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Alex Gurevich on Global Macro Investing Strategies · Masters in Business

0:00
Speaker 1: M This is Mesters in Business with very results on
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Speaker 1: Bloomberg Radio. This week on the podcast, I have a
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Speaker 1: fascinating guest. His name is Alexwerevich. He is a hedge
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Speaker 1: fund manager and trader who has been involved in macro
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Speaker 1: trading for decades since since the late nineties, and he's
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Speaker 1: one of these folks that basically has managed to put
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Speaker 1: together a fascinating trading history and a and a great
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Speaker 1: track record. UH. In twenty UH he was positioned in
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Speaker 1: a very contrarian set up heading at the end of
0:45
Speaker 1: into he was anticipating a substantial decrease in interest rates
0:51
Speaker 1: when most of the rest of the world was positioned
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Speaker 1: in the opposite way. And when the pandemic hit an
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Speaker 1: emergency FED cuts came in UM his funded spectacularly well.
1:05
Speaker 1: It was ranked second best performance of alledge funds in
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Speaker 1: When you read his books and and his most recent
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Speaker 1: one is The Trades of March A Shield against Uncertainty,
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Speaker 1: you can see there is a tremendous amount of complexity
1:23
Speaker 1: and deep thought in how his portfolio was positioned. UH.
1:27
Speaker 1: They primarily trade derivatives, interest rates, swaps, UH currencies. It's
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Speaker 1: not your standard stock and bond trading. It's a little
1:37
Speaker 1: more complex and sophisticated. UH. And this is one of
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Speaker 1: the only books I've ever read where the slack channel,
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Speaker 1: that is his trading desk, where all the trades are
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Speaker 1: are given, confirmed, executed, is pretty much reprinted as it was.
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Speaker 1: I would say about a third of the book is
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Speaker 1: slack and following. This is really a um education and
2:04
Speaker 1: how a real world hedge fund trading desk operates. That
2:08
Speaker 1: they're located on the West coast, so they're both behind, uh,
2:13
Speaker 1: the East coast by three hours, but they're anticipating what
2:16
Speaker 1: takes place in Asia and Japan and China. And what's
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Speaker 1: really fascinating about this is when the pandemic began, they
2:25
Speaker 1: were pretty much trading UM around the clock. It's not
2:29
Speaker 1: a giant firm, it's a you know, him and a
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Speaker 1: number of his employees were you know, for days at
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Speaker 1: a time, trading continuously and you could see it by
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Speaker 1: the time stamps in in the slack channel one am,
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Speaker 1: three am, five am, seven am, ten pm, eight pm,
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Speaker 1: and and that's West coast time. Really fascinating conversation. He's
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Speaker 1: a super interesting UM, not just a trader, but his
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Speaker 1: worldview and how he looks at what drives asset prices.
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Speaker 1: UH is really fascinating. So if you are all interested
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Speaker 1: in the world of macro trading, um strap yourself in
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Speaker 1: for an education because this conversation is fascinating. With no
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Speaker 1: further ado, my interview with Alex Guerrevich of Hante Advisors.
3:20
Speaker 1: This is Masters in Business with very Rehults on Bloomberg Radio.
3:27
Speaker 1: I'm Barry Hults. You're listening to Masters in Business on
3:31
Speaker 1: Bloomberg Radio. My special guest this week Alex Guerrevic, founder
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Speaker 1: and CEO of Hante Advisors. Previously, he was the head
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Speaker 1: of JP Morgan's Macro book in Hante was ranked second
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Speaker 1: in net return by Barclays and Guerevic was one of
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Speaker 1: the top ten emerging managers as tracked by Eureka Hedge.
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Speaker 1: He is the author of two books on trading, the first,
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Speaker 1: the next Perfect Trade, A Magic Sort of necess City.
4:00
Speaker 1: His most recent book just came out this year, The
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Speaker 1: Trades of March, A Shield against Uncertainty. Alex Vervic, Welcome
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Speaker 1: to Bloomberg. Thank you very much for having me. I'm
4:14
Speaker 1: excited about this conversation as am. I. Let's let's start
4:19
Speaker 1: talking a little bit about uh, your background. You earned
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Speaker 1: a PhD in mathematics from the University of Chicago. Tell
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Speaker 1: us a little bit about that experience and and how
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Speaker 1: you get to apply math as a fund manager and
4:32
Speaker 1: a trader. Well, first of all, I will confess the
4:36
Speaker 1: experience of being in graduate school University of Chicago was
4:40
Speaker 1: still amazing that for many years, almost decade afterwards, I
4:44
Speaker 1: suffered from nostalgia. Even while when I was a successful
4:48
Speaker 1: Wall Street trader, I was often suffering from nostalgia for
4:52
Speaker 1: my graduates school days. So that's a quick summary. I
4:56
Speaker 1: think it's pretty amazing for me, at least to be
4:58
Speaker 1: in a very small circle stuff like minded people who
5:01
Speaker 1: had even though I grew up in a different country
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Speaker 1: in backgrounds are different. But interestingly, mathematicians all around the
5:08
Speaker 1: world do the same math and they played the same
5:11
Speaker 1: math games, all the same puzzles. So there was so
5:14
Speaker 1: much in common and so much fun to have in
5:16
Speaker 1: that environment. We were you ever? Were you ever planning
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Speaker 1: on pursuing a career in pure mathematics or was the
5:25
Speaker 1: thinking I'll take this skill and education I I earned
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Speaker 1: the Chicago and applied to Wall Street was tell us
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Speaker 1: what you're thinking was when you were um in school.
5:36
Speaker 1: You know, honestly, since I was a teenager, there was
5:40
Speaker 1: kind of a double thinking in my mind. It's almost
5:42
Speaker 1: like two superposed ideas that I wasn't really clear. My
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Speaker 1: natural path was always to do theoretical math. I wanted
5:48
Speaker 1: to be a mathematicians since I was four years old,
5:51
Speaker 1: but my fascination with finance industry, with strategy was already there.
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Speaker 1: I remember seeing the movie Wall Street in back in Russia,
5:59
Speaker 1: and I was totally fascinated by it, and just the
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Speaker 1: whole idea of like financial strategy was so exciting to me.
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Speaker 1: I think someone in the back of my mind I
6:09
Speaker 1: always thought that at some point I wouldn't up on
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Speaker 1: Wall Street. But at the same time I was making
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Speaker 1: all emotions to pursue the career and theoretical math. So
6:18
Speaker 1: so I think I was a little conflicted about this
6:20
Speaker 1: until some point. So you mentioned you saw the film
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Speaker 1: Wall Street growing up in Russia. You grew up in St. Petersburg.
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Speaker 1: Did you know you always wanted to come to the West.
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Speaker 1: It's hard to imagine seeing such a just like I guess,
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Speaker 1: um capitalist film like Wall Street, even with good guys,
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Speaker 1: bad guys and corruption in the film, even still seeing
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Speaker 1: it in Russia had to be a little um you know,
6:52
Speaker 1: a little cognitive dissonance built into that. Well. I think
6:55
Speaker 1: it was very exciting and refreshing. They did show a
6:59
Speaker 1: bit of foreign always in Russia. It was not that closed.
7:01
Speaker 1: I saw Star Wars on Russia too, so there was
7:04
Speaker 1: a little bit of cultural flow. So I did always
7:09
Speaker 1: want to go to America. There was no question in
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Speaker 1: my mind. Since I was six years old. I considered
7:13
Speaker 1: myself American, like it was deep in my heart that
7:16
Speaker 1: I'm belong only in one country, in the United States.
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Speaker 1: That was not a negative statement on Russia at all.
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Speaker 1: It was not even about politics fully like I mean
7:25
Speaker 1: I and also like I always loved Russian poetry and
7:28
Speaker 1: literature and architecture and many aspects of the culture. But
7:31
Speaker 1: I always felt that I belonged in the United States.
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Speaker 1: There was never a doubt in my mind. I don't
7:35
Speaker 1: know how I knew it, but I knew knew it
7:36
Speaker 1: since I was a little kid. So so when did
7:39
Speaker 1: you move to the US. I moved in the US
7:41
Speaker 1: in the middle of college. It was eighty nine. I
7:45
Speaker 1: was almost twenty years old, and you've been here two
7:48
Speaker 1: years of college there and I had two years of
7:50
Speaker 1: college in American and I went to graduate school and
7:53
Speaker 1: so first job out of school was where Well, I
7:58
Speaker 1: went straight to graduate school. On my first job out
8:00
Speaker 1: of graduate school. That when after I got my PhD,
8:03
Speaker 1: I went to Bankers Trust in n And that's when
8:05
Speaker 1: I was a critical point of my decision, when I decided, Okay,
8:09
Speaker 1: I've already accomplished what I needed accomplished in math. I
8:12
Speaker 1: proved my metal, and now I really want to have
8:15
Speaker 1: a good opportunity. I have a good offer. I'm gonna
8:17
Speaker 1: try Wall Street. And how did you go? Um? How
8:20
Speaker 1: did you end up at JP Morgan? Well, I post
8:25
Speaker 1: at Bankers Trust and I started trading fixed and com derivatives.
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Speaker 1: That's very important to understand that I most of my
8:31
Speaker 1: mathematicition friends went to do some kind of quantitative work
8:34
Speaker 1: on Wolf Street. I never did. I went straight into trading.
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Speaker 1: That was my interested I always said, if I want
8:40
Speaker 1: to do research, I would stay in the in the
8:42
Speaker 1: math department, even if it pays less money, but the
8:44
Speaker 1: lifestyle would be worth it. I wanted to trade. I
8:49
Speaker 1: went to Bankers Trust, which became the trade on a
8:52
Speaker 1: swap desk, and then it bought, got bought by Deutsche
8:55
Speaker 1: Bank and a Deutsche Bank. Because of all they organizing,
8:59
Speaker 1: I was pretty Joe year at that time. They offered
9:01
Speaker 1: me a different kind of job, which was very good
9:03
Speaker 1: in terms of two trade options. It was not particularly
9:06
Speaker 1: interesting for me, but it was very educational. But I
9:08
Speaker 1: started to look for a new job soon and I
9:11
Speaker 1: got a In two thousands, I got a job at
9:13
Speaker 1: Chase basically doing basis swaps, which I did originally at
9:17
Speaker 1: banker Stas as a junior trader, but I got a
9:19
Speaker 1: senior job at Chase and then Chase merg of JP Morgan.
9:23
Speaker 1: I ended up at JP Morgan Chase running basis swop franchise,
9:28
Speaker 1: and then I launched the agency Assets w franchise also
9:31
Speaker 1: in the two thousands one, I think, and then and
9:33
Speaker 1: then by two thousand three you mentioned in the Wall
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Speaker 1: Street Journal as the star trader of JP Morgan. Tell
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Speaker 1: us about that. How did that feel, um being recognized
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Speaker 1: for your trading skills? You know, honestly, it is interesting.
9:50
Speaker 1: At that time I did not really appreciate so much
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Speaker 1: the value of publicity, and I did almost know networking
9:57
Speaker 1: and almost no publicity. So I moved the proprietary desk
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Speaker 1: in two thousand two from UH. Because after I did
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Speaker 1: really well with my market making businesses on two thousand
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Speaker 1: one and build them up really well, there was formed.
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Speaker 1: They were forming Global Currencies and Commodities Group in the
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Speaker 1: merged shape Immorgan Chase Bank. By the way, this group
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Speaker 1: ended up to be extremely successful going forward, and UH
10:20
Speaker 1: they offered me to shift and move a micro portfolio
10:23
Speaker 1: because my even with my client partfolios, I was more
10:26
Speaker 1: and more UH focusing on micro factors. And then that
10:31
Speaker 1: was like then I had a very successful yet two
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Speaker 1: thousand two and started very successfully two thousand three, and
10:36
Speaker 1: that's when they wrote an article. The article was really
10:38
Speaker 1: based on a leak. I think somebody just told them
10:40
Speaker 1: what possessions were had and what money we're making in
10:43
Speaker 1: two thousand three, and then there was this article and
10:47
Speaker 1: it was on one and exciting and like I know,
10:49
Speaker 1: like my parents were excited about showing this article. But
10:53
Speaker 1: on the other hand, that was like a little disturbed
10:55
Speaker 1: that there's a leak and somebody knows something about my
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Speaker 1: positions that they sho not interesting And I was not
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Speaker 1: really seeking publicity and I was a little shy of
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Speaker 1: publicity honestly, after that, I don't think it was like
11:07
Speaker 1: a bad liok. It was a very positive article. There
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Speaker 1: was nothing me no negative in it, and there was
11:14
Speaker 1: nothing wrong about it. But I was just a little
11:17
Speaker 1: nervous about publicity after that because nobody I think they
11:22
Speaker 1: reached for comment, but I don't think there was. This
11:24
Speaker 1: was like an article the JP Morgan was specifically pushing, right.
