1 00:00:00,080 --> 00:00:05,960 Speaker 1: M This is Mesters in Business with very results on 2 00:00:06,200 --> 00:00:11,840 Speaker 1: Bloomberg Radio. This week on the podcast, I have a 3 00:00:11,880 --> 00:00:16,120 Speaker 1: fascinating guest. His name is Alexwerevich. He is a hedge 4 00:00:16,160 --> 00:00:21,560 Speaker 1: fund manager and trader who has been involved in macro 5 00:00:22,360 --> 00:00:26,640 Speaker 1: trading for decades since since the late nineties, and he's 6 00:00:26,720 --> 00:00:30,720 Speaker 1: one of these folks that basically has managed to put 7 00:00:30,720 --> 00:00:35,160 Speaker 1: together a fascinating trading history and a and a great 8 00:00:35,159 --> 00:00:40,800 Speaker 1: track record. UH. In twenty UH he was positioned in 9 00:00:40,880 --> 00:00:44,960 Speaker 1: a very contrarian set up heading at the end of 10 00:00:45,920 --> 00:00:51,520 Speaker 1: into he was anticipating a substantial decrease in interest rates 11 00:00:51,600 --> 00:00:54,840 Speaker 1: when most of the rest of the world was positioned 12 00:00:54,920 --> 00:00:58,720 Speaker 1: in the opposite way. And when the pandemic hit an 13 00:00:58,800 --> 00:01:04,959 Speaker 1: emergency FED cuts came in UM his funded spectacularly well. 14 00:01:05,040 --> 00:01:08,920 Speaker 1: It was ranked second best performance of alledge funds in 15 00:01:10,560 --> 00:01:13,920 Speaker 1: When you read his books and and his most recent 16 00:01:13,959 --> 00:01:18,200 Speaker 1: one is The Trades of March A Shield against Uncertainty, 17 00:01:18,319 --> 00:01:22,919 Speaker 1: you can see there is a tremendous amount of complexity 18 00:01:23,120 --> 00:01:27,440 Speaker 1: and deep thought in how his portfolio was positioned. UH. 19 00:01:27,480 --> 00:01:33,080 Speaker 1: They primarily trade derivatives, interest rates, swaps, UH currencies. It's 20 00:01:33,200 --> 00:01:37,120 Speaker 1: not your standard stock and bond trading. It's a little 21 00:01:37,160 --> 00:01:41,679 Speaker 1: more complex and sophisticated. UH. And this is one of 22 00:01:41,720 --> 00:01:45,720 Speaker 1: the only books I've ever read where the slack channel, 23 00:01:45,840 --> 00:01:49,600 Speaker 1: that is his trading desk, where all the trades are 24 00:01:49,600 --> 00:01:56,560 Speaker 1: are given, confirmed, executed, is pretty much reprinted as it was. 25 00:01:56,680 --> 00:01:58,360 Speaker 1: I would say about a third of the book is 26 00:01:58,440 --> 00:02:04,880 Speaker 1: slack and following. This is really a um education and 27 00:02:04,920 --> 00:02:08,679 Speaker 1: how a real world hedge fund trading desk operates. That 28 00:02:08,800 --> 00:02:13,799 Speaker 1: they're located on the West coast, so they're both behind, uh, 29 00:02:13,840 --> 00:02:16,680 Speaker 1: the East coast by three hours, but they're anticipating what 30 00:02:16,880 --> 00:02:20,760 Speaker 1: takes place in Asia and Japan and China. And what's 31 00:02:20,840 --> 00:02:25,079 Speaker 1: really fascinating about this is when the pandemic began, they 32 00:02:25,080 --> 00:02:29,240 Speaker 1: were pretty much trading UM around the clock. It's not 33 00:02:29,360 --> 00:02:32,000 Speaker 1: a giant firm, it's a you know, him and a 34 00:02:32,080 --> 00:02:34,960 Speaker 1: number of his employees were you know, for days at 35 00:02:34,960 --> 00:02:39,000 Speaker 1: a time, trading continuously and you could see it by 36 00:02:39,000 --> 00:02:42,280 Speaker 1: the time stamps in in the slack channel one am, 37 00:02:42,360 --> 00:02:46,360 Speaker 1: three am, five am, seven am, ten pm, eight pm, 38 00:02:46,440 --> 00:02:50,520 Speaker 1: and and that's West coast time. Really fascinating conversation. He's 39 00:02:50,560 --> 00:02:54,520 Speaker 1: a super interesting UM, not just a trader, but his 40 00:02:55,400 --> 00:02:59,720 Speaker 1: worldview and how he looks at what drives asset prices. 41 00:03:00,280 --> 00:03:04,040 Speaker 1: UH is really fascinating. So if you are all interested 42 00:03:04,080 --> 00:03:08,840 Speaker 1: in the world of macro trading, um strap yourself in 43 00:03:08,840 --> 00:03:12,359 Speaker 1: for an education because this conversation is fascinating. With no 44 00:03:12,480 --> 00:03:18,280 Speaker 1: further ado, my interview with Alex Guerrevich of Hante Advisors. 45 00:03:20,520 --> 00:03:25,640 Speaker 1: This is Masters in Business with very Rehults on Bloomberg Radio. 46 00:03:27,720 --> 00:03:31,240 Speaker 1: I'm Barry Hults. You're listening to Masters in Business on 47 00:03:31,280 --> 00:03:36,240 Speaker 1: Bloomberg Radio. My special guest this week Alex Guerrevic, founder 48 00:03:36,240 --> 00:03:40,400 Speaker 1: and CEO of Hante Advisors. Previously, he was the head 49 00:03:40,440 --> 00:03:45,920 Speaker 1: of JP Morgan's Macro book in Hante was ranked second 50 00:03:46,080 --> 00:03:49,920 Speaker 1: in net return by Barclays and Guerevic was one of 51 00:03:49,920 --> 00:03:54,119 Speaker 1: the top ten emerging managers as tracked by Eureka Hedge. 52 00:03:54,240 --> 00:03:56,880 Speaker 1: He is the author of two books on trading, the first, 53 00:03:57,360 --> 00:04:00,560 Speaker 1: the next Perfect Trade, A Magic Sort of necess City. 54 00:04:00,680 --> 00:04:03,560 Speaker 1: His most recent book just came out this year, The 55 00:04:03,600 --> 00:04:10,120 Speaker 1: Trades of March, A Shield against Uncertainty. Alex Vervic, Welcome 56 00:04:10,400 --> 00:04:14,560 Speaker 1: to Bloomberg. Thank you very much for having me. I'm 57 00:04:14,600 --> 00:04:19,080 Speaker 1: excited about this conversation as am. I. Let's let's start 58 00:04:19,240 --> 00:04:22,679 Speaker 1: talking a little bit about uh, your background. You earned 59 00:04:22,680 --> 00:04:26,320 Speaker 1: a PhD in mathematics from the University of Chicago. Tell 60 00:04:26,400 --> 00:04:28,800 Speaker 1: us a little bit about that experience and and how 61 00:04:28,920 --> 00:04:32,880 Speaker 1: you get to apply math as a fund manager and 62 00:04:32,960 --> 00:04:36,400 Speaker 1: a trader. Well, first of all, I will confess the 63 00:04:36,520 --> 00:04:40,160 Speaker 1: experience of being in graduate school University of Chicago was 64 00:04:40,160 --> 00:04:44,839 Speaker 1: still amazing that for many years, almost decade afterwards, I 65 00:04:44,920 --> 00:04:48,760 Speaker 1: suffered from nostalgia. Even while when I was a successful 66 00:04:48,800 --> 00:04:52,200 Speaker 1: Wall Street trader, I was often suffering from nostalgia for 67 00:04:52,279 --> 00:04:56,000 Speaker 1: my graduates school days. So that's a quick summary. I 68 00:04:56,040 --> 00:04:58,719 Speaker 1: think it's pretty amazing for me, at least to be 69 00:04:58,760 --> 00:05:01,800 Speaker 1: in a very small circle stuff like minded people who 70 00:05:01,839 --> 00:05:04,520 Speaker 1: had even though I grew up in a different country 71 00:05:04,520 --> 00:05:08,080 Speaker 1: in backgrounds are different. But interestingly, mathematicians all around the 72 00:05:08,120 --> 00:05:11,480 Speaker 1: world do the same math and they played the same 73 00:05:11,960 --> 00:05:14,479 Speaker 1: math games, all the same puzzles. So there was so 74 00:05:14,560 --> 00:05:16,920 Speaker 1: much in common and so much fun to have in 75 00:05:16,920 --> 00:05:20,880 Speaker 1: that environment. We were you ever? Were you ever planning 76 00:05:21,160 --> 00:05:25,159 Speaker 1: on pursuing a career in pure mathematics or was the 77 00:05:25,240 --> 00:05:29,359 Speaker 1: thinking I'll take this skill and education I I earned 78 00:05:29,360 --> 00:05:32,640 Speaker 1: the Chicago and applied to Wall Street was tell us 79 00:05:32,680 --> 00:05:35,839 Speaker 1: what you're thinking was when you were um in school. 80 00:05:36,920 --> 00:05:40,080 Speaker 1: You know, honestly, since I was a teenager, there was 81 00:05:40,160 --> 00:05:42,320 Speaker 1: kind of a double thinking in my mind. It's almost 82 00:05:42,360 --> 00:05:45,800 Speaker 1: like two superposed ideas that I wasn't really clear. My 83 00:05:45,920 --> 00:05:48,480 Speaker 1: natural path was always to do theoretical math. I wanted 84 00:05:48,480 --> 00:05:50,960 Speaker 1: to be a mathematicians since I was four years old, 85 00:05:51,440 --> 00:05:55,719 Speaker 1: but my fascination with finance industry, with strategy was already there. 86 00:05:56,240 --> 00:05:59,640 Speaker 1: I remember seeing the movie Wall Street in back in Russia, 87 00:05:59,680 --> 00:06:04,280 Speaker 1: and I was totally fascinated by it, and just the 88 00:06:04,279 --> 00:06:07,200 Speaker 1: whole idea of like financial strategy was so exciting to me. 89 00:06:07,400 --> 00:06:09,120 Speaker 1: I think someone in the back of my mind I 90 00:06:09,160 --> 00:06:11,680 Speaker 1: always thought that at some point I wouldn't up on 91 00:06:11,720 --> 00:06:15,239 Speaker 1: Wall Street. But at the same time I was making 92 00:06:15,240 --> 00:06:18,440 Speaker 1: all emotions to pursue the career and theoretical math. So 93 00:06:18,440 --> 00:06:20,600 Speaker 1: so I think I was a little conflicted about this 94 00:06:20,800 --> 00:06:24,000 Speaker 1: until some point. So you mentioned you saw the film 95 00:06:24,120 --> 00:06:28,040 Speaker 1: Wall Street growing up in Russia. You grew up in St. Petersburg. 96 00:06:28,720 --> 00:06:31,760 Speaker 1: Did you know you always wanted to come to the West. 97 00:06:33,080 --> 00:06:38,479 Speaker 1: It's hard to imagine seeing such a just like I guess, 98 00:06:39,240 --> 00:06:43,560 Speaker 1: um capitalist film like Wall Street, even with good guys, 99 00:06:43,600 --> 00:06:48,120 Speaker 1: bad guys and corruption in the film, even still seeing 100 00:06:48,160 --> 00:06:52,560 Speaker 1: it in Russia had to be a little um you know, 101 00:06:52,600 --> 00:06:55,720 Speaker 1: a little cognitive dissonance built into that. Well. I think 102 00:06:55,760 --> 00:06:59,240 Speaker 1: it was very exciting and refreshing. They did show a 103 00:06:59,240 --> 00:07:01,679 Speaker 1: bit of foreign always in Russia. It was not that closed. 104 00:07:01,720 --> 00:07:04,919 Speaker 1: I saw Star Wars on Russia too, so there was 105 00:07:04,960 --> 00:07:09,000 Speaker 1: a little bit of cultural flow. So I did always 106 00:07:09,040 --> 00:07:11,080 Speaker 1: want to go to America. There was no question in 107 00:07:11,080 --> 00:07:13,160 Speaker 1: my mind. Since I was six years old. I considered 108 00:07:13,200 --> 00:07:16,080 Speaker 1: myself American, like it was deep in my heart that 109 00:07:16,160 --> 00:07:19,119 Speaker 1: I'm belong only in one country, in the United States. 110 00:07:19,120 --> 00:07:21,800 Speaker 1: That was not a negative statement on Russia at all. 111 00:07:22,120 --> 00:07:24,920 Speaker 1: It was not even about politics fully like I mean 112 00:07:25,000 --> 00:07:28,160 Speaker 1: I and also like I always loved Russian poetry and 113 00:07:28,240 --> 00:07:31,720 Speaker 1: literature and architecture and many aspects of the culture. But 114 00:07:31,760 --> 00:07:33,840 Speaker 1: I always felt that I belonged in the United States. 115 00:07:33,840 --> 00:07:35,480 Speaker 1: There was never a doubt in my mind. I don't 116 00:07:35,480 --> 00:07:36,920 Speaker 1: know how I knew it, but I knew knew it 117 00:07:36,960 --> 00:07:38,960 Speaker 1: since I was a little kid. So so when did 118 00:07:39,000 --> 00:07:41,800 Speaker 1: you move to the US. I moved in the US 119 00:07:41,800 --> 00:07:45,120 Speaker 1: in the middle of college. It was eighty nine. I 120 00:07:45,160 --> 00:07:48,600 Speaker 1: was almost twenty years old, and you've been here two 121 00:07:48,680 --> 00:07:50,600 Speaker 1: years of college there and I had two years of 122 00:07:50,600 --> 00:07:53,200 Speaker 1: college in American and I went to graduate school and 123 00:07:53,680 --> 00:07:58,760 Speaker 1: so first job out of school was where Well, I 124 00:07:58,800 --> 00:08:00,960 Speaker 1: went straight to graduate school. On my first job out 125 00:08:00,960 --> 00:08:03,120 Speaker 1: of graduate school. That when after I got my PhD, 126 00:08:03,200 --> 00:08:05,840 Speaker 1: I went to Bankers Trust in n And that's when 127 00:08:05,840 --> 00:08:09,000 Speaker 1: I was a critical point of my decision, when I decided, Okay, 128 00:08:09,160 --> 00:08:12,360 Speaker 1: I've already accomplished what I needed accomplished in math. I 129 00:08:12,480 --> 00:08:15,400 Speaker 1: proved my metal, and now I really want to have 130 00:08:15,480 --> 00:08:17,520 Speaker 1: a good opportunity. I have a good offer. I'm gonna 131 00:08:17,520 --> 00:08:20,760 Speaker 1: try Wall Street. And how did you go? Um? How 132 00:08:20,800 --> 00:08:25,040 Speaker 1: did you end up at JP Morgan? Well, I post 133 00:08:25,080 --> 00:08:28,040 Speaker 1: at Bankers Trust and I started trading fixed and com derivatives. 134 00:08:28,280 --> 00:08:30,720 Speaker 1: That's very important to understand that I most of my 135 00:08:31,520 --> 00:08:34,960 Speaker 1: mathematicition friends went to do some kind of quantitative work 136 00:08:34,960 --> 00:08:37,600 Speaker 1: on Wolf Street. I never did. I went straight into trading. 137 00:08:37,640 --> 00:08:40,040 Speaker 1: That was my interested I always said, if I want 138 00:08:40,040 --> 00:08:42,160 Speaker 1: to do research, I would stay in the in the 139 00:08:42,200 --> 00:08:44,719 Speaker 1: math department, even if it pays less money, but the 140 00:08:44,800 --> 00:08:48,960 Speaker 1: lifestyle would be worth it. I wanted to trade. I 141 00:08:49,000 --> 00:08:52,240 Speaker 1: went to Bankers Trust, which became the trade on a 142 00:08:52,280 --> 00:08:55,920 Speaker 1: swap desk, and then it bought, got bought by Deutsche 143 00:08:55,960 --> 00:08:59,360 Speaker 1: Bank and a Deutsche Bank. Because of all they organizing, 144 00:08:59,360 --> 00:09:01,080 Speaker 1: I was pretty Joe year at that time. They offered 145 00:09:01,120 --> 00:09:03,400 Speaker 1: me a different kind of job, which was very good 146 00:09:03,400 --> 00:09:06,679 Speaker 1: in terms of two trade options. It was not particularly 147 00:09:06,679 --> 00:09:08,800 Speaker 1: interesting for me, but it was very educational. But I 148 00:09:08,800 --> 00:09:11,080 Speaker 1: started to look for a new job soon and I 149 00:09:11,120 --> 00:09:13,480 Speaker 1: got a In two thousands, I got a job at 150 00:09:13,559 --> 00:09:17,840 Speaker 1: Chase basically doing basis swaps, which I did originally at 151 00:09:17,880 --> 00:09:19,679 Speaker 1: banker Stas as a junior trader, but I got a 152 00:09:19,720 --> 00:09:23,160 Speaker 1: senior job at Chase and then Chase merg of JP Morgan. 153 00:09:23,200 --> 00:09:28,000 Speaker 1: I ended up at JP Morgan Chase running basis swop franchise, 154 00:09:28,040 --> 00:09:31,440 Speaker 1: and then I launched the agency Assets w franchise also 155 00:09:31,520 --> 00:09:33,720 Speaker 1: in the two thousands one, I think, and then and 156 00:09:33,720 --> 00:09:37,120 Speaker 1: then by two thousand three you mentioned in the Wall 157 00:09:37,120 --> 00:09:40,559 Speaker 1: Street Journal as the star trader of JP Morgan. Tell 158 00:09:40,640 --> 00:09:45,400 Speaker 1: us about that. How did that feel, um being recognized 159 00:09:45,480 --> 00:09:50,439 Speaker 1: for your trading skills? You know, honestly, it is interesting. 160 00:09:50,840 --> 00:09:53,559 Speaker 1: At that time I did not really appreciate so much 161 00:09:53,600 --> 00:09:57,359 Speaker 1: the value of publicity, and I did almost know networking 162 00:09:57,360 --> 00:09:59,920 Speaker 1: and almost no publicity. So I moved the proprietary desk 163 00:10:00,000 --> 00:10:04,079 Speaker 1: in two thousand two from UH. Because after I did 164 00:10:04,080 --> 00:10:06,559 Speaker 1: really well with my market making businesses on two thousand 165 00:10:06,679 --> 00:10:09,240 Speaker 1: one and build them up really well, there was formed. 166 00:10:09,240 --> 00:10:12,040 Speaker 1: They were forming Global Currencies and Commodities Group in the 167 00:10:12,120 --> 00:10:14,680 Speaker 1: merged shape Immorgan Chase Bank. By the way, this group 168 00:10:14,760 --> 00:10:20,040 Speaker 1: ended up to be extremely successful going forward, and UH 169 00:10:20,240 --> 00:10:22,959 Speaker 1: they offered me to shift and move a micro portfolio 170 00:10:23,040 --> 00:10:26,040 Speaker 1: because my even with my client partfolios, I was more 171 00:10:26,080 --> 00:10:31,200 Speaker 1: and more UH focusing on micro factors. And then that 172 00:10:31,360 --> 00:10:33,040 Speaker 1: was like then I had a very successful yet two 173 00:10:33,080 --> 00:10:36,000 Speaker 1: thousand two and started very successfully two thousand three, and 174 00:10:36,000 --> 00:10:38,240 Speaker 1: that's when they wrote an article. The article was really 175 00:10:38,240 --> 00:10:40,760 Speaker 1: based on a leak. I think somebody just told them 176 00:10:40,800 --> 00:10:43,240 Speaker 1: what possessions were had and what money we're making in 177 00:10:43,240 --> 00:10:46,360 Speaker 1: two thousand three, and then there was this article and 178 00:10:47,080 --> 00:10:49,400 Speaker 1: it was on one and exciting and like I know, 179 00:10:49,520 --> 00:10:53,200 Speaker 1: like my parents were excited about showing this article. But 180 00:10:53,320 --> 00:10:55,640 Speaker 1: on the other hand, that was like a little disturbed 181 00:10:55,640 --> 00:10:58,920 Speaker 1: that there's a leak and somebody knows something about my 182 00:10:58,960 --> 00:11:02,480 Speaker 1: positions that they sho not interesting And I was not 183 00:11:02,600 --> 00:11:04,800 Speaker 1: really seeking publicity and I was a little shy of 184 00:11:04,800 --> 00:11:07,760 Speaker 1: publicity honestly, after that, I don't think it was like 185 00:11:07,800 --> 00:11:10,600 Speaker 1: a bad liok. It was a very positive article. There 186 00:11:10,679 --> 00:11:14,400 Speaker 1: was nothing me no negative in it, and there was 187 00:11:14,480 --> 00:11:17,079 Speaker 1: nothing wrong about it. But I was just a little 188 00:11:17,320 --> 00:11:22,839 Speaker 1: nervous about publicity after that because nobody I think they 189 00:11:22,840 --> 00:11:24,680 Speaker 1: reached for comment, but I don't think there was. This 190 00:11:24,760 --> 00:11:28,560 Speaker 1: was like an article the JP Morgan was specifically pushing, right. 