What Makes an Alternative Investment Truly Valuable? | Systematic Investor | Ep.364

Summary

• Market Insights: The podcast discusses the recent rise in bond yields, particularly UK 30-year bonds reaching their highest yield in 27 years, highlighting concerns over fiscal positions and debt levels in major economies.
• Trend Following: There is a focus on the trend following strategy, noting that while some sectors like equities and bonds have been challenging, commodities such as livestock and precious metals have shown strong trends.
• Investment Strategies: The discussion emphasizes the importance of diversification in investment portfolios, particularly through independent and uncorrelated markets like carbon emissions and Chinese futures.
• Dynamic Position Sizing: The podcast explores the concept of dynamic position sizing, debating its impact on trend following strategies and whether it leads to profit-taking or helps manage risk more effectively.
• Volatility and Fees: There is a critique of the declining volatility in hedge funds and the mismatch with fees, suggesting that institutional demands for lower volatility have influenced this trend, potentially affecting fund performance incentives.
• Alternative Investment Value: A paper discussed in the podcast compares various hedge fund strategies, highlighting trend following as a valuable addition to portfolios, particularly for its crisis alpha and drawdown reduction capabilities.
• Portfolio Diversification: The conversation underscores the benefits of blending different trend following approaches to enhance diversification and manage investment risks effectively.

Transcript

Imagine spending an hour with the world's greatest traders. Imagine learning from their experiences, their successes, and their failures. Imagine no more. Welcome to Top Traders Unplugged, the place where you can learn from the best hedge fund managers in the world, so you can take your manager due diligence or investment career to the next level. Before we begin today's conversation, remember to keep two things in mind. All the discussion we will have about investment performance is about the past and past performance does not guarantee or even infer anything about future performance. Also understand that there's a significant risk of financial loss with all investment strategies and you need to request and understand the specific risks from the investment manager about their product before you make investment decisions. Here's your host, veteran hedge fund manager Neil's Castro Larson. Welcome and welcome back to this week's edition of the systematic investor series. will mor and I Neils Castro Lassen where each week we take the pulse of the global market through the lens of a rules-based investor. And let me also say a warm welcome if today is the first time you're joining us. And if someone who cares about you and your portfolio recommended that you tune in to the podcast, I want to say a big thank you for sharing this episode with your friends and colleagues. It really does mean a lot to us. Morates, it's great to be back with you this week. It's been a little while since we've done one of these systematic investor conversation. you were one of the the founding co-hosts of this particular series many many moons ago. So, I've been uh looking forward to this. How are you doing? >> Likewise, Neils, thank you very much for inviting me. It's great to be back as a guest. Um I'm still one of your co-hosts with the Open Interest, but >> I'm really looking forward to that and um chatting about all things that um you know, you and I both find interesting. >> Yes, in Exactly. We're going to talk about some you know, usual wide ranging topics relating to trend following. We're going to be talking about a paper that the company I work with, Don Capital, put out last week. Um, so there's going to be a little bit for for everyone, I think. But of course, what I always like to start out with is something completely different, and that's just to uh see what's going on in your in your when you don't look at markets and you're not looking at the uh what the ALOS are doing. Um, what what else has been on your radar lately? Yeah, we're on vacation at the moment, so we're pretty much dialed back from things, but the the the one thing that I'm following is the US Open. I I really I'm in love with tennis. I love playing tennis. And you know, it's one of the four grand slams. Uh where I'm in the final week now, quarterfinals, it's just fantastic tennis. And by the way, the the the male and female tennis, it just every year it improves. Like I I think it does. It's it's a faster game. It's a more aggressive game. It's just you can see it. This this this game is moving forward and it's incredibly tough now. Incredibly fast. >> Now I have to ask you who's your favorite? >> I think Sinner is going to win this. Um >> he won last year, right? >> He did win last year, so this could be his first repetition of a grand slam victory. >> Uh he missed out on the French Open, but he did win Wimbledon and he did win the the Australian Open. though. He's just an incredibly fastm moving, fast-hitting player. Um, tough to beat. He just, you know, beat Bubble. Um, 6161 61. I mean, Bubick is kind of like on and off and volatile, but he's he's a great tennis player, very talented, >> and last night he won against his country mani in three sets. Like, he's not even he's not he's winning in three sets pretty much all the time. So, >> yeah, he's got to be tough to beat. Yeah. No, absolutely. And I did see there was an interesting other semi-final with Jookovic and Alcaras lined up for tomorrow. So, >> yeah, very interesting. And actually also I did notice there was a little bit of an upset I think in the women's on the women's side where the lady who lost I think pretty she lost 660 in the Wimbledon final. She she came back with a with a nice uh upset yesterday as far as I recall. >> Yeah, that is true. the the women's tennis is also getting so much better um every year, so much faster. Um it's great to watch. I watch both. It's just good fun. >> Well, I can time differences permitting. >> Sure. Of course. Well, I mean, I'll I'll mention what's been on my radar and there there's two two things that I found interesting uh this week. One is if I have to stay in the sports world, I'm probably more interested in the cycling, the welp at the moment. There's a Danish there's a Danish rider in the lead and that's obviously very uh you know for a country with no mountains I find it extraordinary that we have a a rider that can actually compete in these uh in these races. >> But the other thing more seriously um that I have found quite interesting is actually what's going on in the um uh bond markets. Um, I noticed that earlier this week, um, UK bonds, 30-year bonds, hit the highest yield in 27 years, even higher than the so-called list truss moment, which was a bit of a scare not long ago. And I think since you obviously are based in Germany, I think even German uh, long yields have sort of been ticking up and hitting some maybe not 27year highs, but certainly highs over a long period of time. I mean this is at a time where the ECB I think has caught eight times since 2024 uh about 200 basis points. So and of course the US bonds are flirting with 5% again. So I find it interesting uh also because it's happening at a time where the economy and the labor markets are not super strong. So um >> maybe there is a a 2022 lying ahead of us more which would be good for trend following. >> Yeah. And it seems that you know the gold market is sniffing out the issues potentially because what we see is really a steepening of the yield curve. Um you know we see the long end >> rising. Um you've mentioned the gills um the 10 year and the 30-year and also the books which is the 30-year point in Germany. Um these parts of the yield curve they're they're clearly rising um steadily. I don't know but yeah they're they're moving up and I think there is a concern that the you know fiscal positions of these countries the countries we live in um they're no longer strong in fact they are weak right I mean every country is kind of like in big debt um and it's obviously a relative definition of what is what is a large amount of debt and relative to GDP and what isn't you know when you think about Japan they have I think more than 200% of their GDP is is is is in debt True. >> So I don't know but overall this probably isn't a healthy position and market participants are demanding more of a yield um to buy these bonds which you know it's understandable. >> Yeah. Well turning to trend following not much yield except for a few um managers I guess this year has created um you know positive returns but you know the industry is coming back. We've had a a couple of months now where the footing seemed a little bit firmer