11:29
Speaker 1: So but what I realized afterwards, like an early years later,
11:33
Speaker 1: when I started to raise money and around my own
11:36
Speaker 1: hedge funds, I realized, well, actually any publicity is kind
11:39
Speaker 1: of good and it's good to know people. So so
11:42
Speaker 1: let's let's look at that timeline. So this was back
11:45
Speaker 1: in two thousand and three. How much longer did you
11:48
Speaker 1: stay at JP Morgan four and when did you launch
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Speaker 1: your your funds? Well, I stayed at JP Morgans in
11:55
Speaker 1: early two thousand seven and then so it's been quite
11:58
Speaker 1: a while, it's now fifteen. Is that I've been doing
12:00
Speaker 1: various things on my own, but I not always run business,
12:04
Speaker 1: as I had one fund and which actually did not
12:06
Speaker 1: work out, and I talked about as a lot in
12:09
Speaker 1: my first book, The Next Perfect Trade, about my first
12:12
Speaker 1: found and kind of mistakes that when made there and
12:15
Speaker 1: things like that. It was called Cloudy Capital, and then
12:18
Speaker 1: I for a few years basically was running my own money,
12:21
Speaker 1: and then Hunte was created around two thousands fifteen and
12:25
Speaker 1: started to take outside money around two thousands sixteen. Relatively
12:30
Speaker 1: recent battles are relatively established. Since you mentioned HUNT, let's
12:34
Speaker 1: talk a little bit about that funds. Tell us about
12:37
Speaker 1: the genesis of the name Hunte, which you described in
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Speaker 1: the book The Trades of March. So, Hunte is a
12:45
Speaker 1: Japanese strategic term. It originates from the game of go,
12:50
Speaker 1: and haun means truth and means move, so it's a
12:54
Speaker 1: true move. But the context and which is used that
12:57
Speaker 1: sometimes in the game you make a move which is
12:59
Speaker 1: not the most flashy or aggressive, but what they call
13:02
Speaker 1: an honest move, like what you really have to do,
13:04
Speaker 1: even maybe not the most impressive thing to do, but
13:08
Speaker 1: that's what gives you the best results in the long run,
13:13
Speaker 1: and that's what I wanted to make. The strategic concept
13:16
Speaker 1: is symbol for how you run the fund like it
13:19
Speaker 1: a lot. Let's talk a little bit about what you
13:22
Speaker 1: do with HUNT. You went from being a trader uh
13:26
Speaker 1: to the head of JP Morgan's macrobook to launching this
13:30
Speaker 1: this hedge funds. Um tell us a little bit about
13:34
Speaker 1: those transitions. What how were you able to build on
13:38
Speaker 1: your prior experience with each new position. Yes, I think
13:42
Speaker 1: it was very important stepstone in my career that I
13:45
Speaker 1: started as a market maker. Some people who move directly
13:50
Speaker 1: into hedge fund by side business, I think missed out
13:54
Speaker 1: a little bit seeing what actually happening in the trenches,
13:58
Speaker 1: what's happening on the trading floor of the band, how
14:00
Speaker 1: the client flows work was doable and not doable. I
14:03
Speaker 1: think it was very important for my formation as a trader.
14:07
Speaker 1: I remember the crisis of and when there was the
14:12
Speaker 1: first freeze of the market that observed. That was very junior,
14:14
Speaker 1: but as it turned out, I had to make some
14:16
Speaker 1: decisions because my boss was on vacation and I had
14:19
Speaker 1: to take over some aspects of of the book that
14:22
Speaker 1: I was focusing on and deal with big hedge funds.
14:25
Speaker 1: I was like super junior trader and all this big
14:27
Speaker 1: hedge funds coming to me begging me for unwines because
14:30
Speaker 1: they were blowing up, and people would ask me questions
14:34
Speaker 1: like marketing sells. People would come and ask me questions
14:37
Speaker 1: where it's such and such trading. And I was like,
14:40
Speaker 1: what are you talking about. It's not trading. The market
14:42
Speaker 1: is frozen. There is maybe one bit and if I
14:46
Speaker 1: show any offer, my boss will fire me. That's my market.
14:50
Speaker 1: That's really interesting because there's a line in the book
14:52
Speaker 1: The Trades of March that really jumped out at me. Um,
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Speaker 1: tell me about this quote. Every crisis starts with fear
15:01
Speaker 1: and ends with necessity. Explain that, see as crisis. First
15:06
Speaker 1: of all, crisis always has to be something unexpected. Crisis
15:10
Speaker 1: never happens on schedule. We know that, right, Like when
15:13
Speaker 1: people try it on scheduled crisis like white, Okay, you
15:16
Speaker 1: get no crisis. So it's always comes from unexpected direction
15:22
Speaker 1: by definition. And then it usually when there is a
15:26
Speaker 1: crisis which spills on the financial markets, people loose liquidity
15:30
Speaker 1: and then the panic starts. We need to liquidate positions.
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Speaker 1: How bad things can go, and things get to the
15:35
Speaker 1: points when people are really thinking that the world is
15:37
Speaker 1: ending as we know it, and one day it might
15:39
Speaker 1: end as we know it. But in global financial crisis,
15:41
Speaker 1: people thought, okay, whole financial system will collapse. In COVID,
15:46
Speaker 1: I don't know what people were thinking. We're all gonna
15:48
Speaker 1: die or whatever. Everything is going to be shut down.
15:50
Speaker 1: I don't know what people are thinking, but clearly people
15:52
Speaker 1: are quite panicked about what things can happen. And now,
15:55
Speaker 1: of course we have other existential threats with the current
15:58
Speaker 1: war situation as recording this ah ah. So first it
16:04
Speaker 1: starts with fear, but then what happens is that because
16:08
Speaker 1: and some people act and fear, but then people have
16:11
Speaker 1: Eventually people have to act not because of the fear
16:14
Speaker 1: and not only because of the choices, but because of
16:16
Speaker 1: the decisions are forced. What happens is if you are
16:20
Speaker 1: fund and you're losing money and you're you're a u
16:23
Speaker 1: M decreases, you need to reduce your positions. This is
16:26
Speaker 1: not about fear. This is about necessity. So you have
16:28
Speaker 1: to liquidate. Some various people need to liquidate certain positions,
16:31
Speaker 1: do certain transactions because the exchanges are forcing them, the
16:34
Speaker 1: margins are forcing them, bosses are forcing them. And then
16:37
Speaker 1: the policy makers step in and they buy assets or
16:43
Speaker 1: provide liquidity. And this is also this liquidity comes in
16:45
Speaker 1: not because somebody chooses it, but because this is various
16:50
Speaker 1: unstoppable flaws that's happening in the market. And this is
16:53
Speaker 1: the necessity In the end, there is no choice for things,
16:56
Speaker 1: but to both certain ways, that makes sense. You know,
17:00
Speaker 1: it's perfect sense. We'll talk about the book later, but
17:03
Speaker 1: there are some really interesting um excerpts where you are
17:09
Speaker 1: showing your your trading in real time in the conversation
17:13
Speaker 1: you're having with your colleagues and your desk. When when
17:17
Speaker 1: you say it begins with fear and ends with necessity,
17:21
Speaker 1: can you feel that as a trader when you're plugged
17:24
Speaker 1: into the market. Are you seeing that in flows, in
17:27
Speaker 1: prices and in opportunities. Yes, and I even feel it
17:31
Speaker 1: in my own emotion. Explain to the things that try
17:34
Speaker 1: to concentrate on the book is like show the psychology
17:36
Speaker 1: of trading the more moments and I point them out
17:39
Speaker 1: on the book when I felt like deep existential dread,
17:42
Speaker 1: like what's going to happen? I feel like that those
17:45
Speaker 1: moments were like, oh, yeah, that's just cut hundred basis points,
17:47
Speaker 1: but I'm not sure that I'll do it right. And
17:51
Speaker 1: you're feeling like will everybody cut my funding tomorrow? Right?
17:54
Speaker 1: Will will there be no balance? Ship? What's gonna happen?
17:58
Speaker 1: That is when you see in those terms, you realize
18:02
Speaker 1: that the market is still ruled by fear. When you
18:05
Speaker 1: started thinking, Okay, I've reduced my positions. Now the FED
18:10
Speaker 1: is buying those assets that I'm holding, and they're rallying you,
18:13
Speaker 1: you start feeling the sense of necessity. Huh. Very interesting.
18:18
Speaker 1: So so let's talk a little bit about the trading
18:20
Speaker 1: in during the start of the COVID nineteen pandemic. In
18:27
Speaker 1: that year, your fund ranked second in net returns. You're
18:30
Speaker 1: one of the top ten emerging managers. Tell us what
18:34
Speaker 1: your thought process was in what led to so much
18:38
Speaker 1: conviction that you had position right? And I believe, if
18:42
Speaker 1: I'm reading the book correctly, you were fairly well positioned
18:48
Speaker 1: for a series of rate cuts in when much of
18:52
Speaker 1: the market was still expecting rate hikes. That did I
18:55
Speaker 1: get that right? Yes? Yes, and that definitely contributed to
19:02
Speaker 1: success in two thousand twenty. Generally, one has to realize
19:05
Speaker 1: if you're on a micro part full and there's some
19:07
Speaker 1: kind of exogenous event, you're not always will be positioned
19:11
Speaker 1: right for it. Maybe like if you always own just
19:16
Speaker 1: auptionality that are pure option funds, but even that, like
19:18
Speaker 1: events could do very different things, Like events don't go
19:22
Speaker 1: just one direction. For example, US election in two thousand sixteen,
19:26
Speaker 1: it send markets in a certain way that people did
19:28
Speaker 1: not expect at that moment. Right, But then there was
19:31
Speaker 1: September elevent global financial crisis, there was European Dead crisis,
19:36
Speaker 1: there was of course going back, there was like seven crush.
19:40
Speaker 1: There all those events you can look at which happens
19:43
Speaker 1: suddenly they'll have different flavor and you will not always
19:46
Speaker 1: be positioned right for it. So there is a little
19:49
Speaker 1: bit of an element of luck in terms of being
19:50
Speaker 1: positioned right. But there's also a little bit of an
19:53
Speaker 1: element of work if you always a little positive towards
19:56
Speaker 1: crisis premium, like if you tend to be have assets
20:01
Speaker 1: that have some balancing in your part for it that
20:03
Speaker 1: there are some assets that make positions that make money.
20:07
Speaker 1: Thinks those sideways in that particular case, I was didn't
20:11
Speaker 1: just have protection. I had a very strong view in
20:14
Speaker 1: two thousand eighteen that arate for heading and exorably zero.
20:18
Speaker 1: I think this view was ex anti undisputable. I think
20:21
Speaker 1: people who thought otherwise were just playing wrong, because everything
20:26
Speaker 1: same ways. Two thousand fourteen, I was convinced the trade
20:28
Speaker 1: for going lower, and I delineated my logic in two
20:32
Speaker 1: thousand fourteen, and my first book, The Next Perfect Trade.
20:35
Speaker 1: Even back then and then over the next few years
20:38
Speaker 1: between two thousand fourteen and two thousand twenty up to COVID,
20:42
Speaker 1: we had the situations when everything that could go wrong
20:45
Speaker 1: for bonds wetter went wrong. Like we had very robust growth,
20:49
Speaker 1: strong employment, we had US politics, fiscal boss fiscal phiscal
20:54
Speaker 1: politics and growth. Everything was actually negative for bonds if
20:58
Speaker 1: you looked at it, If you look those numbers right,
21:01
Speaker 1: and at those physical expansions and the elections and everything
21:05
Speaker 1: you will, you would think everything would be negative for
21:08
Speaker 1: US bonds. And yet they performed tremendously well, which and
21:12
Speaker 1: I had that logic and place why there was no
21:14
Speaker 1: choice for them that to perform that well. That's why
21:16
Speaker 1: I called my first book the Magic, magic sort of
21:18
Speaker 1: necessit to you, So I should like to say, sometimes
21:21
Speaker 1: a magic sort of necessities unshoot, huh. So, so how
21:26
Speaker 1: do you conceptualize all of these macro currents and cross
21:31
Speaker 1: currents and events. Do you create a model or is
21:34
Speaker 1: it really you're just putting together a lot of different
21:39
Speaker 1: ideas and trying to game out how they're going to
21:43
Speaker 1: manifest themselves in prices of interest rates and inflation and
21:50
Speaker 1: other factors that that drive markets. I think what I
21:55
Speaker 1: it's a kind of a hybrid I follow. I follow
21:59
Speaker 1: the markets just kind continuously. It's hard to say, because
22:01
Speaker 1: if you want financial markets for twenty five years without
22:05
Speaker 1: ever really taking a true break, there is a certain
22:07
Speaker 1: continuity to it. You see how things develop in the world.