191 00:11:29,360 --> 00:11:33,520 Speaker 1: So but what I realized afterwards, like an early years later, 192 00:11:33,559 --> 00:11:36,480 Speaker 1: when I started to raise money and around my own 193 00:11:36,520 --> 00:11:39,679 Speaker 1: hedge funds, I realized, well, actually any publicity is kind 194 00:11:39,679 --> 00:11:42,120 Speaker 1: of good and it's good to know people. So so 195 00:11:42,240 --> 00:11:45,400 Speaker 1: let's let's look at that timeline. So this was back 196 00:11:45,480 --> 00:11:48,400 Speaker 1: in two thousand and three. How much longer did you 197 00:11:48,440 --> 00:11:51,319 Speaker 1: stay at JP Morgan four and when did you launch 198 00:11:51,400 --> 00:11:55,600 Speaker 1: your your funds? Well, I stayed at JP Morgans in 199 00:11:55,640 --> 00:11:58,800 Speaker 1: early two thousand seven and then so it's been quite 200 00:11:58,800 --> 00:12:00,840 Speaker 1: a while, it's now fifteen. Is that I've been doing 201 00:12:00,920 --> 00:12:04,040 Speaker 1: various things on my own, but I not always run business, 202 00:12:04,080 --> 00:12:06,240 Speaker 1: as I had one fund and which actually did not 203 00:12:06,320 --> 00:12:09,440 Speaker 1: work out, and I talked about as a lot in 204 00:12:09,480 --> 00:12:12,079 Speaker 1: my first book, The Next Perfect Trade, about my first 205 00:12:12,120 --> 00:12:14,560 Speaker 1: found and kind of mistakes that when made there and 206 00:12:15,080 --> 00:12:18,240 Speaker 1: things like that. It was called Cloudy Capital, and then 207 00:12:18,280 --> 00:12:21,679 Speaker 1: I for a few years basically was running my own money, 208 00:12:21,760 --> 00:12:25,800 Speaker 1: and then Hunte was created around two thousands fifteen and 209 00:12:25,840 --> 00:12:30,119 Speaker 1: started to take outside money around two thousands sixteen. Relatively 210 00:12:30,120 --> 00:12:34,680 Speaker 1: recent battles are relatively established. Since you mentioned HUNT, let's 211 00:12:34,679 --> 00:12:37,760 Speaker 1: talk a little bit about that funds. Tell us about 212 00:12:37,920 --> 00:12:42,720 Speaker 1: the genesis of the name Hunte, which you described in 213 00:12:42,760 --> 00:12:45,640 Speaker 1: the book The Trades of March. So, Hunte is a 214 00:12:45,720 --> 00:12:49,440 Speaker 1: Japanese strategic term. It originates from the game of go, 215 00:12:50,400 --> 00:12:54,280 Speaker 1: and haun means truth and means move, so it's a 216 00:12:54,320 --> 00:12:57,199 Speaker 1: true move. But the context and which is used that 217 00:12:57,559 --> 00:12:59,440 Speaker 1: sometimes in the game you make a move which is 218 00:12:59,440 --> 00:13:02,600 Speaker 1: not the most flashy or aggressive, but what they call 219 00:13:02,679 --> 00:13:04,800 Speaker 1: an honest move, like what you really have to do, 220 00:13:04,960 --> 00:13:08,560 Speaker 1: even maybe not the most impressive thing to do, but 221 00:13:08,679 --> 00:13:11,840 Speaker 1: that's what gives you the best results in the long run, 222 00:13:13,720 --> 00:13:16,440 Speaker 1: and that's what I wanted to make. The strategic concept 223 00:13:16,480 --> 00:13:19,240 Speaker 1: is symbol for how you run the fund like it 224 00:13:19,280 --> 00:13:22,400 Speaker 1: a lot. Let's talk a little bit about what you 225 00:13:22,440 --> 00:13:26,320 Speaker 1: do with HUNT. You went from being a trader uh 226 00:13:26,440 --> 00:13:30,840 Speaker 1: to the head of JP Morgan's macrobook to launching this 227 00:13:30,840 --> 00:13:34,200 Speaker 1: this hedge funds. Um tell us a little bit about 228 00:13:34,240 --> 00:13:37,960 Speaker 1: those transitions. What how were you able to build on 229 00:13:38,080 --> 00:13:42,960 Speaker 1: your prior experience with each new position. Yes, I think 230 00:13:42,960 --> 00:13:45,640 Speaker 1: it was very important stepstone in my career that I 231 00:13:45,640 --> 00:13:50,160 Speaker 1: started as a market maker. Some people who move directly 232 00:13:50,200 --> 00:13:54,280 Speaker 1: into hedge fund by side business, I think missed out 233 00:13:54,320 --> 00:13:58,319 Speaker 1: a little bit seeing what actually happening in the trenches, 234 00:13:58,480 --> 00:14:00,720 Speaker 1: what's happening on the trading floor of the band, how 235 00:14:00,760 --> 00:14:03,600 Speaker 1: the client flows work was doable and not doable. I 236 00:14:03,640 --> 00:14:06,560 Speaker 1: think it was very important for my formation as a trader. 237 00:14:07,040 --> 00:14:11,960 Speaker 1: I remember the crisis of and when there was the 238 00:14:12,000 --> 00:14:14,400 Speaker 1: first freeze of the market that observed. That was very junior, 239 00:14:14,440 --> 00:14:16,040 Speaker 1: but as it turned out, I had to make some 240 00:14:16,120 --> 00:14:19,040 Speaker 1: decisions because my boss was on vacation and I had 241 00:14:19,080 --> 00:14:22,080 Speaker 1: to take over some aspects of of the book that 242 00:14:22,160 --> 00:14:25,120 Speaker 1: I was focusing on and deal with big hedge funds. 243 00:14:25,160 --> 00:14:27,360 Speaker 1: I was like super junior trader and all this big 244 00:14:27,360 --> 00:14:30,400 Speaker 1: hedge funds coming to me begging me for unwines because 245 00:14:30,440 --> 00:14:34,840 Speaker 1: they were blowing up, and people would ask me questions 246 00:14:34,880 --> 00:14:37,560 Speaker 1: like marketing sells. People would come and ask me questions 247 00:14:37,880 --> 00:14:40,480 Speaker 1: where it's such and such trading. And I was like, 248 00:14:40,520 --> 00:14:42,600 Speaker 1: what are you talking about. It's not trading. The market 249 00:14:42,680 --> 00:14:46,400 Speaker 1: is frozen. There is maybe one bit and if I 250 00:14:46,400 --> 00:14:49,400 Speaker 1: show any offer, my boss will fire me. That's my market. 251 00:14:50,000 --> 00:14:52,680 Speaker 1: That's really interesting because there's a line in the book 252 00:14:52,760 --> 00:14:56,960 Speaker 1: The Trades of March that really jumped out at me. Um, 253 00:14:57,120 --> 00:15:01,320 Speaker 1: tell me about this quote. Every crisis starts with fear 254 00:15:01,960 --> 00:15:06,920 Speaker 1: and ends with necessity. Explain that, see as crisis. First 255 00:15:06,920 --> 00:15:10,920 Speaker 1: of all, crisis always has to be something unexpected. Crisis 256 00:15:10,920 --> 00:15:13,720 Speaker 1: never happens on schedule. We know that, right, Like when 257 00:15:13,720 --> 00:15:16,240 Speaker 1: people try it on scheduled crisis like white, Okay, you 258 00:15:16,320 --> 00:15:22,000 Speaker 1: get no crisis. So it's always comes from unexpected direction 259 00:15:22,040 --> 00:15:26,480 Speaker 1: by definition. And then it usually when there is a 260 00:15:26,560 --> 00:15:29,520 Speaker 1: crisis which spills on the financial markets, people loose liquidity 261 00:15:30,040 --> 00:15:32,560 Speaker 1: and then the panic starts. We need to liquidate positions. 262 00:15:32,560 --> 00:15:35,240 Speaker 1: How bad things can go, and things get to the 263 00:15:35,280 --> 00:15:37,600 Speaker 1: points when people are really thinking that the world is 264 00:15:37,720 --> 00:15:39,320 Speaker 1: ending as we know it, and one day it might 265 00:15:39,440 --> 00:15:41,880 Speaker 1: end as we know it. But in global financial crisis, 266 00:15:41,960 --> 00:15:46,400 Speaker 1: people thought, okay, whole financial system will collapse. In COVID, 267 00:15:46,440 --> 00:15:48,520 Speaker 1: I don't know what people were thinking. We're all gonna 268 00:15:48,560 --> 00:15:50,400 Speaker 1: die or whatever. Everything is going to be shut down. 269 00:15:50,480 --> 00:15:52,280 Speaker 1: I don't know what people are thinking, but clearly people 270 00:15:52,280 --> 00:15:55,640 Speaker 1: are quite panicked about what things can happen. And now, 271 00:15:55,680 --> 00:15:58,200 Speaker 1: of course we have other existential threats with the current 272 00:15:58,280 --> 00:16:04,760 Speaker 1: war situation as recording this ah ah. So first it 273 00:16:04,880 --> 00:16:08,280 Speaker 1: starts with fear, but then what happens is that because 274 00:16:08,280 --> 00:16:10,760 Speaker 1: and some people act and fear, but then people have 275 00:16:11,120 --> 00:16:14,040 Speaker 1: Eventually people have to act not because of the fear 276 00:16:14,080 --> 00:16:16,240 Speaker 1: and not only because of the choices, but because of 277 00:16:16,560 --> 00:16:20,880 Speaker 1: the decisions are forced. What happens is if you are 278 00:16:20,880 --> 00:16:23,600 Speaker 1: fund and you're losing money and you're you're a u 279 00:16:23,760 --> 00:16:26,040 Speaker 1: M decreases, you need to reduce your positions. This is 280 00:16:26,040 --> 00:16:28,840 Speaker 1: not about fear. This is about necessity. So you have 281 00:16:28,920 --> 00:16:31,760 Speaker 1: to liquidate. Some various people need to liquidate certain positions, 282 00:16:31,760 --> 00:16:34,720 Speaker 1: do certain transactions because the exchanges are forcing them, the 283 00:16:34,720 --> 00:16:37,480 Speaker 1: margins are forcing them, bosses are forcing them. And then 284 00:16:37,800 --> 00:16:42,960 Speaker 1: the policy makers step in and they buy assets or 285 00:16:43,000 --> 00:16:45,520 Speaker 1: provide liquidity. And this is also this liquidity comes in 286 00:16:45,600 --> 00:16:50,040 Speaker 1: not because somebody chooses it, but because this is various 287 00:16:50,120 --> 00:16:53,120 Speaker 1: unstoppable flaws that's happening in the market. And this is 288 00:16:53,160 --> 00:16:56,760 Speaker 1: the necessity In the end, there is no choice for things, 289 00:16:56,800 --> 00:16:59,760 Speaker 1: but to both certain ways, that makes sense. You know, 290 00:17:00,000 --> 00:17:03,600 Speaker 1: it's perfect sense. We'll talk about the book later, but 291 00:17:03,680 --> 00:17:09,200 Speaker 1: there are some really interesting um excerpts where you are 292 00:17:09,200 --> 00:17:13,520 Speaker 1: showing your your trading in real time in the conversation 293 00:17:13,600 --> 00:17:17,640 Speaker 1: you're having with your colleagues and your desk. When when 294 00:17:17,680 --> 00:17:21,640 Speaker 1: you say it begins with fear and ends with necessity, 295 00:17:21,680 --> 00:17:24,359 Speaker 1: can you feel that as a trader when you're plugged 296 00:17:24,400 --> 00:17:27,280 Speaker 1: into the market. Are you seeing that in flows, in 297 00:17:27,400 --> 00:17:31,280 Speaker 1: prices and in opportunities. Yes, and I even feel it 298 00:17:31,320 --> 00:17:34,200 Speaker 1: in my own emotion. Explain to the things that try 299 00:17:34,240 --> 00:17:36,960 Speaker 1: to concentrate on the book is like show the psychology 300 00:17:36,960 --> 00:17:39,120 Speaker 1: of trading the more moments and I point them out 301 00:17:39,160 --> 00:17:41,679 Speaker 1: on the book when I felt like deep existential dread, 302 00:17:42,040 --> 00:17:45,280 Speaker 1: like what's going to happen? I feel like that those 303 00:17:45,280 --> 00:17:47,919 Speaker 1: moments were like, oh, yeah, that's just cut hundred basis points, 304 00:17:47,960 --> 00:17:51,600 Speaker 1: but I'm not sure that I'll do it right. And 305 00:17:51,640 --> 00:17:54,840 Speaker 1: you're feeling like will everybody cut my funding tomorrow? Right? 306 00:17:54,960 --> 00:17:57,920 Speaker 1: Will will there be no balance? Ship? What's gonna happen? 307 00:17:58,000 --> 00:18:02,400 Speaker 1: That is when you see in those terms, you realize 308 00:18:02,440 --> 00:18:05,119 Speaker 1: that the market is still ruled by fear. When you 309 00:18:05,119 --> 00:18:10,360 Speaker 1: started thinking, Okay, I've reduced my positions. Now the FED 310 00:18:10,520 --> 00:18:13,720 Speaker 1: is buying those assets that I'm holding, and they're rallying you, 311 00:18:13,720 --> 00:18:17,920 Speaker 1: you start feeling the sense of necessity. Huh. Very interesting. 312 00:18:18,000 --> 00:18:20,680 Speaker 1: So so let's talk a little bit about the trading 313 00:18:20,840 --> 00:18:27,120 Speaker 1: in during the start of the COVID nineteen pandemic. In 314 00:18:27,160 --> 00:18:30,680 Speaker 1: that year, your fund ranked second in net returns. You're 315 00:18:30,720 --> 00:18:34,040 Speaker 1: one of the top ten emerging managers. Tell us what 316 00:18:34,119 --> 00:18:37,960 Speaker 1: your thought process was in what led to so much 317 00:18:38,080 --> 00:18:42,320 Speaker 1: conviction that you had position right? And I believe, if 318 00:18:42,359 --> 00:18:46,840 Speaker 1: I'm reading the book correctly, you were fairly well positioned 319 00:18:48,040 --> 00:18:52,879 Speaker 1: for a series of rate cuts in when much of 320 00:18:52,880 --> 00:18:55,639 Speaker 1: the market was still expecting rate hikes. That did I 321 00:18:55,680 --> 00:19:01,879 Speaker 1: get that right? Yes? Yes, and that definitely contributed to 322 00:19:02,040 --> 00:19:05,959 Speaker 1: success in two thousand twenty. Generally, one has to realize 323 00:19:05,960 --> 00:19:07,440 Speaker 1: if you're on a micro part full and there's some 324 00:19:07,520 --> 00:19:11,320 Speaker 1: kind of exogenous event, you're not always will be positioned 325 00:19:11,400 --> 00:19:16,080 Speaker 1: right for it. Maybe like if you always own just 326 00:19:16,160 --> 00:19:18,800 Speaker 1: auptionality that are pure option funds, but even that, like 327 00:19:18,920 --> 00:19:22,560 Speaker 1: events could do very different things, Like events don't go 328 00:19:22,680 --> 00:19:25,640 Speaker 1: just one direction. For example, US election in two thousand sixteen, 329 00:19:26,440 --> 00:19:28,640 Speaker 1: it send markets in a certain way that people did 330 00:19:28,640 --> 00:19:31,320 Speaker 1: not expect at that moment. Right, But then there was 331 00:19:31,400 --> 00:19:36,719 Speaker 1: September elevent global financial crisis, there was European Dead crisis, 332 00:19:36,840 --> 00:19:40,480 Speaker 1: there was of course going back, there was like seven crush. 333 00:19:40,760 --> 00:19:43,679 Speaker 1: There all those events you can look at which happens 334 00:19:43,720 --> 00:19:46,080 Speaker 1: suddenly they'll have different flavor and you will not always 335 00:19:46,080 --> 00:19:49,000 Speaker 1: be positioned right for it. So there is a little 336 00:19:49,000 --> 00:19:50,840 Speaker 1: bit of an element of luck in terms of being 337 00:19:50,840 --> 00:19:53,120 Speaker 1: positioned right. But there's also a little bit of an 338 00:19:53,119 --> 00:19:56,879 Speaker 1: element of work if you always a little positive towards 339 00:19:56,920 --> 00:20:00,960 Speaker 1: crisis premium, like if you tend to be have assets 340 00:20:01,000 --> 00:20:03,280 Speaker 1: that have some balancing in your part for it that 341 00:20:03,280 --> 00:20:07,439 Speaker 1: there are some assets that make positions that make money. 342 00:20:07,440 --> 00:20:11,240 Speaker 1: Thinks those sideways in that particular case, I was didn't 343 00:20:11,320 --> 00:20:14,439 Speaker 1: just have protection. I had a very strong view in 344 00:20:14,480 --> 00:20:18,040 Speaker 1: two thousand eighteen that arate for heading and exorably zero. 345 00:20:18,400 --> 00:20:21,200 Speaker 1: I think this view was ex anti undisputable. I think 346 00:20:21,200 --> 00:20:25,960 Speaker 1: people who thought otherwise were just playing wrong, because everything 347 00:20:26,359 --> 00:20:28,840 Speaker 1: same ways. Two thousand fourteen, I was convinced the trade 348 00:20:28,880 --> 00:20:32,359 Speaker 1: for going lower, and I delineated my logic in two 349 00:20:32,359 --> 00:20:34,840 Speaker 1: thousand fourteen, and my first book, The Next Perfect Trade. 350 00:20:35,040 --> 00:20:37,760 Speaker 1: Even back then and then over the next few years 351 00:20:38,000 --> 00:20:41,919 Speaker 1: between two thousand fourteen and two thousand twenty up to COVID, 352 00:20:42,160 --> 00:20:45,160 Speaker 1: we had the situations when everything that could go wrong 353 00:20:45,200 --> 00:20:49,320 Speaker 1: for bonds wetter went wrong. Like we had very robust growth, 354 00:20:49,480 --> 00:20:54,240 Speaker 1: strong employment, we had US politics, fiscal boss fiscal phiscal 355 00:20:54,359 --> 00:20:58,520 Speaker 1: politics and growth. Everything was actually negative for bonds if 356 00:20:58,560 --> 00:21:01,080 Speaker 1: you looked at it, If you look those numbers right, 357 00:21:01,920 --> 00:21:05,360 Speaker 1: and at those physical expansions and the elections and everything 358 00:21:05,760 --> 00:21:08,040 Speaker 1: you will, you would think everything would be negative for 359 00:21:08,119 --> 00:21:12,080 Speaker 1: US bonds. And yet they performed tremendously well, which and 360 00:21:12,280 --> 00:21:14,320 Speaker 1: I had that logic and place why there was no 361 00:21:14,440 --> 00:21:16,680 Speaker 1: choice for them that to perform that well. That's why 362 00:21:16,680 --> 00:21:18,800 Speaker 1: I called my first book the Magic, magic sort of 363 00:21:18,880 --> 00:21:21,480 Speaker 1: necessit to you, So I should like to say, sometimes 364 00:21:21,800 --> 00:21:26,400 Speaker 1: a magic sort of necessities unshoot, huh. So, so how 365 00:21:26,440 --> 00:21:31,439 Speaker 1: do you conceptualize all of these macro currents and cross 366 00:21:31,440 --> 00:21:34,919 Speaker 1: currents and events. Do you create a model or is 367 00:21:34,960 --> 00:21:39,240 Speaker 1: it really you're just putting together a lot of different 368 00:21:39,760 --> 00:21:43,800 Speaker 1: ideas and trying to game out how they're going to 369 00:21:43,880 --> 00:21:50,200 Speaker 1: manifest themselves in prices of interest rates and inflation and 370 00:21:50,920 --> 00:21:55,040 Speaker 1: other factors that that drive markets. I think what I 371 00:21:55,640 --> 00:21:59,080 Speaker 1: it's a kind of a hybrid I follow. I follow 372 00:21:59,119 --> 00:22:01,920 Speaker 1: the markets just kind continuously. It's hard to say, because 373 00:22:01,920 --> 00:22:05,360 Speaker 1: if you want financial markets for twenty five years without 374 00:22:05,400 --> 00:22:07,840 Speaker 1: ever really taking a true break, there is a certain 375 00:22:07,840 --> 00:22:10,480 Speaker 1: continuity to it. You see how things develop in the world. 