The Derivative - Trend Following Turtle Tails (and Tales) with Jerry Parker

Episode Date: August 6, 2020

Legend time. We’re hearing straight from the mouth of well-known Turtle Trader – Jerry Parker – on this episode to talk all things trend following. Becoming a leading voice in the alternatives investment and trend following space – Jerry has turned his Turtle Trader experience into a trend following career (perhaps at the expense of some other things in life, as he mentions…) Join us for this talk with Jerry about new remote CTAs, the hidden gem of Tampa, the famous Wall Street Journal ad, what’s enough risk to make it work, pet birds, trading components instead of an index of components, fed limits on trend, volatility targeting, portfolio construction, trend following impatience, the lack of power in diversification, and trend following as an inflationary hedge. Chapters: 00:00-01:38 = Intro 01:46-12:12 = Background / Turtle Trading 12:18-23:34 = Diversification 23:41-40:16 = Risks of Trend Following 40:23-1:15:15 = Insight into Chesapeake / Trading Systems 1:15:22-1:22:15 = Favorites Follow along with Jerry on Twitter and LinkedIn and check out the Chesapeake website to learn more. And last but not least, don't forget to subscribe to The Derivative, and follow us on Twitter, or LinkedIn, and Facebook, and sign-up for our blog digest. Disclaimer: This podcast is provided for informational purposes only and should not be relied upon as legal, business, or tax advice. All opinions expressed by podcast participants are solely their own opinions and do not necessarily reflect the opinions of RCM Alternatives, their affiliates, or companies featured. Due to industry regulations, participants on this podcast are instructed not to make specific trade recommendations, nor reference past or potential profits. And listeners are reminded that managed futures, commodity trading, and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors. For more information, visit www.rcmalternatives.com/disclaimer

Thanks for listening to The Derivative. 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 solely their own opinions and do not necessarily reflect the opinions of RCM Alternatives, their affiliates, or companies featured. Due to industry regulations, participants on this podcast are instructed not to make specific trade recommendations nor reference past or potential profits, and listeners are reminded that managed futures,

commodity trading, and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors. Welcome to The Derivative by RCM Alternatives, where we dive into what makes alternative investments go, analyze the strategies of unique hedge fund managers, and chat with interesting guests from across the investment world. What have stocks done from a buy and hold perspective? What has real estate done from any of our commodities are worth a damn on buy and hold. But if you let me wrap it inside my trend following, they all spring magically to life and they add value. They add diversification. They add profit to your portfolio. But I've got to wrap it up a trend following.

And so I think that's the lesson is not the individual markets per se. Trend following can take something that loses money on a buy and hold and raise it from the dead. And it's a beautiful addition, long and short to your portfolio. Jeff Mallick All right, thanks for joining us on this episode of The Derivative. I'm your host, Jeff Mallick, and we're going back to our Managed Futures trend following roots today and diving into a conversation with someone who has helped as much as anyone grow that alternative seedling into a massive oak of a tree. We've got turtle trader turned turn managed futures magistrate,

Chesapeake Capital's Jerry Parker. Welcome, Jerry. Thanks, Jeff. Thanks for having me. Glad to be here. Yeah, it's been fun. So Jerry's still one of the most influential proponents of long-term trend following strategies in the industry, and regularly shares his insights on the ins and outs of trend following portfolios, asset allocation strategies, and more via Twitter. But we're lucky to have him here in the flesh, so to speak, the virtual flesh today and excited to dig into turtle trading, trend following and much more. So thanks again. Where you're down in Tampa.

That's right. Tampa, Florida. It's very warm here. And it's good to be inside like I am most of the time. But I can assure all of the watchers and listeners that almost all Floridians are doing all they can to wear their masks and social distance and be responsible. So I hope it rewards us with some better numbers here soon. Yeah, the news doesn't seem to have that same feeling on Florida, but hopefully it's sunk in now. People have got the mask on. Oh, yeah, masks everywhere. No, no, no problem wearing the mask. Yeah, not sure what's going on, but we're trying not to be too sensitive.

But the rest of the country is looking at Florida to do better, and I think we are. And then, so you ran Chesapeake out of Richmond for years and years, right? When did you make the move down to Florida? Well, Chesapeake officially is still in Richmond and still have our core group of people that we've had for 30 years or 25 to 30 years

and I moved down to Florida 2011 but I go back to Richmond fairly often and still have my house in Richmond and I love Richmond and I but so technically Chesapeake is still there I'm'm just, you know, old people move to Florida. So that's why I'm down here. Right. You're not that old. And those were two of like the least hotbed the early years of Managed Futures, you know, it's changed a lot. And to some degree, I was there in the beginning, kind of the beginning, you know. But I remember the old saying, you know, being a CTA in Managed Futures is great. One of the great reasons is because you can live anywhere. But what that doesn't say is you should live anywhere.

You can live anywhere, but I think, you know, as a business, we kind of missed out by not being located in more of a hot spot for clients, you know, New York, Chicago, places like that. I'm sure some people have, firms have done well regardless, but it definitely cost us by thinking, you know, there wasn't a downside to being in a small town outside of those major hubs. You may have made up for it and cost a living savings over all those years. Who knows, who knows who's right? The, I think this coronavirus and

all the zoom meetings and everything everyone's doing is gonna totally wipe that whole concept off the board and you can be a hedge fund manager anywhere right I've already seen it with allocators they're going to more zoom meetings and they're realizing yeah we don't have to get on the plane let's just get on a video uh yeah i agree i really enjoy the webinars and podcasts and it's one of the good things that came out of all of this uh for sure but i think that um there's a hedge fund community in new york and chicago where i you know had my first training and um i think there's a community, there's camaraderie, and being around friendly people like that who understand, you know, there's

possibilities of hiring people, being hired, sort of collaboration to some degree. And I think that's one of maybe the mistakes or issues that the Turtles didn't do well, which is there was no collaboration. There was no two or three turtles going out together and starting their own business. And it's kind of important to have a good team of people. We just all headed for our hometown and probably would have worked out better if we would have thought along those business lines a little bit more to make sure we had a group of good, smart people together rather than trying to recreate a business each individually on our own. the turtle story. So let's, you've got one of the best origin stories around with the turtle traders. Can you give us a quick rundown of what that was, what that looked like? Maybe some pieces that aren't usually talked about? Yeah, of course. I mean, it was just a great experience. And I knew

in the fall of 1983, when I was living in Richmond, Virginia and in public accounting that this was going to be a great opportunity. So I was, I saw the ad in the Wall Street Journal, which is a fair amount of luck. And then I applied and I got an interview and got the job. So it was quite a fun time learning from really genius people. I just don't really think people understand how genius Bill Eckhart and Richard Dennis are and were at that time. And there was always an emphasis on computer testing and back testing and research and so it wasn't really just Richard Bill coming off the floor and some rules and giving us these rules it was some hardcore math and back testing and computers and you know I

don't know of anybody that I think is more smarter than Bill Eckhart I mean he's kind of a it's humbling to listen to both Rich and Bill, you know, talk because it's just another level of human being. So we had great mentors, you know, as it relates to systematic and trading, what to do. And there was a big emphasis as well on the future, how to evolve over time and how to do it the right way. I had a very slow start. I didn't really do well performance wise. What year is this? What year did you answer that? So January 1984, we started with a million dollars to trade of Rich's money. And we had had a twoweek training course, maybe three.

