1
00:00:02,000 --> 00:00:07,160
Speaker 1: This is mesters in Business with very Results on Bloomberg Radio.

2
00:00:08,960 --> 00:00:13,280
Speaker 1: This week on the podcast, I have yet another extra

3
00:00:13,360 --> 00:00:17,360
Speaker 1: special guest, and this is really a fascinating, extra special

4
00:00:17,400 --> 00:00:21,439
Speaker 1: guest who you probably never heard of, but you should.

5
00:00:21,880 --> 00:00:25,040
Speaker 1: His name is Ken Tropin. Uh. Where do I even

6
00:00:25,120 --> 00:00:28,520
Speaker 1: begin with him? He's a member of the Futures Hall

7
00:00:28,560 --> 00:00:32,199
Speaker 1: of Fame. Uh. He's the chairman and founder of Graham

8
00:00:32,280 --> 00:00:36,520
Speaker 1: Capital Management, which runs eighteen billion dollars and has amassed

9
00:00:36,680 --> 00:00:40,320
Speaker 1: a quite a track record. Uh. He used to work

10
00:00:40,360 --> 00:00:43,800
Speaker 1: with John Henry, currently the owner of the Boston Red

11
00:00:43,840 --> 00:00:48,040
Speaker 1: Sox and another successful hedge fund manager. He worked with

12
00:00:48,080 --> 00:00:52,279
Speaker 1: Paul Tutor Jones. The list of people he knows and

13
00:00:52,360 --> 00:00:57,760
Speaker 1: has um trained with and under is quite astonishing. Uh.

14
00:00:57,880 --> 00:01:03,240
Speaker 1: The firm that he's built is one of those very quiet,

15
00:01:04,160 --> 00:01:09,320
Speaker 1: very successful um entities that without a whole lot of

16
00:01:09,360 --> 00:01:13,080
Speaker 1: media coverage, without a whole lot of fanfare, just amass

17
00:01:13,319 --> 00:01:17,160
Speaker 1: an enormous amount of capital because they've done so well

18
00:01:17,200 --> 00:01:21,240
Speaker 1: for their clients over time. UM. I found the conversation

19
00:01:21,480 --> 00:01:26,160
Speaker 1: with Ken to be absolutely fascinating, and I think you

20
00:01:26,280 --> 00:01:30,839
Speaker 1: will also if you're at all interested in macro investing

21
00:01:31,040 --> 00:01:40,600
Speaker 1: trend following commodities, currencies, fixed income, various types of quantitative strategies. Uh,

22
00:01:40,640 --> 00:01:44,960
Speaker 1: and most important of all, risk management. You're gonna find

23
00:01:45,000 --> 00:01:48,640
Speaker 1: this conversation to be absolutely fascinating. With no further ado

24
00:01:48,880 --> 00:01:53,360
Speaker 1: my interview of GCMs Ken Tropin, I want to start

25
00:01:53,880 --> 00:01:57,560
Speaker 1: with your background. You began at Sheerson in the nineteen eighties.

26
00:01:58,120 --> 00:02:01,720
Speaker 1: Tell us a little bit about those days. Well, you know, uh,

27
00:02:02,040 --> 00:02:05,840
Speaker 1: here we are um at a very different place and time,

28
00:02:06,000 --> 00:02:08,440
Speaker 1: So it's kind of cool to reflect back on what

29
00:02:08,480 --> 00:02:13,079
Speaker 1: was happening in nineteen eighty like very different universe, right right, Well,

30
00:02:13,240 --> 00:02:17,840
Speaker 1: for example, interest rates were four uh when I started

31
00:02:17,880 --> 00:02:20,160
Speaker 1: at Jeerson, and those were those were treasuries. We're not

32
00:02:20,200 --> 00:02:22,760
Speaker 1: talking jump on yeah, no, no, no no, And and in fact,

33
00:02:22,800 --> 00:02:25,120
Speaker 1: I think we got as high as twenty earlier in

34
00:02:25,120 --> 00:02:29,240
Speaker 1: my career, and so, uh, you know, it was a

35
00:02:29,360 --> 00:02:32,920
Speaker 1: very interesting time to begin, which I did as an

36
00:02:32,919 --> 00:02:37,079
Speaker 1: account executive at Sheerson, and then in night two, Dean

37
00:02:37,120 --> 00:02:40,960
Speaker 1: Winter recruited me to join them and to really start

38
00:02:41,000 --> 00:02:45,680
Speaker 1: managing what was their floodgling hedge fund practice, which was

39
00:02:45,720 --> 00:02:47,480
Speaker 1: really with C T A S back in that year,

40
00:02:47,560 --> 00:02:51,239
Speaker 1: and then it evolved into you know, more macro style funds.

41
00:02:50,960 --> 00:02:55,720
Speaker 1: So you eventually become director of managed Futures at Deanwood Reynolds.

42
00:02:56,360 --> 00:03:00,960
Speaker 1: That's pretty early in the managed futures history. Tell us

43
00:03:00,960 --> 00:03:03,640
Speaker 1: a little bit about that here. Sure, it was a

44
00:03:03,919 --> 00:03:07,400
Speaker 1: you know, uh, it was an era where you know,

45
00:03:07,440 --> 00:03:10,200
Speaker 1: first of all, the markets were really inefficient, right, um,

46
00:03:10,320 --> 00:03:14,360
Speaker 1: So it was it was very fertile, uh to do

47
00:03:14,840 --> 00:03:17,680
Speaker 1: what we do because markets moved a lot. There was

48
00:03:17,680 --> 00:03:21,760
Speaker 1: a lot of volatility. Uh. And I think it's almost

49
00:03:21,880 --> 00:03:24,760
Speaker 1: the polar opposite of where the world has been the

50
00:03:24,840 --> 00:03:28,480
Speaker 1: last few years, where volatility has been somewhat subdued, and

51
00:03:29,000 --> 00:03:31,520
Speaker 1: you know, equities have been such a strong performer. But

52
00:03:31,560 --> 00:03:35,440
Speaker 1: back in two um, you know, stocks were very quiet,

53
00:03:35,840 --> 00:03:40,160
Speaker 1: they were in a trading range. Interestrates are super high, uh, commandity,

54
00:03:40,240 --> 00:03:43,360
Speaker 1: markets were moving a lot, and there wasn't a lot

55
00:03:43,360 --> 00:03:46,760
Speaker 1: of competition if you were a trader in that early

56
00:03:46,800 --> 00:03:49,600
Speaker 1: part of the industry's history. So let's talk about that

57
00:03:49,680 --> 00:03:53,640
Speaker 1: inefficiency for a moment. Today, you wanna hang a shingle

58
00:03:53,800 --> 00:03:57,320
Speaker 1: or you want to open your own proprietary trading, it's

59
00:03:57,640 --> 00:04:01,560
Speaker 1: very difficult to find an edge and consistently make money.

60
00:04:01,720 --> 00:04:05,560
Speaker 1: Back in the eighties, that wasn't necessarily the case. Yeah,

61
00:04:05,640 --> 00:04:10,320
Speaker 1: I mean relatively simple trading systems made money and uh

62
00:04:10,560 --> 00:04:13,600
Speaker 1: and and you know, they had volatility and people were

63
00:04:13,600 --> 00:04:17,680
Speaker 1: okay with volatility because everything was volatile back then. Um

64
00:04:17,839 --> 00:04:22,080
Speaker 1: and so uh you know it was uh, you know,

65
00:04:22,240 --> 00:04:25,120
Speaker 1: relatively I want to say straightforward, because I don't think

66
00:04:26,000 --> 00:04:29,240
Speaker 1: generating consistent profits has ever been something that's so straightforward

67
00:04:29,320 --> 00:04:32,760
Speaker 1: or so easy. But on a relative basis, it was easier.

68
00:04:33,400 --> 00:04:36,680
Speaker 1: And of course, when you have a young industry, that's

69
00:04:36,680 --> 00:04:38,440
Speaker 1: a great time to get involved. You had to say

70
00:04:38,480 --> 00:04:41,920
Speaker 1: the very least. So after Deanwood Reynolds, you end up

71
00:04:42,000 --> 00:04:44,520
Speaker 1: as CEO of John Henry and Company. Tell us a

72
00:04:44,560 --> 00:04:46,719
Speaker 1: little bit about that experience. Yeah, John was one of

73
00:04:46,720 --> 00:04:50,920
Speaker 1: our managers, uh that we had, you know, our clients

74
00:04:50,920 --> 00:04:57,279
Speaker 1: invest in and in um. He and I explored me

75
00:04:57,400 --> 00:05:00,960
Speaker 1: leaving Dean Winder to join his pharmacy CEO. His company

76
00:05:00,960 --> 00:05:03,279
Speaker 1: was in California at the time. I wanted to be

77
00:05:03,320 --> 00:05:05,560
Speaker 1: in the East coast. We moved the firm to Connecticut.

78
00:05:06,320 --> 00:05:08,800
Speaker 1: Uh and uh I was there for about four and

79
00:05:08,839 --> 00:05:12,320
Speaker 1: a half years, and then he and I saw things differently.

80
00:05:12,360 --> 00:05:17,680
Speaker 1: In nine and a part of company and uh, you know,

81
00:05:17,920 --> 00:05:20,440
Speaker 1: UH had a lot of time to think about what

82
00:05:20,480 --> 00:05:24,560
Speaker 1: I wanted to do and ultimately decided I wanted to

83
00:05:24,560 --> 00:05:27,880
Speaker 1: start up my own fund. And uh that's how Graham got,

84
00:05:28,120 --> 00:05:30,800
Speaker 1: uh you know underway in the you know, spring of

85
00:05:31,880 --> 00:05:34,039
Speaker 1: So we're gonna talk a lot more about Graham. But

86
00:05:34,600 --> 00:05:37,679
Speaker 1: John Henry seemed to have done pretty okay for himself. Sure.