376 00:22:10,720 --> 00:22:13,159 Speaker 1: Of course, you can miss certain important developments, but you 377 00:22:13,200 --> 00:22:15,480 Speaker 1: have a general sense what's happening to interest rate, what's 378 00:22:15,520 --> 00:22:18,439 Speaker 1: happening to currencies, what is the mood of the world, 379 00:22:18,640 --> 00:22:21,199 Speaker 1: and you try you form certain opinions. Now, I have 380 00:22:21,280 --> 00:22:25,120 Speaker 1: a strategic system, which again delineated in my first book, 381 00:22:25,119 --> 00:22:26,840 Speaker 1: but I refer to how I applied it a lot 382 00:22:26,840 --> 00:22:29,480 Speaker 1: on the second book, in which I ranked trade. What 383 00:22:29,600 --> 00:22:32,160 Speaker 1: I tried to do I try to select trades which 384 00:22:32,600 --> 00:22:35,800 Speaker 1: x ANTI look good. And the bond trade of two 385 00:22:35,840 --> 00:22:38,840 Speaker 1: thousand fourteen was the best example of this. This was 386 00:22:38,880 --> 00:22:41,240 Speaker 1: the highest strength trade I ever had in my ranking. 387 00:22:41,280 --> 00:22:43,240 Speaker 1: I have a numerical ranking system, and this was the 388 00:22:43,280 --> 00:22:47,000 Speaker 1: highest strength trade in basically all history of financial markets 389 00:22:47,000 --> 00:22:49,359 Speaker 1: that I know of. And it has been proven to 390 00:22:49,400 --> 00:22:52,119 Speaker 1: work this way because just the highest strength trade that 391 00:22:52,200 --> 00:22:55,679 Speaker 1: rades that make money even if everything goes against them. 392 00:22:57,119 --> 00:22:59,679 Speaker 1: A right, So that is the strongest test. It's very 393 00:22:59,680 --> 00:23:02,400 Speaker 1: easy to like make money on a trade if if 394 00:23:02,480 --> 00:23:05,399 Speaker 1: you if the events helped you, But how does the 395 00:23:05,400 --> 00:23:09,200 Speaker 1: trade perform with events don't help you? Probably the most 396 00:23:09,560 --> 00:23:14,280 Speaker 1: selling and test. So UM I ranked trades based on 397 00:23:14,320 --> 00:23:18,719 Speaker 1: certain factors that I believe predetermined which trades them more 398 00:23:18,800 --> 00:23:21,080 Speaker 1: likely to make money. None of those as certainties. It's 399 00:23:21,119 --> 00:23:25,160 Speaker 1: all about probability skills. It's all about kind of trying 400 00:23:25,200 --> 00:23:27,560 Speaker 1: to shift the odds from being the player in the 401 00:23:27,560 --> 00:23:31,439 Speaker 1: casino to being the casino. Interesting, when you were running 402 00:23:31,480 --> 00:23:36,720 Speaker 1: macro strategy at JP Morgan's trading desk, were there any 403 00:23:36,760 --> 00:23:40,840 Speaker 1: similar uh perfect trades lining up? What did you see 404 00:23:40,880 --> 00:23:47,080 Speaker 1: from your macro perspective as UM low risk, high return trades. Well, 405 00:23:47,119 --> 00:23:50,760 Speaker 1: I think definitely my first perfect trade and probably they 406 00:23:50,800 --> 00:23:53,120 Speaker 1: are like there were two great junctions for perfect trades 407 00:23:53,160 --> 00:23:54,760 Speaker 1: in my career. In the first time happened in two 408 00:23:54,800 --> 00:23:58,160 Speaker 1: thousand two, and in a simple words, that trade into 409 00:23:58,200 --> 00:24:02,040 Speaker 1: thousand two or risk parity here mm hmm. And back 410 00:24:02,080 --> 00:24:04,000 Speaker 1: then I had no idea that some people were already 411 00:24:04,040 --> 00:24:06,959 Speaker 1: doing risperraty. I think they were. It was totally independent thinking, 412 00:24:07,000 --> 00:24:09,040 Speaker 1: but I didn't know of course the weather asperity. I 413 00:24:09,080 --> 00:24:11,080 Speaker 1: don't I didn't know what Cliff Astness was doing, what 414 00:24:11,400 --> 00:24:13,280 Speaker 1: Dalia were doing at the time. I still don't know 415 00:24:13,320 --> 00:24:15,119 Speaker 1: exactly what they were doing back then. I'm not like 416 00:24:15,160 --> 00:24:19,119 Speaker 1: a historian of hedge fund world, but internally a JP Morgan. 417 00:24:19,160 --> 00:24:22,240 Speaker 1: In two thousand two, I gave a presentation about and 418 00:24:22,560 --> 00:24:25,119 Speaker 1: looking back at this, it was exactly a rispiracy. I 419 00:24:25,119 --> 00:24:30,040 Speaker 1: talked about volatility portfolio weighted by implied volatility portfolio of 420 00:24:30,359 --> 00:24:35,639 Speaker 1: SMT futures, and you're adollar futures. Huh. Really interesting. Um On. 421 00:24:35,640 --> 00:24:38,840 Speaker 1: One of the things that we always kind of laugh 422 00:24:38,920 --> 00:24:43,800 Speaker 1: about is the people who tend to be one particular 423 00:24:44,520 --> 00:24:48,920 Speaker 1: type of trader, but for whatever reason, they can't help 424 00:24:48,960 --> 00:24:53,240 Speaker 1: but getting sucked into the macro trade. And I've heard 425 00:24:53,520 --> 00:24:57,240 Speaker 1: various trading desks called them macro tourists. I don't know 426 00:24:57,280 --> 00:25:02,480 Speaker 1: if you're familiar with the phrase. Yes, tell us your thoughts. 427 00:25:02,840 --> 00:25:06,560 Speaker 1: First of all, why are people so compelled to believe 428 00:25:06,680 --> 00:25:11,760 Speaker 1: they have the ability to anticipate and trade around macro events. 429 00:25:12,200 --> 00:25:15,960 Speaker 1: It's it's one of the most challenging types of trading 430 00:25:16,119 --> 00:25:18,640 Speaker 1: if you're not in it every day. Well, I think 431 00:25:18,640 --> 00:25:21,920 Speaker 1: there are two things going on. First of all, successful 432 00:25:22,520 --> 00:25:26,200 Speaker 1: people have a tendency to become ultra crepidarian, which means 433 00:25:26,240 --> 00:25:29,040 Speaker 1: like they just think that they're skilled at more things 434 00:25:29,080 --> 00:25:32,520 Speaker 1: than they actually are. Like if you are, and I've 435 00:25:32,520 --> 00:25:34,919 Speaker 1: fallen prey to this many times in my life too. 436 00:25:35,520 --> 00:25:38,200 Speaker 1: When I think like, I'm really good at many things, 437 00:25:39,080 --> 00:25:40,840 Speaker 1: you try some new things and you think, well, should 438 00:25:40,840 --> 00:25:42,560 Speaker 1: I'll be good at that too? Should I can apply 439 00:25:42,640 --> 00:25:45,520 Speaker 1: this logic? For example, if I use my logic and 440 00:25:45,560 --> 00:25:49,280 Speaker 1: apply my logic tonnelized stocks, right, individual stocks? Should I 441 00:25:49,320 --> 00:25:52,840 Speaker 1: can do that? Right? My intuition. It's very easy for 442 00:25:52,880 --> 00:25:55,480 Speaker 1: me to, for example, to say like, oh, this is 443 00:25:55,480 --> 00:25:59,879 Speaker 1: my intuition about geopolitical developments. For example, think about this, 444 00:26:00,000 --> 00:26:03,879 Speaker 1: I'm a micro trader, right, obviously my portfolio will be 445 00:26:03,920 --> 00:26:09,360 Speaker 1: impacted a lot by current military whatever and political developments. 446 00:26:10,320 --> 00:26:16,200 Speaker 1: Ah So, unavoidably it starts forming views about what can happen, 447 00:26:16,280 --> 00:26:20,480 Speaker 1: what's the next step in the conflict? Now? Do I 448 00:26:20,560 --> 00:26:23,240 Speaker 1: really have any qualification to know what the next step 449 00:26:23,240 --> 00:26:26,960 Speaker 1: in the conflict is? Absolutely not. Furthermore, I don't even 450 00:26:27,000 --> 00:26:30,920 Speaker 1: have qualifications to know what the next inflation release will be. 451 00:26:31,680 --> 00:26:33,320 Speaker 1: I mean, I don't have any I don't know any 452 00:26:33,359 --> 00:26:36,000 Speaker 1: more than thousands of other economists and analyze it. What 453 00:26:36,119 --> 00:26:39,280 Speaker 1: I have qualifications for its construct trade and portfolios. But 454 00:26:39,359 --> 00:26:42,160 Speaker 1: it's very easy to go into other areas which I related. 455 00:26:42,480 --> 00:26:44,760 Speaker 1: Now to imagine that you as an individual stock trader, 456 00:26:45,280 --> 00:26:48,679 Speaker 1: and you know that your stock is affected by interest rates, 457 00:26:48,840 --> 00:26:53,040 Speaker 1: or currency or even just overall direction of economy. It's 458 00:26:53,119 --> 00:26:55,719 Speaker 1: very hard not to start forming views on those things. 459 00:26:55,800 --> 00:26:57,760 Speaker 1: And what I think is very hard in your mind 460 00:26:57,840 --> 00:27:02,240 Speaker 1: to come partamental eyes between the areas you expert in 461 00:27:02,520 --> 00:27:05,880 Speaker 1: and the areas you're not an expert in. Huh, really interesting. 462 00:27:06,240 --> 00:27:09,680 Speaker 1: Let's talk about your first book first, the next Perfect 463 00:27:09,680 --> 00:27:14,080 Speaker 1: Trade A Magic Sword of Necessity. What what's kind of 464 00:27:14,119 --> 00:27:17,800 Speaker 1: interesting about this book is you use all of these 465 00:27:18,080 --> 00:27:22,560 Speaker 1: medieval weapons, armored shields, other types of weaponry as a 466 00:27:22,600 --> 00:27:26,439 Speaker 1: metaphor for trading. To tell us how you developed that 467 00:27:26,680 --> 00:27:31,199 Speaker 1: sort of mindset, I think, first of all, honestly, people, 468 00:27:31,480 --> 00:27:35,199 Speaker 1: when people use metaphors, they just reach to whatever is 469 00:27:35,240 --> 00:27:37,840 Speaker 1: fun for them. For example, if you have found, like 470 00:27:38,040 --> 00:27:41,400 Speaker 1: I hear, people a lot used, for example, baseball metaphors. 471 00:27:41,720 --> 00:27:45,359 Speaker 1: I know nothing about baseball, so and I don't I 472 00:27:45,400 --> 00:27:48,920 Speaker 1: don't really watch team sports, but I do like medieval warfare, 473 00:27:49,000 --> 00:27:51,520 Speaker 1: and I read a lot of fantasy books which involved 474 00:27:51,560 --> 00:27:53,879 Speaker 1: with so that's on my mind. So I think the 475 00:27:53,920 --> 00:27:57,560 Speaker 1: idea is you want to use metaphors which are fun 476 00:27:57,800 --> 00:28:00,800 Speaker 1: for you but also kind of power of all, I 477 00:28:00,800 --> 00:28:03,880 Speaker 1: think going to battle as a powerful metaphor people can 478 00:28:03,960 --> 00:28:06,200 Speaker 1: relate to it. You go to battle, you need to train, 479 00:28:06,280 --> 00:28:08,800 Speaker 1: you need to have a weapon to attack, and a 480 00:28:08,880 --> 00:28:12,040 Speaker 1: shield an armor to protect yourself. So and that is 481 00:28:12,400 --> 00:28:15,240 Speaker 1: very simple kind of I think anyone can relate to it. 482 00:28:15,320 --> 00:28:18,280 Speaker 1: But honestly, for me, it's just fun to write this way. 483 00:28:18,440 --> 00:28:22,840 Speaker 1: So it's it's metaphors for both risk, which is um, 484 00:28:22,920 --> 00:28:26,199 Speaker 1: the shield protects you, when reward, which is how the 485 00:28:26,240 --> 00:28:32,280 Speaker 1: sword obtains gains. Is that a fair description. Yeah, that's 486 00:28:32,280 --> 00:28:34,680 Speaker 1: a very good way to put it. Yes, huh. So 487 00:28:34,880 --> 00:28:37,040 Speaker 1: I noticed in the new book which we're going to 488 00:28:37,119 --> 00:28:41,280 Speaker 1: talk about, um, there's a lot of astrophysics in their 489 00:28:41,560 --> 00:28:46,040 Speaker 1: accretion disks, tidal gravity, wormholes, event horizons, a lot of 490 00:28:46,400 --> 00:28:52,560 Speaker 1: black hole related why the nomenclature of astrophysics. Well, that's 491 00:28:52,560 --> 00:28:54,760 Speaker 1: another area which is super fun for me. I really 492 00:28:54,800 --> 00:28:57,920 Speaker 1: love black holes and I love reading about them. But 493 00:28:58,360 --> 00:29:01,160 Speaker 1: also I started thinking about it is a lot because 494 00:29:01,160 --> 00:29:04,080 Speaker 1: of the time distortion factor. One of the reasons like 495 00:29:04,080 --> 00:29:06,920 Speaker 1: why I started wherever I thought about writing this book 496 00:29:08,200 --> 00:29:10,560 Speaker 1: The Trades of March twenties twenties, because the month of 497 00:29:10,680 --> 00:29:15,920 Speaker 1: March was seemed like infinite. Every trading day was like 498 00:29:16,080 --> 00:29:19,000 Speaker 1: a few months volume of trading every day. And that's 499 00:29:19,040 --> 00:29:20,520 Speaker 1: when I said, like, at the end of that month, 500 00:29:20,600 --> 00:29:23,520 Speaker 1: it's like, well, we survived March. The month of March, 501 00:29:23,600 --> 00:29:26,640 Speaker 1: somebody should read write a book about this month. And 502 00:29:26,640 --> 00:29:28,480 Speaker 1: then it's like, Okay, I can write a book about 503 00:29:28,480 --> 00:29:31,320 Speaker 1: this month because there's so much happening and thinks that 504 00:29:31,360 --> 00:29:34,440 Speaker 1: it would normally take Sometimes the trades that sometimes will 505 00:29:34,480 --> 00:29:38,640 Speaker 1: take years to unfold wood unfold within hours like sudden 506 00:29:38,640 --> 00:29:41,320 Speaker 1: trains would unfold so rapidly. So I'm a long term 507 00:29:41,360 --> 00:29:43,200 Speaker 1: trade I tried to be patient. A lot of times 508 00:29:43,200 --> 00:29:45,400 Speaker 1: I put a trade on and it's there for two years. 509 00:29:46,080 --> 00:29:49,680 Speaker 1: And in March twenty a lot of trades had to 510 00:29:49,720 --> 00:29:53,640 Speaker 1: be changed around quite a bit within days, and that 511 00:29:53,920 --> 00:29:56,040 Speaker 1: so it felt like a time warp. And when you 512 00:29:56,120 --> 00:29:58,640 Speaker 1: have this time warp stort of the time that Magaly 513 00:29:58,680 --> 00:30:00,840 Speaker 1: makes me think of black hole. Sure, and then the 514 00:30:00,880 --> 00:30:03,400 Speaker 1: realized not just time was worked, but the whole market 515 00:30:03,440 --> 00:30:06,719 Speaker 1: structure was worked. Things were just getting really disconnected. Like 516 00:30:06,920 --> 00:30:09,120 Speaker 1: one thing was trading the way one thing was trading 517 00:30:09,160 --> 00:30:10,480 Speaker 1: it has nothing to do with the way the other 518 00:30:10,520 --> 00:30:13,920 Speaker 1: thing was trading. And that also makes me think of 519 00:30:14,040 --> 00:30:17,680 Speaker 1: like time space ruptured by a black hole. Huh, really 520 00:30:17,760 --> 00:30:21,640 Speaker 1: really interesting. I think this is the first book I've 521 00:30:21,680 --> 00:30:24,960 Speaker 1: ever seen that has I don't know, maybe a third 522 00:30:24,960 --> 00:30:29,600 Speaker 1: of it is actual internal slack messages on on the 523 00:30:29,640 --> 00:30:32,760 Speaker 1: trading desk. That that's pretty unique. Tell us why you 524 00:30:32,880 --> 00:30:37,640 Speaker 1: decided to embrace that approach? Well, I realized that there's 525 00:30:37,680 --> 00:30:40,200 Speaker 1: a lot of good books written about trading, and some 526 00:30:40,280 --> 00:30:42,600 Speaker 1: of them are written by journalists and reviewing traders. Some 527 00:30:42,680 --> 00:30:47,200 Speaker 1: of them are written by money money managers themselves. But 528 00:30:47,400 --> 00:30:50,440 Speaker 1: any book, even and that includes m on my first book, 529 00:30:51,240 --> 00:30:55,360 Speaker 1: any book that one reads shows a person's perspective, a 530 00:30:55,440 --> 00:30:58,560 Speaker 1: person's recollection the biases they've used. And that's okay. You 531 00:30:58,640 --> 00:31:00,920 Speaker 1: read that. If you read somebody's book, you want to 532 00:31:00,920 --> 00:31:03,600 Speaker 1: read the views, right. I I wanted to get the 533 00:31:03,680 --> 00:31:07,120 Speaker 1: closest to get writing an objective book, even though my 534 00:31:07,200 --> 00:31:10,560 Speaker 1: commentary is obviously subjective. But the book that you really 535 00:31:10,600 --> 00:31:13,920 Speaker 1: could not say, well, he fudged that you could really 536 00:31:13,920 --> 00:31:16,320 Speaker 1: see time stamp on everything I say. And I think 537 00:31:16,360 --> 00:31:19,440 Speaker 1: the value of that is what I think about in 538 00:31:19,520 --> 00:31:21,840 Speaker 1: terms of safer is some reason they've been using this 539 00:31:21,920 --> 00:31:24,800 Speaker 1: analogy a lot. If you think of aspiring traders and 540 00:31:24,880 --> 00:31:28,400 Speaker 1: medical students, they could read an anatomy book, which could 541 00:31:28,400 --> 00:31:30,880 Speaker 1: be my first book or some other trading book, or 542 00:31:30,920 --> 00:31:33,800 Speaker 1: they can actually go into the operating room seeing the 543 00:31:33,840 --> 00:31:36,920 Speaker 1: actual trade chatter. Well, for anyone who actually wants to 544 00:31:36,920 --> 00:31:40,040 Speaker 1: be in financial markets and wondering what it's like, they 545 00:31:40,040 --> 00:31:42,120 Speaker 1: can actually go and see what is happening in a 546 00:31:42,200 --> 00:31:47,280 Speaker 1: hedge fund when there is a crisis. It's similarly imagined. 547 00:31:47,560 --> 00:31:49,720 Speaker 1: Do you want to be interested in being like an 548 00:31:49,720 --> 00:31:51,840 Speaker 1: oval office of the White House when there is some 549 00:31:51,920 --> 00:31:58,400 Speaker 1: kind of military crisis developing like Caribbean crisis, a current crisis? Right? Uh? Similarly, 550 00:31:59,000 --> 00:32:00,680 Speaker 1: I don't maybe like you want to be like a 551 00:32:02,160 --> 00:32:06,240 Speaker 1: CDC headquarters when pandemic was unfolding. Right. It's interesting to 552 00:32:07,200 --> 00:32:09,360 Speaker 1: take a pick at those places, and I fl my 553 00:32:09,400 --> 00:32:13,760 Speaker 1: slack chances, let my slack records allow people to see 554 00:32:13,800 --> 00:32:15,920 Speaker 1: it in a very faithful way which I cannot paint. 