WEBVTT - Interview With John Roque: Masters in Business (Audio) 0:00:00.120 --> 0:00:03.199 Brought to you by Bank of America Merrill Lynch, committed 0:00:03.240 --> 0:00:06.280 to bringing higher finance to lower carbon named the most 0:00:06.320 --> 0:00:10.280 innovative investment bank for climate change and sustainability by the Banker. 0:00:10.600 --> 0:00:13.920 That's the power of Global Connections. Bank of America North 0:00:13.960 --> 0:00:19.560 America member f D i C. This is Masters in 0:00:19.640 --> 0:00:23.680 Business with Barry Ridholts on Bloomberg Radio this week on 0:00:23.720 --> 0:00:27.840 the podcast, I have someone I've actually followed his work 0:00:27.920 --> 0:00:31.520 for many many years. His name is John Roke, and 0:00:31.800 --> 0:00:36.600 he is a technician extraordinaire. Uh. He is one of 0:00:36.640 --> 0:00:41.560 those technical folks that other technicians talk about in hushed 0:00:41.560 --> 0:00:47.920 and reverent tones. You will find him to be uh straightforward, humble, 0:00:48.400 --> 0:00:52.160 uh blunt and how he describes what he what he does. 0:00:53.320 --> 0:00:57.160 If you're looking for somebody who has worked for George 0:00:57.160 --> 0:01:01.160 Soros and worked for other storage shops to be arrogant 0:01:01.360 --> 0:01:04.920 and uh suffer from a big head, this is not 0:01:05.120 --> 0:01:09.000 the guy uh uh that exhibits any of that. He 0:01:09.280 --> 0:01:13.680 is uh someone who um not only has worked at 0:01:13.720 --> 0:01:18.280 places like uh Lehman Brothers and and Sorrows Funds Management, 0:01:18.680 --> 0:01:23.920 but has constantly improved his craft and constantly raised his 0:01:23.959 --> 0:01:28.000 own skill level and reputation within the industry UM and 0:01:28.160 --> 0:01:32.399 is really insightful and really knowledgeable about just about everything 0:01:32.440 --> 0:01:37.400 related to technical analysis. So if you were all interested 0:01:37.400 --> 0:01:40.880 in charts, in in investing, in trading, if you want 0:01:40.920 --> 0:01:43.720 to know how some of the sausage is made on 0:01:43.760 --> 0:01:47.040 the technical side, UH, you can't do much better than 0:01:47.760 --> 0:01:52.760 John Rokee. So, with no further ado, my conversation with 0:01:52.880 --> 0:01:59.000 John Roke. This is Masters in Business with Barry Ridholtz 0:01:59.040 --> 0:02:03.559 on Boomberg Video. My special guest today is John Roke. 0:02:03.920 --> 0:02:08.440 He is a technician extraordinaire and spent the first twenty 0:02:08.440 --> 0:02:11.760 one years of his career as a south side analyst 0:02:12.240 --> 0:02:16.320 before being recruited to the buy side by UH George 0:02:16.320 --> 0:02:20.000 Soros UH and his hedge funds UH. He spent five 0:02:20.080 --> 0:02:23.399 years at Lehman Brothers, about a decade at the Texas 0:02:23.440 --> 0:02:27.280 BLI Schroeder, a few years at w JB Capital before 0:02:27.320 --> 0:02:32.480 he ended up with Soros. He is now let's call it, 0:02:32.560 --> 0:02:37.160 managing director and chief market strategist at a sorrow seated 0:02:37.200 --> 0:02:42.120 hedge fund called Key Square Capital Management. John Roke, Welcome 0:02:42.160 --> 0:02:44.640 to Bloomberg. Thanks Barry. Pleasure to be here. So you 0:02:44.680 --> 0:02:47.360 and I know each other for for some time. I 0:02:47.400 --> 0:02:51.840 was always a fan of getting your research. UM, let's 0:02:51.919 --> 0:02:54.239 talk a little bit about what you do and how 0:02:54.320 --> 0:02:57.280 you do it. H you were on the South Side 0:02:57.320 --> 0:03:01.720 for over twenty years. Most of what I know about 0:03:01.720 --> 0:03:05.440 your work is that you were U technician, a chart reader. 0:03:06.080 --> 0:03:08.360 Was that always your career? Did you start out as 0:03:08.360 --> 0:03:11.959 a technician or or how did you eventually evolved to that. 0:03:12.840 --> 0:03:16.920 I finished my NBA fort them University and now called 0:03:17.000 --> 0:03:21.000 the Gabelly School. Uh, And like anybody else who probably 0:03:21.000 --> 0:03:24.160 graduated either with an undergraduate degree in the mid eighties 0:03:24.240 --> 0:03:26.240 or an NBA in the early nineties, you probably wanted 0:03:26.240 --> 0:03:29.440 to work on Wall Street. I found it difficult going. 