Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast.
Speaker 1: I'm Joe Wisenthal and I'm Tracy Hallaway. So, Tracy, it
Speaker 1: goes without saying, and we really don't need to uh
Speaker 1: be labor the point at all that from a market's perspective,
Speaker 1: the last year has been I guess unprecedented. Yeah, I
Speaker 1: think that's right when you say we don't need to
Speaker 1: belabor the point. Should I describe what we're talking about
Speaker 1: or should we just move on anyway? You know, it's
Speaker 1: it's just this crisis, this huge crash, this incredible rally
Speaker 1: that never seems to end in the middle of a
Speaker 1: pandemic and so forth. It's just like, there's no obvious,
Speaker 1: uh historical analogy to what we've just seen that I
Speaker 1: can think of. Well, I think what was really interesting
Speaker 1: about last year was that we basically saw an entire
Speaker 1: economic and to some extent, financial crisis and a recovery,
Speaker 1: so a sort of complete economic cycle all squeezed into
Speaker 1: less than a year. And if you think, I mean,
Speaker 1: the trajectory of everything was quite similar to the two
Speaker 1: thousand eight financial crisis. You have the sharp market sell
Speaker 1: off in March, and then you had the central banks
Speaker 1: come in and stabilize things, and then you had a
Speaker 1: slow recovery or a recovery in markets. But again, the
Speaker 1: big difference was that it all happened in the space
Speaker 1: of months versus years before. Yeah. No, I actually I
Speaker 1: think that's right. You could characterize two thousand and twenty
Speaker 1: as essentially a full cycle that really got compressed into
Speaker 1: the span of a few months early. Yeah, exactly. So anyway,
Speaker 1: it's still pretty unusual, even if even if you could
Speaker 1: sort of describe it using words that were familiar with
Speaker 1: it's pretty unusual. But what that means is, you know,
Speaker 1: for investors, obviously we have this incredible rally. Stocks are
Speaker 1: at all time high, but you know, I think a
Speaker 1: lot of people missed it. A lot of people throughout
Speaker 1: the summer saying, oh, we're going to get the second
Speaker 1: the second dip in the market that's coming in eight
Speaker 1: time soon. You talk to sort of wealthy investors and
Speaker 1: um sort of high net works, there was a lot
Speaker 1: of caution under exposure to the gains and so forth.
Speaker 1: So while the headlines were very impressive, I don't think
Speaker 1: there's any doubt that, you know, there probably aren't actually
Speaker 1: a lot of people that saw their portfolios really match
Speaker 1: or really you know, let's just say, I think there
Speaker 1: are probably a lot of people whose portfolios don't match
Speaker 1: the headline games. Yeah, I think that's right. And I
Speaker 1: think there's probably a sense in markets, or at least
Speaker 1: professional investors in markets, that what happened wasn't really what
Speaker 1: they expected or what they were necessarily prepared for. So
Speaker 1: we already mentioned that everything unfolded really really quickly. So
Speaker 1: even if you were well positioned going into March, you've
Speaker 1: taken a little bit of risk off the table, you
Speaker 1: might not have been expected expecting the markets to recover
Speaker 1: as quickly as they did. I think there's also the
Speaker 1: sense of dissatisfaction with what has rallied. I think a
Speaker 1: lot of people are not not upset, but I think
Speaker 1: there's a sense that the stupid stuff has gone up
Speaker 1: a lot more than some other things, which again, like
Speaker 1: that's the kind of thing that tends to upset professional investors. Right.
Speaker 1: In fact, that actually was one of the themes of
Speaker 1: which is that you know, like you know, the back
Speaker 1: of the spring, we got the we had the Virtual
Speaker 1: Buffet shareholder meeting. He was, like many people remarked that
Speaker 1: he was like very negative on the market in a
Speaker 1: way that he usually isn't. And then at the same
Speaker 1: time you had like the Dave Portnoy's of the world
Speaker 1: absolutely killing it in part by picking scrabble letters out
Speaker 1: of a scrabble tile is out of a box and
Speaker 1: picking stocks, and all these people are like, yeah, you know,
Speaker 1: I'm I'm not too busy these days. I'm gonna sign
Speaker 1: up our Robin Hood account making a fortune, you know,
Speaker 1: all kinds of confounding dynamics to make the market. You know,
Speaker 1: the market always is very efficient machine to driving people insane.
Speaker 1: But I think really took the cake at that. Yeah,
Speaker 1: I think that's exactly right. I've always said that. But
Speaker 1: the market is a great technology for humbling people, making
Speaker 1: a smart people feel h feel less smart. But anyway, yeah,
Speaker 1: you can be wrong every day. Yeah, I'm very excited
Speaker 1: about our guests. We're going to talk about some of
Speaker 1: the lessons learned from We're going to be speaking with
Speaker 1: Corey Hofstein. He has the c i O the asset
Speaker 1: management firm Newfound Research, really sort of active publisher of
Speaker 1: research publisher on Twitter talking about ideas in quantitative finance
Speaker 1: trend following various ideas such as that portfolio construction and
Speaker 1: a really interesting thread at the end of last year
Speaker 1: talking about essentially the costly lessons learned of what happens
Speaker 1: when you experience a market that is kind of basically
Speaker 1: unlike anything else before. So Corey, thank you very much
Speaker 1: for joining us, Thank you for having me here, really excited.
Speaker 1: What do you describe Newfound Research? What your general approaches,
Speaker 1: how you would describe it, and uh, yeah, like essentially
Speaker 1: the aims of your investment strategy when we say that
Speaker 1: Newfound Research is a quantitative asset management firm, So everything
Speaker 1: we do we try to focus on creating systematic investment strategies,
Speaker 1: but our predominant focus historically has been really on risk
Speaker 1: mitigation through diversification. But our view is that diversification is
Speaker 1: not just limited to what you invest in, but also
Speaker 1: how you make those investment decisions and when those decisions
Speaker 1: are made, and so we think better risk management is
Speaker 1: really possible through a greater breadth of diversification. Now, historically,
Speaker 1: for us, what that has meant is we've tried to
Speaker 1: play a more siloed role in investor portfolios by offering
Speaker 1: what we would consider to be resilient and robust. Trend
Speaker 1: following strategies predominantly focused on equity markets. So unlike most
Speaker 1: saying managed futures programs that will apply trend following strategies
Speaker 1: to commodities and currencies and rates and equities around the world,
Speaker 1: we really focused exclusively on the equity side of the
Speaker 1: equation because that's where we saw most investor risk in
Speaker 1: a traditional sixty portfolio. So, how did that work out
Speaker 1: for you in because you've been UM, You've been pretty
Speaker 1: vocal on Twitter about um poor performance last year? How
Speaker 1: exactly did that strategy fit into a year? And what
Speaker 1: went wrong? Well, So, so we won't we won't bury
Speaker 1: the lead here. It did not go well. But I
Speaker 1: think if we were to back up and say, how
Speaker 1: would we expect a trend following strategy to perform during
Speaker 1: one of the fastest market reversals in history, both from
Speaker 1: peak to trough and then trough to peak again, we
Speaker 1: generally wouldn't expect the trend following strategy to do very
Speaker 1: well in a in a fast reversal market. That's sort
Speaker 1: of the expectation going in. So when we walk away
Speaker 1: from the year and say, well, the trend following strategy
Speaker 1: didn't do well in I don't think, given how played out,
Speaker 1: that should be unexpected, but I do think it should
Speaker 1: cause us to pause and say, well, this type of
Speaker 1: strategy was really designed to help protect investors against meaningful drawdowns.
