Jerry Parker
Trend Following: A Turtle Trader's Approach
Jerry Parker is one of the original Turtle Traders. In December 1983, he answered an ad in the Wall Street Journal, flew to Chicago, and was selected for Richard Dennis's legendary trading program. He was taught to trade alongside a small group of recruits, and over four years generated roughly 150-200% annual returns following Dennis's system. When the Turtle program ended, Parker launched Chesapeake Capital in Richmond, Virginia in February 1988. He's been running trend following strategies ever since, and recently brought that approach to the ETF market with TFPN (Blueprint Chesapeake Multi-Asset Trend ETF).
On this episode, Jerry sits down with Brad to talk about the Turtle origin story, why he built TFPN to trade roughly 400 instruments including individual stocks, and his conviction that trend following belongs at the center of a portfolio rather than at the margins.
From Accounting to the Turtles
Parker started in public accounting in Richmond, Virginia. He passed his CPA exam, got his certificate, and immediately started looking for the exit. He knew corporate accounting wasn't for him. He interviewed for an assistant role with a commodity trader in Richmond and didn't get the job. A few months later, he saw the Wall Street Journal ad for Richard Dennis's Turtle program and applied. Dennis was settling a bet with his partner Bill Eckhardt about whether great traders were born or made. Dennis believed they could be taught. He gave each Turtle roughly a million dollars and a few weeks of training, then set them loose. The core philosophy: follow the system, take every signal, don't override the rules. Parker describes it as being "handed a career." He was 25 years old.
After the program ended, Parker launched Chesapeake with the same core approach. For decades, he ran a traditional managed futures business, trading primarily through the CTA structure. The move to ETFs was driven by a desire to bring trend following to a broader audience. Parker believes the strategy has been unfairly confined to the alternatives bucket, and the ETF wrapper makes it accessible to any advisor or retail investor who wants exposure.
How TFPN Works
TFPN stands for Trend Following Plus Nothing. The fund trades roughly 400 instruments across five sectors: stocks, commodities, currencies, interest rates, and some crypto. What's unusual is that about half the portfolio is individual stocks, which sets it apart from traditional CTA strategies that typically trade only futures contracts on indices and commodities. Parker added individual stocks because he saw an opportunity to apply trend following signals to a much larger universe of liquid instruments, which improves diversification and creates more independent bets.
Every trade has a predetermined stop loss of roughly 10-15 basis points of total portfolio risk. The system enters positions when price trends confirm across multiple timeframes and exits when those trends break down. There are no fundamental inputs, no earnings estimates, no macroeconomic forecasts. It's purely price-driven. Parker emphasizes that the key to trend following isn't any single trade but the aggregate effect of hundreds of small bets where losses are cut quickly and winners are allowed to run. The math works because the occasional large winner more than compensates for the frequent small losses.
Why Trend Following Belongs in the Core
Parker makes a passionate case for reclassifying trend following from an alternative strategy to a core portfolio holding. His argument: trend following has positive expected returns in both up and down equity markets because it can go long or short any instrument. When stocks enter a bear market, the system shorts them or shifts to long positions in assets that are trending up (like bonds during a flight to quality, or commodities during inflationary periods). This creates a return profile that is genuinely uncorrelated to traditional 60/40 portfolios.
He points to 2022 as a case study. When both stocks and bonds fell simultaneously, trend following strategies had one of their best years because they captured the commodity rally and shorted bonds as rates rose. Parker argues that any strategy capable of generating positive returns during a year when the traditional portfolio got destroyed deserves more than a 5% alternative allocation.
Key Takeaways
- TFPN trades roughly 400 instruments across five sectors, with about half the portfolio in individual stocks, which is rare for a trend following fund.
- Every trade has a predetermined stop loss of roughly 10-15 basis points of total portfolio risk, with the system designed to cut losses quickly and let winners run.
- Parker was one of about a dozen traders selected for Richard Dennis's Turtle program in 1983, generating 150-200% annual returns over four years before launching Chesapeake Capital in 1988.
- In 2022, trend following strategies posted strong positive returns while both stocks and bonds declined, demonstrating the genuine diversification benefit Parker advocates for.
- Parker believes trend following is misclassified as an alternative and should be a core allocation, citing its ability to generate positive returns in both rising and falling equity markets.