I can't remember if it was two or three in around December of 83. And so. I hope it was three. It seems a little odd to just, hey, two weeks training, you're good. Here's two million bucks. Here's a million bucks. I should say it was like three months or six months or something like that it's a lot better uh but we were handed the system you know here are the systems here's what our research says here's what the computer says during the course

rich would frequently say that uh what does the computer say about this question if someone had a question what's the computer say and so we were just spoon fed and given all of this great information and uh and just told hey basically follow the rules uh part of the goals i think rich and bill had for the turtles was um two things mainly that they said was um we don't really have the desire to follow the rules as much as we probably should. So the money that we allocate to the turtles will allow us to have more fun. You know, we can do our fun trading and we know that there's a certain amount dedicated to following the systems entirely. And then number two was they really wanted us to offer some ideas that we saw in the markets and what was happening and here are the rules we gave you but just come to us and let us know if you see something we should test and

possibly incorporate into the systems. And so was it a bet between them or they were trying to kind of build their own prop firm? Or how do you remember it? It kind of gets remembered different ways throughout history here all of a sudden. Yeah, I don't think that they noticed over the years they don't really like the idea that it was a bet. I don't think it was a specific bet necessarily, but I do think that they both had difference of opinions to the degree that trend following or systematic trading could be taught. And so I think Rich thought, yeah, you could teach it, no problem. You just got to follow

the rules, basically. You know, evolving over time and making the systems better and as the markets change how are you going to improve that's something different but then I think Bill's idea was no you probably can't teach this stuff but I think they both came to the conclusion that you know obviously it's fairly teachable but there was a very I think once we we once we were there for those four years, we were making between 100 and 200% a year. And I think people made about the same amount of money. And I remember Rip saying, you know, basically all the turtles are created equal. But then when we went off on our own and we were kind of free to do what we wanted to do with no one watching us, then people's strategies really changed over time. So how did your evolution come about? What was your core that you kept and what was the changes that you made? Well, the core that I really kept and that I'm obsessed with is diversification, maximum diversification.

And trading lots of commodities and currencies and stocks and bonds. And I even got into single stocks to replace stock indices, which I thought was just totally normal and natural to expand the real diversification that you would want in stocks and get away from the indexes. But I stayed very true to the trend following and the money management, I would have changed in an instant. I'm very interested in copying other people

and doing whatever it takes to succeed. So I would have no problem at all reading something or, and I would really read a lot and try to read about Harding and Aspect and TransTran and all of these European guys and the US John Henry and Graham and people like that and trying to figure out something anything that I could find but I basically couldn't find anything that I thought was better as it relates to the money management and then of course the biggest evolution has really been just the look-back period had to be longer term. When we were making 200% a year, our

average holding period was a month or less and now it's probably like a year. So that's just dictated by the change in the markets where it's not really... And what, do you have numbers on that? How much more volatile were the So that's just dictated by the change in the markets where it's not really. And what do you have numbers on that? How much more volatile were the markets in the 80s while you guys were trading? Well, I just think that they were it was less choppiness. And so you would have a trend that would last a month or two. And then you could profit from that with a short-term system but now the short-term system would that same systematic approach the back

testing doesn't look good and you just keep getting bounced out of the trade and it goes right back to the highs so you have to keep getting in and getting out all the time so that seems to be what everybody in the industry sort of picked up on is that in order to be profitable, we've got to be longer term. Now we need to also figure out if we're going to be longer term, obviously, how do we not give back all the profit? You know, something like palladium is a great example in order to stay in that trade gold, you know, this, this gold trade, the recent palladium trade.

In order to stay in those trades, you need to have a loose stop, trailing stop, so you don't get bounced out. But then when it crashes, like palladium did, that stop, that trailing stop, that's pretty far away, will give back all of the profit. some people do it with you're saying this recent in March palladium sold off huge yeah it'd been up like I can't remember the number 60 some percent in 19 something like that exactly and then all the profit on you know or too much of that profit went away very quickly so So what are you gonna do to preserve that? You need to be longer term, but then if you're too long term,

when the market turns, you may give it all back. So that's what we're kind of paid to do is figure that out. And so- Sorry, do you feel, I feel the industry's moved almost too far that direction. Right, they've done two things, become more long-term and added more long bias. So it feels like in the next, you know, maybe they dodged a

bolt with this crisis, but in the next crisis of an 08 type, that those two things might combine to have worse performance than, you know, if we had an exact 2008 replica market in 2021 or something, I feel like they wouldn't put up the same performance as was in 08. You got any thoughts on that? Yeah, I mean, if you look at 08 compared to 2020, it's a very good thing to compare. So let's just talk about the S&P. So in 2020, we've seen a lot of research and papers written recently about how important it was to trade shorter term. So the shorter term, the better. It was such a dramatic cliff drop that you got to get out of the longs quickly and get short quickly because the volatility picked up so so fast and then the market just sold off really really hard made it hard for long-term trend followers to do well this year then in 2080 when the S&P broke the S&P made a 200 day low in January so so it was very near the high and it was very

easy to get short that market with a long-term look back. So ever since then, though, it has not been the case. All of the stock market sell-offs have been more crashes rather than spending some time in a level and consolidating around and allowing the long-term look back to be close to the all-time high for instance so we got lucky in 08 and we haven't been lucky since but then in some of the other markets this year as well the emerging currencies energy not so much that was not a tough trade to get short quickly but some of the other markets especially the S&P you know just the quicker you could get out of that long and go short you know that was

going to determine your relative performance and energies I feel like it was on the flip side right when I started rallying back up that was way too quick for for trend to capture that's right i mean if you're going to exit that energy trade that crude oil short using um that long-term system that long-term exit it's going to be some major give back so a lot of traders the way they combat that is they do the volatility targeting to reduce the position as the ball increases so that helps you kind of take profits a little bit and reduce your risk but that crude got volatile very quickly and so you were getting out of that crude too quick too soon before it made those really

nice lows so I really just feel like that's what we're paid to do. Get in the trade, stay in the trade, don't get out too quickly. Then what are you gonna do when you have these V tops and V bottoms and lots of volatility? You've gotta add these things to your approach where you don't give back all of the profit,

but you stay true to your trend following. So to me, that's become the right people kind of lost patience with that approach over the last five to 10 years, right? Since the 09, we've had trend following managed futures has had maybe one or two good years, 14 and 18 sort of. So how do you square that of like, yeah, this is our job. We gotta make sure we can manage these snapbacks

and this volatility, but if the market's not delivering that, you know, is it broken? Is it a change in environment or we just have to be patient as investors? That's a good question. I mean, I was prepared for that question. So it's not like we haven't heard it before, but yeah. So my description just a second ago was of actual trades.