555 00:32:16,080 --> 00:32:18,480 Speaker 1: I cannot paint myself like Kira was making all the 556 00:32:18,560 --> 00:32:22,480 Speaker 1: right decisions. You could see all the confusion, all their commotion, 557 00:32:22,560 --> 00:32:25,320 Speaker 1: all the mistakes. Although like we did the straight today, 558 00:32:25,320 --> 00:32:27,160 Speaker 1: but you know what, would have to unwind it because 559 00:32:27,160 --> 00:32:29,080 Speaker 1: it's not working at all the way we want it right, 560 00:32:29,880 --> 00:32:32,800 Speaker 1: All of those things happening in real life, what it's 561 00:32:32,840 --> 00:32:35,480 Speaker 1: like in the trenches. One of the things that really 562 00:32:35,560 --> 00:32:39,520 Speaker 1: stood out is at least to my eye, was the 563 00:32:39,600 --> 00:32:43,880 Speaker 1: attempt to make sure that there weren't simple trading errors. 564 00:32:44,240 --> 00:32:46,560 Speaker 1: You would put in an order, it would get called 565 00:32:46,600 --> 00:32:50,160 Speaker 1: back to you in a very specific way. Someone else 566 00:32:50,320 --> 00:32:55,320 Speaker 1: was tracking the price, the time, the margin lines. You 567 00:32:55,400 --> 00:32:57,880 Speaker 1: had to make sure you never went over buying power 568 00:32:58,400 --> 00:33:02,760 Speaker 1: like there are a lot of move being pieces throughout. 569 00:33:03,840 --> 00:33:07,720 Speaker 1: Do you think the slack channel captured all of those, 570 00:33:07,760 --> 00:33:10,080 Speaker 1: because I don't know if people who aren't familiar with 571 00:33:10,080 --> 00:33:14,680 Speaker 1: trading desks pick up a lot of the the complexities there. 572 00:33:14,720 --> 00:33:18,080 Speaker 1: You you specifically refer to it in the text, but 573 00:33:18,640 --> 00:33:22,080 Speaker 1: it goes by really quick and and a lot of 574 00:33:22,120 --> 00:33:25,520 Speaker 1: the trading desk slack chatter. When you look at the 575 00:33:25,560 --> 00:33:28,600 Speaker 1: time stamps, there's a ton of stuff happening in a 576 00:33:28,720 --> 00:33:31,560 Speaker 1: very very short period of time. Yeah, it is actually 577 00:33:32,160 --> 00:33:34,479 Speaker 1: select this trading SLAC there's only a fraction of what 578 00:33:34,560 --> 00:33:36,600 Speaker 1: is happening because it does not show any of the 579 00:33:36,640 --> 00:33:40,160 Speaker 1: operational talk right, and it doesn't take any of the 580 00:33:40,200 --> 00:33:43,200 Speaker 1: strategy research talk, and it doesn't actually have operation talk 581 00:33:43,600 --> 00:33:46,080 Speaker 1: that it's all the strade that getting checked and booked 582 00:33:46,120 --> 00:33:49,680 Speaker 1: unders tons of work done by the by our middle 583 00:33:49,720 --> 00:33:54,240 Speaker 1: of his people, right by operations people. So there's a 584 00:33:54,280 --> 00:33:56,320 Speaker 1: lot of stuff going on in the background in terms 585 00:33:56,360 --> 00:33:59,160 Speaker 1: of operations. But I did think it was important to 586 00:34:00,080 --> 00:34:04,560 Speaker 1: uh particularly important to show slap chat and all its 587 00:34:04,760 --> 00:34:08,840 Speaker 1: entirety without cutting this boring upper almost like boring confirmations 588 00:34:08,880 --> 00:34:12,120 Speaker 1: and operational discussions, just to see what the processes. Like 589 00:34:12,600 --> 00:34:14,800 Speaker 1: I always like get laughing, like when they do in 590 00:34:15,040 --> 00:34:17,360 Speaker 1: TV shows and somebody says, picks up the phone and 591 00:34:17,400 --> 00:34:20,560 Speaker 1: says wire five million dollars to such inside and click off. 592 00:34:20,920 --> 00:34:22,839 Speaker 1: You know what happens in the real world. They'll call 593 00:34:22,880 --> 00:34:25,719 Speaker 1: you back, they will confirm the they will ask you 594 00:34:25,719 --> 00:34:28,919 Speaker 1: why the wire is for. They will make sure ask 595 00:34:29,000 --> 00:34:31,840 Speaker 1: for your birthday, even if they talk to your hundred 596 00:34:31,880 --> 00:34:36,960 Speaker 1: times before, Like there is a lot of due diligence 597 00:34:36,960 --> 00:34:40,000 Speaker 1: goes into any kind of financial transactions, which I think 598 00:34:40,239 --> 00:34:43,200 Speaker 1: a lot of media portrayals of the world's skips, and 599 00:34:43,239 --> 00:34:46,640 Speaker 1: again there says yes, if you're an operating room and 600 00:34:46,760 --> 00:34:51,400 Speaker 1: you are persforming a surgery, they cut, they cut a person, 601 00:34:51,520 --> 00:34:54,000 Speaker 1: They put those little like I don't know what it's caused, 602 00:34:54,040 --> 00:34:56,000 Speaker 1: pieces of gas on side and they count all of 603 00:34:56,040 --> 00:34:58,879 Speaker 1: them so they don't miss one. Right, there's a lot 604 00:34:58,880 --> 00:35:01,880 Speaker 1: of that going on. You can have breakdowns, right, and 605 00:35:02,120 --> 00:35:05,240 Speaker 1: you could see the moments when we're finding an error, 606 00:35:05,239 --> 00:35:08,239 Speaker 1: confused about something and fixing it on a commotion, and 607 00:35:08,280 --> 00:35:11,360 Speaker 1: that again, it's just part of showing what it is 608 00:35:11,400 --> 00:35:13,799 Speaker 1: really like to do the work. One of the things 609 00:35:13,800 --> 00:35:15,759 Speaker 1: you say in the book that I thought was intriguing 610 00:35:15,920 --> 00:35:19,520 Speaker 1: is people may be surprised how little time we spent 611 00:35:19,760 --> 00:35:23,160 Speaker 1: discussing the stock market. Tell us a little bit about 612 00:35:23,200 --> 00:35:28,040 Speaker 1: your thinking. They're well. One of the things is I've 613 00:35:28,080 --> 00:35:30,960 Speaker 1: always thought that stock market is what it is, it's 614 00:35:31,000 --> 00:35:33,840 Speaker 1: a fraction of financial markets. It's very important one because 615 00:35:34,080 --> 00:35:38,239 Speaker 1: stock market is a really good indicator of what's going 616 00:35:38,280 --> 00:35:40,560 Speaker 1: on in the world, and it's tends to be very 617 00:35:40,600 --> 00:35:45,359 Speaker 1: good leading indicator of certain things. Uh. But trying to 618 00:35:45,680 --> 00:35:47,719 Speaker 1: figure out on a given day, whether stocks are going 619 00:35:47,760 --> 00:35:50,000 Speaker 1: to go up and down. Yes, I spent about very 620 00:35:50,040 --> 00:35:53,360 Speaker 1: little time on such discussions. That's extremely rare for me 621 00:35:53,480 --> 00:35:55,360 Speaker 1: to talk about whether stock market is going to go 622 00:35:55,440 --> 00:35:57,480 Speaker 1: up or down to there tomorrow, has no idea and 623 00:35:57,520 --> 00:36:00,560 Speaker 1: I kind of not even think in those terms. I 624 00:36:00,640 --> 00:36:03,880 Speaker 1: find that stock market is an important component of the portfolio, 625 00:36:04,680 --> 00:36:09,600 Speaker 1: and I mentioned earlier on that I have been involved 626 00:36:09,640 --> 00:36:12,760 Speaker 1: in a disparity type of trading early in my career 627 00:36:13,239 --> 00:36:15,600 Speaker 1: and I still and I look. But for me, stock 628 00:36:15,640 --> 00:36:18,760 Speaker 1: market is not special. It's not like the main investable asset. 629 00:36:19,040 --> 00:36:23,719 Speaker 1: Is just one of the assets. And sometimes my portfolio 630 00:36:23,760 --> 00:36:26,280 Speaker 1: will not have any stock, any positions related to stock 631 00:36:26,320 --> 00:36:29,480 Speaker 1: market at all, and sometimes it will be heavily positioned 632 00:36:29,480 --> 00:36:31,920 Speaker 1: on some species. It could be not exactly stock market. 633 00:36:31,960 --> 00:36:34,480 Speaker 1: It could be something like dividend futures. It could be 634 00:36:34,520 --> 00:36:38,319 Speaker 1: any kind of stock indices around the world. Uh. For me, 635 00:36:38,400 --> 00:36:42,040 Speaker 1: that it's just a component, and I don't spend a 636 00:36:42,040 --> 00:36:44,319 Speaker 1: lot of time speculating on the short term direction of it. 637 00:36:45,520 --> 00:36:48,319 Speaker 1: Let's let's talk a little bit about options. I love 638 00:36:48,400 --> 00:36:52,319 Speaker 1: this quote, so after acknowledging my shortcomings and swearing up 639 00:36:52,320 --> 00:36:55,480 Speaker 1: and down to never touch options again, in my life. 640 00:36:56,160 --> 00:36:58,840 Speaker 1: What was I to do but answer the simple question 641 00:36:59,120 --> 00:37:02,720 Speaker 1: and by more options. Tell us a little bit about 642 00:37:02,760 --> 00:37:06,120 Speaker 1: your experience with options and why you sometimes felt you 643 00:37:06,200 --> 00:37:11,320 Speaker 1: had no choice but to participate in the options market. Yes, uh, 644 00:37:11,400 --> 00:37:15,400 Speaker 1: I mentioned I've talked earlier that I used to be 645 00:37:15,400 --> 00:37:19,319 Speaker 1: an options market maker, and I think that gave me 646 00:37:19,360 --> 00:37:21,680 Speaker 1: like a lot of I know. There's actually a pattern 647 00:37:22,120 --> 00:37:25,759 Speaker 1: hedge fund managers who are options market makers in the 648 00:37:25,840 --> 00:37:29,040 Speaker 1: past tend to use options much less when they become 649 00:37:29,160 --> 00:37:32,080 Speaker 1: go to the buy side. The reason is that you 650 00:37:32,160 --> 00:37:34,880 Speaker 1: kind of know the fallacies, all the fallacies associated that 651 00:37:35,040 --> 00:37:38,200 Speaker 1: using options. Every option looks If you buy an option, 652 00:37:38,320 --> 00:37:41,760 Speaker 1: it always looks great if your underlying market assumption is correct. 653 00:37:41,960 --> 00:37:44,080 Speaker 1: If you think the market goes up thirty percent and 654 00:37:44,120 --> 00:37:46,560 Speaker 1: you buy a call, of course the call will look great. 655 00:37:47,080 --> 00:37:49,880 Speaker 1: But that kind of idea of value and called based 656 00:37:49,880 --> 00:37:53,279 Speaker 1: on your original speculation that market is going to up 657 00:37:53,320 --> 00:37:57,160 Speaker 1: go up is fallacious, and when you own option there's 658 00:37:57,200 --> 00:38:00,319 Speaker 1: a lot of ways for them to go wrong. You 659 00:38:00,320 --> 00:38:02,560 Speaker 1: could be right about the direction, but it just can 660 00:38:02,600 --> 00:38:04,880 Speaker 1: move not fast enough or not far enough, or not 661 00:38:04,960 --> 00:38:07,520 Speaker 1: on the timing you need, and you will end up 662 00:38:07,680 --> 00:38:10,719 Speaker 1: having the correct view in a losing trade. And don't 663 00:38:10,760 --> 00:38:13,400 Speaker 1: even get me started on complex options. Absolutely hate all 664 00:38:13,400 --> 00:38:19,960 Speaker 1: those knocking knockouts barriers. I think that is just uh 665 00:38:21,200 --> 00:38:23,600 Speaker 1: of the time, is just setting cash on fire to 666 00:38:23,680 --> 00:38:28,680 Speaker 1: do complex options. There could be some exceptions. So why 667 00:38:28,680 --> 00:38:31,920 Speaker 1: did you feel compelled at times to say I swore 668 00:38:31,960 --> 00:38:35,880 Speaker 1: off options? But I had no choice. The trade presented 669 00:38:35,920 --> 00:38:39,480 Speaker 1: itself and I had to participate with options. Yeah, I 670 00:38:39,520 --> 00:38:46,440 Speaker 1: discussed in my book why what on occasion options? UH? 671 00:38:46,640 --> 00:38:51,120 Speaker 1: On occasion options associately miss priced? There is no choice 672 00:38:51,120 --> 00:38:53,319 Speaker 1: to use them, and usually it has not not to 673 00:38:53,440 --> 00:38:56,400 Speaker 1: do with it actually directly, like what is the implied 674 00:38:56,480 --> 00:38:59,400 Speaker 1: volatility of that the money option is? But sometimes option 675 00:38:59,480 --> 00:39:03,440 Speaker 1: structure is totally wrong because the typical option pricing is 676 00:39:03,480 --> 00:39:06,799 Speaker 1: always built on some kind of normal distribution, that there 677 00:39:06,840 --> 00:39:09,479 Speaker 1: is a central scenario which is most likely, and other 678 00:39:09,520 --> 00:39:11,919 Speaker 1: scenarios that get like as likely as you move away 679 00:39:11,960 --> 00:39:15,719 Speaker 1: from the central scenario. And yes, people have always like 680 00:39:15,840 --> 00:39:18,600 Speaker 1: fat tales skew cartosis. I don't even know all of 681 00:39:18,640 --> 00:39:23,480 Speaker 1: those terms. I used to know the better twenty years ago. So, 682 00:39:23,680 --> 00:39:28,480 Speaker 1: but there are all those things that just to not 683 00:39:28,640 --> 00:39:32,360 Speaker 1: use classic normal distribution. But it's still the idea is 684 00:39:32,360 --> 00:39:36,399 Speaker 1: that there is a certain central most likely price. Occasionally 685 00:39:36,400 --> 00:39:37,920 Speaker 1: that is not the case at all, and that's what 686 00:39:37,920 --> 00:39:40,640 Speaker 1: I was recognizing into thousand eighteen. There was no most 687 00:39:40,800 --> 00:39:43,240 Speaker 1: like if you looked at where the interest rates should 688 00:39:43,280 --> 00:39:46,200 Speaker 1: be in two thousand twenties, there was no most likely price. 689 00:39:46,719 --> 00:39:49,120 Speaker 1: The safety of praise too close to three percent. The 690 00:39:49,200 --> 00:39:52,160 Speaker 1: three percent was not a tiny seniest bit more likely 691 00:39:52,239 --> 00:39:55,160 Speaker 1: than one percent or four percent or two percent or zero. 692 00:39:55,600 --> 00:39:58,239 Speaker 1: So the forward that we had an interest rate had 693 00:39:58,280 --> 00:40:04,240 Speaker 1: absolutely no, no uh prerogative in terms of the actual outcome, 694 00:40:04,600 --> 00:40:07,920 Speaker 1: except that it was the forward that was there market price, 695 00:40:08,360 --> 00:40:10,279 Speaker 1: but in terms of where the price will end up 696 00:40:10,719 --> 00:40:14,239 Speaker 1: gave us absolutely no signal about that because we could 697 00:40:14,280 --> 00:40:16,880 Speaker 1: be easing more, we could be we could be easing 698 00:40:16,880 --> 00:40:18,960 Speaker 1: which I thought, what would happen, and we could be tightening. 699 00:40:19,280 --> 00:40:24,400 Speaker 1: And that originated my option trades for contracts of tho 700 00:40:24,400 --> 00:40:27,279 Speaker 1: thousand twenty. And what happened in two thousand nineteen that 701 00:40:27,360 --> 00:40:29,520 Speaker 1: the vault just on those options trades came down so 702 00:40:29,600 --> 00:40:35,239 Speaker 1: much that the trade was just undeniable, and I had 703 00:40:35,280 --> 00:40:37,640 Speaker 1: to say, okay, I gave up some of my previous 704 00:40:37,640 --> 00:40:40,719 Speaker 1: games and options because the vault collapse so much, but 705 00:40:40,840 --> 00:40:42,960 Speaker 1: that that is not what I should be thinking about. 706 00:40:43,239 --> 00:40:45,400 Speaker 1: What I should be thinking about is not what I 707 00:40:45,520 --> 00:40:48,319 Speaker 1: made on what I lost. But here's where we stand now. 708 00:40:48,440 --> 00:40:50,600 Speaker 1: This is the market price and this is the portfolio. 709 00:40:51,120 --> 00:40:54,879 Speaker 1: I've done this before, sometimes with success. Sometimes I was wrong. 710 00:40:54,920 --> 00:40:58,319 Speaker 1: Of course, I can have some petition going against me, 711 00:40:58,560 --> 00:41:01,120 Speaker 1: but I say, now the levels are really good, and 712 00:41:01,120 --> 00:41:05,880 Speaker 1: I'm gonna dramatically increase the position, really, really really intriguing. 713 00:41:06,440 --> 00:41:09,600 Speaker 1: My extra special guest this week is Alex Kuerevic. He 714 00:41:09,680 --> 00:41:13,480 Speaker 1: is the founder and chief investment officer of Hunte Advisors, 715 00:41:13,520 --> 00:41:16,760 Speaker 1: a macro hedge funds which was one of the top 716 00:41:16,840 --> 00:41:23,120 Speaker 1: ranked performance funds in So we're recording this when we're 717 00:41:23,160 --> 00:41:28,760 Speaker 1: about to get the March Federal Reserve decision on interest rates. 718 00:41:29,520 --> 00:41:32,680 Speaker 1: And one of the things that one of the things 719 00:41:32,719 --> 00:41:35,040 Speaker 1: I'm gonna say that again, one of the things that 720 00:41:35,400 --> 00:41:38,680 Speaker 1: struck me from the book was your line the Fed 721 00:41:38,800 --> 00:41:43,920 Speaker 1: might occasionally surprise the the Fed might occasionally surprise the 722 00:41:43,960 --> 00:41:47,840 Speaker 1: market with rape cuts, but they almost never surprised the 723 00:41:47,880 --> 00:41:52,960 Speaker 1: market with unexpected increases. Explain that situation to us. Yes, 724 00:41:53,040 --> 00:41:55,080 Speaker 1: so we're very close to the Fed and myden'mal in 725 00:41:55,120 --> 00:41:59,160 Speaker 1: the studying starting to pump, and the logic is that, um, 726 00:41:59,360 --> 00:42:02,680 Speaker 1: they're at case. Once FED did intermeding cuts to support 727 00:42:03,600 --> 00:42:09,319 Speaker 1: UH markets to dissolve crisis, dissolve arious liquidity problems that 728 00:42:09,360 --> 00:42:12,920 Speaker 1: were happening, and usually no matter how much expected, they 729 00:42:13,000 --> 00:42:16,399 Speaker 1: tended to surprise by doing even more aggressive rate cut 730 00:42:16,520 --> 00:42:20,239 Speaker 1: measures when UH crisis is like in two thousand one 731 00:42:20,400 --> 00:42:24,520 Speaker 1: or two thousand eight or H two twenty would occur. 732 00:42:24,880 --> 00:42:28,160 Speaker 1: I think they have very little upside of hiking when 733 00:42:28,200 --> 00:42:33,480 Speaker 1: market doesn't expect them to hike, because tightening interest rates 734 00:42:33,480 --> 00:42:35,719 Speaker 1: has a very slow effect. Whether they're gonna raise rates 735 00:42:35,800 --> 00:42:40,120 Speaker 1: twenty five basis points today or extra twenty five basis 736 00:42:40,120 --> 00:42:42,480 Speaker 1: points I mean today or at the next meeting they 737 00:42:42,520 --> 00:42:45,080 Speaker 1: have plenty of that's not going to have any major 738 00:42:45,120 --> 00:42:48,760 Speaker 1: effect on financial markets. Sorry, it's going to have effect. 