34 The Art of Risk Management (for Investors) with Luc Van Hof of Capital Hedge – 2of2
Summary: "I don’t want to trade much more money - I want to show that a mostly automated system can make money over the years in a pretty regularly recurring fashion." - Luc Van Hof (Tweet)<br> In the second part of our interview with hedge fund founder Luc Van Hof, we dive into the philosophy and creation behind his trading models. We also discuss why he is a risk averse person, what hobbies help him stay focused at work, and what investors and fund managers can do to grow their business and trade smarter.<br> <br> Welcome to Part 2 of our conversation with Luc Van Hof.<br> <br> <br> <br> Subscribe on:<br> <br> <br> In This Episode, You'll Learn:<br> <br> How to avoid model decay and how to avoid the risk when the model may stop working in the future.<br> How to diversify your types of models - dynamic filtering that takes place. Automatic de-leveraging when a certain market goes down.<br> "So you focus on effective diversification which means - you have to diversify across markets, across trading approaches, and across time." - Luc Van Hof (Tweet)<br> <br> How Luc chooses his models and why he does:<br> <br> Short term trend following<br> Short term mean reversion<br> <br> <br> What concepts for his models repeat themselves over and over again, pattern recognition.<br> About volatility risk premium strategies.<br> "The risk premium strategy is the most important source of our return drivers." - Luc Van Hof (Tweet)<br> <br> How he tests his models that have so many moving parts in short timeframes.<br> "We spend a lot of time making sure the data we use for our research is of good quality." - Luc Van Hof (Tweet)<br> <br> His views on position sizing.<br> "Position sizing has become by far the most important component." - Luc Van Hof (Tweet)<br> <br> What investors should look at in terms of risk management<br> Maximum Exposure for a trade - determines the maximum risk that a trade can generate for the total of the portfolio.<br> How Luc deals with drawdowns.<br> Why he is a risk averse person.<br> Why he is still researching other trading ideas when he thinks he’s found a way that mitigates risk effectively.<br> How he gets his ideas from math puzzles, reading about geometry and logic.<br> Why investors should look at the predictability of returns and how to convince investors what and how you are going to trade is something that is going to work.<br> Why discipline is the main characteristic that people need to be a successful fund manager.<br> "Build a program and offer that program, so that every single one of your clients has the exact same thing." - Luc Van Hof (Tweet)<br> <br> The books that he recommends for managers starting out wanting to be successful.<br> How his hobbies such as nature, reading, and music help to keep him balanced in a busy financial world.<br> <br> Resources & Links Mentioned in this Episode:<br> <br> Books that Luc mentioned in this episode:<br> <br> Market Wizards<br> The Predictors<br> <br> <br> Definitions of terms mentioned in this episode:<br> <br> Mean Reversion<br> Risk Premium<br> <br> <br> <br> This episode was sponsored by Swiss Financial Services:<br> <br> Connect with Capital Hedge:<br> Visit the Website: www.CapHedge.com<br> <br> E-Mail Capital Hedge: bernhard@caphedge.com<br> <br> Follow Luc Van Hof on Linkedin<br> <br> <br> "If we can make something that is not going to suffer too dramatically in a down market, and is going to underperform in an up market, the client is going to like it." - Luc Van Hof (Tweet)