87
00:05:38,120 --> 00:05:42,719
Speaker 1: I mean he now owns the Red Sox, and you know,

88
00:05:42,839 --> 00:05:46,400
Speaker 1: he's done very, very very well. He's left the finance world,

89
00:05:46,440 --> 00:05:48,560
Speaker 1: but he's certainly not left the business world. And he

90
00:05:48,640 --> 00:05:52,320
Speaker 1: seemed to have brought the same set of analytical chops

91
00:05:52,880 --> 00:05:55,680
Speaker 1: to owning the Red Sox as he did in his

92
00:05:55,720 --> 00:05:57,280
Speaker 1: own Hedge five. Yeah. I think that's kind of who

93
00:05:57,320 --> 00:06:02,680
Speaker 1: he is, quantitative database and logical decisions, which you know,

94
00:06:02,839 --> 00:06:06,960
Speaker 1: seems to have broken, uh, the curse of the Babe. Well, yeah,

95
00:06:07,080 --> 00:06:08,840
Speaker 1: you know, let's face it, right, I mean, what was it?

96
00:06:09,040 --> 00:06:11,360
Speaker 1: What was a year that every down three and out

97
00:06:11,360 --> 00:06:13,640
Speaker 1: of the Yankees or something, and then they ended up

98
00:06:13,800 --> 00:06:16,760
Speaker 1: prevailing in that World Series. I'm a Yankee fan, so

99
00:06:16,800 --> 00:06:18,599
Speaker 1: I can say I was rooting for that. But that's

100
00:06:18,600 --> 00:06:21,920
Speaker 1: what happened. It's a hundred years was all it took

101
00:06:22,000 --> 00:06:25,520
Speaker 1: to overcome that one mistake alright, so let's talk a

102
00:06:25,560 --> 00:06:30,160
Speaker 1: little bit about founding Graham Capital. In you leave John Henry,

103
00:06:30,240 --> 00:06:32,479
Speaker 1: you have a little time to think about what you

104
00:06:32,520 --> 00:06:36,159
Speaker 1: want to do. What was the process like launching a

105
00:06:36,200 --> 00:06:40,320
Speaker 1: new hedge funds in the early to mid nineties, you

106
00:06:40,360 --> 00:06:42,360
Speaker 1: know it was, I mean, this is not an easy

107
00:06:42,400 --> 00:06:46,880
Speaker 1: thing to do. Ever, I would say it probably somewhat, um,

108
00:06:46,920 --> 00:06:48,840
Speaker 1: you know, easier to do in ninety four than it

109
00:06:48,880 --> 00:06:52,800
Speaker 1: would be today where the world has become so institutional. Uh.

110
00:06:52,880 --> 00:06:56,960
Speaker 1: And you know, I've been longtime close friends with Paul

111
00:06:57,040 --> 00:07:00,320
Speaker 1: Jones and Mark Dalton, president and you know when pulled

112
00:07:00,560 --> 00:07:04,960
Speaker 1: the founder and uh CEO of Tutor and uh, when

113
00:07:04,960 --> 00:07:08,240
Speaker 1: I left Henry, we talked about should I you know,

114
00:07:08,680 --> 00:07:11,040
Speaker 1: a couple of ideas I had about starting my own fund,

115
00:07:11,080 --> 00:07:15,680
Speaker 1: and uh they were kind enough and uh and and

116
00:07:16,200 --> 00:07:21,360
Speaker 1: eager to uh invest and helped me seed Graham, which

117
00:07:21,440 --> 00:07:23,480
Speaker 1: made it a lot easier to get the fund off

118
00:07:23,480 --> 00:07:26,400
Speaker 1: the ground. And I am asking my prop capital alongside

119
00:07:26,400 --> 00:07:29,360
Speaker 1: of their prop capital, and we began trading and you know,

120
00:07:29,400 --> 00:07:32,600
Speaker 1: I guess it was July or something like that. What

121
00:07:32,720 --> 00:07:35,320
Speaker 1: sort of strategies were you using when you first launched

122
00:07:35,360 --> 00:07:37,520
Speaker 1: the farm? Yeah, so it was trend following systems that

123
00:07:37,560 --> 00:07:42,040
Speaker 1: I designed, uh and UH they had some features to

124
00:07:42,160 --> 00:07:47,600
Speaker 1: them that, UH were intended to take advantage of what's

125
00:07:47,680 --> 00:07:50,080
Speaker 1: very good about trend following, which is sort of capturing

126
00:07:50,120 --> 00:07:53,560
Speaker 1: these big right tail moves, but we're also intended to

127
00:07:53,600 --> 00:07:56,040
Speaker 1: not have some of the givebacks the people associate with

128
00:07:56,080 --> 00:08:01,240
Speaker 1: trend falling when trends reverse. And UH. Those were techniques

129
00:08:01,400 --> 00:08:03,880
Speaker 1: that I came up with that I thought would work.

130
00:08:03,960 --> 00:08:07,640
Speaker 1: They ended up being pretty successful. And that's you know,

131
00:08:07,680 --> 00:08:10,920
Speaker 1: in the early days of Graham, Uh, like any new

132
00:08:10,960 --> 00:08:14,440
Speaker 1: hedge fund, I did everything from designing trading systems to

133
00:08:14,880 --> 00:08:17,560
Speaker 1: executing those systems. So so let's talk a little bit

134
00:08:17,600 --> 00:08:22,160
Speaker 1: about trend following because people who are professional traders, or

135
00:08:22,280 --> 00:08:26,720
Speaker 1: especially futures and commodities traders, are fairly familiar with that strategy.

136
00:08:27,080 --> 00:08:30,239
Speaker 1: I don't know if all our listeners are. The basic

137
00:08:30,320 --> 00:08:35,240
Speaker 1: concept is when one of these asset classes starts a

138
00:08:35,280 --> 00:08:38,640
Speaker 1: long move, they tend to go much further and much

139
00:08:38,679 --> 00:08:42,120
Speaker 1: longer than people typically expect, and you want to capture

140
00:08:42,160 --> 00:08:44,680
Speaker 1: as much as that move as possible. Is that too

141
00:08:44,720 --> 00:08:48,160
Speaker 1: much of an order description? And think of it this way,

142
00:08:48,200 --> 00:08:53,920
Speaker 1: that a good trend following system will identify based on

143
00:08:54,000 --> 00:08:58,280
Speaker 1: momentum UH signals that a trend is underway. Let's take

144
00:08:58,320 --> 00:09:02,360
Speaker 1: a recent example, uh, energy prices. Everybody knows energy prices

145
00:09:02,360 --> 00:09:04,360
Speaker 1: gone up in the last six months quite a bit.

146
00:09:04,800 --> 00:09:09,320
Speaker 1: And you know, a simple trend following system is going

147
00:09:09,360 --> 00:09:12,400
Speaker 1: to identify that this is a strong trend, and it's

148
00:09:12,400 --> 00:09:15,000
Speaker 1: going to get you on the right side of that trend. Now,

149
00:09:15,000 --> 00:09:17,840
Speaker 1: at some point, that trend is going to end, and

150
00:09:18,640 --> 00:09:21,160
Speaker 1: that same trend following system is never going to predict

151
00:09:21,200 --> 00:09:23,320
Speaker 1: the exact top, but it's gonna get you out of

152
00:09:23,320 --> 00:09:27,200
Speaker 1: that trend after it's made some amount of profit on

153
00:09:27,240 --> 00:09:30,600
Speaker 1: the way up. And it's it's always gonna expect to

154
00:09:30,640 --> 00:09:34,400
Speaker 1: lose some of those profits when the trend reverses, but

155
00:09:34,600 --> 00:09:37,560
Speaker 1: still end up capturing the meat of the trend. So

156
00:09:37,920 --> 00:09:39,960
Speaker 1: if you could say that the maximum size of a

157
00:09:40,000 --> 00:09:45,720
Speaker 1: trend was say a hundred, maybe you might capture that trend.

158
00:09:46,200 --> 00:09:49,360
Speaker 1: And UH if you're able to do that in a

159
00:09:49,440 --> 00:09:54,040
Speaker 1: diverse uh number of markets and asset classes, UH while

160
00:09:54,040 --> 00:09:57,120
Speaker 1: managing risk and the markets that aren't trending. You know,

161
00:09:57,200 --> 00:10:01,120
Speaker 1: that's in general how trend following works. It's much better

162
00:10:01,200 --> 00:10:03,440
Speaker 1: to be involved in trend following when markets are moving

163
00:10:03,920 --> 00:10:06,680
Speaker 1: and when markets are quiet and sideways, not as easy

164
00:10:06,720 --> 00:10:10,360
Speaker 1: to make money and right, how do you avoid I'm

165
00:10:10,360 --> 00:10:12,920
Speaker 1: thinking about how you catch the reversal at the end.

166
00:10:13,040 --> 00:10:15,440
Speaker 1: Obviously you have to be willing to give back some

167
00:10:15,520 --> 00:10:19,439
Speaker 1: of the profits before it's clear that the trend was broken.

168
00:10:20,280 --> 00:10:23,720
Speaker 1: How do you avoid the false positives, the whip saws.

169
00:10:23,800 --> 00:10:26,200
Speaker 1: I can't count how many times when I was a

170
00:10:26,280 --> 00:10:29,679
Speaker 1: young turk on a trading desk, you would get shaken

171
00:10:29,679 --> 00:10:31,360
Speaker 1: out of a move, and then it would as soon

172
00:10:31,400 --> 00:10:34,400
Speaker 1: as you're gone, immediately go back to the prior trends.

173
00:10:34,960 --> 00:10:36,480
Speaker 1: So there are lots of It's a great question. There

174
00:10:36,520 --> 00:10:39,439
Speaker 1: are a lot of technologies that people use that we use.

