catch it medium-term might get whipsawed and the long-term managers might not be in it at all just depends on what side of the trend they're on um and then if if you have a a 2008 or a 2022 events um they're much more slow and protracted maybe the the medium to longer term is going to do better and the short term won't do as well they might get whips saw a lot so that's that's kind of the downside to Trend folling strategies as you can get whips saw as you look for those breakouts or those Trends to happen and they they mean revert um so that's the that's the trade-offs you have now I think what in I think one of the studies you we're going to show on this white paper that we'll have links to in the show notes is that you know historically if you look at trending across all assets most people tend to jump into that why wouldn't I just use it on all asset classes well as I said it's an uncorrelated strategy so you for it to be uncorrelated you want to actually pair it with things like Buy and Hold equities or Buy and Hold bonds um because that's going to give you that differentiation or that diversification you're actually looking for um instead of doing Trend following across the entire um entire portfolio so I think it's an interesting uh diversification you get from that uncorrelated trade that you get out of the commodity Trend following um is there anything else you want to add to that before before we move on to Long volatility in tail risk yeah I I think that that covered all the main points I've been calling this um you know hersel Walker syndrome there was the sort of famous trade actually sort of Circa 1990 Walker Hershel Walker was playing for the Cowboys and the Vikings wanted him they thought this was you know this was the final piece they needed for the Super Bowl and um I think it's kind like it's like the great highway robbery it's got some great nickname and sort of sports lore and uh basically the Vikings just gave up the farm to get herel Walker they give up all these great um draft picks and sort of all that laid the foundation for you know the Cowboys sort of dominant uh early to mid 1990s three Super Bowl runs um you know that those those teams were sort of the the product of of that trade and I think you know it's this this line out of myopia you know we have to have hersel Walker we like this one thing and I think you know trend is sort of the opposite of that in many ways right it's as you said you know what's most interesting is not its Standalone performance it's how it can be additive to a broader portfolio and right get you said like what's interesting about Trend as you know having some more Commodities in there is it might actually make it worse on a standalone basis right if you just look at it in that way but if you're looking at as part of portfolio where you have bonds um and you want some sort of inflationary hedge inflationary protection in there having more Commodities in there is uh is important I think that is is you know it's just counterintuitive on some level and then the way I put it more colloquially is uh every time you know I as you know I live in Northern California every time we see those gas prices just going up and up and up over the years uh you know my girlfriend looks at me and then we go that's why we have uh that's why we have Trend following in our commodity Trend following it the the the returns hopefully paired in an inflation environment helps so for me at least I always thinking about it helps offset hopefully the the cost of gas prices rising at the pump um so it's nice to have something in portfol folio that's you know zigging with others or zagging so that way uh you're not you know you can you can hopefully you know time well or be part or participate in the rising cost of of your Commodities that you have to put into like your gas tank or or food or orever we look at it so let's move on to the next one and that is our our long volatility and tail risk like we said Harry Brown used cash for that bucket we tend to like long volatility and tail risk you know why do we like uh using those um maybe instead of cash like the permanent portfolio did so you know the way I sort of understand the role of cash in the permanent portfolio was it was this um sort of recessionary protection right that you know if you have a liquidity event uh give keep giving Corey hat Ty she liquidity Cascade whatever you want to call it um where you have this sell off across Market and I think like March 2020 I remember I went to the uh finv dashboard one day and you know it shows like all the the sort of daily price movage and it's just all dark red you know the whole dashboard Commodities all the major Bond indices stock indices um everything's just readed right and you had this rush for cash um that everyone everyone had to have cash and they were selling whatever they could get in their portfolio um and so you know that was the role of cash and the Perman portfolio when you had those sort of liquidity events all the correlations go to one you had something to help rebalance that you know in March 2020 if you were sitting on a significant cash position that was a pretty nice place to be in that you could redeploy that into things that had sold off um pretty substantially so the logic behind a long volatility and tail risk component is the same right instead of just trying to sort of have something that is um staying flat during those periods you're hoping uh to have something that's sort of providing its most substantial gains in that period so you're able to to rebalance you know even more aggressively right that you have you have profits from that long volatil and tail risks and you're able to use those to um purchase know stocks bonds some of the other offensive assets that are in that um selloff perod so again you know the defensive strategy in general like Trend following as a standard alone it doesn't necessarily make much sense you know putting your whole portfolio in a long volatility and tail risk investment strategy would not be prudent and I you know that I don't think that makes sense but using it again as part of a you know sort of complimenting these offensive assets um is really interesting and then do you want to talk a little bit about sort of our particular approach to Long Vol inist like how how how do you think about constructing um a long volatility portfolio sure and part of that it it this whole goes back to our discussions in 2018 when we