739 00:42:48,880 --> 00:42:51,200 Speaker 1: I apologize. They're gonna have effect on financial markets, but 740 00:42:51,200 --> 00:42:53,920 Speaker 1: they're not going to have a long term economic effects 741 00:42:53,960 --> 00:42:58,439 Speaker 1: that actual tightening. So it seems like a very bad 742 00:42:58,560 --> 00:43:00,759 Speaker 1: risk rep word for position for if they hike more 743 00:43:00,760 --> 00:43:03,520 Speaker 1: than expected and cause the stock market crush or some 744 00:43:03,600 --> 00:43:06,680 Speaker 1: kind of disruption, it will all be on them. While 745 00:43:06,760 --> 00:43:09,360 Speaker 1: they have plenty of time to do what the market 746 00:43:09,360 --> 00:43:12,520 Speaker 1: expects them to do and then signal if they if 747 00:43:12,520 --> 00:43:14,920 Speaker 1: they for the next meeting, what they actually want to 748 00:43:14,920 --> 00:43:18,160 Speaker 1: do at the next meeting. Because of this mentality, there 749 00:43:18,160 --> 00:43:23,600 Speaker 1: haven't been any intermeding hikes or surprised seeingly hikes and 750 00:43:23,719 --> 00:43:28,919 Speaker 1: size since I believe and tell us what happened, because 751 00:43:29,000 --> 00:43:31,200 Speaker 1: I think recall there was a little bit of a 752 00:43:31,239 --> 00:43:33,719 Speaker 1: disruption in the bond market then, wasn't there, Yeah, that 753 00:43:33,840 --> 00:43:35,960 Speaker 1: caused the bond market collapse, and I think they kind 754 00:43:35,960 --> 00:43:39,400 Speaker 1: of just learned the lesson why. It's very hard for 755 00:43:39,440 --> 00:43:41,959 Speaker 1: me to imagine why would they bother? So the event 756 00:43:42,120 --> 00:43:44,160 Speaker 1: is to happen in four minutes and I could be 757 00:43:44,280 --> 00:43:49,160 Speaker 1: proven wrong, but the market is pricing maybe like ten 758 00:43:49,200 --> 00:43:53,439 Speaker 1: percent of chance of them doing fifty basis points. So 759 00:43:53,600 --> 00:43:58,880 Speaker 1: how do you position yourself in anticipation of an outcome 760 00:43:58,920 --> 00:44:02,239 Speaker 1: where there are only a couple of possible results. Are 761 00:44:02,280 --> 00:44:06,239 Speaker 1: you positioning for all the results? Are you doing the 762 00:44:06,280 --> 00:44:08,600 Speaker 1: ones that are the most miss priced that give you 763 00:44:08,640 --> 00:44:13,800 Speaker 1: the best risk reward profile. I'm trying to position for 764 00:44:13,920 --> 00:44:16,320 Speaker 1: miss priced results, and usually that means that I could 765 00:44:16,440 --> 00:44:19,000 Speaker 1: take some losses that time wrong. I do like to 766 00:44:19,040 --> 00:44:22,120 Speaker 1: have trades that go in every possible direction, but like 767 00:44:22,480 --> 00:44:25,439 Speaker 1: something that will make money if this, if the other 768 00:44:25,480 --> 00:44:28,840 Speaker 1: thing happens right, But it's it's not always possible to 769 00:44:28,880 --> 00:44:32,839 Speaker 1: have portfolio balanced. The dichotomy that one phases on such 770 00:44:32,840 --> 00:44:35,120 Speaker 1: situations when you're pretty sure which way the way will 771 00:44:35,160 --> 00:44:38,239 Speaker 1: go is that, well, on one hand, you have really 772 00:44:38,239 --> 00:44:40,200 Speaker 1: good outs in your favor. On the other hand, the 773 00:44:40,280 --> 00:44:43,400 Speaker 1: risk symmetry is very bad. So if you make a 774 00:44:43,400 --> 00:44:46,800 Speaker 1: bad for example, that the just very specific bad on 775 00:44:46,800 --> 00:44:49,200 Speaker 1: on the performacy outcome that they're going to go to 776 00:44:49,200 --> 00:44:52,120 Speaker 1: twenty five basis points, I might make such a bad 777 00:44:52,239 --> 00:44:55,239 Speaker 1: but it would be very moderate and size because so 778 00:44:55,400 --> 00:44:58,000 Speaker 1: that if they do go fifty, which would be an outlier, 779 00:44:58,080 --> 00:45:01,040 Speaker 1: I cannot afford to blow up. Can It has to 780 00:45:01,080 --> 00:45:05,680 Speaker 1: be a moderate manageable loss if that happens. And you 781 00:45:05,760 --> 00:45:11,000 Speaker 1: also spend a lot of time betting on intermarket relationships 782 00:45:12,200 --> 00:45:15,839 Speaker 1: various currencies and various interest rates around the world, tell 783 00:45:15,920 --> 00:45:20,360 Speaker 1: us how you approach those sorts of trades in the 784 00:45:20,440 --> 00:45:25,120 Speaker 1: face of Federal reserve action. Well, there is a strong 785 00:45:25,160 --> 00:45:31,040 Speaker 1: relation obviously, relations between interest rates and interestrate differential, between 786 00:45:31,080 --> 00:45:38,839 Speaker 1: currencies and UM and and actually currency performance, interest rate 787 00:45:38,880 --> 00:45:42,600 Speaker 1: differentials the carrying currencies tend to be actually probably the 788 00:45:42,640 --> 00:45:47,839 Speaker 1: best long term predictor of currency performance if you look 789 00:45:47,880 --> 00:45:50,800 Speaker 1: at the total return, even not even the real carry 790 00:45:50,800 --> 00:45:53,880 Speaker 1: but it's just simply the nominal career seems to be 791 00:45:53,880 --> 00:45:57,040 Speaker 1: a very good predictor of long term performance. So, of 792 00:45:57,080 --> 00:46:02,440 Speaker 1: course central bank decisions have a very meaningful impact on currencies, 793 00:46:02,480 --> 00:46:06,600 Speaker 1: and sometimes this is where you can look for opportunities, 794 00:46:06,640 --> 00:46:09,360 Speaker 1: like I did in two thousand fourteen. One one central 795 00:46:09,360 --> 00:46:11,800 Speaker 1: bank is priced in to do all those trade hikes, 796 00:46:11,840 --> 00:46:14,920 Speaker 1: but the currency is actually weaker than it should be, 797 00:46:15,320 --> 00:46:17,160 Speaker 1: like dollar was much weaker than it should be in 798 00:46:17,160 --> 00:46:20,239 Speaker 1: two thousand fourteen. So long dollar long bonds was a 799 00:46:20,320 --> 00:46:24,279 Speaker 1: very good trade because if the FAT cut raised rates 800 00:46:24,360 --> 00:46:28,120 Speaker 1: as it was projected to uh post two thousand fourteen, 801 00:46:28,160 --> 00:46:30,680 Speaker 1: as fast as they projected to should it, dollar would 802 00:46:30,680 --> 00:46:34,480 Speaker 1: be as stronger, even stronger than it was for than 803 00:46:34,520 --> 00:46:37,640 Speaker 1: it was trading. But there was also plenty of opportunities 804 00:46:37,640 --> 00:46:40,879 Speaker 1: for dollar to strength, and even without that, even if 805 00:46:41,200 --> 00:46:44,239 Speaker 1: the FAT did not really raise rates as much. So 806 00:46:44,280 --> 00:46:49,279 Speaker 1: those type of relationships um allow you to understanding this 807 00:46:49,400 --> 00:46:53,479 Speaker 1: type of dominance that being long dollar is dominant over 808 00:46:53,560 --> 00:46:57,040 Speaker 1: being shot bond, and being long bond is dominant over 809 00:46:57,080 --> 00:47:00,000 Speaker 1: being shot dollar. It's it's a little difficult to grasp. 810 00:47:00,440 --> 00:47:02,399 Speaker 1: You'd probably have to read the book and work through 811 00:47:02,440 --> 00:47:05,160 Speaker 1: the logic to understand how this logic works. But this 812 00:47:05,239 --> 00:47:07,359 Speaker 1: type relationship allow me to get a lot of edge 813 00:47:07,360 --> 00:47:11,720 Speaker 1: when I get them right. Huh, really really interesting. Um, 814 00:47:11,840 --> 00:47:15,879 Speaker 1: you have very significant fixed income derivative experience from your 815 00:47:15,880 --> 00:47:20,799 Speaker 1: prior roles. How large of a piece of your fund 816 00:47:20,880 --> 00:47:25,960 Speaker 1: strategy does that play? It does play, specifically on the 817 00:47:26,000 --> 00:47:29,320 Speaker 1: fact that we're much more granular when it comes to 818 00:47:29,400 --> 00:47:32,080 Speaker 1: us fixed income than other products. When we deal with 819 00:47:32,120 --> 00:47:34,319 Speaker 1: products that we don't know about, we try to deal 820 00:47:34,400 --> 00:47:37,520 Speaker 1: with simple liquid things like liquid. Say we go to 821 00:47:37,520 --> 00:47:39,280 Speaker 1: the country, we try to see what are the liquid 822 00:47:39,280 --> 00:47:42,560 Speaker 1: bond futures on that country. Okay, so the interest rate 823 00:47:42,640 --> 00:47:47,480 Speaker 1: decision is twenty five, as we expected. I think the 824 00:47:47,520 --> 00:47:52,200 Speaker 1: next big thing will really be waiting for their waiting 825 00:47:52,200 --> 00:47:54,760 Speaker 1: for the press conference. They won't be that much happening, 826 00:47:54,800 --> 00:47:57,120 Speaker 1: I think until press conference. I mean, market can do 827 00:47:57,120 --> 00:48:00,480 Speaker 1: all sorts of weird things, but otherwise, now that might 828 00:48:00,520 --> 00:48:03,359 Speaker 1: all be happening ntil press conference. So let's let's talk 829 00:48:03,400 --> 00:48:06,480 Speaker 1: a little bit about inflation and what the Federal Reserve 830 00:48:06,600 --> 00:48:09,200 Speaker 1: is doing, because this is the perfect time to bring 831 00:48:09,239 --> 00:48:11,640 Speaker 1: this up. You know, on the one hand, it looks 832 00:48:11,680 --> 00:48:14,440 Speaker 1: like the FED is long overdue to get off of 833 00:48:14,480 --> 00:48:18,879 Speaker 1: their emergency footing and and bring FED fund rates up 834 00:48:18,920 --> 00:48:22,719 Speaker 1: to at least closer to a normal level. And on 835 00:48:22,760 --> 00:48:25,719 Speaker 1: the other hand, everybody's jumping up and down about inflation, 836 00:48:26,960 --> 00:48:30,120 Speaker 1: but it seems like much of the inflation that's out 837 00:48:30,160 --> 00:48:33,440 Speaker 1: there isn't very much going to be affected by what 838 00:48:33,600 --> 00:48:38,279 Speaker 1: the FED is doing. Automobiles and and semiconductors seem to 839 00:48:38,320 --> 00:48:41,040 Speaker 1: be outside of the FED. Energy prices and the war, 840 00:48:42,080 --> 00:48:44,800 Speaker 1: the Russian invasion of Ukraine, FED rates aren't going to 841 00:48:44,880 --> 00:48:49,440 Speaker 1: impact home prices. Really is an inventory problem and a 842 00:48:49,520 --> 00:48:54,640 Speaker 1: massive surge in in pent up demand from both both 843 00:48:54,680 --> 00:48:59,279 Speaker 1: the pandemic and a decade of weak household information. When 844 00:48:59,320 --> 00:49:02,360 Speaker 1: you see the sort of things that are taking place, 845 00:49:02,920 --> 00:49:06,399 Speaker 1: you know, what's your thought pricess as to what's really 846 00:49:06,400 --> 00:49:09,360 Speaker 1: going on at a fat Yes. So one of the 847 00:49:09,440 --> 00:49:13,239 Speaker 1: things that I can always repeat, and honestly, it's one 848 00:49:13,280 --> 00:49:16,080 Speaker 1: of those things do as I say, but not always 849 00:49:16,120 --> 00:49:19,040 Speaker 1: do is I do? I repeat this advice don't focus 850 00:49:19,080 --> 00:49:21,680 Speaker 1: on what the FAT should do, focus on what the 851 00:49:21,719 --> 00:49:25,120 Speaker 1: FAT will do. We'll have our opinions about policy, and 852 00:49:25,120 --> 00:49:30,680 Speaker 1: I have some strong opinions about policy, but what is 853 00:49:30,719 --> 00:49:34,560 Speaker 1: really important to understand, like what actually will happen. For example, 854 00:49:34,600 --> 00:49:37,640 Speaker 1: I could say today I could be talking and they 855 00:49:37,640 --> 00:49:40,160 Speaker 1: should not hide at all, or someone else should say 856 00:49:40,239 --> 00:49:43,239 Speaker 1: they should really hide fifty basis points. But the reality 857 00:49:43,320 --> 00:49:47,719 Speaker 1: is they were going to hike twenty five basis points 858 00:49:47,719 --> 00:49:49,879 Speaker 1: on March and that's what they did. There was really 859 00:49:49,960 --> 00:49:53,400 Speaker 1: very little doubt that that's going to happen. And you 860 00:49:54,320 --> 00:49:56,480 Speaker 1: the interesting part about the discussion that you had a 861 00:49:56,520 --> 00:49:59,960 Speaker 1: discussion unfold life. You've heard me my reasoning before it happened, 862 00:50:00,000 --> 00:50:04,319 Speaker 1: not after it happened. Uh, it is my Yes, I 863 00:50:04,320 --> 00:50:06,960 Speaker 1: totally agree with you. I think it's kind of a 864 00:50:07,000 --> 00:50:10,919 Speaker 1: little insane that fat field urgency to raise interest rates 865 00:50:10,920 --> 00:50:14,120 Speaker 1: to do anything about the current situation because exactly as 866 00:50:14,120 --> 00:50:16,320 Speaker 1: you said, the situations that's absolutely not on their purview. 867 00:50:16,520 --> 00:50:21,080 Speaker 1: You cannot fix supply bottlenecks with raising interest rates usually 868 00:50:21,120 --> 00:50:24,960 Speaker 1: cannot fix them quickly. You could crush demand, but the 869 00:50:25,120 --> 00:50:27,400 Speaker 1: underlying problem is already well. First of all, if you 870 00:50:27,400 --> 00:50:30,120 Speaker 1: ask why is inflation even bad. Well, people are not 871 00:50:30,160 --> 00:50:33,359 Speaker 1: happy that they cannot buy things, right, they don't want 872 00:50:33,360 --> 00:50:36,239 Speaker 1: to right, So you make it even harder for them 873 00:50:36,280 --> 00:50:40,239 Speaker 1: to buy things, inflict even more pain on people, just 874 00:50:40,560 --> 00:50:45,719 Speaker 1: so that you end up inflicting even more pain on people, uh, 875 00:50:45,960 --> 00:50:49,000 Speaker 1: just so the demand would go down and maybe then 876 00:50:49,040 --> 00:50:51,360 Speaker 1: the price will come down. It's really ridiculous logic, and 877 00:50:51,360 --> 00:50:54,759 Speaker 1: it's very slow logic. It's not gonna work very much. 878 00:50:55,760 --> 00:50:58,120 Speaker 1: A lot of what we're seeing right now, a lot 879 00:50:58,160 --> 00:51:00,520 Speaker 1: of inflation that wasting right now, a lot of generally 880 00:51:00,840 --> 00:51:03,759 Speaker 1: economic outcomes, part of a more even part of a 881 00:51:03,800 --> 00:51:07,439 Speaker 1: more general rule. Economic outcomes typically the result of what 882 00:51:07,480 --> 00:51:09,479 Speaker 1: was happening a year or two ago, not of what's 883 00:51:09,520 --> 00:51:12,320 Speaker 1: happening today. Right. So the inflation that we see, the 884 00:51:12,360 --> 00:51:15,040 Speaker 1: economic numbers, they see the result of the result of 885 00:51:15,280 --> 00:51:19,360 Speaker 1: stock market rallying over the last two years, of incredible 886 00:51:19,400 --> 00:51:22,880 Speaker 1: monetary expansion, of incredible physical expansion of two thousand, two 887 00:51:22,880 --> 00:51:25,440 Speaker 1: thousand twenty one. Of course, why seeing high inflation all 888 00:51:25,440 --> 00:51:28,880 Speaker 1: those numbers? Now right now we have a very different environment. 889 00:51:28,920 --> 00:51:33,440 Speaker 1: We're seeing relative physical contraction, we're seeing raising rates where 890 00:51:33,560 --> 00:51:38,279 Speaker 1: seeing monetary contraction coming up. We're seeing stock markets no 891 00:51:38,360 --> 00:51:41,680 Speaker 1: longer cooperating with people. I think that one or two 892 00:51:41,760 --> 00:51:43,879 Speaker 1: years from now, we'll see a very different picture which 893 00:51:43,920 --> 00:51:46,840 Speaker 1: will unwind what we see now. What the FED is 894 00:51:46,880 --> 00:51:50,680 Speaker 1: doing now is not relevant to the shouldn't be relevant 895 00:51:50,800 --> 00:51:53,120 Speaker 1: to the numbers where I see in today with a 896 00:51:53,200 --> 00:51:55,640 Speaker 1: result of what they were doing two years ago. But 897 00:51:55,840 --> 00:51:57,600 Speaker 1: I think I think this is the case. I'm a 898 00:51:57,680 --> 00:52:00,000 Speaker 1: like criticizing too much, but I think this is the case. 899 00:52:00,080 --> 00:52:02,480 Speaker 1: Is on political pressure and kind of the sense of 900 00:52:02,520 --> 00:52:05,399 Speaker 1: site guides and the chat are blindsided them a little bit. 901 00:52:05,960 --> 00:52:08,279 Speaker 1: So let's talk about Let's talk about that, because that's 902 00:52:08,320 --> 00:52:12,919 Speaker 1: really interesting. And as you said earlier, if the FED 903 00:52:13,160 --> 00:52:18,320 Speaker 1: really thought that they're raising rates now here in March 904 00:52:18,400 --> 00:52:23,200 Speaker 1: of would do something about inflation. They could have done 905 00:52:23,200 --> 00:52:27,879 Speaker 1: an increase at the previous meeting they didn't. They could 906 00:52:27,880 --> 00:52:31,080 Speaker 1: have done an intermeding increase they didn't. They could have 907 00:52:31,120 --> 00:52:35,279 Speaker 1: done fifty basis points they didn't. This seems to be 908 00:52:35,719 --> 00:52:37,359 Speaker 1: you know, when I was on a trading desk, they 909 00:52:37,400 --> 00:52:39,880 Speaker 1: used to call it throwing a virgin in the volcano. 910 00:52:40,320 --> 00:52:44,480 Speaker 1: Sometimes you just have to appease the market, give them 911 00:52:44,520 --> 00:52:47,080 Speaker 1: a little bit so they don't think you're too far behind. 912 00:52:47,120 --> 00:52:50,640 Speaker 1: The crowd, and that's what this I don't want to 913 00:52:50,640 --> 00:52:54,520 Speaker 1: put words in your mouth, is this quarter point essentially 914 00:52:55,200 --> 00:52:58,520 Speaker 1: addressing that that the fact that they were surprised by 915 00:52:58,520 --> 00:53:02,319 Speaker 1: the political pressure and the noise about inflation. Is that 916 00:53:02,320 --> 00:53:05,400 Speaker 1: what you're suggesting something like that. Yes, I think it 917 00:53:05,640 --> 00:53:10,520 Speaker 1: was the political pressure that got to them. It does 918 00:53:10,600 --> 00:53:14,640 Speaker 1: not make, honestly a ton of sense to me, this 919 00:53:14,800 --> 00:53:18,000 Speaker 1: whole thing, because but yeah, I think it was a 920 00:53:18,000 --> 00:53:21,239 Speaker 1: political pressure that and kind of the mentality a lot 921 00:53:21,280 --> 00:53:25,120 Speaker 1: of people started to get really concerned about inflation. Honestly, 922 00:53:25,160 --> 00:53:27,239 Speaker 1: I was concerned about inflation, but that's a concerned about 923 00:53:27,280 --> 00:53:29,879 Speaker 1: it in two thousand twenty. I'm not concerned about it now. 924 00:53:29,880 --> 00:53:33,399 Speaker 1: It already happened, and I'm not concerned about inflation going 925 00:53:33,440 --> 00:53:37,320 Speaker 1: forward because all the conditions point towards negative inflation going forward, 926 00:53:37,360 --> 00:53:40,680 Speaker 1: not towards positive inflation going forward. So I would be 927 00:53:41,040 --> 00:53:44,799 Speaker 1: now I'm concerned about deflation in the next two years. 