175
00:10:39,840 --> 00:10:43,600
Speaker 1: Um you know. Some of those technologies can include having

176
00:10:44,120 --> 00:10:49,200
Speaker 1: multiple signals and multiple time horizons. So maybe your quick

177
00:10:49,240 --> 00:10:52,720
Speaker 1: systems get shaken out on a on a sort of

178
00:10:52,760 --> 00:10:57,600
Speaker 1: minor medium reversal, but you're longer term systems, for example,

179
00:10:58,000 --> 00:11:02,360
Speaker 1: take longer to get knocked out. And so most people

180
00:11:02,440 --> 00:11:05,360
Speaker 1: I know who do this do not have one time horizon.

181
00:11:05,400 --> 00:11:07,760
Speaker 1: They use multiple time rides. That's just an example of

182
00:11:07,760 --> 00:11:11,960
Speaker 1: a technique that's easy to understand. You guys, do everything

183
00:11:12,040 --> 00:11:15,840
Speaker 1: from quantitative analysis to macro. Tell us a little bit

184
00:11:15,840 --> 00:11:20,120
Speaker 1: about your approach to trading the markets. Sure, well, there's

185
00:11:20,400 --> 00:11:22,920
Speaker 1: as you sort of referenced, we do a lot of

186
00:11:22,960 --> 00:11:27,680
Speaker 1: different trading styles of Graham. We do discretiony macro trading,

187
00:11:27,720 --> 00:11:32,160
Speaker 1: which is typically a portfolio manager, and we have um

188
00:11:32,200 --> 00:11:35,880
Speaker 1: some number of portfolio managers fifteen or eighteen different portfolio

189
00:11:35,920 --> 00:11:41,920
Speaker 1: managers that independently manage a book of of you know,

190
00:11:42,360 --> 00:11:47,720
Speaker 1: risk assets, and uh they uh will decide what they're

191
00:11:47,720 --> 00:11:50,920
Speaker 1: going to buy and sell. Uh, and they're going to

192
00:11:51,000 --> 00:11:54,080
Speaker 1: live with certain risk policies and they're going to hopefully

193
00:11:54,559 --> 00:11:58,280
Speaker 1: not be all doing the same thing at the same time. Uh.

194
00:11:58,360 --> 00:12:00,959
Speaker 1: And then we also run a bit large annotative business,

195
00:12:01,200 --> 00:12:04,880
Speaker 1: which is a model driven uh you know, computer uh

196
00:12:05,240 --> 00:12:10,679
Speaker 1: you know, trading system business that uh is also really

197
00:12:10,679 --> 00:12:13,640
Speaker 1: diversified in the types of models that uses. Some are

198
00:12:13,800 --> 00:12:16,880
Speaker 1: pure momentum based models, which people identify with trend following,

199
00:12:17,200 --> 00:12:19,400
Speaker 1: but then there are some models that are value based,

200
00:12:19,400 --> 00:12:23,160
Speaker 1: that are fundamentally based. Uh. Some that uh you know

201
00:12:23,400 --> 00:12:28,160
Speaker 1: are smart systems that are learning systems. So there are

202
00:12:28,200 --> 00:12:30,760
Speaker 1: a lot of different ways to hopefully make money in

203
00:12:30,800 --> 00:12:33,920
Speaker 1: the macro markets that we are involved in. So let's

204
00:12:33,960 --> 00:12:36,840
Speaker 1: talk a little bit about that diversification. If you have

205
00:12:37,040 --> 00:12:40,640
Speaker 1: eighteen different portfolio managers, and I know you're only half

206
00:12:40,720 --> 00:12:43,160
Speaker 1: joking when you say, we hope they're not all doing

207
00:12:43,160 --> 00:12:46,320
Speaker 1: the same things by design, the assumption is each of

208
00:12:46,360 --> 00:12:51,040
Speaker 1: them are bringing a different approach to the assets they're covering,

209
00:12:51,200 --> 00:12:54,120
Speaker 1: or is it possible that some of them are overlapping

210
00:12:54,200 --> 00:12:57,320
Speaker 1: with others. Yeah, well the answer is yes to both.

211
00:12:57,559 --> 00:13:00,880
Speaker 1: So we currently have fifteen different teams, not eighteen, No,

212
00:13:00,960 --> 00:13:03,440
Speaker 1: all other a couple of teams that are pretty close

213
00:13:03,440 --> 00:13:08,120
Speaker 1: to joining us. And uh, many of them are going

214
00:13:08,160 --> 00:13:10,760
Speaker 1: to be trading the most important macro markets, so that

215
00:13:11,080 --> 00:13:14,680
Speaker 1: you know, that's fixed income markets. Uh, that's the equity markets,

216
00:13:14,920 --> 00:13:17,960
Speaker 1: that's the foreign exchange markets, and to some extent, commodities,

217
00:13:18,320 --> 00:13:21,080
Speaker 1: and uh, some of them are gonna have similar views

218
00:13:21,480 --> 00:13:25,040
Speaker 1: when really interesting big moves are happening. Uh. An example

219
00:13:25,080 --> 00:13:26,520
Speaker 1: of that is there was a big move up in

220
00:13:26,640 --> 00:13:30,439
Speaker 1: rates that sort of peaked in May, and a lot

221
00:13:30,480 --> 00:13:32,760
Speaker 1: of our traders got involved in that and benefited from

222
00:13:32,840 --> 00:13:34,599
Speaker 1: rates going up in Germany and rates going up in

223
00:13:34,640 --> 00:13:39,360
Speaker 1: the United States. UM. There are other times where they

224
00:13:39,360 --> 00:13:42,560
Speaker 1: have very different time horizons and so one trader, uh

225
00:13:42,920 --> 00:13:47,080
Speaker 1: might you know, be a long US fixed income and

226
00:13:47,200 --> 00:13:50,640
Speaker 1: a trader right next to them is short, and they

227
00:13:50,640 --> 00:13:53,080
Speaker 1: could both actually be right depending on the time arising.

228
00:13:53,160 --> 00:13:55,680
Speaker 1: So somebody who has a very short term trading style

229
00:13:56,200 --> 00:13:58,040
Speaker 1: could be short for a week and get out and

230
00:13:58,280 --> 00:14:01,440
Speaker 1: make a profit doing that, while the other trader who's long,

231
00:14:02,080 --> 00:14:04,320
Speaker 1: is waiting you know, for six to eight or twelve

232
00:14:04,320 --> 00:14:07,719
Speaker 1: weeks for his position to accomplish what he thinks it

233
00:14:07,720 --> 00:14:11,840
Speaker 1: should accomplish. So different different time horizons, different assets. We

234
00:14:11,880 --> 00:14:15,200
Speaker 1: have traders that are involved in you know, a lot

235
00:14:15,240 --> 00:14:19,160
Speaker 1: of interest rate derivatives, UH swaps, the yield curve, um,

236
00:14:19,640 --> 00:14:22,560
Speaker 1: things that are trading systems don't always get involved in,

237
00:14:23,600 --> 00:14:26,520
Speaker 1: but our traders will. So for example, as you know,

238
00:14:26,560 --> 00:14:29,320
Speaker 1: there's been this giant flattening into the yield curve. That's

239
00:14:29,320 --> 00:14:31,000
Speaker 1: been something that a number of our traders have been

240
00:14:31,040 --> 00:14:35,840
Speaker 1: involved in, something that typically the uh you know, technical

241
00:14:35,880 --> 00:14:40,600
Speaker 1: systems wouldn't be so involved in. And and you sit

242
00:14:40,680 --> 00:14:44,040
Speaker 1: on the risk management committee when you have all these

243
00:14:44,080 --> 00:14:45,920
Speaker 1: teams with a lot of authority and a lot of

244
00:14:45,960 --> 00:14:50,640
Speaker 1: independence trading their own models, how do you manage that?

245
00:14:50,640 --> 00:14:52,440
Speaker 1: That sounds like that's a lot of balls in the

246
00:14:52,480 --> 00:14:54,800
Speaker 1: air at once. It is. But you know, we have

247
00:14:54,840 --> 00:14:57,640
Speaker 1: a lot of technology to support all of that. We

248
00:14:57,720 --> 00:15:01,240
Speaker 1: have UM risk system ms that are live pian L

249
00:15:01,720 --> 00:15:05,600
Speaker 1: reporting models that tell us what every trader's performances every

250
00:15:05,600 --> 00:15:07,880
Speaker 1: minute of the day that the markets are open. And

251
00:15:07,920 --> 00:15:10,160
Speaker 1: then we meet every day at nine thirty and have

252
00:15:10,560 --> 00:15:14,240
Speaker 1: since two thousand and eight to look at every trader's portfolio.

253
00:15:14,320 --> 00:15:16,720
Speaker 1: How has it changed since the previous day. Who's added

254
00:15:16,760 --> 00:15:19,520
Speaker 1: to risk, who's cut risk, what assets are they in?

255
00:15:19,840 --> 00:15:22,720
Speaker 1: We run stress tests on all of their positions. UH.

256
00:15:22,840 --> 00:15:26,640
Speaker 1: We see who's performing well, who's might be struggling. And

257
00:15:27,040 --> 00:15:30,120
Speaker 1: you know, if we have to uh encourage a trader

258
00:15:30,160 --> 00:15:34,280
Speaker 1: to reduce risk or do nothing. Uh, we as the

259
00:15:34,320 --> 00:15:38,640
Speaker 1: senior management UH team of the firm are acutely aware

260
00:15:38,800 --> 00:15:41,840
Speaker 1: of exactly what the firm's risk is at any minute

261
00:15:42,160 --> 00:15:45,480
Speaker 1: of the day. And I think it's that discipline to

262
00:15:45,720 --> 00:15:50,080
Speaker 1: meet and have. You know, total transparency into risk taking

263
00:15:50,600 --> 00:15:53,440
Speaker 1: helps manage uh. You know the outcome quite a bit.

264
00:15:53,840 --> 00:15:56,640
Speaker 1: And you guys have been doing this for almost thirty years,

265
00:15:56,640 --> 00:16:00,600
Speaker 1: so you obviously know a thing or two about risk management.

