WEBVTT - Gary Chropuvka on Financial Engineering (Podcast) 0:00:02.040 --> 0:00:07.160 This is mesters in Business with very Renaults on Blueberg Radio. 0:00:09.400 --> 0:00:12.280 This week on the podcast, I have a special guest. 0:00:12.800 --> 0:00:17.040 His name is Gary Kropovka. He's the president of World Quants, 0:00:17.280 --> 0:00:22.680 a highly regarded quantitative investment firm. UH. Gary has a 0:00:22.720 --> 0:00:28.440 fascinating background, really insightful UH twenty years at ge Sam 0:00:28.440 --> 0:00:33.080 and Goldman Sachs Asset Management, where he was co head 0:00:33.159 --> 0:00:38.080 of the quantitative investment Strategies team. Ge Sam runs a 0:00:38.120 --> 0:00:41.960 ton of capital UH, and last year he moved over 0:00:42.000 --> 0:00:46.800 to world Quan, which in and of itself was spun 0:00:46.840 --> 0:00:50.280 out from Millennium Management in two thousand and seven. Millennium 0:00:50.280 --> 0:00:56.480 Management is another giant quantitative hedge funds, and World Quan 0:00:56.880 --> 0:01:01.720 runs a nice lug of capital for them. As innovative 0:01:02.040 --> 0:01:05.880 as so many different quantitative approaches are, World quant Is 0:01:05.959 --> 0:01:10.360 really stands out. They're an unusual shop. They do a 0:01:10.360 --> 0:01:14.200 lot of really interesting things that read led by UM, 0:01:14.840 --> 0:01:18.480 a very a kind of clastic and brilliant founder and 0:01:18.560 --> 0:01:23.040 CEO UM And really this is just a very intriguing 0:01:23.080 --> 0:01:28.400 and fascinating conversation if you are at all interested in 0:01:28.680 --> 0:01:34.520 quantitative investing, understanding one of the key drivers of markets 0:01:34.560 --> 0:01:38.679 today or just to get a sense of what people 0:01:38.720 --> 0:01:43.319 with advanced computer and mathematical degrees think about UM, the 0:01:43.360 --> 0:01:47.039 financial engineering that's taking place in the markets these days. 0:01:47.600 --> 0:01:51.320 You're going to find this to be a fascinating conversation. So, 0:01:51.400 --> 0:01:55.760 with no further ado, my interview of Gary Krapovka of 0:01:55.840 --> 0:02:02.360 World quant This is Mester's in Business with very Renaults 0:02:02.400 --> 0:02:08.280 on Bloomberg Radio. Our special guest this week is Gary Propovka. 0:02:08.600 --> 0:02:13.120 He is the president of World Quants, a highly regarded 0:02:13.400 --> 0:02:17.720 quantitative shop spun out of Millennium Management back in two 0:02:17.760 --> 0:02:21.280 thousand and seven. Gary has a BA in mathematics and 0:02:21.360 --> 0:02:25.640 a master's degree in financial engineering from Colombia. He's also 0:02:25.720 --> 0:02:30.080 on the board of trustees of Rutgers University. Gary Kropovka, 0:02:30.400 --> 0:02:33.359 Welcome to Bloomberg. Thank you so much, Barry. Great to 0:02:33.400 --> 0:02:37.000 be here. So I'm I'm kind of fascinated by your background. 0:02:37.080 --> 0:02:41.399 You you spend time UM at the quantitative investment strategies 0:02:41.440 --> 0:02:44.680 co heading that at Goldman Sachs, and you have your 0:02:44.680 --> 0:02:50.320 financial engineering degree from Colombia. Any overlap with Emmanuel Derman, 0:02:50.440 --> 0:02:55.520 you seem to have followed his footsteps. Yeah, I actually 0:02:55.680 --> 0:02:58.480 I think I predated Emmanuel Derman because I I was 0:02:58.520 --> 0:03:00.600 in the program when it first start bit back in 0:03:00.639 --> 0:03:03.639 the early two thousands. UM I did follow em Manuel, 0:03:03.720 --> 0:03:07.160 I guess to to Goldman facts UM. You know, after 0:03:07.240 --> 0:03:10.959 he had he was there, but separate paths, but there's 0:03:11.000 --> 0:03:14.560 definitely a correlation among the two UM A share. I 0:03:14.960 --> 0:03:17.840 went to Columbia, you know, after I joined the quant 0:03:17.840 --> 0:03:21.760 group at Goldman UM, there was you know, looking looking 0:03:21.760 --> 0:03:23.880 around the space, there were a lot of folks with 0:03:23.919 --> 0:03:28.680 some pretty advanced degrees, and decided to try to marry 0:03:28.760 --> 0:03:32.120 the computer science as well as the engineering with some 0:03:32.200 --> 0:03:34.920 of the business side to uh, you know, to to 0:03:35.040 --> 0:03:38.800 be better trained in the in the quant field. So 0:03:38.800 --> 0:03:43.760 so you eventually become co head of quantitative Investment Strategies 0:03:44.320 --> 0:03:48.720 at ge SAM. What what was that experience like? So, 0:03:48.760 --> 0:03:51.480 I would say I spent at over twenty years in 0:03:51.520 --> 0:03:55.760 the same group, and you know, I it really drove 0:03:56.000 --> 0:03:59.400 what I love about, you know, my job, which is 0:03:59.720 --> 0:04:02.280 fun dative investing. It's something that I have a huge 0:04:02.280 --> 0:04:05.160 passion for. I love, you know, dealing with data and 0:04:05.320 --> 0:04:08.440 figuring out problems. And you know, there were certainly a 0:04:08.440 --> 0:04:12.400 lot of investment problems that we dealt with in that 0:04:12.520 --> 0:04:15.960 in that group, and you know, really compelled me to 0:04:16.560 --> 0:04:19.279 go and join World Quant for for you know, even 0:04:19.320 --> 0:04:21.560 other opportunities. But you know, while I was at Goldman, 0:04:21.600 --> 0:04:24.000 did a number of different things on the research side, 0:04:24.040 --> 0:04:27.599 on the portfolio management side, on the product development side, 0:04:27.640 --> 0:04:30.920 the client side, and so had a had a host 0:04:30.960 --> 0:04:35.400 of experiences that I cherished, had a great experient, great 0:04:35.400 --> 0:04:38.760 time there, learned a ton and uh and now I'm 0:04:38.800 --> 0:04:41.400 here at the World Pants for the last roughly six months. 0:04:41.880 --> 0:04:44.440 So we're going to talk more about World Quant in 0:04:44.440 --> 0:04:47.520 a in a few minutes. Let's let's stick with the 0:04:47.560 --> 0:04:51.440 big data you referenced at Goldman and elsewhere. You know, 0:04:51.560 --> 0:04:55.200 big data is almost a cliche these days. How is 0:04:55.240 --> 0:05:00.240 it used in quantitative investment? Yeah, I would say, you know, 0:05:00.279 --> 0:05:02.680 when I think about big data, and you know, it's 0:05:02.680 --> 0:05:05.680 a it's a large term. But I would say, you know, 0:05:05.720 --> 0:05:08.680 we're all consumers, not just in the investment or in 0:05:08.680 --> 0:05:11.320 the quant group, but this whole concept around big data 0:05:12.000 --> 0:05:14.960 is affecting each and every one of our lives. We're 0:05:14.960 --> 0:05:17.920 all trying to have a have an information edge, We're 0:05:17.920 --> 0:05:20.560 trying to make better decisions, we're trying to you know, 0:05:20.680 --> 0:05:24.720 utilize as much data to make informed decisions of where 0:05:24.760 --> 0:05:27.599 we're spending our time, whether it's things like going on 0:05:27.720 --> 0:05:30.839 vacation or you know, figuring out where you what restaurant 0:05:30.880 --> 0:05:33.600 you want to go to. And so, you know, the 0:05:33.640 --> 0:05:37.120 world has moved beyond things like zag. It's um and 0:05:37.240 --> 0:05:40.240 really trying to understand the idea. There's a lot of 0:05:40.240 --> 0:05:43.200 things that will provoke what you want to do or 0:05:43.240 --> 0:05:44.560 where you want to spend your time and where do 0:05:44.600 --> 0:05:46.719 you want to invest in. And so this whole concept 0:05:46.760 --> 0:05:50.239 of big data is really to take you know, anything 0:05:50.279 --> 0:05:54.080 and everything that may be applicable to a company and 0:05:54.160 --> 0:05:56.559 try to learn from it. And so, you know, there's 0:05:56.560 --> 0:05:59.760 just this massive amount every time we click on something, 0:06:00.160 --> 0:06:03.920 time we move, there's all this data that's being captured. 0:06:04.440 --> 0:06:06.520 And really, you know, one of the great things about 0:06:06.560 --> 0:06:09.400 being a quantitative investor is that we have tools and 0:06:09.480 --> 0:06:13.279 techniques to take all this awesome amount of data which 0:06:13.320 --> 0:06:15.080 comes in many forms and I could touch on that, 0:06:15.400 --> 0:06:18.000 but it comes in many forms and convert that into 0:06:18.080 --> 0:06:21.680 some insight or some informational edge that helps us predict 0:06:21.720 --> 0:06:25.200 companies or particular asset class. So this whole concept of 0:06:25.240 --> 0:06:27.960 big data absolutely here to stay I'd say it's much 0:06:28.080 --> 0:06:31.080 broader than the investing business. It's happening, you know, all 0:06:31.120 --> 0:06:33.120 of our lives. We're all sitting with you know, the 0:06:33.279 --> 0:06:36.320 phones in our pockets that have massive amounts of information 0:06:36.839 --> 0:06:40.279 and so really the goal of all this big data 0:06:40.760 --> 0:06:43.200 is to create an informational edge to know something that 0:06:43.240 --> 0:06:46.600 maybe somebody else doesn't or um in order to be 0:06:46.640 --> 0:06:49.920 able to leverage that in in pursuit of learning something else. 0:06:50.640 --> 0:06:52.960 So give us, give us an example, how can you 0:06:53.160 --> 0:06:57.919 use a data set, uh, specifically to identify opportunities that 0:06:58.720 --> 0:07:02.880 other people that aren't looking at that data might miss. Sure, 0:07:03.040 --> 0:07:06.320 So I think there's there's tons of data out there 0:07:06.360 --> 0:07:08.080 that you know, one can glam that. We could take 0:07:08.080 --> 0:07:12.080 an example of, you know, looking through analyst reports and 0:07:12.120 --> 0:07:14.880 you know a lot of people read analysts reports, and 0:07:14.960 --> 0:07:16.560 so you know, things you can do is try to 0:07:16.560 --> 0:07:19.640 pick up on their sentiment and so how we're analysts 0:07:19.640 --> 0:07:22.360 starting to change their mind about a particular company. You know, 0:07:22.400 --> 0:07:25.560 it is a pretty common example of you know, figuring 0:07:25.560 --> 0:07:28.280 out how you know, you can train a computer to 0:07:28.400 --> 0:07:30.800 read all of these words that some of these analysts 0:07:30.800 --> 0:07:34.920 are putting together. UM. That might be one example, UM 0:07:34.920 --> 0:07:37.400 looking at you know, what's in the newspaper and trying 0:07:37.440 --> 0:07:40.240 to gauge sentiment around you know, what's popular and maybe 0:07:40.280 --> 0:07:44.200 what topics are interesting and what companies may be related 0:07:44.280 --> 0:07:48.280 to those topics, and or those topics trending positively or negatively. 