22:10
Speaker 1: Of course, you can miss certain important developments, but you
22:13
Speaker 1: have a general sense what's happening to interest rate, what's
22:15
Speaker 1: happening to currencies, what is the mood of the world,
22:18
Speaker 1: and you try you form certain opinions. Now, I have
22:21
Speaker 1: a strategic system, which again delineated in my first book,
22:25
Speaker 1: but I refer to how I applied it a lot
22:26
Speaker 1: on the second book, in which I ranked trade. What
22:29
Speaker 1: I tried to do I try to select trades which
22:32
Speaker 1: x ANTI look good. And the bond trade of two
22:35
Speaker 1: thousand fourteen was the best example of this. This was
22:38
Speaker 1: the highest strength trade I ever had in my ranking.
22:41
Speaker 1: I have a numerical ranking system, and this was the
22:43
Speaker 1: highest strength trade in basically all history of financial markets
22:47
Speaker 1: that I know of. And it has been proven to
22:49
Speaker 1: work this way because just the highest strength trade that
22:52
Speaker 1: rades that make money even if everything goes against them.
22:57
Speaker 1: A right, So that is the strongest test. It's very
22:59
Speaker 1: easy to like make money on a trade if if
23:02
Speaker 1: you if the events helped you, But how does the
23:05
Speaker 1: trade perform with events don't help you? Probably the most
23:09
Speaker 1: selling and test. So UM I ranked trades based on
23:14
Speaker 1: certain factors that I believe predetermined which trades them more
23:18
Speaker 1: likely to make money. None of those as certainties. It's
23:21
Speaker 1: all about probability skills. It's all about kind of trying
23:25
Speaker 1: to shift the odds from being the player in the
23:27
Speaker 1: casino to being the casino. Interesting, when you were running
23:31
Speaker 1: macro strategy at JP Morgan's trading desk, were there any
23:36
Speaker 1: similar uh perfect trades lining up? What did you see
23:40
Speaker 1: from your macro perspective as UM low risk, high return trades. Well,
23:47
Speaker 1: I think definitely my first perfect trade and probably they
23:50
Speaker 1: are like there were two great junctions for perfect trades
23:53
Speaker 1: in my career. In the first time happened in two
23:54
Speaker 1: thousand two, and in a simple words, that trade into
23:58
Speaker 1: thousand two or risk parity here mm hmm. And back
24:02
Speaker 1: then I had no idea that some people were already
24:04
Speaker 1: doing risperraty. I think they were. It was totally independent thinking,
24:07
Speaker 1: but I didn't know of course the weather asperity. I
24:09
Speaker 1: don't I didn't know what Cliff Astness was doing, what
24:11
Speaker 1: Dalia were doing at the time. I still don't know
24:13
Speaker 1: exactly what they were doing back then. I'm not like
24:15
Speaker 1: a historian of hedge fund world, but internally a JP Morgan.
24:19
Speaker 1: In two thousand two, I gave a presentation about and
24:22
Speaker 1: looking back at this, it was exactly a rispiracy. I
24:25
Speaker 1: talked about volatility portfolio weighted by implied volatility portfolio of
24:30
Speaker 1: SMT futures, and you're adollar futures. Huh. Really interesting. Um On.
24:35
Speaker 1: One of the things that we always kind of laugh
24:38
Speaker 1: about is the people who tend to be one particular
24:44
Speaker 1: type of trader, but for whatever reason, they can't help
24:48
Speaker 1: but getting sucked into the macro trade. And I've heard
24:53
Speaker 1: various trading desks called them macro tourists. I don't know
24:57
Speaker 1: if you're familiar with the phrase. Yes, tell us your thoughts.
25:02
Speaker 1: First of all, why are people so compelled to believe
25:06
Speaker 1: they have the ability to anticipate and trade around macro events.
25:12
Speaker 1: It's it's one of the most challenging types of trading
25:16
Speaker 1: if you're not in it every day. Well, I think
25:18
Speaker 1: there are two things going on. First of all, successful
25:22
Speaker 1: people have a tendency to become ultra crepidarian, which means
25:26
Speaker 1: like they just think that they're skilled at more things
25:29
Speaker 1: than they actually are. Like if you are, and I've
25:32
Speaker 1: fallen prey to this many times in my life too.
25:35
Speaker 1: When I think like, I'm really good at many things,
25:39
Speaker 1: you try some new things and you think, well, should
25:40
Speaker 1: I'll be good at that too? Should I can apply
25:42
Speaker 1: this logic? For example, if I use my logic and
25:45
Speaker 1: apply my logic tonnelized stocks, right, individual stocks? Should I
25:49
Speaker 1: can do that? Right? My intuition. It's very easy for
25:52
Speaker 1: me to, for example, to say like, oh, this is
25:55
Speaker 1: my intuition about geopolitical developments. For example, think about this,
26:00
Speaker 1: I'm a micro trader, right, obviously my portfolio will be
26:03
Speaker 1: impacted a lot by current military whatever and political developments.
26:10
Speaker 1: Ah So, unavoidably it starts forming views about what can happen,
26:16
Speaker 1: what's the next step in the conflict? Now? Do I
26:20
Speaker 1: really have any qualification to know what the next step
26:23
Speaker 1: in the conflict is? Absolutely not. Furthermore, I don't even
26:27
Speaker 1: have qualifications to know what the next inflation release will be.
26:31
Speaker 1: I mean, I don't have any I don't know any
26:33
Speaker 1: more than thousands of other economists and analyze it. What
26:36
Speaker 1: I have qualifications for its construct trade and portfolios. But
26:39
Speaker 1: it's very easy to go into other areas which I related.
26:42
Speaker 1: Now to imagine that you as an individual stock trader,
26:45
Speaker 1: and you know that your stock is affected by interest rates,
26:48
Speaker 1: or currency or even just overall direction of economy. It's
26:53
Speaker 1: very hard not to start forming views on those things.
26:55
Speaker 1: And what I think is very hard in your mind
26:57
Speaker 1: to come partamental eyes between the areas you expert in
27:02
Speaker 1: and the areas you're not an expert in. Huh, really interesting.
27:06
Speaker 1: Let's talk about your first book first, the next Perfect
27:09
Speaker 1: Trade A Magic Sword of Necessity. What what's kind of
27:14
Speaker 1: interesting about this book is you use all of these
27:18
Speaker 1: medieval weapons, armored shields, other types of weaponry as a
27:22
Speaker 1: metaphor for trading. To tell us how you developed that
27:26
Speaker 1: sort of mindset, I think, first of all, honestly, people,
27:31
Speaker 1: when people use metaphors, they just reach to whatever is
27:35
Speaker 1: fun for them. For example, if you have found, like
27:38
Speaker 1: I hear, people a lot used, for example, baseball metaphors.
27:41
Speaker 1: I know nothing about baseball, so and I don't I
27:45
Speaker 1: don't really watch team sports, but I do like medieval warfare,
27:49
Speaker 1: and I read a lot of fantasy books which involved
27:51
Speaker 1: with so that's on my mind. So I think the
27:53
Speaker 1: idea is you want to use metaphors which are fun
27:57
Speaker 1: for you but also kind of power of all, I
28:00
Speaker 1: think going to battle as a powerful metaphor people can
28:03
Speaker 1: relate to it. You go to battle, you need to train,
28:06
Speaker 1: you need to have a weapon to attack, and a
28:08
Speaker 1: shield an armor to protect yourself. So and that is
28:12
Speaker 1: very simple kind of I think anyone can relate to it.
28:15
Speaker 1: But honestly, for me, it's just fun to write this way.
28:18
Speaker 1: So it's it's metaphors for both risk, which is um,
28:22
Speaker 1: the shield protects you, when reward, which is how the
28:26
Speaker 1: sword obtains gains. Is that a fair description. Yeah, that's
28:32
Speaker 1: a very good way to put it. Yes, huh. So
28:34
Speaker 1: I noticed in the new book which we're going to
28:37
Speaker 1: talk about, um, there's a lot of astrophysics in their
28:41
Speaker 1: accretion disks, tidal gravity, wormholes, event horizons, a lot of
28:46
Speaker 1: black hole related why the nomenclature of astrophysics. Well, that's
28:52
Speaker 1: another area which is super fun for me. I really
28:54
Speaker 1: love black holes and I love reading about them. But
28:58
Speaker 1: also I started thinking about it is a lot because
29:01
Speaker 1: of the time distortion factor. One of the reasons like
29:04
Speaker 1: why I started wherever I thought about writing this book
29:08
Speaker 1: The Trades of March twenties twenties, because the month of
29:10
Speaker 1: March was seemed like infinite. Every trading day was like
29:16
Speaker 1: a few months volume of trading every day. And that's
29:19
Speaker 1: when I said, like, at the end of that month,
29:20
Speaker 1: it's like, well, we survived March. The month of March,
29:23
Speaker 1: somebody should read write a book about this month. And
29:26
Speaker 1: then it's like, Okay, I can write a book about
29:28
Speaker 1: this month because there's so much happening and thinks that
29:31
Speaker 1: it would normally take Sometimes the trades that sometimes will
29:34
Speaker 1: take years to unfold wood unfold within hours like sudden
29:38
Speaker 1: trains would unfold so rapidly. So I'm a long term
29:41
Speaker 1: trade I tried to be patient. A lot of times
29:43
Speaker 1: I put a trade on and it's there for two years.
29:46
Speaker 1: And in March twenty a lot of trades had to
29:49
Speaker 1: be changed around quite a bit within days, and that
29:53
Speaker 1: so it felt like a time warp. And when you
29:56
Speaker 1: have this time warp stort of the time that Magaly
29:58
Speaker 1: makes me think of black hole. Sure, and then the
30:00
Speaker 1: realized not just time was worked, but the whole market
30:03
Speaker 1: structure was worked. Things were just getting really disconnected. Like
30:06
Speaker 1: one thing was trading the way one thing was trading
30:09
Speaker 1: it has nothing to do with the way the other
30:10
Speaker 1: thing was trading. And that also makes me think of
30:14
Speaker 1: like time space ruptured by a black hole. Huh, really
30:17
Speaker 1: really interesting. I think this is the first book I've
30:21
Speaker 1: ever seen that has I don't know, maybe a third
30:24
Speaker 1: of it is actual internal slack messages on on the
30:29
Speaker 1: trading desk. That that's pretty unique. Tell us why you
30:32
Speaker 1: decided to embrace that approach? Well, I realized that there's
30:37
Speaker 1: a lot of good books written about trading, and some
30:40
Speaker 1: of them are written by journalists and reviewing traders. Some
30:42
Speaker 1: of them are written by money money managers themselves. But
30:47
Speaker 1: any book, even and that includes m on my first book,
30:51
Speaker 1: any book that one reads shows a person's perspective, a
30:55
Speaker 1: person's recollection the biases they've used. And that's okay. You
30:58
Speaker 1: read that. If you read somebody's book, you want to
31:00
Speaker 1: read the views, right. I I wanted to get the
31:03
Speaker 1: closest to get writing an objective book, even though my
31:07
Speaker 1: commentary is obviously subjective. But the book that you really
31:10
Speaker 1: could not say, well, he fudged that you could really
31:13
Speaker 1: see time stamp on everything I say. And I think
31:16
Speaker 1: the value of that is what I think about in
31:19
Speaker 1: terms of safer is some reason they've been using this
31:21
Speaker 1: analogy a lot. If you think of aspiring traders and
31:24
Speaker 1: medical students, they could read an anatomy book, which could
31:28
Speaker 1: be my first book or some other trading book, or
31:30
Speaker 1: they can actually go into the operating room seeing the
31:33
Speaker 1: actual trade chatter. Well, for anyone who actually wants to
31:36
Speaker 1: be in financial markets and wondering what it's like, they
31:40
Speaker 1: can actually go and see what is happening in a
31:42
Speaker 1: hedge fund when there is a crisis. It's similarly imagined.
31:47
Speaker 1: Do you want to be interested in being like an
31:49
Speaker 1: oval office of the White House when there is some
31:51
Speaker 1: kind of military crisis developing like Caribbean crisis, a current crisis? Right? Uh? Similarly,
31:59
Speaker 1: I don't maybe like you want to be like a
32:02
Speaker 1: CDC headquarters when pandemic was unfolding. Right. It's interesting to
32:07
Speaker 1: take a pick at those places, and I fl my
32:09
Speaker 1: slack chances, let my slack records allow people to see
32:13
Speaker 1: it in a very faithful way which I cannot paint.
32:16
Speaker 1: I cannot paint myself like Kira was making all the
32:18
Speaker 1: right decisions. You could see all the confusion, all their commotion,
32:22
Speaker 1: all the mistakes. Although like we did the straight today,
32:25
Speaker 1: but you know what, would have to unwind it because
32:27
Speaker 1: it's not working at all the way we want it right,
32:29
Speaker 1: All of those things happening in real life, what it's
32:32
Speaker 1: like in the trenches. One of the things that really
32:35
Speaker 1: stood out is at least to my eye, was the
32:39
Speaker 1: attempt to make sure that there weren't simple trading errors.