266
00:16:01,120 --> 00:16:04,000
Speaker 1: I look around this year, I see some quant focus

267
00:16:04,120 --> 00:16:08,160
Speaker 1: head funds blowing up to say nothing of all the

268
00:16:08,240 --> 00:16:11,680
Speaker 1: venture investments into crypto, and some of the crypto funds

269
00:16:11,720 --> 00:16:17,240
Speaker 1: really just losing in some cases their assets. As someone

270
00:16:17,280 --> 00:16:21,320
Speaker 1: who is a professional risk manager, when you look out,

271
00:16:21,800 --> 00:16:24,440
Speaker 1: what do you see when when the world around you

272
00:16:24,920 --> 00:16:29,640
Speaker 1: has these frequent flare ups, Well, you know, it always

273
00:16:29,720 --> 00:16:32,560
Speaker 1: gives you religion about managing risk, right, I mean, at

274
00:16:32,560 --> 00:16:36,480
Speaker 1: the end of the day, Uh, it's it's awfully important

275
00:16:36,520 --> 00:16:39,200
Speaker 1: to make money for our clients and on our proprietect

276
00:16:39,280 --> 00:16:42,280
Speaker 1: capital for ourselves. But the only way you're gonna do

277
00:16:42,320 --> 00:16:45,280
Speaker 1: that is by managing the downside. And so we're just

278
00:16:45,400 --> 00:16:49,080
Speaker 1: really conservative in our risk policies. We're not so conservative

279
00:16:49,120 --> 00:16:52,360
Speaker 1: that there's no breathing room to make money, because if

280
00:16:52,400 --> 00:16:54,000
Speaker 1: you're not willing to lose some money, you can't make

281
00:16:54,000 --> 00:16:56,320
Speaker 1: any money. I mean, it's the age old thing and

282
00:16:56,280 --> 00:16:59,600
Speaker 1: investing in trading. But uh, the question is how much

283
00:17:00,080 --> 00:17:03,040
Speaker 1: and you know, and and and we're just very processed

284
00:17:03,120 --> 00:17:05,959
Speaker 1: driven and how we look at risk, how we analyze it,

285
00:17:06,440 --> 00:17:09,919
Speaker 1: and we we you know, we were we've learned that

286
00:17:09,960 --> 00:17:12,919
Speaker 1: we just have to make some hard decisions, uh fairly

287
00:17:13,000 --> 00:17:16,800
Speaker 1: quickly at certain moments. And we've had moments where we've

288
00:17:16,800 --> 00:17:19,000
Speaker 1: had traders lose more than we would have liked to

289
00:17:19,080 --> 00:17:22,200
Speaker 1: have lost. We've had trading systems that have had bad cycles,

290
00:17:22,240 --> 00:17:26,000
Speaker 1: but we have prevailed over twenty nine years because in general,

291
00:17:26,640 --> 00:17:30,200
Speaker 1: we avoid uh you know, uh, some some really bad

292
00:17:30,240 --> 00:17:33,200
Speaker 1: experiences that sort of as you alluded to, we try

293
00:17:33,240 --> 00:17:35,480
Speaker 1: not to let that happen to us our clients. It's

294
00:17:35,520 --> 00:17:37,520
Speaker 1: pretty clear that a number of the funds that have

295
00:17:37,560 --> 00:17:40,200
Speaker 1: blown up didn't seem to have a whole lot of

296
00:17:40,320 --> 00:17:43,439
Speaker 1: risk controls in place. They just let Uh. It's one

297
00:17:43,480 --> 00:17:45,960
Speaker 1: thing to take a loss, it's another thing to let

298
00:17:46,000 --> 00:17:49,159
Speaker 1: a bad situation become a fatal one. Yeah, well, I

299
00:17:49,560 --> 00:17:52,200
Speaker 1: think that, you know, it kind of speaks to who

300
00:17:52,320 --> 00:17:54,840
Speaker 1: is Graham or a conservative firm. We've been doing this

301
00:17:54,880 --> 00:17:57,960
Speaker 1: for twenty nine years. I've been involved in the markets

302
00:17:57,960 --> 00:18:00,879
Speaker 1: for over forty. Uh. You learn all out over that

303
00:18:01,000 --> 00:18:03,320
Speaker 1: amount of time that you know, you can't be in

304
00:18:03,320 --> 00:18:06,440
Speaker 1: a hurry to try and make a profit. You've got

305
00:18:06,480 --> 00:18:09,880
Speaker 1: to just you know, be a patient investor. You've got

306
00:18:09,880 --> 00:18:15,520
Speaker 1: to be an opportunistic investor. And if you manage conservatively

307
00:18:15,520 --> 00:18:18,879
Speaker 1: your business, I like the odds of you finding the

308
00:18:18,960 --> 00:18:21,760
Speaker 1: moments when it's good for what you do and capitalizing

309
00:18:21,840 --> 00:18:26,200
Speaker 1: on it. You know, I'm gonna editorialize briefly, but I've

310
00:18:26,280 --> 00:18:32,360
Speaker 1: had this conversation countless times about just be long term greedy,

311
00:18:32,480 --> 00:18:36,520
Speaker 1: just be patient. It will come to you. And everybody

312
00:18:36,560 --> 00:18:39,400
Speaker 1: that seems to get into trouble, whether it's a traitor

313
00:18:39,560 --> 00:18:43,639
Speaker 1: or a fund or whatever, it's always that hurry that

314
00:18:43,760 --> 00:18:48,840
Speaker 1: seems to cause their disasters. Yeah, that that's a factor

315
00:18:48,920 --> 00:18:51,280
Speaker 1: for sure. It's not the only one, right, Like, liquidity

316
00:18:51,320 --> 00:18:55,040
Speaker 1: can change, and that is something that can bite you

317
00:18:55,560 --> 00:18:58,360
Speaker 1: when something that was relatively liquid and easy to get

318
00:18:58,400 --> 00:19:02,119
Speaker 1: in and out of becomes illoqui uh. And you know

319
00:19:02,200 --> 00:19:04,720
Speaker 1: we've seen that in some of the situations you described

320
00:19:04,760 --> 00:19:07,919
Speaker 1: earlier of funds having problems, and so one of the

321
00:19:07,960 --> 00:19:12,280
Speaker 1: things we really scrutinize as risk managers is there is

322
00:19:12,320 --> 00:19:15,159
Speaker 1: what's happening with liquidity, How is it changing? And is

323
00:19:15,200 --> 00:19:19,960
Speaker 1: it is there any adverse behavior as relates to liquidity

324
00:19:20,000 --> 00:19:22,640
Speaker 1: that we should be very careful and thoughtful about. And

325
00:19:22,920 --> 00:19:27,840
Speaker 1: last question about the various teams, does everybody have a

326
00:19:27,880 --> 00:19:31,520
Speaker 1: different benchmark? How do you track performance? Is it strictly

327
00:19:32,160 --> 00:19:38,240
Speaker 1: absolute returns or people working towards a specific uh bogey

328
00:19:38,359 --> 00:19:40,960
Speaker 1: that they're they're comparing themselves with. Yeah, it's really an

329
00:19:40,960 --> 00:19:44,679
Speaker 1: absolute return business. And you know, we are trying to

330
00:19:44,840 --> 00:19:49,600
Speaker 1: have our traders, you know, generate uh you know, call

331
00:19:49,640 --> 00:19:54,560
Speaker 1: it high single digits, slow double digit returns with relatively

332
00:19:55,520 --> 00:19:59,119
Speaker 1: moderate volatility, So annual volatility of four percent or something

333
00:19:59,280 --> 00:20:02,840
Speaker 1: like that. And uh, that's a that's a pretty good

334
00:20:03,160 --> 00:20:07,760
Speaker 1: ballpark idea of the parameters that we ask traitors to

335
00:20:07,800 --> 00:20:12,200
Speaker 1: live within. And that's a pretty comfortable place for our clients, uh,

336
00:20:12,400 --> 00:20:14,639
Speaker 1: you know, meaning the amount of risk they're willing to

337
00:20:14,680 --> 00:20:19,639
Speaker 1: assume relative to potential reward correct really really interesting. I

338
00:20:19,680 --> 00:20:22,520
Speaker 1: want to start talking about the current environment with a

339
00:20:22,600 --> 00:20:25,680
Speaker 1: quote of yours that I really like. Uh. You said,

340
00:20:26,160 --> 00:20:28,960
Speaker 1: I can't recall a more interesting time to be a

341
00:20:29,000 --> 00:20:33,600
Speaker 1: macro investor since the financial crisis. Tell us a little

342
00:20:33,600 --> 00:20:35,680
Speaker 1: bit about that. I haven't heard a lot of people

343
00:20:35,760 --> 00:20:40,919
Speaker 1: describe this year two that way. Yeah. Well, you know,

344
00:20:41,280 --> 00:20:45,720
Speaker 1: because we're a macro oriented fund, what we're really concerned

345
00:20:45,760 --> 00:20:49,679
Speaker 1: with is what's happening with interest rates, what's happening with

346
00:20:49,720 --> 00:20:54,040
Speaker 1: foreign exchange, what's happening with commodity prices, uh, and what's

347
00:20:54,040 --> 00:20:57,320
Speaker 1: happening with equity prices and all of those four sectors

348
00:20:57,359 --> 00:21:00,560
Speaker 1: have been moving a lot, and so that's a really

349
00:21:00,640 --> 00:21:05,359
Speaker 1: fertile constructive environment for us to try and generate returns.

350
00:21:05,680 --> 00:21:09,720
Speaker 1: And if they're moving, you finding opportunities exactly what you

351
00:21:09,760 --> 00:21:14,880
Speaker 1: know for us, it's nowhere near as uh productive an

352
00:21:14,960 --> 00:21:19,000
Speaker 1: environment if asset classes are really quiet. Um. If you

353
00:21:19,040 --> 00:21:22,399
Speaker 1: think about interest rates as an example, you know, today

354
00:21:23,200 --> 00:21:26,440
Speaker 1: is a FED meeting, but uh, you know, think about that.

