"When the market turns and goes negative, strategies like Trend Following tend to do really well. They provide that hedge. So it’s completely inappropriate to compare Trend Following to a long equity portfolio, because Trend Following has different properties - it has hedging properties." - Cam Harvey
How should you protect your portfolio against large losses, but without giving up its upside potential? To answer this question, and many more, I invited back professor of finance at Duke University, Campbell Harvey to the show. I also thought it would be fitting if Rob Carver, could also join us, considering Rob and Cam used to work together at Man AHL. Enjoy the show as we discuss how to navigate a crisis in the markets, and what to expect in terms of the global outlook for investing.
Thank you for listening and please welcome to the show, our guest, Campbell Harvey.
In This Episode, You’ll Learn:
How to manage a portfolio through a crisis
The motivation behind writing his new book
Various methods of portfolio protection
Diversification within Trend Following systems
Volatility targeting and why it can be a powerful tool
“When you have a portfolio of different assets, the noise cancels out, you reduce the volatility, and that’s good for you.” - Cam Harvey
The journey of volatility going from a measure to an input
Drawdowns as an important metric to monitor
Timing portfolio rebalances effectively
The 60 / 40 portfolio, diversification, and inflation
And please share this episode with a like-minded friend and leave an honest rating & review on iTunes so more people can discover the podcast.
“People don’t truly understand diversification, because it’s not just about reducing volatility, it’s also about reducing some of the tail-risks. So when I think about a diversified portfolio, I want to reduce the noise, and reduce the variance, but I also want to reduce the skew.” - Cam Harvey