I Stole a Trading Strategy Worth $60 Billion - Professional Investor Reacts
Summary
Chris and Joe analyze a $60 billion hedge fund’s multi-horizon momentum strategy, which uses trendlines to rate market strength and volatility-based position sizing to manage risk. Chris tests the method with a $60,000 trade in Charles Schwab, resulting in a 12% gain, while the hosts critique the video’s potential survivorship bias and lack of comprehensive backtesting data. They also discuss their own portfolio plans, emphasizing the importance of strict rules and avoiding forced trades in choppy markets.
Topics discussed
Intro: Joe as portfolio analyst and the $60M strategy
Overview of the hedge fund's simple trend-following model
Backtest results: 140 years of data and consistent returns
The multi-horizon momentum rating system explained
Discussion on risk tolerance and 'A+' setups
Step-by-step: Drawing trend lines for 1, 2, 4, and 10 weeks
Interpreting scores: From fully long to fully short
Position sizing: The formula and volatility adjustment
Analogy: Managing risk like leashes on dogs
Calculating target risk and annualized volatility (ATR)
Simplifying the math: Using TradingView's ATR widget
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Finalizing position size for stocks and options
Why volatility adjustment helps survive market crashes
Chris's nervousness before entering the $60k trade
Analyzing Charles Schwab (SCW) chart for entry signals
Calculating the final score and discussing survivorship bias
Entering the trade and the 12% gain one month later
Critique: Why backtests and expectancy matter more than one win
Current market conditions and the importance of a plan
Conclusion: Similarities to their strategy and final promo
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