And we didn't handle those, you know, that's, they're difficult to handle. Maybe the, the average CTA did not handle those actual trades, you know, in 2020, as well as we had hoped so now but now you're talking about the past 10 years so I just think that to get quickly to the punchline the problem is we just haven't had enough long-term trends especially trends on the upside I think anytime you have a CTA, a trend follower talking about their short trades, even though I appreciate the crude trade in 2014, you know, we're short a lot of the commodities now and they have small profits and I appreciate those. You're in trouble if that's all you can talk about is your short commodity or short trades in general. So we just haven't had enough of these outlier moves to the upside that we

used to have. But when we did the back test, it's the back test said, Hey, you should trade long-term trend following. You can blame that on us or me. Why did you choose a methodology that was so reliant upon outlier trades we had 2,000 5,000 trades goes back 30 or 40 years you have a huge sample size those trades are there this is what we should do and people like yeah it's been working then all of a sudden we don't have those long commodity trades and this is coming from a group that prides themselves on delivering

diversification being different and how you're really going to be different if you don't trade some commodities love the commodities there's so much different they have great trends but then they go in the trends go away we don't really have any great long-term trends. We get a few in gold and, you know, some, but very few in the past 10 years. And we need more than just a couple. new environment for whatever reason because of algorithmic execution or more quant funds out there or who knows what. Well, I think if we just, you know, we did get some nice uptrends, like you mentioned in 18 and the bonds, that helps. And the stocks, of course, we've had some good uptrends in the stocks, but half of our portfolio is in currencies and commodities, and they really haven't done very much.

So I think that if we had seen nice commodity trends and currency trends, and we just gave back all the profit and we just, you know, they were there, but we didn't capture it. We could say, OK, the systems are broken, but I don't, so I don't think that they're broken, but it may be irrelevant if we're not going to get the, whatever it took, inflation or just normal monetary policy, or normal economy, because we all think it's kind of not that normal these days. So, and if we don't get those commodity trends back, you know, we're going to maybe have to all switch to trading stocks. I don't know. It's great. What do you do? Let's talk about how do you square right. So we had that huge trade trend in Palladium.

So there is one trend that happened, but you can't risk enough to make that worthwhile for the portfolio, right? Oh, that's right. And we think it's a huge advantage to trade 100 markets. We have our risk budget and we we trade it based on a hundred markets so every trade is very small now back in 1980s when I traded for Chesapeake and for rich we traded 20 markets and so every market could be of those 20 we didn't have nearly the diversification but they could make a

difference positively or negatively you could get your ass kicked if you had a big position in something or you can make a lot of money i made 30 in 1980 um oh crap i think it was 86 i made 30 in december of 86 and all in heating oil. Wow. So is that preferable versus a hundred great markets, massive diversification, small little bets. So you don't, you never get crushed. You never get killed depending upon your overall risk budget and leverage that you're using.

And so if you have a nice trade in palladium, it makes a few percent or 5%, let's say, but not like the old days where it would have made 30. This is an advancement. But if it's the only big trend, no good. Right. I feel like it's an advancement from a risk perspective. From a return perspective, it seems like now we need more trends in order for the total portfolio to make money, right? Of course, but there's no reason to think that we won't get more. We're trading more markets. I mean, anybody could pull out 20 right now and say, you know, I'm going to just trade 20 random markets where I have a reason to believe these 20 markets will do better than 100.

Go ahead and do that. You don't see people doing that, putting the money where their mouth is. No, because we all believe that one of the core beliefs in trend following or systematic trading in general is that all the trades have the same expectation. So there is no reason not to trade lots of markets and because they all have the same expected return. Now if you pretend that heating oil, unleaded, crude, Brent, and gas oil are not really the same market, then you may get in some trouble when you have some losing trades in that energy sector or all the grains are pretty correlated as well so you have to take all of that into consideration but uh trend following theory is that there is no opportunity lost by trading more markets

and people are free to trade fewer markets but but no one does. Right. But I could argue perhaps that you have a point of diminishing returns and then you need so many trends simultaneously that it's almost impossible to happen. That you might always be perfectly balanced, right, between no trends and trends. But you could counter-argument with an 08 or a, you know, hey, when things start to really happen and start to move, you're going to see trends across the board. Yeah, I mean, I think the analogy I use, which I don't think is that great, so forgive me, but it's like having an edge in blackjack and sending out a thousand people to a hundred different casinos. Yeah. The same edge is being played out all around. But it will look like, you know, we should stay away from a certain casino.

Or some of these other people have more talent than others, but they don't, they're all following the same system. So once again, I'm gonna stick with my, I'm gonna be very hard-headed on this and stick with my idea that theoretically, it does look like stocks are superior they're superior in every way trend better make money better and all the other markets have a problem but in my opinion they i'm going to stick with a trend following orthodoxy and that they all have the same

expectation well in this whole conversation we're having assumes a whole hell of a lot, right? That U.S. stocks will continue to be the best performing thing in the world, right? They've just had their best 10-year run ever in their history. And there's been periods Japan was flat for 30 years. Canada, I think, is still underwater from 20 years ago. China went to zero once back in the 80s. Russia went to zero. So I feel like we just, whenever we're having these theoretical discussions of like digging into the weeds on trend following versus just holding fang, right? Like it ignores the history that there's huge risk to those stock position.

Hasn't been seen in 10 or 20 years, but huge risk. Huge risk. I mean, I think we saw it this year. We got a little taste or a smell of it, but yeah. Yeah. I mean, I think just because the market rallied, it doesn't mean it didn't seem like there was some undue risk taken. Let me ask, you mentioned vol targeting. I was having a debate with Jason Buck at Mutiny Funds the other day.