Listen to the full conversation on Spotify, Apple Podcasts, or YouTube.
Full Transcript
5,889 wordsMachine transcribed from Brad Roth's conversation with Jerry Parker, with speakers identified automatically. Timestamps link to that moment on YouTube. Lightly cleaned, otherwise unedited.
Welcome to Behind the Ticker. I'm Brad Roth, Chief Investment Officer of Thor Financial Technologies and Portfolio Manager of THLV, the Thor Low Volatility ETF. Behind the Ticker uncovers the inner workings of the ETF industry. We will interview portfolio managers and ETF service providers to dive deep into their work lives and their businesses. We will learn the inner workings of their strategies and what drives them as they continue to grow their company. Many of these individuals are entrepreneurs and will have unique and compelling insights to share as much goes on behind the ticker. Please note, nothing in this show is investment advice and it is meant solely for educational and entertainment purposes only.
Welcome to Behind the Ticker. Today we have on Jerry Parker. He is from Chesapeake and we're here to talk about their ETF, ticker TFPN, the Blueprint Chesapeake Multi-Asset Trend ETF. As the name says, it is a trend-following product, trades multiple different markets, both long and short, does a wonderful job in my observation mitigating drawdown. I believe that this would be a very good addition and a bolt-on to help mitigate some overall volatility in the portfolio as well as a product that can really go anywhere. So without further ado, please enjoy this episode with Mr. Jerry Parker.
Hey Jerry, welcome to the show. Hey Brad, thanks for having me. Good to be here.
Yeah, no, thanks for doing it. So can you give everybody a bit about your background, how you eventually started Chesapeake and just give us how you got to where you are today?
Read the full transcript (61 more sections)Collapse transcript
Yes. I'll start in graduating from accounting and accounting and being an accountant in public accounting for a while and really desperately wanting to not be in public accounting right shortly after college. I kind of figured that out. So I answered an ad in the Wall Street Journal to go to work for Richard Dennis, famous commodities trader in Chicago, the turtle story. Everyone's heard about that probably. And yeah, so December of 1983, I went to Chicago and was taught by Richard Dennis. It was 12 turtles at the time. And then we had a couple of weeks of a course and with real with, with, with rich and Bill Eckhart. And then in January of 1984, we started trading with a million dollars. He gave us a million dollars. He gave us all this knowledge and everything we
Needed to know about trading futures come out of these trend following. And then he gave us the money and it was the perfect client because he, all we had to do to please him was to do what he taught us how to do. Not even to make money really, because he said, if you make money the wrong way, I won't be very happy. So that program lasted about four years and it was very successful. Most people were making probably 200% a year, 150% a year with large drawdowns and lots of risk. And then in February, 1988, I started Chesapeake Capital. I would have loved to stay in Chicago, work for rich for years and years, but they decided to end the turtle program. And that's how
Chesapeake got started.
So it's funny, you and I share, we started one year, oh, I did one year in public accounting and said that was enough for me. One tax season and I threw my hands up.
Yeah, I wanted, I was hell bent on getting my certificate. that's kind of the goal I had. Okay, I did all this stuff. I passed the exam. I want to get my certificate. So after the few years that it takes to work for it under other accountants, you finally get you a certificate, then I was kind of out of there. And I was trying to find all kinds of jobs, stockbroker. And ironically, I interviewed for an assistant to a commodity trader in my, in Richmond, Virginia, and I did not get the job. And just a few months later, I got the greatest job in the world. And one that I didn't even, no one should expect or deserve, to be handed a career,
Basically. And my resume is very short, because I'm always dismayed by, send me your bio. And I'm like, oh, God, I haven't done anything, except trade futures and be a CTA for like my, almost my entire career and Chesapeake. And I haven't really done much more than that, because I've been so totally in love with trend following and focused on that. When I was in my 20s and learning about trend following in my spare time as an accountant, I just thought trend following was the greatest thing ever. I thought it from the date from the first time I heard about it. And I've every day I've woken up since I think I've just fallen in love over again. And I think it's just the greatest thing ever. And I was just really happy that when I went to
Chicago, I didn't really know, but I kind of thought maybe they were trend followers. And I was really
Happy that that was the case. Yeah. So we're going to talk about that a little bit here in a little bit. But before we do, I'm sure trend following is not your only hobby. What are some of the things you like to do when you're not, trading and following the markets and doing stuff like this?