were looking at at forming you know our our business and what we what we really wanted to do for ourselves and for eventually for clients is you know we talked about you know stocks and bonds and all these other offensive asset classes and then what I brought up before is that Trend followings uncorrelated so they pair well together but then you can get that structural negative correlation that you can get from tail risk and long volatility and I remember in 2018 we have these long discussions about you know you could have stocks and bonds you know trending higher so therefore you know Trend following managers may not have a lot of Trends and commodities and then they're they're riding this trend as stocks and bonds higher and then you could have a liquidity Cascade uh TM Cory hofstein and then you know what would you do in that scenario where none of your strategies would potentially work out and that we used to talk about that prior to March 20120 and that's exactly what happened in March 2020 like you said everybody's throwing out the baby with the bath water and that's why Harry Brown want to go uh cash and we we prefer to have that that comat like like instruments with tail risk and long volatility so that way we can buy maybe some of those offensive assets at that lower nav Point um so the way we think about constructing our our long volatility Ensemble once again we think about everything in ensembles because there's a lot of path dependencies to these strategies and more importantly both in the long volatility and in the commodity Trend advisor side is you know these are very Niche type strategies because these are typically built for institutional investors and the way institutional investors work is they like to construct their own portfolios so they like very narrow Niche type managers that do very specific things um it's quite different than I think we typically think about construction portfolio at the retail level but we like that because what it allows us to do is find all these Niche managers trading very specific strategies and put them together into ensembles and so in our long volatility book you know we're buying options that classical tail risk uh that's very much like car insurance or house insurance um where you have you know a little bit of that insurance premium then you're deductible and then you get that payout to cover your risks um that's what classical tail risk is is the best analogy for it so we like classical tail risk the problem is just like most insurance is you're paying that premium bleed every year and you know a lot of people they don't mind it on their house car or life insurance or health insurance but they they tend to mind it on their portfolio insurance so the way we thought about that is let's let's pair you know that that tail risk options with what we call Long volatility managers or long optionality and these are are managers that trade opportunistically those options on both you know puts and calls side and what they're trying to do is maybe lower the cost of that insurance premium over time but really capture that move when it does happen so the analogy we always use is a forest fire right they're looking for you know when's winds start to pick up you know what's the humidity levels you know what's been the you know the dryness or drought conditions in that environment is this a a particular Force that's susceptible to lightning strikes all of those things kind of add up to then opportunistically buy that insurance instead of having that permanent tail risk kind of always rolling and always paying that premium so we combine kind of those two long optionality strategies but like we said once again you have that that premium cost of it so we look to cover that premium cost a little bit with what we call our our relative value uh volatility managers and those managers are are trading a lot of spread trades on on both the you know the vix the S&P um and other potential option markets and the idea there is if with a stereotypical pairs trade is you're trying trying to offset those pairs to give you a little bit of income um and so as long as you're trading those fairly Market neutral and you may buy the taals as Extra Protection we view that those kind of uh implicitly you know mean reversion type strategies should hopefully provide a little bit of income that helps offset that premium bleed that we that we're getting on that long optionality side the other thing that we like to layer in there is after that like March 2020 scenario if you go to roll those options forward the implied volatility of those options going to be higher it just means they're more expensive the premium has gone up because we have a recency bias of the most recent event and so we use like intraday Trend following that can short those market indices around the world using Futures where they don't have to pay up for the implied volatility it's just a directional kind of bet and so by having kind of those three to four different markets and multiple strategies within each you know we're up to 14 managers or 14 and actually more strategies than just the 14 because a lot of our managers have even sub strategies inside of there is we're trying to build out that Ensemble approach to capture all those path to dependencies to a selloff and so you know we think about the paths of moneyness from at the money to out of the money to deep out of the money and we try to Overlay and overlay those paths with our optionality as well but the general idea is you know we're trying to keep the carry over the longer term um carry the the cost of that premium insurance as as low as we can as close to zero as possible over the long term but still trying to capture those major sell-offs if they happen every 1 to five 10 years that sort of thing and the idea is we try to think about you know anything less than NE 10% draw down is kind of a noise to us it would cost too much to cover that uh we look to start really seeing that convexity start to kick in and like that negative 20% draw down in the S&P markets um so that's the kind of the way we think about kind of building out that that long volatility piece um so we have our long volatility Ensemble our commodity Trend Ensemble and so with this new defense strategy what we really want to do is we want to pair those together now why do we want to pair those together hopefully it's becoming clear that that long volatility and tail risk uh tends to do really well