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The Ray Dalio Debate Continues

Feedback in:

You raise interesting points about how Dalio’s decision rule signals actually work. Based on Schwager’s interview of Dalio it would seem that Dalio has quantitative portfolio risk based signals just like [Tom] Basso does. [Refer to your Basso Q&A episode. Could it be that failing a fundamental signal, portfolio risk can start an exit/re-balance program on positions exceeding a covariance threshold in one of Dalio’s portfolio risk decision rules? I am looking forward to your future podcast on this topic.

I do not know Dalio’s systems. He has said he uses only fundamental data, but 100% systematically.

That seems original, if it is indeed his trading approach.

Falling Prey to The Wall Street Journal Spin

Received this request recently:

Hello, I would like to know your view on this article by John Taylor.

Thanks for the opportunity to clarify:

1. In my 4 books I address multiple historical instances where trend following was pronounced “dead”.

2. Trend following is not meant to be a currency only strategy. Diversification is mission critical.

3. Some trend following performance for comparison: Please keep eyes wide open to a longer time horizon v. the short-term focus of a WSJ reporter spin pen.

4. Taylor sounds as if he is using fundamentals to explain trend following strategy. Trend following is a systematic technical strategy. There is no fundamental usage.

Ep. 16: Francisco Vaca Interview with Michael Covel on Trend Following Radio

Francisco Vaca
Francisco Vaca

Francisco Vaca started his career as a physicist, but then a funny thing happened on the way to the predictable career. Vaca’s tale combines curiosity, passion, determination and a little luck all on his journey to systematically trading the markets:

Listen to this episode:

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