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

'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

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‘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:

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: