Jerry Parker on Big Game Hunting in the Market | #647

**SPEAKER_1** (0:06)
Welcome to The Meb Faber Show, where the focus is on helping you grow and preserve your wealth. Join us as we discuss the craft of investing and uncover new and profitable ideas, all to help you grow wealthier and wiser. Better investing starts here.

**SPEAKER_2** (0:19)
Meb Faber is the co-founder and chief investment officer at Cambria Investment Management. Due to industry regulations, he will not discuss any of Cambria's funds on this podcast. All opinions expressed by podcast participants are solely their own opinions and do not reflect the opinion of Cambria Investment Management or its affiliates. For more information, visit cambriainvestments.com.

**Meb Faber** (0:35)
Welcome back, everybody. Summer is winding down. Hopefully, you had a great one. We have a returning favorite on the show today. Former Wahoo, now Florida Man, although he's calling in from New York. Trend following extraordinary. Our guest is Jerry Parker, founder and CEO of Chesapeake Capital, which he started in 1988
Jerry was one of the original Turtles trained by Richard Dennis. He's been running systematic trend following strategies for four decades, almost. Together, we run the Cambria Chesapeake Pure Trend ETF, Ticker MFUT. Jerry, welcome back to the show.

**Jerry Parker** (1:11)
Hey, thanks for having me. Glad to be here.

**Meb Faber** (1:13)
Last time we were hanging out, it was just me, you, and the nature boy, Ric Flair in Tampa. I take that back. Ric Flair was also with a very beautiful 20-something female, which I assume was his granddaughter. Listeners, don't let your mind go to a terrible place. Let's talk about what's going on in the world. How's the trend following world treating you? We've had a pretty awesome year this year, after following kind of a sideways period for the SOCGEN Trend Index last year. I think it was, if it wasn't the worst 12 months, it was one of them. Well, how are you feeling this year?

**Jerry Parker** (1:46)
I know we got started at a bad time, but I'm feeling pretty good. I think things are looking up. We're building expectation in some of these sectors, currencies are not doing anything, haven't done anything for a while. Interest rates are trying to do something on the downside. Rates inflation look like they may go up, but commodities maybe, but not a lot going on in commodities. Gold and silver sinking.
Energy is strong today, but possibly weak tomorrow. You never know with the situation over there. But stocks, like you said, I think stocks are looking pretty good overall. We've got some good trends in some of our individual single stocks. We're one of the few who try to trend follow the stocks rather than exclusively the indices. So that's where a lot of good movements have come recently.

**Meb Faber** (2:37)
So the interesting part about this fund, of course, listeners and we'll dial in to the positions or anything else later. By the time this publishes, of course, they may be different, but you can look up the positions every day. That's the beauty of ETFs, as you can see on a daily disclosure. And it's fun to look through and you say, oh, this is what's going on with sugar or the Aussie dollar, or Japanese interest rates, on and on. But we'll dig in a lot more to the positions in a little bit, but let's lay a little foundation for those listening.
They've heard me talk for this for 10 years now, I think on the podcast about trend and managed futures and CTAs. But these are all kind of jargon terms that I think get a little lost in the weeds because they're not the same thing. And I'll hear people talk about momentum and I try to kind of clarify a little bit. But you know, you had a tweet where you were talking about outlier hunting and you're like, that's trend following. Everything else is an imposter. Managed futures is not trend following, which I think would surprise a lot of people because they hear managed futures. They're like, no, that's trend, that's systematic trend, right? And you've been on a little bit of a crusade about this. So maybe explain the difference between managed futures, trend following, CTAs, not all the same thing.

**Jerry Parker** (3:45)
True. And just a disclaimer that this is my opinion, and I don't have anyone to debate. So just set me straight and make me modify my opinions.

**Meb Faber** (3:56)
I can be devil's advocate. Don't worry. That's my favorite role.

**Jerry Parker** (3:59)
Whenever people quote the things I post on Twitter, I start laughing because I do these things late at night, early in the morning when I'm really fired up, and they're overstatements usually just to get people fired up. I think the Managed Futures is, that's the industry, that's the SOCGEN index, and those managers are very large and very sophisticated with long track records and good performance, and it includes some trend following, and it includes other things as well. Mean reversion, carry trade, pattern recognition, short-term trading, AI, all kinds of things, not just trend following. So trend following is a subset of that. It used to be 100% for all the CTAs. Now it's maybe a lot less than that. It's maybe 50%, 75% for some, 100% for MFUT, Chesapeake.