Arrogance
Arrogance is the death of any skill.
It does not discriminate.
Whether it’s learning jiu-jitsu, building a business, managing risk, or trading institutional portfolios, arrogance will undo years of hard work faster than almost anything else. Stellar past performance doesn’t inoculate anyone from that danger; in fact, it often accelerates it.
The GTC Sample Portfolio has been performing exceptionally well, as we have strived for linearity, rather than raw upside absolute returns. It’s been ‘weighed down’ a bit more than we would like … due to a bit of arrogance on our part.
More on that in a bit.
But still … overall … it’s been performing well …
Remember … that is the total portfolio. And we’ve made no secret of the fact that we believe the market, overall … is on a fragile foundation. Therefore, given the volatility that occur around major turning points? We opt’d for a linear return profile, rather than absolute.
Trust us. The time will come when it is time to aim for the absolute … 60% years. It’s just that we do not believe that now is that time. We are firm believers in protecting the left tail and shaping returns around downside efficiency. Everything we do is basically rooted in a ‘Sortino’ mindset.
The Equity–Fixed Income Hybrid Core continues to do exactly what it was designed to do. Provide stability, generate linearity, and serve as an educational anchor for premium members …
The Long–Short Valuation Book has been operating in a short-only mode since November 2023 and has delivered performance that, frankly, is better than almost any short-only program one is likely to find.
Perhaps that is a bit arrogant.
At least, in the upper tier of such programs. And ….
… we’re especially proud that the design remains fully scalable.
But nothing will destroy all of that faster than arrogance.
Arrogance convinces someone that they are intrinsically better than other practitioners, insulated from risk, immune to market structure, or too “skilled” to get hurt. In markets, that belief is not just wrong.
It is catastrophically stupid.
Arrogance is rooted in the narcissistic conviction of one’s own superiority. And that is precisely what blinds a trader, an analyst, or a portfolio manager to the risks directly in front of them.
Being Cocky
However … being ‘cocky’ or ‘cockiness’ … is different.
We have always admired well-placed cockiness. Cockiness is an outward behavior. An expression of confidence grounded in demonstrable competence and performance. And in markets, a certain measure of confidence is required. Approaching risk timidly often results in worse decisions than approaching it with controlled, well-earned conviction.
So when programs deliver what they were designed to deliver. When the returns are linear, the risk is contained, and the execution is disciplined? Let’s face it … we are good enough that we literally hand-pick the return profile we want to see.
Yeah.
That part was cocky.
But we are comfortable allowing ourselves a little cockiness regarding the GTC Sample portfolio.
Not arrogance.
Not superiority.
But the simple confidence that comes from designing something correctly and seeing it work as intended.
But Perhaps We Got a Bit Too Cocky? Or Was it Arrogance?
When we began the GTC sample portfolio, we knew exactly what we would run.
We knew the Equity–Fixed Income Hybrid Core would anchor the portfolio and provide a stable teaching platform and demonstrate how to build a monthly income account. We knew we wanted the Neutral-Carry Short Program in the Long–Short Valuation Book operating in parallel. Those were deliberate decisions grounded in decades of experience and years of internal research.
But in the Short-Term Trading Account … perhaps that is where a bit of arrogance crept in.
We assumed nearly 30 years of discretionary experience … each … would be enough on its own. No quantitative frameworks. No structured rule-sets. Just discretionary execution. And while the performance was never catastrophic (not even close) …
It was flat to slightly positive each year. And that simply is not acceptable for a program meant to demonstrate disciplined process. And it has thus weighed down the entire portfolio.
So we stopped being arrogant.
We introduced two programs specifically designed for the GTC sample portfolio:
• the 10-Year Delta-Skewed Arbitrage Program, and
• the Quad Trading Program.
Both were engineered from the ground up for the GTC Traders brand. This avoids conflicts with anything else we may be doing. And both were tuned for this particular environment which is to say: linear return profiles.
Both are currently printing exactly that.
When the time comes to tune each to an environment that we feel absolute returns are warranted? It’s a very simple ‘flip of the metaphoric’ switch, as would then run them a bit more ‘hot’.
We are now planning to combine these into a single, unified short-term system we’re calling the Interest Rate Pulse Program. Same engines. Same principles. But combining both programs into one in the future … will give us a cleaner operational footprint.
A Lesson in Robustness
This brings us to robustness.
We have stressed repeatedly that any trading program must be robust. If a strategy only works when executed at an exact minute, under an exact condition, with zero tolerance for variation, because of this exact parameter … then it is not a strategy. It is a curve-fit Jenga tower waiting to collapse.
Every model and every program we design … even those with five-day periodicity … has been tested for robustness across 30 years of data. We tested whether ….
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