in these liquidity crunches or these liquidity crisis like when we brought up March 2020 where all your other strategy and portfolio like Taylor said can be thrown out baby with a bath water like even March 2020 people are selling off gold and and crypto they did not want to sell them they really did not want to sell them but everybody had to go to cash and so these are what happens in those liquidity crunches or those liquidity Cascades and that's what long volatil and tail risk is great about and once again it's that that convexity that you can get from optionality that we really like that has those kind of exponential returns that you can't get elsewhere um and then you know what happens in a more protracted recession or a inflationary environment like 2008 or 2022 um those are when you're going to have your commodity Trend followers hopefully they they have a higher beta to those type of environment are hopefully going to do well in those environments so if we're trying to think about you know your defense is like where does all your offensive assets get hurt they get hurt in liquidity Cascades protracted recessions inflationary environments and so if we can pair those two strategies together we're hoping to cover more of those paths for our clients and so that's the idea around kind of pairing those together and offering that in a package deal and then by offering that package hopefully you know we're increasing the diversification and in decre in I'm sorry increasing the diversification increasing that Ensemble exposure uh which we we hope helps bring a a more positive carry or a better carry with a maybe reduce volatility and reduce draw down over time um and then have still trying to maintain that PO you would get when you really need that defense to to jump out from behind the curtain and really help you um I'm sure I said some things in there you might want to correct or expand on um so go ahead please no that was great I think the um I think the other just practical thing you know sort of the core of our you know investment philosophy and how we think about things is sort of this idea of the Cockroach which is our sort of modern version of the permanent portfolio so that that same four quadrant model um just looking at you know we call it fractal diversification how can we diversify even within each of these buckets you know you talked about within Trend following um looking across those different timing you know short versus long-term uh Trends and I think you know it's easy to look at oh Trend following quote unquote does well in this or doesn't do well in this um but you know once you've been following these managers for a long time uh as you have you know you you see this big dispersion right that you know you can have short-term Trend followers doing very well and longer term FY struggling and and vice versa and so you know putting those all in an ensemble um really makes a lot of sense right for trying to capture sort of wherever those Trends um are showing up and you know again the same true at the Cockroach level I think you know one of the things we've learned is just you know you have to meet people uh where they're at to some extent and you know there's also a factor outside of just your investment strategy there's you know whatever your tax situation is there's um you know if you own a bunch of real estate that's IL liquid right um and so you know we found that there are a lot of people that maybe are in the position of well I would like to add some more defense to my portfolio but I have all these offensive assets that you know either maybe there's some tax reasons I don't want to get rid of them maybe they're liquid um maybe I really like them you know I think I'm I'm a real estate investor I'm a private Equity investor I'm a VC whatever um and you know I think I have I can do some things here that's better than just sort of um you know a stock Bond index or 6040 portfolio how can I sort of combine defense um into my portfolio so that that's kind of the that was the genis I'm start talking about okay can we can we find some way to structure something that less people say all right I want to manage for whatever reason more of the offensive stuff but I do think I need to combine some defense with that and you know what's what's a way to do that well the other thing you're touching on there that you know we'll have more information in the white paper and and more information on and as we put out more and more on this strategy is the idea is we we really love the Futures and options space P because we're able to implement a lot of capital efficiency and so by combining these kind of strategies together in a very Capital efficient way um it allows our clients to get access to like these defensive strategies in a way that really works for them that they compare with their offensive strategies especially if they're like you said in you know more ill liquid real estate or private Equity or Venture Capital um this is why we love this space because it allows us to build Capital efficient portfolios for ourselves and our clients that are um much more useful than than traditional style of investing that can have like kind of like a cash problem where you're not getting the best usage of of your Capital when you're pairing these kind of strategies together so the other question would be that we started touching on the beginning but there's other ways to look at as like why now why should we have a def why should people add defense to their portfolio now like if I look at a back test 6040 has been great and it's been fairly stocks and buttons have been fairly negatively correlated till recently like why why now why why is defense interesting I think I think to some extent we would answer that question being like well you know you should do it anytime right like it's not that now's particular good or particularly bad necessarily um but I do think you know I think 2022 was a bit of a wakeup call for some people maybe not as much as you would have expected that you know um these periods of stock Bond correlation uh I think we were looking at this internally a week or so ago right like the the the fiveyear moving average of stock Bond correlations turned positive I think in like the last uh in 20123 for the first time since uh you know pre- Doom bubble that that correlation you know when you had these stock sell-offs 2008 um typically you've had this rally in bonds and so that 6040 portfolio has