928 00:53:44,040 --> 00:53:47,359 Speaker 1: It's it's funny you say that because I pulled out 929 00:53:47,440 --> 00:53:50,879 Speaker 1: this quote from the book which came out a while ago, 930 00:53:50,960 --> 00:53:55,759 Speaker 1: which obviously you wrote long before that. In fact, when 931 00:53:55,760 --> 00:53:59,120 Speaker 1: I realized that, if anything, the stimulus and liquidity triggered 932 00:53:59,160 --> 00:54:03,719 Speaker 1: by the crisis would have long term inflationary consequences. So 933 00:54:03,880 --> 00:54:09,920 Speaker 1: clearly this most recent bout of inflation you anticipated. It 934 00:54:10,120 --> 00:54:13,640 Speaker 1: sounds like you're in the transitory camp. Is that is 935 00:54:13,640 --> 00:54:16,920 Speaker 1: that fair statement. I'm definitely in the terms of the 936 00:54:17,080 --> 00:54:22,160 Speaker 1: camp with a passion, and I just to be a 937 00:54:22,200 --> 00:54:26,360 Speaker 1: bit humble about that. I anticipated the inflation, but I 938 00:54:26,400 --> 00:54:30,239 Speaker 1: did not really get the past right fully. And what 939 00:54:30,600 --> 00:54:35,399 Speaker 1: was I did not anticipate this reaction, So I did 940 00:54:35,400 --> 00:54:38,200 Speaker 1: not anticipate, like what I was thinking that even if 941 00:54:38,200 --> 00:54:40,040 Speaker 1: the events, like if you told me that the events 942 00:54:40,040 --> 00:54:43,320 Speaker 1: would unfold like they were with unfold the unfolded, I 943 00:54:43,360 --> 00:54:46,400 Speaker 1: would expect rates to be solidly zero now and holding. 944 00:54:48,280 --> 00:54:51,319 Speaker 1: I had no idea that the fact would panic into 945 00:54:51,360 --> 00:54:53,959 Speaker 1: the trade rising and the main reason why I didn't 946 00:54:53,960 --> 00:54:57,200 Speaker 1: think that would happen, and I still think that, But 947 00:54:57,480 --> 00:55:00,200 Speaker 1: I'm also aware of the sending opinions with me. I 948 00:55:00,440 --> 00:55:02,680 Speaker 1: think that there would so much more focus on this 949 00:55:02,800 --> 00:55:05,920 Speaker 1: environment reducing the balance, because when else they're going to 950 00:55:05,960 --> 00:55:07,880 Speaker 1: have a chance to reduce the balance. Right now, the 951 00:55:08,040 --> 00:55:12,000 Speaker 1: raise rates crush the economy, have the rollover, then they 952 00:55:12,000 --> 00:55:14,640 Speaker 1: won't have never chance to sell any of the balance it, 953 00:55:14,760 --> 00:55:18,120 Speaker 1: and they're stuck with this thing with the success reserves 954 00:55:18,160 --> 00:55:20,360 Speaker 1: that they have paid interest on which they're currently raising. 955 00:55:21,920 --> 00:55:25,600 Speaker 1: The point of this exercise makes very little sense to me. 956 00:55:25,760 --> 00:55:31,640 Speaker 1: Why raise uh interest rate on reserves on trillions of 957 00:55:31,640 --> 00:55:34,120 Speaker 1: those those deserves the interest rate actually paying two banks? 958 00:55:34,560 --> 00:55:37,520 Speaker 1: The banks don't really need a bailout right now, So 959 00:55:37,560 --> 00:55:40,120 Speaker 1: why they in the fact bailing out banks by raising 960 00:55:40,160 --> 00:55:44,480 Speaker 1: interest rates? Why they could be tightening monitory conditions if 961 00:55:44,560 --> 00:55:48,320 Speaker 1: so needed, by doing the much needed reduction of the 962 00:55:48,360 --> 00:55:52,640 Speaker 1: balance she it so so they've already begun to roll 963 00:55:52,760 --> 00:55:56,719 Speaker 1: back quantitative easing. At what point do we start to 964 00:55:56,719 --> 00:56:01,360 Speaker 1: see quantitative tightening? And again this may enough be your specialty, 965 00:56:01,480 --> 00:56:05,040 Speaker 1: but clearly what the FET is doing in the bond 966 00:56:05,080 --> 00:56:08,880 Speaker 1: market impacts how you build a portfolio and put on 967 00:56:08,920 --> 00:56:13,520 Speaker 1: specific trades. Well, we will probably know more about the 968 00:56:14,080 --> 00:56:21,200 Speaker 1: quantitative tightening schedule quantitative tightening schedule UM when we look 969 00:56:21,239 --> 00:56:25,600 Speaker 1: at their um post game press conference. When I look 970 00:56:25,640 --> 00:56:27,480 Speaker 1: at the press press conference and probably be a lot 971 00:56:27,520 --> 00:56:30,840 Speaker 1: of questions about this, I believe that they're gonna so 972 00:56:31,000 --> 00:56:35,480 Speaker 1: far their own track too uh start at least running 973 00:56:35,480 --> 00:56:37,359 Speaker 1: off the balunce it. But there might be a lot 974 00:56:37,400 --> 00:56:39,279 Speaker 1: of and I don't think like details of how they're 975 00:56:39,280 --> 00:56:41,200 Speaker 1: gonna do it at what places are the important. But 976 00:56:41,239 --> 00:56:42,960 Speaker 1: I think they will start running off the balance it. 977 00:56:43,200 --> 00:56:44,759 Speaker 1: I just don't know how long the time they will 978 00:56:44,840 --> 00:56:48,000 Speaker 1: have to do it. What's gonna happen is they're gonna 979 00:56:48,120 --> 00:56:50,000 Speaker 1: they started to raise race, they're gonna start running off 980 00:56:50,000 --> 00:56:52,480 Speaker 1: the balance at the moment they see the inflation of 981 00:56:52,520 --> 00:56:56,919 Speaker 1: the economy showing some cracks. They might stop raising interest rates, 982 00:56:57,120 --> 00:56:59,319 Speaker 1: but stopping the runoff of the balances will be probably 983 00:56:59,360 --> 00:57:02,160 Speaker 1: a little bit more of a wonderous process. Really interesting, 984 00:57:02,440 --> 00:57:04,880 Speaker 1: let's talk a little I don't know, I don't so 985 00:57:05,040 --> 00:57:07,040 Speaker 1: we might have like tightening still going on in the 986 00:57:07,040 --> 00:57:10,440 Speaker 1: background even when they stopped tightening. That's why I'm actually 987 00:57:10,480 --> 00:57:11,840 Speaker 1: so much in the camp that they're going to be 988 00:57:11,840 --> 00:57:15,880 Speaker 1: easy next year. That's really interesting. Let's talk a little 989 00:57:15,920 --> 00:57:19,880 Speaker 1: bit about because you trade currencies, I want to talk 990 00:57:19,920 --> 00:57:26,840 Speaker 1: about cryptocurrencies and central bank digital cash. Tell us your 991 00:57:26,840 --> 00:57:29,240 Speaker 1: thoughts about what you think is happening in that space 992 00:57:29,280 --> 00:57:32,320 Speaker 1: and what you think the FED and other central banks 993 00:57:32,320 --> 00:57:35,280 Speaker 1: are going to do about digital currency. Well, first of all, 994 00:57:36,600 --> 00:57:39,600 Speaker 1: did you like when I think of digital currencies? I 995 00:57:39,640 --> 00:57:41,560 Speaker 1: wrote an article about it is actually a free years 996 00:57:41,560 --> 00:57:43,640 Speaker 1: a goal when I called in quest of digital gold. 997 00:57:43,880 --> 00:57:45,240 Speaker 1: I don't know if I was the first one to 998 00:57:45,320 --> 00:57:47,720 Speaker 1: use the term digital goal, but I used it fairly earlier. 999 00:57:47,720 --> 00:57:49,680 Speaker 1: I used it a few years ago. And what I 1000 00:57:49,760 --> 00:57:56,040 Speaker 1: pointed out that digital currencies have different users, and Bitcoin 1001 00:57:56,920 --> 00:58:00,520 Speaker 1: tries to be digital goals, like a digital consistent store 1002 00:58:00,520 --> 00:58:05,080 Speaker 1: of value. Why is it? Uh, it doesn't have to 1003 00:58:05,120 --> 00:58:09,280 Speaker 1: have ease of transactions. That doesn't have to be it 1004 00:58:09,320 --> 00:58:11,320 Speaker 1: should not actually be easy to move it around. That's 1005 00:58:11,320 --> 00:58:14,840 Speaker 1: actually the fact that bitcoin is a clunky to transact 1006 00:58:14,880 --> 00:58:16,680 Speaker 1: as a feature, not a bug, because if you want 1007 00:58:16,680 --> 00:58:18,000 Speaker 1: to have store of value, you don't want it to 1008 00:58:18,000 --> 00:58:23,560 Speaker 1: be easily stolen. So uh, bitcoin is a heavy, ponderous 1009 00:58:23,560 --> 00:58:25,720 Speaker 1: store of value like gold. And then there are other 1010 00:58:25,720 --> 00:58:30,760 Speaker 1: currencies which could have various industrial uses like I think 1011 00:58:30,800 --> 00:58:35,120 Speaker 1: I call the theium digital copper. I honestly not don't 1012 00:58:35,160 --> 00:58:38,040 Speaker 1: really know enough to understand what all of those cryptic 1013 00:58:38,040 --> 00:58:41,000 Speaker 1: currencies doing, what could be the use cases? I cannot 1014 00:58:41,040 --> 00:58:44,200 Speaker 1: give any opinion. What I think is that bitcoin has 1015 00:58:44,240 --> 00:58:47,000 Speaker 1: been working really hard to accumulate the street cred as 1016 00:58:47,000 --> 00:58:50,560 Speaker 1: a store of value because it had multiple cv corrections, 1017 00:58:50,560 --> 00:58:52,920 Speaker 1: but it never really collapsed, which is not how we 1018 00:58:53,000 --> 00:58:55,880 Speaker 1: think and bubble trades. Many people say that bitcoin is 1019 00:58:55,920 --> 00:59:01,040 Speaker 1: a bubble, for example, and it trades anything, uh it 1020 00:59:01,080 --> 00:59:04,680 Speaker 1: tastes like anything but a bubble, because bubbles do not 1021 00:59:04,800 --> 00:59:07,440 Speaker 1: do this eighty percent correction then rebound eighty percent per 1022 00:59:07,480 --> 00:59:10,680 Speaker 1: correction rebound. You know what does that type of trading 1023 00:59:11,120 --> 00:59:15,120 Speaker 1: precious metals and that's exactly how cryptocurrency is trading. That 1024 00:59:15,200 --> 00:59:19,400 Speaker 1: trading is precious metals and alternative core uh coins trading 1025 00:59:19,440 --> 00:59:23,120 Speaker 1: as base metals. And that is a pattern that I 1026 00:59:23,120 --> 00:59:26,400 Speaker 1: recognize best based in two thousand fifteen. So for traders 1027 00:59:26,400 --> 00:59:30,840 Speaker 1: who want to trade cryptocurrencies, and my recommendation is look 1028 00:59:30,880 --> 00:59:35,040 Speaker 1: at precious metals patterns and try to understand how those develop. 1029 00:59:36,440 --> 00:59:38,600 Speaker 1: There are all sorts of pros and cons that could 1030 00:59:38,600 --> 00:59:42,080 Speaker 1: be talked about whether bitcoin will survive as a store 1031 00:59:42,120 --> 00:59:45,919 Speaker 1: of value, what will be the adoption levels. I don't 1032 00:59:45,960 --> 00:59:49,600 Speaker 1: think that government digital currencies, which a subject the jure, 1033 00:59:49,640 --> 00:59:52,960 Speaker 1: have threat to Bitcoin, no more than fiat currencies that 1034 00:59:53,000 --> 00:59:56,480 Speaker 1: currently exists are a threat to bolth. I think if 1035 00:59:56,800 --> 01:00:00,960 Speaker 1: every country will have its own digital currency U something 1036 01:00:01,560 --> 01:00:04,240 Speaker 1: that it could be like not affected by central banks, 1037 01:00:04,280 --> 01:00:09,240 Speaker 1: like bitcoin will actually have a use interesting how far 1038 01:00:09,320 --> 01:00:11,720 Speaker 1: it can go thor whether what's the fair value for it? 1039 01:00:11,760 --> 01:00:17,160 Speaker 1: I'm really not qualified to say really really interesting. So 1040 01:00:17,440 --> 01:00:22,720 Speaker 1: let's talk about your old boss when when you were 1041 01:00:22,720 --> 01:00:26,560 Speaker 1: a JP Morgan, Jamie Diamond was running the shop. You've 1042 01:00:26,600 --> 01:00:30,240 Speaker 1: been pretty uh, You've offered a lot of praise to 1043 01:00:30,360 --> 01:00:33,960 Speaker 1: Diamond over over the time he was there, but you 1044 01:00:34,040 --> 01:00:39,920 Speaker 1: also criticized his thoughts on bitcoin back in Obviously lots 1045 01:00:40,040 --> 01:00:42,240 Speaker 1: changed since then. Tell us a little bit about your 1046 01:00:42,240 --> 01:00:47,320 Speaker 1: thoughts of money center banks like JP Morgan Chase being 1047 01:00:47,480 --> 01:00:53,680 Speaker 1: active participants in cryptocurrencies. Well, one thing about Jamie what 1048 01:00:53,760 --> 01:00:56,920 Speaker 1: I know, like call how much I know him? And 1049 01:00:57,040 --> 01:00:59,800 Speaker 1: I'm kind of feeling awkward to stop tweeting somebody essentially 1050 01:00:59,800 --> 01:01:02,440 Speaker 1: by talking about somebody on podcast. But I know that 1051 01:01:02,520 --> 01:01:05,480 Speaker 1: he can like say things and then take them back 1052 01:01:05,480 --> 01:01:09,320 Speaker 1: and recognize his mistake without too much stress over that. 1053 01:01:09,800 --> 01:01:12,400 Speaker 1: So he's like, nobody should be trading bitcoin, And my 1054 01:01:12,520 --> 01:01:15,120 Speaker 1: joke was basically, what do you know about trading bitcoin? 1055 01:01:16,680 --> 01:01:18,840 Speaker 1: And I'm sure he could have changed his mind several 1056 01:01:18,880 --> 01:01:23,120 Speaker 1: times and loved at all. Right, So that's what actually 1057 01:01:23,120 --> 01:01:25,800 Speaker 1: makes a good manager, right, he's encouraging to people, he 1058 01:01:25,920 --> 01:01:29,160 Speaker 1: knows how to write, run a good bank or business 1059 01:01:29,200 --> 01:01:32,520 Speaker 1: success of JP more of all banks under his leaderships 1060 01:01:32,520 --> 01:01:36,560 Speaker 1: are so tremendous and so divergent from performance of any 1061 01:01:36,600 --> 01:01:38,960 Speaker 1: other banks. Like I don't think there was ever a 1062 01:01:39,000 --> 01:01:42,000 Speaker 1: bad illustration a better case study of how much is 1063 01:01:42,040 --> 01:01:44,280 Speaker 1: he all can make a difference than Jamie Diamond. I 1064 01:01:44,280 --> 01:01:47,280 Speaker 1: mean that is completely outlined in terms of in terms 1065 01:01:47,320 --> 01:01:50,320 Speaker 1: of how much different he made. If you track same bags, 1066 01:01:50,360 --> 01:01:54,120 Speaker 1: how they were performing, stockless, performing relatively the appears under 1067 01:01:54,200 --> 01:01:57,840 Speaker 1: his rule, under his leadership and without his leadership, and 1068 01:01:57,840 --> 01:02:02,080 Speaker 1: the divergence is just insane, really really more than one case, 1069 01:02:02,160 --> 01:02:05,040 Speaker 1: it's it's the case with City Bank Bank one JP Morgan. 1070 01:02:05,120 --> 01:02:08,360 Speaker 1: Every single time, the divergence is just out of the galaxy. 1071 01:02:09,320 --> 01:02:12,200 Speaker 1: How much better everything performs than to his leadership. But 1072 01:02:12,480 --> 01:02:14,680 Speaker 1: I also was just laughing about the fact, what do 1073 01:02:14,680 --> 01:02:17,040 Speaker 1: you know about bitcoin? Why do you think that bitcoin 1074 01:02:17,120 --> 01:02:20,760 Speaker 1: should be cheaper or more expensive or whatever? And I 1075 01:02:20,840 --> 01:02:23,600 Speaker 1: sometimes make laugh fun of myself that way as well. 1076 01:02:24,480 --> 01:02:28,400 Speaker 1: I think banks will have to uh take this into 1077 01:02:28,400 --> 01:02:30,520 Speaker 1: account because it's a store of value and banks are 1078 01:02:30,560 --> 01:02:33,440 Speaker 1: supposed to store value. I think banks have no choice 1079 01:02:33,480 --> 01:02:36,600 Speaker 1: to get into the business of digital volts and volts 1080 01:02:36,600 --> 01:02:41,960 Speaker 1: and institutional custody for cryptocurrency. Huh really really interesting. So 1081 01:02:42,440 --> 01:02:48,720 Speaker 1: when you look at cryptocurrencies, are they a macro factor 1082 01:02:48,800 --> 01:02:51,920 Speaker 1: that you have to think about? Cryptocurrencies are becoming a 1083 01:02:51,920 --> 01:02:54,880 Speaker 1: micro factor? I think up a certain point, it was 1084 01:02:54,920 --> 01:02:59,320 Speaker 1: a very esoteric trade and just this one specific asset 1085 01:02:59,360 --> 01:03:03,280 Speaker 1: and the only SR strategy, and you about this assets too, 1086 01:03:04,160 --> 01:03:07,640 Speaker 1: how to buy and hold them? And when my investors 1087 01:03:07,680 --> 01:03:10,360 Speaker 1: were asking about this, my answer as well, you can 1088 01:03:10,400 --> 01:03:13,040 Speaker 1: buy and hold them yourselves. Why should I be doing 1089 01:03:13,040 --> 01:03:15,360 Speaker 1: this for you and charge your money to do that? 1090 01:03:16,320 --> 01:03:19,240 Speaker 1: Um and let of institutional custody was part of the 1091 01:03:19,440 --> 01:03:22,240 Speaker 1: issue for me, But also I felt like I cannot 1092 01:03:22,240 --> 01:03:24,840 Speaker 1: really add value. I'm a trader. My job is to 1093 01:03:25,240 --> 01:03:27,280 Speaker 1: buy low and so high. Even if I have long 1094 01:03:27,360 --> 01:03:31,360 Speaker 1: term time horizons, I'm still quintessentially a trader. So why 1095 01:03:31,360 --> 01:03:34,840 Speaker 1: would I be trading if I don't. If I cannot 1096 01:03:34,840 --> 01:03:38,120 Speaker 1: trade cryptocurrency, why I would be holding it for for clients? 