0:07:48.640 --> 0:07:52.200 Those are some examples of of ideas where you know 0:07:52.240 --> 0:07:55.600 there's something out there that you know not as company, 0:07:55.680 --> 0:07:58.280 may not be coming out of a company's financials, but 0:07:58.400 --> 0:08:01.840 it's something that's happening around the company that might be impactful. 0:08:01.920 --> 0:08:05.040 So you know, those are two examples of of items 0:08:05.080 --> 0:08:08.160 that you know you'd constitute as big data because you're 0:08:08.200 --> 0:08:11.400 looking at massive amount of whether it's research reports or 0:08:11.480 --> 0:08:14.400 news articles, to kind of get a gauge of can 0:08:14.440 --> 0:08:17.720 I have a better picture of that company's fortunes? And 0:08:17.720 --> 0:08:19.160 I would say, you know, one of the things that 0:08:19.240 --> 0:08:21.800 we do at work Pond is you know, there's not 0:08:21.840 --> 0:08:26.160 just three ideas or five ideas. There's millions of ideas 0:08:26.160 --> 0:08:29.640 of ways to to navigate and have a view on 0:08:29.680 --> 0:08:33.040 a company, and big data forwards us the opportunity big 0:08:33.120 --> 0:08:36.160 data along with some you know, some great analytical tools 0:08:36.880 --> 0:08:42.559 to be able to kind of have views on particular companies. Huh, 0:08:42.600 --> 0:08:46.040 so so how does that play into things like smart 0:08:46.160 --> 0:08:50.640 data or factor based approaches. Is that something that you 0:08:50.679 --> 0:08:55.920 can apply um large data sets towards identifying new variations 0:08:55.960 --> 0:08:59.520 on absolutely? And I think you're touching on an important 0:08:59.520 --> 0:09:02.959 component if we think about the quant industry, you know, 0:09:03.040 --> 0:09:04.840 really started with a lot of these kind of let's 0:09:04.840 --> 0:09:09.199 call them smart betas or traditional measures of factors. So 0:09:09.600 --> 0:09:13.560 thinking about things like value or momentum, value being a 0:09:13.640 --> 0:09:17.640 cheap company relative to its book value as an example, momentum, 0:09:17.679 --> 0:09:19.840 So if the stock is starting to trend in a 0:09:19.880 --> 0:09:24.920 favorable direction, will it continue that particular trend? And so 0:09:25.240 --> 0:09:28.880 you know, the whole idea around analyzing all the data 0:09:29.280 --> 0:09:31.920 you know as quants. For the original quants, you really 0:09:31.920 --> 0:09:34.160 wanted to play off the law of large numbers, and 0:09:34.240 --> 0:09:37.320 so you had a lot of a lot of data 0:09:37.440 --> 0:09:41.439 yet information on each and every company, thousands of companies, 0:09:41.679 --> 0:09:44.880 and you try to rank companies by these particular metrics 0:09:45.120 --> 0:09:48.680 price to book or some measure of momentum. And you'd 0:09:48.720 --> 0:09:52.280 create a portfolio around those kind of quote unquote smart datas. 0:09:52.920 --> 0:09:56.199 And you know that tried and true works over time, 0:09:56.880 --> 0:09:59.480 and I think you know, as the industry is evolved, 0:10:00.120 --> 0:10:04.840 the smart data strategies, Um, there's now more interesting other 0:10:04.880 --> 0:10:09.360 ways of evolving and utilizing things like big data to 0:10:09.480 --> 0:10:13.040 be able to similarly look at those look at factors. 0:10:13.440 --> 0:10:16.880 So very similar to rank companies. So quants always want 0:10:16.880 --> 0:10:19.680 to play the breath game, meaning spread out their bets, 0:10:19.720 --> 0:10:23.800 have a lot of different views on particular companies. But 0:10:23.920 --> 0:10:27.960 what the alternative data and big data allows us to 0:10:28.000 --> 0:10:31.160 do is really play the depth game, so know a 0:10:31.200 --> 0:10:34.840 lot more about a particular company as opposed to just 0:10:35.040 --> 0:10:37.520 their price to book. So you know, back to your 0:10:37.559 --> 0:10:40.640 original question. The smart data strategies you know, which are 0:10:41.200 --> 0:10:47.840 largely common um implementable, absolutely use large amounts of data, um, 0:10:47.880 --> 0:10:51.719 you know in a pretty uh academically proven, you know, 0:10:51.800 --> 0:10:54.520 well thought out, but have been around for many decades. 0:10:55.400 --> 0:10:58.600 So one of the phrases I've been reading about is 0:10:59.440 --> 0:11:05.280 variation and of that customized data. What what is comdomized data? Yeah, 0:11:05.360 --> 0:11:09.240 so it is an interesting topic customization, I would say 0:11:09.400 --> 0:11:12.600 when we think about when you think about customized data 0:11:12.640 --> 0:11:15.520 in the industry, Um, you know, there's there's really two 0:11:15.559 --> 0:11:19.080 things that are happening. One is, um, what types of 0:11:19.840 --> 0:11:21.880 i'll call it bets would you like to make? So 0:11:22.360 --> 0:11:25.280 you know, do you want to bet on value stocks, 0:11:25.440 --> 0:11:28.320 do you want to bet on companies that are um 0:11:28.480 --> 0:11:32.120 have higher dividend payers, And you're able to customize what 0:11:32.200 --> 0:11:35.120 you want to place a wager on UM. The other 0:11:35.160 --> 0:11:37.680 part of the customization, which continues to be a pretty 0:11:37.720 --> 0:11:42.040 interesting trend in the industry, is there are certain E 0:11:42.240 --> 0:11:45.319 s G. Factors that one may want to hold near 0:11:45.400 --> 0:11:49.280 and dear and want to have companies in their portfolios 0:11:49.280 --> 0:11:52.160 that express their the beliefs that they, you know, have 0:11:52.320 --> 0:11:55.880 and want to express. So for example, you know, I 0:11:55.880 --> 0:11:58.319 don't want to invest in tobacco stocks, or I don't 0:11:58.360 --> 0:12:00.680 want to invest in, you know, something that is going 0:12:00.760 --> 0:12:04.480 to negatively impact the environment, and so you can, you know, 0:12:04.600 --> 0:12:06.800 with quant tools, you can figure out, okay, what are 0:12:06.800 --> 0:12:09.880 those companies or how do they fall into those categories, 0:12:09.880 --> 0:12:13.719 whether it's an industry or the percentage of revenues that 0:12:13.800 --> 0:12:16.200 company is going to get from you know, let's say 0:12:16.200 --> 0:12:20.200 emissions UM and then be able to create a portfolio 0:12:20.880 --> 0:12:23.920 to identify, you know, whether it's a factor bet around 0:12:24.040 --> 0:12:28.640 value or momentum and or um you know, different types 0:12:28.679 --> 0:12:31.200 of exposures that they want. So for example, things like 0:12:31.440 --> 0:12:35.840 tobacco or or emission, so you can customize the what 0:12:35.960 --> 0:12:39.920 your equity portfolio looks like relative to a benchmark or 0:12:40.080 --> 0:12:42.720 just an absolute. So let's talk a little bit about 0:12:42.760 --> 0:12:45.920 what you do at World Quants. What does the president 0:12:46.040 --> 0:12:51.600 of the firm's jobs responsibility look like? Great barrier. Yes, 0:12:51.679 --> 0:12:54.560 So so as as president, which I'm extremely fortunate to 0:12:54.600 --> 0:12:57.880 have joined such an incredible team, you know, I'd say, 0:12:58.040 --> 0:13:00.640 really three things that I focus on. You know, one 0:13:00.720 --> 0:13:04.480 is overall business strategy, help with the operating of the 0:13:04.559 --> 0:13:07.560 operating of the firm, and then add some leadership on 0:13:07.640 --> 0:13:10.719 the investing on the investing side, and it really that 0:13:11.160 --> 0:13:14.240 breaks down into kind of four key elements that you know, 0:13:14.440 --> 0:13:17.000 in terms of my role, and I work very closely 0:13:17.000 --> 0:13:20.720 with our CEO, Igor Tolchinsky, UM and really thinking about 0:13:21.160 --> 0:13:23.559 the following four things. One is vision, so you know, 0:13:23.600 --> 0:13:26.800 where where should we be spending our time? I would say, interestingly, 0:13:26.880 --> 0:13:31.160 we've got you know, roughly all over six hundred quantitative people, 0:13:31.600 --> 0:13:33.480 and so you know, we feel like we could solve 0:13:33.520 --> 0:13:36.920 a lot of interesting problems. UM. And really one of 0:13:37.040 --> 0:13:39.560 one of our jobs is to ensure that we're focusing 0:13:39.559 --> 0:13:42.160 on the right ones to solve and so you know, 0:13:42.280 --> 0:13:46.840 the you know, setting out that vision, UM, keeping people focused, UM, 0:13:46.840 --> 0:13:50.880 making sure that incentives are aligned, were allocating resources to 0:13:51.040 --> 0:13:54.560 tackling the right problems and and remaining focused on those 0:13:54.559 --> 0:13:57.720 types UM. Speed and one of the things that you know, 0:13:57.760 --> 0:14:01.120 in an organization that has over six people, you want 0:14:01.120 --> 0:14:04.560 to make decisions quickly. UM Igory does a terrific job 0:14:04.600 --> 0:14:07.199 of you know, of of of leading in attempt to 0:14:07.240 --> 0:14:11.280 help him with that in terms of making decisions, making 0:14:11.280 --> 0:14:14.199 sure things escalate very quickly, UM, so that we can 0:14:14.240 --> 0:14:17.280 continue our focus and our vision. And then the last 0:14:17.320 --> 0:14:19.960 thing I spend a decent amount of time on is talent. 