has worked really well you know as we've been in an inflationary period starting to see that well that's not always the case right you can have periods where stocks and bonds um are very correlated I think great you know that's been challenging people like oh you know they drisk and they went you know heavier into bonds and less in the stocks as they were retiring two years ago or something and like that's been a difficult position to be and as you've seen this you know bonds really take a major hit and um and the drw Downs go together so I think you know there's some awareness um sort of the role of Defense in the portfolio that maybe wasn't there as much um a couple years ago and then I think um you know generally you know in our experience the inclination is investors portfolios are always uh fully prepared to fight the previous war right is um you know we've looked at everything bad that happened over the last 10 years and we're prepared for all that bad stuff to happen uh in the future but generally you know the market takes the the path of most pain right it takes the path that people are are are least prepared for and so I think um you know over the last 30 years these sorts of more defensive strategies have been relatively out of favor um and so now it's an interesting time to start thinking about working them back into a portfolio yeah and so the things we always look at when portfolios and we try to share with clients and and for people to take a look at it it's like you know what can you have in your portfolio that does well during like thec bust of of of 2 to 2002 you know the great financial crisis of 0809 or even 07 if you're in real estate the coid crisis of 2020 um the inflationary effects or 2022 whatever you whatever we're going to call 2022 in the future is what can you have in your portfolio that'll hopefully do well during that and that's is why we build things like this defensive strategy that can hopefully do well in whatever that future war is without necessarily attenuating to the Past Wars um and so that's the way we try to think about it um and we you know can try to show you know what it could potentially do in a hypothetical scenario like in the past U but also with an eye towards the future of things we can't imagine um part of that though is what we've been talking about is like we love ensembles we love diversification we talked about rebalancing timing luck but we haven't necessarily talked about rebalancing specifically um and this is what we think about with our cockroach portfolio with this defense strategy or our cockroach strategy versus our defense strategy and other strategies is you have to rebalance these portfolio so maybe you could talk about that a little bit Yeah I think the again you've talked about you know go back to our March 2020 example the advantage there of having some sort of defensive assets but um you know long volatility cash whatever it's performing well is it's only useful if you're deploying that at that point right um You you want to use it to buy sort of the things that have that have sold off rapidly and and and rebalanced the flip site is equally true which is H you know think the the famous story was I believe cpers basically had a tail risk manager they were using for five or six years and they gave up on that manager in January of 2020 because they said oh this is a waste you know we just lose 3% a year or whatever on our tail risk position um let's Let It Go right they stopped rebalancing the tail RIS position and you know then you had the massive selloff in uh in March and they were unprepared so that the defensive strategies really only make sense if you're going to be rebalanced ing them with the rest of your portfolio which means both um you know taking money out of them when they've done exceptionally good over the last period um and also you know putting money back in so you know people whether that's monthly quarterly yearly a lot of people use rebalancing bands they say I want to keep this between 20 and 30% and I'll you know rebalance the portfolio at that point there's there's a bunch of different approaches um but some sort of rebalancing uh is basically prerequisite for this to make any sense the other part of our our industry when we're going back to you know why isn't Trend fallowing more popular I think that's part of it is unfortunately the finance or investing industry talks about stocks and bonds and then everything else falls into this bucket of ss you know like we even go to at the end of January we go down to South Florida for alternative hedge fund week but like what does SS mean to you like does that even is that have any meaning to you how do you think about when people say ults we were talking about this before we turned on the podcast I think everyone has what whatever you know you're an expert in right like you you see all the nuance and you see all the details and you hear other people that don't really that you know aren't involved in the details talk about this at a very high level you know that just makes no sense um but then you know you see it you see it happen somewhere else and you're like it's that kind of thing so I think like Alternatives or um like hedge funds oh hedge funds did good or hedge funds did bad um you know I think is a weird thing you know from our perspective to say because you know the difference between a long you know a value oriented long short Equity hedge fund and a trend follower uh are completely different things right you know it's uh it doesn't make any sense to talking it's like you know the food is good the food is bad and there's 250 things on the menu like what's good what's bad like they're all totally different things um it's hard to talk about them in those in those broad terms so I think yeah I think that's one of you know you know we like these terms offense and defense because a lot of what falls under alternatives we would consider you know Alternative forms of offense which can be great right you know real estate private Equity um Venture Capital Angel Investing private credit all this kind of stuff that are sort of considered Alternatives um those things can be great and they can have an important role um in the portfolio but you know in terms of looking at how they fit in overall we think of them as those are offensive things that you still want to offset um by defense so rather than using sort of stocks bonds alts you know nomenclature I think it's more