SI411: Why the Best Portfolios Are Built to Be Wrong ft. David Dredge & Richard Brennan

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.

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50 YEARS OF TREND FOLLOWING BOOK AND BEHIND-THE-SCENES VIDEO FOR ACCREDITED INVESTORS - CLICK HERE

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Follow Niels on Twitter, LinkedIn, YouTube or via the TTU website.

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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

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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

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