0:14:20.200 --> 0:14:22.440 And you know, how do we acquire talent? How do 0:14:22.520 --> 0:14:27.720 we promote a culture of collaboration? UM? Intellectual stimulation. You 0:14:27.720 --> 0:14:29.880 know a lot of quants in general, we like to 0:14:29.880 --> 0:14:32.240 be intellectually stimulated. So how do we continue to do 0:14:32.280 --> 0:14:35.320 that and create a culture where ideas can be shared 0:14:35.400 --> 0:14:38.360 and collaborated across the firm? So those are those are 0:14:38.360 --> 0:14:41.120 where I've been spending my time over the last six months. 0:14:41.640 --> 0:14:47.760 What sort of programs do you have to incentivize your staff? Sure? So, 0:14:47.760 --> 0:14:52.200 so we have many different ways that we try to 0:14:52.240 --> 0:14:56.080 incentivize our people. UM. In terms of the you know, 0:14:56.080 --> 0:14:59.360 what we do for our for our researchers, and so 0:14:59.400 --> 0:15:03.920 we have real different challenges that we have around around 0:15:03.920 --> 0:15:08.080 the world to you know, to to incentivize people's work. 0:15:08.280 --> 0:15:11.040 And so, you know, that's just yet another piece of 0:15:11.080 --> 0:15:14.040 the puzzle where um, you know, we're trying to promote 0:15:14.080 --> 0:15:19.280 a particular activity or particular research and be able to, um, 0:15:19.320 --> 0:15:23.480 you know, incentivize them, call them out, reward them for uh, 0:15:23.680 --> 0:15:26.480 you know, for for doing some some really good work. 0:15:26.520 --> 0:15:28.560 And so you know, we have many of these, and 0:15:28.600 --> 0:15:31.880 I think one of the unique things about this firm 0:15:32.120 --> 0:15:36.360 is that we have many different competitions where uh, you know, 0:15:36.400 --> 0:15:39.960 where people can our our teams can be incented to 0:15:40.880 --> 0:15:43.880 uh to do different things and to use their mind 0:15:43.880 --> 0:15:48.040 a little differently and have the right uh incentive structure 0:15:48.080 --> 0:15:50.440 to be able to to to be rewarded for those 0:15:51.240 --> 0:15:56.480 So so you're creating these um for lack of a 0:15:56.480 --> 0:16:02.880 better word, competitions internally to solve an investing problem or 0:16:02.920 --> 0:16:07.120 equation or issue, and everyone who works in the firm 0:16:07.240 --> 0:16:10.000 can basically throw the hat in the ring and say 0:16:10.000 --> 0:16:12.880 this is the way I think we can solve this problem, 0:16:12.960 --> 0:16:15.920 and then you run the tests and figure out who's 0:16:15.960 --> 0:16:19.160 the winner on that or is it real time and hey, 0:16:19.200 --> 0:16:24.360 this is the best results based on your suggestion. Yes, 0:16:24.520 --> 0:16:27.120 so we we did. You have we have several competitions 0:16:27.560 --> 0:16:31.359 around around the firm UM with you know, set incentives 0:16:31.680 --> 0:16:33.160 for each of them, and we kind of have a 0:16:33.160 --> 0:16:36.440 group of people that try to tackle this and instead 0:16:36.480 --> 0:16:38.840 of it being relative to others in the firm, they're 0:16:38.960 --> 0:16:42.520 we're saying, okay, here's a particular UM strategy that we 0:16:42.520 --> 0:16:44.760 want to spend some time on. Let's see what you 0:16:44.760 --> 0:16:48.080 can develop UM. And so that's you know, that's an 0:16:48.160 --> 0:16:50.840 area where you know, we have projects that you might 0:16:50.880 --> 0:16:54.200 not fit into the core research that we do on 0:16:54.240 --> 0:16:57.720 a daily basis, but you know, maybe a little more um, 0:16:58.040 --> 0:16:59.600 you know, a little more out there. Maybe we're trying 0:16:59.600 --> 0:17:02.800 to look at a different asset class and we want 0:17:02.800 --> 0:17:05.040 to uncover. So we realize, you know, the the upfront 0:17:05.160 --> 0:17:06.800 R and D or the research is going to take 0:17:06.800 --> 0:17:09.480 a little bit longer, and so we want to incentivize 0:17:09.520 --> 0:17:11.960 them to go out and um, you know, and really 0:17:12.000 --> 0:17:16.440 think creatively about about capturing and we incentivize them accordingly 0:17:16.520 --> 0:17:18.760 because they're taking time out of their kind of core 0:17:19.200 --> 0:17:22.000 to really push the envelope a little bit more in 0:17:22.119 --> 0:17:24.880 terms of um, you know, in terms of figuring out 0:17:24.920 --> 0:17:27.560 something unique. One of the questions I was going to 0:17:27.680 --> 0:17:31.400 ask you is, hey, how is World quant differentiated from 0:17:31.400 --> 0:17:36.399 other firms? But but things like the accelerated platform, these 0:17:36.400 --> 0:17:42.000 sound somewhat different than what we typically hear about at 0:17:41.320 --> 0:17:45.679 a at a lot of shops. Are these common in 0:17:45.680 --> 0:17:47.480 the worlds of quant or is this a little more 0:17:47.560 --> 0:17:50.760 unique to what you guys do? Yeah, I think I think, 0:17:50.960 --> 0:17:54.760 Um sometimes people may do this, um, you know, for 0:17:55.200 --> 0:17:57.800 you know, to try to recruit people, and I've heard 0:17:57.800 --> 0:18:01.000 of people doing that, but putting it as a systematic way, 0:18:01.520 --> 0:18:04.879 you know, internally, I think is something quite unique. I 0:18:04.880 --> 0:18:07.639 would say when we think about our you know, our group, 0:18:07.640 --> 0:18:11.679 and really one of the compelling opportunities that is I 0:18:11.720 --> 0:18:13.879 had when I when I thought of of joining and 0:18:14.000 --> 0:18:16.520 fortunate enough to join World Font is you know, we've 0:18:16.560 --> 0:18:19.520 got over six people around the globe. We operate in 0:18:20.280 --> 0:18:25.119 twenty three offices thirteen countries. UM. So we've got unbelievable 0:18:25.160 --> 0:18:27.880 global diversity. And so I think that's you know, one 0:18:27.920 --> 0:18:31.479 thing that makes us UM quite unique. UM. So we 0:18:31.520 --> 0:18:35.240 operate in many different places we have many different opinions. UM. 0:18:35.760 --> 0:18:39.879 We've we've always promoted diversity, diversity of thought, UM, diversity 0:18:39.920 --> 0:18:44.320 of alpha's or drivers of return when we invest. And 0:18:44.359 --> 0:18:49.240 so you know, having programs that can continue to incentivize 0:18:50.280 --> 0:18:53.440 people UM and really create a collaborative and you know, 0:18:53.440 --> 0:18:56.280 I would say competitive in a in a good way, UM, 0:18:56.440 --> 0:19:00.000 where where people continue to be intellectually stimulated. I think 0:19:00.000 --> 0:19:04.120 that's really what you know, really drives the firm, the collaboration. UM. 0:19:04.160 --> 0:19:08.000 We just recently did a a research tour, a virtual 0:19:08.040 --> 0:19:10.600 research tour, and myself and Igo and a few other 0:19:10.720 --> 0:19:12.960 the senior folks kind of did a did a tour 0:19:13.040 --> 0:19:15.919 around and and you know, it's unbelievable when you know 0:19:16.000 --> 0:19:19.320 people can promote the collaboration they're sharing with us some 0:19:19.440 --> 0:19:23.159 of the research and the first thing they say is, 0:19:23.600 --> 0:19:26.000 I'd like to acknowledge the four or five people that 0:19:26.080 --> 0:19:29.600 helped with this with this research project. And so you know, 0:19:29.680 --> 0:19:34.480 just the idea around true collaboration, true appreciation for where 0:19:34.480 --> 0:19:37.159 you're getting assistance from. You know, I think it was 0:19:37.240 --> 0:19:41.000 really makes makes this place a pretty unique, unique uh 0:19:41.320 --> 0:19:43.840 neque place to be. World Tom was spun out of 0:19:43.880 --> 0:19:49.920 Millennium by Igor Tolchinsky, who is the founder and CEO. 0:19:50.119 --> 0:19:52.840 Tell us a little bit about your boss. Yeah. So, 0:19:52.840 --> 0:19:57.000 so when I first met Igor Um, he's just so 0:19:57.119 --> 0:20:02.760 intellectually stimulating. I mean, a brilliant, brilliant investor, brilliant man. Um. 0:20:02.800 --> 0:20:05.280 You know, extremely charitable. Um. Some of the things that 0:20:05.359 --> 0:20:08.879 he's done, UM. You know, so we are just a 0:20:09.240 --> 0:20:11.160 really spectacular and you can see a lot of those 0:20:11.200 --> 0:20:14.360 on the web. He's written some really interesting books and 0:20:14.440 --> 0:20:19.080 just his vision, his ability to articulate, um, you know 0:20:19.119 --> 0:20:23.480 where we're going, uh, and and and collaborate very well. Uh. 0:20:23.640 --> 0:20:25.879 To the other thing that is just very impressive is 0:20:25.960 --> 0:20:28.280 his decision making. And I think I've observed a lot 0:20:28.320 --> 0:20:30.720 of quants over the years. You know, you kind of 0:20:30.760 --> 0:20:34.560 get into the analysis paralysis. UM. You know, the there's 0:20:34.600 --> 0:20:37.720 always another test you can run on something. You know, 0:20:37.760 --> 0:20:41.520 Igor to his credit, is a decision maker. UM. And 0:20:41.560 --> 0:20:44.200 it is. You know, it's just great to be able 0:20:44.240 --> 0:20:46.040 to partner with him for six months of the last 0:20:46.040 --> 0:20:48.400 six months and you know, look forward for for many 0:20:48.440 --> 0:20:51.760 many years and decades to come. But he is, you know, 0:20:51.800 --> 0:20:54.600 someone who really does make decisions, takes in all the 0:20:54.680 --> 0:20:58.920 information um, and you know, has really built an unbelievable business. 