TTU28: How to Bridge the Gap Between Philosophy & Rules ft. Scott Foster of Dominion Capital Management – 2of2

Welcome back to the second part of our interview with Scott Foster, President and Founder of Dominion Capital Management.

In this episode, we learn the philosophical rules that drive his firm, and how he bridges the gap between the philosophy behind his decisions and the models he creates. We discuss the increased governmental involvement in the markets and the adjustments that Scott has had to make to adapt to new signals. Finally, we learn the personal habits that help Scott succeed. Thank you for listening to Part 2 of our conversation with Scott Foster.

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In This Episode, You’ll Learn:

• Why Scott does not worry about model decay due to the principals with which he runs his firm.
• How to bridge the gap between philosophy and rules.
• How he created the Sapphire program, his firm’s signature service, and what it took to create it.
• How increased government involvement in the markets has changed his system and made him adapt to new signals in the markets.
• Why and how political feedback and involvement are affecting the markets and short term trading.
• How his firm is able to so expertly predict to potential customers their drawdowns and how they contain them.
• That investors spend too much time dissecting the drawdowns and not enough time looking at why and how they made money.
• The principals of behavior finance and the underlying philosophical principals such as self attribution bias and loss aversion.
• How alone time and contemplation have led to 80% of Scott’s best trading ideas.
• The hardest part of being the President of a fund and why it is not the trading.

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Resources & Links Mentioned in this Episode:

• Learn more about illusory superiority, the bias that the Lake Wobegon effect is name after, or Lake Wobegon itself, a fictional town in Minnesota.
• Learn more about Mean Reversion, which Scott’s firm looks at closely in the models they use.

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