0:03:29.600 --> 0:03:32.040 I you know, walked around my resume back then, and 0:03:32.120 --> 0:03:34.040 there was very little security in the buildings, so you 0:03:34.040 --> 0:03:37.600 were able to go in and deliver just resume want 0:03:37.880 --> 0:03:39.600 it was. It was a great time. I got to 0:03:39.600 --> 0:03:43.640 meet the Sanford Bernstein just by doing that. Just happenstance. 0:03:43.920 --> 0:03:45.840 And there was an ad in the paper. Like guys 0:03:45.880 --> 0:03:47.320 of our age used to do. We used to look 0:03:47.320 --> 0:03:51.840 at what's in the classified correct and UH, there was 0:03:51.880 --> 0:03:55.680 a job for a an analyst position at Sappian Investment 0:03:55.680 --> 0:03:58.560 Research and place, New York. That's way back when. Uh. 0:03:58.720 --> 0:04:01.840 It certainly is Ken Sappian Uh and his former partner, 0:04:01.920 --> 0:04:04.440 Ken Smiling where top analysts on the street in the seventies, 0:04:04.520 --> 0:04:07.680 and uh he ran a boutique investment shop. I applied 0:04:07.720 --> 0:04:09.440 to him. I sent the resume, a cover letter and 0:04:09.440 --> 0:04:12.800 a copy of my thesis paper, and Ken was kind 0:04:12.920 --> 0:04:14.600 enough to hire me. So you you come out of 0:04:14.640 --> 0:04:16.560 school with an m b A, you start working for 0:04:16.600 --> 0:04:21.479 a boutique research firm. How does that morph into a CMT? 0:04:21.600 --> 0:04:24.119 How does that morph into technicals? Well, to be honest, 0:04:24.320 --> 0:04:25.880 I'm not a CMT, but I'll tell you how it 0:04:25.920 --> 0:04:29.599 morphed into technicals. So Ken saffian Um did a ton 0:04:29.640 --> 0:04:31.600 of economic work, but he also did a ton of 0:04:31.640 --> 0:04:34.839 technical work. In fact, he had a process in the 0:04:34.880 --> 0:04:38.560 late sixties seventies called the dual market principle, where he 0:04:38.560 --> 0:04:41.560 saw the market as being delineated between growth stocks and 0:04:41.600 --> 0:04:45.440 cyclical stocks at different points in an economic cycle. So 0:04:45.480 --> 0:04:48.159 he did a lot of cutting edge technical work, and 0:04:48.440 --> 0:04:52.680 um he allowed me to join in to maintain and 0:04:52.680 --> 0:04:56.320 and create and keep economic UH indicators as well as 0:04:56.360 --> 0:04:59.560 technical indicators. And I think it was sort of Um, 0:04:59.600 --> 0:05:01.359 you know he opened the kimono for lack of a 0:05:01.360 --> 0:05:02.960 better phrase, and I got to see a lot of things. 0:05:03.000 --> 0:05:06.920 I became very interested. So so how did that lead 0:05:06.960 --> 0:05:10.720 to chart? Well, every single day, I know this will 0:05:10.760 --> 0:05:13.960 sound really old school or or dinosaur like, at the 0:05:14.040 --> 0:05:15.800 end of the day, I would print out nine D 0:05:16.000 --> 0:05:18.479 prices from my bloomberg. There was one Bloomberg in the 0:05:18.480 --> 0:05:22.320 whole shop, and I would graph using pencil and a 0:05:22.440 --> 0:05:26.280 ruler and graph paper. Uh, the high low enclosing prices 0:05:26.279 --> 0:05:29.080 for nineties stocks for every day for four years. You 0:05:29.120 --> 0:05:31.839 are you are not the only technician who said that. 0:05:31.880 --> 0:05:36.080 We We've had from Jeff to graft to to Luisia Matta, 0:05:36.240 --> 0:05:40.800 to Paul Desmond to Ralph Akimpora. It seems that this 0:05:40.880 --> 0:05:45.120 generation and the previous generation of people all graft by 0:05:45.240 --> 0:05:47.480 hand in the early days. Well that was the only 0:05:47.480 --> 0:05:49.120 way to do it when it really came down to it. 0:05:49.600 --> 0:05:51.840 The Mansfield chart used to be delivered on a Saturday 0:05:51.880 --> 0:05:53.960 morning to your house, but they were through Thursday prices. 