Whether you are a sovereign wealth fund managing trillions or a family office/hedge fund with billions in assets under management, navigating market extremes is a necessity for effectively managing risk and identifying the most favorable risk-adjusted opportunities in the most strategic fashion, and this blog post touches a little more on that.
As a hedge fund manager, what steps should you take when your trend following models are failing and your fund is bleeding capital? This is a difficult question to ask yourself and sometimes necessary to take a step back while rethinking today along with the future.
Do you double down on a strategy that may have lost its inherent edge or do you detach ego and refocus your efforts on market research by distilling the market elements down to their most granular form in pursuit of capturing first principles of market function? We prefer the latter.
It is no secret that with the advent of algorithmic/quantitative trading the liquidity profiles for various securities on exchanges have shifted globally. And now with the early integration of AI into financial models/algorithmic trading market participants are racing to find new opportunities.
Another question to ask yourself/team: As market trends and liquidity profiles continue to evolve over time, is your fund falling behind or setting the pace as a leader?
Looking at The Practical Contrarian and the guidance we deliver, our core principles are scientifically constructed on the premise of mean reversion akin to a pendulum that swings from the zero-scale line at equilibrium between two opposing extremes along with a measured data-driven approach for identifying/navigating trending and consolidating markets.
We are a boutique financial consulting and market research firm that extracts and delivers actionable insights for family offices, hedge funds and institutional investors around the world to help them navigate the wide range of potential outcomes.
Interested in exploring new approaches? Let’s connect.