Speaker 1: We just saw a really meaningful drawdown and it didn't
Speaker 1: work particularly well. Are there lessons here that we need
Speaker 1: to think about? Has has market structure changed? Is there
Speaker 1: something we need to do differently in our portfolio? What
Speaker 1: is the next drawdown going to look like? I want
Speaker 1: to get into sort of like what you saw as
Speaker 1: the year progressed, but before we get to that specifically,
Speaker 1: and then of course the lessons from that, but before
Speaker 1: we get to that specifically. For listeners, how would you
Speaker 1: describe the theoretical basis for a trend following strategy, And
Speaker 1: whether it's in equities, whether it's in rates, currencies, commodities.
Speaker 1: Why is there theoretically premium to be harvested with strategies
Speaker 1: that are sort of built around following some measure of
Speaker 1: a trend? So I think there's really two primary arguments
Speaker 1: that are out there that could be supported. I think
Speaker 1: in many of the futures markets, there's an argument that
Speaker 1: trend followers are liquidity providers to hedgers, that ultimately hedgers
Speaker 1: are going to be trying to place trades that lock
Speaker 1: in their profit, and that trend followers are ultimately providing
Speaker 1: the liquidity to those players, and therefore, in providing that liquidity,
Speaker 1: they should earn a premium. So I think there's a
Speaker 1: reasonable argument there in the managed future space. I think
Speaker 1: the second argument that often comes around, and I certainly
Speaker 1: believe in this one, is that there are certain risk
Speaker 1: limits that firms tend to hit during periods of market stress.
Speaker 1: That market stress periods are just fundamentally different than normal
Speaker 1: market environments. And so what that means is that while
Speaker 1: markets may for the most part be a random walk,
Speaker 1: these non linear response functions that that firms have to make,
Speaker 1: that they have to cut risk, that they have to
Speaker 1: raise capital UH in certain market environments creates trends during
Speaker 1: periods of stress, and that they're very procyclical in nature.
Speaker 1: That as the market starts to sell off, firms are
Speaker 1: forced to de risk, which puts more downward pressure on
Speaker 1: markets and continues them to force the sell off UH.
Speaker 1: And so you get this sort of crisis trend type exposure.
Speaker 1: And that's ultimately what we're trying to exploit, particularly when
Speaker 1: it comes to trying to manage risk. So with that
Speaker 1: framework in mind, can you describe how you were positioned
Speaker 1: going into the big sell off in March and then
Speaker 1: how you started changing the portfolio. I'm assuming we started
Speaker 1: changing the portfolio or um the strategy, the systematic process
Speaker 1: that you were actually using as the month kind of unfolded. Absolutely,
Speaker 1: So as we went into March, what we really saw
Speaker 1: was that the majority of our trend signals remained positive
Speaker 1: late February. So what we're really looking at, just to
Speaker 1: be very clear for listeners, is we were looking at
Speaker 1: a cross section of different trend signals on US equity sectors.
Speaker 1: So that was really where the primary signals are coming
Speaker 1: from in terms of managing risk in our portfolio. And
Speaker 1: as we sort of went into late February, we started
Speaker 1: to see some sectors turn off, their trend signals turned negative.
Speaker 1: It really wasn't until say March thirteenth or fourteenth, that
Speaker 1: the majority of the trend signals turned off. And so
Speaker 1: for our portfolio, even if we implement those signals on
Speaker 1: a daily basis, ultimately, what it sort of looks like
Speaker 1: it was a dimmer switch that as the market started
Speaker 1: to roll over, we started decreasing our exposure to equities
Speaker 1: sort of ultimately minimize that exposure right around late March UM,
Speaker 1: so there was a buffer there. I should be very clear.