under the trend following space. I know you guys have been doing well. Um and um you know there seems to be a few of the longerterm trends that have kind of reestablished like equities obviously things like some of the commodities like livestock live cattle is >> quite a fantastic trend for a couple of years now >> and of course gold as you mentioned uh it's been really good and and obviously a market where uh even big managers can take reasonable precise positions so has had a positive impact um and it's kind of classic, right? Because only a few months ago there were uh articles coming out um very disappointed with the returns of of our beloved industry. Um and then we see a bit of a a turnaround and um I mean who knows it might even end up as a positive year for the industry uh if it continues. But curious to know a little bit about sort of your experience in terms of interesting contributions maybe interesting changes in exposure because when I look at it from my vantage point a lot of the financial sectors uh which are generally obviously the powerhouse for uh certainly the larger managers um have been quite difficult uh for for various reasons. I mean, fixed income has been trading in a huge range up and down for a couple of years now. Equities, yes, they've been going up, but they've had these pretty quick nasty corrections, mostly politically uh driven. Um, that has made it difficult to hold on to your long positions. Um, and currencies have been also a little bit all over the place uh to some extent. At least that's how I have uh experienced it. Um, are you seeing the same or anything else of interest? and and you trade by the way some markets that I don't follow. >> Um for us it's really been a year of the commodities they are driving our returns. You've mentioned the livestock markets. So that's leanhawks, livestock uh leanhawks um live cattle and feeder cattle. All of these markets have been in strong uptrends and I think these trends are I mean as of right now they they're still looking bullish. So we have long positions in these markets. We're >> we're long in the precious metal sector. This is uh platinum, silver, gold. Um, all of that has worked really well and continues to work well as of right now. In terms of contribution, um, actually we've lost most this year from currencies, equities, and bonds. And that was around the liberation day period. Um, where all of a sudden we had these, >> you know, we started the year actually with um, a positive profit contribution from currencies. Um, and then you had these massive moves around the early April period where we got kicked out of our positions. Then it takes a long while to get back in if you get back in. >> Um, so we exited these with a loss and and there still year to date we have losses in currencies. We have losses in bonds and we have losses in equities even though you know when you look at the equity markets over the entire year since the 1st of January this year, they're they're they're up this year. Um, but not for us because, you know, we're trading long-term and we got kicked out in April. We made it back in. We're not fully exposed to all of the equity markets that we trade. There are some that we just don't have any long exposure to right now. On net net, we do have long equity exposure and we're also very much underexposed or not exposed to the fixed income markets. Um, we do have some exposure there, but a lot of these markets we got kicked out and then our systems determine them to be still trading rangebound. So, we just don't have a position. Um, you know, the the bubble is one example, the SHTS is one example. Um, maybe that'll change in a couple of weeks, but as of right now, we just don't have that. But yeah, we have these long-term positions in in the livestock markets, in the precious metal markets. We're still long coco even though like since years even though this market has kind of like stopped moving higher but it's also it hasn't moved down enough yet at least not for us to call it quits. Um coffee has been difficult by the way. Uh we've had this strong bull market in coffee which was great for us and then moved down now it's moving up again so we kind of like reversed going back in. But yeah, overall Neils, it's um it's a good year for us. Um so yeah, um definitely not complaining. I never complain. It is what it is. >> It is what it is. That's that much we learned um over the years. That's for sure. Yeah. Yeah, know it's interesting you also mentioned this uh fixed income because although I said it's been a difficult sector actually also think there's a little bit of a um um quote unquote disagreement among managers right now or the models uh as to whether you should be fully long or fully short or somewhere in between. When I look at the daily returns of the um mutual funds for example where you can see daily moves um yeah it's not actually moving uh in the same direction every day and it seems like it's really driven by what bonds are doing. So that would be interesting to follow. But of course this is also why um you know investors have a choice to uh mix and match uh the managers, the time frames, the speeds and all of that stuff that they want and not least of course the markets traded which is so important. Let me quickly run through uh where we see performance um now that we are in early September. Um so not a lot of trading going on so far but still uh positive start beat up 50 up 27 basis points down 2.68%. 68% for the year. Uh the stock gen index up 22 basis points still down 6% or so for the year. The sochain trend index up 36 basis points down seven and a quarter for the year thereabouts. And the maybe a surprise uh this year is the for me the shock sochain short-term traders index um it's flat so far this September but it is down 6.46% for the year. um and that is a big number relative to the volatility to that index. So uh that is something we may discuss later on uh today actually. Then in the traditional world um Msei world is down 40 basis points as of last night up 13.6% for the year. The US aggregate bond index is up six basis points but up almost 5% for the year and the S&P 500 total return is down 16 basis points up uh 10.61% 61% so far this year. Now, Morates, we uh we didn't coordinate really our topics um far in advance. I think that's fair to say. A few hours ago, we kind of exchanged ideas. We um so I'm going to kind of lead with some of the ideas you wanted to talk about. Um I think we're going to weave it into some of the things that we had planned uh in terms of there's a an article out from Trans Trend which uh touches on some of the same points. Um surprise surprise as I mentioned Don Capital has made a paper that we can we can talk a little bit about uh but more from a maybe a benchmark or industry point of view. Um so what are the things let's dive into some of your things what are the things that that that that you find interesting important about the space at the moment some of the discussions that you're having um let's dive into that >> yeah one of the topics which I really like is is diversification and the number of markets that we trade and not necessarily the number in terms of does it have to be 100 or 50 or 200. It is more the composition of the portfolio that one is creating. Um, and you know, some people distinguish between the traditional markets, um, or alternative markets. I'm not necessarily a fan of that term. I think they're all markets. But the way we approach the composition of our portfolio is to find as many independent moving items as we possibly can. And with independent, that may be uncorrelated, but you know, they really should be distinguished in and by themselves. So, um, cocoa and the S&P 500 or sugar and orange juice probably don't relate to one another. They just have their own they they they dance to their own drum beat and that is what we want. Um, California carbon emissions don't have anything to do with the 10-year note. That is what we want. So, we're building a portfolio of these constituents where ideally there's just nothing that links between them. That's akin to if you go to a casino and you play blackjack, you play many different independent tables and you always play a different, you know, hand. There's a different set of cards there. They're they're not correlated. And we have this, you know, small little edge with our trend following system. So, if we can apply it to as many independent markets and return streams as we possibly can, then in expectation our um return stream will be improving. So I'm not saying that one needs to have 400 markets. Um I'm also not saying that 50 markets is wrong, but and there is no wrong or right. It's just the way we do it is we're building a portfolio of as many independent constituents as we possibly can and we've set up our funds so that we can do this. Um so we're