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DISCUSSION THREAD: Episode 32 - Alex Gurevich

  • amkc
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1 year 7 months ago #1 by amkc
Alex is so smart and for those of you interested in learning more about his framework for picking trades (as he spoke about, concurrent necessity, dominant trades, etc.) I recommend checking out his book, The Next Great Trade. It's rare to find macro books that speak so explicitly about a framework and definitely something I'll be keeping as a reference on my bookshelf. Other than that, it was impressive to hear Erik and Alex cover so much ground in less than an hour of interview time.

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1 year 7 months ago #2 by Pepe le Moko
Replied by Pepe le Moko on topic DISCUSSION THREAD: Episode 32 - Alex Gurevich
Do the actions of the fed matter? It looks like the 10 year will keep going down for years. The next hike will cause a yield curve inversion ( i.e. a recession ). Recessions will happen anyways.

Did you notice what Gurevich said about hedging? Don't do it! In other words, that whole hedge fund industry? Forget about it. It doesn't work.
I LOLed.

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1 year 7 months ago - 1 year 7 months ago #3 by Pepe le Moko
Replied by Pepe le Moko on topic DISCUSSION THREAD: Episode 32 - Alex Gurevich
I'm thinking more about this hedging idea. Gurevich is not the first guy you have had on the show who tossed off the "Don't Hedge" idea. Is it that these guys don't know how to use the futures markets? This isn't "Futures markets will breakdown in a zombie apocalypse, run for your life, end game" but more of a "Doesn't work ever ever" kind of thing.

Can you imagine these guys showing up for an interview at a Hedge Fund and saying "That stuff is dangerous! Don't do that!". Kind of like a chemist at a job interview saying "I don't mix chemicals, it is too dangerous."

So I don't want to rag on the guy too much. Is there some way to quantitatively show that hedging works. By this I mean buying financial "products" such as options, futures or derivatives to offset unidirectional trades, as opposed to say buying the GLD ETF to offset a Dow index fund.

Since we are on the topic, Imagine that you are a typical retail investor with a stock trading account through your insurance company or bank. This account will not permit you to use leverage or futures, options etc. You are limited to those stock symbols that appear on the New York Stock Exchange. Those who remember the 2008 crash will recall that the inverse Dow ETF SDS failed to track the inverse Dow when the collapse was at it's most extreme. Is it possible for this type of investor to hedge? Maybe more to the point, is it a good idea?
Last edit: 1 year 7 months ago by Pepe le Moko.

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1 year 7 months ago #4 by Joesxm
I enjoyed this interview. In fact, I have enjoyed every one of the five or six archived interviews I have listened to since I found this site last week.

I bought Alex's book, so he got at least one book sale from doing the interview. :-)

The book seems good, but a lot of the stuff is new to me and I suspect out of my reach to do in my account.

The part about validating your trading ideas against the macro trend made sense, as did the part about how stops could end up doing something other than what you are intending.

I particularly liked what he said about not trying to short a bubble top, but instead to get underweight and have cash ready to buy in after the bubble pops.

Having dry powder after the 2008 crash and buying in after seems to have been a big help repairing the damage. My former boss had his money professionally managed and he is still working off his carry forward losses.

I realise that I am at the bottom of the class here but I am learning a lot.

Thanks.

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