To me, if I'm a trend follower, and I believe this is how you run your portfolio, right? Like you were saying, we're going to have the same expected return across each market. If it trends the way, you know, if it has a three standard deviation move in heating oil it's going to return the same amount of money to me as a three standard deviation move in euro currency or whatever um because at the entry you're sizing it based off some risk proxy or your distance to the stop right and then you're knowing what the contract value is so you'll have an expected return so that's not what you mean by vol targeting, correct? Because you can you can get a target

overall portfolio back tested vol by adjusting your risk that way. Right, normalizing the losses using the volatility at entry and keeping all the losses the same size and then the same dollar amount, that's not vol targeting. Vol targeting is more when you have a big profit like palladium, you scale it back whenever the volatility increases. So if an average day in palladium is $10 when you put it on and it gets to be $20, maybe you get out of half your position, something like that. And what, but you're saying that's no good because you're going to basically you're cutting your profit short, which is opposite of everything you've learned in the total trader rules.

And I definitely think it's, you should take the freedom that profits give you that this strategy kind of allows to be very cowardly with losses and preserve your capital but then when you have a profit you need to let you know let be be more willing to let it turn into a big huge monster winner and you can if you have this dichotomy between those two I ask people all the time you know are are small losses the same as a give back on a big profit and most of them say yes the same thing and I'm just like oh darn you know I just can't go there because I like that freedom that I have with a winner and I'm very worried about taking bigger you know big losses so I keep those pretty. So maybe I'll risk 25 basis points.

I tweeted this the other day, I'll risk 25 basis points on a loss. I will, I will let my open profit fluctuate 250 basis points in order to make 2,500 basis points. So I like that. I think it works. And cutting your profit short kind of rubs me the wrong way. And I think there are better ways to navigate the markets and the choppiness and what's going on these days. There's better ways than using volatility targeting. And I think another thing that happens is clients love it oh my gosh they love it you know we were just told from the day one

like clients are like you know clients won't make you do bad things and clients are to be resistant they want you to take small profits and and do all kinds of you know suboptimal ideas and so that's one of the market axioms, right? Nobody ever went broke taking a profit. Yeah, exactly. That's what they say. So in this particular strategy that we have with 40% winning trades,

that's a bummer to have such a low win rate. You need to do everything in your power to try to capture as many mega trends, outlier trades as possible. And so I'm sympathetic to what happened in Palladium. Come up with a good strategy. I just don't think vol targeting is the best one to lock in some profit. And, you know, they'll say, well, we're not locking in profit.

It's more risk control well i'm keeping my losses to 25 basis points and i'm maximizing my diversification so i think i'm doing a pretty decent job on the risk management but honestly you know if i'm long tesla now i mean i got to let that thing go. Take a little bit of profit, that's fine. Don't worry about it. Take your principal off the table or something. Yeah, but don't try to call the highs

and do something materially that really limits that upside that you have. They're hard to find. These mega trades are hard to find. Don't limit what they can give you and it switches the whole profile from a convex right then it caps that upside which is the whole point which i like that 25 what was it 25 250 2500 that explains convexity really is it yeah risk 25 basis points on a loss,

but you may have to let that profit vacillate 250 basis points. I mean, who knows? That's the freedom that the profit will give you to allow you, because the computer will say, let those profits run. Be liberal. Don't be so tight with your trailing stop. Follow the system. Follow what the math says.

If you didn't say that, I wouldn't do it. Right. And it's kind of back to the issues with the sharp and differences and upside volatility versus downside volatility is really what we're talking about, right? If I go inside a month from up 8% to up 4%, are you really all that upset? Versus, you know, you'd be much more upset if you're from down 4% to down 8%.

Exactly, what if I, what if, you know, we had a system where we could guarantee we just have no losses? We just have no losing trades. They're all winners. I've got one. You wanna hear it real quick? Buy today, sell when profitable. Never have a loser.

If we had that, what would you do with those winning trades? What would your litmus test be? How would you grade your group of traders who ever made the most amount of money? Do whatever it takes to make the most amount of money, but limit your losses, take small losses and diversify. And I want to come back. We mentioned all the commodities and just commodity trend has been thrown around about a little bit lately as the answer to inflation um i kind of push back on that a little bit of like well that's not its mandate

it's not trying to capture those inflationary moves it probably will but you might have too high of a carry to do what are your thoughts it? Just trend falling as a inflationary hedge. And commodity trend in particular. Yeah, well, like I said, we haven't seen that in a long time. So we've been short all the commodities. I'm looking forward to getting long some commodities. I think just the data is just full of the long trades

are so much better. I'm just selfish. I don't know if it's going to be inflation or whether or what it's going to be. I don't really care. But I know that it's very important as well to have long and short commodities because all the shorts are sort of correlated. The bond shorts and I mean, the currency shorts and the commodity shorts and the stock shorts are all sort of correlated the bond shorts and I mean the currency shorts and the commodity shorts and the stock shorts all kind of correlated the longs are kind of correlated so it's great to have longs and shorts in your

portfolio that's diversification right there and it's great to have some long stops and short stocks long commodity short commodities so it's just hard to find some long commodities now for risk control purposes and for profit opportunities. So I think, I mean, what's out there, you know, copper, silver and gold. That's great. It's a good start. Let's get going. And then you added Bitcoin to the portfolio markets, right? I love Bitcoin. You know, I think Bitcoin is a great market. I like it for a couple of reasons. One is that, you know, I think it's

responsible to do some analysis and, you know, figure out how to handle markets that are correlated, like eating all crude and unleaded. It's not three different markets, but it's more than just one market because they do different things. They have different chart patterns. The trend following overlay will give you some more diversification. It's just great to have a market like Bitcoin that's not like anything. I love that.

It's liquid. I could care less that I don't understand it or no one understands it. I think to some degree, psychologically, it's a huge edge. Here's the one market that no one understands it. I think to some degree, psychologically, it's a huge edge. Here's the one market that no one understands. So you got to be a thousand percent dedicated to use your system. So, I mean, I don't really look at all the other markets that way because I don't understand soybeans either and have no interest,

but it's really great that you're forced into a systematic approach with Bitcoin, unless it's a religious thing for you or whoever's trading it. But just for me, it's a, thank God for another liquid market that's different. Right, so just another diversifying, right? It could have been some new commodity metal

that they found in the ground. Who cares? It's got a liquid market, I'm gonna trade it. It's got data, it's got price trends. We traded, we just started trading INOR this year. So that's a liquid market. I'm going to trade it. It's got data. It's got price trend. We just started trading INOR this year. So that's another good market. I'm always very happy to, you know, over the years just collect and collect. And you end up with 100 or so markets that really make a difference.