0:20:59.200 --> 0:21:01.679 Uh here at will on. So when I normally speak 0:21:01.680 --> 0:21:04.040 to a firm and I say, hey, what's your firm's 0:21:04.080 --> 0:21:08.640 investment philosophy? Usually I get a sentence that sums everything 0:21:08.720 --> 0:21:13.119 up in in one nice little SoundBite. I get the 0:21:13.160 --> 0:21:16.840 sense that you're operating a whole lot of different approaches. 0:21:17.560 --> 0:21:19.680 It might be a little harder to pin you down 0:21:19.800 --> 0:21:25.639 to one philosophy of of the firm. What is World 0:21:25.760 --> 0:21:31.520 Quants investment philosophy? So, so World World Plants investment philosophy 0:21:31.560 --> 0:21:36.479 is really, you know, pretty pretty simple global leverage our 0:21:36.520 --> 0:21:42.439 people and provide them the tools and technology two to 0:21:42.520 --> 0:21:45.040 make returns for our investors. I mean that's really you know, 0:21:45.080 --> 0:21:48.119 in a nutshell, you know what we're trying to do. Um. 0:21:48.160 --> 0:21:50.320 We we have a very systematic way in which we 0:21:50.400 --> 0:21:53.400 do it. We try to leverage the law of large 0:21:53.480 --> 0:21:58.040 numbers and have millions of different alphas that we can leverage. 0:21:58.040 --> 0:22:00.600 We put them together in a portfolio and then we 0:22:00.680 --> 0:22:03.720 execute and make them a reality through trading. So, you know, 0:22:03.720 --> 0:22:08.399 the investment processes is quite simple and straightforward. But the 0:22:08.560 --> 0:22:12.880 uniqueness of our philosophy is that we are extremely global 0:22:12.880 --> 0:22:17.200 in terms of our people. Um, we do believe in 0:22:17.200 --> 0:22:21.679 in playing the breath game. We have we have a 0:22:21.760 --> 0:22:25.199 lot of alpha's, a lot of ways to look at 0:22:25.240 --> 0:22:28.600 companies and we try to leverage that throughout our process 0:22:28.680 --> 0:22:33.080 and create portfolios that driver turned for our clients. So 0:22:33.359 --> 0:22:35.880 let's talk a little bit about the past year, which 0:22:36.000 --> 0:22:40.159 was some people have called it unprecedented. When you are 0:22:40.400 --> 0:22:44.280 crunching numbers to try and find a pattern, how can 0:22:44.480 --> 0:22:49.520 you deal with the possibility of events which have simply 0:22:49.640 --> 0:22:54.520 never occurred before. Yeah, Berry, that's a terrific question. Um. 0:22:54.560 --> 0:22:57.800 You know, that really separates the you know, the quantz 0:22:57.960 --> 0:23:00.760 quote unquote and the quant investors. And so, you know, 0:23:00.800 --> 0:23:04.000 one of the things that makes our jobs so interesting, 0:23:04.040 --> 0:23:07.200 I find is the ability to adapt and really to 0:23:07.200 --> 0:23:10.439 to be market practitioners as well as as quants, and 0:23:10.440 --> 0:23:13.359 I think that really makes great quant investors. So, you know, 0:23:13.359 --> 0:23:15.240 if we think about two thousand twenty and also in 0:23:15.440 --> 0:23:18.320 two thousand twenty one thus far, you know we've seen 0:23:18.640 --> 0:23:22.760 you know, obviously unprecedented events. Um. You know, whether it's 0:23:22.760 --> 0:23:26.239 around COVID or you know other types of you know 0:23:26.320 --> 0:23:28.640 of of events that that have happened over the last year, 0:23:28.680 --> 0:23:34.000 which which ramifications have caused very large moves in you know, 0:23:34.119 --> 0:23:38.239 kind of common let's call them factors or expressions or 0:23:38.760 --> 0:23:43.159 buckets of particular stocks or characteristics of stocks. You know, 0:23:43.240 --> 0:23:47.760 for example, you know, things like momentum we talked about 0:23:48.480 --> 0:23:53.520 before value. UM, these have had some pretty unprecedented moves. UM. 0:23:53.560 --> 0:23:57.119 You know, there's been you know, for value, about fifteen 0:23:57.760 --> 0:24:02.080 UH standard standard aviation moves that are that we're above 0:24:02.160 --> 0:24:07.040 two in two thousand and UM. You know, one just 0:24:07.240 --> 0:24:11.359 massive moves. When you think about a simple five center 0:24:11.400 --> 0:24:16.200 deviation move means that that happens once one day every 0:24:16.200 --> 0:24:20.600 approximate fourteen thousand years. So to your point, there's been 0:24:20.640 --> 0:24:25.080 no shortage of massive moves UM, you know, largely because 0:24:25.080 --> 0:24:27.560 there's been such a big shift. And so I think 0:24:27.560 --> 0:24:30.440 as quant investors, the way we try to approach it 0:24:30.520 --> 0:24:33.679 is to I is to adapt as quickly as we 0:24:33.760 --> 0:24:37.480 possibly can for some unforeseen event. Obviously we try to 0:24:37.520 --> 0:24:41.080 predict whatever we can in advance. UM. But to the 0:24:41.119 --> 0:24:44.720 extent UH you know you have something like uh COVID, 0:24:45.200 --> 0:24:47.639 you know, you want to think about companies that are 0:24:47.640 --> 0:24:51.520 going to be largely affected because of that, And there's 0:24:51.560 --> 0:24:55.200 two approaches. One is you can try to risk manage, 0:24:55.200 --> 0:24:58.960 which is usually what we would do, which is, you know, listen, 0:24:59.000 --> 0:25:01.280 this is a once in a life time events. Let's 0:25:01.359 --> 0:25:06.480 try to immunize our portfolios from those. So, whether you 0:25:06.520 --> 0:25:09.280 know it's a it helps or hurt stocks, let's try 0:25:09.280 --> 0:25:12.320 to immunize ourselves. And the other is to say, okay, 0:25:12.520 --> 0:25:15.119 let's try to get a sense whether there's going to 0:25:15.200 --> 0:25:18.359 be some type of trend here or there's some you know, 0:25:18.440 --> 0:25:23.159 ability to to create alpha or some excess returns UM 0:25:23.200 --> 0:25:25.320 when these events happen. So you know, you can think 0:25:25.320 --> 0:25:28.480 about binary events, so things like elections that have happened 0:25:28.920 --> 0:25:31.720 UM and what the ramifications are. You can think about 0:25:31.760 --> 0:25:35.600 things like trade UM. You could think about companies exposure 0:25:35.640 --> 0:25:38.560 to you know, things like bitcoin when they announce and 0:25:38.600 --> 0:25:40.560 what do you do about it? And so, you know, 0:25:40.600 --> 0:25:43.679 we think about the world in characteristics. So we call 0:25:43.760 --> 0:25:47.120 them factors, and so you can create these quote unquote 0:25:47.160 --> 0:25:50.320 factors and say I want to have a portfolio that 0:25:50.800 --> 0:25:55.119 whether those factors do well or poorly, I'm my portfolio 0:25:55.160 --> 0:25:57.560 will not be affected. So that's really the way we've 0:25:57.640 --> 0:26:00.040 We've thought about a lot of two thousand, twenty and 0:26:00.320 --> 0:26:02.639 twenty one and our investment team has just done a 0:26:02.720 --> 0:26:06.159 terrific job of being able to navigate that and identify 0:26:06.280 --> 0:26:09.040 some of these risks that they haven't seen before. We 0:26:09.119 --> 0:26:12.160 try to codify it in a systematic way and then 0:26:12.320 --> 0:26:15.199 focus our attention on, you know, on really where we 0:26:15.240 --> 0:26:17.560 believe we can make money UM, and that's a lot 0:26:17.560 --> 0:26:20.800 of these millions of alphas that we believe have been 0:26:20.880 --> 0:26:23.679 contested for for years. So that's how we think about, 0:26:23.960 --> 0:26:26.479 you know, dealing with some of these unprecedented moves that 0:26:26.520 --> 0:26:29.320 we've seen in you know, things like short interest and 0:26:29.440 --> 0:26:33.119 momentum and value that have happened over the last twelve 0:26:33.119 --> 0:26:36.359 months or so. Huh So. So I'm intrigued by the 0:26:36.400 --> 0:26:40.560 concept of of something UM that's so many standard deviations 0:26:40.600 --> 0:26:42.520 away from the norm that it's really a one in 0:26:42.560 --> 0:26:47.280 a fourteen thousand year events, those sort of tail risks. 0:26:47.920 --> 0:26:52.800 How can we anticipate them on a quantitative basis? And 0:26:52.800 --> 0:26:57.359 and more specifically, UM, think back to January six and 0:26:57.600 --> 0:27:01.879 the attempted insurrection in the US capital. How can you 0:27:01.960 --> 0:27:06.680 quantify that? And we've learned since that that actually came 0:27:07.400 --> 0:27:09.960 pretty close to I don't know if I would call 0:27:10.000 --> 0:27:15.440 it successful, but but pretty close to having the rioters 0:27:15.680 --> 0:27:20.720 access UM, various people in Congress, maybe even the Vice president. 