355
00:21:26,480 --> 00:21:30,840
Speaker 1: Germany didn't raise rates for ten years until recently, right,

356
00:21:30,960 --> 00:21:34,679
Speaker 1: So just practically speaking, there's gonna be less to do

357
00:21:34,720 --> 00:21:37,359
Speaker 1: if you're trading German interest rates and the and the

358
00:21:37,400 --> 00:21:41,359
Speaker 1: central banks not moving them for ten years. Now rates

359
00:21:41,359 --> 00:21:43,439
Speaker 1: are moving and they're moving a lot. Um. If you

360
00:21:43,480 --> 00:21:47,919
Speaker 1: think about the US, you know, uh, the Central Bank

361
00:21:48,920 --> 00:21:52,000
Speaker 1: uh started giving us something they never used to do,

362
00:21:52,000 --> 00:21:55,679
Speaker 1: which was forward guidance, saying not only are we not

363
00:21:55,800 --> 00:21:57,760
Speaker 1: changing rates today, but we're telling you we're not going

364
00:21:57,760 --> 00:22:01,399
Speaker 1: to change rates for the foreseeable future. I'm so glad

365
00:22:01,480 --> 00:22:04,600
Speaker 1: you said that, because I remember in the nineties nineties

366
00:22:05,560 --> 00:22:10,480
Speaker 1: CNBC used to have the Greenspan briefcase in the cator.

367
00:22:10,720 --> 00:22:14,000
Speaker 1: How thick or thin the briefcase? He carried into the

368
00:22:14,080 --> 00:22:17,879
Speaker 1: FOMC meeting was their hint as to what was going

369
00:22:17,920 --> 00:22:21,840
Speaker 1: to go on with rates. That's a different world. Now.

370
00:22:21,880 --> 00:22:26,719
Speaker 1: They literally say this is what we're doing. Earlier this

371
00:22:26,920 --> 00:22:30,479
Speaker 1: last week or two weeks ago. Um, somebody at the

372
00:22:30,480 --> 00:22:33,600
Speaker 1: FED said to Nick Timorris at the Wall Street Journal, Hey,

373
00:22:33,640 --> 00:22:39,240
Speaker 1: we're going seventy five basis points. There's no misunderstanding. They

374
00:22:39,240 --> 00:22:43,760
Speaker 1: are not just telegraphing, explicitly telling us what they're gonna do.

375
00:22:44,240 --> 00:22:49,760
Speaker 1: How does that affect your ability to find opportunities? Well, so, here,

376
00:22:49,840 --> 00:22:52,199
Speaker 1: here's the thing. If they're telling us they're going to

377
00:22:52,240 --> 00:22:55,800
Speaker 1: do nothing, that's not so helpful. If they're telling us

378
00:22:56,040 --> 00:22:58,320
Speaker 1: that they're going to be moving interest rates a lot,

379
00:22:58,520 --> 00:23:00,639
Speaker 1: and they're not just gonna do this at one meeting,

380
00:23:00,720 --> 00:23:04,200
Speaker 1: but over some series of meetings and for the next

381
00:23:04,320 --> 00:23:07,239
Speaker 1: year or something, then there's a lot to work with

382
00:23:07,400 --> 00:23:09,200
Speaker 1: in terms of the markets. They're gonna move a lot,

383
00:23:09,240 --> 00:23:13,439
Speaker 1: they're gonna overreact, they're going to give us, uh, you know,

384
00:23:13,520 --> 00:23:16,639
Speaker 1: trading opportunities, both on the long and short side. And

385
00:23:16,720 --> 00:23:19,520
Speaker 1: so when I say that markets are more interesting, they've

386
00:23:19,560 --> 00:23:22,199
Speaker 1: been for a really long time. It's for a variety

387
00:23:22,200 --> 00:23:25,560
Speaker 1: of reasons. Markets are moving. Uh. We've got some banks

388
00:23:25,600 --> 00:23:29,240
Speaker 1: all over the world, uh starting to move. We've got

389
00:23:29,760 --> 00:23:33,000
Speaker 1: equity prices moving a lot. You know, there's a there's

390
00:23:33,000 --> 00:23:36,480
Speaker 1: a big realization of of pe s to lower levels

391
00:23:36,560 --> 00:23:39,320
Speaker 1: right as earning to start to decline on the road. Uh.

392
00:23:39,359 --> 00:23:42,000
Speaker 1: You've got commodity prices that went through the roof in

393
00:23:42,040 --> 00:23:45,119
Speaker 1: the first third of this year because of supply chain issues,

394
00:23:45,160 --> 00:23:48,320
Speaker 1: the Ukraine war and so on. Uh. And then you've

395
00:23:48,320 --> 00:23:50,639
Speaker 1: got the dollar making one of the biggest moves that

396
00:23:50,680 --> 00:23:52,800
Speaker 1: I've seen in a long time, like twenty years. I

397
00:23:52,800 --> 00:23:55,560
Speaker 1: mean we we we've had a move in dollar again,

398
00:23:55,600 --> 00:23:59,280
Speaker 1: it's we haven't seen that in a long time. So

399
00:23:59,359 --> 00:24:02,640
Speaker 1: that that makes euro party is exactly. And so so

400
00:24:02,960 --> 00:24:06,320
Speaker 1: you've had great moves and a lot of markets. And

401
00:24:06,560 --> 00:24:10,240
Speaker 1: what I'm excited about is I don't see that changing

402
00:24:10,680 --> 00:24:15,600
Speaker 1: into a quiet moment anytime soon. So so let's talk

403
00:24:15,680 --> 00:24:18,680
Speaker 1: about next year. But before we get to that, I

404
00:24:18,760 --> 00:24:23,320
Speaker 1: want to ask you about last year. So one, for

405
00:24:23,440 --> 00:24:27,680
Speaker 1: equity investors, hey, plus twenty seemed like a great year,

406
00:24:28,280 --> 00:24:31,720
Speaker 1: but if you're a volatility trader, markets were never less

407
00:24:31,720 --> 00:24:34,679
Speaker 1: than five percent from all time highs. It was a

408
00:24:34,880 --> 00:24:41,080
Speaker 1: shockingly quiescent year straight up, and hardly any move was

409
00:24:41,960 --> 00:24:46,400
Speaker 1: one a less interesting year than Yeah, for sure, definitely.

410
00:24:46,560 --> 00:24:49,520
Speaker 1: I mean we're able to generate on average returns last

411
00:24:49,560 --> 00:24:52,840
Speaker 1: year they were positive year, but there's way more to

412
00:24:52,880 --> 00:24:56,520
Speaker 1: do this year. Um. And you know, last year, if

413
00:24:56,560 --> 00:24:59,240
Speaker 1: you were going to have a good year, you had

414
00:24:59,280 --> 00:25:02,560
Speaker 1: to be essentially long data and we like from the

415
00:25:02,560 --> 00:25:06,119
Speaker 1: beginning of the year and correct and just be patient

416
00:25:06,160 --> 00:25:10,440
Speaker 1: and stay with it. And you know we uh we

417
00:25:10,440 --> 00:25:12,880
Speaker 1: we certainly did that on a portion of what we

418
00:25:13,680 --> 00:25:18,760
Speaker 1: look at as our risk budget. But there's we're much happier,

419
00:25:18,840 --> 00:25:21,119
Speaker 1: We're going to be more profitable, there's going to be

420
00:25:21,160 --> 00:25:25,359
Speaker 1: more interesting environment when uh, you know, you're not looking

421
00:25:25,400 --> 00:25:27,440
Speaker 1: at one asset class and that's the only game in town,

422
00:25:27,480 --> 00:25:29,399
Speaker 1: but rather there's something to do in foreign exchange, or

423
00:25:29,440 --> 00:25:31,720
Speaker 1: something doing rates, or something doing commodities, something to do

424
00:25:31,720 --> 00:25:34,679
Speaker 1: in credit, all of these asset classes. Now we're moving

425
00:25:35,000 --> 00:25:41,800
Speaker 1: and moving a lot, so so not so interesting, very interesting.

426
00:25:42,400 --> 00:25:48,480
Speaker 1: Why do you believe this high interest, high volatility environment

427
00:25:48,800 --> 00:25:52,639
Speaker 1: is going to continue into next year? Yeah? So the question,

428
00:25:52,640 --> 00:25:55,520
Speaker 1: of course is I expect there to be plenty of

429
00:25:55,560 --> 00:25:59,080
Speaker 1: volatility next year. Will it be as volatile as twenty two.

430
00:25:59,080 --> 00:26:02,040
Speaker 1: Maybe not, but it will it be bold enough for

431
00:26:02,240 --> 00:26:04,520
Speaker 1: it to be fertile for what we do and constructive

432
00:26:04,520 --> 00:26:06,120
Speaker 1: for what we do. And I think the answer that's yeah,

433
00:26:06,200 --> 00:26:09,080
Speaker 1: some cautiously optimistic that will be the case. And I

434
00:26:09,160 --> 00:26:11,840
Speaker 1: say that because I think of some of the problems

435
00:26:12,640 --> 00:26:15,240
Speaker 1: that the FED is trying to manage through, and central

436
00:26:15,240 --> 00:26:17,600
Speaker 1: banks in Europe are trying to manage through these problems.

437
00:26:17,640 --> 00:26:20,359
Speaker 1: I don't see ending at you know, when we when

438
00:26:20,359 --> 00:26:22,879
Speaker 1: we flip the calendar in twenty three, uh, you know,

439
00:26:23,000 --> 00:26:28,480
Speaker 1: the supply chain bottlenecks gonna end, will go away, exactly

440
00:26:28,520 --> 00:26:31,960
Speaker 1: my point. So, so there are secular issues that are

441
00:26:32,000 --> 00:26:36,440
Speaker 1: causing inflation that I believe the FED really can't do

442
00:26:36,520 --> 00:26:39,760
Speaker 1: that much about. And I think the problem that inflation

443
00:26:39,880 --> 00:26:43,679
Speaker 1: causes for central banks are not going away so quickly.