Well, believe it or not, I'm kind of older now. But for about 20, 25 years, I've been really into working out and doing weightlifting cardio. And I lost 65, 70 pounds in 1999. And so for some reason, I just woke up one day and I was like, okay, I'm gonna, get my body straight, eat healthy, work out, having never done that before, having never been in shape before. And so it takes up a lot of my interest in time, diet and fitness. And then fishing. I live in Florida, and we've been fishing already a lot this year. And I like fishing quite a bit. Pickleball, that's the go-to for people my age, especially in Florida. My wife, my wife is a very good athlete. So that kind of like,
Kind of bums me out a little bit. She's such a, she's so great at skiing, which I like to ski as well. But then she's a great tennis player. But pickleball levels the feel quite a bit. So I enjoy
Pickleball. Yeah, I heard the pickleball is definitely, is definitely hot in the South. So can we talk about Chesapeake as a whole? This isn't the ETF isn't the only thing you do. So can you talk about all the things you're doing over at Chesapeake to help clients?
Well, we've kind of evolved into a ETF and mutual fund company. Yeah. So we have sort of given up on practicing classic trend following and earning an incentive fee. So we have sort of bit the bullet. and just sort of said, okay, we're going to manage money for, roughly 100 basis points. And so we have one of the oldest CTA trend following mutual funds out there that has been around for I think 12 years or so. And then an ETF that started almost a year ago. And so yeah, that's, that's, that's pretty much all we do. And it's all trend following. And the, the symbol is TFPN. And which stands for trend following plus nothing. So that's a little thing I came up with that I think is kind of
Funny. But that's sort of our total focus. Focus is bringing trend following to the masses and to people who love trend following. And there are a handful of people out there, small percentage of people who really, like it as much as we do.
Yeah. So let's, let's talk about kind of systematic investing as a whole. And we'll also get into some trend following and some of the rules of the ETF, but what is it about systematic investing? And a lot of our listeners, listeners are financial advisors and RIAs. So what is it about that systematic process and about trend following that really makes it appealing for an
Investor and for an advisor? Right. I definitely think systematic is a good way to start talking about what we do. It is systematic. And it just so happens when we come up with rules and we test them on historical data, do a back test. The computer says, yeah, you should consider trend following. And, but we have to be systematic first and foremost. We don't want to be doctrinaire or religious about one type of strategy unless it actually does work. So everyone kind of realizes that when you have something like investing, you have to, you have to come up with some rules in order to be maintained, some discipline and know what to do in all situations and good situations and bad situations, tough situations, you want to have your
Rules, you want to stick by them. And the computer analysis and research basically says, look, if you did the, if you apply these rules for the rest of your life, you may get performance that looks similar to history. Maybe that's what you're kind of hoping for. And you look at a lot of data, have a lot of sample size, and then you sort of put your faith in that and really try to fall in love with everything about the, about the system. One of the things that Rich used to say is, traders should love their losses. And what he kind of meant was, you love everything about the systematic approach. It's losses, it's wins, it's win percentage, it's, it gives back profits,
Too much profit. Sometimes it makes a lot of profit sometimes. So you really want to embrace it and, and realize that objectivity and historical data researching and following a set of rules for the future is your best shot at taking money out of the market.
Yeah. And I couldn't agree more. I saw on your website, you have a phrase price is king. So can you elaborate on kind of how your process is using price to really generate and make investment decisions?
That's right. We only look at the price of the markets and basically it will just, using a sort of a trend following approach with moving averages or breakouts or something like that, just by looking at the prices, you'll, you'll, you're able to come up with some entry and exit signals and sort of know what your positions ought to be. That's, that's kind of the way we do it. And we try not to add in too many filters or bells and whistles that number one could keep us out of a trend. There's nothing worse than missing the trend for a trend follower. Five to 10% of the trades per year might be a big outlier trend. So number one, you just cannot miss those. You can't have a filter
That filters you out of a trade. So you're always taking a lot of, all your trades are not A plus, they're Cs and they're Ds maybe, because you're really going to take every single trade that looks like it's in a trend. Thus your win percentage is going to be kind of low and you're going to really have to rely upon those small losses. So we, before we do a trade, we have a predetermined loss that we're going to take on the trade. And I think maybe the second most important thing is just hanging in with those winning trades and using the price and the, this, the signals that the prices give you and, that are going to sort of say, Hey, the trend looks like it's ending.
