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In Episode 45, we welcome one of the most often-requested guests for our podcast, Gary Antonacci.\nAfter a few minutes on Gary\u2019s background, the guys dive into Gary\u2019s \u201cDual Momentum\u201d research. To make sure everyone is on the same page, Meb asks for definitions before theory. \u201cRelative momentum\u201d compares one asset to another. \u201cAbsolute momentum\u201d compares performance to its own track record over time, also called time-series momentum. Gary uses a 12-month lookback, and compares his results to the S&P and other global markets. In essence, you\u2019re combining these two types of momentum for outperformance.\nThe guys talk a bit about using just one of the types of momentum versus combining them, but Gary tells us \u201cYou get a synergy that happens when you use (Dual Momentum).\u201d The compound annual growth rate applied to the indices is 16.2% dating back to 1971, compared to the S&P\u2019s 10.5%. And the reduction in volatility and drawdown is under 20% compared to 51% for the S&P.\nWith the basics of Gary\u2019s Dual Momentum out of the way, Meb decides to go down some rabbit holes. He asks about the various extensions on Dual Momentum. It turns out, Gary says you can introduce some additional granularity, but not a lot. Almost nothing really improves the current version of Dual Momentum substantially. (And in case you\u2019re wondering, you can go to Optimalmomentum.com to track Gary\u2019s performance.)\nMeb then brings up questions that came in via Twitter. The first: \u201cWhat sort of evidence would be required to convince Gary that Dual Momentum won\u2019t work in the future?\u201d\nGary tells us that because the evidence for Dual Momentum is so strong, the evidence against it would have to be strong. We would need more than a few years of underperformance, and instead, a full market cycle of underperformance. But more importantly, he\u2019d want to understand why it would underperform \u2013 for instance, perhaps everyone decided to become a trend follower, squeezing out the alpha? Gary quickly ads that such a scenario will likely never happen due to our behavioral tendencies as investors.\nThe next Twitter question: \u201cWhat are your thoughts on doing something alpha oriented versus just dropping into cash and bonds when you\u2019re in a downtrend?\u201d\nGary says shorting doesn\u2019t work because of an upward bias to stocks. Meb agrees, saying that shorting actually amps up risk and volatility, but doesn\u2019t really add to risk-adjusted returns.\nNext, Meb brings up a post Gary wrote about commodities \u2013 are they still a good diversifier? The idea is that markets and their participants change over time. Gary thinks passive commodities have changed over time. And while they were a good diversifier to a stock/bond portfolio before, everyone has started doing it, which changed the nature of the market, reducing the benefit.\nGary also mentions the risk of others front-running you. Meb chimes in, agreeing \u2013 you\u2019re going to want to hear this back-and-forth.\nThere\u2019s tons more in this episode: moving away from market cap weighting when using Dual Momentum\u2026 Dual Momentum applied to sector rotation\u2026 sports gambling\u2026 our tendencies to stray from our investment plans\u2026 and Gary\u2019s most memorable trade \u2013 hint: it involves an options blow-up.\nWhat are the details? Find out in Episode 45.\nLearn more about your ad choices. Visit megaphone.fm/adchoices