444
00:26:44,160 --> 00:26:50,080
Speaker 1: So I think this year maybe unusually good for for macro,

445
00:26:50,280 --> 00:26:52,960
Speaker 1: but I think the upcoming several years are going to

446
00:26:53,040 --> 00:26:56,400
Speaker 1: be also pretty interesting for what we do. So the

447
00:26:56,480 --> 00:27:01,360
Speaker 1: consensus of economists have the FED using seventy five basis

448
00:27:01,359 --> 00:27:08,440
Speaker 1: points today July and then another seventy in September, and

449
00:27:08,480 --> 00:27:11,080
Speaker 1: then I think, is the basis is that way? That's

450
00:27:11,080 --> 00:27:15,159
Speaker 1: now moving back towards because the prior hints was seventy.

451
00:27:16,480 --> 00:27:19,480
Speaker 1: I think the economy really seems to be slowing. We've

452
00:27:19,520 --> 00:27:21,960
Speaker 1: got that really bad inflation print a few weeks ago,

453
00:27:22,600 --> 00:27:25,439
Speaker 1: and and and then you know, we've gotten some weaker

454
00:27:25,520 --> 00:27:28,639
Speaker 1: data since. And so I think people have priced in

455
00:27:28,800 --> 00:27:33,440
Speaker 1: fifty basis points in the next hike, and then that's

456
00:27:33,440 --> 00:27:36,920
Speaker 1: the thing they're pricing. And also cuts in twenty three

457
00:27:37,880 --> 00:27:41,040
Speaker 1: maybe maybe not. You know, I'm you're not in that camp.

458
00:27:41,920 --> 00:27:43,800
Speaker 1: I'm waiting to see. I mean, I think we need

459
00:27:43,880 --> 00:27:46,920
Speaker 1: to see inflation get a lot closer to the Fed's target.

460
00:27:47,400 --> 00:27:49,920
Speaker 1: And you know, I don't see inflation coming down as

461
00:27:50,000 --> 00:27:53,280
Speaker 1: rapidly as the market is pricing in Fed cuts. Oh really,

462
00:27:53,320 --> 00:27:56,680
Speaker 1: that's very interesting, right, So in order for the Fed

463
00:27:56,720 --> 00:28:00,000
Speaker 1: to want to cut, they're gonna need to see inflation

464
00:28:00,040 --> 00:28:04,160
Speaker 1: and contract quite a bit. And it will contract from

465
00:28:04,359 --> 00:28:06,159
Speaker 1: the very high levels it's at now. But will it

466
00:28:06,200 --> 00:28:08,399
Speaker 1: go down to their target? I'm not sure. So so

467
00:28:08,480 --> 00:28:12,280
Speaker 1: let's talk about commodities. Lumber cut in half, copper down,

468
00:28:13,480 --> 00:28:16,000
Speaker 1: oil under a hundred. What are we like thirty two

469
00:28:16,080 --> 00:28:19,919
Speaker 1: days in a row of gasoline prices falling? Industrial medals

470
00:28:19,960 --> 00:28:26,000
Speaker 1: also do um. Most of the commodity complex, that really

471
00:28:26,080 --> 00:28:30,040
Speaker 1: random uck seems to be starting to roll over and soften.

472
00:28:31,000 --> 00:28:33,119
Speaker 1: How do you view that? Is that? I view that

473
00:28:33,160 --> 00:28:37,000
Speaker 1: as helpful for sure, But you know, have rents collapsed,

474
00:28:37,080 --> 00:28:42,160
Speaker 1: No housing is really tight, labor still really really tight.

475
00:28:42,720 --> 00:28:46,160
Speaker 1: The employee still has the upper handed, you know, as relation.

476
00:28:46,280 --> 00:28:48,840
Speaker 1: Is that still true? Because the scent seems to be

477
00:28:49,520 --> 00:28:52,120
Speaker 1: you have layoffs at the tech firms. They were in

478
00:28:52,200 --> 00:28:55,680
Speaker 1: a mad dash to hire, they over hired, and now

479
00:28:55,760 --> 00:28:59,800
Speaker 1: some of the retailers are talking about easing Amazon and Walmart.

480
00:29:01,600 --> 00:29:05,719
Speaker 1: It feels like the great resignation is over and whatever

481
00:29:05,840 --> 00:29:09,600
Speaker 1: upper hand employees had, they seem to have lost a

482
00:29:09,600 --> 00:29:13,760
Speaker 1: little hand over the past few weeks. I think that's

483
00:29:13,800 --> 00:29:17,120
Speaker 1: a perception, not necessarily the reality. I think that will

484
00:29:17,200 --> 00:29:19,440
Speaker 1: become a reality. I don't think we're there. I don't

485
00:29:19,440 --> 00:29:24,160
Speaker 1: think psychology changes so fast. So I think you know,

486
00:29:24,400 --> 00:29:27,760
Speaker 1: employees here at Bloomberg you have a three you know,

487
00:29:27,840 --> 00:29:32,520
Speaker 1: a remote work policy. Uh. You know we have perspect

488
00:29:33,960 --> 00:29:38,680
Speaker 1: and and and and most firms you know have similar policies. Uh.

489
00:29:38,720 --> 00:29:41,600
Speaker 1: And I think that's reflective of employee having a lot

490
00:29:41,640 --> 00:29:47,000
Speaker 1: of leverage over employers and these policies will probably evolve,

491
00:29:47,240 --> 00:29:49,560
Speaker 1: you know, because they all got birth out of COVID

492
00:29:49,760 --> 00:29:52,640
Speaker 1: and and so on in an incredibly hot labor market.

493
00:29:53,160 --> 00:30:01,120
Speaker 1: But I don't see drastic changes yet and how employees

494
00:30:01,440 --> 00:30:05,040
Speaker 1: are thinking and what their work expectations are. I think

495
00:30:05,080 --> 00:30:08,560
Speaker 1: there will get to there, but we're not there. You know,

496
00:30:08,600 --> 00:30:10,320
Speaker 1: it used to be how do you keep them down

497
00:30:10,360 --> 00:30:13,160
Speaker 1: on the farm once they've seen gay Paris? And now

498
00:30:13,200 --> 00:30:14,640
Speaker 1: it's hey, how the hell do you get them back

499
00:30:14,640 --> 00:30:17,360
Speaker 1: into the city they want to work from the farm.

500
00:30:17,440 --> 00:30:23,160
Speaker 1: The world has changed. Personally, I can't help but notice

501
00:30:23,480 --> 00:30:27,320
Speaker 1: how much more productive and efficient I am up into

502
00:30:27,320 --> 00:30:29,040
Speaker 1: a point where, all right, I gotta get the hell

503
00:30:29,080 --> 00:30:31,920
Speaker 1: out of these same four walls. I'm wondering how that

504
00:30:32,000 --> 00:30:35,520
Speaker 1: extrapolates out to the entire labor market. Yeah, I think

505
00:30:35,560 --> 00:30:38,200
Speaker 1: it really depends on what people do, right. I mean,

506
00:30:39,280 --> 00:30:42,520
Speaker 1: I think, you know, some people can be very effective

507
00:30:42,800 --> 00:30:46,120
Speaker 1: working remotely, and I think others are more effective when

508
00:30:46,160 --> 00:30:48,920
Speaker 1: they collaborate and there and there. And I think it's

509
00:30:48,960 --> 00:30:53,000
Speaker 1: easier to learn right when you're around uh people who

510
00:30:53,080 --> 00:30:56,640
Speaker 1: are very bright and very innovative, and you know, you

511
00:30:56,680 --> 00:31:00,520
Speaker 1: can hopefully piggyback some of that knowledge and experience and

512
00:31:00,720 --> 00:31:04,040
Speaker 1: you know, have it improve your knowledge base and your

513
00:31:04,440 --> 00:31:07,760
Speaker 1: and your skill set. And so I'm a big fan

514
00:31:07,800 --> 00:31:12,560
Speaker 1: of of UH, you know, people working UH in offices

515
00:31:13,080 --> 00:31:15,800
Speaker 1: to a you know, a significant degree. UM, But I

516
00:31:15,840 --> 00:31:18,560
Speaker 1: also understand that a lot of people really enjoy working

517
00:31:18,560 --> 00:31:22,000
Speaker 1: remotely and and and I understand that. I mean, it's

518
00:31:22,080 --> 00:31:25,680
Speaker 1: it's it's very efficient, right right, But it's pretty clear

519
00:31:25,760 --> 00:31:29,680
Speaker 1: that it's there's going to be some form of hybrid

520
00:31:29,840 --> 00:31:33,240
Speaker 1: at most major employers going forward. The question is is

521
00:31:33,240 --> 00:31:36,000
Speaker 1: it four and one? Is it three and two? It's

522
00:31:36,040 --> 00:31:38,600
Speaker 1: not gonna be oh and five like it was for

523
00:31:38,640 --> 00:31:40,840
Speaker 1: two years. That that's pretty much done. I have to

524
00:31:40,920 --> 00:31:43,640
Speaker 1: agree with that. Yeah, let's talk a little bit about

525
00:31:43,920 --> 00:31:48,520
Speaker 1: some interesting trends that we've seen play out in two

526
00:31:48,600 --> 00:31:51,600
Speaker 1: and what whether or not they'll continue for the rest

527
00:31:51,640 --> 00:31:54,080
Speaker 1: of the year. We haven't talked a lot about equities,

528
00:31:54,600 --> 00:31:59,280
Speaker 1: but if I think of anything in two, it's finally

529
00:31:59,560 --> 00:32:05,120
Speaker 1: value has started to show it's UH advantage after lagging