0:27:21.760 --> 0:27:27.160 How do you factor that into to your UM analyzes. Yes, 0:27:27.320 --> 0:27:29.119 as I would say, you know, I'll take it up 0:27:29.160 --> 0:27:31.520 a step in terms of just in general how we 0:27:31.600 --> 0:27:34.160 think about it. But it's really about, you know, trying 0:27:34.160 --> 0:27:38.679 to identify things that will impact UM companies and you know, 0:27:38.720 --> 0:27:42.160 what are the ramifications and and I think that's really 0:27:42.200 --> 0:27:44.919 the way we try to think about that. So you know, 0:27:44.920 --> 0:27:48.399 in that specific case, in terms of what would happen 0:27:48.400 --> 0:27:51.640 to particular companies UM, you know, those those events are 0:27:52.040 --> 0:27:56.000 relatively UM you know, quick moves. We try to be 0:27:56.119 --> 0:27:59.480 very diversified in many different ways. And you know, that's 0:27:59.480 --> 0:28:01.160 probably one of the first times I've used that term, 0:28:01.160 --> 0:28:04.560 but I would say the diversification point is so critical 0:28:04.680 --> 0:28:07.560 in investing UM, whether you're a quant investor or you're 0:28:07.560 --> 0:28:10.520 any type of investor. It's it's definitely an extremely helpful 0:28:11.160 --> 0:28:14.760 UM attribute when you have events like this occur. And 0:28:14.800 --> 0:28:17.880 so you know, creating you know, different ways to look 0:28:17.920 --> 0:28:22.040 at risks UM as quickly as you possibly can, and 0:28:22.119 --> 0:28:25.720 adapting a portfolio, you know, we think leads to very 0:28:25.760 --> 0:28:28.960 successful outcomes in the long run. How did you guys 0:28:29.000 --> 0:28:32.919 look at what was taking place with things like Robin 0:28:32.960 --> 0:28:36.320 Hood and read it to me that was reminiscent of 0:28:36.920 --> 0:28:40.160 you know, late nineties action, although it certainly was faster 0:28:40.360 --> 0:28:43.960 and maybe more powerful than we've seen in the past. 0:28:44.240 --> 0:28:48.520 How do you look at these sort of group behavior 0:28:48.600 --> 0:28:54.480 that that social networks can foster. Yeah, again we um so, 0:28:54.840 --> 0:28:57.480 I think we look at in terms of, you know, 0:28:57.560 --> 0:29:00.760 from a from a liquidity standpoint, what what are the 0:29:01.240 --> 0:29:04.400 know how is this affecting the amount of the amount 0:29:04.440 --> 0:29:08.400 of ability to trade our securities? Um? You know, we 0:29:08.640 --> 0:29:11.200 really do try to minimize that I mentioned earlier. We 0:29:11.320 --> 0:29:14.160 try to minimize the amount of risk we take from 0:29:14.160 --> 0:29:17.680 any particular factor and things like you know, short interest 0:29:17.840 --> 0:29:20.000 is something that you know is a is a pretty 0:29:20.040 --> 0:29:23.360 common factor that you know, folks UM like us would 0:29:23.440 --> 0:29:27.480 would try to identify and minimize. Um. Are you know 0:29:27.760 --> 0:29:31.200 how much our our stocks will move because of that? UM, 0:29:31.200 --> 0:29:35.080 I'd say, you know, big picture thinking about liquidity, obviously, 0:29:35.400 --> 0:29:38.120 there there is a big retail you know, retail input 0:29:38.720 --> 0:29:40.880 um to liquidity. They tend to you know, trade it 0:29:41.920 --> 0:29:45.200 trade you know, stocks that are that are relatively cheap 0:29:45.200 --> 0:29:47.920 in priced um. You know, and I think there's some 0:29:48.080 --> 0:29:50.920 you know, some pretty interesting data around that I would say, 0:29:50.960 --> 0:29:53.640 for you know, for our purposes. You know, we look 0:29:53.680 --> 0:29:56.520 at things like liquidity and depths of market and how 0:29:56.560 --> 0:29:59.280 that's being impacted. And I would say, over the last 0:29:59.360 --> 0:30:02.560 twelve months, you know, interestingly that the world of market 0:30:02.600 --> 0:30:05.560 micro structure has gotten pretty complicated, you know, to the 0:30:05.600 --> 0:30:09.000 extent you could trade you could trade you know, ABC 0:30:09.200 --> 0:30:14.360 stock in forty different venues in the US is interesting enough, 0:30:14.760 --> 0:30:18.360 you know, across sixteen different exchanges, or roughly about sixteen 0:30:18.360 --> 0:30:20.959 different exchanges. And so you know, we spend a lot 0:30:21.000 --> 0:30:24.360 of our time looking at things like volumes and spreads 0:30:24.520 --> 0:30:28.200 and and overall liquidity UM. And so that's really where 0:30:28.240 --> 0:30:31.400 we see um, you know, those effects. And I would say, 0:30:31.680 --> 0:30:33.480 you know, it looks like over the last twelve months 0:30:33.480 --> 0:30:36.680 it's been a pretty rocky um, you know, rocky area. 0:30:36.720 --> 0:30:38.880 But you know we're pretty much back to you know, 0:30:38.920 --> 0:30:42.520 kind of pre pandemic levels when I think about quote sizes, 0:30:43.040 --> 0:30:46.680 bid ask spreads, UM, you know for for SMP type names. 0:30:46.680 --> 0:30:48.720 So it looks like things are kind of getting a 0:30:48.760 --> 0:30:51.960 little bit back to normal in terms of of market liquidity, 0:30:52.080 --> 0:30:56.960 depth and spreads. So you mentioned value earlier. I think 0:30:57.040 --> 0:31:01.760 this is up until this quarter. I think the underperformance 0:31:01.800 --> 0:31:06.600 of value versus growth, it could be the longest run 0:31:06.640 --> 0:31:11.320 we've seen of growth dominating value since since at least 0:31:11.320 --> 0:31:15.320 since the CRISP database goes back to nineteen seventeen or 0:31:15.400 --> 0:31:19.680 something like that. How do you think about something that's 0:31:20.360 --> 0:31:23.880 rather unusual in those terms. How does the FED factor 0:31:23.920 --> 0:31:27.160 into this or is that even an input to to 0:31:27.320 --> 0:31:31.840 what you're building in your models. Yeah, no, it's it's 0:31:31.920 --> 0:31:35.720 it's exactly. It's very consistent with again thinking about it 0:31:35.760 --> 0:31:39.320 as a as a very diversified portfolio, and you know, 0:31:39.480 --> 0:31:43.479 value investing over the long term has done reasonably well. UM. 0:31:43.520 --> 0:31:46.320 I'm very impressed that you went back to the CRISP database, 0:31:46.480 --> 0:31:50.400 So kudos to you. UM. When I think about you 0:31:50.600 --> 0:31:54.080 value again, value on itself, we tend to take an 0:31:54.080 --> 0:31:56.880 approach where we want to be more diversified. We don't 0:31:56.880 --> 0:31:58.680 want to just bet on value. We want to have 0:31:59.000 --> 0:32:01.200 things that have growth at tributes and really have some 0:32:01.720 --> 0:32:04.560 you know, we call it idiosyncratic or some specific type 0:32:04.600 --> 0:32:07.800 of return where we think that's our edge. And and 0:32:07.960 --> 0:32:10.360 in terms of other types of factors like value or 0:32:10.400 --> 0:32:14.200 growth or low volatility. UM, those are something that we 0:32:14.240 --> 0:32:17.480 want to have a very modest amount of exposure or 0:32:17.960 --> 0:32:19.920 you know, we really don't want to We don't necessarily 0:32:19.960 --> 0:32:22.400 make a lot of money on that particular aspect because 0:32:22.400 --> 0:32:26.240 it's very common and it's also subject to very sharp moves, 0:32:26.680 --> 0:32:28.120 and so you know, we aim to have a little 0:32:28.160 --> 0:32:31.360 bit more consistent, persistent results. But to your point, you're right, 0:32:31.400 --> 0:32:35.200 this is it's been an unbelievable um challenge for Value. 0:32:35.240 --> 0:32:37.960 We've we have seen a little bit of a turnaround, um, 0:32:38.000 --> 0:32:41.080 you know, since since the election, UM, and so you know, 0:32:41.160 --> 0:32:43.280 value that start us to do a little bit better. 0:32:43.880 --> 0:32:45.920 But your point is well taken, But I think it 0:32:46.000 --> 0:32:50.240 just speaks to our philosophy of you want to have, 0:32:50.680 --> 0:32:53.000 you know, many different ways of looking at the fortunes 0:32:53.000 --> 0:32:58.760 of a company and diversification. Diversification, diversification is key and 0:32:58.960 --> 0:33:02.600 at World Plant we that with millions of alpha's, we 0:33:02.680 --> 0:33:06.600 have many different portfolio managers, many different ways of combining 0:33:06.600 --> 0:33:09.240 our alpha's, and so you know, we kind of live 0:33:09.280 --> 0:33:13.320 and breathe from diversifying of our people to our alpha's, 0:33:13.360 --> 0:33:17.240 to our portfolio managers, and then to our execution. So again, 0:33:17.320 --> 0:33:19.920 I think you know, your observation is spot on, and 0:33:19.920 --> 0:33:21.920 I would say we as a as a group try 0:33:21.960 --> 0:33:26.600 not to take too many bets in one place. Huh. Interesting. 0:33:27.000 --> 0:33:31.120 You know you mentioned certain strategies are popular, and I 0:33:31.160 --> 0:33:35.040 can't help but think back to the um quant quake 0:33:35.200 --> 0:33:38.760 that took place about eight years ago, where a lot 0:33:38.800 --> 0:33:43.240 of quantitative strategies were very similar at different shops, and 0:33:43.600 --> 0:33:48.120 we saw what had become a fairly crowded trade. Maybe 0:33:48.160 --> 0:33:50.880 maybe it's a decade ago, it's even longer ago. What 0:33:50.880 --> 0:33:53.920 what do you make of that crowded trades? Yeah, so 0:33:53.920 --> 0:33:56.160 so it was more than a decade ago, is you 0:33:56.160 --> 0:33:58.200 know if I think it was almost eight thirteen and 0:33:58.240 --> 0:34:00.840 a half years ago? Okay, I think I think there 0:34:00.880 --> 0:34:04.960 was a huge lesson learned for for Kuant investors. Um. 0:34:05.000 --> 0:34:07.920 I think it was a period where, uh, you know, 0:34:08.040 --> 0:34:11.000 there was you know, some some shops had a fair 0:34:11.000 --> 0:34:14.560 amount of complacency where they didn't continue to use their research. 0:34:14.640 --> 0:34:17.840 There was more into there was you know, there there 0:34:17.840 --> 0:34:19.920 should have been a lot more pushing in terms of 0:34:19.960 --> 0:34:22.560 research and and I think you look back and you 0:34:22.600 --> 0:34:25.760 saw events that you know, for a number of reasons. 