Speaker 1: I think our portfolio compared to the SMP five hundred,
Speaker 1: we had sort of reduced the draw down by about
Speaker 1: a thousand and fifteen hundred basis points, which was great
Speaker 1: for the time. The problem was, as the market rebounded
Speaker 1: very quickly, the trend types of trend following signals we
Speaker 1: were looking at which were a little bit slower in nature,
Speaker 1: looking for those sort of prolonged nine month type trends, Uh,
Speaker 1: we're slower to get back in. And so almost all
Speaker 1: of that draw down buffer that we had created was
Speaker 1: erased within a two or three week period, and the
Speaker 1: market kept ripping upwards, and by the time that the
Speaker 1: trends turned back positive in the portfolio repositioned back into equities,
Speaker 1: there was a meaningful delay in exposure. So do you
Speaker 1: think that you could have changed some of the parameters
Speaker 1: of the trends that you were following and maybe had
Speaker 1: a better performance, or was there something inherent in having
Speaker 1: this trend following strategy, the systematic process that made it
Speaker 1: difficult to be nimble in an exceptionally quick market sell
Speaker 1: off and then recovery. Well, I think that that's a
Speaker 1: really great question because there's sort of two sides of
Speaker 1: the answer. There's the what I'll say is the investment
Speaker 1: professional answer, which is with hindsights, certainly, and I think
Speaker 1: even in real time, we recognize that the nature of
Speaker 1: the draw down was extraordinary and very different than what
Speaker 1: we had seen in the past. Um, So that's gonna
Speaker 1: be my sort of portfolio manager answer, which is, yes,
Speaker 1: we were seeing things that made us think the way
Speaker 1: in which our trend following signals work this draw down
Speaker 1: may be very very different. If I sort of silo
Speaker 1: that and then say, well, what is my asset manager answer,
Speaker 1: which is I run an asset management firm, and I
Speaker 1: have clients who are allocating to me for a very
Speaker 1: specific style of exposure. They know that it's longer term
Speaker 1: trend following. I have a fund prospectus that says it's
Speaker 1: a certain type of trend following. Can I actually override
Speaker 1: that in an extreme situation? Well, yes, I do, as
Speaker 1: a PM have ultimate discretion, But there are a lot
Speaker 1: of hurdles that you need to overcome to really have
Speaker 1: the justification to do that, and you're gonna certainly have
Speaker 1: to answer to your clients if you're wrong, and so
Speaker 1: it becomes a difficult trade off to make. In many ways,
Speaker 1: you are prohibited from making large changes if you have
Speaker 1: painted yourself in a corner, both in the way you
Speaker 1: have legally described your mandate as well as the way
Speaker 1: you've communicated your mandate to your clients. This is this
Speaker 1: is super interesting because in theory, these signals that you've
Speaker 1: built your strategy off of it from years and years
Speaker 1: realms and realms of market data. To make the call that, say,
Speaker 1: you know, in a in a very fast moving market,
Speaker 1: to make the call to say, well, maybe these aren't
Speaker 1: working anymore is very bold either way, because, as you
Speaker 1: point out, you would look very bad if people invested
Speaker 1: their money with you because you had this sort of
Speaker 1: strict rule follow approach or the sort of general rule
Speaker 1: follow up approach and then you unplugged it and then
Speaker 1: they continue to work absolutely. And I think that's where
Speaker 1: there is this um potential problem between right the way
Speaker 1: you should manage a portfolio and isolation versus the way
Speaker 1: you're managing a portfolio when it's others, other people's money
Speaker 1: and you have potentially a legal obligation to them both
Speaker 1: in the way again, the way you describe your portfolio,
Speaker 1: or again if it's a it's a forty X mutual
Speaker 1: fund or something like that, your prospectus is going to
Speaker 1: be varying degrees of restrictions. And if you write an
Speaker 1: overly restrictive investment strategy summary, then it's really going to
Speaker 1: prohibit you from making changes even if you think you
Speaker 1: should make them. And what we ultimately found this year
Speaker 1: was when we did decide that there were changes we
Speaker 1: wanted to make, even enacting those changes and giving ourselves
Speaker 1: the flexibility took months and months and months of prospectus
Speaker 1: updates and operational updates to be able to implement those changes. So,
Speaker 1: you know, it's it's interesting you say that UM. You know,
Speaker 1: earlier you were talking we were talking about, okay, why
Speaker 1: does trend following work? And as you pointed out, during
Speaker 1: extreme periods, UM market has become less of a random
Speaker 1: walk and there are certain mandates that investors have of
Speaker 1: UM that you know, either catalyzed selling or for selling
Speaker 1: or prevent the sort of normal market reaction in what
Speaker 1: you just described about your own fund, just the mechanics
Speaker 1: of say, updating the perspective, the perspectives and the legal
Speaker 1: requirements around that. Are you a sort of microcosm of
Speaker 1: I guess why profits can be made at various times
Speaker 1: by different players in the market, because there's a range
Speaker 1: of players like yourself that in different times simply cannot
Speaker 1: you know, for various sort of structural regulatory things, client
Speaker 1: mandate things cannot change fast enough. I mean, is this
Speaker 1: sort of what we're talking about basically of why opportunities exist?
Speaker 1: I absolutely think so. I think when you look at
Speaker 1: different areas of the market, what you will find is
Speaker 1: that there are price and sensitive buyers and sellers, particularly
Speaker 1: around certain points. I would argue that our thesis played
Speaker 1: out exactly as we thought it would in March, in
Speaker 1: the sense that I leave that there was a true
Speaker 1: procyclical cascade of de risking that occurred across various market
Speaker 1: players that fed into each other in a very rapid
Speaker 1: and violent fashion. Our problem was that we were just
Speaker 1: expecting it to occur over a much slower time horizon
Speaker 1: than it did, and so the speed at which our
Speaker 1: trend models were going to adapt to the markets was
Speaker 1: more designed for a two thousand and two thousand two
Speaker 1: or two thousand eight type environment. To see the market
Speaker 1: unwind so quickly, and I will say our our trend models,
Speaker 1: which are dynamic in nature, did speed up very quickly.
Speaker 1: So I think we did a fairly reasonable job on
Speaker 1: helping mitigate the downside. But to then have central banks
Speaker 1: step in and unleash a playbook that took them two
Speaker 1: years to develop from two thousand seven to two thousand
Speaker 1: nine and unveil it in two weeks, well, you don't
Speaker 1: want to say this time is different, but certainly it
Speaker 1: is different. Right for them to be able to do
Speaker 1: that and have the confidence to do that and think
Speaker 1: about the policy implications from a narrative perspective and how
Speaker 1: that reinvigorates confidence within the markets, I think it really
Speaker 1: was different this time. I want to talk a little
Speaker 1: bit more about your market thesis, but before we do,
Speaker 1: can you I mean you have you have this overall
Speaker 1: view of the markets and this idea of a cascading
Speaker 1: effect depending on available liquidity and risk appetite, so you
Speaker 1: can see a bunch of players in the market kind
Speaker 1: of step away at precisely the moment you would argue
Speaker 1: that they probably need to be providing liquidity, and that
Speaker 1: kind of creates this bad feedback loop for the overall market.
Speaker 1: How did your models actually incorporate or where your models
Speaker 1: hindered by incorporating data from previous years? So the financial crisis,
Speaker 1: is that why they weren't able to adapt as fast?