32:44
Speaker 1: You would put in an order, it would get called
32:46
Speaker 1: back to you in a very specific way. Someone else
32:50
Speaker 1: was tracking the price, the time, the margin lines. You
32:55
Speaker 1: had to make sure you never went over buying power
32:58
Speaker 1: like there are a lot of move being pieces throughout.
33:03
Speaker 1: Do you think the slack channel captured all of those,
33:07
Speaker 1: because I don't know if people who aren't familiar with
33:10
Speaker 1: trading desks pick up a lot of the the complexities there.
33:14
Speaker 1: You you specifically refer to it in the text, but
33:18
Speaker 1: it goes by really quick and and a lot of
33:22
Speaker 1: the trading desk slack chatter. When you look at the
33:25
Speaker 1: time stamps, there's a ton of stuff happening in a
33:28
Speaker 1: very very short period of time. Yeah, it is actually
33:32
Speaker 1: select this trading SLAC there's only a fraction of what
33:34
Speaker 1: is happening because it does not show any of the
33:36
Speaker 1: operational talk right, and it doesn't take any of the
33:40
Speaker 1: strategy research talk, and it doesn't actually have operation talk
33:43
Speaker 1: that it's all the strade that getting checked and booked
33:46
Speaker 1: unders tons of work done by the by our middle
33:49
Speaker 1: of his people, right by operations people. So there's a
33:54
Speaker 1: lot of stuff going on in the background in terms
33:56
Speaker 1: of operations. But I did think it was important to
34:00
Speaker 1: uh particularly important to show slap chat and all its
34:04
Speaker 1: entirety without cutting this boring upper almost like boring confirmations
34:08
Speaker 1: and operational discussions, just to see what the processes. Like
34:12
Speaker 1: I always like get laughing, like when they do in
34:15
Speaker 1: TV shows and somebody says, picks up the phone and
34:17
Speaker 1: says wire five million dollars to such inside and click off.
34:20
Speaker 1: You know what happens in the real world. They'll call
34:22
Speaker 1: you back, they will confirm the they will ask you
34:25
Speaker 1: why the wire is for. They will make sure ask
34:29
Speaker 1: for your birthday, even if they talk to your hundred
34:31
Speaker 1: times before, Like there is a lot of due diligence
34:36
Speaker 1: goes into any kind of financial transactions, which I think
34:40
Speaker 1: a lot of media portrayals of the world's skips, and
34:43
Speaker 1: again there says yes, if you're an operating room and
34:46
Speaker 1: you are persforming a surgery, they cut, they cut a person,
34:51
Speaker 1: They put those little like I don't know what it's caused,
34:54
Speaker 1: pieces of gas on side and they count all of
34:56
Speaker 1: them so they don't miss one. Right, there's a lot
34:58
Speaker 1: of that going on. You can have breakdowns, right, and
35:02
Speaker 1: you could see the moments when we're finding an error,
35:05
Speaker 1: confused about something and fixing it on a commotion, and
35:08
Speaker 1: that again, it's just part of showing what it is
35:11
Speaker 1: really like to do the work. One of the things
35:13
Speaker 1: you say in the book that I thought was intriguing
35:15
Speaker 1: is people may be surprised how little time we spent
35:19
Speaker 1: discussing the stock market. Tell us a little bit about
35:23
Speaker 1: your thinking. They're well. One of the things is I've
35:28
Speaker 1: always thought that stock market is what it is, it's
35:31
Speaker 1: a fraction of financial markets. It's very important one because
35:34
Speaker 1: stock market is a really good indicator of what's going
35:38
Speaker 1: on in the world, and it's tends to be very
35:40
Speaker 1: good leading indicator of certain things. Uh. But trying to
35:45
Speaker 1: figure out on a given day, whether stocks are going
35:47
Speaker 1: to go up and down. Yes, I spent about very
35:50
Speaker 1: little time on such discussions. That's extremely rare for me
35:53
Speaker 1: to talk about whether stock market is going to go
35:55
Speaker 1: up or down to there tomorrow, has no idea and
35:57
Speaker 1: I kind of not even think in those terms. I
36:00
Speaker 1: find that stock market is an important component of the portfolio,
36:04
Speaker 1: and I mentioned earlier on that I have been involved
36:09
Speaker 1: in a disparity type of trading early in my career
36:13
Speaker 1: and I still and I look. But for me, stock
36:15
Speaker 1: market is not special. It's not like the main investable asset.
36:19
Speaker 1: Is just one of the assets. And sometimes my portfolio
36:23
Speaker 1: will not have any stock, any positions related to stock
36:26
Speaker 1: market at all, and sometimes it will be heavily positioned
36:29
Speaker 1: on some species. It could be not exactly stock market.
36:31
Speaker 1: It could be something like dividend futures. It could be
36:34
Speaker 1: any kind of stock indices around the world. Uh. For me,
36:38
Speaker 1: that it's just a component, and I don't spend a
36:42
Speaker 1: lot of time speculating on the short term direction of it.
36:45
Speaker 1: Let's let's talk a little bit about options. I love
36:48
Speaker 1: this quote, so after acknowledging my shortcomings and swearing up
36:52
Speaker 1: and down to never touch options again, in my life.
36:56
Speaker 1: What was I to do but answer the simple question
36:59
Speaker 1: and by more options. Tell us a little bit about
37:02
Speaker 1: your experience with options and why you sometimes felt you
37:06
Speaker 1: had no choice but to participate in the options market. Yes, uh,
37:11
Speaker 1: I mentioned I've talked earlier that I used to be
37:15
Speaker 1: an options market maker, and I think that gave me
37:19
Speaker 1: like a lot of I know. There's actually a pattern
37:22
Speaker 1: hedge fund managers who are options market makers in the
37:25
Speaker 1: past tend to use options much less when they become
37:29
Speaker 1: go to the buy side. The reason is that you
37:32
Speaker 1: kind of know the fallacies, all the fallacies associated that
37:35
Speaker 1: using options. Every option looks If you buy an option,
37:38
Speaker 1: it always looks great if your underlying market assumption is correct.
37:41
Speaker 1: If you think the market goes up thirty percent and
37:44
Speaker 1: you buy a call, of course the call will look great.
37:47
Speaker 1: But that kind of idea of value and called based
37:49
Speaker 1: on your original speculation that market is going to up
37:53
Speaker 1: go up is fallacious, and when you own option there's
37:57
Speaker 1: a lot of ways for them to go wrong. You
38:00
Speaker 1: could be right about the direction, but it just can
38:02
Speaker 1: move not fast enough or not far enough, or not
38:04
Speaker 1: on the timing you need, and you will end up
38:07
Speaker 1: having the correct view in a losing trade. And don't
38:10
Speaker 1: even get me started on complex options. Absolutely hate all
38:13
Speaker 1: those knocking knockouts barriers. I think that is just uh
38:21
Speaker 1: of the time, is just setting cash on fire to
38:23
Speaker 1: do complex options. There could be some exceptions. So why
38:28
Speaker 1: did you feel compelled at times to say I swore
38:31
Speaker 1: off options? But I had no choice. The trade presented
38:35
Speaker 1: itself and I had to participate with options. Yeah, I
38:39
Speaker 1: discussed in my book why what on occasion options? UH?
38:46
Speaker 1: On occasion options associately miss priced? There is no choice
38:51
Speaker 1: to use them, and usually it has not not to
38:53
Speaker 1: do with it actually directly, like what is the implied
38:56
Speaker 1: volatility of that the money option is? But sometimes option
38:59
Speaker 1: structure is totally wrong because the typical option pricing is
39:03
Speaker 1: always built on some kind of normal distribution, that there
39:06
Speaker 1: is a central scenario which is most likely, and other
39:09
Speaker 1: scenarios that get like as likely as you move away
39:11
Speaker 1: from the central scenario. And yes, people have always like
39:15
Speaker 1: fat tales skew cartosis. I don't even know all of
39:18
Speaker 1: those terms. I used to know the better twenty years ago. So,
39:23
Speaker 1: but there are all those things that just to not
39:28
Speaker 1: use classic normal distribution. But it's still the idea is
39:32
Speaker 1: that there is a certain central most likely price. Occasionally
39:36
Speaker 1: that is not the case at all, and that's what
39:37
Speaker 1: I was recognizing into thousand eighteen. There was no most
39:40
Speaker 1: like if you looked at where the interest rates should
39:43
Speaker 1: be in two thousand twenties, there was no most likely price.
39:46
Speaker 1: The safety of praise too close to three percent. The
39:49
Speaker 1: three percent was not a tiny seniest bit more likely
39:52
Speaker 1: than one percent or four percent or two percent or zero.
39:55
Speaker 1: So the forward that we had an interest rate had
39:58
Speaker 1: absolutely no, no uh prerogative in terms of the actual outcome,
40:04
Speaker 1: except that it was the forward that was there market price,
40:08
Speaker 1: but in terms of where the price will end up
40:10
Speaker 1: gave us absolutely no signal about that because we could
40:14
Speaker 1: be easing more, we could be we could be easing
40:16
Speaker 1: which I thought, what would happen, and we could be tightening.
40:19
Speaker 1: And that originated my option trades for contracts of tho
40:24
Speaker 1: thousand twenty. And what happened in two thousand nineteen that
40:27
Speaker 1: the vault just on those options trades came down so
40:29
Speaker 1: much that the trade was just undeniable, and I had
40:35
Speaker 1: to say, okay, I gave up some of my previous
40:37
Speaker 1: games and options because the vault collapse so much, but
40:40
Speaker 1: that that is not what I should be thinking about.
40:43
Speaker 1: What I should be thinking about is not what I
40:45
Speaker 1: made on what I lost. But here's where we stand now.
40:48
Speaker 1: This is the market price and this is the portfolio.
40:51
Speaker 1: I've done this before, sometimes with success. Sometimes I was wrong.
40:54
Speaker 1: Of course, I can have some petition going against me,
40:58
Speaker 1: but I say, now the levels are really good, and
41:01
Speaker 1: I'm gonna dramatically increase the position, really, really really intriguing.
41:06
Speaker 1: My extra special guest this week is Alex Kuerevic. He
41:09
Speaker 1: is the founder and chief investment officer of Hunte Advisors,
41:13
Speaker 1: a macro hedge funds which was one of the top
41:16
Speaker 1: ranked performance funds in So we're recording this when we're
41:23
Speaker 1: about to get the March Federal Reserve decision on interest rates.
41:29
Speaker 1: And one of the things that one of the things
41:32
Speaker 1: I'm gonna say that again, one of the things that
41:35
Speaker 1: struck me from the book was your line the Fed
41:38
Speaker 1: might occasionally surprise the the Fed might occasionally surprise the
41:43
Speaker 1: market with rape cuts, but they almost never surprised the
41:47
Speaker 1: market with unexpected increases. Explain that situation to us. Yes,
41:53
Speaker 1: so we're very close to the Fed and myden'mal in
41:55
Speaker 1: the studying starting to pump, and the logic is that, um,
41:59
Speaker 1: they're at case. Once FED did intermeding cuts to support
42:03
Speaker 1: UH markets to dissolve crisis, dissolve arious liquidity problems that
42:09
Speaker 1: were happening, and usually no matter how much expected, they
42:13
Speaker 1: tended to surprise by doing even more aggressive rate cut
42:16
Speaker 1: measures when UH crisis is like in two thousand one
42:20
Speaker 1: or two thousand eight or H two twenty would occur.
42:24
Speaker 1: I think they have very little upside of hiking when
42:28
Speaker 1: market doesn't expect them to hike, because tightening interest rates
42:33
Speaker 1: has a very slow effect. Whether they're gonna raise rates
42:35
Speaker 1: twenty five basis points today or extra twenty five basis
42:40
Speaker 1: points I mean today or at the next meeting they
42:42
Speaker 1: have plenty of that's not going to have any major
42:45
Speaker 1: effect on financial markets. Sorry, it's going to have effect.