0:34:25.800 --> 0:34:27.640 One is there was a fair amount of leverage in 0:34:27.640 --> 0:34:30.840 the system, and so you're able to amplify your returns 0:34:30.840 --> 0:34:33.759 with leverage UM and leverage is great if you're always 0:34:33.760 --> 0:34:37.840 going to have high, high positive returns, but when you don't, 0:34:38.280 --> 0:34:40.839 you know, leverages is a you know as a very 0:34:40.840 --> 0:34:42.960 big challenge because people call up and ask you for 0:34:43.000 --> 0:34:44.919 money and you need to pay them. So I think 0:34:44.960 --> 0:34:47.200 you know that that really was one of the biggest 0:34:47.200 --> 0:34:50.040 issues of of oh seven UM. But I'd also say 0:34:50.040 --> 0:34:53.520 there was crowded traits, as you correctly point out. And 0:34:53.600 --> 0:34:55.319 so I think one of the goals that we have 0:34:55.360 --> 0:34:58.680 at World pant is continue to differentiate, continue to create 0:34:58.840 --> 0:35:04.120 unique ways of making money for our clients investing in 0:35:04.160 --> 0:35:08.400 our almost three hundred researchers, to try to continue to 0:35:08.440 --> 0:35:12.280 innovate and be much less crowded than other people. Again, 0:35:12.320 --> 0:35:14.560 we want to be unique. We don't want to be 0:35:14.760 --> 0:35:18.160 susceptible to those large movements in terms of those quote 0:35:18.200 --> 0:35:22.279 unquote crowded trades. And that's really a huge goal and 0:35:22.320 --> 0:35:25.640 frankly was a big lesson learned for I believe the 0:35:25.680 --> 0:35:29.480 quand industry. UM that happens, you know, almost fourteen years ago. 0:35:29.960 --> 0:35:32.719 So let's talk a little bit about the future of 0:35:32.840 --> 0:35:37.160 quant investing. You mentioned previously that the industry has learned 0:35:37.200 --> 0:35:41.080 from past mistakes. It's involved UM. Tell us a little 0:35:41.080 --> 0:35:45.120 bit about the direction the industry is in evolving towards, 0:35:46.719 --> 0:35:49.680 Sir Barry, I think the you know, the quand industry 0:35:49.800 --> 0:35:53.360 will continue to evolve in in places like data, in 0:35:53.400 --> 0:35:57.799 places like storage, in places like analytics, UM and the 0:35:57.840 --> 0:36:00.759 tools that are that one can use to try to, 0:36:01.680 --> 0:36:04.120 you know, figure out the fortunes of a company have 0:36:04.239 --> 0:36:08.040 increased exponentially, and so you know, the amount of data 0:36:08.120 --> 0:36:10.360 that's out there, amount of data that can be stored, 0:36:10.760 --> 0:36:13.920 amount of data that can be analyzed, the simulations that 0:36:13.960 --> 0:36:18.600 one can run has grown, like I said, absolutely exponentially, 0:36:19.000 --> 0:36:22.480 and really for a quant investor, it's terrific because you know, 0:36:22.520 --> 0:36:24.440 the world is kind of coming in our direction. The 0:36:24.440 --> 0:36:26.480 amount of data. We think, you know, one of our 0:36:26.560 --> 0:36:29.719 edges to be able to take data, synthesize it and 0:36:29.760 --> 0:36:32.919 create information and drive returns. And you know, we think, 0:36:32.920 --> 0:36:36.239 here a world point, we're extremely well positioned to be 0:36:36.320 --> 0:36:39.239 able to do that. And so, you know, honestly, I 0:36:39.239 --> 0:36:42.040 think it's a you know, it's an absolute golden age 0:36:42.080 --> 0:36:44.799 for us as Kuan investors UM in terms of kind 0:36:44.840 --> 0:36:49.080 of where the industry is evolving really interesting. Any of 0:36:49.080 --> 0:36:54.040 this evolution surprised you what what has taken place that um, 0:36:54.080 --> 0:36:56.600 either you didn't see coming, or you saw coming and 0:36:56.640 --> 0:37:01.319 didn't think would happen, and it happened anyway, right, I 0:37:01.320 --> 0:37:04.120 would tell you know, one of the surprises is is 0:37:04.440 --> 0:37:09.239 the adoption of you know, more and more quantitative investing 0:37:09.480 --> 0:37:16.080 strategies in general. Um. Just given uh, everyday people's thoughts 0:37:16.120 --> 0:37:19.239 on you know, the use of computers and use of 0:37:19.280 --> 0:37:24.799 your phone to drive information, It's happening across most every industry. 0:37:25.280 --> 0:37:28.800 I guess I'm surprised, happily surprised that more and more 0:37:29.120 --> 0:37:33.560 kind of investment folks aren't employing more and more quantitative strategy. 0:37:33.760 --> 0:37:37.040 Good for us from where we sit, but I'm just surprised. 0:37:37.280 --> 0:37:39.880 You know, I think everybody wants to you know, if 0:37:39.920 --> 0:37:41.879 you're at a dinner party, you're you're asked, you're getting 0:37:41.880 --> 0:37:44.239 asked a question, it's got to be empirically back that 0:37:44.320 --> 0:37:46.560 You're gonna look it up as quickly as you possibly can, 0:37:47.360 --> 0:37:50.440 and you want to test that there whatever someone said, 0:37:50.520 --> 0:37:53.920 whatever hypothesis, um, you know, and there's there's a lot 0:37:53.960 --> 0:37:56.279 of skeptics and they can be proven yea or nay 0:37:56.440 --> 0:37:58.719 very quickly. And I'm just you know, I guess I'm 0:37:58.880 --> 0:38:01.480 I'm surprised that that's not happening more and more in 0:38:01.520 --> 0:38:03.880 the in the investment industry. So that would be one 0:38:03.880 --> 0:38:06.480 of the I would say, my my biggest surprises. But 0:38:06.520 --> 0:38:09.920 I'm but I'm okay with that. Huh. You mentioned earlier 0:38:09.960 --> 0:38:14.399 trying to read sentiment data from analysts reports. I've read 0:38:14.440 --> 0:38:19.240 about firms trying to actually scrape market wide sentiment data 0:38:19.400 --> 0:38:23.640 off of social networks like Twitter. What what does that 0:38:23.719 --> 0:38:28.160 look like? And can you really find an investable edge 0:38:28.719 --> 0:38:34.280 from the characters of millions of people who know um 0:38:34.360 --> 0:38:37.520 relatively little, although they may not know that they know 0:38:37.640 --> 0:38:43.640 relatively little? What what signal is in all that noise? Sure, Marry, 0:38:43.680 --> 0:38:46.800 I think you're you're touching on a really important components. 0:38:46.840 --> 0:38:49.560 You think about all this alternative data, you know, it's 0:38:49.600 --> 0:38:51.279 it's what do you do with it? And and how 0:38:51.280 --> 0:38:53.759 do you utilize it? And I think you know, a 0:38:53.840 --> 0:38:59.120 diversified approach of you using things like satellite images, using 0:38:59.160 --> 0:39:03.279 things like social media, um, you know, can be quite impactful, 0:39:03.480 --> 0:39:05.799 you know, some of which might be very very short run. 0:39:06.160 --> 0:39:10.200 Some of it might have more longer term ramifications, things 0:39:10.239 --> 0:39:13.839 like credit card transactions, web clicks. I mean, there's so 0:39:13.920 --> 0:39:17.400 much alternative data out there that you know, if you 0:39:17.440 --> 0:39:20.239 can think about how best to utilize it. Again, it's 0:39:20.320 --> 0:39:23.759 that whole concept of marrying kind of technical acumen and 0:39:23.800 --> 0:39:29.120 so you understand data, you understand uh something about you know, 0:39:29.160 --> 0:39:32.800 putting data together to create some type of expected return, 0:39:32.880 --> 0:39:36.680 but also marrying that with some business acumen. You know, 0:39:36.719 --> 0:39:40.279 I think is is really exploding. And so you know, 0:39:40.360 --> 0:39:42.879 whether it's social media, where it's at allite imaging, whether 0:39:42.960 --> 0:39:46.520 it's you know, clicking on you know, getting vendors that 0:39:46.520 --> 0:39:50.279 that provide some of this data all anonymized to be 0:39:50.320 --> 0:39:53.400 able to have a view of where company's fortunes maybe 0:39:54.120 --> 0:39:56.879 is certainly something that the industry is seeing. Um, there's 0:39:56.880 --> 0:39:59.520 a massive amount of data vendors out there. There is 0:39:59.560 --> 0:40:01.680 some content validation and some of those data vendors, but 0:40:01.719 --> 0:40:04.200 there's a lot of data out there to be able 0:40:04.200 --> 0:40:07.000 to employ not just social media, but other types of 0:40:07.000 --> 0:40:10.000 of data that you know, can be informative of a 0:40:10.000 --> 0:40:13.719 company's fortunes. Yeah, I've been kind of fascinated by the 0:40:13.800 --> 0:40:18.520 satellite data and how granular it can get not just 0:40:19.080 --> 0:40:24.279 tracking ships carrying goods or oil around the world, but 0:40:24.520 --> 0:40:28.040 how deep the ships are sitting in the water. That 0:40:28.360 --> 0:40:32.680 gives some insight as to how are they traveling? Full 0:40:32.800 --> 0:40:37.440 half full? Three corps. That's just astonishing stuff. Yeah, I 0:40:37.440 --> 0:40:40.120 mean it's it really is. And I think you know, listen, 0:40:40.120 --> 0:40:43.040 I think we all we all have our phones and 0:40:43.040 --> 0:40:45.319 and you know I could I could kindly tracked my 0:40:45.440 --> 0:40:48.120 kids on on Life three sixty and figuring out where 0:40:48.160 --> 0:40:50.919 they are. Um, you know this is happening. It's part 0:40:50.920 --> 0:40:54.880 of our everyday lives, um and uh. And you know 0:40:55.160 --> 0:40:57.920 it's it could be insightful information. You know certainly helped me, 0:40:58.400 --> 0:41:00.840 you know, with my kids and and you know other parts, 0:41:00.840 --> 0:41:04.240 whether it's uh, you know, tankers or whether it's uh, 0:41:04.280 --> 0:41:07.600 you know, clicks. Uh. You know, these are insights that 0:41:08.120 --> 0:41:11.800 you know, can be you know, potentially telling. Again, I 0:41:11.800 --> 0:41:15.040 would go back to my other common about diversification. So 0:41:15.239 --> 0:41:19.080 in isolation, these you know, will you know almost for 0:41:19.120 --> 0:41:21.480 certain will not work all the time. Um, But if 0:41:21.520 --> 0:41:23.960 there's some level of insight that you can gain from 0:41:24.000 --> 0:41:25.600 a piece of this data or a way to look 0:41:25.640 --> 0:41:29.400 at this data, and then you marry that with millions 0:41:29.400 --> 0:41:31.640 and millions of other things. You know, you can have 0:41:31.680 --> 0:41:35.200 a pretty good sense of that company's fortune. So you know, 0:41:35.239 --> 0:41:38.520 again it's it's really about diversification and not thinking about 0:41:39.040 --> 0:41:42.200 you know, these pieces of data in isolation. UM. You know, 0:41:42.320 --> 0:41:44.879 we had talked a little bit about value and other 0:41:44.920 --> 0:41:47.520 types of factors. Again, I think you know, the approach 0:41:47.600 --> 0:41:50.839 that that one that most quants take UM is really 0:41:50.880 --> 0:41:54.960 to think about diversification um as as a really helpful 0:41:54.960 --> 0:41:58.640 way to produce UM you know, consistent results for clients. 