now adding some of the Chinese futures markets which um you know we found a very nice way of doing and they're just very diversifying. Um you know uh canola is very diversifying, lumber is very diversifying but obviously you cannot scale these markets into the billions which is why we've made the decision to limit the size of our firm or our fund to 500 million which by the way is a moving target. That is just a best guesstimate as of the liquidity profile that we can see right now. It might actually be 300 million or 450 million or 700 million by the time we get there. Um, but we like it for these markets to continue to have a footprint and a meaningful footprint inside our portfolio. This year is a good good example. you know, feeder kettle and life kettle and lenox. I know CTAs, most of them trade that, but they're not the largest markets in the world. They're definitely smaller than gold in the S&P 500 and the 10-year nodes. So, if you run a multi-billion dollar fund, um your footprint in any of these markets might become too large or you may not be able to efficiently trade them without um a lot of market impact. But for us, it's important to have them. >> Yeah. a couple of things to to to kind of follow up on um from what you just said. Um first of all, by the way, um you mentioned carbon. I very much enjoyed your last conversation uh on the open interest series uh with Mike about carbon trading. I learned a lot. I I don't know much about carbon. There was a lot to learn. I thought it's very interesting. Uh you mentioned now that you trade California uh carbon, but but I think actually the main carbon is still Europe as far as I recall from the >> correct >> conversation. But these are not are they futures markets or are they? >> Yes. >> Okay. >> So they're um they're all futures markets. The EUA, the European Union allowances. Um this is the largest and the most liquid market with screen liquidity. So you can go there right now. They trade on ICE um and uh on ICE index and you can just you know uh bid offer maybe you know a cent or two. Um so you can just trade them very efficiently. The same is true, smaller market, but also screen liquidity on on UKAS. That's the United Kingdom allowances. These two markets, the EUAS and the UKAS, they're relatively correlated to one another right now because there is a tendency for these markets to remerge. Um they, you know, want to relink these two emission markets uh in the future. At least there's an initiative to work toward that. With Brexit, these markets decoupled which um also decoupled their correlation properties. Now a CO2 molecule is the same everywhere in the world. Uh but all of these markets are trading differently. So California is absolutely uncorrelated um to EUAs and the EUAS are uncorrelated to the Reggie market which is the east coast of the US. Um it's it's interesting. Um so you have so by the way CCAs CCAs also trade on um trade on ICE. It's a futures contract but that is a brokered market. Um so you don't see screen liquidity or very rarely do you see screen liquidity. It really goes through specialist carbon brokers and then you trade with them there that your execution broker and you clear with your FCM your clearing broker at the end of the day if they support that market. And that is true for quite a few of the markets that we trade. um we don't necessarily think that as disadvantage doesn't make these markets some people call it crappy futures markets. I don't agree with that. There's just futures markets like all the other futures market. It's just maybe through history or the way market participants you know operate in these markets is is using a broker structure. Um South African grain markets they're not the largest markets in the world but they tend to be brokered markets. there's some screen liquidity there, but really, you know, you go through a broker. Yes, that costs a little bit extra uh a penny here and there to get the execution done, but you're probably getting a better execution than, you know, just going um going on screen and and lifting offers and hitting bits. So, >> so were so were you inspired by Mike's uh idea, which I actually liked. I mean, obviously they're carbon specialists, but the fact that they take part of their performance fee and they buy these carbon credits and then they burn them. people can't. So, companies can't use them to offset their emissions. >> We don't we don't do that. I uh I I give a lot of kudos to Mike for doing that, but it's more in line with their fund and their objective and the way they position themselves as you know, they also want to have an impact. >> We need to be very clear and honest with the way what, you know, we're we're a hedge fund. We're a commodity fund trading systematic trend strategy. So, we're not really mixing this with um with a climate impact strategy. Um, we can do this privately, but we've been, Neil, we've been trading these markets for quite some time. Um, >> yeah, >> they're they're not new to our portfolio. >> We're not trading New Zealand. We're not trading, you know, some of these very small emerging um, carbon markets, but that is simply because we haven't found a good way to access them. I'm sure there is one. Um, it requires some digging. It requires some setup. But, you know, all of that is time inensive. it does have some operational complexity which we're always cognizant of. Um we're always cognizant of the risks um when we access these markets so we don't have exposure there but yeah California is great and and the EUAS and the UKAS as well they're very diversified. Yeah, and that's actually that's kind of another thing I was inspired to ask you about when you started talking about this. And that is uh and this is also related to the paper we uh I think both briefly uh read uh that uh our friends over at Trans Trend uh produced uh where they talked about well they didn't talk about it directly I I guess but what you could say indirectly is this question about yeah we try to diversify through different markets but actually do we now as managers also have to think about where they're traded not just what we're trading because I mean in the carbon market you clearly you're doing it. But they're using this example with copper which I think most managers will be aware of. Uh copper had a very interesting uh couple of uh market days uh due to the tariff issue but it was the US copper not the Europeanbased LME copper. So there you could see very different reaction patterns um certainly on the I think the last announcement maybe not the first announcement. So, so do you think as managers I mean first of all should we encourage um say European and Asian exchanges to list some markets um that may be only traded right now in the US given the fact that it seems like now policy uh can have an impact um uh or um or should we just think about it more generally to to actually say well it's fine to trade the same market if they're traded you know in different places and we just divide up the total risk we want in that market. >> Yeah, this is more akin to what we're doing. Um, you know, the Comx copper or the CME copper market in the US and the LME copper market, they tend to be very highly and persistently correlated and now they've decoupled. Obviously that's been they're now kind of like recoupling again but you know with the risk of that correlation structure breaking again in the future if you know the tariff onoff uh dynamics continue um you could make similar arguments about you know London sugar and New York sugar and London coffee and New York coffee cocoa markets >> they trade in different locations the delivery mechanics um the warehouse locations what can be delivered from where they they're different. They differ between these markets, which means they can at times have different prices. They, you know, tend to be very highly correlated, but they're really not the same. Um, the grades may be slightly different or the delivery mechanics are slightly different. That's one of the reason why we trade them. Um, we trade them all. And in the case of copper, I mean, nothing really much has happened with our LME copper position. that was just you know um you know it didn't have these gaps these discontinuities but the comx copper position that we had on um we were long copper in in in the US and we enjoyed the spike that happened when you know the first tariff on announcement came out like yeah boom yeah we were on the on the right side of that right >> and then we took it on the chin when the opposite happened um >> and it's I think this is what I wrote to you about is this is one example where you have these massive viol it moves it. It does make a difference whether you have a resting stop in the order book um and you kind of like you know you have a resting good till cancel order um to sell out of your copper