Taming Market Risk: Defense? How? Why Now?(59:56)
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In this episode of Insight is Capital, Pierre Daillie chats with Jason Buck, Chief Investment Officer at Mutiny Fund. Discussed is the importance of incorporating both offensive and defensive strategies into investment portfolios to navigate volatility and manage risk effectively. Drawing from his experience and the concept of the 'cockroach investment strategy,' Buck emphasizes the need for diversification beyond traditional stocks and bonds, advocating for the inclusion of long volatility, tail risk, and commodity trend advisors to create a more resilient portfolio. He explains how systematic rebalancing and the use of derivative instruments can enhance capital efficiency and protect against significant market downturns. The conversation also touches on behavioral finance aspects, highlighting the challenges investors face in maintaining discipline during market volatility. Buck's insights are framed within the broader context of portfolio construction, aiming to provide investors with strategies to compound wealth efficiently over time while minimizing exposure to severe drawdowns.
Timestamped Highlights
00:00 Introduction - Guest - Jason Buck, Mutiny Fund
00:14 Jason Buck's Background and Investment Philosophy
00:49 The Cockroach Investment Strategy
01:20 Podcast Disclaimer and Welcome Back
01:49 Discussing the Cockroach Strategy
03:08 Importance of Diversification and Defense Strategy
04:44 Launching the Defense Strategy
06:47 The Great Financial Crisis and Its Lessons
07:40 Combining Offensive and Defensive Assets
08:53 Harry Browne's Four Quadrant Model
09:33 Modern Portfolio Techniques and Convexity
12:33 Commodity Trend Advisors (CTAs) Explained
14:12 The Role of CTAs in Inflationary Environments
15:01 Ensemble of CTAs for Robust Returns
24:04 Challenges in Explaining Trend Following
30:43 Understanding the Buy Button Mentality
31:05 The Case for Commodity Trend Following
31:38 Challenges in Portfolio Allocation
32:42 Financial Advisors and Client Resistance
34:37 The Importance of Defensive Assets
36:37 Cash and Capital Efficiency
39:19 Long Volatility and Tail Risk Explained
41:02 Convexity and Portfolio Insurance
48:51 Rebalancing for Effective Compounding
55:45 The Herschel Walker Trade Analogy
58:57 Conclusion and Final Thoughts
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