42:48
Speaker 1: I apologize. They're gonna have effect on financial markets, but
42:51
Speaker 1: they're not going to have a long term economic effects
42:53
Speaker 1: that actual tightening. So it seems like a very bad
42:58
Speaker 1: risk rep word for position for if they hike more
43:00
Speaker 1: than expected and cause the stock market crush or some
43:03
Speaker 1: kind of disruption, it will all be on them. While
43:06
Speaker 1: they have plenty of time to do what the market
43:09
Speaker 1: expects them to do and then signal if they if
43:12
Speaker 1: they for the next meeting, what they actually want to
43:14
Speaker 1: do at the next meeting. Because of this mentality, there
43:18
Speaker 1: haven't been any intermeding hikes or surprised seeingly hikes and
43:23
Speaker 1: size since I believe and tell us what happened, because
43:29
Speaker 1: I think recall there was a little bit of a
43:31
Speaker 1: disruption in the bond market then, wasn't there, Yeah, that
43:33
Speaker 1: caused the bond market collapse, and I think they kind
43:35
Speaker 1: of just learned the lesson why. It's very hard for
43:39
Speaker 1: me to imagine why would they bother? So the event
43:42
Speaker 1: is to happen in four minutes and I could be
43:44
Speaker 1: proven wrong, but the market is pricing maybe like ten
43:49
Speaker 1: percent of chance of them doing fifty basis points. So
43:53
Speaker 1: how do you position yourself in anticipation of an outcome
43:58
Speaker 1: where there are only a couple of possible results. Are
44:02
Speaker 1: you positioning for all the results? Are you doing the
44:06
Speaker 1: ones that are the most miss priced that give you
44:08
Speaker 1: the best risk reward profile. I'm trying to position for
44:13
Speaker 1: miss priced results, and usually that means that I could
44:16
Speaker 1: take some losses that time wrong. I do like to
44:19
Speaker 1: have trades that go in every possible direction, but like
44:22
Speaker 1: something that will make money if this, if the other
44:25
Speaker 1: thing happens right, But it's it's not always possible to
44:28
Speaker 1: have portfolio balanced. The dichotomy that one phases on such
44:32
Speaker 1: situations when you're pretty sure which way the way will
44:35
Speaker 1: go is that, well, on one hand, you have really
44:38
Speaker 1: good outs in your favor. On the other hand, the
44:40
Speaker 1: risk symmetry is very bad. So if you make a
44:43
Speaker 1: bad for example, that the just very specific bad on
44:46
Speaker 1: on the performacy outcome that they're going to go to
44:49
Speaker 1: twenty five basis points, I might make such a bad
44:52
Speaker 1: but it would be very moderate and size because so
44:55
Speaker 1: that if they do go fifty, which would be an outlier,
44:58
Speaker 1: I cannot afford to blow up. Can It has to
45:01
Speaker 1: be a moderate manageable loss if that happens. And you
45:05
Speaker 1: also spend a lot of time betting on intermarket relationships
45:12
Speaker 1: various currencies and various interest rates around the world, tell
45:15
Speaker 1: us how you approach those sorts of trades in the
45:20
Speaker 1: face of Federal reserve action. Well, there is a strong
45:25
Speaker 1: relation obviously, relations between interest rates and interestrate differential, between
45:31
Speaker 1: currencies and UM and and actually currency performance, interest rate
45:38
Speaker 1: differentials the carrying currencies tend to be actually probably the
45:42
Speaker 1: best long term predictor of currency performance if you look
45:47
Speaker 1: at the total return, even not even the real carry
45:50
Speaker 1: but it's just simply the nominal career seems to be
45:53
Speaker 1: a very good predictor of long term performance. So, of
45:57
Speaker 1: course central bank decisions have a very meaningful impact on currencies,
46:02
Speaker 1: and sometimes this is where you can look for opportunities,
46:06
Speaker 1: like I did in two thousand fourteen. One one central
46:09
Speaker 1: bank is priced in to do all those trade hikes,
46:11
Speaker 1: but the currency is actually weaker than it should be,
46:15
Speaker 1: like dollar was much weaker than it should be in
46:17
Speaker 1: two thousand fourteen. So long dollar long bonds was a
46:20
Speaker 1: very good trade because if the FAT cut raised rates
46:24
Speaker 1: as it was projected to uh post two thousand fourteen,
46:28
Speaker 1: as fast as they projected to should it, dollar would
46:30
Speaker 1: be as stronger, even stronger than it was for than
46:34
Speaker 1: it was trading. But there was also plenty of opportunities
46:37
Speaker 1: for dollar to strength, and even without that, even if
46:41
Speaker 1: the FAT did not really raise rates as much. So
46:44
Speaker 1: those type of relationships um allow you to understanding this
46:49
Speaker 1: type of dominance that being long dollar is dominant over
46:53
Speaker 1: being shot bond, and being long bond is dominant over
46:57
Speaker 1: being shot dollar. It's it's a little difficult to grasp.
47:00
Speaker 1: You'd probably have to read the book and work through
47:02
Speaker 1: the logic to understand how this logic works. But this
47:05
Speaker 1: type relationship allow me to get a lot of edge
47:07
Speaker 1: when I get them right. Huh, really really interesting. Um,
47:11
Speaker 1: you have very significant fixed income derivative experience from your
47:15
Speaker 1: prior roles. How large of a piece of your fund
47:20
Speaker 1: strategy does that play? It does play, specifically on the
47:26
Speaker 1: fact that we're much more granular when it comes to
47:29
Speaker 1: us fixed income than other products. When we deal with
47:32
Speaker 1: products that we don't know about, we try to deal
47:34
Speaker 1: with simple liquid things like liquid. Say we go to
47:37
Speaker 1: the country, we try to see what are the liquid
47:39
Speaker 1: bond futures on that country. Okay, so the interest rate
47:42
Speaker 1: decision is twenty five, as we expected. I think the
47:47
Speaker 1: next big thing will really be waiting for their waiting
47:52
Speaker 1: for the press conference. They won't be that much happening,
47:54
Speaker 1: I think until press conference. I mean, market can do
47:57
Speaker 1: all sorts of weird things, but otherwise, now that might
48:00
Speaker 1: all be happening ntil press conference. So let's let's talk
48:03
Speaker 1: a little bit about inflation and what the Federal Reserve
48:06
Speaker 1: is doing, because this is the perfect time to bring
48:09
Speaker 1: this up. You know, on the one hand, it looks
48:11
Speaker 1: like the FED is long overdue to get off of
48:14
Speaker 1: their emergency footing and and bring FED fund rates up
48:18
Speaker 1: to at least closer to a normal level. And on
48:22
Speaker 1: the other hand, everybody's jumping up and down about inflation,
48:26
Speaker 1: but it seems like much of the inflation that's out
48:30
Speaker 1: there isn't very much going to be affected by what
48:33
Speaker 1: the FED is doing. Automobiles and and semiconductors seem to
48:38
Speaker 1: be outside of the FED. Energy prices and the war,
48:42
Speaker 1: the Russian invasion of Ukraine, FED rates aren't going to
48:44
Speaker 1: impact home prices. Really is an inventory problem and a
48:49
Speaker 1: massive surge in in pent up demand from both both
48:54
Speaker 1: the pandemic and a decade of weak household information. When
48:59
Speaker 1: you see the sort of things that are taking place,
49:02
Speaker 1: you know, what's your thought pricess as to what's really
49:06
Speaker 1: going on at a fat Yes. So one of the
49:09
Speaker 1: things that I can always repeat, and honestly, it's one
49:13
Speaker 1: of those things do as I say, but not always
49:16
Speaker 1: do is I do? I repeat this advice don't focus
49:19
Speaker 1: on what the FAT should do, focus on what the
49:21
Speaker 1: FAT will do. We'll have our opinions about policy, and
49:25
Speaker 1: I have some strong opinions about policy, but what is
49:30
Speaker 1: really important to understand, like what actually will happen. For example,
49:34
Speaker 1: I could say today I could be talking and they
49:37
Speaker 1: should not hide at all, or someone else should say
49:40
Speaker 1: they should really hide fifty basis points. But the reality
49:43
Speaker 1: is they were going to hike twenty five basis points
49:47
Speaker 1: on March and that's what they did. There was really
49:49
Speaker 1: very little doubt that that's going to happen. And you
49:54
Speaker 1: the interesting part about the discussion that you had a
49:56
Speaker 1: discussion unfold life. You've heard me my reasoning before it happened,
50:00
Speaker 1: not after it happened. Uh, it is my Yes, I
50:04
Speaker 1: totally agree with you. I think it's kind of a
50:07
Speaker 1: little insane that fat field urgency to raise interest rates
50:10
Speaker 1: to do anything about the current situation because exactly as
50:14
Speaker 1: you said, the situations that's absolutely not on their purview.
50:16
Speaker 1: You cannot fix supply bottlenecks with raising interest rates usually
50:21
Speaker 1: cannot fix them quickly. You could crush demand, but the
50:25
Speaker 1: underlying problem is already well. First of all, if you
50:27
Speaker 1: ask why is inflation even bad. Well, people are not
50:30
Speaker 1: happy that they cannot buy things, right, they don't want
50:33
Speaker 1: to right, So you make it even harder for them
50:36
Speaker 1: to buy things, inflict even more pain on people, just
50:40
Speaker 1: so that you end up inflicting even more pain on people, uh,
50:45
Speaker 1: just so the demand would go down and maybe then
50:49
Speaker 1: the price will come down. It's really ridiculous logic, and
50:51
Speaker 1: it's very slow logic. It's not gonna work very much.
50:55
Speaker 1: A lot of what we're seeing right now, a lot
50:58
Speaker 1: of inflation that wasting right now, a lot of generally
51:00
Speaker 1: economic outcomes, part of a more even part of a
51:03
Speaker 1: more general rule. Economic outcomes typically the result of what
51:07
Speaker 1: was happening a year or two ago, not of what's
51:09
Speaker 1: happening today. Right. So the inflation that we see, the
51:12
Speaker 1: economic numbers, they see the result of the result of
51:15
Speaker 1: stock market rallying over the last two years, of incredible
51:19
Speaker 1: monetary expansion, of incredible physical expansion of two thousand, two
51:22
Speaker 1: thousand twenty one. Of course, why seeing high inflation all
51:25
Speaker 1: those numbers? Now right now we have a very different environment.
51:28
Speaker 1: We're seeing relative physical contraction, we're seeing raising rates where
51:33
Speaker 1: seeing monetary contraction coming up. We're seeing stock markets no
51:38
Speaker 1: longer cooperating with people. I think that one or two
51:41
Speaker 1: years from now, we'll see a very different picture which
51:43
Speaker 1: will unwind what we see now. What the FED is
51:46
Speaker 1: doing now is not relevant to the shouldn't be relevant
51:50
Speaker 1: to the numbers where I see in today with a
51:53
Speaker 1: result of what they were doing two years ago. But
51:55
Speaker 1: I think I think this is the case. I'm a
51:57
Speaker 1: like criticizing too much, but I think this is the case.
52:00
Speaker 1: Is on political pressure and kind of the sense of
52:02
Speaker 1: site guides and the chat are blindsided them a little bit.
52:05
Speaker 1: So let's talk about Let's talk about that, because that's
52:08
Speaker 1: really interesting. And as you said earlier, if the FED
52:13
Speaker 1: really thought that they're raising rates now here in March
52:18
Speaker 1: of would do something about inflation. They could have done
52:23
Speaker 1: an increase at the previous meeting they didn't. They could
52:27
Speaker 1: have done an intermeding increase they didn't. They could have
52:31
Speaker 1: done fifty basis points they didn't. This seems to be
52:35
Speaker 1: you know, when I was on a trading desk, they
52:37
Speaker 1: used to call it throwing a virgin in the volcano.
52:40
Speaker 1: Sometimes you just have to appease the market, give them
52:44
Speaker 1: a little bit so they don't think you're too far behind.
52:47
Speaker 1: The crowd, and that's what this I don't want to
52:50
Speaker 1: put words in your mouth, is this quarter point essentially
52:55
Speaker 1: addressing that that the fact that they were surprised by
52:58
Speaker 1: the political pressure and the noise about inflation. Is that
53:02
Speaker 1: what you're suggesting something like that. Yes, I think it
53:05
Speaker 1: was the political pressure that got to them. It does
53:10
Speaker 1: not make, honestly a ton of sense to me, this
53:14
Speaker 1: whole thing, because but yeah, I think it was a
53:18
Speaker 1: political pressure that and kind of the mentality a lot
53:21
Speaker 1: of people started to get really concerned about inflation. Honestly,
53:25
Speaker 1: I was concerned about inflation, but that's a concerned about
53:27
Speaker 1: it in two thousand twenty. I'm not concerned about it now.
53:29
Speaker 1: It already happened, and I'm not concerned about inflation going
53:33
Speaker 1: forward because all the conditions point towards negative inflation going forward,
53:37
Speaker 1: not towards positive inflation going forward. So I would be
53:41
Speaker 1: now I'm concerned about deflation in the next two years.
53:44
Speaker 1: It's it's funny you say that because I pulled out
53:47
Speaker 1: this quote from the book which came out a while ago,
53:50
Speaker 1: which obviously you wrote long before that. In fact, when
53:55
Speaker 1: I realized that, if anything, the stimulus and liquidity triggered
53:59
Speaker 1: by the crisis would have long term inflationary consequences. So
54:03
Speaker 1: clearly this most recent bout of inflation you anticipated. It
54:10
Speaker 1: sounds like you're in the transitory camp. Is that is
54:13
Speaker 1: that fair statement. I'm definitely in the terms of the
54:17
Speaker 1: camp with a passion, and I just to be a
54:22
Speaker 1: bit humble about that. I anticipated the inflation, but I
54:26
Speaker 1: did not really get the past right fully. And what
54:30
Speaker 1: was I did not anticipate this reaction, So I did
54:35
Speaker 1: not anticipate, like what I was thinking that even if
54:38
Speaker 1: the events, like if you told me that the events
54:40
Speaker 1: would unfold like they were with unfold the unfolded, I
54:43
Speaker 1: would expect rates to be solidly zero now and holding.