0:05:54.120 --> 0:05:56.720 Explain what that is? That's people so younguns aren't going 0:05:56.760 --> 0:05:59.600 to know. Mansfield was was out of New Jersey. I 0:05:59.600 --> 0:06:01.599 think it was Jersey City, and it was a subscription 0:06:01.680 --> 0:06:04.360 pricing and you sent in your check and you would 0:06:04.360 --> 0:06:07.920 get New York Stock Exchange or nasdac amex charts like 0:06:08.320 --> 0:06:11.039 Giant book would show it was Actually it was almost 0:06:11.080 --> 0:06:13.679 like loose leap paper that you could you could update stuff. 0:06:13.720 --> 0:06:16.039 You would flip through it and they would deliver it on. 0:06:18.279 --> 0:06:19.960 You could put it in a binder, but um, I 0:06:20.000 --> 0:06:21.680 would end up flipping through it, throwing out the ones 0:06:21.720 --> 0:06:23.800 I didn't want, keeping the ones I did, And it 0:06:23.880 --> 0:06:25.840 came and sell a fane paper and some guy would 0:06:25.880 --> 0:06:27.840 drop it off like your newspaper on a Saturday morning 0:06:27.839 --> 0:06:30.520 on your front stoop. If I recall they were located 0:06:30.560 --> 0:06:33.240 in Jersey City, so they could get to the New 0:06:33.320 --> 0:06:36.479 York City people quickly as opposed to where, you know, 0:06:36.520 --> 0:06:38.000 being on the other side of the country. They had 0:06:38.279 --> 0:06:40.600 printed and then drop it off in. It was an 0:06:40.600 --> 0:06:43.040 excellent service. The charts were easy to read. And uh, 0:06:43.200 --> 0:06:44.960 nobody had this sort of stuff at your home, right 0:06:45.000 --> 0:06:47.760 bloom By coming into your house was thin. But you 0:06:47.760 --> 0:06:49.600 didn't have the Internet, you didn't have the computing patter, 0:06:49.640 --> 0:06:52.640 you didn't have anything, right, So and then UH Investors 0:06:52.640 --> 0:06:55.400 Business Daily. You could buy chart books from them. They 0:06:55.440 --> 0:06:57.839 would also be delivered on a weekly basis. That sort 0:06:57.839 --> 0:07:00.520 of took Mansfield and and upgraded a little bit. Uh huh. 0:07:00.560 --> 0:07:02.119 But those were the only ways to do it, really, 0:07:02.320 --> 0:07:05.159 that was it. So at what point did you say, gee, 0:07:05.240 --> 0:07:07.520 I'm a pure technician. I'm not really looking at a 0:07:07.520 --> 0:07:12.640 whole lot else besides technicals. Well, when at Saffian Investment Research, 0:07:12.960 --> 0:07:14.920 I thought that doing it from a technical point of 0:07:15.000 --> 0:07:18.119 view allowed me to see a lot of things pretty 0:07:18.200 --> 0:07:21.400 dawn quickly, rather than focusing on one thing and being 0:07:21.480 --> 0:07:24.160 in depth. And I like the overview aspect of it. 0:07:25.000 --> 0:07:28.480 And at that point, although my thesis paper was on 0:07:28.560 --> 0:07:31.160 kind of peripherals and it was using you know, financial 0:07:31.160 --> 0:07:34.040 statement analysis, I was sort of wholly technical. And I've 0:07:34.040 --> 0:07:37.120 been wholly technical since ever since. So so let's talk 0:07:37.160 --> 0:07:40.720 about technicals a little bit. Um. What is it that 0:07:41.480 --> 0:07:46.400 charts actually measure and why does that work? I think 0:07:46.480 --> 0:07:53.080 charts measure the dynamic between buyers and sellers, supply and demand. 0:07:53.680 --> 0:07:57.000 Now you know you're you're you're a long time market participant, 0:07:57.280 --> 0:07:59.080 and you might say to me, well, John, for every 0:07:59.080 --> 0:08:01.280 buyer there has to be a seller, and I'd say, 0:08:01.320 --> 0:08:05.480 I agree, But technical analysis tells us who's more aggressive, 0:08:06.040 --> 0:08:08.480 the buyer or the seller. And I think that's a 0:08:08.600 --> 0:08:11.840 very important concept. So we might say, yeah, for every buyer, 0:08:11.880 --> 0:08:13.600 there's a seller. Yeah. But if I'm the buyer and 0:08:13.640 --> 0:08:15.200 I want to pay more for it because I really 0:08:15.200 --> 0:08:19.200 think it's going up, that is information that is readily available. 