0:41:58.719 --> 0:42:01.160 And I think that's really, you know, the key to 0:42:01.840 --> 0:42:03.799 how most wants and at World want you know, we 0:42:03.840 --> 0:42:07.000 think about diversification at pretty much every step of the way. 0:42:07.200 --> 0:42:11.000 But it's our people, whether it's the expected returns that 0:42:11.040 --> 0:42:14.400 we try to generate or portfolio managers and how we 0:42:14.480 --> 0:42:17.440 go about executing and making that a reality. So you 0:42:17.560 --> 0:42:23.440 talked several times about how gigantic these data sets are 0:42:23.480 --> 0:42:27.839 and how fast they're growing, How how big can these get? 0:42:28.040 --> 0:42:31.640 And at what point do they become unmanageable? I mean, 0:42:31.640 --> 0:42:36.759 when is too much data too much? Yeah? UM, we 0:42:37.000 --> 0:42:40.560 certainly have not found that out yet. UM. You know, 0:42:40.600 --> 0:42:43.600 the nice thing about it is there's the amount of data, 0:42:44.000 --> 0:42:48.640 you know, is increasing exponentially. There's some unbelievable stats on 0:42:48.760 --> 0:42:52.040 just that massive amount of growth UM. And I think, 0:42:52.080 --> 0:42:55.240 you know, frankly, we've spent an enormous amount of time 0:42:55.600 --> 0:42:58.120 figuring out how to take in that data, how to 0:42:58.160 --> 0:43:00.799 collate it, how to check that data. Um. You know, 0:43:00.800 --> 0:43:04.240 again it's the gory details of data, but it's um 0:43:04.280 --> 0:43:06.840 but it's fascinating. I know, I d C I d 0:43:07.000 --> 0:43:09.799 c UM. You know reported a quote them more than 0:43:09.880 --> 0:43:14.360 five billion consumers interact with data every day. Five billion 0:43:14.440 --> 0:43:18.680 consumers interact with data every day. By they say that 0:43:18.760 --> 0:43:22.040 number will be six billion, or three quarters of the 0:43:22.080 --> 0:43:26.000 world's population. So data is getting created again exponentially. I 0:43:26.000 --> 0:43:27.960 think this is the thing that we spend a lot 0:43:27.960 --> 0:43:31.560 of time on is how do we ingest that, How 0:43:31.600 --> 0:43:33.920 do we come up with processes to be able to 0:43:34.400 --> 0:43:37.279 you know ingest it, how do we store it, how 0:43:37.280 --> 0:43:40.439 do we analyze it? Again? And that's that's really, uh, 0:43:40.520 --> 0:43:42.600 you know, one of our integral parts of what we 0:43:42.680 --> 0:43:45.200 do and how we do it. And you're seeing this 0:43:45.280 --> 0:43:48.239 in the investment industry. You're seeing this in many different industries. 0:43:48.719 --> 0:43:51.520 But I think that's one of the exciting parts um, 0:43:52.080 --> 0:43:54.000 you know, and it's a lot of data. But again 0:43:54.040 --> 0:43:57.000 I think that's really you know, we've been waiting for 0:43:57.040 --> 0:43:59.360 these times for for a long time. To continue to 0:43:59.400 --> 0:44:01.880 have more and more data, it allows us a huge 0:44:01.880 --> 0:44:05.040 opportunity to drive an edge because we think we know 0:44:05.239 --> 0:44:07.520 what to do with that type of data. Um, to 0:44:07.640 --> 0:44:10.640 pair that with some of our you know, smart researchers 0:44:10.640 --> 0:44:13.319 and figuring out what are the insights. So, you know, 0:44:14.320 --> 0:44:16.959 I think the other challenge that we face in terms 0:44:16.960 --> 0:44:20.120 of your comment about too much is again signal to noise? 0:44:20.200 --> 0:44:23.200 All right, What's what's a signal? Meaning what what gives 0:44:23.239 --> 0:44:26.279 you insight? And what's just noise? And so part of 0:44:26.320 --> 0:44:30.480 our jobs as researchers and portfolio managers, as good quants 0:44:30.480 --> 0:44:33.319 at worklan is is to kind of distinguish between the 0:44:33.400 --> 0:44:36.840 signal meaning does this have some value, does it provide 0:44:36.840 --> 0:44:40.960 me insight? Or is it really just noise and you know, 0:44:41.040 --> 0:44:46.319 not really worthy of of of allocating any investment to it. Huh. 0:44:46.480 --> 0:44:49.120 Quite interesting. Let let me change gears on you a 0:44:49.120 --> 0:44:53.840 little bit. We recently heard rumblings about possible changes in 0:44:54.080 --> 0:44:57.759 tax policy coming out of the new administration. I know 0:44:57.920 --> 0:45:00.520 at Goldman, I know a gam You did a lot 0:45:00.520 --> 0:45:05.759 of work on UM tax efficiency from from your new perch. 0:45:05.920 --> 0:45:12.239 How do you think about things like tax efficiency in investing? 0:45:12.320 --> 0:45:16.560 Is that something that's still within your bailiwick or or 0:45:16.680 --> 0:45:19.560 is it more institutional and you're you're less focused on 0:45:19.640 --> 0:45:22.960 tax Yeah, so, I mean the way we think about it, 0:45:23.000 --> 0:45:26.040 and I'm happy to spend some time on just generally 0:45:26.040 --> 0:45:28.680 tax efficient investing. I think it is. It's you know, 0:45:28.719 --> 0:45:30.920 it's a very useful piece and I've had some prior 0:45:30.920 --> 0:45:33.680 experience in it, but more substantively on you know, kind 0:45:33.680 --> 0:45:35.440 of what we do now at work on you know, 0:45:35.520 --> 0:45:37.600 if there is a change to tax policy, we're gonna 0:45:37.680 --> 0:45:39.239 you know, figure out how it's going to impact a 0:45:39.239 --> 0:45:41.560 particular company. You know, our corporate tax is going to 0:45:41.640 --> 0:45:44.280 go up or down UM, and how will that impact 0:45:44.560 --> 0:45:46.880 you know, cash flow or you know something on on 0:45:46.920 --> 0:45:49.560 a company's statements. UM. So that that's really how we 0:45:49.600 --> 0:45:52.400 would tackle it, and you know, we'll we'll understand how 0:45:52.440 --> 0:45:55.359 we should you know, update our accounting UM for for 0:45:55.400 --> 0:45:58.279 those types of events and adapt accordingly, like like you 0:45:58.320 --> 0:46:01.799 would expect most in sters to do. UM. You know, 0:46:01.840 --> 0:46:03.640 in the ray of tax efficient investing, you know, I'm 0:46:03.640 --> 0:46:05.440 happy to spend a few minutes there, but you know, 0:46:05.800 --> 0:46:07.960 we don't, uh, that's really not one of our core 0:46:08.040 --> 0:46:11.840 focuses at world point. You're you're looking more as to 0:46:12.239 --> 0:46:16.120 how the changes in taxes impact either the bottom line 0:46:16.120 --> 0:46:20.480 for the companies or their position relative to their competitors 0:46:21.160 --> 0:46:26.360 UM and what the tax code means, uh to their valuation. 0:46:26.440 --> 0:46:28.880 Is that is that a fair description? Like, I know, 0:46:28.960 --> 0:46:33.879 you guys aren't tax loss harvesting the way a traditional 0:46:34.760 --> 0:46:39.120 UM advisor would. You're you're running a very different portfolio 0:46:39.640 --> 0:46:43.680 for for a different audience. So your perspective is what 0:46:43.760 --> 0:46:45.920 does this mean to the companies that we may or 0:46:45.960 --> 0:46:48.200 may not own, and and how does it affect them 0:46:48.719 --> 0:46:52.759 relative to their competitors? Is that a fair statement? Yeah? 0:46:52.760 --> 0:46:54.560 I think that's a that's a fair statement. Again, we 0:46:54.840 --> 0:46:57.640 want to see as as Biden you know, institutes new policies, 0:46:57.680 --> 0:47:00.759 how that will affect corporations and frank we that goes 0:47:00.880 --> 0:47:04.239 you know beyond you know, tax policy, other types of policies, 0:47:04.280 --> 0:47:06.640 and so you know, if there's international policies that will 0:47:06.640 --> 0:47:10.200 affect trade or or any type of you know of 0:47:10.200 --> 0:47:13.319 of things that come out of Washington or Frankly, any 0:47:13.400 --> 0:47:15.960 any other government around the world. Given we are a 0:47:16.000 --> 0:47:18.680 global organization, you know, we're gonna attempt to take that 0:47:18.719 --> 0:47:22.200 into account, um, to try to understand it, understand what 0:47:22.239 --> 0:47:25.320 the ramifications are two companies and being able to position 0:47:25.360 --> 0:47:28.319 our portfolios accordingly. And that's that's you know, we do 0:47:28.360 --> 0:47:31.239 that whether it's a regulatory issue or an event that 0:47:31.280 --> 0:47:35.520 we talked about again. Our ability to adapt and understand 0:47:35.560 --> 0:47:38.200 what's going on in markets, what's going to affect companies 0:47:38.239 --> 0:47:41.160 or particular asset classes is really you know, one of 0:47:41.200 --> 0:47:45.000 the fun parts of the job as being a quantitative investor. Huh, 0:47:45.200 --> 0:47:47.480 what what are other fun parts of the job? What 0:47:47.480 --> 0:47:50.799 what do you enjoy doing most? Um, as presidents of 0:47:50.800 --> 0:47:56.200 world want so, I will tell you I've had such 0:47:56.200 --> 0:48:01.800 a great time of of walking out of meetings action steps. Uh, 0:48:01.840 --> 0:48:05.880 it's been you know, seeing seeing people intellectually stimulated around 0:48:06.120 --> 0:48:07.640 you know again where a lot of it is on 0:48:07.719 --> 0:48:10.080 zoom and so you know, we sit there and and 0:48:10.120 --> 0:48:13.919 just you know, watching how people dialogue has just been 0:48:14.320 --> 0:48:17.319 you know, so incredibly exhilarating. Um. You know a lot 0:48:17.320 --> 0:48:20.200 of the great ideas and you know, watching how respectful 0:48:20.239 --> 0:48:22.840 people heard of each other and challenging them in in 0:48:23.080 --> 0:48:27.319 thoughtful ways and almost hearing them think, uh, you know 0:48:27.600 --> 0:48:30.239 right in real time. Is it's just been been incredible. 