TTU109: Risk Mitigation Whilst Trading Exotic Markets ft. Doug Greenig of Florin Court Capital – 2of2 - a podcast by Niels Kaastrup-Larsen

"What is your edge? Why do you think you have it? Why do you think it will persist?" (Tweet)
Moritz Seibert and I continue our conversation with Doug Greenig, talking about the many different ways risk can manifest in your firm, how best to minimize it, and why building a strong team is one of the most important elements in staying ahead in the trend following space. Listen in to learn the many benefits of getting into exotic markets, how to best manage your risk, and what all investors should be asking themselves to better their portfolio.
Thanks for listening and please welcome our guest Doug Greenig.

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In This Episode, You'll Learn:

What makes the exotic market space so good to trade in right now
How Doug knows there is still a lot of room left for trading in the exotic market space
The difficulties Doug has had in attracting investors to investing in exotic markets
Why momentum should be your key signal when investing in exotic markets

"When things break and start moving quickly, if you're trading momentum as opposed to other kinds of signals, you're very likely to be going in the right direction. Then, when the peak of the crisis occurs, that's when liquidity 'dries up'." (Tweet)

The role cash equities play in Doug's portfolio
Why Doug has reservations in trading VIX
The different varieties of risk and how to minimize them
The importance of focusing on model risk

"I don't want to spend a lot of my time having to worry about, or explaining our position in volatility, because the VIX can positively explode." (Tweet)

Benefits of building and maintaining a good team
What questions investors should be asking themselves

Connect with Florin Court Capital:
Visit the Website: Florin Court Capital
Call Florin Court Capital: +44 207-016-3473
E-Mail Florin Court Capital: info@florincourt.com
Follow Doug Greenig on LinkedIn
"The [exotic market] space has a fair bit of room to grow. The CTA space has about 300-350 billion in AUM, and we're talking about a number in the neighborhood of ten for the exotic markets." (Tweet)
Full Transcript
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Niels
I read an article the other day, actually, about the AUM and funds that focus on exotic markets and your firm was definitely mentioned in that article. It talked about the total assets in those kinds of strategies having gone up from about a billion dollars, five years ago, to (they're estimating) seven billion today, I think was the number. Of course, I know that your firm has grown a lot as well. How do you view that development, and how big, as a space (not necessarily as a firm but as a space) can this become without too many people chasing the same exotic markets?
Doug
I think that the space has a fair bit of room to grow. The CTA space has, I think, about three hundred to three hundred and fifty billion in AUM. We're talking about a number in the neighborhood of ten for the exotic markets. Some of the exotic markets are very big and deep markets. The Chinese commodity markets are huge, for example. Some of the interest rate markets are quite large as well. Some of the foreign exchange markets are pretty large.
Now, one piece of evidence that it's not getting that crowded, just empirical evidence, is when we went to a one hundred percent exotics focus in April of 2017, before that we were about fifty percent exotic and fifty percent not. But, we said we're going to be a pure play exotic CTA - that was in April of 2017. From then to the end of September or even to now... I believe from April to the end of September we were up twenty-one percent when the CTA index was down...

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