0:08:19.560 --> 0:08:22.360 There may not be a buyer seller at every price. 0:08:22.440 --> 0:08:25.520 That's correct. So that's what determined. That's correct. I mean, 0:08:25.680 --> 0:08:27.680 if you think about it this way, um, you know, 0:08:28.120 --> 0:08:30.320 you might say to me that I'm buying this stock 0:08:30.360 --> 0:08:34.560 because it's cheap, and and I'll say that's true, But 0:08:34.640 --> 0:08:37.480 it doesn't win because it stays cheap, right, It wins 0:08:37.520 --> 0:08:40.720 because by definition, it gets momentum and gets less cheap. 0:08:41.520 --> 0:08:43.800 And and just just because something is cheap doesn't mean 0:08:43.840 --> 0:08:47.080 it's not going to get cheaper. That's correct. I'm Barry Ridults. 0:08:47.360 --> 0:08:51.040 You're listening to Master's in Business on Bloomberg Radio. My 0:08:51.120 --> 0:08:55.200 special guest today is John Roke. He is the master 0:08:55.280 --> 0:08:59.080 technician who previously was working with George Soros. Now he 0:08:59.120 --> 0:09:03.440 works at a sorrow specked hedge fund called Key Square Capital. 0:09:03.880 --> 0:09:07.400 Let's talk a little bit about technicals, and I'm assuming 0:09:07.480 --> 0:09:14.120 the audience is fairly lay person. Explain exactly what technical 0:09:14.160 --> 0:09:18.079 analysis is for the lay person. I think technical analysis 0:09:18.200 --> 0:09:23.040 is about trend It is not about trading. There are 0:09:23.040 --> 0:09:25.439 some people who are really good at trading, but I'm not. 0:09:26.160 --> 0:09:29.040 And I think in the advent of machines at hyper 0:09:29.080 --> 0:09:33.560 speed um, the less we talk about trading, the the 0:09:33.679 --> 0:09:36.280 likely we're going to be more successful at our trend 0:09:36.400 --> 0:09:40.480 following discipline. So I think technicals are about trend. Trend 0:09:40.559 --> 0:09:43.440 is the most is the trend is the least in 0:09:43.480 --> 0:09:46.720 my opinion, understood investment concept, however, because it's very hard 0:09:46.760 --> 0:09:49.839 to identify. So let's let's let's go into trends a 0:09:49.920 --> 0:09:52.560 little bit. I was always taught a trend is you 0:09:52.559 --> 0:09:54.320 you can as if you can draw a straight line 0:09:54.360 --> 0:09:58.360 across three points, you have a trend. Is Is that oversimplifying? No, 0:09:58.440 --> 0:10:00.240 I don't think it's oversimplifying it at all. And how 0:10:00.240 --> 0:10:01.640 many people do you know in a business are willing 0:10:01.640 --> 0:10:04.200 to stick with that trend until it's finished, as long 0:10:04.240 --> 0:10:07.120 as it's going in the same right direction. Richard Russell 0:10:07.200 --> 0:10:08.959 said the most difficult thing in the business is to 0:10:09.000 --> 0:10:11.440 stick with the bull market the entire way through, and 0:10:11.480 --> 0:10:13.760 the second most difficult thing in the business is to 0:10:13.800 --> 0:10:16.240 stay out of a bear market the entire way through. 0:10:16.520 --> 0:10:19.080 So I'd say trend following is pretty darned difficult. Richard 0:10:19.160 --> 0:10:21.360 Russell was pretty ahead of the game with that one. 0:10:21.679 --> 0:10:23.360 So what do you think are some of the bigger 0:10:23.400 --> 0:10:29.200 misconceptions about charts and technical analysis. I think the misconceptions 0:10:29.200 --> 0:10:33.760 are that technical analysis sees all. It may be that 0:10:33.800 --> 0:10:37.400 it does, but no technical analysts sees all that's intriguing. 