SI60: The dangers of "Home" bias and the benefits of Diversification

Published: Nov. 3, 2019, 1:15 a.m.

This week, we cover some of the dangers of \u2018Home Bias\u2019, and the benefits of diversification mixed with good risk management. We also discuss the differences between common Trend Trading and Systematic Trend Following, why investors tend to hold on to losing positions longer than winning positions, why people being hopeful with losses and afraid with profits may be the reason for why Trend Following works, DUNN\u2019s Capital\u2019s recent milestone of 45 years in the business, why Trend Following strategies are more than just the \u2018perfect hedge\u2019, ways that Trend Following can be applied to life, and we touch Abbey Capital\u2019s recent article regarding Trend Following performance over the current decade, compared to previous decades.  Questions answered this week include: Should long and short entries be symmetrical?  Should you limit position sizing in particular markets?  What do you define as a small loss?

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Episode TimeStamps:

00:00 \u2013 Intro

01:05 \u2013 Macro recap from Niels

02:20-  Weekly review of performance

09:00 \u2013 Top tweets

35:05 \u2013 Questions 1/2: David; Should a bearish strategy mirror a bullish strategy (i.e. 100 day hi/lo entry for both)? Should you expect bearish strategies to do as well as bullish strategies?

39:45 \u2013 Question 3: Walter; Do you have position size limits on individual contracts?

44:15 \u2013 Question 4: Neil; What is the definition of a \u201csmall loss\u201d?

49:50 \u2013 Benchmark performance update

50:55 \u2013 Discussion of <a href="https://www.abbeycapital.com/insights/the-market-environment-for-trendfollowing/" rel="noopener noreferrer"...