0:48:30.719 --> 0:48:33.680 Uh in terms of uh, you know, the the organization, 0:48:33.760 --> 0:48:37.920 it's it's just highly productive, highly collaborative. Um, there's just 0:48:38.320 --> 0:48:40.759 a lot of great decision making that goes on. We 0:48:40.840 --> 0:48:44.400 just recently did a research off site where we just 0:48:44.480 --> 0:48:48.160 walked through and have many, many decisions. We pride ourselves that, 0:48:48.480 --> 0:48:51.480 you know, we're very action oriented, and so you know, 0:48:51.520 --> 0:48:53.399 that's been you know, some of the fun things that 0:48:54.040 --> 0:48:56.120 that I've been fortunate enough to uh, you know, to 0:48:56.200 --> 0:48:58.720 observe in my in my six months. Let me jump 0:48:59.160 --> 0:49:02.840 to my favorite questions that I asked all of my guests, 0:49:02.920 --> 0:49:06.080 starting with what are you streaming these days? Give us 0:49:06.120 --> 0:49:09.560 your your favorite Netflix or Amazon Prime show or any 0:49:09.600 --> 0:49:16.080 podcast you might be listening to. What's keeping you entertained? Sure? Um, 0:49:16.120 --> 0:49:19.280 I would say been a fan of House of Cards. Um, 0:49:19.719 --> 0:49:23.279 My daughter and I watched Million Little Things. Um. Joe 0:49:23.360 --> 0:49:27.160 Rogan's interviews with Elon musk Are are pretty pretty impressive. 0:49:27.200 --> 0:49:29.360 And I would have to say, you know, one of 0:49:29.360 --> 0:49:32.600 my favorite videos is a four minute and thirteen second 0:49:33.080 --> 0:49:36.880 Jason Garrett speeches. He talks about one World Trade Center. 0:49:36.880 --> 0:49:39.440 It's just it's an amazing video that you know, all 0:49:39.440 --> 0:49:42.120 my friends, uh get a text from me on a 0:49:42.120 --> 0:49:45.640 pretty regular basis, just just level sets. It's a great video. 0:49:46.280 --> 0:49:49.879 H really interesting. Uh tell us about your mentors who 0:49:49.920 --> 0:49:55.040 helped to shape your career. Sure, I would say my 0:49:55.120 --> 0:49:58.920 dad had unbelievable work ethic. Um it was a six 0:49:59.000 --> 0:50:01.400 day a week guy. Um. One of my my first 0:50:01.440 --> 0:50:05.640 bosses was was a guy named Gustic Conomos, who unfortunately 0:50:05.680 --> 0:50:08.920 passed away at nine eleven. Um. But you know, was 0:50:08.920 --> 0:50:13.359 was was able to balance enormous credibility or industry credibility 0:50:13.840 --> 0:50:16.719 with a sense of humor. And uh, you know, us 0:50:16.800 --> 0:50:18.360 always used to tell me I may have taught you 0:50:18.440 --> 0:50:21.120 everything you know, but I didn't teach you everything I know. 0:50:21.600 --> 0:50:23.960 And I always always think that's a pretty funny, uh 0:50:24.239 --> 0:50:26.600 funny quote. But uh, you know, And and the last 0:50:26.600 --> 0:50:29.400 one I would say on the quant spaces two gentlemen 0:50:29.400 --> 0:50:32.400 and Bob Jones and Don Mulvehill. Bob was the founder 0:50:32.440 --> 0:50:35.640 of the g Sam uh you know chront equity business 0:50:35.680 --> 0:50:37.600 back in the day, and you know, taught me a 0:50:37.600 --> 0:50:39.960 lot and really helped shape my career and my interest 0:50:40.000 --> 0:50:43.160 in quantitative investing. And then Don was you know, an 0:50:43.160 --> 0:50:46.240 age old colleague and boss of mine that really taught 0:50:46.239 --> 0:50:50.080 me a tremendous amount about UM investing, in dealing with 0:50:50.160 --> 0:50:53.440 clients and you know to too great early role models 0:50:53.440 --> 0:50:57.719 that I had had in the industry quite quite interesting. 0:50:58.120 --> 0:51:00.600 Tell us about some books? What do you what are 0:51:00.600 --> 0:51:02.400 you some of your favorites and what are you reading 0:51:02.520 --> 0:51:07.840 right now? Sure? So, uh, some of my favorite especially 0:51:07.840 --> 0:51:11.360 since I had a decent amount of time between between 0:51:11.400 --> 0:51:14.200 taking on the role at at World quand UM. You know, 0:51:14.239 --> 0:51:16.560 I was able to read David Rubinstein's How to Lead, 0:51:16.600 --> 0:51:19.960 which I thought was just terrific. Um Sartin to Tella 0:51:20.040 --> 0:51:22.440 had the hit Refresh, which I thought was quite good. 0:51:22.880 --> 0:51:26.360 I was also able to read our books from our CEO, 0:51:26.560 --> 0:51:29.280 who has two good ones, Finding Alpha's and The Unrules, 0:51:29.280 --> 0:51:32.000 So I gotta plug those two. Those were quite quite 0:51:32.000 --> 0:51:34.920 good and just interesting ways of thinking. UM. And then 0:51:34.920 --> 0:51:36.799 the one I'm reading now, which I think is a 0:51:36.840 --> 0:51:40.839 pretty cool book. It's called Outrageous Good Fortune. It's about 0:51:40.840 --> 0:51:44.240 a guy named Michael Burke, UM football hero you penn 0:51:44.440 --> 0:51:49.520 c I agent overthrew Communist government um Ran Intelligence for 0:51:49.600 --> 0:51:55.799 Eastern Europe Ran Ringling Brothers Circus. He was the executive 0:51:55.840 --> 0:51:59.160 at TBS Sports, president of the Yankees, and president of MSG. 0:51:59.440 --> 0:52:01.880 So talk about a pretty packed life, but that books 0:52:02.080 --> 0:52:04.160 called outrageous good Fortune. I'm in the middle of that 0:52:04.280 --> 0:52:08.600 and it's, uh, it's pretty amazing, really really quite interesting. 0:52:09.400 --> 0:52:12.000 What sort of advice would you give to a recent 0:52:12.239 --> 0:52:16.680 college grad who was interested in pursuing a career in 0:52:16.880 --> 0:52:24.600 quantitative finance? UM, I would say to those that are 0:52:25.719 --> 0:52:29.480 uh their First of all, they're welcome. We'd love to 0:52:29.520 --> 0:52:34.000 see them, UM to enjoy the journey. UH, substantively network. 0:52:34.600 --> 0:52:36.719 I think you learned so much from asking a lot 0:52:36.719 --> 0:52:41.080 of questions about what people do and how they do it. UM. 0:52:41.239 --> 0:52:44.280 Be a sponge. UM. Surround yourself with some really smart 0:52:44.360 --> 0:52:48.160 people UM that are equally driven UM. And then you know, 0:52:48.160 --> 0:52:50.960 the last thing I would say, for particularly for Kuan investors, 0:52:51.719 --> 0:52:54.920 is you know, marry the how and the why. And 0:52:54.960 --> 0:52:56.359 what I mean by that is, you know a lot 0:52:56.400 --> 0:53:00.520 of people either have the correlation understanding or the causation 0:53:00.600 --> 0:53:05.360 understanding correlation and they understand the math behind it causation, 0:53:05.440 --> 0:53:09.120 they understand the practical effects. So it could work again. UM. 0:53:09.120 --> 0:53:12.840 Marrying those two I think really makes for UM, you know, 0:53:12.880 --> 0:53:17.719 a phenomenal quantitative investor. Uh, quite quite interesting. And our 0:53:17.800 --> 0:53:21.040 final question, what do you know about the world of 0:53:21.160 --> 0:53:26.040 quantitative investing in trading today that you wish you knew 0:53:26.560 --> 0:53:32.279 years ago when you were first starting out UM. But 0:53:32.320 --> 0:53:37.120 I would say, besides buying UM it was a monster beverage, 0:53:37.120 --> 0:53:39.880 which I think is up about six hundred thousand percent. 0:53:40.440 --> 0:53:44.040 The SMP is only a less than a thousand percent UM, 0:53:44.120 --> 0:53:46.880 and I would say, I would say, there's there's really 0:53:46.880 --> 0:53:49.640 nothing I would want to know in advance. And it 0:53:49.760 --> 0:53:52.800 might sound a little weird, but I think it spoils 0:53:52.800 --> 0:53:55.040 the excitement. I'm one of the great things about being 0:53:55.040 --> 0:53:58.440 in this quantitative business that really finance in general, is 0:53:58.520 --> 0:54:02.080 just the expert exploration and the quest for learning. That's 0:54:02.080 --> 0:54:04.560 something that has driven me, you know in my career 0:54:04.640 --> 0:54:08.480 that I've I've truly enjoyed and and knowing you know stuff, 0:54:08.640 --> 0:54:11.000 would you know what would kind of spoil that journey? 0:54:11.000 --> 0:54:13.440 And so, you know, I the hiccups that I've had 0:54:13.640 --> 0:54:16.719 across the around the years and and the successes I 0:54:16.760 --> 0:54:20.840 think have made the journey awesome. And I'd say respectfully, 0:54:20.840 --> 0:54:23.959 No thanks on on you know the other pieces, because 0:54:24.000 --> 0:54:26.640 it wouldn't have made the journey is fun. We have 0:54:26.800 --> 0:54:30.440 been speaking with Gary Kropovka. He is the president of 0:54:30.480 --> 0:54:34.839 World Quantz. If you enjoy this conversation, well please check 0:54:34.880 --> 0:54:39.200 out any of our previous almost four hundred prior conversations. 0:54:39.719 --> 0:54:43.560 You can find those at iTunes, Spotify, wherever you feed 0:54:43.600 --> 0:54:47.760 your podcast fix. We love your comments, feedback and suggestions 0:54:47.960 --> 0:54:51.800 right to us at m IB podcast at Bloomberg dot net. 0:54:52.239 --> 0:54:55.960 Sign up for my daily reads at ridoltz dot com. 0:54:56.080 --> 0:54:59.800 Check out my weekly column on Bloomberg dot com slash Opinion. 0:55:00.400 --> 0:55:04.240 Follow me on Twitter at Ritholtz. I would be remiss 0:55:04.280 --> 0:55:06.480 if I did not thank the crack team that helps 0:55:06.520 --> 0:55:10.560 put these conversations together each week. Nick Falco is my 0:55:10.680 --> 0:55:15.880 audio engineer. Michael Boyle is my producer. Attika Valbrunn is 0:55:15.920 --> 0:55:19.920 our project manager. Michael Batnick is my head of research. 0:55:20.680 --> 0:55:25.200 I'm Barry Ritholtz. You've been listening to Master's Business on 0:55:25.280 --> 0:55:26.280 Bloomberg Radio.