When Paul Tudor Jones speaks – people listen. He is known as one of Wall Street’s most successful macro traders, with a legendary track record spanning over four decades. His status as a trading legend was cemented in history when he famously shorted the 1987 market crash, delivering a reported 200% return for his investors that year. [Past performance is not necessarily indicative of future results]  

So when PTD gave his two cents on CNBC last week, our ears sure perked up:

Paul Tudor Jones has began positioning for a Trump victory and is long Bitcoin and gold as an inflation hedge.

“I think all roads lead to inflation. I’m long gold. I’m long Bitcoin. I think commodities are so ridiculously under-owned, so I’m long commodities. I think most… pic.twitter.com/Q3L0DJZ54v

— Hedge Vision (@HedgeVision) October 22, 2024

The want for increased commodity exposure is a clear choice based on the stats, if he thinks more inflation is coming. While stocks and bonds often show negative real returns during inflation, commodities perform almost as well as gold in protecting value – posting about a 15% average annualized return during inflationary periods dating back to 1970, as can be seen in this chart from our trend following guide whitepaper.

Problem is, commodities are known for some rather nasty volatility, even when they are in up trends thanks to inflation.  Enter Trend Following, which doesn’t just buy and hold commodities, torpedoes be damned… and instead employs dynamic positioning which only holds each commodity long when it is in a confirmed uptrend. The below research shows that trend following approaches in commodities have historically outperformed buy-and-hold strategies during inflationary periods, second only to energy sector performance.

Now, trend following based managed futures programs won’t be loading up on just Bitcoin, Gold, and Commodities like PTD says he is doing. And they don’t position portfolios on who they ‘think’ will be elected, thank goodness. They will wait patiently for those sectors, and others, or breakout one way or the other. 

That approach is a bit better in our opinion, because what if good old PTD is wrong?  We’d rather be a bit late to the party and risk a small portion of our principal on a computer model confirmed uptrend, than throw caution to the wind and bet it all on red (states), PTD style. He became a legend doing that sort of thing… but let the pros be the pros… He can afford to be massively wrong. For the rest of us, wouldn’t you rather just be a little bit wrong… and able to be quite right, if the trends develop?