54:48
Speaker 1: I had no idea that the fact would panic into
54:51
Speaker 1: the trade rising and the main reason why I didn't
54:53
Speaker 1: think that would happen, and I still think that, But
54:57
Speaker 1: I'm also aware of the sending opinions with me. I
55:00
Speaker 1: think that there would so much more focus on this
55:02
Speaker 1: environment reducing the balance, because when else they're going to
55:05
Speaker 1: have a chance to reduce the balance. Right now, the
55:08
Speaker 1: raise rates crush the economy, have the rollover, then they
55:12
Speaker 1: won't have never chance to sell any of the balance it,
55:14
Speaker 1: and they're stuck with this thing with the success reserves
55:18
Speaker 1: that they have paid interest on which they're currently raising.
55:21
Speaker 1: The point of this exercise makes very little sense to me.
55:25
Speaker 1: Why raise uh interest rate on reserves on trillions of
55:31
Speaker 1: those those deserves the interest rate actually paying two banks?
55:34
Speaker 1: The banks don't really need a bailout right now, So
55:37
Speaker 1: why they in the fact bailing out banks by raising
55:40
Speaker 1: interest rates? Why they could be tightening monitory conditions if
55:44
Speaker 1: so needed, by doing the much needed reduction of the
55:48
Speaker 1: balance she it so so they've already begun to roll
55:52
Speaker 1: back quantitative easing. At what point do we start to
55:56
Speaker 1: see quantitative tightening? And again this may enough be your specialty,
56:01
Speaker 1: but clearly what the FET is doing in the bond
56:05
Speaker 1: market impacts how you build a portfolio and put on
56:08
Speaker 1: specific trades. Well, we will probably know more about the
56:14
Speaker 1: quantitative tightening schedule quantitative tightening schedule UM when we look
56:21
Speaker 1: at their um post game press conference. When I look
56:25
Speaker 1: at the press press conference and probably be a lot
56:27
Speaker 1: of questions about this, I believe that they're gonna so
56:31
Speaker 1: far their own track too uh start at least running
56:35
Speaker 1: off the balunce it. But there might be a lot
56:37
Speaker 1: of and I don't think like details of how they're
56:39
Speaker 1: gonna do it at what places are the important. But
56:41
Speaker 1: I think they will start running off the balance it.
56:43
Speaker 1: I just don't know how long the time they will
56:44
Speaker 1: have to do it. What's gonna happen is they're gonna
56:48
Speaker 1: they started to raise race, they're gonna start running off
56:50
Speaker 1: the balance at the moment they see the inflation of
56:52
Speaker 1: the economy showing some cracks. They might stop raising interest rates,
56:57
Speaker 1: but stopping the runoff of the balances will be probably
56:59
Speaker 1: a little bit more of a wonderous process. Really interesting,
57:02
Speaker 1: let's talk a little I don't know, I don't so
57:05
Speaker 1: we might have like tightening still going on in the
57:07
Speaker 1: background even when they stopped tightening. That's why I'm actually
57:10
Speaker 1: so much in the camp that they're going to be
57:11
Speaker 1: easy next year. That's really interesting. Let's talk a little
57:15
Speaker 1: bit about because you trade currencies, I want to talk
57:19
Speaker 1: about cryptocurrencies and central bank digital cash. Tell us your
57:26
Speaker 1: thoughts about what you think is happening in that space
57:29
Speaker 1: and what you think the FED and other central banks
57:32
Speaker 1: are going to do about digital currency. Well, first of all,
57:36
Speaker 1: did you like when I think of digital currencies? I
57:39
Speaker 1: wrote an article about it is actually a free years
57:41
Speaker 1: a goal when I called in quest of digital gold.
57:43
Speaker 1: I don't know if I was the first one to
57:45
Speaker 1: use the term digital goal, but I used it fairly earlier.
57:47
Speaker 1: I used it a few years ago. And what I
57:49
Speaker 1: pointed out that digital currencies have different users, and Bitcoin
57:56
Speaker 1: tries to be digital goals, like a digital consistent store
58:00
Speaker 1: of value. Why is it? Uh, it doesn't have to
58:05
Speaker 1: have ease of transactions. That doesn't have to be it
58:09
Speaker 1: should not actually be easy to move it around. That's
58:11
Speaker 1: actually the fact that bitcoin is a clunky to transact
58:14
Speaker 1: as a feature, not a bug, because if you want
58:16
Speaker 1: to have store of value, you don't want it to
58:18
Speaker 1: be easily stolen. So uh, bitcoin is a heavy, ponderous
58:23
Speaker 1: store of value like gold. And then there are other
58:25
Speaker 1: currencies which could have various industrial uses like I think
58:30
Speaker 1: I call the theium digital copper. I honestly not don't
58:35
Speaker 1: really know enough to understand what all of those cryptic
58:38
Speaker 1: currencies doing, what could be the use cases? I cannot
58:41
Speaker 1: give any opinion. What I think is that bitcoin has
58:44
Speaker 1: been working really hard to accumulate the street cred as
58:47
Speaker 1: a store of value because it had multiple cv corrections,
58:50
Speaker 1: but it never really collapsed, which is not how we
58:53
Speaker 1: think and bubble trades. Many people say that bitcoin is
58:55
Speaker 1: a bubble, for example, and it trades anything, uh it
59:01
Speaker 1: tastes like anything but a bubble, because bubbles do not
59:04
Speaker 1: do this eighty percent correction then rebound eighty percent per
59:07
Speaker 1: correction rebound. You know what does that type of trading
59:11
Speaker 1: precious metals and that's exactly how cryptocurrency is trading. That
59:15
Speaker 1: trading is precious metals and alternative core uh coins trading
59:19
Speaker 1: as base metals. And that is a pattern that I
59:23
Speaker 1: recognize best based in two thousand fifteen. So for traders
59:26
Speaker 1: who want to trade cryptocurrencies, and my recommendation is look
59:30
Speaker 1: at precious metals patterns and try to understand how those develop.
59:36
Speaker 1: There are all sorts of pros and cons that could
59:38
Speaker 1: be talked about whether bitcoin will survive as a store
59:42
Speaker 1: of value, what will be the adoption levels. I don't
59:45
Speaker 1: think that government digital currencies, which a subject the jure,
59:49
Speaker 1: have threat to Bitcoin, no more than fiat currencies that
59:53
Speaker 1: currently exists are a threat to bolth. I think if
59:56
Speaker 1: every country will have its own digital currency U something
1:00:01
Speaker 1: that it could be like not affected by central banks,
1:00:04
Speaker 1: like bitcoin will actually have a use interesting how far
1:00:09
Speaker 1: it can go thor whether what's the fair value for it?
1:00:11
Speaker 1: I'm really not qualified to say really really interesting. So
1:00:17
Speaker 1: let's talk about your old boss when when you were
1:00:22
Speaker 1: a JP Morgan, Jamie Diamond was running the shop. You've
1:00:26
Speaker 1: been pretty uh, You've offered a lot of praise to
1:00:30
Speaker 1: Diamond over over the time he was there, but you
1:00:34
Speaker 1: also criticized his thoughts on bitcoin back in Obviously lots
1:00:40
Speaker 1: changed since then. Tell us a little bit about your
1:00:42
Speaker 1: thoughts of money center banks like JP Morgan Chase being
1:00:47
Speaker 1: active participants in cryptocurrencies. Well, one thing about Jamie what
1:00:53
Speaker 1: I know, like call how much I know him? And
1:00:57
Speaker 1: I'm kind of feeling awkward to stop tweeting somebody essentially
1:00:59
Speaker 1: by talking about somebody on podcast. But I know that
1:01:02
Speaker 1: he can like say things and then take them back
1:01:05
Speaker 1: and recognize his mistake without too much stress over that.
1:01:09
Speaker 1: So he's like, nobody should be trading bitcoin, And my
1:01:12
Speaker 1: joke was basically, what do you know about trading bitcoin?
1:01:16
Speaker 1: And I'm sure he could have changed his mind several
1:01:18
Speaker 1: times and loved at all. Right, So that's what actually
1:01:23
Speaker 1: makes a good manager, right, he's encouraging to people, he
1:01:25
Speaker 1: knows how to write, run a good bank or business
1:01:29
Speaker 1: success of JP more of all banks under his leaderships
1:01:32
Speaker 1: are so tremendous and so divergent from performance of any
1:01:36
Speaker 1: other banks. Like I don't think there was ever a
1:01:39
Speaker 1: bad illustration a better case study of how much is
1:01:42
Speaker 1: he all can make a difference than Jamie Diamond. I
1:01:44
Speaker 1: mean that is completely outlined in terms of in terms
1:01:47
Speaker 1: of how much different he made. If you track same bags,
1:01:50
Speaker 1: how they were performing, stockless, performing relatively the appears under
1:01:54
Speaker 1: his rule, under his leadership and without his leadership, and
1:01:57
Speaker 1: the divergence is just insane, really really more than one case,
1:02:02
Speaker 1: it's it's the case with City Bank Bank one JP Morgan.
1:02:05
Speaker 1: Every single time, the divergence is just out of the galaxy.
1:02:09
Speaker 1: How much better everything performs than to his leadership. But
1:02:12
Speaker 1: I also was just laughing about the fact, what do
1:02:14
Speaker 1: you know about bitcoin? Why do you think that bitcoin
1:02:17
Speaker 1: should be cheaper or more expensive or whatever? And I
1:02:20
Speaker 1: sometimes make laugh fun of myself that way as well.
1:02:24
Speaker 1: I think banks will have to uh take this into
1:02:28
Speaker 1: account because it's a store of value and banks are
1:02:30
Speaker 1: supposed to store value. I think banks have no choice
1:02:33
Speaker 1: to get into the business of digital volts and volts
1:02:36
Speaker 1: and institutional custody for cryptocurrency. Huh really really interesting. So
1:02:42
Speaker 1: when you look at cryptocurrencies, are they a macro factor
1:02:48
Speaker 1: that you have to think about? Cryptocurrencies are becoming a
1:02:51
Speaker 1: micro factor? I think up a certain point, it was
1:02:54
Speaker 1: a very esoteric trade and just this one specific asset
1:02:59
Speaker 1: and the only SR strategy, and you about this assets too,
1:03:04
Speaker 1: how to buy and hold them? And when my investors
1:03:07
Speaker 1: were asking about this, my answer as well, you can
1:03:10
Speaker 1: buy and hold them yourselves. Why should I be doing
1:03:13
Speaker 1: this for you and charge your money to do that?
1:03:16
Speaker 1: Um and let of institutional custody was part of the
1:03:19
Speaker 1: issue for me, But also I felt like I cannot
1:03:22
Speaker 1: really add value. I'm a trader. My job is to
1:03:25
Speaker 1: buy low and so high. Even if I have long
1:03:27
Speaker 1: term time horizons, I'm still quintessentially a trader. So why
1:03:31
Speaker 1: would I be trading if I don't. If I cannot
1:03:34
Speaker 1: trade cryptocurrency, why I would be holding it for for clients?
1:03:38
Speaker 1: I think now with institutional custody developing now, with the
1:03:41
Speaker 1: futures market, various et fs and various options, there are
1:03:44
Speaker 1: some opportunities opening up for arbitrash for various investments and
1:03:51
Speaker 1: various more structured investments. And also cryptocurrency is becoming to
1:03:55
Speaker 1: be incorporated in the global marcro pictures. So definitely we're
1:03:58
Speaker 1: becoming more and more open to going in the direction
1:04:03
Speaker 1: really interesting. Before I get to my favorite questions that
1:04:06
Speaker 1: we ask all of our guests, UH, let me throw
1:04:09
Speaker 1: a couple of curveballs at you one from the book
1:04:13
Speaker 1: I'd rather manage money than people explain that. Well. So
1:04:18
Speaker 1: my background, I'm a mathematician. I'm essentially I like playing games.
1:04:23
Speaker 1: I like sitting in front of screens and thinking about numbers.
1:04:26
Speaker 1: I like walking around and thinking about charts and relationship
1:04:30
Speaker 1: with in assets. I'm not the kind of person who
1:04:32
Speaker 1: wants to be hiring, firing, doing interviews, having a lot
1:04:36
Speaker 1: of chatswood employees. They're just not my strong point. When
1:04:39
Speaker 1: I started a fund, my important condition has to have
1:04:42
Speaker 1: a team. Uh, and I have a business partner who
1:04:45
Speaker 1: can hand who really can spearhead that side of the business,
1:04:48
Speaker 1: like money raising and just building the team. It's I
1:04:54
Speaker 1: think I do. I did always okay with my employees
1:04:57
Speaker 1: and relationship with my employees, and PEP seem to have
1:05:00
Speaker 1: worked with me, seemed to have wanted to work with
1:05:02
Speaker 1: me again. In fact, um one of my team members
1:05:06
Speaker 1: might chief risk corfus. She's started working with me to
1:05:10
Speaker 1: get two thousands back at a chase when she came
1:05:13
Speaker 1: to be my assist, like my kind of second and
1:05:16
Speaker 1: comment on my market making desk. And she's still with me.