useful to talk about offense and defense and then you know how you get exposure to each of those things you know you can be strategic within that context yeah I think a lot of times that alternative hedge fund week I'm using quotes is that uh like private credit and those sorts of things are in there and like you just said stocks bonds and SS it makes me laugh because the way we think about it a lot of times they're good they're good diversifiers um and they can have different liquidity premiums but at the at the end of the day they're still offense and most of them are highly levered you know Equity or debt and so they they would still be in the same bucket so calling those things alts that are are just leverage versions or or high-powered versions of equity or debt are still in the same offensive bucket or category that we look at so it's it usually throws us off a little bit um and then there was a I was telling you there's a great story uh just recently uh that David Rubinstein did a interview with Howard Marx and they were talking about in the last kind of year or two some of Howard Marx's letters and um at the end David asked one of his usual questions what do you do at a cocktail party if somebody comes up to you and says hey I have 100 Grand you know how should I invest it should I invest it you know in your funds that sort of thing and he said that's like coming up to a doctor and asking hey do you have any good drugs and so he's like well you know what's your malady you know what is your family history you know what are you trying to accomplish there's a lot more questions to be involved there than just the category of drugs or you know alts is another one that we always hate like when people similarly hate on like hedge funds like hedge funds can be anything that's like saying I hate llc's like it can be any kind of business in that LLC so it's just a it's just an intering category when we try to to simplify things too much uh we lose a lot of context and Nuance that are very important um there's the last last thing kind of want to touch on or talked about is before the fall after the fall so I'll let you kind of Riff on that yeah no I thought this you were talking about you know I I've my background was um running small businesses and working with small business owners I know a lot of people in that um that space and there's sort of um you know what the famous Mike Tyson quote like you know everyone got to plan until you get punched in the face kind of thing and so you know I think there's people that have been punched in the face and there's people that haven't been punched in the face there's some lucky people that haven't been punched in the face but have seen other people got punched in the face and go that doesn't look very fun um I'd like to not get get punched in the face but you know I think you know in practice this sort of defensive approach is probably going to appeal to the people that have been punched in the face uh or seen someone else get punched in the face uh and are thinking you know well getting punched in the face isn't so nice right that it it's not you know when things are going good and everything's great um maybe this isn't so good but uh i' I'd really like to not get punched in the face um too much over the over the course of my lifetime and so I think you know just from the investors we've talked to and sort of psychologically um I think I think there's a bit of that that mindset of you know um have you been through a situation where um things have been rough and and things have gone bad and I think there's also you know we can talk again you know we talked bunch about the even if you're not a that scario right you're the you know the relatively young investor and you're just trying to reduce that path risk or that timing risk that maybe goes you know I think there's a lot of other uses for for defense but you know I think you do have to wrap your head around that to some extent right that you know this is something that can happen there is path risk and it may not happen I don't know um but being prepared for that scenario is is sort of The Prudent thing to do yeah I was I was envisioning cartoons of of You cartoon version of you and I being like punch drunk boxers and like Mike Tyson's punch out that was great like the Tweety Birds around their heads or something but like you said it's like we talk about this all the time we build portfolios exactly for what we wanted right and because we realize you know we want to ride the good times like everybody else but we realize bad stuff does happen right and so we're just kind of agnostic about it but we prepare for it and you know just like everybody we think that you know a lot of people take a lot of concentrated risk to get wealthy and then to stay wealthy you're going to need that diversification but it also applies to like the young person investing you want that diversification to reduce the variance of your path that way you can compound more efficiently and effectively over time and you know just you know betting on one asset class like stocks has a lot of variants to it and like we pointed out you can go through multi-decade periods of being underwater so we try to diversify and kind of pair up offense and defense so no matter what that was the idea of Harry Brown that you can muddle along in kind of whatever Global Mac War environment we're in and all you really want is your savings to kind of like outpace inflation over time and be there when you need it most um and that's the way we think about constructing portfolios uh we'll put links in the in the show notes of both the audio and video uh where you can find out more information about the defense strategy that we'll be launching in the near future here um also you'll be able to find it on our new and improved website it's quite beautiful I I must say myself uh Taylor and everybody else has done an amazing job on it but you can find that at Mutiny fund.com um Taylor anything else at the end no uh yeah good talking to you we'll do it again uh hopefully not too distant future all right thanks everybody this podcast is provided for informational purposes only and should not be relied upon as legal business investment or tax advice all opinions expressed by podcast participants are Solly their own opinions and do not necessarily reflect the opinions of mutually fund their Affiliates or company's futured due 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