position to close that copper position >> or if you do not in in our case we do not have these resting stops in in the order book for several reasons. Um you know we don't want these orders to be seen. Um but also like you know in in the case of in in the case of copper we had big slippage because you know our the radical exit was north of five 5.17 or something that we got out at 4.6 so around there. So so big slippage in in this instance because we have a delayed exit like you know we get the signal to exit the position we do the next day. Um, sometimes that works for us and sometimes that works against us. When we do it over all of our systems, all the markets that we trade, we find that there's actually an improvement to have these um delayed exits where we kind of like, you know, wait a bit and then get out of >> the exit or do you do it on the entry as well that you wait for a day to um >> we also like we correct. So we get a signal to take a position based on the last available settlement price and then we would implement that signal >> um usually on the next day settlement. So we're not immediately hitting the open um we don't have stop orders to get into positions. >> Yeah. >> But you know Morris even if you had stops and and of course we we have this debate between and we'll come to that a little bit later in terms of how you manage risk through the trade and all of that stuff. I mean, even if you had a a stop in the market, you probably wouldn't have gotten a much better price if if at all uh compared to waiting a day. And I also remember actually one of the very first episodes I ever did with a manager. The manager doesn't exist anymore, but uh I remember that this is back in 2014. They're very successful at the time and had a decent long track track record. I think either they did it or they had found that delaying your actual execution by a whole week was a better which sounds like crazy um but it was actually better in terms of uh overall returns in the end compared to just reacting straight away. Um kind of interesting. >> Yeah. I mean overall just to maybe put this into perspective it it doesn't make at least for the way we trade it doesn't make a world of a difference. Like if we had the same systems run on a stop basis with kind of like resting stops in the order book or with our delayed entry delayed exit type of methodology that we're currently using. You overlay these two charts, they're pretty much identical. It's it's not that like it's not you're not creating a different an all to different experience. The delayed entry exit rule or it's not a rule, it's just a mechanic that we're using actually produces slightly better returns. Um, so we're using it for that reason. We're using it because we don't want to have these stops being picked off in the order book. And sometimes, and I think I also mentioned that to you, you have these spikes in the market. Translimes reports about them. Um, and I enjoy reading that is like just wild price moves um caused by whatever some market participants, a glitch, um, whatever it is. So two weeks ago you had a massive move in the South African rand which is one of the markets that we trade against the dollar and you know if you have a resting stop you get you get you know hit you lose your position and you're out of it. But it was just like one of these second events you know where boom boom it just goes up a massive amount and then you're back down to where you started. We just don't want any of these um like oneoff random price events to kick us out of a position and um interfere with our models. >> Yeah. Yeah. You mentioned in your uh email to me earlier today something like simple derivative free indicators support resilience and robustness and remove unnecessary complexity. What what did you um what what did you have in mind when you wrote that? >> Yeah. Um so removing complexities from a trend system is a good thing. Like you have to stick to the system. You have to give it some time. We all know that in order to you know get the benefit of of its workings. Um one of the ways to create robustness and increase resilience is to use relatively simple rules. All comes Razer. Don't overdo it. Don't get into the curve fitting trap or the overoptimization trap where you put on yet another filter to do this and another filter to do that and you know all these parameters that you're using which are usually just a way to improve your back test but not your future returns. M >> and what we find is that in terms of indicators to get us into positions for example there's you know some which we put put into the derivative free box such as is the price today higher than the price 100 days ago and that is a very simple nothing else required than you know these two prices and you compare one against the other or has the price made a new 200 day high. All right again there's no derivative it's just is the price higher than the high price 200 days ago over the past 200 days. A derivative-based indicator is for instance a moving average. A simple moving average is already a derivative of price because you're putting in 200 observations of past prices to come up with the latest calculation of your simple moving average. That doesn't mean that a simple moving average doesn't work um or any of these other indicators doesn't work. In fact, they do work. But we try to stay away from it from them and just keep everything that we do as clean and free of complexities as we possibly can. That's what I wanted to say with that. That makes a lot of sense when I hear it. But then I also think about all the conversations we've had, especially when Ellen and I talked to the constituents of the Sockchen CTA index. And I would hazard to guess that certainly the Europeans, the large European firms. Um, a lot of them actually uh started out using moving averages and are still using moving averages. And it's kind of interesting to me that that on one hand, you know, your research might find that actually doing it in a simple way, uh, and I think I think we all agree on that simplicity is is good and and you don't want to over complicate it. And but I also find it interesting at the same time that some of these large managers which you know by definition have been very successful even though they may not have produced the highest returns but they've certainly done it for a long time um are maybe still using uh somewhat more complex if we define complexity as using say second derivative information >> in their uh methodology. Has this also something to do simply to you know size meaning that if you if you have large AUM you need to do something that gradually moves risk uh rather than say maybe a stop and reverse or or stop you stops or >> well you you could also do this with the the simple indicators. you could also like smooth them out over time and you know um get into positions over a period of time if you're doing different look back windows. >> So I'm I'm not saying that the moving averages don't work. In contrast, they do work when we research them. You know, you can make money um trading off of a moving average. So I guess it's more of a philosophical quantity thing for us uh to stay away from them. >> Yeah. >> Most of the it's it's kind of funny. the the least important thing uh for the way that we trade, the least important signal and also the most important signal at the same time is the entry. It's the most important because if you don't take the entry, you don't have a position. But it's also the least important because whether you're getting in based on a moving average indicator, a breakout, or whether you're getting in today or 3 days from today, for a long-term trend following system, it doesn't move the needle that much. Obviously you will see a difference but the longer you hold the pos the position the more that difference um you know goes into the background and it's actually not that important anymore. So when you when you think about this and like you know 70% of our trades are losing trades only 30% of them are winning trades. This signal has almost it has such a poor quality already that you kind of think like why are you doing this? And then it's so why do we make that money sometimes is because we're just ruthless in keeping these losses small. Um it's the that is that is one of the most important things the way we size the initial position the initial stop placement like how much room do we give the position to develop >> and how how do we then exit the position at um at the end of yeah at the end of the trade which is on a reversal on a give back you know there's some methodology to get us out of the position >> so if you had to rank I mean because I think a lot of people would be interested in find what is the most important when you design the system, right? So, if you had to kind of rank it a little bit, um, if we