Speaker 1: Or is that why you were sort of operating on
Speaker 1: a different time scale. I guess what I'm trying to
Speaker 1: get at is how much just having an investment strategy
Speaker 1: that's actually based on historical data, based on evidence, how
Speaker 1: much does that hinder you when it comes to big
Speaker 1: events that might be unexpected. I think there's really sort
Speaker 1: of two questions embedded in here. I think the first
Speaker 1: question is about the data itself, and I would argue
Speaker 1: for a type of strategy like ours, it's it's less
Speaker 1: about the data because the trend following strategy isn't necessarily
Speaker 1: going to incorporate information about two thousand eight. Where that
Speaker 1: information creeps in is in the design of the strategy. Right, So,
Speaker 1: as a PM, my personal memory of two thousand eight
Speaker 1: and environments like two thousand and other market environments that
Speaker 1: I've studied to say this is the sort of trend
Speaker 1: horizon that I think is going to be most efficient
Speaker 1: for trying to mitigate those types of draw downs without
Speaker 1: the foresight or expectation that the next draw down may
Speaker 1: be rapid, violent and only take a month or two
Speaker 1: to bounce back, right. And so I think it's not
Speaker 1: necessarily that it's in the data for a strategy like ours,
Speaker 1: but it is in the memory of the people who
Speaker 1: are designing the strategy. We can talk about quantitative and
Speaker 1: systematic all day long, but at the end of the day,
Speaker 1: there is a very human element that goes into designing
Speaker 1: these portfolios. Who are choosing what data is relevant and
Speaker 1: what sort of constraints or information they want to build
Speaker 1: into it. Philosophically, I mean this gets to one of
Speaker 1: the bigger questions is you know, what do you what
Speaker 1: do you do with the human element? Because you know,
Speaker 1: one of the most popular you know, it's a cliche,
Speaker 1: they always say, you know, your motions are a terrible guide.
Speaker 1: They tell you to do to buy at the time
Speaker 1: up to sell at the bottom. And one of the
Speaker 1: most popular strategies for a lot of people these days
Speaker 1: is a very simple algorithm when you have money by
Speaker 1: and never sell it. So basically this sort of this
Speaker 1: new dominant strategy is by every month by an ETF.
Speaker 1: Don't think about it, keep buying, keep buying, keep buying,
Speaker 1: keep buying. And so you know that's proven. That turned
Speaker 1: out to be a pretty good strategy in just absolutely
Speaker 1: whatever you do, don't sell. How do you think about, however,
Speaker 1: with more sophisticated strategies, the degree to which the human
Speaker 1: element either needs to be brought in or excised. Well,
Speaker 1: if you'll allow me a little bit of a philosophical tangent,
Speaker 1: i'll answer. You know, I've long thought about this difference
Speaker 1: between what's really the difference between a systematic manager and
Speaker 1: a discretionary manager, And I think if you sort of
Speaker 1: go towards the absurd and say, well, let's allow a
Speaker 1: systematic manager to follow around a discreptionary manager and just
Speaker 1: write down all the rules. Right, if you've ever looked
Speaker 1: at a discretionary manager's pitch book, there's always that upside
Speaker 1: down pyramid that talks about their universe and how they
Speaker 1: filter the securities they purchase, and so there is a process,
Speaker 1: and so that systematic manager could take that process and
Speaker 1: turn it into a set of rules and codify it
Speaker 1: and implement it, and then whenever those rules are broken,
Speaker 1: they could say to the discretionary manager, well, why do
Speaker 1: you break those rules? And Okay, there's a new rule,
Speaker 1: and they could just keep layering that in and ultimately,
Speaker 1: if you sort of take that to its absurd conclusion,
Speaker 1: what that really means is discretionary managers are systematic managers,
Speaker 1: with the big difference that their value adds should come
Speaker 1: in the idiosyncratic decisions that they make, that they are
Speaker 1: breaking the core rules for a truly unprecedented reason. And
Speaker 1: if you reverse that, I think you could also argue
Speaker 1: then that systematic managers are discretionary managers. But they're ultimately
Speaker 1: selling that optionality that they are foregoing ability to adapt
Speaker 1: their rules to an idiosyncratic environment. And the argument that
Speaker 1: they would make is the premium they're going to collect
Speaker 1: as they're avoiding the behavioral bias, and that there's an
Speaker 1: edge there. But the down side, the skew that they're
Speaker 1: they're really selling might be, well, this time is different
Speaker 1: and the rules are broken, and now they're foregoing that
Speaker 1: optionality to adapt. And so I think that's in my
Speaker 1: mind the ultimate distinction between them whether they're selling that
Speaker 1: optionality or retaining it. So I mentioned that I wanted
Speaker 1: to dig in a little bit to your markets thesis,
Speaker 1: your grand markets thesis before the big sell off in March.
Speaker 1: So you wrote this paper called Liquidity Cascades, and I
Speaker 1: read it today. It's really good, and it's sort of
Speaker 1: connects a lot of the different things that we've been
Speaker 1: thinking and discussing on all loots. But primarily it's about
Speaker 1: this self reflexive relationship between central banks, markets and risk
Speaker 1: taking behavior, and this idea that you can get feedback
Speaker 1: loops like deep in the bowels of the financial system,
Speaker 1: one of the obvious ones being um the treasury trains
Speaker 1: that blew up in March and then sort of fed
Speaker 1: into the equity market. Could you describe that pisis a
Speaker 1: little more or what inspired you to put that together
Speaker 1: in that way? Absolutely? So after March I took a
Speaker 1: step back and said, I think I'm fundamentally missing something
Speaker 1: in my understanding of markets. What I witnessed in March
Speaker 1: as we were watching markets day to day was what
Speaker 1: I thought were procyclical sell offs. That you were seeing
Speaker 1: a market that was being very heavily driven by hedging
Speaker 1: behavior extreme selling that did not seem connected to fundamentals
Speaker 1: anymore to me. And so as we exited March, I said,
Speaker 1: I think I'm missing something in my personal understanding, and
Speaker 1: so I went out and I tried to survey all
Speaker 1: the different narratives I could find about what was really
Speaker 1: driving markets today. So I should be very clear that
Speaker 1: what I wrote in the Liquidity Cascades piece is not,
Speaker 1: in my opinion, particularly novel research. I leaned very very
Speaker 1: heavily on the ideas of folks like Mike Green at Logica,
Speaker 1: or Chris cole Vaneer, Ben Sally, I know Ben Effort
Speaker 1: who has been on the podcast with you guys a
Speaker 1: few times before. Folks like that have identified a lot
Speaker 1: of these different features. I think if I brought anything
Speaker 1: new to the table, it was simply trying to say
Speaker 1: that these are not all These ideas that they are
Speaker 1: presenting are not necessarily independent of each other, and in
Speaker 1: fact may have a knock on influence into each other.