0:10:37.480 --> 0:10:42.400 So explain the difference between everything being there in price 0:10:42.600 --> 0:10:46.920 and not being able to recognize that from from the charts. Well, 0:10:46.960 --> 0:10:48.480 just to give you an example, when I was at 0:10:48.640 --> 0:10:52.760 Sorrows Fund Management, I surveyed, uh, let's call it twelve 0:10:52.880 --> 0:10:58.120 technical types every week and I asked them buy, sell, 0:10:58.400 --> 0:11:03.040 or neutral on a roster item list, and you'd be 0:11:03.040 --> 0:11:05.360 surprised how many people came back with items that were 0:11:05.360 --> 0:11:08.280 different from the person who had just responded. So you 0:11:08.280 --> 0:11:10.400 could have twelve people responding every week and there would 0:11:10.400 --> 0:11:13.400 be no quorum as to what, let's say, item A 0:11:13.640 --> 0:11:16.800 is doing. And so my former partner, Steve Schaubin at 0:11:16.880 --> 0:11:18.960 Lehmann was fond of saying, it's the singer and not 0:11:19.080 --> 0:11:23.760 the song. Hey, so uh. The naturally leads the next question, 0:11:24.200 --> 0:11:26.480 how much of this is science and how much of 0:11:26.559 --> 0:11:29.840 this is art and and somewhat subjective. I get the 0:11:29.880 --> 0:11:32.920 sense you're implying it's a little of both. I think 0:11:32.960 --> 0:11:36.160 it's a lot of both. So I'm I'm fond of 0:11:36.200 --> 0:11:38.400 this book that was that I read earlier in my career. 0:11:38.400 --> 0:11:40.199 It's it's not a it's not an investment book. It's 0:11:40.200 --> 0:11:42.680 a poker book. It's called Shut Up and Deal. And 0:11:42.679 --> 0:11:45.520 it's written by a guy named Jesse May. Okay, and 0:11:45.559 --> 0:11:48.240 I'm gonna paraphrase it, and I'm going to cuff the comment. 0:11:48.320 --> 0:11:51.040 But in the book he said, when you play poker, 0:11:51.480 --> 0:11:55.160 everybody wants to master the rules, right, when you raise, 0:11:55.360 --> 0:11:59.440 when you fold, right, that's important, he said. But but 0:11:59.520 --> 0:12:03.560 winning it poker is about mastering the luck. And I 0:12:03.600 --> 0:12:06.600 think that's appropriate for our business as well. So so 0:12:06.679 --> 0:12:09.280 I would apply that to your question and say, it's 0:12:09.320 --> 0:12:11.760 a little bit of science, it's a little bit of uh, 0:12:11.760 --> 0:12:15.439 it's a little bit of um poetry, it's it's all 0:12:15.480 --> 0:12:19.000 those things put together. So, so how do we master luck? 0:12:19.360 --> 0:12:23.160 I always assume luck is to some degree random, although 0:12:23.200 --> 0:12:26.280 we've all heard the expression luck is with preparation meets 0:12:26.320 --> 0:12:29.760 opportunity or branch Rickey said, luck is the residue of design, right. 0:12:29.760 --> 0:12:32.080 I mean, the harder I work, the luckier I get. 0:12:32.280 --> 0:12:36.760 All those things are appropriate. I think it is listening 0:12:36.800 --> 0:12:42.000 to the message in the charts and not putting your 0:12:42.040 --> 0:12:45.480 biases into what you think it's telling you. How hard 0:12:45.559 --> 0:12:47.560 is it to keep your biases? I think it's very hard, 0:12:47.559 --> 0:12:50.000 which is why sometimes when I was on the cell side, 0:12:50.040 --> 0:12:52.760 I would send out charts that I would reports entitled 0:12:52.800 --> 0:12:55.800 mystery charts, and I would say, the first person who 0:12:55.800 --> 0:12:58.080 gets this question right, I'll buy him lunch next time 0:12:58.120 --> 0:13:00.679 I'm in there town. And you'd be prize. How many 0:13:00.679 --> 0:13:03.280 people would be quick to respond, and I would put 0:13:03.320 --> 0:13:06.439 the chart, I would put the technical characteristics of it, 0:13:06.480 --> 0:13:08.480 but I would take the title off of it. Huh. 0:13:08.559 --> 0:13:11.079 And I think when people saw it without the title, 0:13:11.440 --> 0:13:14.080 they made a more objective decision than when they saw 0:13:14.080 --> 0:13:17.000 it with the title. And I think that's a good 0:13:17.000 --> 0:13:19.560 way to think about it. So I have a variation 0:13:19.640 --> 0:13:23.280 of that, which I call the indicator. That when you 0:13:23.320 --> 0:13:26.800 would talk about a name with somebody who is on 0:13:26.840 --> 0:13:29.160 the bi side, when you're on the cell side. If 0:13:29.200 --> 0:13:31.160 you would bring up the name and three out of 0:13:31.160 --> 0:13:33.679 four people go, uh, I can't touch that. That's a 0:13:33.679 --> 0:13:36.840 piece of junk. Hey, well guess what if everybody thinks 0:13:36.880 --> 0:13:39.679 that it's probably already in the price and it was 0:13:39.720 --> 0:13:42.240 a little bit of momentum and you have plenty upside there. 