say, okay, actually the entry point, let's obviously say take it as an assumption yet that you do get into the market. So, we're not discussing whether taking the signal or not, but >> you know, if if the entry point is not super important and actually I find that if you look at different types of trend following, I think more or less we get in more around the same time. Obviously speed will determine how early, how late, but still more or less the same time. But what what would you rank as being really kind of the key drivers of success then in um in designing a a trend following system? >> I think markets the number of markets not the number the diversified property of your portfolio is is really important. Keeping losses small and letting these profits run uh appropriately sizing trades. We we know that um you know from our research but also you know Tom Basso I think has done this. You can actually use a random entry methodology um and if you randomly enter the market and you have a rule to keep losses small and let profits run you end up making money. >> You can improve the random entry through signals such as a 200 day high or 100 day high. So, what we do buying on a high, as silly as that may sound, because we're buying something on a high point, which is kind of like counter to what most people like to do, but that improves a random entry signal. Um, so it's it is it is good. If we could improve this even further, I mean that would be fantastic because obviously if we have, you know, the the lopsidedness of our return stream, we have a positive kar, but we are able to do this because we have the occasional outlier, but we're doing this in the face of 70% losing trades. Obviously, if we could improve this and move from 70 to 60 to 50% losing trades, our returns would go through the roof. But it's very difficult to find something that is statistically significant and better than buying a new high. Um, you know, or in the case of your maybe moving average, if the moving average, if there's a crossover, use this as a signal. This is better than randomness. And this in combination with keeping losses small and letting winners run in a diversified portfolio with really independent bets is a great system. And it's very robust, very resilient, very protective to your capital, which is what most people sometime or not most many people sometimes forget because when you we trade with our volatility, you know, a single month can be a big down month, it can be a big up month. So, it kind of like looks a little bit wild, but we're really keeping losses small and we're, you know, preventing um these losses from deteriorating the portfolio where the uh you know, the the the compounding drag, the volatility drag really becomes such a big break where it's very difficult to recover from the from the draw down. >> Yeah. No, no, absolutely. I mean, you did also mention actually um the the beloved topic of dynamic position sizing in your note to me. I don't know if you want to go down that route. Um it's been interesting to see. It's been interesting to see. Um I think that I mean there are a few um we probably know all of them um that simply won't you know adjust positions um you know within a within a trade. Then there are a few who uh would probably do it but not necessarily in the way that most people who adjust positions do. I think you might be one of them. I think even rich might be one of them or at least maybe not the position size but certainly the stops could be vault driven or whatever. And then there of course uh people like uh Assad Dunn and many other people where we say well actually we do want to uh recalibrate the position size on an ongoing basis not necessarily based on V could be based on risk and so on and so forth whether it makes a big difference in the very long run um I don't know because sometimes it can be hard to see the difference in long and here I mean really long-term performance of managers. they'll be different along the way but that could also be driven by as you say market universe which is clearly very important uh in determining um managers returns and I think even you sent me a link I didn't read it in details I don't know if you did but I think man just published a paper that I might discuss next week in more detail with Katie um about dispersion of managers and some you know what they have found in in that space um but clearly all of these small decisions that we we take in our design makes a bit of a difference. Uh, of course. >> Yeah. Yeah. It's the the evergreen topic of dynamic position sizing and there's, you know, so many variants of dynamic position sizing that is very difficult to really capture it. >> Um, but like let's just distinguish that there is kind of like this volatility based or volatility and correlation based dynamic position sizing which some funds are using. we're not one of them where they respond to changing volatilities and changing correlation properties and they would adjust their positions because of that. So this is this is one form volatility targeting. There's a lot of QIS indices out there by banks that use these type of mechanisms. They create a more steady return stream. It's smoother. They like you know you have less of a risk of a big loss. Obviously there's it's not without side effects. Something has to give. But this is one way of doing it. And then there's there's other ways where people use valued risk or they use a risk based metric. Maybe this is where where you come in where you have like a heat component or how much is the risk if you know we went to the stop of the position. How much are we therefore willing to lose uh on a portfolio or market basis if if all our positions hit that stop. It is also a form of dynamic position sizing because you would react and adjust the position post the initial trade. But it's a different function. It's not volatility and correlation based. It's based on the risk that you observe in your portfolio and which you're willing to trade. No matter how you slice and dice it. Um, and I'm not critiquing the riskbased stuff at all. I think risk management is an important um part of portfolio managing inside a portfolio. The most important one is the initial trade sizing. Um, but all of these trades tend to be profit taking trades. When you think about, you know, when when do you have a big volatility burst and you're in the right position, it's like this copper thing that I've just mentioned where, oh yeah, we're, you know, we're making all this money because of the initial tariff tariff on discussion and obviously there's a lot of volatility now in the copper market. You'd be reducing your size um because of the volatility that you're experiencing from that market or also from other components at the same time in your portfolio. So, but you're in a fitting position, you have this long copper position. Um, the kind of like very crude, very basic first rule is to cut losses short and let winning trades run on unconstrained. So, you're taking you're taking some of these profits early. And the same would be true um for risk based or heat-based um risk assessment where you say, okay, the market has moved, gold is now a good example, right? gold has in the past couple of days um really moved quite significantly to the upside um on a long-term trend following system depending on how you set your exits, but the odds are that um the distance between the last price and your stop has no or or your exit has now increased and there is more of a of a more of a gap between these two points which means there's more of a portfolio risk more of a give back risk and if you're calculating that and you say I don't want um I don't want that much you know I can go until here but then no mass um you would now also be reducing your gold position in a long-term uptrend um because of that calculation. So that would that would also be a profit- takingaking trade. Right? Now the more frequent you do this, if you do it based on volatility, these trades become kind of like mean reversion trades where you go on and off and on and off and you know all these type of dynamics that take place and they are not without consequence. I think it's you know the obviously the implementation cost of these traits that's one component. you know, you're paying commission, you're paying bit offer, you have implementation costs to do this in the first place. But getting rid of these um big outlier trends when you when you're in the position reduces the asymmetry of your trade distribution. And it's a question of taste really, I think, is like how lopsided do you want your trades to be? Do you want to be um a fund that really like takes these trades and lets them run? And this is like you know this year is going to be defined because of gold. This year is going to be you know defined because of the return that we made in