031 – Trend Following & Market Breadth – Greg Morris

GregMorris

Greg Morris was Sr. Vice President, Chief Technical Analyst, and Chairman of the Investment Committee for Stadion Money Management, overseeing the management of over $5.5 billion in assets.

He has been featured in the media a number of times, being invited to lecture about technical market analysis around the world.

He is currently semi-retired, serving as a consultant and working on a few projects, including golf.

In this episode we talk about the real definition of risk and how to manage it, the applications of market breadth and how the ‘Weight of the evidence’ concept can be used in trading.

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Topics discussed

  • Why defining risk as volatility isn’t accurate and what risk really is
  • Can diversification actually be used to minimise risk?
  • Why Rebalancing doesn’t make sense
  • The ‘Weight of the evidence’ concept and how it can be used in trading
  • Why it’s important to test indicators over non-standard ranges
  • What market breadth measures can reveal in market tops
  • Different types of breadth and their applications in Trend Following
  • Selecting indicators and why diversification of indicators is vital
  • How often should you tweak your model if something isn’t working so well
  • The current state of the market

Resources mentioned in this episode

Book-GregMorrisBook-CharleKirkpatrickBook-JohnMurphyBook-MartinPring

Quotes

Top tips from this episode

Here are few of my favourite takeaways from the chat with Greg this week:

  • Risk is the loss of capital, not volatility – I thought this statement from Greg was quite interesting because volatility is often classified as risk however Greg provided some arguments to demonstrate why risk is actually the loss of capital and not volatility.
  • Weight of the evidence – The weight of the evidence approach was also an interesting concept. I won’t go into it again here because Greg just spent time explaining it in detail but it’s an interesting approach for managing entries and exits and identifying the market regime.

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