028 - Eric Crittenden - A Portfolio for All Seasons

Building a Durable, All-Weather Portfolio with Eric Crittenden

In this episode, we had the privilege of speaking with Eric Crittenden, Chief Investment Officer at Standpoint Asset Management, and a seasoned expert in trend following and portfolio construction. Eric’s deep insights into risk management and wealth preservation make for a fascinating discussion on how to build a portfolio that can weather all types of market environments—something every trader and investor can appreciate.

An All-Weather Portfolio

One of the standout points from Eric’s approach is the focus on constructing a durable, all-weather portfolio. Eric designed his fund with the idea that it should be able to endure the most uncertain future scenarios, a goal he finds essential for long-term wealth preservation. His strategy blends managed futures, global equities, and laddered treasury bills, with a focus on equal risk contribution across futures & equities. Eric emphasizes simplicity and robustness over complexity, believing that this provides the best opportunity for consistent performance in both good times and bad.

A core aspect of the conversation was Eric’s extensive use of trend following and its synergy with a global, buy-and-hold equity approach. He explained how a well-diversified strategy with simple rules—like channel breakouts—can smooth returns while maintaining durability. By balancing different timeframes (short, medium, and long-term trend following), Eric's fund is designed to navigate diverse market environments and minimize drawdowns, even in the most volatile conditions.

Art v Science

We also explored the psychological side of trading, something Eric has experienced throughout his career. He shared valuable insights on recognizing cognitive biases, the danger of relying too heavily on backtests, and the art of avoiding overfitting. For Eric, effective trading is a blend of art and science—knowing when to trust the data and when to recognize that the future will always hold surprises. It was extremely interesting to hear Eric’s wisdom that “direct attempts to create a smoother equity curve usually cause more harm than good. They create more problems than they solve”, adding that it is akin to asking for “more infrequent iceberg risk” in order to avoid “frequent, survivable, nuisance risk”. The solution being to build something that is robust and durable on a stand-alone basis, then something else, and then something else. Pick the ones that play well together and combine into a portfolio!

A Trading Edge

One of the most intriguing topics we discussed was the relationship between hedgers and speculators in futures markets. While futures trading is a zero-sum game, Eric explained how hedgers—who are often on the losing side—actually benefit economically by reducing their business risks. This creates opportunities for trend followers and highlights the important role that market liquidity plays in driving returns.

Risk Management

In addition, Eric discussed the automation of his trading systems and how, despite a high degree of automation, there is always a human touch when it comes to final execution. He also shared his framework for risk management, including how he caps downside risk to ensure that short-term losses never spiral into something larger than intended. His 10% risk budget ensures that even in the worst-case scenario, his portfolio remains intact and ready to move forward.

Eric's thoughtful and disciplined approach to portfolio construction and risk management offers a masterclass in creating long-term, sustainable strategies for uncertain times. His insights into trend following, risk, and psychology are essential listening for anyone looking to enhance their trading mindset and process.

Be sure to catch the full episode for a deep dive into Eric’s investment philosophy and practical strategies. And if you found this episode valuable, please share it with someone who might benefit from these lessons!

Here’s to navigating markets with clarity and confidence,

Rich & Simon