I said to myself: “There’s no way in hell I’m listening to a 4-hour episode with Tom Basso…” And then I got to hour 3 and said to myself “I owe you an apology” holy **** this is amazing. 95 pages into Trend Following and just bought The Complete TurtleTrader today… thank you for doing this amazing show.
Some great feedback came through the other other day:
It’s because of you my friend that I’ve come to know so many in the space. Thanks for your efforts.
His personal message to me (above) was followed by his newsletter to his clients:
In my career, I’ve had many mentors, some of which I’ve met and some not.
Tom Basso is one of these people, and I was fortunate to get to meet him last week where he was generous enough to give me over two hours of his time over lunch in Scottsdale. Tom is also getting added to the email list and may be able to contribute some wisdom from time to time.
Tom Basso trader is probably most known for being profiled in the bestseller, The New Market Wizards, where he was nicknamed “Mr. Serenity.”
The scope of our discussion was very broad… Tom left the money management business largely because of the frustration of working with clients who constantly made poor decisions that were rooted in fear and greed. Tom produced decades of double digit gains for clients on a very attractive risk-adjusted basis yet many never achieved these results because of emotions and performance chasing. As you know, I write on these subjects regularly because they matter that much.
One thing Tom mentioned that was particularly interesting was how at the later stages of his career (approximately 10 years ago) Tom put together a diversified program that was a combination of strategies, asset classes, and products (meaning futures, ETF’s, mutual funds, etc.). He said he himself was the largest customer and it seemed that many people just simply didn’t grasp the value. Regulatory restrictions about combining multiple products together (such as equities and futures) made it overly obstructive. This, in essence, is exactly what I’m trying to do with LCD (Lorintine Capital Diversified) as it mimics endowment level diversification.
The benefit of a multi-strategy single account is it doesn’t give you the opportunity to miss the forest through the trees and take from those who may be underperforming in the short term in favor of those who are currently performing best…essentially the process of buy HIGH and sell LOW where you should be doing the opposite. Tom mentioned how he had a client during the Black Monday crash of 1987 (largest single down day in history where the Dow lost over 22%) that he had set up one account as a stock portfolio and another account as a hedging portfolio where he would short equity futures based on his quantitative market measurements… The client ended up making money on Black Monday (about 1.5% from Tom’s memory) while of course the stock account was down significantly it was more than offset by the short futures account…The client ended up firing Tom as an equity manager because they couldn’t see past the losses in the stock account…yet if this would have been done collectively in one account they would have only seen the net gain (on the worst day in history where many traders went bankrupt). Unfortunately, I’ve witnessed much of this type of behavior in 2014 as some things never change.
This game is incredibly simple, yet not at all easy. It’s simple the same way that getting in shape or losing weight is – just get on almost any decent diet and work out consistently and you are almost guaranteed results… yet few have the discipline to do it day after day for the long term. Make it your goal in 2015 to follow your plan. If you don’t really have a plan it’s like not being able to spot the sucker at the poker table… because you’re it.
My guest today is Tom Basso, the trader most famously known as “Mr. Serenity” in Jack Schwager’s “New Market Wizards”. Basso, now retired from managing client money, was president and founder of Trendstat Capital Management. Basso became a registered investment advisor in 1980, a registered commodities advisor in 1984, and was elected to the board of the National Futures Association in 1998. Today, he is a private trader.
The topic is Trend Following.
In this episode of Trend Following Radio we discuss:
50% drop in oil and why trend followers have done especially well with this price movement
Why people like to blame speculators, and the value of speculation; emotional rushes and emotional devastation
Mentally rehearsing catastrophic events
Focusing 1,000 trades into the future
Separating your trading from your political opinion
Trend following and behavioral economics
The importance of not letting your trading define you
Basso’s advice to newcomers to the CTA industry
Listen to this episode:
Listen to this podcast on iTunes. (Please leave a rating!)
My guest today is Tom Basso, the trader most famously known as “Mr. Serenity” in Jack Schwager’s “New Market Wizards”. Basso, now retired, was a stock and commodities trader who was president and founder of Trendstat Capital Management. He is the author of two books, “Panic-Proof Investing” and “The Frustrated Investor”. Basso became a registered investment advisor in 1980, a registered commodities advisor in 1984, and was elected to the board of the National Futures Association in 1998.
The topic is Trend Following.
In this episode of Trend Following Radio we discuss:
Location independence
Making sure trading doesn’t take up your entire life
Stoicism
Trend following in the emotional arena
Mental exercises
The psychology of trend following
The “observer self”
The mental aspects of success
The importance of being able to lose small amounts of money
Why trend following does so well when the black swans hit
Basso’s daily routine and the importance of routine in daily life. Covel and Basso also go through listener questions such as whether Basso would make the same trading decisions that he did from the start
Money management v. trading
Tinkering with current systems
Knowing when it’s a regular drawdown v. something really going the wrong way
Whether Basso is a one-system kind of guy v. multiple systems
In this episode of Trend Following Radio:
How to use mental exercises to improve yourself as a trader
Why the tolerance for losing small amounts of money can make you almost invincible
Tom’s daily trading routine: how to ensure you don’t spend the whole day making trading decisions
Why understanding strategic planning is key to being a successful trader
Trading for clients vs. trading for yourself, and the regulations that go along with that
Understanding the difference between a normal draw down vs. something really going wrong
Separating facts from opinions, and why it’s important in trend following trading
Listen to this episode:
Listen to this podcast on iTunes. (Please leave a rating!)
My guest today is Tom Basso, the trend following trader famously featured in Jack Schwager’s “New Market Wizards”. Basso is a hedge fund manager. He was president and founder of Trendstat Capital Management. Trendstat was closed in 2003 when assets under management fell to $65M. He is the author of two books, Panic-Proof Investing and the self-published The Frustrated Investor. In 1998, he was elected to the board of the National Futures Association. He currently runs enjoytheride.world, a website dedicated to trader education. He is also the chairman of the board of Standpoint Funds.
The topic is Trend Following.
In this episode of Trend Following Radio we discuss:
Video of philosopher Alan Watts
How Basso manages his emotions during both losing and winning periods
What drove Basso to “enjoy the ride” and whether there were periods in his life when it was difficult to do so
Exit strategies on winning positions
Basso’s use of hedges
The process behind taking a developed system from testing to live trading
What Basso learned from his earliest large drawdown
Basso’s use of money management and risk control
Basso’s advice to the first time programmer
How to handle skeptics of trend following
Whether Basso considered the notion of serenity from the very beginning of his career
The career of John W. Henry
Basso’s coin flip entry method, and the importance of exit strategies
Percent betting
Diversification
What would cause Basso to stop trading a particular system
Comfort with uncertainty
Basso’s views on initial capital at risk vs. unrealized gains
Fighting against your gut reaction when your system tells you otherwise
Listen to this episode:
Listen to this podcast on iTunes. (Please leave a rating!)