1 hr 17 min

115 Protection Against Black Swans & Building a Bulletproof Portfolio with Jason Buck of Mutiny Fund Top Traders Unplugged

    • Investing

'The typical pie-chart of diversification ends up being all long-GDP assets, which means these are going to do well in a risk-on environment, when we’re awash with liquidity. The problem is, when we see a sell off or a liquidity event like March 2020, we see the correlations of an ‘uncorrelated’ pie chart go to 1, which means that they all sell off at the same time.' - Jason Buck



What happens when an unexpected major event occurs and all of your supposedly diversified investments suddenly become correlated, before heading sharply to the downside?  Jason Buck and his partner at Mutiny Fund have been thinking about this question for a long-time, and have created a portfolio designed to protect against these ‘Black Swan’, high-volatility events.  You may have seen Jason Buck alongside another volatility-expert (and previous guest of Top Traders Unplugged) Chris Cole on Real Vision, or listened to his ‘Pirates of Finance’ podcast with co-host Corey Hoffstein (another previous guest of Top Traders Unplugged), but he’s also been a long-time listener of the show, so it was only right that I invited him on  to discuss some of the methods and thinking behind Mutiny Fund, and how these approaches can provide protection and profits during all market environments.

Thanks for listening and please welcome to the show our guest Jason Buck.



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In This Episode, You'll Learn:



How Jason got to where he is today

If the initial risks Jason set out to protect his clients against, have changed

Why CTAs could be considered ‘long-volatility’ assets that provide protection during broad market selloffs such as 2020

The benefits of ‘ensemble’ investing

The opposite requirements of building wealth versus keeping wealth

Why a sample size of 100 years is still just an anomaly

Why the typical ‘diverse’ portfolio might be riskier than investors realise

What a ‘long-volatility’ asset looks like

The history of long-volatility assets

The term ‘crisis alpha’ and what it means to him and his clients

How to overcome the challenges of educating investors about volatility-event risks

Whether the addition of long-volatility components to portfolios today has affected his initial approach





'The problem with Sharpe Ratio is that it was originally built as a portfolio tool to measure the portfolio level, but now we measure individual strategies or individual managers with Sharpe, and that was never the intention.’ - Jason Buck





Why the Sharpe Ratio is often misunderstood as a risk measurement tool

How much, and why, returns vary among different long-volatility managers

How to approach position sizing with black swan events in mind

Some of the common investor mistakes

How to choose between different Trend Following managers

How to create a strategy for inflationary and deflationary environments

If less-liquid assets can be safely incorporated into a portfolio

How to analyse backtests properly

If Jason uses Gold and Bitcoin in his long-volatility strategies

What keeps Jason up at night in terms of risks



Connect with Mutiny Fund:

Visit the Website: MutinyFund.com

Follow Jason Buck on Twitter

 



‘We had a lot of family and friends coming to us and saying, I've read a Nassim Taleb book or Chris Cole's white paper. How do I do this? And if you don't have tens of millions of dollars, there was never a solution.  So as entrepreneurs, we figured out there had to be a solution to this, and the piece that was missing was this long volatility, tail risk piece. And so we set out to create that opportunity for retail to get access to this asset class.' - Jason Buck



Subscribe on:

'The typical pie-chart of diversification ends up being all long-GDP assets, which means these are going to do well in a risk-on environment, when we’re awash with liquidity. The problem is, when we see a sell off or a liquidity event like March 2020, we see the correlations of an ‘uncorrelated’ pie chart go to 1, which means that they all sell off at the same time.' - Jason Buck



What happens when an unexpected major event occurs and all of your supposedly diversified investments suddenly become correlated, before heading sharply to the downside?  Jason Buck and his partner at Mutiny Fund have been thinking about this question for a long-time, and have created a portfolio designed to protect against these ‘Black Swan’, high-volatility events.  You may have seen Jason Buck alongside another volatility-expert (and previous guest of Top Traders Unplugged) Chris Cole on Real Vision, or listened to his ‘Pirates of Finance’ podcast with co-host Corey Hoffstein (another previous guest of Top Traders Unplugged), but he’s also been a long-time listener of the show, so it was only right that I invited him on  to discuss some of the methods and thinking behind Mutiny Fund, and how these approaches can provide protection and profits during all market environments.

Thanks for listening and please welcome to the show our guest Jason Buck.



·

Subscribe on:



In This Episode, You'll Learn:



How Jason got to where he is today

If the initial risks Jason set out to protect his clients against, have changed

Why CTAs could be considered ‘long-volatility’ assets that provide protection during broad market selloffs such as 2020

The benefits of ‘ensemble’ investing

The opposite requirements of building wealth versus keeping wealth

Why a sample size of 100 years is still just an anomaly

Why the typical ‘diverse’ portfolio might be riskier than investors realise

What a ‘long-volatility’ asset looks like

The history of long-volatility assets

The term ‘crisis alpha’ and what it means to him and his clients

How to overcome the challenges of educating investors about volatility-event risks

Whether the addition of long-volatility components to portfolios today has affected his initial approach





'The problem with Sharpe Ratio is that it was originally built as a portfolio tool to measure the portfolio level, but now we measure individual strategies or individual managers with Sharpe, and that was never the intention.’ - Jason Buck





Why the Sharpe Ratio is often misunderstood as a risk measurement tool

How much, and why, returns vary among different long-volatility managers

How to approach position sizing with black swan events in mind

Some of the common investor mistakes

How to choose between different Trend Following managers

How to create a strategy for inflationary and deflationary environments

If less-liquid assets can be safely incorporated into a portfolio

How to analyse backtests properly

If Jason uses Gold and Bitcoin in his long-volatility strategies

What keeps Jason up at night in terms of risks



Connect with Mutiny Fund:

Visit the Website: MutinyFund.com

Follow Jason Buck on Twitter

 



‘We had a lot of family and friends coming to us and saying, I've read a Nassim Taleb book or Chris Cole's white paper. How do I do this? And if you don't have tens of millions of dollars, there was never a solution.  So as entrepreneurs, we figured out there had to be a solution to this, and the piece that was missing was this long volatility, tail risk piece. And so we set out to create that opportunity for retail to get access to this asset class.' - Jason Buck



Subscribe on:

1 hr 17 min