1:05:20
Speaker 1: I mean, she hasn't been working with me all this time,
1:05:22
Speaker 1: but she's on the team now. So clearly I can
1:05:25
Speaker 1: have good relationships with people, but managing people are just
1:05:28
Speaker 1: not my passion. I never thought I want to hire
1:05:30
Speaker 1: ten thousand people and build a business of the scope
1:05:33
Speaker 1: of other big hedge funds. I am interested in running
1:05:36
Speaker 1: a strategy. Interesting and the other curveball you've talked about.
1:05:41
Speaker 1: You'd like to play chess, you like to play poker,
1:05:44
Speaker 1: but you've also described them as tools that help you
1:05:48
Speaker 1: with your trading skills. Tell us a little bit about
1:05:51
Speaker 1: the parallels. How can one transfer skills from those games
1:05:56
Speaker 1: into trading and investing. One thing that I like to
1:05:59
Speaker 1: talk at about, and this has a lot of with
1:06:01
Speaker 1: a mathematical background, that there is two components that go
1:06:04
Speaker 1: into trading, analysis and strategy. And you know when you
1:06:09
Speaker 1: are mus have a PhD in mathematics. People usually don't
1:06:14
Speaker 1: have any doubt that you're good at analysis and analysis,
1:06:17
Speaker 1: whether it's economic analysis of plate analysis, about plending a solution,
1:06:20
Speaker 1: about thinking what is the central scenario, what is likely
1:06:24
Speaker 1: to happen. Strategy is a very different way of thinking.
1:06:28
Speaker 1: You it's when you don't know what's gonna happen, what
1:06:30
Speaker 1: is your system of responses? How there You're gonna respond
1:06:33
Speaker 1: to various scenarios, and you could be one good at
1:06:36
Speaker 1: one thing and not necessarily good at the others, though
1:06:38
Speaker 1: they are somewhat connected. I think I was lucky in
1:06:42
Speaker 1: my preparation to Wall Street that I was really involved
1:06:45
Speaker 1: in a lot of strategic activities. To I, I did
1:06:48
Speaker 1: a lot of academic competitions which involves strategy. And I
1:06:51
Speaker 1: started to play chess very young, and then I switched
1:06:54
Speaker 1: to Go, which became more more my passion kind of
1:06:57
Speaker 1: throughout college and high school. So high school, college and
1:07:01
Speaker 1: even and I SAI. Now I still play Go, and
1:07:03
Speaker 1: then I've learned later many other strategy games, including poker,
1:07:07
Speaker 1: and that really taught me about this system of responses.
1:07:12
Speaker 1: You cannot just say decide what's going to happen, and
1:07:15
Speaker 1: that's what's gonna happen. You might must be prepared to
1:07:17
Speaker 1: react to things which you didn't anticipate. And I think
1:07:21
Speaker 1: poker specifically, but all competitive activities, but poker specifically is
1:07:25
Speaker 1: very good at building psychological fortitude, the ability to take
1:07:30
Speaker 1: a loss and move on, ability to gauge whether I'm
1:07:33
Speaker 1: in a good set of mind to even continue playing
1:07:36
Speaker 1: right now. It's never perfect. I made a lot of
1:07:40
Speaker 1: those mistakes both and poker and trading when I probably
1:07:44
Speaker 1: did not gauge my state of mind correctly. However, it's
1:07:50
Speaker 1: a good start. It's a good background. And I did
1:07:52
Speaker 1: use a lot of poker analogies in my book The
1:07:55
Speaker 1: Trade of March twenty twenty, which in some sense looks
1:07:59
Speaker 1: to an earlier men About interview when we're talking about
1:08:01
Speaker 1: positioning uh into March two thousand twenty one of very
1:08:06
Speaker 1: strong poker anology I talk I thought a lot about
1:08:09
Speaker 1: this over my poker days. How much better you're likely
1:08:12
Speaker 1: to perform if you start the night well, if you
1:08:15
Speaker 1: have a lot of chips in front of you on
1:08:17
Speaker 1: the table, you're so much likely to play better. So
1:08:20
Speaker 1: if you're moving into the crisis with your portfolio in
1:08:23
Speaker 1: a good shape, You're so much more likely to make
1:08:25
Speaker 1: good decisions then when you are moving into crisis, when
1:08:30
Speaker 1: you're Part four is under pressure. Part of it is
1:08:33
Speaker 1: just your risk management obviously, like if you're losing money,
1:08:36
Speaker 1: you're not going to be able to have space to
1:08:37
Speaker 1: take new positions. But part of the pure psychology, you're
1:08:40
Speaker 1: gonna be a little paralyzed when you're losing money, while
1:08:43
Speaker 1: if you're doing well, you can be very open minded
1:08:45
Speaker 1: and think like, Okay, I can take profits on this,
1:08:47
Speaker 1: I'll take off this position, I'll put this position all,
1:08:49
Speaker 1: I'll do this, I'll do that. Really really interesting. I
1:08:53
Speaker 1: know only have you for a couple more minutes, So
1:08:55
Speaker 1: let me jump to my favorite questions that I ask
1:08:59
Speaker 1: all of our guests, starting with you know, I was
1:09:03
Speaker 1: gonna One of the things I noticed in the book
1:09:06
Speaker 1: is there are long periods of time when you're working
1:09:11
Speaker 1: literally twenty four hours a day. There there are slack
1:09:15
Speaker 1: messages back and forth at one in the morning, at
1:09:17
Speaker 1: three in the morning, at two at five in the morning,
1:09:19
Speaker 1: West Coast time. UM. There were days in March of
1:09:25
Speaker 1: uh where the whole team was working twenty four hours
1:09:28
Speaker 1: a day. Days on a time, So it kind of
1:09:32
Speaker 1: makes my next question almost uh irrelevant, But I have
1:09:36
Speaker 1: to ask, you know, during the pandemic, did you have
1:09:40
Speaker 1: time to watch TV? Were you streaming any shows or
1:09:44
Speaker 1: listening to anything online? Or were you just you know,
1:09:48
Speaker 1: pretty much seven at the trading desk. I think the
1:09:53
Speaker 1: first few weeks were really funk here, the first few
1:09:57
Speaker 1: weeks of March, and that's what I'm writing the book of.
1:09:59
Speaker 1: There was not a lot of time to do many
1:10:00
Speaker 1: other things except dealing with like kids being suddenly remote
1:10:06
Speaker 1: in remote education, and dealing with markets. I generally do
1:10:10
Speaker 1: do a lot of things to onn wine, which includes
1:10:12
Speaker 1: watching TV. Uh. In the first amounts of Pandemic, yes,
1:10:16
Speaker 1: I started to watch TV. I was writing fiction, I
1:10:19
Speaker 1: was going for a lot of hikes. I would do
1:10:21
Speaker 1: a lot of my work, including writing this book, The
1:10:24
Speaker 1: Trades of march Um. Much of it was written with
1:10:27
Speaker 1: a laptop sitting by the ocean both and here in
1:10:30
Speaker 1: California and Hawaii. I did. I did a lot of
1:10:34
Speaker 1: those things, and I did a lot of things that
1:10:36
Speaker 1: many people do not think of doing. It undwinding at night.
1:10:38
Speaker 1: One of the things I did in Pandemic I watched
1:10:41
Speaker 1: the series of footy six YouTube videos which were really
1:10:45
Speaker 1: math videos, just discussing constructions, really really large numbers. What's
1:10:50
Speaker 1: the name of that YouTube channel that you were watching is.
1:10:53
Speaker 1: I think it's called Ridiculously a Huge Numbers And there's
1:10:56
Speaker 1: like fourty six video videos. And so I would be
1:11:00
Speaker 1: at eleven in the evening watching a video about transfine
1:11:03
Speaker 1: conduction and felt growing erarchies. I have my own weird ways,
1:11:07
Speaker 1: but I do watch quite a bit of TV. I
1:11:08
Speaker 1: do like I I really like good TV. I think
1:11:11
Speaker 1: that I don't go to movies anymore very much. I
1:11:14
Speaker 1: think the movies are no longer any good, but the
1:11:15
Speaker 1: TV shows are amazing. So give us a few TV
1:11:18
Speaker 1: shows you like, and uh, tell us, tell us what
1:11:21
Speaker 1: entertain you over the past couple of years. Well, I
1:11:25
Speaker 1: obviously love Billions, especially because I know in person many
1:11:28
Speaker 1: people it's based on. I love Game of Thrones because
1:11:34
Speaker 1: it's a fantasy show and I know the author and
1:11:38
Speaker 1: I read all these books obviously long before they came out,
1:11:41
Speaker 1: and it's really well done. There's been a lot of
1:11:43
Speaker 1: great shows over the years. Uh. Some of them were
1:11:46
Speaker 1: a kind of surprise shows that we're not e one
1:11:49
Speaker 1: made as a first uh R shows originally, like I'm
1:11:54
Speaker 1: a huge fan, for example, of the nineties show Puppet
1:11:56
Speaker 1: the Vampire Slayer. I I'm a fan of the recent
1:12:01
Speaker 1: show with Magicians. Oh, I love that show. Yeah, I
1:12:05
Speaker 1: think that was a really huge upside surprise for me.
1:12:07
Speaker 1: How the show were tremendous. Yeah, that's funny. It's it's funny,
1:12:12
Speaker 1: it's creative. It's just keeps taking into places you don't
1:12:15
Speaker 1: expect to be it. I was delighted show. And then
1:12:19
Speaker 1: there are always classic shows which are just really good,
1:12:21
Speaker 1: like Wire Breaking, Bad, Original Sopranos, Homeland does those kind
1:12:30
Speaker 1: of classic goods. True Blood and I like thru Blood
1:12:33
Speaker 1: as well. I'm surprised, given your proclivity for black hole metaphors,
1:12:38
Speaker 1: I'm not hearing any science fiction in that list other
1:12:41
Speaker 1: than Magicians. Is more fantasy than sci fi, you know.
1:12:44
Speaker 1: I love battles. I love New Battlestar Galactica. Really yes,
1:12:48
Speaker 1: the New Battlestar Galactica is one of my favorites. So
1:12:51
Speaker 1: so there are two shows I have to ask you about, um,
1:12:54
Speaker 1: the Expanse, which I'm up to the finale. I've watched
1:12:59
Speaker 1: everything except the last one has been tremendous. I don't know,
1:13:03
Speaker 1: if you're a fan of that sort of sci fi,
1:13:06
Speaker 1: you know what. I was going to be killed for
1:13:08
Speaker 1: my ants on this. I haven't yet gone through Expensive
1:13:10
Speaker 1: and I wished a few episodes. I have a particular thing,
1:13:13
Speaker 1: and that's probably why my I don't watch a lot
1:13:17
Speaker 1: of science fiction shows is I'm tend to be claustrophobic,
1:13:20
Speaker 1: and I'm really bothered by shows which set up all
1:13:23
Speaker 1: on a closed space station. Somehow Battlestar Galactica managed to
1:13:28
Speaker 1: circumvent it and I was able to watch it, But
1:13:30
Speaker 1: a space station shows that usually kind of a tough
1:13:33
Speaker 1: watch for me. And then there's another sci fi I'm
1:13:36
Speaker 1: going to recommend. There's only two seasons of it. Altered
1:13:39
Speaker 1: Carbon was spectacular. Yeah, it was good. I wished for
1:13:43
Speaker 1: season and I enjoyed it. The second season is that,
1:13:47
Speaker 1: you know the character human they wear people like skins
1:13:51
Speaker 1: so you can change bodies. They do that in the
1:13:54
Speaker 1: second season, and it was, you know, surprisingly good and
1:14:00
Speaker 1: it resolves a lot of open questions. If you like
1:14:02
Speaker 1: the first season, I'm going to recommend the second season.
1:14:05
Speaker 1: Might I might turn back to that and I probably
1:14:08
Speaker 1: will watch Expense. I love one of the authors writing
1:14:12
Speaker 1: for expense his other books, and one of my favorite authors,
1:14:17
Speaker 1: Daniel Abraham. We're going to circle back to books in
1:14:20
Speaker 1: a moment um. Let me ask about mentors who who
1:14:23
Speaker 1: helped to shape your career. There is actually if you
1:14:27
Speaker 1: look at my book at the acknowledgement page, there is
1:14:29
Speaker 1: a list of mentors there. They were mentors along my
1:14:35
Speaker 1: like they'll key people obviously along my entire life studying,
1:14:38
Speaker 1: from my like mask club mentors to high school teachers
1:14:42
Speaker 1: to UH graduate school professors to my serious advisor and
1:14:48
Speaker 1: people like that when you think about Wolsted. Also, there
1:14:51
Speaker 1: were some it's really easy for me to remember certain
1:14:54
Speaker 1: key moments of mentorship, like, for example, my first boss
1:14:58
Speaker 1: at Bankers Rush, Jeff Basmon, and I noticed he would
1:15:03
Speaker 1: say some things which is really register for me forever.