Speaker 1: So to take a step back, what was the ultimate
Speaker 1: conclusion of Liquidity Cascades. Well, the way I saw it
Speaker 1: was there were a few big narratives out there that
Speaker 1: all sort of played into each other, and they all
Speaker 1: played into each other in a big loop. And it's
Speaker 1: hard to know where the loop really started or ended,
Speaker 1: but I think sort of the easy place to begin
Speaker 1: is with the influence of central banks. The core idea
Speaker 1: being here that central banks have moved from referee to
Speaker 1: very active player in the market, and that by reducing
Speaker 1: the discount rate over time, they have forced investors up
Speaker 1: the risk curve to pursue yield. The reason that occurs
Speaker 1: is because ultimately a lot of investors have far dated
Speaker 1: fixed dollar liabilities, they cannot afford to earn a lower
Speaker 1: expected return, and so they have to keep increasing their risk.
Speaker 1: So someone who was pursuing a seven or seven and
Speaker 1: a half percent return twenty years ago, thirty years ago
Speaker 1: could have just invested in US treasuries. Today it has
Speaker 1: to be a portfolio filled with equity like securities and
Speaker 1: highly illiquid securities. And I'll come back to that illiquid part,
Speaker 1: But what it ultimately means is investors are bidding for
Speaker 1: riskier and riskier securities and moving into a more and
Speaker 1: more crowded trade. Now. Coincidental with that has been this
Speaker 1: sort of change in market micro structure. Both moved from
Speaker 1: active to passive, and this has really been Mike Green's
Speaker 1: argument around the influence of passive investing in markets, but
Speaker 1: also a migration from um active discretionary mutual funds to
Speaker 1: indexed e t f s which are predominantly traded via baskets.
Speaker 1: And then finally, one of the things that facilitated all
Speaker 1: that was the rise of concentrated high frequency trading. So
Speaker 1: you have a very large change in the way that
Speaker 1: liquidity is now being provided within markets. It's being provided
Speaker 1: by fewer and fewer players, and these high frequency traders
Speaker 1: are highly levered and capital constraint during periods of market stress.
Speaker 1: Final piece of the puzzle, at least the way I
Speaker 1: I've seen it, is that in moving up the risk curve,
Speaker 1: a lot of investors have tried to adopt what will
Speaker 1: call volatility contingent strategies. So these are going to be
Speaker 1: strategy that are risk managing in some way so or
Speaker 1: their position sizing is going to be based on market volatility.
Speaker 1: So this is gonna be things like risk parity strategies
Speaker 1: uh C T A S. I would argue the type
Speaker 1: of strategies that newfound has provided in the past fall
Speaker 1: into this camp UH target risk variable annuities, but even
Speaker 1: structured products out of Asia are sort of, in my opinion,
Speaker 1: a way that people are moving up the risk curve
Speaker 1: while touching into this volatility contingent space, explicit volatility selling,
Speaker 1: the adoption of covered calls among institutions in the US,
Speaker 1: And what this ultimately means is that as investors move
Speaker 1: up the risk curve, there's this perpetual bid for equities.
Speaker 1: You get this suppressed volatility. All of these volatility contingent
Speaker 1: strategies increase their leverage, which increases their bid for equities.
Speaker 1: So you get this sort of procyclical grind up within
Speaker 1: equity markets. And then when there's some sort of exogenous shock,
Speaker 1: they're all forced to unwind at the same time into
Speaker 1: a market that's already very fragile from a liquidity perspective,
Speaker 1: and so you get this very violent unwind that either
Speaker 1: sort of sees its way through, and I think we
Speaker 1: saw that in March. Sort of by the end of March,
Speaker 1: most of these players had fully liquidated their equity exposure,
Speaker 1: or simultaneously you get a very heavy handed UH step
Speaker 1: in by central banks around the world to try to
Speaker 1: return liquidity back to normal and in many ways the
Speaker 1: whole cycle has started anew m. So is the upshot
Speaker 1: of this? You know, so many players around the world
Speaker 1: forced to increase risk, lots of leverage, lots of capacity
Speaker 1: to buy equities. Is the upshot essentially by the dip?
Speaker 1: And I mean that sort of casually but also seriously,
Speaker 1: Like you know, people always tweet that there's like buying
Speaker 1: the dip, buying the dip. But in terms of like
Speaker 1: how one identifies alpha opportunities in a market with such
Speaker 1: a perpetual bid and such a sort of demand for assets,
Speaker 1: does that mean that like the sort of like biggest
Speaker 1: opportunity to exploit And obviously it worked out what it
Speaker 1: worked out, But in general that the players that provide
Speaker 1: liquidity when the entire system is demanding it are the
Speaker 1: people who can reap access returns. I think what this
Speaker 1: thesis would argue is that price moves within the market
Speaker 1: are becoming an increasing function of flow and not fundamentals
Speaker 1: to your to your point Joe about uh mean version
Speaker 1: within the markets. It's a really interesting paper that was
Speaker 1: published recently about the influence of target date funds. This
Speaker 1: is an industry that has silently grown from eight billion
Speaker 1: to two and a half trillion, And arguably this plays
Speaker 1: into the whole thesis of liquidity cascades as well, where
Speaker 1: the influence of central banks is forcing people up the
Speaker 1: risk curve. They can't hold money in savings accounts anymore,
Speaker 1: and so the market has become their vehicle of savings.
Speaker 1: And what this paper found was that how much the
Speaker 1: market trends, So this this measure of auto correlation in
Speaker 1: the market, there's a really significant break post two thousand
Speaker 1: eight as these target date funds became larger and larger
Speaker 1: that before the influence of target date funds, which are
Speaker 1: systematic rebalancers, every time the market goes up, they're going
Speaker 1: to sell the market exposure to buy to rebalance down.
Speaker 1: Every time the market goes down, they're gonna buy to
Speaker 1: increase their exposure. Prior to the real growth of target
Speaker 1: date funds, markets tended to trend more. After target date
Speaker 1: funds got really large, that seemed to disappear. Now that
Speaker 1: might just entirely be a coincidence, right, It's not to
Speaker 1: say it's causal um but I think what we're seeing
Speaker 1: is more and more circumstantial evidence like that that as
Speaker 1: in there's more of these sort of price and sensitive
Speaker 1: systematic strategies that are all existing in the market today,
Speaker 1: they're having impacts that are no longer fundamentally related. They're
Speaker 1: purely flow related, and they're having knock on influence into
Speaker 1: how securities are being priced. So this is what I've
Speaker 1: called the flows before pros dynamic earlier, and I think
Speaker 1: it gets to some of what we were discussed. Yeah,
Speaker 1: I did, you can look for it on my Miscope,
Speaker 1: that's really good. I like that flows before pros, thank you.