530
00:32:05,200 --> 00:32:09,480
Speaker 1: growth for practically a decade. Uh. Do you guys look

531
00:32:09,520 --> 00:32:13,000
Speaker 1: at these sort of factors? Is that we do? I mean,

532
00:32:13,160 --> 00:32:16,400
Speaker 1: it depends on you know, our A lot of our

533
00:32:16,440 --> 00:32:19,800
Speaker 1: training systems are sort of momentum based systems. But then

534
00:32:19,840 --> 00:32:23,240
Speaker 1: we also have value based quantitative models, and our traders

535
00:32:23,600 --> 00:32:26,760
Speaker 1: are definitely looking at value. Um. And I you know,

536
00:32:26,880 --> 00:32:29,920
Speaker 1: I think, look, equities have come down a lot, uh,

537
00:32:30,400 --> 00:32:35,680
Speaker 1: but I think the question is what's next? And you know,

538
00:32:35,880 --> 00:32:38,560
Speaker 1: to me, we're do we test the lows? You know,

539
00:32:38,560 --> 00:32:41,240
Speaker 1: we've bounced about seven percent off the lows uh in

540
00:32:41,280 --> 00:32:43,800
Speaker 1: the last few weeks. Uh. You know it would not

541
00:32:43,840 --> 00:32:47,719
Speaker 1: surprise me as earnings slow down and and you know,

542
00:32:47,840 --> 00:32:50,239
Speaker 1: the economy slows down and the effect of these rate

543
00:32:50,320 --> 00:32:54,960
Speaker 1: hikes begins to kick in. You know, earnings should deteriorate,

544
00:32:55,200 --> 00:32:57,920
Speaker 1: and the question is how much and how much we'll

545
00:32:57,960 --> 00:33:01,080
Speaker 1: spending contract and things like that, and what kind of

546
00:33:01,080 --> 00:33:04,400
Speaker 1: demand destruction are we going to see? So uh, I

547
00:33:04,440 --> 00:33:09,040
Speaker 1: think equities probably have some downside in them. On the

548
00:33:09,040 --> 00:33:11,000
Speaker 1: other hand, the bookcases, there's not a lot else to

549
00:33:11,000 --> 00:33:14,560
Speaker 1: do with money, and so you know, uh, the sell

550
00:33:14,640 --> 00:33:18,320
Speaker 1: offs are are pretty well bought by institutional you know,

551
00:33:18,360 --> 00:33:22,120
Speaker 1: investors said differently, what's already in the price. So let

552
00:33:22,160 --> 00:33:24,800
Speaker 1: me throw a couple of things at you. Um. We

553
00:33:25,120 --> 00:33:29,680
Speaker 1: talked earlier down more or less prices in a recession,

554
00:33:29,800 --> 00:33:32,360
Speaker 1: right or at least a mild recession. Is that a

555
00:33:32,400 --> 00:33:35,200
Speaker 1: fair assessment the way you would think about the macro

556
00:33:35,360 --> 00:33:38,640
Speaker 1: environment of of stocks as a leading indicator, You know,

557
00:33:39,160 --> 00:33:41,200
Speaker 1: I don't. I don't know that that's the old priced

558
00:33:41,200 --> 00:33:43,240
Speaker 1: in there, because think about it. We were up twenty

559
00:33:43,280 --> 00:33:46,280
Speaker 1: eight percent last year, right, so there's a lot and

560
00:33:46,600 --> 00:33:50,920
Speaker 1: we were down this year, um and up the year before.

561
00:33:51,080 --> 00:33:54,240
Speaker 1: So this is just a little mean reveal. So you know,

562
00:33:54,280 --> 00:33:57,240
Speaker 1: I think this is sort of a very normal correction

563
00:33:58,000 --> 00:34:01,040
Speaker 1: after the years and years and years of unusually good

564
00:34:01,040 --> 00:34:05,240
Speaker 1: performance for equities. And I'm not sure that our recession

565
00:34:05,280 --> 00:34:08,040
Speaker 1: is completely priced then. I think I think a slow

566
00:34:08,080 --> 00:34:11,200
Speaker 1: down the economy is somewhat priced then, but I think

567
00:34:11,200 --> 00:34:14,080
Speaker 1: we could see lower prices from here. So let's talk

568
00:34:14,120 --> 00:34:18,680
Speaker 1: about earnings. Both second quarter and third quarter. Second quarter

569
00:34:18,719 --> 00:34:24,200
Speaker 1: earnings have started to trickle out a few disappointments, but

570
00:34:24,440 --> 00:34:28,480
Speaker 1: stocks really haven't been punished the way when we saw

571
00:34:28,520 --> 00:34:32,480
Speaker 1: a first quarter earnings come out in April. If you missed,

572
00:34:32,760 --> 00:34:39,160
Speaker 1: you got shell lacked down. Walmart. Really, I can't say

573
00:34:39,160 --> 00:34:42,239
Speaker 1: on radio what they did, but terrible. The stock was

574
00:34:42,280 --> 00:34:45,399
Speaker 1: off eight or nine percent. It's really relative to how

575
00:34:45,480 --> 00:34:48,799
Speaker 1: badly they missed. I was surprised that that's all they

576
00:34:48,840 --> 00:34:52,920
Speaker 1: were down. Um. So the question is what does it

577
00:34:52,960 --> 00:34:56,520
Speaker 1: mean when stocks aren't punished when bad news comes out.

578
00:34:56,800 --> 00:35:00,480
Speaker 1: So I think perhaps part of the actually a nation

579
00:35:01,160 --> 00:35:03,560
Speaker 1: is that there was a de leveraging that occurred in

580
00:35:03,600 --> 00:35:09,000
Speaker 1: the first quarter, and I think that is somewhat behind us,

581
00:35:09,120 --> 00:35:14,080
Speaker 1: so meaning that very richly valued stocks. Yeah, so this

582
00:35:14,200 --> 00:35:19,400
Speaker 1: is more multiple contraction than being punished by missing earnings.

583
00:35:19,520 --> 00:35:22,799
Speaker 1: I mean, you know, there were equity hedge funds that

584
00:35:22,880 --> 00:35:26,480
Speaker 1: were pretty laverage, that had pretty highly concentrated you know,

585
00:35:26,560 --> 00:35:30,040
Speaker 1: growth bats and you know a lot of technology companies

586
00:35:30,040 --> 00:35:31,560
Speaker 1: and so on, and and and a lot of those

587
00:35:31,600 --> 00:35:34,520
Speaker 1: equities went down a lot and those a lot of

588
00:35:34,560 --> 00:35:36,920
Speaker 1: those funds had exit and a lot of investors and

589
00:35:37,280 --> 00:35:40,080
Speaker 1: you know, exited some of those positions and they've come

590
00:35:40,080 --> 00:35:42,640
Speaker 1: back to earth. And so I think some of the

591
00:35:42,719 --> 00:35:47,600
Speaker 1: de leveraging has already occurred, and that's why the reaction

592
00:35:47,640 --> 00:35:50,640
Speaker 1: functions not as severe. Uh as you see new orrangs

593
00:35:50,680 --> 00:35:55,160
Speaker 1: at the hit the tape really really intriguing. Um. So

594
00:35:55,360 --> 00:35:58,480
Speaker 1: let's talk a little bit about third quarter earnings. If

595
00:35:58,520 --> 00:36:03,200
Speaker 1: the FED goes fifty or seventy five in September, is

596
00:36:03,239 --> 00:36:08,840
Speaker 1: the market pricing in a potential decrease from record highs

597
00:36:08,880 --> 00:36:13,480
Speaker 1: for sp I don't. I don't think we're pricing that yet. Uh,

598
00:36:13,560 --> 00:36:18,440
Speaker 1: and I'd be a bit surprised if we don't. If

599
00:36:18,480 --> 00:36:23,480
Speaker 1: we have continuing uh, you know, erosion of earnings, I

600
00:36:23,520 --> 00:36:27,640
Speaker 1: think equity prices will follow that. Um. Well, I'm not

601
00:36:27,719 --> 00:36:30,719
Speaker 1: forecasting another down, but I do think we could go

602
00:36:30,760 --> 00:36:33,960
Speaker 1: down five or tending, right, I mean, what is that's

603
00:36:33,960 --> 00:36:37,480
Speaker 1: a bad Tuesday? Down ten percent? We people forget it?

604
00:36:37,560 --> 00:36:44,200
Speaker 1: What um or that's right? Or it's really just a

605
00:36:44,280 --> 00:36:47,120
Speaker 1: fraction of that. So, so we talked about if this

606
00:36:47,200 --> 00:36:51,840
Speaker 1: is pricing in recession, does it matter if we're in

607
00:36:51,880 --> 00:36:54,839
Speaker 1: a recession or not now or will be next year?

608
00:36:55,080 --> 00:36:59,919
Speaker 1: How do you contextualize the economic data? And the brew

609
00:37:00,000 --> 00:37:05,040
Speaker 1: would stamp recession when you're thinking about managing risk. You know,

610
00:37:05,040 --> 00:37:10,280
Speaker 1: we obviously have to be concerned with it. And you know, uh,

611
00:37:10,320 --> 00:37:15,600
Speaker 1: we we would not be at all surprised to see

612
00:37:16,239 --> 00:37:20,880
Speaker 1: our you know, the economy contract, the Feds, rate heights

613
00:37:21,200 --> 00:37:27,000
Speaker 1: take effect. Uh, beta slips, um prices go down somewhat

614
00:37:27,040 --> 00:37:29,799
Speaker 1: if you're talking about equities, uh, and then at some

615
00:37:29,880 --> 00:37:34,640
Speaker 1: point buyers come back and invest because there's a perception

616
00:37:34,719 --> 00:37:37,000
Speaker 1: and if you think about, you know, the last decade

617
00:37:37,040 --> 00:37:39,880
Speaker 1: or more, UH, if you didn't buy the dips and

618
00:37:39,880 --> 00:37:43,239
Speaker 1: equity prices, you're sort of punished by the market. And

619
00:37:43,320 --> 00:37:47,000
Speaker 1: so there is a psychology that's been well trained into

620
00:37:47,040 --> 00:37:51,080
Speaker 1: all investors, institutional and otherwise that when equities go down

621
00:37:51,080 --> 00:37:53,200
Speaker 1: a lot, you need to buy, shut your eyes and buy.