livestock. In our case we don't mind that. Um, and there's other funds that don't want that necessarily because when you trade that way, the give back potential, the draw down potential is also much larger because you just, you know, you're taking these positions and they're fully loaded, fully sized, and you just let them go into the lottery ticket, the left tail or right tail lottery ticket, um, where you've entered the draw and you see what happens. And obviously, if you if you interfere with these trades, you're you you smoothing out your return stream. you're kind it's kind of like a rebalancing process that takes place and you're also reducing the risk of that major draw down um or that major loss because at some points these markets usually reverse but you're also cutting short that asymmetry and you're also cutting short the you know potential you know massive year that you could have. So it's a question of what is it that you want? Um and especially during times of like these big stress events maybe in markets I I I tend to think that what you want is really that punchiness um something from that you've mentioned that in your paper that is actually quite valuable you know to be there and then really have these punchy returns that help investors with other investments in their portfolio. >> Yeah. No, I mean of course what you just said is absolutely true. Um, and of course this is often sort of the case that's being made for for uh for that approach. I will say though I'm not um I don't agree with always the way it's portrayed because I think also it's you know there are obviously as you say kind of single day or two-day event risk where you can just get stopped out if you if you use that kind of approach. There's also of course the the the very real uh situation whereby yeah you may see that positions are being uh reduced at certain times even if the trend is still in place. Um but you may also see that if there is a correction or if there is a period then of of volatility dying down or some other whatever the factor is that drives the position size that these positions get increased again. So, it's a little for me it's just a little bit more of a nuanced uh but what I do like about the the the different approach is when you blend them so to speak you actually diversify the investment process and that that kind of diversification is also very valuable because as as we talked about yeah sometimes one manager might stay in a position and other managers might get out and and that actually helps I think overall and which is also why when even if people look at trend followers and they they see that the correlation long term is pretty high. They're certainly not the same and uh you should always find probably a few to to blend together if you um if you want to get the most out of it. Uh unless you just happen to be pick the very best one. >> Oh, it's funny. Um one of our investors and it may be a person that both you and I know at some point Yeah. told me because we've been talking about this dynamic position sizing stuff now for two or three years and especially you with you know some other participants on your show and and he kind of like said you guys have to stop talking about this we as investors we just do not care whether you DPS or you do not DPS at the end of the day it's about the performance that you make um how much money you make what your whatever your definition what your sharp ratio is whatever the definitions are but whether you've used dynamic position sizing to get there or you didn't use dynamic position size to get there just doesn't matter to them. It seems to matter to us more from a kind of like you know where who's right who's wrong but yeah >> I think it depends a little bit on investor type I think that you're right I think sort of family offices high net worth individuals they probably don't uh care frankly as you say I think when you get to the institutional level where people are kind of get paid for doing long reports on the managers they invest in and they kind of want to understand uh all the details it probably does mean something to them to to be able to kind of clarify these points. But anyways, that's a side issue. By the way, just one thing before we move on. Um, one thing that was interesting that I picked up from one like one little paragraph from the trans trend uh paper, you may have you may have seen it yourself, but at one point they write it may sound a bit counterintuitive, but we would argue that in a scenario like this, and they talked about the the copper situation, what happened, an unprecedented large global event, and this is also the tariff um in April, I think more diversified programs will generally lose more than less diversified programs. I thought that was kind of an an interesting which I mean they also explain why it is and and and and so people should go and and read it. But I think it's one of those things where people say well hang on how can that be? I thought trading hundreds of markets would always be less risky. But they're saying well not always. you have more components in your portfolio and if these components have positions on which by the way we don't necessarily force we don't force our systems to have a position in the market there's many markets where we just don't have a position and to us that is the same as having a position just the position is neutral but I I tend to agree with that paper um when you have these big big big events you know there is a correlation event there is a correlated behavior tendency of markets and simply because of the fact that you have more markets on will probably make you experience a larger loss on that day. As I promised in the beginning, as we're starting to uh slowly um run out of time, but before we do so, um although August was a pretty uneventful month for us at Don, it was an eventful month because we rarely rarely publish any papers. Um but one of my colleagues found the time to uh put uh paper to uh or pen to paper I should say uh in the summer month and we we wanted to basically do something a little bit different because there has been so many papers published over the years. I remember the first paper I came across was in 1987 about John Lindner arguing that if you combine non correlated asset classes like managed futures which I guess it was called back then um with say bonds and and and equities you would be able to increase the overall portfolio returns and decrease the overall portfolio risk. That was kind of where it started and we know since then there have been plenty of papers uh talking about this. But one thing that we wanted to do maybe a little bit different uh that I haven't seen too many papers of is actually comparing the universe of alternative investments to see well what if you could have to pick one maybe two what would be called kind of the most valuable uh alternative investment you could find. So that would be kind of one question that we wanted to ask. So we looked at I think 14 different hedge fund uh strategies from private equity to longshot equity to um global macro and credit and all of that stuff. Then we also wanted to uh ask the question and that is well within uh the alternative and strategy space how about leverage how about volatility? Does it actually um have an impact positive negative? um if you if you have something that is a little bit more highval and and one of the reasons why we wanted to ask that question is that we uh we did a little study uh which is just simply taking the uh longest running uh CTA index which is the Barkley CTA index and which goes back to 1987 I think and we did a rolling three-year uh volatility uh assessment so what's the rolling um annualized volatility over 3 years and It's very interesting because back uh when I started in the industry um the volatility was usually somewhere between 20 25%. A number both you and I will recognize because that's what our firms are kind of uh where we are still. Um but then the industry volatility really took a big dive in the '9s and then has continued. So the rolling three-year analyze volatility of managers is not 20 25% anymore. it's sub 5%. Now, you and I probably uh have an opinion about why that is. It's the instit in institutionalization. It's maybe the flat fee um asset gathering type approach that we see. Whatever it is, it has a real impact for investors who need to decide on um where to put their money, how much to put uh their money uh to work and the efficiencies they get. So those were the two things um that we wanted to to look at. And um before I forget, by the way, there is a way for people if they want to follow along as they listen to this conversation if and and there are two versions of the paper, but the one we can publish uh publicly um where we use the the industry benchmark uh for trend. So it's not representing Don's