SI411: Why the Best Portfolios Are Built to Be Wrong ft. David Dredge & Richard Brennan
Top Traders UnpluggedShow Notes
The future isn’t hidden. It hasn’t been written yet. That idea anchors this foundational conversation between Dave Dredge, Richard Brennan and Niels Kaastrup-Larsen, on what risk really means in markets. They challenge the mathematics behind modern portfolio construction, exposing how calm conditions can conceal leverage, how diversification can fail when it matters most, and why familiar measures such as volatility and Sharpe ratios often miss the forces that lead to permanent loss. From path dependency and complex adaptive systems to trend following, convexity and the geometry of wealth, this episode offers a different framework for investing under uncertainty. For anyone responsible for preserving and compounding capital, this is essential listening. Because the strongest portfolio is not the one built around being right, but the one prepared to survive being wrong. ----- JOIN THE TREND FOLLOWING MANIFESTO BOOK LAUNCH LIST TO GET SPECIAL LOW PRICE ON OUR UPCOMING BOOK DURING THE FIRST WEEK! - CLICK HERE -----
Follow Niels on Twitter, LinkedIn, YouTube or via the TTU website. IT’s TRUE ? – most CIO’s read 50+ books each year – get your FREE copy of the Ultimate Guide to the Best Investment Books ever written here. And you can get a free copy of my latest book “Ten Reasons to Add Trend Following to Your Portfolio” here. Learn more about the Trend Barometer here. Send your questions to [email protected] And please share this episode with a like-minded friend and leave an honest Rating & Review on iTunes or Spotify so more people can discover the podcast. Follow Rich on Twitter. Follow David on LinkedIn. Episode TimeStamps: 00:00 - Market review, July performance and introducing Dave Dredge 08:01 - Why markets are complex adaptive systems 18:49 - Price insensitive investors and the hidden drivers of markets 26:03 - How market participants create fat tails and volatility 31:38 - Where major market moves really come from 39:05 - Ergodicity and why sequence matters in investing 46:37 - The forest fire analogy for understanding financial risk 51:15 - Why calm markets often hide the greatest dangers 56:13 - Leverage, convexity and the source of market fragility 01:00:53 - Why optimal portfolio construction can increase risk 01:05:38 - Football, convexity and building resilient portfolios 01:13:03 - Why the Sharpe ratio fails to measure real risk 01:21:40 - Lessons for trend followers navigating complex markets Copyright © 2026 – CMC AG – All Rights Reserved ---- PLUS: Whenever you're ready... here are 3 ways I can help you in your investment Journey: 1. eBooks that cover key topics that you need to know about In my eBooks, I put together some key discoveries and things I have learnt during the more than 3 decades I have worked in the Trend Following industry, which I hope you will find useful. Click Here 2. Daily Trend Barometer and Market Score One of the things I’m really proud of, is the fact that I have managed to published the Trend Barometer and Market Score each day for more than a decade...as these tools are really good at describing the environment for trend following managers as well as giving insights into the general positioning of a trend following strategy! Click Here 3. Other Resources that can help you And if you are hungry for more useful resources from the trend following world...check out some precious resources that I have found over the years to be really valuable. Click Here Privacy Policy Disclaimer
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