Because there's so much fun having on, you know, 100 small bets all around. It's really easy to sleep at night. You get your leverage, your overall leverage is correct. You like it. It's not too much. You have a few stocks, a few commodities, currencies and interest rates, long and short. You know, it's just suits my personality. You know, I came from an accounting background and I trade futures, but I never left my conservative nature of really disliking. And I was thrown into Richard Dennis and the Turtles in 1983. And with 200 percent returns, I mean, I lost 60 percent in one day. So, yeah. So you can't have the returns without that volatility but i'm very happy with

the way it's all set up now much better much more suited to my personality did they have you ever on the trading floor back in the turtle days uh no i went down to the floor once and saw rich go into the pit and trade some s&ps or something. But, oh, and I did get on the floor to visit. Yeah, yeah, you're right. I was on there to visit a couple of times. So yeah, it's, I was very happy to be upstairs. So we sort of buried the lead and started getting into the weeds before I asked you what you're up to at Chesapeake these days. So I want to take a quick minute and just give us the elevator pitch on, you know, what your guys' focus is currently and what program you're excited about.

Well, we've tried over the years many different programs and it just, we never enjoyed anything other than fully diversified. And long short and trend following, pretty much trend following only is our motto. And we have a mutual fund that basically has the same portfolio and strategy as our LP and maximum diversification trend following single stocks we trade the single stocks and believe it or not we trade them with trend following the same systems long and short no reason not to no interest in hailing stocks any different but I think 15% of your money in the stocks is probably enough I remember doing some analysis research on the stocks and they're so uncorrelated so often that you can definitely get lulled into

trading a lot of stocks until you know that one big sell-off like we've seen every now and then and this year as well so I'm jealous of the stock market's return and wish that we had those similar returns but I'm really happy to be trading a few stocks and a lot of currencies, commodities, and interest rates. And what, so let's dig into that with a single stock. So right, if I'm learning about trend following, reading some of these books, and I go create a portfolio, I'm probably going to have, like you're saying, a couple energy sectors, a couple currency markets, a couple grain markets. And then usually I'll pick the S&P or Russell, a few stock indices. So you're saying I don't want to own the index. I want to own the individual stocks for a further push of diversification.

Exactly. And then you want to set that up in your portfolio in the exact same way that you did your other markets without any regard to historical performance. Maybe the yen was the best in your back test and crude has been really good in the back test. Who cares? You added in the wheat and the corn and the beans and Swiss franc. And in the same way, find a few stocks that are different and then don't look to be too correlated I

think one of the great things about the trading the individual stocks this year is it gives you an opportunity to not be fully long you know in January and so we were short some stocks not all stocks go up we had different we're flat some stocks and wait hold on that might bear repeating for any young investors out there not all stocks go up are you sure well these days it looks like there's just a handful that are carrying that index that you mentioned the FANG stocks but you know you definitely one of the lessons of 2020, especially in the stock market,

is come in with some shorts. You've got, you cannot come in and when the market starts crashing and figure out how am I going to get out of these longs? How am I going to get short? You know, it's better to come in short. You know, the CTAs are going to come in short some currencies and grains and commodities and long bonds and long gold so they were doing pretty

well not being all long stocks but even if your stock sector is 100 long like you would be if you only traded indices at least trading some individual names gives you some more diversification and a chance that you won't be fully long. It's kind of odd too, because what is Jerry saying? I'm actually saying if you did it perfect, if you were like a genius and you set up this portfolio perfectly, and the biggest uptrend in stocks history, which we've seen a lot of those recently, you would still have some shorts. You were able to find some stocks that didn't go up pat yourself on the back that's exactly where you want to be and CTAs are kind of like need to embrace that in the same way they would embrace not being long every commodity

you know yeah we made a killing in the metals or in energy in 2014. We didn't have to be short every commodity in 2014. So in the same way, your first desire is diversification. Stop trading those indices that all look the same and add a few single stocks from different sectors, different countries. Look at China. That market has just skyrocketed recently. So have an ADR from China or two and cover the world and cover the sectors and really offer yourself the same level of diversification that you want in the commodities. No CTA would ever trade the Goldman Sachs Commodity Index or the Dollar Index only. Of course not. So don't trade those indices. You've gotta open up that portfolio

and find the magic of a few stocks that hopefully won't be so correlated. And if they're correlated like they were in February, then hell, your shorts made some money. Like a confirmation signal. But two things there. one, aren't you introducing like some selection bias into the process there? So, you know, why not have all 500 S&P stocks?

Well, just for practical reasons, but in the same way that we set up the futures portfolio, we choose the markets we're gonna trade based upon correlation and based upon liquidity. And so stocks are a little bit different and there's so many to choose from. You have to set up a rule for yourself on how you're gonna choose them.

And then once you choose them, stick with that universe and trade that for as long as you can right so you're not pulling them out of a hat you've got a selection process and meet the rules and they come into the portfolio right and then secondly it's interesting to me i think people know this intellectually but they might not reflect it in their portfolios as you're saying the s p is essentially a trading system, right? Of like which stocks come in, how much weighting there is. So trend following the S&P is like,

you know, you're trading a trading system in a way. Yes, it's like trend following the Chesapeake NAV. Right. You ever tried that? So I don't really, I don't know what, you know, all of these markets in there, there are markets coming and going all the time. You've done this back test over your back test of the S&P. There's been many different stocks. The weightings keep changing. What is this back test even telling you? I think a great idea is to trade all 500 stocks individually or a sample 50 or 20 or five, whatever. You don't have to trade

them all, just cherry pick the ones that give you the most diversification in this exact same way that we all handle currencies, commodities, and interest rates. I'm just saying, treat those stocks in the exact same way, the same attitude. Try to get out of your head all of the stuff that's been put in there over the years about stocks. That's a big challenge. I would go to my turtle friends over the years, and I would say, I'm trading stocks. And they'd say, oh, I'm going to look into that as well. And I've got a lot of ideas. And I'm like, what do you mean ideas?

We just, we just trade the stocks with trend following? No, no, no, no. So I grew up on Wall Street Week and Marty Zweig. But I, and I find it a challenge as well to get all of that noise out of my head that's been put there that has nothing to do with trend following. And then most back tests, the stock indices aren't the best performers as well, right? Are most trend following back tests?

