Introduction
Header

[Part 1]
I spoke with Tom about timeless topics.
Five conversations

Enjoy the journey
Q&A with Mr. Serenity
Brain Teaser
Travel, politics, and catastrophe
Tools that determine success or failure

[Part 2]
Insights on Trading

Adding CTAs with low Sharpe ratios can increase the Sharpe ratio of your portfolio.
- Research background
- Research results
- Use of research results
Algorithmic trading is receiving unfair criticism.
Forex Investing: A Way to Preserve and Grow Your Net Worth
Net Worth vs. Net Wealth
- Currency value: The score of the game played by each country
Trading well isn't complicated.
Some leverage is good, but excessive leverage is dangerous.
- Research purpose
- Definition of leverage
- Leverage varies from market to market.
- How to use leverage effectively
- Leverage can be used in various ways depending on the strategy.
- The level at which leverage becomes dangerous
A study on the periods of trending and sideways markets
- Research purpose
- The market is rising, falling, or moving sideways.
- How to measure market trends
- Timing model in a rising market
- Timing model in a bear market
- Timing model in the cross market
- Periods of bull market, bear market, and sideways market
10 Rules to Consider When Investing
ETR Comfort Index
- Problems with measuring risk-adjusted returns using these measures
A Better Way to Calculate Risk-Rate Returns: The ETR Comfort Index
- Simple example: US Treasury bonds
- Another example: S&P 500 Index
- How to calculate the ETR comfort index?
- Diagram example
- Conclusion and suggestions
The Value of Asset Allocation Strategies Combined with Rebalancing
- Research background
- Research results
- Implications of the research results
Thoughts on maintaining good investment sentiment amidst turmoil
A Study on the Periods of Bull Markets, Bear Markets, and Sideways Markets (Revised 2018)
- Research purpose
- Research method
- Exponential moving average
- conclusion
Rethinking Market Timing Strategies
- Composition of a rational study on timing strategies
- What are the potential returns with a perfect timing strategy?
- Performance of simple timing strategy
- Additional research results
- The best days and the worst days
- Annual yield
- Monthly return comparison
- The Real Reason Timing Strategies Help Investors
- Formula for calculating exponential moving average
Risk Management System
- New position risk
- Continuous risk exposure
Measuring futures volatility
- Daily volatility
Market wizard Tom Basso discusses the logic of trend following and how to improve trading psychology.

References

Mr. Serenity, Living Legend, Genius Trader
What makes Tom Basso so special?

"Trend-Following Investment Strategy" is a book written by Michael Covel, who conducted in-depth interviews with Tom Basso and edited his key writings to introduce his trend-following investment method to the world.
Part 1 consists of five interviews with Tom Basso, which appeared on Michael Covell's podcast, while Part 2 is filled with Tom Basso's paper and an interview he had with another interviewer, Aaron Fifield.
In other words, it can be said that this book contains everything about Tom Basso.
Michael Covel also writes in the preface, 'My goal in this book is simple.
'My goal is to create a unique book with everything I can find out about Tom,' he said.
Who on earth is Tom Basso that Michael Covell could distill his entire story into a single book? Here's the introduction included in the book.

Tom Basso was featured in Jack Schwager's Market Wizards series and is best known as Mr. Serenity.
Now retired from asset management, Tom was the founder and president of TrendStat Capital Management, becoming an investment advisor in 1980 and a commodities advisor in 1984.
He is a living legend with extensive experience in trend-following investment strategies.

'Living legend' is no exaggeration.
Mark Minervini said the same thing, and Jack Schwager said that of the many great investors mentioned in the Market Wizards series, Tom Basso's trading style was the one he most wanted to emulate.
What sets Tom Basso apart from other traders, as his nickname suggests, is his calmness.
Tom Basso also says, curiously enough, to Michael Covell:
“Jack seemed to think from the beginning that trading was bound to be stressful.
In other words, trading is a kind of macho thing, and it has to generate high returns.
To do that, you have to move up and down the capital curve while enduring stress.
Actually, that's nonsense.
“That’s just a bias.” This is what makes his trading style different.
He peacefully controls the trading process.
So when he introduces himself, he says he is not a very interesting person.
As a money manager with an engineering background, he enjoys a leisurely life, earning (from his perspective) mediocre returns.

The secret to making money without stress
It only matters how you use your own strategy.

Another interesting thing about Tom Basso is that he only spends 12 minutes a day trading.
Sometimes it gets longer, but even on those days it doesn't last more than 30 minutes.
He checks his trading style after the market closes.
'Are we going in the right direction as expected?' If things are going differently than expected, we need to adjust our strategy.
If things are going as expected, there is no need to change the strategy.
This is the trading secret he talks about.
And that's what we have to learn.
He says you should ask yourself, "Given the way the market has behaved, has the strategy achieved the expected results?"
Especially when you're going through a tough time, not a profitable one, and you think, "This period was bound to be tough in terms of the content and application of the strategy," he says, it's okay to stick with the strategy.
In other words, strategy is important.
However, what is important here is your own strategy.


“You don’t have to worry about what strategy I, Michael Covell, or Jack Schwager use.
Because it won't help at all.
“It only matters how you use your strategy.”

If you develop your own strategy and it's working well, you can dedicate only short periods of time to trading, like Tom Basso.
Of course, stress does not come with it.
The reason why the mindset he conveys is useful to us is because we too are designing our own lives.
Investing in stocks isn't everyone's life.
This book also teaches us how to design our lives through Tom Basso's story.

"What else do you do after retirement besides trading in other markets? Today, I wanted to play golf for over two hours.
I don't want to sit in front of the computer all day, staring at charts and ruining my eyesight.
I'd rather be out in the backyard and do all the things I enjoy: trimming trees, planting flowers, exercising, hiking, or playing golf.

If I'm going to create a trading strategy, why wouldn't I design it in a way that allows me to enjoy the lifestyle I want? Even then, I can apply sound strategic principles to my trading.
I think it's as simple as starting with the question, 'How do I align my trading strategy with my lifestyle?'