Harry Moore

Trend following serves as a critical portfolio diversifier because it can go short equities and bonds, has historically exhibited negative correlation to equities during left‑tail events, and offers capital efficiency through futures. In an environment where AI‑driven equity risks are elevated and bonds may fail to provide protection (due to persistent inflation limiting the Fed’s ability to cut rates), trend following’s lack of a long-term bias and ability to follow price trends make it uniquely positioned to protect portfolios when traditional diversifiers correlate.

If the inflation theme continues, trend following will likely go short bonds as rising inflation pressures cause bond prices to fall. This is based on the expectation that inflation remains a key macro driver, leading to a sustained sell-off in fixed income.