numbers here. Um, you can get a copy of that if you go to toptradersunplug.com/highvalltrend. [Music] So toptradersunplug.com highval trend and you can get a copy of that. So I encourage you of course to do that. Now I'm happy to talk a little bit about it. I would love to hear your thoughts but not surprisingly we start by just looking at these different strategies uh over the 25 year uh worth of data that we have for the sock trend index. So we looked at all the indices at least those that were around for that long a couple of them started uh after that time but we put them in and we see okay what's the total return what's the kar what's the annualized volatility what's the sharp what's the max draw down and also what is the max draw down in relation to the volatility of the uh strategies and of course as you and I know most people would just say well let me just look at the sharp and let me find out whether this is a good investment or not and of course to no surprise for the people listening to this conversation and who have been regular listeners. The sharp ratio doesn't make trend following look very good. It's not it's not bad but it's not it's not great either. Certainly not in this company. Um now there is one thing that I do find interesting in that simple table is also uh something that I gravitate more to talk about with people or at least make them aware of and that is well what's actually the max draw down in relation to the volatility you trade because a lot of people think of volatility as being the risk I think and I have a feeling you might agree that actually it's probably more the loss you can experience that is the real risk. So what is that draw down in relation to volatility for us? That's at least an interesting point. And of course when you do it like that trend following comes out uh on top of all of these strategies including by the way the S&P 500 and the um world government bond index which we also include. The next thing we do is we try and look at well you know these returns are obviously overall important but what about um you know the timing of returns a timing of returns important uh for investors. So we look at correlations uh we look at convexity we look at skew and of course this is where it starts becoming a little bit more interesting when you look at it from our vantage point because trend following starts to to pick up a few places to say the least when we when we look at that. So that was the next thing we started um in you know being interested in. Um then the the third thing we said was okay well let's look at what happens when you start putting it into a portfolio because although a lot lots of people like to think about sharp when they compare managers and strategies of course sharp was never invented to use as on single line items it's a portfolio tool so it makes sense to maybe look at the impact uh of these alternative strategies when you include in this case we used a 20% allocation. Uh so instead of a 6040 it became a 50 3020. But again we do it for all the various um um strategies and of course this is where we start seeing something really interesting happening both when you use the industry benchmark so the stock trend index but also this is where we start seeing the benefit of maybe having adding leverage to the strategy. um maybe not as much uh as when you look at draw downs. I'll come to that in a second. But certainly overall returns of that portfolio uh increases uh a lot. The sharp is a little bit lower but okay that's how it is. Of course the max draw down uh benefits also from having more of this non-correlated or even negative correlated at times strategy involved uh or invested in it. Um and then finally we start looking at okay specifically if we if we objectively say a crisis in equity markets is more than 20 25% or more uh draw down in the S&P 500. So we're not cherry-picking uh as such. We're just saying this is the criteria. You come up with five crisis, sorry, four crisis since uh 2000. And and this is where of course uh trend following really starts to to shine in terms of the the reduction of draw down to the portfolio relative to all the other strategies uh in terms of what they uh would have produced. So those are some of the um you know the highlights and people can go and read it. Um but uh of course I'm I'm curious to uh to hear your um your thoughts. I'm I'm sure the conclusions are not not a surprise to you. Um, but I don't know if you've ever looked at all these other hedge fun strategies that we are compared to and of course that people often prefer because they look safer when you look at them on a standalone basis than than what we do. They might even look better performing um in some cases. So was there anything? >> Nothing controversial. First of all, I do agree with you that volatility is not risk to us. Volatility is also opportunity uh to get into very interesting and potentially lucrative trades. We've done that research Neils. We've selectively shared it. is not something that we can put out on social media but you know we've not only analyzed the CTAs and trend following funds but also you know other hedge fund categories with the data that we could find from databases and very clearly what you can see and you know some strategies the deterioration and the decline and realized volatility has happened in the '9s for some it has kind of like started 25 years ago um around the change of the millennium but very clearly and now statistically significant the role Rolling 12-month volatility. You can look at this and observe this obviously over different time frames, but you know, I'm just using the 12-month volatility here. Rolling 12-month fall is really just downhill downhill downhill. Um, essentially the volatility has um hedge funds used to produce and generate a much greater or 2x times the volatility on average that they're doing today. That by the way is also true for trend following funds. Um so one of the questions naturally that comes out from this is why has that volatility declined? Why has that happened? And obviously I do not have the definitive answer and nobody will have the definitive answer. It's a decision that each of these funds has kind of like made for themselves. But we can at least hypothesize about a couple of things. One easy one would be size. Um the larger you get as a fund um you know you go from a 100 million to a billion to 10 billion we've seen this like went more than 30 billion at some point um the greater that portfolio the greater aum the more difficult you will find it to implement these trades forget about trading some of the smaller markets that we've mentioned at the beginning of this recording like lumber and OJ just you know these have already dropped by the wayside then but also in the traditional larger markets if you want to get a 30 billion portfolio to work. Um, you know, it just makes sense to trade smaller. Trading smaller or having a lower volatility target. If this is your objective, um, if if we're using volatility now as a objective function, then if you lower your your volatility by by 50%, it means you're trading half the number of contracts. Um, so that means more scalability, less market impact, less slippage, you know, all these type of things. So, so that that that's one thing. size could be one thing just the size of your own fund. M >> the other reason for this and this could be in combination with number one is a response function to institutional investor demands and this is also clearly it can be seen over the past 25 years the big tickets are written by institutional investors the sovereign wealth funds the pension funds and so on and most hedge funds are looking to get investments from these clients because they can be very large sticky lucrative um they can open other doors right? Because it kind of like it gives you a pedigree if you will. Um now the the willingness of these investors on average um to experience large draw downs or large monthly losses is is much smaller relative to say a high net worth individual investor that has a diversified portfolio of things. That is because these allocators are usually paid career risk. um you've mentioned at the beginning of the recording there's a board that oversees all of these type of things and assesses it at the end of the year or periodically and you just don't want to look stupid um you know as an allocator to invest or allocate to a higher volatility investment that you know occasionally does go the wrong way and then you you're kind of like responsible for that right so also so in response to these institutional investor demands the hedge funds could have lowered their volatility. I'm sure they will have. Now, the the the kind of like weird outcome of this is is that the fees really haven't changed that much. I mean, over the past 10 years, we could observe that the 2 