Is the traditional 60/40 portfolio still fit for purpose? What should investors look for in a systematic fund manager? And how is AI changing the careers of people working in finance?

In Part 2 of The Most Important Thing, Alan O’Sullivan continues his conversation with Dr. Philip Seager, Head of Portfolio Strategy at Capital Fund Management (CFM).

Beginning with the 2008 financial crisis, Philip explains why trend-following strategies stood out during a prolonged market downturn and how investors might think about allocations to genuinely diversifying strategies. They discuss the changing correlation between stocks and bonds, inflationary regimes, the limits of private equity as a diversifier, and why a manager’s investment process may be more revealing than a recent performance chart.

The discussion then turns to CFM’s scientific research culture and the profound impact of artificial intelligence on quantitative finance. Philip describes how AI-assisted coding and prompt-based research are transforming daily workflows, while stressing the continuing importance of domain expertise, critical thinking and statistical judgement.

To close, they explore the influence of physics on financial research, recommended reading, the wisdom of crowds and how market flows shape prices.

Topics include managed futures, the 2008 crisis, portfolio construction, manager selection, inflation, stocks and bonds, AI in finance, scientific research and behavioural markets.

Explore CFM and the resources discussed:

Capital Fund Management on LinkedIn

https://www.linkedin.com/company/capital-fund-management/

Any statements regarding market events, future events or other similar statements constitute only subjective views, are based upon expectations or beliefs, involve inherent risks and uncertainties and should therefore not be relied on. Future evidence and actual results could differ materially from those set forth, contemplated by or underlying these statements. In light of these risks and uncertainties, there can be no assurance that these statements are or will prove to be accurate or complete in any way.

All opinions and estimates included in this document constitute judgments as at the date of this document and are subject to change without notice. CFM accepts no liability for any inaccurate, incomplete or omitted information of any kind or any losses caused by using this information. CFM does not give any representation or warranty as to the reliability or accuracy of the information contained in this document.

The information provided in this document is general information only and does not constitute investment or other advice. The content of this document does not constitute an offer or solicitation to subscribe for any security or interest.

The interviewer selected the graphs and images; CFM was not involved in that decision.

Can artificial intelligence outperform traditional fund managers? And how much of successful investing is genuine skill rather than market luck?

In Part 1 of The Most Important Thing, Alan O’Sullivan speaks with Dr. Philip Seager, Head of Portfolio Strategy at Capital Fund Management (CFM), about the science behind quantitative investing and what it means for constructing more resilient portfolios.

Drawing on his background in experimental particle physics and more than 25 years at CFM, Philip explains how systematic investors use large datasets, statistical testing and increasingly AI to identify investment opportunities. He also explores why impressive backtests can be misleading, how market beta can be mistaken for manager skill, and why traditional diversification may fail investors when they need it most.

The conversation examines trend following as a potential source of genuine diversification, including its behaviour during prolonged equity drawdowns, the limitations exposed by rapid market reversals, and the difference between trend following and buying downside insurance.

Topics include quantitative versus discretionary investing, alternative data, AI and neural networks, overfitting, active management, the 60/40 portfolio, trend following and crisis alpha.

Read Philip’s Financial Times article referenced in the conversation:

Philip Seager — Financial Times: Beating the Market Is Even Harder Than You Think

https://www.ft.com/content/299b4cd0-9ce8-431e-aaec-3f7b8d704910

Capital Fund Management on LinkedIn

https://www.linkedin.com/company/capital-fund-management/

Additional resource

https://share.google/7AWCMqojgoG1tyZpc

The Most Important Thing Podcast | Hosted by Alan O’Sullivan

Important Disclaimer

Any statements regarding market events, future events or other similar statements constitute only subjective views, are based upon expectations or beliefs, involve inherent risks and uncertainties and should therefore not be relied on. Future evidence and actual results could differ materially from those set forth, contemplated by or underlying these statements. In light of these risks and uncertainties, there can be no assurance that these statements are or will prove to be accurate or complete in any way. All opinions and estimates included in this document constitute judgments as at the date of this document and are subject to change without notice. CFM accepts no liability for any inaccurate, incomplete or omitted information of any kind or any losses caused by using this information. CFM does not give any representation or warranty as to the reliability or accuracy of the information contained in this document. The information provided in this document is general information only and does not constitute investment or other advice. The content of this document does not constitute an offer or solicitation to subscribe for any security or interest. The interviewer selected the graphs and images; CFM was not involved in that decision.

In this episode of The Long & Short, Ivan Yates and Dr Alan O’Sullivan revisit the Wall Street Crash of 1929, the 2008 global financial crisis and today’s concerns around AI valuations, defence stocks and changing investment regimes. From speculative bubbles to excessive private debt, they explore why crashes happen, what investors can learn from previous cycles, and whether the old investment playbook still works.

Featuring insights from previous conversations with financial historian Edward Chancellor, economist Professor Steve Keen and investor Jesse Felder, alongside an additional perspective from financial historian Professor Russell Napier.

Topics covered: historical bubbles and market psychology; the role of private debt in 2008; falling interest rates and the shift towards real assets; bull and bear markets; AI and dot-com comparisons; contrarian positioning; economic cycles; and lessons from Ireland’s financial history.

Previous guest interviews featured in this episode:

Edward Chancellor — The Price of Time and historical market bubbles

Professor Steve Keen — How he predicted the 2008 crash

Jesse Felder — The market paradigm shift since the 1980s

Professor Russell Napier — The New Rules of Money (Part 1)

Subscribe to The MOST Important Thing for interviews and commentary on markets, investing, economics and geopolitics.

For information and educational purposes only. Nothing in this episode constitutes personal investment advice. Investments involve risk, including possible loss of capital.

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