1097 01:03:38,280 --> 01:03:41,280 Speaker 1: I think now with institutional custody developing now, with the 1098 01:03:41,280 --> 01:03:44,520 Speaker 1: futures market, various et fs and various options, there are 1099 01:03:44,520 --> 01:03:50,840 Speaker 1: some opportunities opening up for arbitrash for various investments and 1100 01:03:51,240 --> 01:03:55,800 Speaker 1: various more structured investments. And also cryptocurrency is becoming to 1101 01:03:55,880 --> 01:03:58,600 Speaker 1: be incorporated in the global marcro pictures. So definitely we're 1102 01:03:58,600 --> 01:04:02,200 Speaker 1: becoming more and more open to going in the direction 1103 01:04:03,400 --> 01:04:06,840 Speaker 1: really interesting. Before I get to my favorite questions that 1104 01:04:06,920 --> 01:04:09,800 Speaker 1: we ask all of our guests, UH, let me throw 1105 01:04:09,800 --> 01:04:13,240 Speaker 1: a couple of curveballs at you one from the book 1106 01:04:13,960 --> 01:04:18,680 Speaker 1: I'd rather manage money than people explain that. Well. So 1107 01:04:18,760 --> 01:04:23,360 Speaker 1: my background, I'm a mathematician. I'm essentially I like playing games. 1108 01:04:23,400 --> 01:04:26,600 Speaker 1: I like sitting in front of screens and thinking about numbers. 1109 01:04:26,640 --> 01:04:30,040 Speaker 1: I like walking around and thinking about charts and relationship 1110 01:04:30,040 --> 01:04:32,160 Speaker 1: with in assets. I'm not the kind of person who 1111 01:04:32,200 --> 01:04:35,960 Speaker 1: wants to be hiring, firing, doing interviews, having a lot 1112 01:04:36,000 --> 01:04:39,600 Speaker 1: of chatswood employees. They're just not my strong point. When 1113 01:04:39,640 --> 01:04:42,600 Speaker 1: I started a fund, my important condition has to have 1114 01:04:42,680 --> 01:04:45,480 Speaker 1: a team. Uh, and I have a business partner who 1115 01:04:45,480 --> 01:04:48,560 Speaker 1: can hand who really can spearhead that side of the business, 1116 01:04:48,600 --> 01:04:53,200 Speaker 1: like money raising and just building the team. It's I 1117 01:04:54,640 --> 01:04:57,240 Speaker 1: think I do. I did always okay with my employees 1118 01:04:57,280 --> 01:05:00,480 Speaker 1: and relationship with my employees, and PEP seem to have 1119 01:05:00,480 --> 01:05:02,480 Speaker 1: worked with me, seemed to have wanted to work with 1120 01:05:02,520 --> 01:05:06,760 Speaker 1: me again. In fact, um one of my team members 1121 01:05:06,840 --> 01:05:10,320 Speaker 1: might chief risk corfus. She's started working with me to 1122 01:05:10,360 --> 01:05:13,640 Speaker 1: get two thousands back at a chase when she came 1123 01:05:13,680 --> 01:05:16,400 Speaker 1: to be my assist, like my kind of second and 1124 01:05:16,440 --> 01:05:20,560 Speaker 1: comment on my market making desk. And she's still with me. 1125 01:05:20,720 --> 01:05:22,959 Speaker 1: I mean, she hasn't been working with me all this time, 1126 01:05:22,960 --> 01:05:25,440 Speaker 1: but she's on the team now. So clearly I can 1127 01:05:25,680 --> 01:05:28,600 Speaker 1: have good relationships with people, but managing people are just 1128 01:05:28,680 --> 01:05:30,920 Speaker 1: not my passion. I never thought I want to hire 1129 01:05:30,960 --> 01:05:33,880 Speaker 1: ten thousand people and build a business of the scope 1130 01:05:33,880 --> 01:05:36,880 Speaker 1: of other big hedge funds. I am interested in running 1131 01:05:36,880 --> 01:05:41,560 Speaker 1: a strategy. Interesting and the other curveball you've talked about. 1132 01:05:41,760 --> 01:05:44,200 Speaker 1: You'd like to play chess, you like to play poker, 1133 01:05:44,600 --> 01:05:48,200 Speaker 1: but you've also described them as tools that help you 1134 01:05:48,360 --> 01:05:51,360 Speaker 1: with your trading skills. Tell us a little bit about 1135 01:05:51,400 --> 01:05:56,680 Speaker 1: the parallels. How can one transfer skills from those games 1136 01:05:56,880 --> 01:05:59,640 Speaker 1: into trading and investing. One thing that I like to 1137 01:05:59,680 --> 01:06:01,880 Speaker 1: talk at about, and this has a lot of with 1138 01:06:01,960 --> 01:06:04,800 Speaker 1: a mathematical background, that there is two components that go 1139 01:06:04,880 --> 01:06:09,560 Speaker 1: into trading, analysis and strategy. And you know when you 1140 01:06:09,640 --> 01:06:14,000 Speaker 1: are mus have a PhD in mathematics. People usually don't 1141 01:06:14,000 --> 01:06:17,000 Speaker 1: have any doubt that you're good at analysis and analysis, 1142 01:06:17,000 --> 01:06:20,320 Speaker 1: whether it's economic analysis of plate analysis, about plending a solution, 1143 01:06:20,800 --> 01:06:24,760 Speaker 1: about thinking what is the central scenario, what is likely 1144 01:06:24,800 --> 01:06:27,840 Speaker 1: to happen. Strategy is a very different way of thinking. 1145 01:06:28,440 --> 01:06:30,760 Speaker 1: You it's when you don't know what's gonna happen, what 1146 01:06:30,840 --> 01:06:33,080 Speaker 1: is your system of responses? How there You're gonna respond 1147 01:06:33,080 --> 01:06:36,320 Speaker 1: to various scenarios, and you could be one good at 1148 01:06:36,360 --> 01:06:38,520 Speaker 1: one thing and not necessarily good at the others, though 1149 01:06:38,560 --> 01:06:42,600 Speaker 1: they are somewhat connected. I think I was lucky in 1150 01:06:42,640 --> 01:06:45,400 Speaker 1: my preparation to Wall Street that I was really involved 1151 01:06:45,440 --> 01:06:48,160 Speaker 1: in a lot of strategic activities. To I, I did 1152 01:06:48,160 --> 01:06:51,920 Speaker 1: a lot of academic competitions which involves strategy. And I 1153 01:06:51,960 --> 01:06:54,600 Speaker 1: started to play chess very young, and then I switched 1154 01:06:54,600 --> 01:06:57,880 Speaker 1: to Go, which became more more my passion kind of 1155 01:06:57,960 --> 01:07:01,400 Speaker 1: throughout college and high school. So high school, college and 1156 01:07:01,440 --> 01:07:03,600 Speaker 1: even and I SAI. Now I still play Go, and 1157 01:07:03,640 --> 01:07:06,760 Speaker 1: then I've learned later many other strategy games, including poker, 1158 01:07:07,360 --> 01:07:11,760 Speaker 1: and that really taught me about this system of responses. 1159 01:07:12,160 --> 01:07:15,040 Speaker 1: You cannot just say decide what's going to happen, and 1160 01:07:15,040 --> 01:07:17,680 Speaker 1: that's what's gonna happen. You might must be prepared to 1161 01:07:17,760 --> 01:07:21,200 Speaker 1: react to things which you didn't anticipate. And I think 1162 01:07:21,280 --> 01:07:25,720 Speaker 1: poker specifically, but all competitive activities, but poker specifically is 1163 01:07:25,840 --> 01:07:30,160 Speaker 1: very good at building psychological fortitude, the ability to take 1164 01:07:30,200 --> 01:07:33,760 Speaker 1: a loss and move on, ability to gauge whether I'm 1165 01:07:33,800 --> 01:07:36,360 Speaker 1: in a good set of mind to even continue playing 1166 01:07:36,440 --> 01:07:40,600 Speaker 1: right now. It's never perfect. I made a lot of 1167 01:07:40,600 --> 01:07:44,800 Speaker 1: those mistakes both and poker and trading when I probably 1168 01:07:44,840 --> 01:07:50,000 Speaker 1: did not gauge my state of mind correctly. However, it's 1169 01:07:50,000 --> 01:07:52,280 Speaker 1: a good start. It's a good background. And I did 1170 01:07:52,360 --> 01:07:55,160 Speaker 1: use a lot of poker analogies in my book The 1171 01:07:55,200 --> 01:07:59,320 Speaker 1: Trade of March twenty twenty, which in some sense looks 1172 01:07:59,320 --> 01:08:01,840 Speaker 1: to an earlier men About interview when we're talking about 1173 01:08:01,840 --> 01:08:06,560 Speaker 1: positioning uh into March two thousand twenty one of very 1174 01:08:06,560 --> 01:08:09,160 Speaker 1: strong poker anology I talk I thought a lot about 1175 01:08:09,200 --> 01:08:12,440 Speaker 1: this over my poker days. How much better you're likely 1176 01:08:12,520 --> 01:08:15,640 Speaker 1: to perform if you start the night well, if you 1177 01:08:15,720 --> 01:08:17,040 Speaker 1: have a lot of chips in front of you on 1178 01:08:17,080 --> 01:08:20,240 Speaker 1: the table, you're so much likely to play better. So 1179 01:08:20,280 --> 01:08:22,960 Speaker 1: if you're moving into the crisis with your portfolio in 1180 01:08:23,000 --> 01:08:25,680 Speaker 1: a good shape, You're so much more likely to make 1181 01:08:25,720 --> 01:08:30,599 Speaker 1: good decisions then when you are moving into crisis, when 1182 01:08:30,600 --> 01:08:33,320 Speaker 1: you're Part four is under pressure. Part of it is 1183 01:08:33,360 --> 01:08:35,960 Speaker 1: just your risk management obviously, like if you're losing money, 1184 01:08:36,000 --> 01:08:37,600 Speaker 1: you're not going to be able to have space to 1185 01:08:37,600 --> 01:08:40,400 Speaker 1: take new positions. But part of the pure psychology, you're 1186 01:08:40,400 --> 01:08:43,400 Speaker 1: gonna be a little paralyzed when you're losing money, while 1187 01:08:43,439 --> 01:08:45,559 Speaker 1: if you're doing well, you can be very open minded 1188 01:08:45,600 --> 01:08:47,280 Speaker 1: and think like, Okay, I can take profits on this, 1189 01:08:47,320 --> 01:08:49,400 Speaker 1: I'll take off this position, I'll put this position all, 1190 01:08:49,479 --> 01:08:52,960 Speaker 1: I'll do this, I'll do that. Really really interesting. I 1191 01:08:53,040 --> 01:08:55,479 Speaker 1: know only have you for a couple more minutes, So 1192 01:08:55,600 --> 01:08:59,439 Speaker 1: let me jump to my favorite questions that I ask 1193 01:08:59,560 --> 01:09:03,840 Speaker 1: all of our guests, starting with you know, I was 1194 01:09:03,880 --> 01:09:06,639 Speaker 1: gonna One of the things I noticed in the book 1195 01:09:06,880 --> 01:09:11,280 Speaker 1: is there are long periods of time when you're working 1196 01:09:11,520 --> 01:09:14,960 Speaker 1: literally twenty four hours a day. There there are slack 1197 01:09:15,040 --> 01:09:17,720 Speaker 1: messages back and forth at one in the morning, at 1198 01:09:17,800 --> 01:09:19,599 Speaker 1: three in the morning, at two at five in the morning, 1199 01:09:19,680 --> 01:09:24,120 Speaker 1: West Coast time. UM. There were days in March of 1200 01:09:25,600 --> 01:09:28,840 Speaker 1: uh where the whole team was working twenty four hours 1201 01:09:28,840 --> 01:09:32,120 Speaker 1: a day. Days on a time, So it kind of 1202 01:09:32,160 --> 01:09:36,559 Speaker 1: makes my next question almost uh irrelevant, But I have 1203 01:09:36,720 --> 01:09:39,920 Speaker 1: to ask, you know, during the pandemic, did you have 1204 01:09:40,080 --> 01:09:44,600 Speaker 1: time to watch TV? Were you streaming any shows or 1205 01:09:44,680 --> 01:09:48,840 Speaker 1: listening to anything online? Or were you just you know, 1206 01:09:48,960 --> 01:09:53,880 Speaker 1: pretty much seven at the trading desk. I think the 1207 01:09:53,960 --> 01:09:57,040 Speaker 1: first few weeks were really funk here, the first few 1208 01:09:57,040 --> 01:09:58,920 Speaker 1: weeks of March, and that's what I'm writing the book of. 1209 01:09:59,000 --> 01:10:00,519 Speaker 1: There was not a lot of time to do many 1210 01:10:00,520 --> 01:10:05,679 Speaker 1: other things except dealing with like kids being suddenly remote 1211 01:10:06,160 --> 01:10:09,920 Speaker 1: in remote education, and dealing with markets. I generally do 1212 01:10:10,040 --> 01:10:12,400 Speaker 1: do a lot of things to onn wine, which includes 1213 01:10:12,439 --> 01:10:16,439 Speaker 1: watching TV. Uh. In the first amounts of Pandemic, yes, 1214 01:10:16,479 --> 01:10:19,120 Speaker 1: I started to watch TV. I was writing fiction, I 1215 01:10:19,240 --> 01:10:21,760 Speaker 1: was going for a lot of hikes. I would do 1216 01:10:21,800 --> 01:10:24,120 Speaker 1: a lot of my work, including writing this book, The 1217 01:10:24,200 --> 01:10:27,320 Speaker 1: Trades of march Um. Much of it was written with 1218 01:10:27,360 --> 01:10:30,559 Speaker 1: a laptop sitting by the ocean both and here in 1219 01:10:30,600 --> 01:10:34,200 Speaker 1: California and Hawaii. I did. I did a lot of 1220 01:10:34,240 --> 01:10:36,000 Speaker 1: those things, and I did a lot of things that 1221 01:10:36,040 --> 01:10:38,320 Speaker 1: many people do not think of doing. It undwinding at night. 1222 01:10:38,400 --> 01:10:41,160 Speaker 1: One of the things I did in Pandemic I watched 1223 01:10:41,160 --> 01:10:45,080 Speaker 1: the series of footy six YouTube videos which were really 1224 01:10:45,160 --> 01:10:50,160 Speaker 1: math videos, just discussing constructions, really really large numbers. What's 1225 01:10:50,200 --> 01:10:52,960 Speaker 1: the name of that YouTube channel that you were watching is. 1226 01:10:53,000 --> 01:10:56,599 Speaker 1: I think it's called Ridiculously a Huge Numbers And there's 1227 01:10:56,600 --> 01:10:59,840 Speaker 1: like fourty six video videos. And so I would be 1228 01:11:00,240 --> 01:11:03,320 Speaker 1: at eleven in the evening watching a video about transfine 1229 01:11:03,320 --> 01:11:07,120 Speaker 1: conduction and felt growing erarchies. I have my own weird ways, 1230 01:11:07,120 --> 01:11:08,840 Speaker 1: but I do watch quite a bit of TV. I 1231 01:11:08,880 --> 01:11:11,760 Speaker 1: do like I I really like good TV. I think 1232 01:11:11,800 --> 01:11:14,200 Speaker 1: that I don't go to movies anymore very much. I 1233 01:11:14,200 --> 01:11:15,880 Speaker 1: think the movies are no longer any good, but the 1234 01:11:15,920 --> 01:11:18,439 Speaker 1: TV shows are amazing. So give us a few TV 1235 01:11:18,520 --> 01:11:21,559 Speaker 1: shows you like, and uh, tell us, tell us what 1236 01:11:21,760 --> 01:11:25,280 Speaker 1: entertain you over the past couple of years. Well, I 1237 01:11:25,320 --> 01:11:28,800 Speaker 1: obviously love Billions, especially because I know in person many 1238 01:11:28,840 --> 01:11:34,320 Speaker 1: people it's based on. I love Game of Thrones because 1239 01:11:34,320 --> 01:11:38,040 Speaker 1: it's a fantasy show and I know the author and 1240 01:11:38,080 --> 01:11:40,960 Speaker 1: I read all these books obviously long before they came out, 1241 01:11:41,000 --> 01:11:43,519 Speaker 1: and it's really well done. There's been a lot of 1242 01:11:43,520 --> 01:11:46,840 Speaker 1: great shows over the years. Uh. Some of them were 1243 01:11:46,880 --> 01:11:48,920 Speaker 1: a kind of surprise shows that we're not e one 1244 01:11:49,000 --> 01:11:53,960 Speaker 1: made as a first uh R shows originally, like I'm 1245 01:11:54,000 --> 01:11:56,280 Speaker 1: a huge fan, for example, of the nineties show Puppet 1246 01:11:56,360 --> 01:12:01,280 Speaker 1: the Vampire Slayer. I I'm a fan of the recent 1247 01:12:01,320 --> 01:12:05,439 Speaker 1: show with Magicians. Oh, I love that show. Yeah, I 1248 01:12:05,479 --> 01:12:07,680 Speaker 1: think that was a really huge upside surprise for me. 1249 01:12:07,720 --> 01:12:12,759 Speaker 1: How the show were tremendous. Yeah, that's funny. It's it's funny, 1250 01:12:12,880 --> 01:12:15,880 Speaker 1: it's creative. It's just keeps taking into places you don't 1251 01:12:15,880 --> 01:12:19,519 Speaker 1: expect to be it. I was delighted show. And then 1252 01:12:19,520 --> 01:12:21,800 Speaker 1: there are always classic shows which are just really good, 1253 01:12:21,880 --> 01:12:30,400 Speaker 1: like Wire Breaking, Bad, Original Sopranos, Homeland does those kind 1254 01:12:30,400 --> 01:12:33,080 Speaker 1: of classic goods. True Blood and I like thru Blood 1255 01:12:33,080 --> 01:12:38,400 Speaker 1: as well. I'm surprised, given your proclivity for black hole metaphors, 1256 01:12:38,680 --> 01:12:41,080 Speaker 1: I'm not hearing any science fiction in that list other 1257 01:12:41,120 --> 01:12:44,280 Speaker 1: than Magicians. Is more fantasy than sci fi, you know. 1258 01:12:44,320 --> 01:12:48,559 Speaker 1: I love battles. I love New Battlestar Galactica. Really yes, 1259 01:12:48,760 --> 01:12:51,360 Speaker 1: the New Battlestar Galactica is one of my favorites. So 1260 01:12:51,360 --> 01:12:54,840 Speaker 1: so there are two shows I have to ask you about, um, 1261 01:12:54,960 --> 01:12:59,320 Speaker 1: the Expanse, which I'm up to the finale. I've watched 1262 01:12:59,360 --> 01:13:03,479 Speaker 1: everything except the last one has been tremendous. I don't know, 1263 01:13:03,479 --> 01:13:05,679 Speaker 1: if you're a fan of that sort of sci fi, 1264 01:13:06,640 --> 01:13:08,280 Speaker 1: you know what. I was going to be killed for 1265 01:13:08,360 --> 01:13:10,720 Speaker 1: my ants on this. I haven't yet gone through Expensive 1266 01:13:10,720 --> 01:13:13,800 Speaker 1: and I wished a few episodes. I have a particular thing, 1267 01:13:13,840 --> 01:13:17,000 Speaker 1: and that's probably why my I don't watch a lot 1268 01:13:17,040 --> 01:13:20,520 Speaker 1: of science fiction shows is I'm tend to be claustrophobic, 1269 01:13:20,840 --> 01:13:23,439 Speaker 1: and I'm really bothered by shows which set up all 1270 01:13:23,479 --> 01:13:28,200 Speaker 1: on a closed space station. Somehow Battlestar Galactica managed to 1271 01:13:28,600 --> 01:13:30,760 Speaker 1: circumvent it and I was able to watch it, But 1272 01:13:30,880 --> 01:13:32,960 Speaker 1: a space station shows that usually kind of a tough 1273 01:13:33,000 --> 01:13:36,439 Speaker 1: watch for me. And then there's another sci fi I'm 1274 01:13:36,439 --> 01:13:39,679 Speaker 1: going to recommend. There's only two seasons of it. Altered 1275 01:13:39,800 --> 01:13:43,720 Speaker 1: Carbon was spectacular. Yeah, it was good. I wished for 1276 01:13:43,880 --> 01:13:46,920 Speaker 1: season and I enjoyed it. The second season is that, 1277 01:13:47,120 --> 01:13:51,400 Speaker 1: you know the character human they wear people like skins 1278 01:13:51,479 --> 01:13:54,800 Speaker 1: so you can change bodies. They do that in the 1279 01:13:54,840 --> 01:14:00,120 Speaker 1: second season, and it was, you know, surprisingly good and 1280 01:14:00,160 --> 01:14:02,720 Speaker 1: it resolves a lot of open questions. If you like 1281 01:14:02,840 --> 01:14:05,719 Speaker 1: the first season, I'm going to recommend the second season. 