It looks like it's going the other way now. But our, our strategy is sort of really long-term and we try not to get out too quickly. We try to get as much out of these long-term trends as possible and not to pay too much attention to the, the give backs and the volatility. We would try to be shorter term. We would get out quicker if the computer told us that's what worked best. So we're really, the computer basically says, look, I'll tell you what works best. And that is hanging onto these trends a lot longer than you want to. It's going to be very uncomfortable. You've got to sit with some volatility, but if you want to pull the most out of the market,
That's possible. You're going to have to have some pain and suffering. And it makes sense to me. And I think to us that that's kind of how the world works.
And, you bring up an interesting point and I know that this is variable based on trend. It's variable based on volatility and market dynamics and how everything is working, but kind of on average, um, cause you could set your moving averages a handful of different ways. Um, what are your typical or ideal kind of holding periods? And again, I'm not, it's very, it's definitely volatility dependent, price dependent, but where are you kind of picking up super long-term cycles? Are we talking about a handful of years in some of these things or
A handful of months or weeks? Their average holding period is about a year. We trade multiple, um, systems, uh, trend following systems, and some are shorter term than the other and then others. So, but they're all in that, um, nine to 12 month range. And some of these trends can last for multiple years, two or three years that would pull the average up, uh, losing trades maybe wouldn't last as long because we're trying to keep the losses sort of optimal. We don't want them to be too small to where we're going to get whipsawed in and out. And obviously we don't want them to be too large. We want, uh, uh, we trade about 400 different instruments, 400. We could have 400 holdings at one time. So each trade, we like to call it each bet we put on the maximum loss is going
To be really small, 10 to 15 basis points. So microscopic losses, but we have so many markets. And if we apply this five to 10% of the trades will be a big mega outlier. we should have a, 20 to 40 big trades per year, um, that will make up for trade each trade, uh, very small.
That's interesting. And let's, we're going to unpack that in a little bit. So, um, before we kind of get dive deeper, I think it's better to talk high level about the specific ETF we're talking about, which is, uh, TFPN is a ticker, which is the blueprint Chesapeake multi-asset trend ETF. So can you kind of first at a high level, explain what this ETF is trying to accomplish? And then we'll dig into the weeds a little bit.
Yes. It's trying to accomplish, um, not so much a managed futures thing. It's really trying to accomplish, um, put trend following as its primary, um, emphasis. we wanted, we want to show what trend following can do. So with hundreds of markets like this, um, we feel like that this will show what trend following is all about. We can, um, keep, keep more of a classic, uh, trend following approach where we really try to let the profits run and not be too interested in, uh, when the volatility kicks up in a trade like cocoa. the cocoa was out of sight and the volatility was crazy. A lot of CTAs are scaling back positions true just based upon the volatility. And when cocoa is making all time highs. So we're like, okay, we're going to have
This one fund that sort of just says, we're going to let it run irrespective of the volatility and trading so much, so many markets. It sort of minimizes cocoa's impact, which is kind of bad in the sense that it would have been a great impact if we'd only traded the 20 markets. But it also, when you have those drawdown periods, you, um, it really, it's really not anything that's going to upset you too much because it's just one out of hopefully 20 or 40 markets that are going to, um, uh, have this outlier trade.
So is the ETF go anywhere? Um, like what types of securities are generally going to be included inside of the, the holdings file inside of, uh, inside of the CTF?