Speaker 1: But I think it actually gets to one of the
Speaker 1: reasons why a lot of professional investment managers seem to
Speaker 1: be so angry at the moment or disgruntled in some way.
Speaker 1: Up core, you are by no means disgruntled. You're very
Speaker 1: calm and explaining all of this in a very rational manner.
Speaker 1: But I think there is a lot of you know,
Speaker 1: you see a lot of commentary going, oh, the Fed's
Speaker 1: just inflating asset prices. It's creating this massive bubble. Uh,
Speaker 1: you can't generate alpha anymore. There's no point in making
Speaker 1: rational investment decisions because everything is dictated by momentum. So
Speaker 1: I guess the big question is what does the dynamic
Speaker 1: that you just laid out actually mean for the relationship
Speaker 1: between the Federal Reserve and the market. Can the market
Speaker 1: stand on its own without a central bank back stop? Well,
Speaker 1: my my thesis would be that the central bank has
Speaker 1: put itself in a place where markets in the real
Speaker 1: economy have become more tightly lengked than ever before via
Speaker 1: the wealth effect. That as investors are forced up the
Speaker 1: risk curve, as they're forced to put more and more
Speaker 1: in their of their savings into markets, that volatile markets
Speaker 1: have a very real knock on impact into the way
Speaker 1: consumers are going to spend. And so I think it's
Speaker 1: very hard for central banks to extract themselves for markets
Speaker 1: in a rapid fashion for that reason, because they can't
Speaker 1: just magically raise rates back to a reasonable level whereby
Speaker 1: investors could have a real rate of savings in a
Speaker 1: bank savings account without causing huge disruption. And so I
Speaker 1: think this is going to have to be a very
Speaker 1: slow unwind for central banks. To your point, though, my
Speaker 1: view is, look, ultimately we're I can't control the field,
Speaker 1: I can't control the game I'm playing, and I just
Speaker 1: have to play the game. And so for us, it's
Speaker 1: not to be angry about what central banks are or
Speaker 1: are not doing. I think there's both plenty of qualitative
Speaker 1: and quantitative evidence that tail risk has increased over time.
Speaker 1: If you simply plot a measure of tail risk in
Speaker 1: the SMP five hundred of weekly SMP five hundred returns,
Speaker 1: it has very steadily climbed over the last thirty years, UH,
Speaker 1: jumping in two thousand eight, but continuing to climb through
Speaker 1: the two tents. So I think there's an argument markets
Speaker 1: are moving further faster. Uh. They are. You're seeing more
Speaker 1: greater extremes with greater frequency. But that's the environment we're in.
Speaker 1: So what we ultimately chose to do this year, Let's say, look,
Speaker 1: we we think the type of trend following approach that
Speaker 1: we were using may not work in this market regime,
Speaker 1: and so we need to introduce different features UM into
Speaker 1: the portfolio, not only diversify the way in which we're
Speaker 1: managing risk beyond just trend following, to include things like
Speaker 1: UM convexity on the downside with put options UH, stylistic
Speaker 1: tilts with inequities themselves, and overlay to bond futures to
Speaker 1: try to capture that flight to safety premium but on
Speaker 1: the upside as well, we're just going to lean into
Speaker 1: the momentum in many ways, we're going to create some
Speaker 1: upside convexity using options to try to benefit from the
Speaker 1: same gamma that a lot of these retail option investors
Speaker 1: are benefiting from. If if that's what's going on in markets,
Speaker 1: then our job is to play the hand we're dealt.
Speaker 1: Speaking of, um, the world getting tail riskier. One of
Speaker 1: the I like following Tracy on Twitter because she always
Speaker 1: informs us when events happen in the market that are
Speaker 1: only supposed to happen one every two million years, according
Speaker 1: to the math, happened multiple times in a cycle. You're
Speaker 1: you're always on top of that one, Tracy. I only
Speaker 1: do it so that people can have an opportunity to
Speaker 1: show that they've read to Leb's books. Everyone likes to
Speaker 1: do that, right, Well, according to black Swan, Yeah, you're
Speaker 1: it's really a public service. Okay, Um, oh god, you're
Speaker 1: gonna want to get to live on, aren't you? I
Speaker 1: can tell all right. Um, here's my other question. So,
Speaker 1: if we think that the world is becoming more tail riskier,
Speaker 1: and if we think that market stresses are becoming more important,
Speaker 1: for the FED. Is there an opportunity in investing in
Speaker 1: identifying potential pressure points in the market and actually exploiting
Speaker 1: them on the assumption that if they blow up, the
Speaker 1: central bank is going to have to come in and
Speaker 1: rescue the system. I mean this kind of goes back
Speaker 1: to Joe's point. Is the conclusion just by the dip,
Speaker 1: but in a slightly more I guess sophisticated way, is
Speaker 1: the conclusion, try to find the weak points in the
Speaker 1: financial system, arbitrage opportunities, free money basically, and get as
Speaker 1: much as you can out of it. I think the
Speaker 1: way we've tried to attack this problem is almost thinking
Speaker 1: about it as a game of musical chairs. I certainly
Speaker 1: think that there are players out there who can survey
Speaker 1: the landscape and try to identify those fault lines and
Speaker 1: position themselves on it. I guess it's largely been my
Speaker 1: view that that is very, very difficult, because truly exogenous
Speaker 1: shock is going to be something that is going to
Speaker 1: be sort of unknown. I think, you know COVID nineteen.
Speaker 1: I think a lot of us were scratching our heads
Speaker 1: in February why it wasn't impacting markets more and maybe
Speaker 1: this liquidity cascades. Answer is exactly why, because markets were
Speaker 1: being flow driven, not fundamental driven in February, uh, and
Speaker 1: then we saw the reverse in March. But ultimately, I
Speaker 1: think it's not so much a question of what's going
Speaker 1: to take the market down versus if we just know
Speaker 1: the market is going to move further faster, both on
Speaker 1: the melt up and the meltdown, how do you reposition
Speaker 1: a traditionally allocated portfolio for that? I would argue, if
Speaker 1: the game of musical chairs is playing, we need to
Speaker 1: lean into the momentum. We need to lean into the
Speaker 1: upside convexity, but not leave ourselves naked on the downside.
Speaker 1: And I think that's the important point. It's trying to
Speaker 1: create this sort of asymmetric profile where we can harvest
Speaker 1: that edge and recognize that flows really are potentially changing markets.