and 20 model has kind of broken and it the average fee has declined. Now, that has reversed with the multistrat funds. The hedge fund fees are actually increasing again. Um, but what I find very weird is that the fees had have not come down commenurate with the reduction in volatility. And some of these hedge funds, they're kind of like now in the singledigit per year return business. And I kind of like asked myself, why why are you in the in the hedge fund business, which is tough enough to begin with with all the regulatory constraints that we have, all the things that we need to do if you're shooting for single-digit returns. And investors apparently have uh put a blind eye to it. they're just continuing to pay these high fees um especially management. >> But sorry to interrupt here Morris but but do you think that's really true? Because I actually think fees have really come under pressure. I mean look just look at the the the the CTA space. I mean uh 10 years ago people or maybe more started to offer like flat fee which was I think there are a couple of indices with flat fee managers that's been around for a while now. I thought that was a big um change in our industry. Um I don't understand uh frankly personally um why people would not want to participate uh in the upside if you do a good job for your clients. That's just my personal opinion. Um but anyway flat fee became very import um uh much more common. Um and we know in in a sense that that is something that institutions often gravitate to. And the other thing is of course with the ETF space right with replicators, non-replicators um you see the fees now below 1% flat fee. So I actually feel uh that that there has been a change. Uh I I can't say whether it's proportion with the drop in volatility and all of that. I don't I've never done that calculation but I think there's a there's a definitely a change in uh in our industry uh happening. >> Yeah. With with ETFs, you know, different dynamics. I do agree and like I've said fees have come down but not commenurate with the decline and volatility that has been experienced >> and for some hedge fund strategies I'm excluding commodity trend following or our space in that regard >> but for multistrat funds the fees have been increasing >> sure no I agree with that lockups have been increasing and all that right >> yeah and you know what the other fun part actually uh is that this industry to a large extent And probably most of the um top 20 managers uh that we have today in size, they all had experience with sovereign wealth funds when they started out because there was one sovereign wealth fund in particular that was very early into this space um and and into this industry. Now, of course, they were not keen on paying too high fees, but still, but one thing that was very different back then was they didn't mind the volatility. So, and and this is kind of the interesting thing because today you could say, yeah, maybe it is sovereign wealth funds, maybe it's pension funds that are driving down the uh the volatility of our industry and other alternative investment strategies. But you would think with funds that have like really really long investment horizons that volatility wouldn't be an issue. And I don't know if you read some of Dave Dred stuff um that he on the podcast. Yeah. And and I like his his um and I don't want to sort of completely misrepresent what he says, but but this idea that institutions today are really just optimizing for some kind of average return. they don't want to be too far away from instead of optimizing for how do we compound the best over the next 40 years not worrying too much about annual performance and that makes a big difference in the strategies you end up choosing because you kind of deemphasize the the true risk mitigators like trend like maybe even long v uh which he's obviously involved in uh and then you end up picking a lot of the uh the strategies that that we put in our paper uh the one that people love because they look safe uh and but they just you know they're just highly correlated uh during crisis to uh to the underlying that they're trying to diversify away from. >> Yeah, I think uh Dave Dret nails this as as always um quite well and and I do agree with him. >> The the behaviors or the dynamics in this institutional space have changed. Um above all, nobody wants to look stupid. you're kind of like, you know, don't go don't go on a limp. Don't punt anything into a high volatility, you know, trend following system because you might just be looking silly at the end of the year, right? So, it's become this composite thing of just Yeah. kind of like an average um which is what they want to optimize for. >> Mhm. Also because of that I mean in a way this has been this has been fantastic for for the hedge funds in this game catering to these investors who already have their allocation and the tickets from these pension funds because you know now with a lower volatility you just change the business dynamics where the management fee the asset the AUM based management fee is so much more valuable relative to the performance fee that you're kind of like getting into this asset gathering mode where I fear that the alignment that previously was meant to exist between the hedge fund and the end investor kind of like deteriorates. It's no longer as strong. Um which which I think is a is a negative and it may also take away from the motivation um to really produce the best returns because the average is good enough if you if you've as gathered billions um and it's it's sticky money. You know, you're just making so much money off that pool for management fees that could just sit there. So this is one of the reason I think your firm and mine were the only ones in that camp. Let me take the only ones back, but we're at least I don't know of any other ones. We're not taking management fees that are based on assets. And I think that is incredibly fair. It is motivating. It aligns us with our investors. And in a way, I think this is the way it should be. If we're holding ourselves out as um as a manager that can produce a return stream that is different, distinguished, uncorrelated, whatever your definition is, but it's valuable and it doesn't look like long only buy and hold or buy and hope of the S&P 500. So, you're not something that is beta. It and beta is different than a strategy being commoditized. um which trend following may be because a lot of people have read about the rules but the return stream that we're producing is not a beta return stream and it can be very valuable at times very punchy at times and because of that I think we deserve a performance fee if we're doing our job right and we should be driven by that incentive fee and we should not be driven by asset gathering dynamics where we're compensated based on management fees in fact in our case because we're limiting our size the management fee would never really be possible to be the dominant driver anyways. >> Yeah. No, no, fair point. Now, of course, we we should always uh say that we have lots of friends that we uh we respect a lot in the industry that have a different opinion about fees and all of that and uh so uh this is of course just the way we uh the way we we see things and and of course it gives it gives investors uh more choice um to decide what they really want to do. This was fun, Morris. This was uh great uh to have you back in in this role um uh in addition to all the episodes that you produce um yourself. So that's fantastic. Um and uh if you want to um show your appreciation for the uh the efforts of Moritz, go to your favorite podcast platform, leave a rating and review, share the episodes um so that more people can enjoy uh this type of content. Next week I'm joined by Katie Kaminsky. Um, that will be fun. I think, as I said, we I might get Katie to look more into the paper that just came out from Man Group about uh dispersion among managers. Maybe she's produced another paper since I last spoke to her. You never know with her. So, if you have questions uh that you want Katie to tackle, info@toptraders.com is the email address from Morates and me. Thanks ever so much for listening. We look forward to being back with you next week. And until next time, as usual, take care of yourself and take care of each other. >> Thanks for listening to Top Traders Unplugged. If you feel you learned something of value from today's episode, the best way to stay updated is to go on over to iTunes and subscribe to the show so that you'll be sure to get all the new episodes as they're released. We have some amazing guests lined up for you. And to ensure our show continues to grow, please leave us an honest rating and review in iTunes. It only takes a minute and it's the best way to show us you love the podcast. We'll see you next time on Top Traders Unplugged. [Music]