88 The Importance of Explaining Why with Andrew Baxter of Cambridge Capital Management – 2of2

"I believe track record is a very blunt instrument." - Andrew Baxter (Tweet)
In this episode, we dive into the models and processes that Cambridge Capital and Andrew Baxter use to manage risk, research new ideas, and grow their business. We also talk about the importance for managers to explain why they do what they do, rather than just what they do.

Listen in to learn more about what lies ahead for the managed futures industry and how to be successful in it.

Thanks for listening and please welcome back our guest, Andrew Baxter.



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In This Episode, You'll Learn:

How his forecast method works
How he develops his basic models
How they come up with new ideas for models at Cambridge Capital
"One can ask the data to suggest areas for interesting research." - Andrew Baxter (Tweet)

The various short term and long term models that they employ and how they use them
When they make interventions to the system
The risk management they use and why they have a risk budget
"We actively control risk on a daily basis." - Andrew Baxter (Tweet)

Why they are continuously adjusting their risk in the market
The drawdowns that they expect to see in their program and the ones that they have been through
Why he thinks CTA firms had significantly higher drawdowns in 2013 then they had ever had before
"I think the increased flow of assets into the larger managers is potentially increasing market impact problems." - Andrew Baxter (Tweet)

How their research cycles work
How to compare a life track record with a simulation of the current program
Why we should look at why managers do things more than what they do
Why raising assets is the biggest challenge his firm faces today
What it takes to become a great fund manager
"We need to continue moving and increasing the sophistication of what we do." - Andrew Baxter (Tweet)

The skill that he would pass onto his children
The challenges he sees for the CTA space
"We should consider an audience outside the traditional CTA space." - Andrew Baxter (Tweet)


Resources & Links Mentioned in this Episode:

Andrew recommends reading:

Extraordinary Popular Delusions and The Madness of Crowds
The Winner's Curse
books by Reinhold Messner



"One should not underestimate how long things take in this business." - Andrew Baxter (Tweet)
This episode was sponsored by Eurex Exchange:

Connect with Cambridge Capital Managment:
Visit the Website: www.ccmllp.com

Call Cambridge Capital: +44 (0) 1223 851 001

E-Mail Cambridge Capital: [email protected]

Follow Andrew Baxter on Linkedin
"We have a structure to control risk without discretionarily turning models on or off." - Andrew Baxter (Tweet)