Well, another thing, another saying, another saying we have is, uh, trend following plus trend following everything. So we try to trade as many markets as we possibly can. And, um, we have a lot of securities in there, a lot of stocks, half the portfolio is stock. So that right there, most CTAs don't trend follow their stocks. They don't trade single stocks. They trade, uh, indices. So we have all this diversification and all these different kinds of stocks, long and short, half the portfolio. The other half of the portfolio is made up of the currencies, the commodities and the, um, bond futures. And we have some bond ETFs, some of the, um, exposure to the bond markets that you don't get in futures. We pick those up in ETFs,
Like junk bonds, mortgage backs, tips, corporate munis, uh, things like that. So we're just searching the world over for securities or futures and trying to create this amazingly diverse portfolio. And so where some, um, sort of the managed futures marketing, um, is usually something like, please add us to your portfolio, a five or 10% allocation to your stock and bond portfolio to, um, for crisis alpha to mitigate, uh, the times where stocks are really bad and have a big sell off. We're like, Hey, there's a more direct approach. Let's trend follow the actual stocks and not rely upon the small allocation. our allocation will probably be small anyways, but we sort of say, let's get at this, uh, as quickly as possible and wrap around, you know,
Equities themselves, uh, stop losses, trading stops, small losses, all the benefits and the risk management that a trend following has, um, and pick up all this extra diversification that, uh, single stocks can give you that you don't get from indices. Like right now, every index, every stock index future is long and all around the world. And, uh, but if you look at some, uh, individual stocks, there's, there's a handful of shorts, certainly kind of in a up market, but still there's some, uh, there's some shorts out there. So we really liked, uh, getting that diversification and being like the only CTA who really has a, um, really diverse portfolio that includes a trend following of the single stocks.
Well, in this, in this particular ETF, you briefly mentioned, um, shorting some stocks as well. So the portfolio is long, short. Do you have any guardrails on kind of net long, short exposure? Um, I'm sure it doesn't get levered, but, um, is there, do you have any guardrails on your, on your net long and or short exposures?
We, we set the portfolio up to have a max, uh, risk budget for the stocks. And, um, the stocks can be long or short. We don't have a preference for either. It just depends upon which, which way the trend is going. And it's really a great to come in and have, uh, longs and shorts, in a certain sector. Like right now we have just made mostly only shorts in the interest rates, and that's the way it has been for quite a, quite a while. Um, and sometimes you get in these situations with the currencies as well, where you just long dollar and short all the currencies. And so that's kind of a bummer. Your commodities can give you a little bit of, uh, diversification, longs and shorts.
That's really gotta be your first line of defense in a sector. Do I have some longs and shorts? Um, or am I going to be scrambling to have tremendous, have this sector be mostly just one way, long or short and have to scramble to reduce risk if, if the trends reverse. So I really like to come in and have longs and shorts and commodities give you that and stocks give it to you about as well as any other sector, especially recently, because even during this, um, big run up in equities where we've, had a lot of, uh, big trends in some of our long stocks, we still can find, um, some stocks that are worth shorting and they have their trends too. I think that people just
Get, uh, so focused on these indexes and that's what, that's how they see the market. But if you look inside those indexes, you'll say, oh, okay, there's some stocks in here. I want to go long. Some, I like to be flat and some, I would like to be short. And this is what, um, which you, the benefit you get by not trading the indices and, uh, looking at each individual market. No CTA would ever say, well, I'm just going to trade the dollar index, or I'm just going to trade, uh, the Goldman Sachs commodity index or some commodity index. No, they would break that thing apart and see the benefits of the diversification and the sizing algorithm and all the, of each individual market.
And so we'd like to do that with the stocks as well.
Well, you, you walked me right into my next question, which is, let's talk about portfolio weighting. Um, when running kind of a signal based business, it can be hard to, that signal can sometimes be binary. So it could be hard to kind of do portfolio weighting. So how you, you mentioned correlation and a covariance process. Can you explain to the average advisor what that means and how you're going about weighting the holdings inside of this portfolio?