Of course, I mean, how could they be? It's an average. Some of those stocks you want to be long some are in an uptrend some are in downtrend and it's the very definition of muting an outlier move you want to pull out those stocks because you know you'll get your fair share of 500% movers and you just need to you know size it based upon its own volatility the same way that you handle all the other markets so is Tesla in there I was

lucky enough to trade Tesla it's weird it's a different it's look it's very liquid and it's different and that's my litmus. You know, is it different? And is it kind of weird? I have WWE, Tesla, Canopy Growth, Marijuana. I just wanted to try to find stocks that really, the numbers said they were not correlated. And then my brain was saying, yeah, these are kind of weird industries, weird companies. So I was lucky enough to get Tesla in there, but I'm not going to look at the chart right now because it could be down a hundred today. Who knows? I know I haven't seen, but that thing's insane.

I somehow was on both sides of that trade all through March there. I owned the 300 puts and got, had to get rid of them before they went down there yeah it's kicking myself where to go i think it went down to like 250 or 270 before rallying all the way back yeah kind of crazy there's also it's kind of cool that you could kind of fine-tune is nobody wants to do this but you could have bespoke portfolios of sectors of stocks in each sector to protect different investors. Right. If I'm a Tesla exec or something, which people have promoted for a long time of like, hey, you'll never go broke. Is it Paul Tudor Jones with a 200 day moving average or whatnot?

All right. You could have trend following on all these different sectors to protect a founder or an investor from a deep sell-off across the sector? I don't think there's anything better than applying your trend following system to an individual market. It's just, it's going to work so well and be so clean and noise, less noise than, I just never have understood this whole idea of mixing in a lot of different markets I want to be you know long copper and short aluminum I don't know what the the cop the base metal sector calculation would look like and that index but I wouldn't be long copper I'm pretty sure so I'm happy with being long copper and short everything else it's really every day I just come in and look at my portfolio of longs and shorts and I'm just like so much fun I couldn't even

tell you how much much I love that and how far can you take this idea so could you go like the Saudi oil contract or the Chinese oil contract and take this diversification idea even further and further? Oh yeah, I mean I got pretty excited recently when I was working with you guys and doing my research on China commodities and once again I'm not that interested you know in finding another gold contract or crude contract but it seems that there are some really unique commodities in China and around the world and different countries that could add real diversification of the portfolio and not just be another market

that looks very similar what I'm already trading so I think the sky's the limit. You know, once again, all the CTAs really require is liquidity, diversification, exchange traded, let's say. But even some people have moved off to more over-the-counter commodities, things that don't trade on the exchange. Yeah, and I think there's a whole nother portfolio when your head wants to explode someday of, into kind of like you're saying over the counter contracts that have their own dynamics and basically could create their own price data stream, whatever I'm trying to call it there. So let just back on the stocks

when you're saying 15% that's what you would recommend someone that's just your portfolio limit of what you'll go up to in the overall portfolio you know once again I think it's just based on analyzing the real amount of diversification you're going to get in stocks and it's a little tricky because most the time you know the stocks are different they act a lot different and you do get real meaningful diversification as long as it's different industries and sectors and countries or whatever things like that but then all of a sudden they all go down like this year and you're like, where's my diversification?

So you are tilting the odds more in your favor if you're using trend following and you're using different stocks because you're, you needed to come into that February period with short stocks. So never going to be quick enough every single time to turn it around your system oh my system needs to be shorter term yeah it could be shorter term you could optimize your system you could change it to try to make money in 2020 but what does that do for all the rest of the period how about taking what's right staring you in the face and is totally available, which is different markets that, you know, some of them may be short and shorts don't do very well. They don't make as much money.

Well, they can really bail you out and help you in a period where everything is going down like we saw in February, March. Let's change gears a bit. How you've been on record I think for saying a very heavy percentage of someone's overall assets should be in trend following. How's your feelings on that evolved over the years? Where where your feelings currently on that man that's a good that's a good question I mean personally I'm just I think it gets back I'll build my case for this it just goes back to the fundamental principle that I said earlier which is all the markets have the same expectation and that's from a trend following systematic point of view. Stocks are not better trenders. They have been, they look like they have been, they

look like they will be, but more than likely they will not, the commodities and the currencies will catch up soon and have some really nice trends. And then I think the second part to that is I'm just not willing to make a material investment in a buy and hold that might make me 8%. But in order to hit that 8%, I would have to risk historically, you know, we've seen drawdowns of 50% plus. So I just take that off the table that, no, I can't do that. I've got to use small losses. I've got to have longs and shorts, currencies, commodities, stocks, and bonds, maximum diversification, price only, rule-based. Along with my small profits, I'm going to have to play for big gains. And so I just cannot sleep at night allocating the material amount to equities

just because they've always gone up. And I'm not sure they're going to continue to always go up. And as you said earlier, some of the countries we're getting to see that outside of the US, it seems that countries are falling off this list of countries where you can just invest in the stock and eventually they make new highs. It's been a long time in some of the European countries and Japan, I guess, as well. So I think that my case is built upon theory and what I believe to be true. And the period that we went through before 08, where CTAs made more money than the stock market and had less risk, of course. And so I'm going to have to stick with that theory and the experience I had and just sort of wait for things to change, you know, as I've spoken about getting the trends going back in the commodities and currencies. And as you're saying, you get a little stock exposure anyway inside the portfolio. Yes.

Less risky before 08, what are you basing that on? Basically as they're rough sharp return over vol? Yeah, I mean, I think that most of the analysis that CTAs did in-house and then independent studies would show prior to 08, you know, trend following was wonderful and it made its shark was higher than long only S&P so and it wasn't that long ago you know 2008 where there was the last decade in stocks yeah didn't last very long so we're really looking good then. And I think that another proponent of just because what has happened in the past,

you know, that is much different than a 5,000 trade sample size. So long-only equities just doesn't have that robustness that one can get from, you know, running a back test on a cta system and counting up those entries and exits and really saying hey you know there's an edge here um and so the only thing we have going against this is real-time performance recently this is the big thing and i would say recent performance right like it almost is counter it almost means it's not going to happen again versus people believing it will happen again yeah like i feel like the only thing for certain is these next 10 years are not going to look

like these last 10 years but they'll be proven wrong so and then since that 09, right, I just want to go through this list of trend following is dead articles or excuses. So, I'll go one by one. You can tell me your thoughts. So, it's dead because it's too big. Like after that decade, you were talking about assets flooded into there. AQR's mutual fund went to 14 billion or whatever. So, trend following is too big. What are your quick thoughts? AQR's mutual fund went to 14 billion or whatever. So trend following is too big. What are your quick thoughts?