1282 01:14:05,800 --> 01:14:08,240 Speaker 1: Might I might turn back to that and I probably 1283 01:14:08,280 --> 01:14:12,000 Speaker 1: will watch Expense. I love one of the authors writing 1284 01:14:12,040 --> 01:14:17,160 Speaker 1: for expense his other books, and one of my favorite authors, 1285 01:14:17,520 --> 01:14:20,080 Speaker 1: Daniel Abraham. We're going to circle back to books in 1286 01:14:20,160 --> 01:14:23,479 Speaker 1: a moment um. Let me ask about mentors who who 1287 01:14:23,520 --> 01:14:27,400 Speaker 1: helped to shape your career. There is actually if you 1288 01:14:27,439 --> 01:14:29,880 Speaker 1: look at my book at the acknowledgement page, there is 1289 01:14:29,880 --> 01:14:34,320 Speaker 1: a list of mentors there. They were mentors along my 1290 01:14:35,200 --> 01:14:38,559 Speaker 1: like they'll key people obviously along my entire life studying, 1291 01:14:38,600 --> 01:14:42,760 Speaker 1: from my like mask club mentors to high school teachers 1292 01:14:42,840 --> 01:14:48,680 Speaker 1: to UH graduate school professors to my serious advisor and 1293 01:14:48,760 --> 01:14:51,200 Speaker 1: people like that when you think about Wolsted. Also, there 1294 01:14:51,200 --> 01:14:54,800 Speaker 1: were some it's really easy for me to remember certain 1295 01:14:54,920 --> 01:14:57,960 Speaker 1: key moments of mentorship, like, for example, my first boss 1296 01:14:58,040 --> 01:15:03,240 Speaker 1: at Bankers Rush, Jeff Basmon, and I noticed he would 1297 01:15:03,240 --> 01:15:05,799 Speaker 1: say some things which is really register for me forever. 1298 01:15:06,680 --> 01:15:08,479 Speaker 1: Like I remember one of my early days on Wall 1299 01:15:08,520 --> 01:15:10,759 Speaker 1: Street and he's talking to broker on the shout box 1300 01:15:11,080 --> 01:15:13,280 Speaker 1: and he's asking about the price on something and broker 1301 01:15:13,360 --> 01:15:16,280 Speaker 1: is saying the prices. I think I calculated the price 1302 01:15:16,280 --> 01:15:19,120 Speaker 1: should be four at five, and he's like, I don't 1303 01:15:19,160 --> 01:15:22,800 Speaker 1: care about your calculation. I can do calculation myself. Where 1304 01:15:22,920 --> 01:15:25,880 Speaker 1: do you have forbid, do you have five offer? And 1305 01:15:25,920 --> 01:15:28,000 Speaker 1: that's kind of mentality which registered for me. It's not 1306 01:15:28,000 --> 01:15:30,000 Speaker 1: about what you think the market should be, it's about 1307 01:15:30,400 --> 01:15:33,960 Speaker 1: whether the market is there and going on forward. I 1308 01:15:34,000 --> 01:15:38,719 Speaker 1: had lots of those mentorship moments with my various bosses 1309 01:15:38,760 --> 01:15:43,160 Speaker 1: at JP Morgan. That included Evan Burnson, David Puss, Mark Sarp, 1310 01:15:43,640 --> 01:15:48,080 Speaker 1: John Anderson, who was probably the person I worked really 1311 01:15:48,120 --> 01:15:51,080 Speaker 1: closely with during my years of proprietary trading, and JP 1312 01:15:51,160 --> 01:15:54,400 Speaker 1: Morgan and still remained the great friend and supporter. He's 1313 01:15:54,439 --> 01:15:59,400 Speaker 1: currently co head of fixed and Common Commodities and Millennium. 1314 01:15:59,439 --> 01:16:02,760 Speaker 1: People like that were super helpful to me. Each of 1315 01:16:02,800 --> 01:16:05,360 Speaker 1: them said at some point some things that really registered 1316 01:16:05,400 --> 01:16:08,000 Speaker 1: with me. Those For example, one time, which was very 1317 01:16:08,040 --> 01:16:10,640 Speaker 1: criticalizing time in my career, when I came to my 1318 01:16:10,680 --> 01:16:13,680 Speaker 1: boss and I asked him, I told him this is 1319 01:16:13,680 --> 01:16:15,360 Speaker 1: the trade. I'm laying out this trade, this is my 1320 01:16:15,400 --> 01:16:19,200 Speaker 1: trade idea. And he said, well, if you do this 1321 01:16:19,240 --> 01:16:21,439 Speaker 1: what you're proposing to do, how much you're gonna make? 1322 01:16:21,880 --> 01:16:24,559 Speaker 1: I said, we're gonna make ten million dollars and then 1323 01:16:24,600 --> 01:16:27,040 Speaker 1: he said, okay, let's do twice that and make twenty million. 1324 01:16:29,760 --> 01:16:31,880 Speaker 1: And that was kind of an important way for me 1325 01:16:31,920 --> 01:16:34,760 Speaker 1: to understand you should not set your side low in 1326 01:16:34,840 --> 01:16:41,280 Speaker 1: financial markets. How that trade end up working out, we 1327 01:16:41,439 --> 01:16:46,080 Speaker 1: made ten million probably so so let's not say that officially, 1328 01:16:46,080 --> 01:16:48,120 Speaker 1: but well made a good amount of money on the trade. 1329 01:16:49,040 --> 01:16:51,639 Speaker 1: So let's talk. You mentioned some of your favorite authors. 1330 01:16:51,640 --> 01:16:53,680 Speaker 1: What are some of your favorite books and what are 1331 01:16:53,680 --> 01:16:59,639 Speaker 1: you reading now? Are you mostly think about fiction I'll 1332 01:16:59,640 --> 01:17:02,000 Speaker 1: fix you nor non fiction either or what do you like? Well? 1333 01:17:02,600 --> 01:17:04,920 Speaker 1: I mostly read fiction. I read some books I read 1334 01:17:05,000 --> 01:17:09,280 Speaker 1: you usually read some books related to finance with materials 1335 01:17:10,760 --> 01:17:16,960 Speaker 1: related to finance, or I read Oh, I read the 1336 01:17:17,360 --> 01:17:20,280 Speaker 1: fantasy and science fiction. Give it give us some names. 1337 01:17:20,680 --> 01:17:23,280 Speaker 1: So obviously my all time favorite is The Lord of 1338 01:17:23,280 --> 01:17:26,880 Speaker 1: the Rings. Yeah, Lord of the Rings, if you stay 1339 01:17:26,880 --> 01:17:29,360 Speaker 1: in fantasy. I love The Will of Time, which is 1340 01:17:29,400 --> 01:17:31,240 Speaker 1: recently made into a show. But by the way, I 1341 01:17:31,240 --> 01:17:35,760 Speaker 1: loved on Amazon Prime the Will of Time. I love 1342 01:17:36,120 --> 01:17:40,799 Speaker 1: all works by possibly my favorite living author, Guy Gabriel 1343 01:17:40,880 --> 01:17:46,320 Speaker 1: ka Um. He writes a lot of historical fantasy. I like. 1344 01:17:46,439 --> 01:17:50,479 Speaker 1: Another current author I really like is Naomi novic Um. 1345 01:17:50,640 --> 01:17:53,600 Speaker 1: Give us a book title, but my favorite book of 1346 01:17:53,640 --> 01:17:58,120 Speaker 1: hers is Spinning Silver. But she is also very well 1347 01:17:58,120 --> 01:18:00,960 Speaker 1: known for her temporary series starts with the book Her 1348 01:18:00,960 --> 01:18:04,640 Speaker 1: Majesty Is His Majesty is Dragon for Guy Gabriel k K, 1349 01:18:04,840 --> 01:18:09,520 Speaker 1: who I mentioned earlier. His earlier work is Fionova Tapestry Trilogy, 1350 01:18:09,840 --> 01:18:13,240 Speaker 1: but his his recent books, which are set up in 1351 01:18:13,320 --> 01:18:17,320 Speaker 1: any Sounds period children are The Sky and The Brightness 1352 01:18:17,360 --> 01:18:24,960 Speaker 1: Long Ago um I Viering. I mentioned Daniel Abraham. I 1353 01:18:24,960 --> 01:18:28,760 Speaker 1: really like his series The Dagger in the Coin. I 1354 01:18:28,800 --> 01:18:32,920 Speaker 1: already mentioned The Game of Thrones, both showing books. I 1355 01:18:33,000 --> 01:18:35,400 Speaker 1: probably could go on with a list of fantasy novels 1356 01:18:35,400 --> 01:18:38,960 Speaker 1: I love, just to switch to science fiction a bit. 1357 01:18:39,439 --> 01:18:43,200 Speaker 1: I like Andres Game by Orson Scott Card some of 1358 01:18:43,240 --> 01:18:46,200 Speaker 1: the sequels, but not too farantsticals because they get worse. 1359 01:18:47,160 --> 01:18:50,320 Speaker 1: The first book is terrific. Yeah. I love Andrew's Game, 1360 01:18:50,360 --> 01:18:52,240 Speaker 1: and it's great for I think it's great for traders 1361 01:18:52,240 --> 01:18:56,040 Speaker 1: and anyone interested in strategy. I like Uh. I like 1362 01:18:56,120 --> 01:19:01,200 Speaker 1: a lot of Hyperion series by Dan Simmons. M. Do 1363 01:19:01,040 --> 01:19:03,960 Speaker 1: you do you go back historically in sci fi? Any 1364 01:19:04,000 --> 01:19:06,880 Speaker 1: of the classics are? Have you mostly been reading more 1365 01:19:06,960 --> 01:19:12,080 Speaker 1: modern sci fi? Well? I read some of the classics 1366 01:19:12,080 --> 01:19:14,439 Speaker 1: by the necessity because I'm not a young Some of 1367 01:19:14,479 --> 01:19:16,360 Speaker 1: the stuff that I was reading in the teenager by 1368 01:19:16,360 --> 01:19:18,639 Speaker 1: now is a classic, even if it was relatively modern 1369 01:19:18,720 --> 01:19:21,680 Speaker 1: back then. But I did go a little back in 1370 01:19:21,720 --> 01:19:24,839 Speaker 1: the history back then. Now I tend to read mostly 1371 01:19:24,880 --> 01:19:27,280 Speaker 1: more modern stuff, and it's a little it's a little 1372 01:19:27,280 --> 01:19:30,200 Speaker 1: difficult a days to read, especially science fiction which was 1373 01:19:30,600 --> 01:19:33,559 Speaker 1: written even say in the nineties, because projections of the 1374 01:19:33,600 --> 01:19:37,360 Speaker 1: near future just so off and it's very hard to 1375 01:19:37,439 --> 01:19:41,800 Speaker 1: kind of stay in there kind of suspended disbelief. But 1376 01:19:41,880 --> 01:19:44,000 Speaker 1: it all depends on the texture of the science fiction 1377 01:19:44,120 --> 01:19:46,639 Speaker 1: some of it, like for example of novels by Den Simmons, 1378 01:19:46,840 --> 01:19:51,200 Speaker 1: which are stand really well regardless of what, regardless of 1379 01:19:51,200 --> 01:19:53,439 Speaker 1: the fact that they we're wating really long ago. Yeah, 1380 01:19:53,479 --> 01:19:57,200 Speaker 1: the more general they were about the day to day 1381 01:19:57,920 --> 01:20:00,719 Speaker 1: use of technology and the more math grow they were. 1382 01:20:00,760 --> 01:20:05,839 Speaker 1: I'm thinking of people like Asimov's Foundation or Larry Niven's 1383 01:20:05,960 --> 01:20:11,240 Speaker 1: Ring World. They didn't talk about cell phones and personal computers. 1384 01:20:11,600 --> 01:20:17,040 Speaker 1: It was always massive macro engineering projects. Um like the 1385 01:20:17,120 --> 01:20:20,640 Speaker 1: Ring World as an example, that it gave it a 1386 01:20:20,680 --> 01:20:24,439 Speaker 1: timelessness that that I think the people who got too 1387 01:20:24,479 --> 01:20:27,280 Speaker 1: involved in the day to day you know, either they 1388 01:20:27,280 --> 01:20:29,599 Speaker 1: were right or wrong, and if they're wrong, it's hard 1389 01:20:29,640 --> 01:20:34,320 Speaker 1: to get immersed in that world. Yes, and there is 1390 01:20:34,360 --> 01:20:37,160 Speaker 1: certain idea that there is certain talent about being a 1391 01:20:37,160 --> 01:20:40,080 Speaker 1: good futurist, Like there are some good writers who are 1392 01:20:40,120 --> 01:20:42,720 Speaker 1: just not good futurists. For example, Isaac Asimov, which is 1393 01:20:42,920 --> 01:20:47,799 Speaker 1: one of the most celebrated science fiction writers of all times, 1394 01:20:47,960 --> 01:20:53,280 Speaker 1: was an awful, horrible, atrocious futurist. I mean, he had 1395 01:20:53,320 --> 01:20:58,280 Speaker 1: made completely unforgivable mistakes, and his treatment of science was uh, 1396 01:20:59,200 --> 01:21:02,640 Speaker 1: outright fall and almost insulting, Like I felt like he 1397 01:21:02,720 --> 01:21:05,200 Speaker 1: was actually insulting science by the way he was treating it. 1398 01:21:05,400 --> 01:21:09,639 Speaker 1: And yet his novels were innovative, creative, and very readable 1399 01:21:09,720 --> 01:21:13,120 Speaker 1: and had a lot of great ideas, really really interesting. 1400 01:21:13,560 --> 01:21:16,920 Speaker 1: Our last two questions, what sort of advice would you 1401 01:21:16,920 --> 01:21:20,360 Speaker 1: give to a recent college grad who was interested in 1402 01:21:20,400 --> 01:21:26,800 Speaker 1: the career of either investing or finance. The advice it 1403 01:21:26,920 --> 01:21:29,599 Speaker 1: is probably similar to what I would tell anyone going 1404 01:21:29,600 --> 01:21:32,880 Speaker 1: into any career. First of all, if you care about 1405 01:21:32,880 --> 01:21:37,040 Speaker 1: financial success, you want to find a confluence of three things. 1406 01:21:37,880 --> 01:21:43,120 Speaker 1: Thinks that uh, thinks that rewarding financially obviously, just as 1407 01:21:43,120 --> 01:21:46,240 Speaker 1: I mentioned, thinks that you are good at, and things 1408 01:21:46,240 --> 01:21:48,880 Speaker 1: that you enjoy. So when you find the consers of 1409 01:21:48,880 --> 01:21:51,040 Speaker 1: those things that you can do, something that you enjoy 1410 01:21:51,120 --> 01:21:53,760 Speaker 1: doing it, you happen to be good at, and they're 1411 01:21:53,800 --> 01:21:57,320 Speaker 1: financial rewarding, then you'll have a rewarding career. And finance 1412 01:21:57,360 --> 01:21:59,960 Speaker 1: could very easily be that. And but even within air 1413 01:22:00,120 --> 01:22:02,639 Speaker 1: is so finance you need to find initia I think 1414 01:22:03,320 --> 01:22:05,360 Speaker 1: it is. Might be not easy, of course for a 1415 01:22:05,400 --> 01:22:10,040 Speaker 1: young person, but it's very important to assess, ah, well, 1416 01:22:10,120 --> 01:22:12,439 Speaker 1: what are you actually good at and be realistic about that, 1417 01:22:12,880 --> 01:22:15,040 Speaker 1: be very honest with yourself. What it is that I 1418 01:22:15,080 --> 01:22:17,439 Speaker 1: do better than any other person in the world, and 1419 01:22:17,479 --> 01:22:19,559 Speaker 1: how they capitalize on those things that I do better 1420 01:22:19,560 --> 01:22:22,679 Speaker 1: than any other person in the world. And then uh, 1421 01:22:22,720 --> 01:22:25,679 Speaker 1: and part of the reason, like, for example, I write 1422 01:22:25,680 --> 01:22:28,280 Speaker 1: books like my book The Trade of mar and I'm 1423 01:22:28,320 --> 01:22:31,439 Speaker 1: sure that are equivalent, some equivalent books, maybe different fields 1424 01:22:31,479 --> 01:22:35,240 Speaker 1: and sub fields, is try to actually understand what it 1425 01:22:35,320 --> 01:22:37,360 Speaker 1: is that people do so you have a correct idea 1426 01:22:37,640 --> 01:22:40,800 Speaker 1: whether you're going to enjoy this or not. Really really 1427 01:22:40,840 --> 01:22:44,599 Speaker 1: interesting and our final question, what do you know about 1428 01:22:44,600 --> 01:22:47,800 Speaker 1: the world of investing today that you wish you knew 1429 01:22:48,479 --> 01:22:50,840 Speaker 1: twenty five years or so ago when you were first 1430 01:22:50,840 --> 01:22:54,280 Speaker 1: getting started as a trader. I think The most important 1431 01:22:54,280 --> 01:22:56,880 Speaker 1: thing I would have liked to know back then that 1432 01:22:56,960 --> 01:22:59,800 Speaker 1: I will still be here now. The importance of that 1433 01:22:59,880 --> 01:23:02,760 Speaker 1: is to understand that this is a long game, and 1434 01:23:03,040 --> 01:23:07,200 Speaker 1: very often it's very easy to get impatient and think 1435 01:23:08,120 --> 01:23:13,639 Speaker 1: somewhat uh, and think somewhat short term, like think like, oh, well, 1436 01:23:13,800 --> 01:23:18,040 Speaker 1: if when you're twenty five years old, events that will 1437 01:23:18,080 --> 01:23:20,439 Speaker 1: happen when you're forty five or fifty years old seems 1438 01:23:20,439 --> 01:23:23,880 Speaker 1: so remote you almost don't care about. But the actual 1439 01:23:23,960 --> 01:23:28,160 Speaker 1: reality is that you do care about them. Huh. Reality 1440 01:23:28,240 --> 01:23:32,320 Speaker 1: is that you will when you're fifty years old, you 1441 01:23:32,360 --> 01:23:34,200 Speaker 1: still weren't gonna want to be healthy, you still aren't 1442 01:23:34,240 --> 01:23:36,360 Speaker 1: gonna want to have money, and you're still gonna have 1443 01:23:36,400 --> 01:23:38,920 Speaker 1: fun in the world, right and some of those seeds 1444 01:23:38,960 --> 01:23:43,880 Speaker 1: will be planted at your earlier age. So understanding that 1445 01:23:43,920 --> 01:23:47,559 Speaker 1: this is a long game that you if I'm knowing 1446 01:23:47,680 --> 01:23:50,559 Speaker 1: back then, that I will still be in this game 1447 01:23:50,680 --> 01:23:53,240 Speaker 1: twenty five years later and I'll still enjoy it, would 1448 01:23:53,240 --> 01:23:55,439 Speaker 1: probably alleviate a lot of stress and pressure on me 1449 01:23:55,520 --> 01:23:59,679 Speaker 1: back then. Really really interesting, Alex, thank you for being 1450 01:23:59,720 --> 01:24:03,360 Speaker 1: so generous with your time. We have been speaking with 1451 01:24:03,400 --> 01:24:07,720 Speaker 1: Alex Guarevich. He's the founder and CEO of Hante Advisers 1452 01:24:07,920 --> 01:24:11,719 Speaker 1: and the author of the Trades of March, a Shield 1453 01:24:11,880 --> 01:24:15,880 Speaker 1: against Uncertainty. If you enjoy this conversation, well be sure 1454 01:24:15,880 --> 01:24:19,160 Speaker 1: and check out any of the previous four hundred discussions 1455 01:24:19,200 --> 01:24:22,640 Speaker 1: we've had over the past eight or so years that 1456 01:24:22,680 --> 01:24:26,960 Speaker 1: we've been doing the show. You can find those at iTunes, Spotify, 1457 01:24:27,000 --> 01:24:31,960 Speaker 1: a cast, Bloomberg, wherever you get your favorite podcast from. 1458 01:24:32,080 --> 01:24:35,400 Speaker 1: We love your comments, feedback and suggestions right to us 1459 01:24:35,520 --> 01:24:40,040 Speaker 1: at m IB podcast at Bloomberg dot net. Sign up 1460 01:24:40,080 --> 01:24:42,840 Speaker 1: for my daily reads at Ridholts dot com. Follow me 1461 01:24:42,880 --> 01:24:45,800 Speaker 1: on Twitter at rid Halts. I would be remiss if 1462 01:24:45,840 --> 01:24:47,960 Speaker 1: I did not thank the crack team that helps put 1463 01:24:48,000 --> 01:24:53,600 Speaker 1: these conversations together each week. Katherine Silva is my audio engineer. 1464 01:24:53,880 --> 01:24:58,080 Speaker 1: Attika val Brund is my project manager. Sean Russo is 1465 01:24:58,080 --> 01:25:01,240 Speaker 1: our head of research. Paris wall Old is my producer. 1466 01:25:01,960 --> 01:25:05,879 Speaker 1: I'm Barry Ritolts. You've been listening to Masters in Business 1467 01:25:06,320 --> 01:25:07,479 Speaker 1: on Bloomberg Radio.