Well, like I said, we have four major sectors. Maybe you can show, throw crypto in there as a fifth, uh, smaller sector with some crypt. We have a few crypto stocks and blockchain stocks, and we trade the Bitcoin and Ethereum futures, but, uh, we'd like to set it up to where it's basically, um, looking at these sectors and seeing how much diversification is within these sectors. So, like I said, with stocks, we feel like there's tremendous diversification here with thousands of stocks to choose from. And, uh, we can choose all kinds of stocks, all sorts of companies, maybe a lot of commodity based, uh, commodities that are not on the, um, not where there's no futures to trade or no physical markets to trade, pick up lithium and uranium and, uh, marijuana,
Things like that. So we, we're always trying to find stocks that have a sort of a commodity tilt to them. So we think that stocks alone, because there's so many to choose from, that's worth half the portfolio. And then we split up the rest, uh, evenly with the currencies, commodities, and interest rates. Uh, if there was a thousands and thousands of, uh, commodities, that would be half the portfolio properly, or the same with the currencies. If, if you could get inside of that currency sector and really see some diversification, which is not always possible. Uh, we have had, uh, some good moves recently in the yen and the peso, but, um, by and large, we just, um, set the portfolio up to try to achieve maximum diversification from the
Get go from the very beginning. But then as, as we start trading, as we see the market start to move around, the correlations will vary quite a bit. we trade, um, gold and silver, you could argue that gold and silver are kind of the same thing, but sometimes it doesn't work that way. There's been times when silver kind of doubled or tripled in price and gold kind of sat there. Many times heating oil, a few times heating oil has done the same thing, doubled in price due to something happening with the weather or freezing in New York and crude kind of just sits there. So you don't want to play to, uh, be too concerned with what looks like a correlation, uh, because all of a sudden something could happen in these markets and, uh, two markets that were once
Correlated look nothing alike any longer. And yet when the big trend is over and one of them, maybe they go back to the end correlated again. So since our goal and our, uh, whole reason for existing is to hunt down these outlier trades and capture these things and, uh, allow a small percentage of the overall trades to make all the money and pay for all those small losing trades, we really don't want to take correlation too seriously because, uh, as, as we've seen historically, um, the markets are individual and they can do their own thing and have these idiosyncratic moves. So the, the ETF in the portfolio does a fantastic,
Fantastic job of drawdown mitigation. Um, your, your drawdown statistics are, are phenomenal. I would assume that has to do, uh, with the stop losses that you're kind of applying to all of these different positions. So can we talk about your stop losses a bit? Is it a static stop on each security? Is it variable dependent on the volatility of that particular security? can you talk about how you're limiting that risk?
We limit the risk. Definitely. Part of that is with the stop losses. They, um, like I said, when we put a trade on, we have a formula that tells us, um, to, we want to treat all the trades the same, uh, give them all the same amount of room and lose the same amount potentially on, on each mark, on each trade that we take. So we have a predetermined stop losses based upon, uh, the capital we have under management, uh, the volatility in that particular market at entry. And so we just subtract, um, something from that entry price. And then that tells us where to get out. We don't move that stop. It's, it's just sits there the whole time. And then hopefully
The, a trend begins and takes off. And then the trailing stop will move above that, uh, stop loss. And so the trailing stop will sort of take over. Um, so just like, uh, trend following, the cliche is let profits run and take small losses. We are separating, um, we're treating the, the losing trades much different from the winning trades. We're going to be very conservative and very, um, fearful of losing too much money on any one trade. But then if that trade becomes a profit, it's just hands off, we'll let that thing have lots of volatility, lots of drawdown, uh, cause we see all the time, big sell-offs and big drawdowns mean nothing sometimes because the market goes right back to all time highs. So we see this in the data. We wouldn't do it.
If that's not what we saw in the data, we would love to trade shorter term. We're not in this for the pain and suffering. We just know that's kind of a part of the optimal strategy.
So when you get stopped out of a position, um, what is the, uh, ability to reenter that position? Are you waiting for your next positive trend signal on? So can you, will you just sit out of it and leave it on the bench until you get another long?
Well, no, if we get a, if we get stopped out of a trade with our small loss, we will, maybe go the opposite direction next time, wait for that entry signal or have to get right back in. that's kind of what happens a lot is you take the small loss and you have to get back in, in the same direction. It's kind of a bummer, but originally I didn't say it was a small loss. I corrected myself. I said it was a optimal loss. So we don't want it to be too small because that's going to make our wind percentage really low. We're going to get chopped up. We're going to have to keep buying at new highs all the time. And so we're,
It's not going to work out very well, but, uh, the optimal loss where you have a balance between, uh, keeping the losses under control, not letting them get crazy and yet trying to maximize that wind percentage and minimize the, um, whipsawing nature of trend following.
So the portfolio is set up as active. Um, are you guys acting on new signals or new trends daily, or are you kind of assessing all of your signals and kind of on a more weekly or monthly rebalance scheduled for kind of adding or deleting new positions?
