What if the real edge in markets is not in adding more assets, but in choosing fundamentally different ones? In this episode, Moritz Siebert speaks with Tom Babbedge about why alternative commodity markets offer a distinct source of diversification and trend. They explore how structural supply and demand imbalances create persistent price moves, why many financial markets behave as one during stress, and how capacity constraints shape portfolio construction. The conversation also examines how markets are selected, how execution differs from traditional CTAs, and why understanding who trades a market may matter more than any backtest.
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Episode TimeStamps:
00:00 - Introduction to the episode and guest
02:04 - Why focus only on commodity markets
03:59 - The myth of diversification through more markets
05:01 - Structural differences within commodity markets
06:22 - Why financial markets behave as one in crises
07:57 - Capacity constraints and portfolio construction
11:18 - Adding and removing markets from the portfolio
13:28 - How to identify truly alternative markets
16:40 - Trend quality vs trend quantity explained
19:11 - Structural drivers behind commodity trends
20:01 - Case study European carbon and trend persistence
26:59 - Execution as an edge in systematic trading
32:42 - Reducing trading costs through patience
40:09 - Why investors allocate to alternative commodity strategies
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