True, I think that that's the reason we all had to go longer term. So that's a bummer. The trends were going to be there, the trends were there. We made money on trends. It was just choppier, more volatile. A worse investment investment still profitable yeah so nobody really likes to be too crowded there's no reason to deny it so it's a it's a little bummer but certainly not

the reason we haven't had massive commodity uptrends like we used to see there's other reasons for that. We may never see them again. But it wasn't logical for all of us to do that back test and realize, hey, this is a really good way to trade. Right, but if I make you are, and I'm at those billions, I can't materially trade because the position limits some of those commodity markets, right?

So, there is a limit to your aum and um that was my stock answer for many years at one point we traded over two billion that was my stock answer that you don't want to run yourself out of these commodity markets they're so great it's your value add it's what you can bring to the table and it makes your portfolio so much safer to have long and short commodities along with the financials. But yeah, if you get to a point where your commodities can't be 50% of your portfolio whenever you want it to be needed to be, then you that's going to be a problem. Long term performance. So fair to say it's a problem problem but not the answer to the problem no it's the what has happened recently is the opposite of that the fewer the commodities you you traded the

better off you were so that means you had bigger bond positions and bigger stock positions which were the only things trading so uh be having too much aum and being kind of irresponsible in that area to your clients worked out well for you and your clients. For now. This is the theme of the show. Irresponsibility is paid for the last decade. Next trend following its dead meme is they've had the bond tailwind for 30 years. Now they won't have that with interest rates near zero. So they're not going to do as well.

Well, more than likely, as I've said, we need to get some contribution and profit from commodities and currencies, which we haven't seen in so long. And I think I've seen some analysis over the past few years from Campbell and Niederhofer that due to the term structure of the bonds, we won't make as much if bonds go right back to where they were many years ago. We won't make as much on the short side as we did on the long side. I don't think we need it. What we need, it's not gonna matter if we don't get nice moves back in the commodities and currencies again.

All right, next. Trend following is dead because of all the Fed actions and inner saving the day. So these trends don't have any ability to move because the basically the fed put puts a limit on trends what definitely has helped the bond market the cta's crushed it in the bonds uh the only ones dumb enough to stay long bonds as rates were getting close to zero certainly you can't make more money in the bonds. CTAs crushed it. That was wonderful.

We got some trouble with the stocks because we only trade indices for most of the people. And then the V bottoms just really hurt. But once again, it's the same message for me. If the Fed could be blamed for a lack of inflation and lack of commodity trends, currency trends, then yeah, they're to blame. But you know, really, I'm to blame

if I have chosen a methodology that allows this to occur, and especially if it's not going to turn around. So I need to get some intelligence or figure something else out if the next 10 years I'm not gonna look a lot different right but it's also weird right because in your your intellect wants to tell you all this meddling all this printing of money is going to cause those commodity trends so it's almost you know and it's gonna cause moves in the dollar and whatnot in different

currencies but it's it's been proven wrong so far, right? They printed all that money in 09 and basically nothing happened. You know, I grew up in the 70s with double digit inflation and interest rates and then graduated college, Milton Friedman. And I thought I understood how all this stuff worked with money supply. So please have a guest on that can explain to all of us why that doesn't work anymore. You know, what happened, what's happening now where we really don't see inflation now. And so how did printing money in the 70s obviously yield to high inflation,

but since 08, we've not seen that. What are we all missing? And then my last trend following is dead one is the everything, basically there's no power of diversification anymore. That crude and cotton and corn all move together based on globalization and real-time demand manufacturing I'm butchering that one a little bit but any thoughts on that basically the concept

of globalization has made different commodity moves less less likely well I definitely don't know if it's globalization, but it definitely seems to have occurred that. So maybe I still, unfortunately, and have always looked at commodities as maybe like four or five sectors, grains, metals, energy, and salts and everything else. But they all pretty much look the same now, don't they?

And that is they're basically in downtrends. And downtrends are no good. Downtrends are only good for diversification purposes, most of the time, you know, obviously crude in 2014, I'm wrong, and I've made a ton of money over the years and some short trades but the longs are so much better but it looks like I was incorrect that there are four sectors in the commodities it looks like there's one sector it's called commodities it's all been down my portfolio was heavily

weighted in commodities and maybe it should have been 25% rather than 50%. Do you feel like those days of an endowment having 5% long only commodities are over? It seems like a pretty high risk, right? That was a rather standard allocation, you know, even five, ten years ago. But yeah, any time you run the stats, commodities are the most volatile and the least return. Yeah. You know, one of the things that's very frustrating or kind of just I know people are smarter than this, but they'll write an article. And to the degree that gold has done well recently on a buy and hold basis, that's the degree you can include it in your portfolio.

And so I don't think there's any commodity outside of gold that just so happens to have gone up over time because this is their system. What have stocks done from buy and hold perspective? What has real estate done from buy and hold? What have bonds done from buy and hold? What is gold done? And that's the extent. And here the CTA sit with, you know, hardly any of our commodities are worth a damn on buy and hold. But if you let me wrap it inside my trend follower, they all spring magically to life and they add value, they add diversification, they add profit to your portfolio, but I've got to wrap it up at trend following. And so I think that's the lesson

is not the individual markets per se. Trend following can take something that loses money on a buy and hold and raise it from the dead. And it's a beautiful addition, long and short to your portfolio. Right. I feel like we should have 10, 15, 20 years ago, renamed it like smart commodities or enhanced commodities or something. Right. And probably could have gotten some of these big

allocations from those who wanted a commodity sleeve. Because really, yeah, I'd much rather have long or short commodities than just long commodities, paying the roll, paying everything. You're just almost guaranteed loser. And then I had one more thought on that globalization concept of, to me, and you see this in farming and in oil, right? We can get down to the oil. We can drill 3,000 feet down, 3 3 000 feet sideways and get oil that was trapped

in there so the technology i feel like is improving faster than the demand so we're always creating the technology to grow more of it get more of it out of the ground um versus the population growth and the demand that's there i feel like that's kind of, for the last 10 years at least, we kind of ignored in that mining and farming space, but it's there and it's causing that constant downward pressure of more supply. Yeah. Oh, yes. What you're saying now, I was thinking of something else when you were saying that, like technology creates these surprises. And that's one of the benefits of trend following is that it's so amazing on surprises. We see things that are happening all the time we've never seen before in our entire life, politically and economically and pandemic and stuff.

