The fifty greatest trends in forty years of futures markets, and what they reveal about luck, selection, and the futility of picking winners Warren Buffett, the most celebrated stock picker who has ever lived, is disarmingly honest about where his...
Most investors think diversification waters down returns. They are wrong. Dead wrong. This belief comes from the neat Gaussian world of classical finance. Add more bets, and risk falls with the square root of the number of bets. Smooth curves....
“True risk isn’t volatility. True risk is missing the outlier because it wasn’t in your universe.” Traditional investing preaches diversification as the ultimate risk reducer. It’s the core principle behind Modern Portfolio Theory (MPT): spread your capital across many assets,...
Introduction In systematic trend following, diversification is more than a risk management tool; it’s the gateway to capturing high-impact returns from unexpected outliers. By spreading exposure across a wide range of markets—from commodities and equities to bonds and currencies—trend followers...
Warren Buffett’s observation that diversification is protection against ignorance has been widely cited as an argument for concentrated investing. The full weight of that statement is worth examining carefully, because it applies in ways that most systematic traders have...
The Classic Trend Followers go on safari searching for maximum diversification in their quest to hunt for Outliers. We hope you enjoy this episode as much as we did presenting it. Episode 18 of The Algorithmic Advantage is a Trading...