We look at the markets daily and we download new data daily, put it in our computer is run the systems over the new data. But as I said, with averaging one trade per year per market. So we would have a tendency not to trade very often, even though we're, we're ready to trade every day. We're, we're acting like we, we were saying we will trade every day. We just usually don't have to, but not in every market, but with 400 markets, four different, uh, entries and exits systems, 1600. Now, um, you're inevitably going to get a trade, get a, probably a small trade.
So you're trading the max position for each market is small. Then when you cut that in quarters, it's even smaller. So we're always doing these small trades, uh, almost every day, we're just doing really small trades. And, but like I said, we're holding them for long periods of time, hopefully, as long as, as long as we can, we know that, um, human beings don't like to hold onto things too long. They want to book a profit. It's a little pat on the back. It makes you feel better about yourself. The smallest profit, just a small little profit, maybe make your day. So we know we want to stay away from what makes us feel good. What makes people feel good. Um, because that's kind of the secret to the market, put yourself in situations where
Your win loss, your win percentage is less than 50%. Um, you're willing to live with drawdowns. You're willing to, uh, live with volatility. Big profits turn into small profits, big profits turn into losses even. So we really don't try to do anything to manipulate and to make ourself feel better in, in the, in the, in the name of, uh, risk management. That's where I see a lot of people going wrong with silly rules. And they, if they just slap risk management on top of it, uh, they think they can get away with it. But, I feel like, um, the big money is going to be made and letting those profits run. And, uh, yeah, trying to, and trading lots of markets. That's, that's our kind of go-to. We can trade
The strategy that really doesn't pay too much attention to volatility and drawdowns. Um, like most people do, but we trade so many different markets. It really, one, one market's not going to, uh, help us that much or hurt us that much.
Right. So if you're sitting down, uh, with an investment advisor with an already diversified model portfolio, where are you putting TFPN? Is it kind of fits in the alt bucket or would you argue that it's probably like a, a bolt on to large cap equity exposure? Where would you like it to sit ideally?
Oh, that's a tough question. um, everybody answers this question to make the advisors feel better, but I think that we built it. You can put it wherever you want. You just understand what we're doing, uh, understand why we think it's so great and how it is different. Uh, but we built it for, as the core holding, um, I don't want to have anything in my portfolio that doesn't have a stop loss and a trailing stock and can get me in gear with the right trend. bonds were not a good option in 2022. You had to be short. And so I'm, that's, I'm unrepentant on that. I'm, we need to be short stocks and bonds sometimes. So for me, I'm too conservative, I'm an accountant kind of at heart, and I'm not going to trade anything,
Or have a portfolio that's not incredibly diversified in gear with the trends, taking small losses all the time, habitually just taking small losses and letting those profits run and being in gear with the trend and not paying attention to what I think ought to happen in the markets, but looking at those price trends and using prices, the only input. So we certainly built it as a core holding. Uh, but I'm sure people say, Hey, I own a lot of TFPN. We love it. I don't pay any attention to what Jerry says about it being a core holding. It's five or 10%. I actually had someone this past weekend asked me, she was a young person.
She said, help me build my portfolio. And I was, she had 60, 40, and I was like, Oh, like 5% of TFPN. So I just can't make that decision for people. I, I sort of say, okay, even I'm going to be subject to what conventional wisdom, I don't believe it for myself, but I really believe that people have to make these decisions on their own. I, I, we have clients who love trend following. They understand, they think it's the greatest thing ever. Nothing could be better. And then, but I guess to, for most of our clients are just going to be people who have a small percentage allocated to alt. Yeah. So Jerry, again, thank you for your time.
I appreciate you being here before I let you go. Where can people learn more about, uh, TFPN
And Chesapeake and as well as yourself? Uh, the best place to go is TFPN ETF.com. That's, uh, all you need to know is right there with the proper disclosure and, um, Twitter. Um, I'm on Twitter. I think, uh, RJPJR12 and, uh, yeah. And, uh, podcasts like these. Thank you very
Much for having me. Yeah. Thanks again, Jerry. Appreciate you doing this. Thanks, Brad. Thanks, Brad.
Daily Market Intelligence
The Signal
Brad Roth's daily market brief — systematic signals, ETF positioning, and what the data is actually showing.
Subscribe Free →