0:13:42.559 --> 0:13:44.720 That's that's funny that you you did it by just 0:13:44.760 --> 0:13:47.960 pulling the names off. So when you reveal the names, 0:13:48.559 --> 0:13:50.800 what was generally the response to people who said, this 0:13:50.880 --> 0:13:53.800 chart looks great, I'm excited about this. I think some 0:13:54.120 --> 0:13:58.200 people who had the objectivity would say, oh, well, okay, 0:13:58.200 --> 0:13:59.640 I don't care what the name is. The dawn chart 0:13:59.679 --> 0:14:01.720 looks it must be that the story is pretty good, 0:14:02.400 --> 0:14:04.840 and other people might have been a little bit dismissive 0:14:04.880 --> 0:14:07.839 of it. Oh yeah, okay, but I'm not interested. But 0:14:07.960 --> 0:14:12.360 I think the yeah, and I think the exercise sort 0:14:12.360 --> 0:14:15.120 of was a good exercise to allow them to say, hey, 0:14:15.160 --> 0:14:17.920 there's something there and if we remove our biases, we 0:14:17.960 --> 0:14:21.240 can actually pick up some important information. So tell me 0:14:21.240 --> 0:14:23.320 a little bit about your process. When you're on the 0:14:23.360 --> 0:14:27.800 cell side. What did your daily research consist of and 0:14:27.840 --> 0:14:30.560 how did that change once you moved to the buy side. 0:14:31.680 --> 0:14:35.360 So My process includes trying, and I'm going to emphasize 0:14:35.360 --> 0:14:38.960 the word of trying to monitor or pay attention to 0:14:39.600 --> 0:14:44.960 all sorts of traded prices, bonds, they're corresponding, yields, commodities, 0:14:45.000 --> 0:14:49.880 currency sectors, indexes, stocks across all sorts of time zones. 0:14:51.040 --> 0:14:54.520 And I built some screening tools, some scoring mechanisms that 0:14:54.560 --> 0:14:57.720 helped me do that. And like any other technical person 0:14:57.840 --> 0:15:00.200 or any other chart person, I look at it ton 0:15:00.240 --> 0:15:02.920 of charts, and I've taken that discipline from the cell 0:15:03.040 --> 0:15:05.440 side and I've tried to apply it on the by side. 0:15:05.520 --> 0:15:07.800 So now that you're on the by side, is your 0:15:07.800 --> 0:15:11.200 process very much different? Other than having to travel for 0:15:11.280 --> 0:15:14.280 work and and sell a product? Short of that, is 0:15:14.320 --> 0:15:16.920 the research process still the same? I'd say it's pretty 0:15:16.960 --> 0:15:20.640 much the same. That's that's really, um quite interesting. One 0:15:20.640 --> 0:15:23.600 of the things I loved about when you were on 0:15:23.640 --> 0:15:27.720 the seal side, you're written product, you would you would, 0:15:28.360 --> 0:15:31.600 similar to Ed Hyman, who's an economist, take a chart 0:15:31.760 --> 0:15:35.360 and mark it up by hands. Um. First, where did 0:15:35.400 --> 0:15:38.360 that idea come from? Well, well, I mean you you 0:15:38.360 --> 0:15:40.440 you prefaced it. I mean Ed Hyman taught us all 0:15:40.520 --> 0:15:45.080 that annotating charts simply and clearly really goes a long 0:15:45.120 --> 0:15:47.840 way to making your research more palatable to the people 0:15:47.880 --> 0:15:49.720 who are paying for it. So he's the he's the 0:15:49.760 --> 0:15:52.080 godfather of it. To tell him truth. And you answered 0:15:52.120 --> 0:15:55.000 the second question, which is what's the purpose of right, 0:15:55.080 --> 0:15:57.680 I think it's just so people become familiar with you 0:15:58.400 --> 0:16:00.760 and your research. And I think when people become familiar 0:16:00.800 --> 0:16:04.880 with you, there's a trust aspect that grows. And uh, 0:16:04.920 --> 0:16:07.320 you know when for somebody who was formally selling research. 0:16:07.360 --> 0:16:10.560 I think that's a really important concept to building a business. 0:16:10.600 --> 0:16:12.320 You have to develop a trust aspect with the people 0:16:12.320 --> 0:16:14.960 who are going to pay you commission dollars for your research. 