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Hi Do, Here are Todd’s latest fun picks to take your financial skills to the next level... I've been saving these resources (see below) for you while traveling the entire month of November.
I'm back now, and there's enough good stuff to fill two newsletters. So you'll get two quick updates - today and next week.
That will set us up for taking an extended Christmas holiday break into mid-January.
Long-time subscribers know I don't publish during the holidays to respect your inbox and support healthy life priorities. You don't need distractions during holiday family time, and neither do I.
Today's resources are investment themed. Next week's theme will update you on Epochal Change.
The first resource below is the venerable Michael Howell, who has made a name for himself in recent years. His analysis focuses on changes in government liquidity as the cause behind intermediate to long-term market price movements. His track record of accurate calls speaks for itself. That's why Michael gets my attention whenever he returns to the podcast circuit with an update. I hope you enjoy his latest analysis.
Your second resource is an interview podcast celebrating the 50th anniversary of Dunn Capital Management, one of the original trend-following, managed futures programs.
While the particular form of trend-following I advocate does not use managed futures (it uses only the most liquid ETFs as market risk proxies similar to passive investing), the lessons shared from 50 years in the trend following investment management business are valuable for everyone.
For example, when they talk about independent sources of return as the driver behind non-correlated returns, it's worth listening closely because that's a feature of all trend following, not just managed futures. The way I teach it in my wealth strategy course is every investment strategy is ultimately just a bet on a specific source of return persisting into your investment time horizon. For passive investing in stocks, the bet is that dividends plus economic growth will exceed any negative change in market valuation, which is mean reverting. I think that's a risky bet over the next 10 years given extreme market valuations. Whereas trend following is entirely different: the only thing required is that serial autocorrelation continues into the future as it has for all the data in existence. I'm very comfortable with that bet given the extreme economic uncertainty we face today.
The above analysis provides a simple and actionable way to understand investment return expectations. It's also ABSOLUTELY ESSENTIAL to smart diversification strategy, because diversification only adds value when the assets chosen are both non-correlated and non-dilutive. With bonds (conventional source of diversification against stocks) failing miserably on both accounts, it means every investor with a passive portfolio must seriously consider trend-following as the best, proven source of diversification.
In fact, I'll boldly state that anyone not diversifying their passive portfolio with my recommended version of trend-following simply doesn't know the math, because the decision is that compellingly obvious to those that do know the math.
Additionally, diversifying your assets by source of return is a smart decision because it's the only form of diversification that holds up reliably against extreme bear markets when asset classes correlate to the downside. I teach this form of diversification in my wealth strategy course as "deep diversification" to differentiate it from conventional asset diversification that your financial advisor practices.
So anyway, lots of useful, actionable insights in today's investment resources. However, just remember that you have to look past some of the semantics to identify the principles that matter and produce actionable results.
I hope you get great value from today's resources... One of the tenets of my epochal change call dating back to late-2021 is that markets have progressively become disconnected from economic fundamentals. This increases risk because there's no fundamental floor to support prices during a downturn. The current game of "Number Go Up" reflects that concern because it's driven almost entirely by government liquidity, which is why Michael Howell's analysis is worth a listen. He's been tracking changes in government liquidity and accurately forecasting markets with this information since long before it was fashionable, and he now says the tide is close to changing. Government liquidity is the only game in town, so it merits paying attention to Michael's analysis. 50 years in the trend following business teaches you a thing or two about investing. Listen closely for the principles illustrated: don't get hung up on the details of the story or strategy discussed. The principles shared are where you'll uncover the actionable insights in this interview. While this episode is focused on Dunn Capital's managed futures, trend following models, the principles are equally applicable to the version of trend following I advocate using only the most liquid ETFs as risk proxies for the various markets. It's the smartest way to manage the uncertainty of the future, and it should seriously be considered (at a minimum) for diversifying a portion of every portfolio. Learn more here...
Onward and upward!
Todd Tresidder
Take Action Now So You Can Grow Your Wealth During Epochal Change: This investment software solution includes two of Todd's top investment systems. You'll learn the smart, proven way to manage portfolio risk during epochal change. Once you understand it, you'll wonder why you tolerated the unmanaged risk in your old "buy and hold" investment strategy. My Expectancy Wealth Planning group coaching program shows you how to maximize the expected growth of your wealth in every market condition regardless of epochal change. My students were prospering during the good times, and they're still prospering during this adversity. Join this smart community of active wealth builders to secure your financial future. |
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