Why alpha is uncomfortable ft. Andrew Beer and Eric Crittenden

Andrew Beer and Eric Crittenden discuss the counterintuitive nature of generating investment alpha, emphasizing that it fundamentally requires algorithmic discipline rather than comfort or consensus. Crittenden shares decades of experience with managed futures strategies, illustrating his point with specific historical examples where algorithmic signals forced him to take positions he personally didn't want to take. In June 2002, despite his reluctance, the algorithm directed him to short equities. Similarly, in April 2008, he was forced into equity shorts against his natural inclination. Most dramatically, in February 2020 (just before COVID), his algorithm forced him to short every energy market globally, a deeply uncomfortable position that proved prescient. Conversely, he was forced into cocoa positions that subsequently rallied 400%, demonstrating that algorithmic discipline works in both directions. The speakers emphasize that alpha is inherently lumpy and volatile—it doesn't come smoothly or hand you a comfortable report. To successfully pursue alpha, investors must accept this volatility and implement robust risk controls. Crucially, algorithmic discipline also requires the ability to abandon trades that don't work out, preventing emotional attachment to losing positions. The core thesis is that if investors want genuine alpha, they must accept discomfort as a prerequisite.