0:16:15.400 --> 0:16:19.000 I'm Barry Rihults. You're listening to Masters in Business on 0:16:19.080 --> 0:16:23.000 Bloomberg Radio. My special guest today is John Roke. And 0:16:23.200 --> 0:16:27.040 you have been working UM for the past couple of 0:16:27.120 --> 0:16:32.440 years for Soros Fund Management, which is George Soros's hedge 0:16:32.440 --> 0:16:36.800 funds UM. What is it like working at such a 0:16:36.920 --> 0:16:40.720 storied firm like that. I'm going to try to create 0:16:40.760 --> 0:16:43.240 a metaphor. I think it was to me it was 0:16:43.240 --> 0:16:45.520 sort of like being able to play basketball for University 0:16:45.520 --> 0:16:47.520 of North Carolina Tar Hills. When Dean Smith was a 0:16:47.560 --> 0:16:50.280 coach or playing basketball for the u c l A 0:16:50.360 --> 0:16:52.800 Bruins when John Wooden was a coach. It was sort 0:16:52.840 --> 0:16:58.800 of PhD macro um across the board. Just a true 0:16:58.800 --> 0:17:01.640 honor for me to have been there. So I we 0:17:01.720 --> 0:17:04.359 all recall the story I think was told by a 0:17:04.440 --> 0:17:08.800 Soros's son that when his back started aching started bothering him, 0:17:08.840 --> 0:17:11.560 he basically had to sell something to make the pain 0:17:11.600 --> 0:17:14.119 go away. Any truth to that, Well, I read the 0:17:14.160 --> 0:17:17.160 same story, but I would probably say that was akin 0:17:17.240 --> 0:17:21.520 to a very strong intuition. And um, I think after 0:17:21.600 --> 0:17:23.120 being in the business for a long period of time, 0:17:23.160 --> 0:17:27.159 we all developed intuitions that we uh listened to, you know, 0:17:27.320 --> 0:17:29.720 with with with a very uh, you know, attentive ear. 0:17:30.119 --> 0:17:33.840 So he's known as a big macro trader, famously bet 0:17:33.840 --> 0:17:37.159 against the pound and a number of other really large 0:17:37.240 --> 0:17:41.080 macro bets. How does a technician fit into a shop 0:17:41.160 --> 0:17:45.160 like that that, at least publicly seems to be so 0:17:45.960 --> 0:17:50.119 macro event driven. I actually think it's a natural that 0:17:50.240 --> 0:17:55.000 macro and technical analysis are complimentary, uh. In my opinion. 0:17:55.480 --> 0:17:57.359 One of my favorite books in the business is a 0:17:57.359 --> 0:18:00.400 book entitled More Money Than God, which is written by 0:18:00.400 --> 0:18:05.280 Sebastian Mallaby, and in it you read about all of 0:18:05.280 --> 0:18:08.119 the storied hedge funds and about guys in our business 0:18:08.160 --> 0:18:10.960 whose faces are on the mount rushmore of investing, and 0:18:11.000 --> 0:18:15.399 you realize just how important technical analysis is, was, or 0:18:15.520 --> 0:18:18.159 is to their process. I think it's just a natural 0:18:18.400 --> 0:18:21.520 and uh, it wasn't a shock to me, not a 0:18:21.560 --> 0:18:25.040 shock at all. It wasn't a pretty consistent Um. It's 0:18:25.040 --> 0:18:28.480 funny Malaby just put out the book on Greenspan, which 0:18:28.520 --> 0:18:31.240 I haven't gotten to, but I have more money than 0:18:31.280 --> 0:18:33.200 God at home, and it was it's one of those 0:18:33.240 --> 0:18:35.600 things that's on my short list that I'm that I'm 0:18:35.600 --> 0:18:39.119 going to get to. UM. So you move from the 0:18:39.119 --> 0:18:41.840 cell side to the by side. When you were on 0:18:41.880 --> 0:18:44.720 the cell side, you were very much a public figure, 0:18:44.840 --> 0:18:47.560 used to do conferences, in television everything. You go to 0:18:47.600 --> 0:18:50.639 the buy side and its radio silence. What was that 0:18:50.720 --> 0:18:54.280 transition like? Was it was it relaxing to kind of 0:18:54.280 --> 0:18:56.480 get out of the public eye or did you miss 0:18:56.480 --> 0:18:59.720 a little of the back and forth give and take. UM. Well, 0:18:59.800 --> 0:19:02.040 I I gotta tell you, for twenty years of of 0:19:02.240 --> 0:19:05.040 doing shows like this with people like you, there are 0:19:05.119 --> 0:19:08.800 no shows. It's very nice or or traveling to market 0:19:08.840 --> 0:19:10.840 my product was a was a great thrill being on 0:19:10.880 --> 0:19:14.119 Wall Street Week with Lewis Ruth Keiser was Uh, you know, 0:19:14.280 --> 0:19:16.040 one of a bucket list kind of thing to do. 0:19:16.119 --> 0:19:18.920 But I'm equally happy being on the buy side, and 0:19:19.240 --> 0:19:22.560 I put all my energy and emphasis into putting out 0:19:22.600 --> 0:19:24.240 product that I think is going to help Key Square 0:19:24.280 --> 0:19:27.520 Capital Management. So when you say put out products, I'm 0:19:27.560 --> 0:19:31.359 assuming there's an investment committee you're participating in that, or 0:19:31.640 --> 0:19:36.560 there's some dialogue back and forth. How is advising on 0:19:36.680 --> 0:19:42.600 deploying capital different then selling a commission transaction or or 0:19:42.720 --> 0:19:45.440 is it not different? I think an idea is an 0:19:45.440 --> 0:19:48.359 idea irrespective of which side of the business you're on. 0:19:48.960 --> 0:19:52.080 And I think the person that you're speaking to uh, 0:19:52.119 --> 0:19:54.200 and I happen to be speaking to a person who 0:19:54.280 --> 0:19:57.719 is uh intellectually open. His name is Scott Bessant and 0:19:58.040 --> 0:20:01.520 always willing to listen to an idea. And and because 0:20:01.560 --> 0:20:03.600 he's like that, it gives me confidence to continue to 0:20:03.640 --> 0:20:06.560 present those ideas. It's sort of like, uh, when you're 0:20:06.560 --> 0:20:08.040 on the cell side and you have a client that 0:20:08.080 --> 0:20:11.359 you get along with really well, you'll call that person 0:20:12.040 --> 0:20:14.720 all the time and you'll show that person all of 0:20:14.760 --> 0:20:18.800 your ideas because they're they're willing recipients of those ideas. 0:20:18.880 --> 0:20:21.440 And some of your clients when you're on when on 0:20:21.600 --> 0:20:25.520 being on the cell side, were probably less um receptive. 0:20:25.600 --> 0:20:27.960 Receptive is a good word, and so I'm just I've 0:20:28.000 --> 0:20:30.440 been lucky that the the gentleman I'm working with now 0:20:30.440 --> 0:20:33.639 and have worked with over five years is receptive to 0:20:33.760 --> 0:20:36.920 ideas and intellectually open and uh and willing to listen 0:20:36.920 --> 0:20:39.720 to my my, my imagination. So, Scott Besson, if the 0:20:39.920 --> 0:20:43.199 I recall the name correctly formally c I O of 0:20:43.240 --> 0:20:47.639 Soros Fund Management, is that right? And I also recall 0:20:47.720 --> 0:20:50.840 you saying he's the person who recruited you to work 0:20:50.840 --> 0:20:53.480 it with Sorows. That's exactly right. So I have to 0:20:53.520 --> 0:20:58.080 assume that he is a heavy hitter running Soros is money. 0:20:58.119 --> 0:21:02.600 That's a fairly substantial. And is it the same sort 0:21:02.640 --> 0:21:05.640 of investment process at Key Square that it was at 0:21:05.920 --> 0:21:08.680 Sorrows or is it a little different? You know, soroces 0:21:08.760 --> 0:21:12.440 now mostly running his own money, if I'm correct, mostly 0:21:13.040 --> 0:21:17.240 um the family office family office, as opposed to Key Square, 0:21:17.240 --> 0:21:20.280 whereas it's a lot of outside I think it is 0:21:20.280 --> 0:21:22.640 a macro focus fund, and from that point of view, 0:21:23.000 --> 0:21:26.280 UH it has a similar focus. My special guest today 0:21:26.480 --> 0:21:30.880 is John Roke. He is a technician UH currently working 0:21:31.000 --> 0:21:34.360 for key Square Capital, which is a hedge fund seated 0:21:34.400 --> 0:21:37.399 by George Soros. He worked on the sealth side and 0:21:37.480 --> 0:21:41.159 a number of storied shops, including Lehman Brothers UH for 0:21:41.240 --> 0:21:45.359 many years before going to work at Soros Fund Management. 0:21:45.760 --> 0:21:49.600 Let's let's talk a little bit about your approach. You 0:21:49.720 --> 0:21:52.399 do some things that I find to be really interesting 0:21:52.800 --> 0:21:54.800 that I don't see a lot of other people doing. 0:21:55.359 --> 0:22:00.200