Speaker 1: I saw a wonderful little note this morning on Twitter
Speaker 1: where an analyst had demonstrated that YESG funds and green funds,
Speaker 1: which have had phenomen coominal performance year to date and
Speaker 1: we're only I don't know halfway through January, if you
Speaker 1: segmented them between funds that had just a few holdings
Speaker 1: versus more diversified funds, the performance was very, very different,
Speaker 1: and it seemed to be driven almost entirely by flows.
Speaker 1: That large flows into these highly concentrated funds were actually
Speaker 1: driving up the prices of the underlying securities. And so
Speaker 1: if we think this is a flow driven market, if
Speaker 1: we think that there's an outsize influence of retail investors
Speaker 1: who are speculating using options with Robin Hood, I can
Speaker 1: either sit on the sidelines and and cross my arms
Speaker 1: and be upset about it, or I can take that
Speaker 1: into account, try to recognize where I think flow is
Speaker 1: potentially influencing prices, try to maximize our exposure to that momentum,
Speaker 1: and then again make sure that I'm I'm hedged on
Speaker 1: the downside. Let me ask you, you know, uh trade
Speaker 1: As Tracy said, you know, some investors they do seem
Speaker 1: to get angry and they go on TV and wind
Speaker 1: about the fad. You don't do that at all. And
Speaker 1: that was one of the reasons I want to chat
Speaker 1: with you, just because of you know, how sort of
Speaker 1: like transparent open you are, and you're talking about lessons
Speaker 1: learned in UM. It's just like it's extremely refreshing. Uh,
Speaker 1: it's much more useful than uh and some of the
Speaker 1: other stuff out there. What is the conversation like with
Speaker 1: clients in terms of how you're sort of explaining how
Speaker 1: you're incorporating these new ideas, and also, you know you're
Speaker 1: you're sort of point your point about how a true
Speaker 1: systemic strategy is selling something of a call option. You're
Speaker 1: diminishing some of that optionality for the purpose of sort
Speaker 1: of taking human human emotion out of it. How are
Speaker 1: you thinking about that going forward? Because may not be
Speaker 1: the last time where you sort of identify that certain
Speaker 1: rules aren't working in real time as much as you
Speaker 1: expected they would. So how are you thinking and sort
Speaker 1: of the long term strategy and your long term career
Speaker 1: approach about the role of flexibility and maintaining that. I'll
Speaker 1: start by saying, I appreciate the kind words my wife
Speaker 1: will tell you. I wine plenty, so's I'm just taking
Speaker 1: it out in a different avenue. So as it relates
Speaker 1: to client conversations, I do think it really all is
Speaker 1: going to depend upon your relationship with your clients. I
Speaker 1: think we have great relationships with our clients. We work
Speaker 1: very hard at that. We worked very hard at constant communication,
Speaker 1: and so for us. The process of transition this year
Speaker 1: was not I won't say it wasn't unexpected. We were
Speaker 1: in contact with our clients and stakeholders the entire process
Speaker 1: of the research we were doing and sharing with them
Speaker 1: what we were finding and the questions we were asking.
Speaker 1: And it's hard to be that transparent it right, this
Speaker 1: is an industry where confidence really does sell. Hubris Cells, Um,
Speaker 1: you're the only one on Twitter that didn't gain a
Speaker 1: last year. Well that's true, that is true. But if
Speaker 1: if Hubris Cells, I would hope that humility ultimately survives.
Speaker 1: And so my view is that if we can have
Speaker 1: that conversation, that hard but transparent conversation with our clients,
Speaker 1: they're either going to say, look, I bought you for
Speaker 1: a particular position in my portfolio. I wanted you to
Speaker 1: fill that position. You're changing and therefore I I no
Speaker 1: longer want to allocate to you, which I think is
Speaker 1: totally fine. Right. If they wanted an intermediate term trend
Speaker 1: follower and we're not going to do that anymore, then
Speaker 1: I think from their portfolio composition, they do need to
Speaker 1: find another manager. But for other clients who are saying, look,
Speaker 1: I was really just trying to allocate to you for
Speaker 1: resilient equity exposure. If you think market structure has changed
Speaker 1: and you need a to change your process to increase
Speaker 1: the amount of diversifiers are holding in your portfolio to
Speaker 1: adapt to this new market environment, well that's what we
Speaker 1: ultimately are hiring you to do. So please give yourself
Speaker 1: the flexibility, Please come back to us when you think
Speaker 1: you have the solution. And so it really I think
Speaker 1: if you have a good relationship with your clients, this
Speaker 1: is something that you can make that transition over time.
Speaker 1: As it relates to the role of discretion I think
Speaker 1: this is a really interesting one. I will say the
Speaker 1: market trend within investing over the last decade has been
Speaker 1: towards greater and greater, greater and greater pushed towards systematic strategies.
Speaker 1: We've seen it through the adoption of smart Beta. We've
Speaker 1: seen it as people move away from traditional discretionary, especially
Speaker 1: within equities, and so I continue to get pushed back
Speaker 1: both among prospects as well as clients of US adopting
Speaker 1: any discretionary To be honest that the question is how
Speaker 1: are you going to make this systematic? I think what
Speaker 1: is interesting is I think there's certain areas where I
Speaker 1: will continue to be systematic. I think within our stylistic
Speaker 1: tilts of equities, um, momentum exposure, defensive styles that we
Speaker 1: implement UM. So whether that's quality tilts or UH statistical
Speaker 1: measures a risk like low ball or low bait up,
Speaker 1: those will continue I think to be systematic because I
Speaker 1: haven't seen a lot of evidence that we can add
Speaker 1: a lot of value. On the discretionary side, where I
Speaker 1: think it's harder to be systematic, where we've given ourselves
Speaker 1: more flexibility and being discretionary is in those types of
Speaker 1: positions that are going to have a very strong path dependency. So,
Speaker 1: for example, are options that we hold a ladder of,
Speaker 1: say out of the money call options and out of
Speaker 1: the money put options. When you want to monetize those
Speaker 1: positions is going to be very very path dependent on
Speaker 1: the nature of the type of draw down that you're seeing.
Speaker 1: And so you can try to enumerate all the rules
Speaker 1: in a systematic manner, but I think ultimately at the
Speaker 1: end of the day, you just end up with this
Speaker 1: sort of infinite long list versus having some sort of
Speaker 1: ad hoc you know, or maybe some rules of thumb
Speaker 1: about when you might want to monetize, but recognizing you're
Speaker 1: gonna need a little bit more discretion in those types
Speaker 1: of market environments because those situations can change rapidly. Liquidity
Speaker 1: can change rapidly. You don't want to just lock yourself
Speaker 1: into making a decision beforehand without giving yourself a little
Speaker 1: bit of flexibility to recognize how how environments are changing. Corey,
Speaker 1: that was great. You do such a good clear job
Speaker 1: of explaining this, and I really appreciate you coming up well.