1:15:06
Speaker 1: Like I remember one of my early days on Wall
1:15:08
Speaker 1: Street and he's talking to broker on the shout box
1:15:11
Speaker 1: and he's asking about the price on something and broker
1:15:13
Speaker 1: is saying the prices. I think I calculated the price
1:15:16
Speaker 1: should be four at five, and he's like, I don't
1:15:19
Speaker 1: care about your calculation. I can do calculation myself. Where
1:15:22
Speaker 1: do you have forbid, do you have five offer? And
1:15:25
Speaker 1: that's kind of mentality which registered for me. It's not
1:15:28
Speaker 1: about what you think the market should be, it's about
1:15:30
Speaker 1: whether the market is there and going on forward. I
1:15:34
Speaker 1: had lots of those mentorship moments with my various bosses
1:15:38
Speaker 1: at JP Morgan. That included Evan Burnson, David Puss, Mark Sarp,
1:15:43
Speaker 1: John Anderson, who was probably the person I worked really
1:15:48
Speaker 1: closely with during my years of proprietary trading, and JP
1:15:51
Speaker 1: Morgan and still remained the great friend and supporter. He's
1:15:54
Speaker 1: currently co head of fixed and Common Commodities and Millennium.
1:15:59
Speaker 1: People like that were super helpful to me. Each of
1:16:02
Speaker 1: them said at some point some things that really registered
1:16:05
Speaker 1: with me. Those For example, one time, which was very
1:16:08
Speaker 1: criticalizing time in my career, when I came to my
1:16:10
Speaker 1: boss and I asked him, I told him this is
1:16:13
Speaker 1: the trade. I'm laying out this trade, this is my
1:16:15
Speaker 1: trade idea. And he said, well, if you do this
1:16:19
Speaker 1: what you're proposing to do, how much you're gonna make?
1:16:21
Speaker 1: I said, we're gonna make ten million dollars and then
1:16:24
Speaker 1: he said, okay, let's do twice that and make twenty million.
1:16:29
Speaker 1: And that was kind of an important way for me
1:16:31
Speaker 1: to understand you should not set your side low in
1:16:34
Speaker 1: financial markets. How that trade end up working out, we
1:16:41
Speaker 1: made ten million probably so so let's not say that officially,
1:16:46
Speaker 1: but well made a good amount of money on the trade.
1:16:49
Speaker 1: So let's talk. You mentioned some of your favorite authors.
1:16:51
Speaker 1: What are some of your favorite books and what are
1:16:53
Speaker 1: you reading now? Are you mostly think about fiction I'll
1:16:59
Speaker 1: fix you nor non fiction either or what do you like? Well?
1:17:02
Speaker 1: I mostly read fiction. I read some books I read
1:17:05
Speaker 1: you usually read some books related to finance with materials
1:17:10
Speaker 1: related to finance, or I read Oh, I read the
1:17:17
Speaker 1: fantasy and science fiction. Give it give us some names.
1:17:20
Speaker 1: So obviously my all time favorite is The Lord of
1:17:23
Speaker 1: the Rings. Yeah, Lord of the Rings, if you stay
1:17:26
Speaker 1: in fantasy. I love The Will of Time, which is
1:17:29
Speaker 1: recently made into a show. But by the way, I
1:17:31
Speaker 1: loved on Amazon Prime the Will of Time. I love
1:17:36
Speaker 1: all works by possibly my favorite living author, Guy Gabriel
1:17:40
Speaker 1: ka Um. He writes a lot of historical fantasy. I like.
1:17:46
Speaker 1: Another current author I really like is Naomi novic Um.
1:17:50
Speaker 1: Give us a book title, but my favorite book of
1:17:53
Speaker 1: hers is Spinning Silver. But she is also very well
1:17:58
Speaker 1: known for her temporary series starts with the book Her
1:18:00
Speaker 1: Majesty Is His Majesty is Dragon for Guy Gabriel k K,
1:18:04
Speaker 1: who I mentioned earlier. His earlier work is Fionova Tapestry Trilogy,
1:18:09
Speaker 1: but his his recent books, which are set up in
1:18:13
Speaker 1: any Sounds period children are The Sky and The Brightness
1:18:17
Speaker 1: Long Ago um I Viering. I mentioned Daniel Abraham. I
1:18:24
Speaker 1: really like his series The Dagger in the Coin. I
1:18:28
Speaker 1: already mentioned The Game of Thrones, both showing books. I
1:18:33
Speaker 1: probably could go on with a list of fantasy novels
1:18:35
Speaker 1: I love, just to switch to science fiction a bit.
1:18:39
Speaker 1: I like Andres Game by Orson Scott Card some of
1:18:43
Speaker 1: the sequels, but not too farantsticals because they get worse.
1:18:47
Speaker 1: The first book is terrific. Yeah. I love Andrew's Game,
1:18:50
Speaker 1: and it's great for I think it's great for traders
1:18:52
Speaker 1: and anyone interested in strategy. I like Uh. I like
1:18:56
Speaker 1: a lot of Hyperion series by Dan Simmons. M. Do
1:19:01
Speaker 1: you do you go back historically in sci fi? Any
1:19:04
Speaker 1: of the classics are? Have you mostly been reading more
1:19:06
Speaker 1: modern sci fi? Well? I read some of the classics
1:19:12
Speaker 1: by the necessity because I'm not a young Some of
1:19:14
Speaker 1: the stuff that I was reading in the teenager by
1:19:16
Speaker 1: now is a classic, even if it was relatively modern
1:19:18
Speaker 1: back then. But I did go a little back in
1:19:21
Speaker 1: the history back then. Now I tend to read mostly
1:19:24
Speaker 1: more modern stuff, and it's a little it's a little
1:19:27
Speaker 1: difficult a days to read, especially science fiction which was
1:19:30
Speaker 1: written even say in the nineties, because projections of the
1:19:33
Speaker 1: near future just so off and it's very hard to
1:19:37
Speaker 1: kind of stay in there kind of suspended disbelief. But
1:19:41
Speaker 1: it all depends on the texture of the science fiction
1:19:44
Speaker 1: some of it, like for example of novels by Den Simmons,
1:19:46
Speaker 1: which are stand really well regardless of what, regardless of
1:19:51
Speaker 1: the fact that they we're wating really long ago. Yeah,
1:19:53
Speaker 1: the more general they were about the day to day
1:19:57
Speaker 1: use of technology and the more math grow they were.
1:20:00
Speaker 1: I'm thinking of people like Asimov's Foundation or Larry Niven's
1:20:05
Speaker 1: Ring World. They didn't talk about cell phones and personal computers.
1:20:11
Speaker 1: It was always massive macro engineering projects. Um like the
1:20:17
Speaker 1: Ring World as an example, that it gave it a
1:20:20
Speaker 1: timelessness that that I think the people who got too
1:20:24
Speaker 1: involved in the day to day you know, either they
1:20:27
Speaker 1: were right or wrong, and if they're wrong, it's hard
1:20:29
Speaker 1: to get immersed in that world. Yes, and there is
1:20:34
Speaker 1: certain idea that there is certain talent about being a
1:20:37
Speaker 1: good futurist, Like there are some good writers who are
1:20:40
Speaker 1: just not good futurists. For example, Isaac Asimov, which is
1:20:42
Speaker 1: one of the most celebrated science fiction writers of all times,
1:20:47
Speaker 1: was an awful, horrible, atrocious futurist. I mean, he had
1:20:53
Speaker 1: made completely unforgivable mistakes, and his treatment of science was uh,
1:20:59
Speaker 1: outright fall and almost insulting, Like I felt like he
1:21:02
Speaker 1: was actually insulting science by the way he was treating it.
1:21:05
Speaker 1: And yet his novels were innovative, creative, and very readable
1:21:09
Speaker 1: and had a lot of great ideas, really really interesting.
1:21:13
Speaker 1: Our last two questions, what sort of advice would you
1:21:16
Speaker 1: give to a recent college grad who was interested in
1:21:20
Speaker 1: the career of either investing or finance. The advice it
1:21:26
Speaker 1: is probably similar to what I would tell anyone going
1:21:29
Speaker 1: into any career. First of all, if you care about
1:21:32
Speaker 1: financial success, you want to find a confluence of three things.
1:21:37
Speaker 1: Thinks that uh, thinks that rewarding financially obviously, just as
1:21:43
Speaker 1: I mentioned, thinks that you are good at, and things
1:21:46
Speaker 1: that you enjoy. So when you find the consers of
1:21:48
Speaker 1: those things that you can do, something that you enjoy
1:21:51
Speaker 1: doing it, you happen to be good at, and they're
1:21:53
Speaker 1: financial rewarding, then you'll have a rewarding career. And finance
1:21:57
Speaker 1: could very easily be that. And but even within air
1:22:00
Speaker 1: is so finance you need to find initia I think
1:22:03
Speaker 1: it is. Might be not easy, of course for a
1:22:05
Speaker 1: young person, but it's very important to assess, ah, well,
1:22:10
Speaker 1: what are you actually good at and be realistic about that,
1:22:12
Speaker 1: be very honest with yourself. What it is that I
1:22:15
Speaker 1: do better than any other person in the world, and
1:22:17
Speaker 1: how they capitalize on those things that I do better
1:22:19
Speaker 1: than any other person in the world. And then uh,
1:22:22
Speaker 1: and part of the reason, like, for example, I write
1:22:25
Speaker 1: books like my book The Trade of mar and I'm
1:22:28
Speaker 1: sure that are equivalent, some equivalent books, maybe different fields
1:22:31
Speaker 1: and sub fields, is try to actually understand what it
1:22:35
Speaker 1: is that people do so you have a correct idea
1:22:37
Speaker 1: whether you're going to enjoy this or not. Really really
1:22:40
Speaker 1: interesting and our final question, what do you know about
1:22:44
Speaker 1: the world of investing today that you wish you knew
1:22:48
Speaker 1: twenty five years or so ago when you were first
1:22:50
Speaker 1: getting started as a trader. I think The most important
1:22:54
Speaker 1: thing I would have liked to know back then that
1:22:56
Speaker 1: I will still be here now. The importance of that
1:22:59
Speaker 1: is to understand that this is a long game, and
1:23:03
Speaker 1: very often it's very easy to get impatient and think
1:23:08
Speaker 1: somewhat uh, and think somewhat short term, like think like, oh, well,
1:23:13
Speaker 1: if when you're twenty five years old, events that will
1:23:18
Speaker 1: happen when you're forty five or fifty years old seems
1:23:20
Speaker 1: so remote you almost don't care about. But the actual
1:23:23
Speaker 1: reality is that you do care about them. Huh. Reality
1:23:28
Speaker 1: is that you will when you're fifty years old, you
1:23:32
Speaker 1: still weren't gonna want to be healthy, you still aren't
1:23:34
Speaker 1: gonna want to have money, and you're still gonna have
1:23:36
Speaker 1: fun in the world, right and some of those seeds
1:23:38
Speaker 1: will be planted at your earlier age. So understanding that
1:23:43
Speaker 1: this is a long game that you if I'm knowing
1:23:47
Speaker 1: back then, that I will still be in this game
1:23:50
Speaker 1: twenty five years later and I'll still enjoy it, would
1:23:53
Speaker 1: probably alleviate a lot of stress and pressure on me
1:23:55
Speaker 1: back then. Really really interesting, Alex, thank you for being
1:23:59
Speaker 1: so generous with your time. We have been speaking with
1:24:03
Speaker 1: Alex Guarevich. He's the founder and CEO of Hante Advisers
1:24:07
Speaker 1: and the author of the Trades of March, a Shield
1:24:11
Speaker 1: against Uncertainty. If you enjoy this conversation, well be sure
1:24:15
Speaker 1: and check out any of the previous four hundred discussions
1:24:19
Speaker 1: we've had over the past eight or so years that
1:24:22
Speaker 1: we've been doing the show. You can find those at iTunes, Spotify,
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Speaker 1: a cast, Bloomberg, wherever you get your favorite podcast from.
1:24:32
Speaker 1: We love your comments, feedback and suggestions right to us
1:24:35
Speaker 1: at m IB podcast at Bloomberg dot net. Sign up
1:24:40
Speaker 1: for my daily reads at Ridholts dot com. Follow me
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Speaker 1: on Twitter at rid Halts. I would be remiss if
1:24:45
Speaker 1: I did not thank the crack team that helps put
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Speaker 1: these conversations together each week. Katherine Silva is my audio engineer.
1:24:53
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Speaker 1: our head of research. Paris wall Old is my producer.
1:25:01
Speaker 1: I'm Barry Ritolts. You've been listening to Masters in Business
1:25:06
Speaker 1: on Bloomberg Radio.