And it's a real benefit to have an approach that just buys these breakouts or follows these moving averages irrespective of the price is too high it's too low majority is saying this or that and it really just fits into your portfolio if for no other reason than that you know who is going to get short or get long these bonds when they're so the rates are so low and who still is going to be long equities you know when everything obviously is overvalued and you just don't see these things

coming for whatever reasons technology or or things that happen in this world today it's it's really fun to be on the front line and see your positions work out over time when nobody really expected them to right and it's the cold feeling of like how in the world were you in that position well and you can't you can't take credit really like well just we're in all the positions a lot of them don't work out every now and then they work out because of some surprise but we're there we're positioned there for when that surprise happens now i uh back in 88 or 89 around that period i just started chesapeake we were in richmond and we got word that paul jones was speaking at uva so we all drove up to uva and to hear paul jones speak

and this was our late 80s or 90 and he talked about that being short the Nikkei trade and he said that when he made all that money being short Nikkei people just loved him and they just thought he was amazing that he made all that money he said but what they didn't want to hear was that was my fourth time going short yeah right and then and that's was pretty good to hit it on your right one out of four some of these could be one out of forty four well I lost so much money before that 2014 crude short just selling the crude you know at the lows over and over and then buying it at the high going long at the highs all throughout 2012 and then you finally get rewarded um it's you know you've got to take in consideration all

these trades not just the good ones i hear you i've been there that's what's so weird what you said before like if you just model these you might end up with a portfolio of like 17 markets, right? You're going to be like, this is no good. Gold looks no good. Crude looks no good. You're going to throw them out. So it takes some resolve to be, no, I know this individual market doesn't test well, but instead of messing with its individual parameters, I'm including it in the portfolio

and I know it's going to create a better portfolio overall. Yeah, exactly. I think things like that mean a lot and they're going to determine how successful you are. And so they're so goofy and it's not really fitting in with most people's personalities that you would kind of hope that that would make what we do a more resilient. As far as being able to last a lot, who are these weird people with these weird thoughts

trading all these markets the same way without paying any attention to any fundamentals. But we're all sort of subject to the trends in the markets and just trying to stay alive and stay flat until we get the big trends. And you've seen these papers over the past couple of years, AQR wrote one for sure about this in depth analysis they did and they said, look, here it is right here.

CTAs didn't make money because they're learning enough big trends. That's it, nothing else, everything else. The trends they got, the trends they had, they captured the same amount that they always did. But unless we get, you know, we put ourself out there for outlier trades, we've seen them. They're there. They happen. We just need to have more. And I feel like the better thing when. Is it asleep over there in the corner because it's right it's not like its head's gotten blown off it's just been and not even all that bad it's been flat to up so it should i think we need to change the narrative there too is trend following asleep

and just holding its breath waiting for that big pop versus dead implies that it's lost tons of money which it hasn't as a as an average as an industry true true yeah all right um we're going over time here so we're gonna move on you got anything else you want to say on the chess speak or program or anything i don't think so you've allowed me to get all my talking points in and I appreciate that. And you made it sound like it was your idea. So I didn't have to force my way to talk about ball targeting or stocks and things like that, that I'm really passionate about. So I thank you. And Jerry, we're going to do some quick fire questions here. How we end up every pod. First name, Ralph or Jerry.

Ralph after my father. And that was called Jerry. And that's fine. Either is fine. I'm proud of my father being a junior. I like it. There's a rumor you have four dogs and a bird? Yes, I have three Shih Tzus and a Black Lab and a bird.

My bird is pretty wonderful. Great pet. Which one's your favorite? The Black Lab is hard to beat you know but the cockatiel is my um she usually sits on my shoulder and uh but she's very loud so she would have been very just uh just distracting today that's the bird the cockatiel yes it's related to a cockatoo i think think so. I don't know my birds. I dated a girl in high school whose family had birds in this room,

and, yeah, it was scary to me a little bit. A lot of noise. So favorite city, Richmond or Tampa? Oh, wow. I'm going to get in trouble on this question. I love Tampa. Tampa's my home, and I have a lot of good friends here. And this to be over so I can go back to New York and enjoy my restaurants and things I like to do up there. Well, I need to now hear one of the favorite restaurants and favorite things you like to do restaurants, I would say, you know, around West Village, Bar Pity, Raul's, kind of really, really fun, fun things to do up there.

And I have two children who live up there. They're grown. And so seeing them up in New York and seeing them enjoy New York City is really fun for me. I've got a life hack for you that also fits into your diversification persona. But we also do it in New York. Diversify your restaurant. So we'll have apps at one restaurant, entree at a second restaurant,

dessert at a third restaurant. So you get a three for one in one night. Get to see the city a little bit it's good um and so i don't know if this is a favorite but just if you hadn't answered that ad back in 84 what do you think you'd be doing now that is a very good question um i think about that some. You know, it's hard to say. One of the things, you know, that I would say that getting so in depth in the trend following and having that experience with Richard Dennis, it closed my mind to almost everything else. You know, it was just me and trend following and this early success and continuing to build off of that. And that's all I was interested in.

And there was so many other opportunities that I'm, you know, take a guy like Salem Abraham. He's just a fantastic businessman. And he is a great trader and had so many different investments, you know, in Texas and all around and just had his open, more open minded than me. So I just got closed down and it was all about being a CTA and that was it. And I missed so many opportunities, but I probably would have been in the stock business in an RIA firm or something like that, but probably an investor and had a lot more different strategies or different types of investments than I do now, which is pretty much real estate and my trading.

Right. But it's worked out pretty well for you, I think. Yeah. And then we ask all our guests favorite Star Wars character. Hopefully you've seen one or two in the movies. I have. I'm going to say R2-D2 or whatever that is. Yeah that little. Yeah R2-D2 the droid. Yes I'm more of a um lord of the rings but um star wars i remember going to star wars when it came out i think in i don't know 1975 yeah yeah the uh we're reading lord of the rings with the kids right now hobbit so what i'll take your favorite Lord of the Rings Hobbit character as well oh you know I don't know the guy's name but he's an actor this one actor on that uh was a Hobbit he is probably he was um Sherlock Holmes he was in the Sherlock Holmes with um

oh yeah yeah famous actor. That man is one of my favorite actors and pretty sure he was a hobbit. I watch a lot of movies and Netflix and things so I don't have a good memory as it relates to remembering all of the

characters but I'm pretty much this COVID thing shut down has really upped my Netflix game quite a bit. Yeah, I sold Netflix short once back in like, oh seven or 11 and lost some money. So I still don't have a Netflix subscription cause out of spite.

I don't think that's how, i need a system right that's not how it's supposed to work uh well thanks jerry this has been fun uh hope to see you when all the lockdown stuff's over and uh welcome you back anytime yeah me too thanks jeff i enjoyed it thanks jerry you've been listening to the derivative links from this episode will be in the episode description of this channel follow us on twitter at rcm alt and visit our website to read our blog or subscribe to our newsletter at rcmalts.com. If you liked our show, introduce a friend and show them how to subscribe. And be sure to leave comments.

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