TIP702: Hedging Against Market Crashes w/ Kris Sidial

We Study Billionaires - The Investor’s Podcast Network

Stig Brodersen

Education, Investing, Business

4.6 • 3.6K Ratings

🗓️ 28 February 2025

⏱️ 53 minutes

🔗️ Recording | iTunes | RSS

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Summary

On today’s episode, Clay is joined by Kris Sidial to discuss tail risk hedging. A tail risk hedging strategy is designed to help investors protect their portfolios from extreme market downturns, reducing the risk of significant capital loss. By mitigating large drawdowns, investors can potentially achieve a smoother return profile over time, enhancing their Sharpe ratio and the long-term growth of their portfolio. Kris Sidial is the co-investment officer of Ambrus Group, which implements a carry-neutral tail risk hedging strategy to protect investors against market crashes. IN THIS EPISODE YOU’LL LEARN: 00:00 - Intro 01:40 - What a tail risk hedging strategy is and how it’s implemented. 06:25 - What is the VIX, and how it ties into a tail risk hedging strategy. 08:28 - Examples of historical market blowups where a tail risk strategy thrives. 21:07 - Why the reflexive nature of markets has led to more violent and swift drawdowns in recent years. 31:06 - The benefits of a tail risk strategy to investor portfolios. 50:41 - Legendary traders Kris looks up to and books that influenced him the most. And so much more! Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences. BOOKS AND RESOURCES Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Stig, Clay, Kyle, and the other community members. Kris’s firm: Ambrus Group. Book mentioned: The Misbehavior of Markets. Episode mentioned: TIP128: Edward Thorp: Investing Legend, Math Genius. Email Shawn at [email protected] to attend our free events in Omaha or visit this page. Follow Kris on Twitter. Follow Clay on Twitter. Check out all the books mentioned and discussed in our podcast episodes here. Enjoy ad-free episodes when you subscribe to our Premium Feed. NEW TO THE SHOW? Get smarter about valuing businesses in just a few minutes each week through our newsletter, The Intrinsic Value Newsletter. Check out our We Study Billionaires Starter Packs. Follow our official social media accounts: X (Twitter) | LinkedIn | Instagram | Facebook | TikTok. Browse through all our episodes (complete with transcripts) here. Try our tool for picking stock winners and managing our portfolios: TIP Finance Tool. Enjoy exclusive perks from our favorite Apps and Services. Learn how to better start, manage, and grow your business with the best business podcasts. SPONSORS Support our free podcast by supporting our sponsors: Hardblock SimpleMining Unchained Netsuite Found Fintool The Bitcoin Way Shopify Vanta Onramp TurboTax PrizePicks Fundrise HELP US OUT! Help us reach new listeners by leaving us a rating and review on Spotify! It takes less than 30 seconds, and really helps our show grow, which allows us to bring on even better guests for you all! Thank you – we really appreciate it! Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Learn more about your ad choices. Visit megaphone.fm/adchoices Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm

Transcript

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0:00.0	You're listening to TIP. On today's episode, I'm joined by Chris Sidial to discuss tail risk hedging.
0:07.3	Chris is the co-investment officer of Ambris Group, which implements a carry-neutral tail-risk hedging
0:12.5	strategy to protect investors against market crashes. A tail-risk hedging strategy is designed to help
0:18.1	investors protect their portfolios from extreme market downturns,
0:21.7	reducing the risk of significant capital loss. By mitigating large drawdowns, investors can
0:26.8	potentially achieve a smoother return profile over time, enhancing their risk-adjusted returns
0:31.8	and the long-term growth of their portfolio. During this episode, Chris and I discuss what a tail-risk
0:36.9	catching strategy is and how it's
0:38.4	implemented, how investors should think about the VIX, examples of historical market
0:42.9	blow-ups where a tail-risk strategy thrives, the benefits of this strategy to investors'
0:47.4	portfolios, why the reflexive nature of markets has led to more violent and swift drawdowns
0:52.9	such as what happened in March 2020,
0:55.1	the legendary traders Chris looks up to, and so much more.
0:58.6	While we very rarely discuss different trading strategies here on the show,
1:02.3	Chris's approach to tail risk-catching very much reminds me of someone who is taking a value-investing approach
1:07.3	and applying it to the derivatives market.
1:09.8	So with that, here's my chat with Chris Sidial.
1:16.0	Since 2014 and through more than 180 million downloads,
1:20.7	we've studied the financial markets and read the books that influence self-made billionaires
1:25.1	the most.
1:26.2	We keep you informed and prepared for the unexpected.
1:29.3	Now for your host, Playfink.
	...

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