"Trinity And Chill"

Meb Faber hosted well know trend following manager Jerry Parker for a podcast. The two partner on Cambria Chesapeake Pure Trend ETF (MFUT). Parker also manages the Blueprint Chesapeake Multi-Asset Trend ETF (TFPN). They've done at least one other podcast together and I wrote about that one too so just a couple of points to make today.

Yes, there is plenty of history to support the idea that managed futures is pretty reliable when it comes to functioning as crisis alpha. Pretty reliable doesn't mean infallible, there could of course be some sort of crisis lasting longer than a few days, in the future where it doesn't react like it has previously. Whipsaw environments typically aren't good for managed futures and it seems plausible that whipsaw action could coincide with a stock market crisis. Still though, the track record is excellent and I am big believer in small doses.

A comment that Meb made before and repeated was about having 50% of the Cambria Trinity ETF (TRTY) in trend one way or another which I think includes the momentum factor for equities and managed futures. TRTY is a quadrant sort of permanent portfolio inspired idea. It seems like TRTY is Meb's favorite Cambria fund because of the tag line Trinity and chill but who knows. 

I built out the following, allocating 25% to each holding and compared to VBAIX, PRPFX and TRTY.

The full term backtest of Trinity/Permanent Inspired is compelling of course but it trailed VBAIX and PRPFX in 2020, 2021 and 2023. In 2024 it was slightly behind PRPFX and slightly ahead of VBAIX. It was up in 2022 which contributes mightily to the CAGR being the best of the group. If momentum has a much better year than market cap weighting in a year that MCW does very well, then Trinity/Permanent Inspired might be able to keep up with VBAIX and PRPFX but I wouldn't expect that to happen very often. Also both alts can very easily lag from year to year when stocks are going up which could try investor patience.

It really is important to understand that while the CAGR and other portfolio stats look outstanding over a period of years, the portfolio would likely cause frustration in more years than not. 

Side note, in other blog posts where we've looked at TRTY, this time period which is dictated by QDSIX is the best performance for it that I've ever seen for that fund. The concept is very intriguing but its actual results have not been. 

Another quick fire department story. I mentioned that we recently upgraded our engine for structure fires which left us with an old one to try to sell. As luck would have it, one of the board members found a buyer very quickly. We were storing it at a community member's house since the new truck came. We had a huge snow storm here this week that of course coincided with when it was due to get hauled off to its new home in California. We had a plan, so I thought, where I was going to drive the truck from the community member's residence to the firehouse and the trucking company would get it there.

The snow added some risk but the plow job on the road combined with a relatively gradual hill to drive down and the weight of the truck should have been no problem and fortunately it wasn't! This wasn't riskless but it worked out and I just had to then drive a half mile on the pavement to meet the trucking company. For who knows what reason or where he thought he was going, the driver went sailing passed the firehouse. He got caught then in an intersection that wasn't big enough for him to turn around. It turned into a two hour ordeal where the solution finally was a backhoe came and moved his back end. 

When we finally got the the firehouse, it took him about 20 minutes to get situated but that's ok, I'm off the hook, I got the old engine to the firehouse unscathed. Nope, I had to back it onto the trailer. I think it was kind of a lowboy, where the truck pulls away from the trailer and then you back on which I found out, I had to do. 

Not much margin for error but I got it done. I don't believe I was in danger of getting hurt if something went wrong but could have easily, seriously damaged the truck and cost us quite a bit of money if this went sideways. All good and the truck was on its way.

The information, analysis and opinions expressed herein reflect our judgment and opinions as of the date of writing and are subject to change at any time without notice. They are not intended to constitute legal, tax, securities or investment advice or a recommended course of action in any given situation.