Speaker 1: Thank you so much for having me, and you didn't
Speaker 1: whine about the FED at all. I can if you
Speaker 1: want me to next next when we do the follow up,
Speaker 1: when they change the rules again next year, then we'll
Speaker 1: have you back for that. But no, that was really great.
Speaker 1: It's so so clear and helpful, and I learned a lot.
Speaker 1: Good luck. Thanks, Cory. That was really good. Corey is great.
Speaker 1: It is super clear. You know, like one thing I
Speaker 1: kept thinking back to. It's like when we first you know,
Speaker 1: when I was thinking about this episode, I was thinking
Speaker 1: about it, Okay, this is gonna be talking about quantitative stuff,
Speaker 1: of the challenge of quantum investing, and it is. But
Speaker 1: it's interesting how many conversations come back to this point
Speaker 1: about the degree to which the FED is sort of
Speaker 1: in this corner where they're the only player in the
Speaker 1: game and everyone has to buy assets, and how linked
Speaker 1: the real economy is to financial markets. It's such a
Speaker 1: recurring theme of so many of the guests we talked
Speaker 1: to from all all different perspective, right, this idea that
Speaker 1: you have the central bank suppressing volatility, which then leads
Speaker 1: to risk taking, which leads to further suppression of volatility
Speaker 1: until something kind of um gets knocked out of whack
Speaker 1: in the system, and then you get stresses, and then
Speaker 1: they kind of cascade in the opposite direction. You get
Speaker 1: sell off, you get a big burst of volatility, and
Speaker 1: then the central bank comes in, pours cold water on
Speaker 1: whatever fire has set the whole thing off, and then
Speaker 1: the cycle begins again. I think that's definitely a theme
Speaker 1: that's come up in a bunch of our conversations. But
Speaker 1: I'm thinking of a couple right now, Chris Cole and
Speaker 1: Ben Effort, which of course Corey mentioned as an inspiration
Speaker 1: for his Liquidity Cascades paper, but also, yeah, I mean
Speaker 1: all of those, and then also I'm thinking like uh,
Speaker 1: stream of us to Vedanta and Paul McCulley and like,
Speaker 1: how much of this situation where the FED is the
Speaker 1: only game in town is downstream from the fact that
Speaker 1: economic policies deprive the private sector of the income it
Speaker 1: needs to have a sustainable economy, and so therefore you
Speaker 1: end up with this situation where so many people's fortunes
Speaker 1: are not really linked to GDP per se, but to
Speaker 1: asset markets specifically. So it's like, there is like this
Speaker 1: weird There are tons of guests that we talked to
Speaker 1: last year that all sort of like talked about this
Speaker 1: same phenomenon. I don't know what he's going with that.
Speaker 1: It's just it always seems to come back to this phenomenon,
Speaker 1: regardless of the sort of perspective that the person is
Speaker 1: coming from. Now, I think that's a big deal for
Speaker 1: the way the world act. That's another one who's sort
Speaker 1: of in that. Yeah, yeah, I mean it's a big deal.
Speaker 1: And but I I think one of the reasons it's
Speaker 1: important is because, well, first of all, it deals with
Speaker 1: the gap between the reality of the economy and what's
Speaker 1: happening in markets, which we've seen a lot of people
Speaker 1: complain about last year. But it also explains why there's
Speaker 1: the sense of um again, dissatisfaction both among financial professionals,
Speaker 1: but also between people who are set out of the
Speaker 1: stock market rally versus people who are included in it.
Speaker 1: Or you know, this idea of the K shaped recovery
Speaker 1: in I think that disconnects, you know, Yeah, go ahead, No,
Speaker 1: I was just gonna say, it's interesting, there's something I
Speaker 1: meant to bring up with Corey. But you know, it's
Speaker 1: their signals were obviously for a long time after March,
Speaker 1: obviously not telling them to get back into the markets aggressively.
Speaker 1: But I think if you looked at a lot of
Speaker 1: like non systemic investors, you have the same thing. I
Speaker 1: remember talking to a someone at a broker dealer this
Speaker 1: summer whose clients were mostly high net worth and family offices,
Speaker 1: and he's like, everything, this is probably May or June,
Speaker 1: and he's like, every single person I know is missing
Speaker 1: the rally to some extent, Like everyone is under invested here.
Speaker 1: And remember, there was just this general disbelief that amid
Speaker 1: such an economic downturn, the market could be railing this much.
Speaker 1: And so whether it's like people on a purely systemic
Speaker 1: basis or just people going with their gut or whatever.
Speaker 1: Lots of people had some sort of mitigating thing keeping
Speaker 1: them out of the big rally. Well, so this gets
Speaker 1: back to the flows versus prose phenomenon, which is that
Speaker 1: if the entire market is moving based on momentum and inflows,
Speaker 1: then the retail trader, you know, the guy sitting in
Speaker 1: his basement who's reading the Reddit forums and looking at
Speaker 1: a bunch of meme stocks, he might have a better
Speaker 1: sense of those inflows and momentum than a lot of
Speaker 1: professional investors do. Wow. As a very very provocative statement
Speaker 1: to end, I don't know what to say, but let's
Speaker 1: leave it there. Okay, it's late at night, maybe we
Speaker 1: should end it. Okay, very provocative. Yeah, all right. This
Speaker 1: has been another episode of the Odd Lots Podcast. I'm
Speaker 1: Tracy Alloway. You can follow me on Twitter at Tracy Alloway.
Speaker 1: And I'm Joe Wisenthal. You can follow me on Twitter
Speaker 1: at the Stalwart. And you should definitely follow our guests
Speaker 1: on Twitter. Corey Hofstein he's at Sea Hofstein Fountain Insights.
Speaker 1: You heard just now extremely clear. Also check out all
Speaker 1: of his research at I Think Newfound. Very provocative stuff.
Speaker 1: Follow our producer Laura Carlson. She's at Laura M. Carlson.
Speaker 1: Follow the Bloomberg head of podcast Francesco Levi at Francesca Today,
Speaker 1: and check out all of our podcasts at Bloomberg under
Speaker 1: the handle at podcasts. Thanks for listening.