622
00:37:53,280 --> 00:37:55,480
Speaker 1: And so I think we're going to continue to have

623
00:37:55,600 --> 00:37:58,920
Speaker 1: that behavior occurring, and you know, we'll just have to

624
00:37:58,960 --> 00:38:01,520
Speaker 1: see how it plays out in terms of UH, where

625
00:38:01,520 --> 00:38:03,960
Speaker 1: the you know, what does the market do not just

626
00:38:04,040 --> 00:38:06,600
Speaker 1: over the lext quarter, but over the next several You

627
00:38:06,640 --> 00:38:10,080
Speaker 1: were rewarded for buying the dip in when we had

628
00:38:10,080 --> 00:38:12,680
Speaker 1: the flash crash. You were rewarded for buying the dip

629
00:38:13,320 --> 00:38:18,120
Speaker 1: in the fourth quarter when we were down almost if

630
00:38:18,160 --> 00:38:20,680
Speaker 1: you bought into the end of the quarter of the

631
00:38:20,680 --> 00:38:24,880
Speaker 1: pandemic March Q one, you were rewarded. This seems to

632
00:38:24,920 --> 00:38:28,319
Speaker 1: be the first year where the dip buyers really got

633
00:38:28,360 --> 00:38:31,160
Speaker 1: their hands smacked by the market. How long does it

634
00:38:31,280 --> 00:38:34,120
Speaker 1: take You've been doing this for forty years, How long

635
00:38:34,160 --> 00:38:37,719
Speaker 1: does it take for that psychology of by the dip,

636
00:38:37,719 --> 00:38:40,520
Speaker 1: by the dip, by the dip for that muscle memory

637
00:38:40,560 --> 00:38:43,359
Speaker 1: to get broken. I think it takes a couple of years. Really, Yeah,

638
00:38:43,400 --> 00:38:47,279
Speaker 1: I don't think definitely had a big impact on people. Yeah,

639
00:38:47,400 --> 00:38:49,279
Speaker 1: I think it takes a couple of years. I don't

640
00:38:49,280 --> 00:38:52,560
Speaker 1: really think it happens. And the face, let's face it,

641
00:38:52,840 --> 00:38:55,200
Speaker 1: five six months into the year or six seven months

642
00:38:55,239 --> 00:38:58,120
Speaker 1: in the year now, I mean, I don't think we're there. Um.

643
00:38:58,280 --> 00:39:02,080
Speaker 1: I think, you know, if we were to see two

644
00:39:02,200 --> 00:39:06,239
Speaker 1: years of poor performance and equities that buy the dip,

645
00:39:06,280 --> 00:39:09,160
Speaker 1: psychology would really erode a lot. But if you see

646
00:39:09,239 --> 00:39:13,359
Speaker 1: seven months of poor equity performance, I'm not sure we're there. Huh.

647
00:39:13,480 --> 00:39:16,440
Speaker 1: So we're halfway through two. We're looking out at the

648
00:39:16,480 --> 00:39:20,280
Speaker 1: rest of the year and into three. Any particular asset

649
00:39:20,360 --> 00:39:25,520
Speaker 1: class or sector that strikes you as intriguing. Energy you

650
00:39:25,560 --> 00:39:28,280
Speaker 1: mentioned earlier, had a great year the past twelve months.

651
00:39:28,680 --> 00:39:32,960
Speaker 1: The banking sector really seems to have missed earnings. What

652
00:39:33,080 --> 00:39:36,200
Speaker 1: looks interesting, Well, the dollars really interesting. I mean the

653
00:39:36,239 --> 00:39:40,279
Speaker 1: dollars making a big move and it continues uh to

654
00:39:40,440 --> 00:39:47,120
Speaker 1: be a currency right that has uh positive carry versus

655
00:39:47,680 --> 00:39:51,400
Speaker 1: uh it's it's counterparts. So you know, rates in the

656
00:39:51,400 --> 00:39:54,400
Speaker 1: Ice States are are still and servedly higher than the

657
00:39:54,440 --> 00:39:56,640
Speaker 1: rest of the world look at it, and that attracts capital.

658
00:39:56,680 --> 00:39:59,440
Speaker 1: That's gonna track capital so that, you know, uh, until

659
00:39:59,719 --> 00:40:03,520
Speaker 1: for when otherwise. I mean, you know, Japan has committed

660
00:40:03,960 --> 00:40:09,160
Speaker 1: to you know, uh maximum rate of twenty five basis points. Uh,

661
00:40:09,320 --> 00:40:13,600
Speaker 1: while the US is marching on up seventy five points today.

662
00:40:13,640 --> 00:40:19,120
Speaker 1: So you know, I think the dollar continues to intrigue me. Uh.

663
00:40:19,360 --> 00:40:21,640
Speaker 1: You know, it's moved a lot. We have to be

664
00:40:21,680 --> 00:40:25,600
Speaker 1: cognizant of that. We've seen you know, the dollar against

665
00:40:25,640 --> 00:40:27,680
Speaker 1: the end, but could have go more I think so,

666
00:40:27,840 --> 00:40:29,479
Speaker 1: and could have got more against hero I think so.

667
00:40:29,480 --> 00:40:34,000
Speaker 1: So here's the pushback from my goldbug friends, um, who

668
00:40:34,080 --> 00:40:37,879
Speaker 1: I have been tormenting for the past decade. Uh, yeah,

669
00:40:37,960 --> 00:40:40,680
Speaker 1: the dollars up, but it's the only clean shirt and

670
00:40:40,960 --> 00:40:44,480
Speaker 1: dirty hamper. We're gonna go the wand the end. The euro,

671
00:40:45,200 --> 00:40:48,400
Speaker 1: everything else is junk. The dollar is just half decent.

672
00:40:48,800 --> 00:40:52,040
Speaker 1: How do you respond to that sort of criticism to

673
00:40:52,239 --> 00:40:58,480
Speaker 1: dollar strength? You know, I guess my question is doesn't matter.

674
00:40:58,920 --> 00:41:02,640
Speaker 1: I mean, if the if the dollars going up because uh,

675
00:41:02,680 --> 00:41:05,319
Speaker 1: you know, well, because it's got a much higher interest

676
00:41:05,440 --> 00:41:09,239
Speaker 1: rate than other currencies. Uh, I don't know if I

677
00:41:09,560 --> 00:41:13,160
Speaker 1: call it that it has a clean shirt. I think

678
00:41:13,200 --> 00:41:17,879
Speaker 1: it's just uh, it has favorable fundamentals, and uh and

679
00:41:17,880 --> 00:41:20,799
Speaker 1: and and people should buy things that have favorable fundamentals

680
00:41:20,800 --> 00:41:23,200
Speaker 1: and not buy things that have allows the fundamentals. So

681
00:41:23,360 --> 00:41:26,600
Speaker 1: if the dollar is strong, what does that say about

682
00:41:26,880 --> 00:41:30,400
Speaker 1: our ability to export? What does that say about global

683
00:41:30,480 --> 00:41:33,960
Speaker 1: macro travel. I had a buddy who in the late

684
00:41:34,040 --> 00:41:36,880
Speaker 1: nineties and early two thousand's, the last time the dollar

685
00:41:37,000 --> 00:41:41,160
Speaker 1: was this strong, was flying to Europe buying nine elevens

686
00:41:41,160 --> 00:41:45,240
Speaker 1: and Z eights and other um European sheet metal. Ferraris

687
00:41:45,320 --> 00:41:48,520
Speaker 1: bringing them back to the US, converting them and still

688
00:41:48,520 --> 00:41:51,840
Speaker 1: selling them at a healthy profit versus what what the

689
00:41:51,880 --> 00:41:55,520
Speaker 1: dealers were asking for. Because of the strength of the dollar.

690
00:41:55,920 --> 00:41:59,480
Speaker 1: How does this impact global trade and other economic facts. Well,

691
00:42:00,360 --> 00:42:03,600
Speaker 1: it's a big factor. I think. You know, keep in mind,

692
00:42:04,040 --> 00:42:08,040
Speaker 1: your supply chain bottleneck problems are as persistent as ever,

693
00:42:08,560 --> 00:42:11,759
Speaker 1: so you know, our ability to do what you just said,

694
00:42:11,920 --> 00:42:14,799
Speaker 1: right to go and start buying Porsche's or something that's

695
00:42:14,800 --> 00:42:17,719
Speaker 1: not happening because you can't get them. Uh So some

696
00:42:17,800 --> 00:42:20,520
Speaker 1: of that stuff has to work itself out independent of

697
00:42:20,560 --> 00:42:24,040
Speaker 1: the currency. But you know, one of the things that's

698
00:42:24,080 --> 00:42:30,319
Speaker 1: causing inflation is secular trends such you know, such as

699
00:42:30,560 --> 00:42:33,640
Speaker 1: supply chain problems and what have you. And that's one

700
00:42:33,640 --> 00:42:35,520
Speaker 1: of the reasons I think inflation is gonna be around

701
00:42:35,520 --> 00:42:38,360
Speaker 1: for a while. It's those secular trends are slow moving.

702
00:42:38,680 --> 00:42:42,000
Speaker 1: So when you say inflation, we're obviously, or maybe not

703
00:42:42,080 --> 00:42:46,600
Speaker 1: so obviously, we're not talking eight, but we're talking elevated

704
00:42:46,640 --> 00:42:51,440
Speaker 1: above FED target of correct So four or five percent inflation. Yeah,

705
00:42:51,440 --> 00:42:53,279
Speaker 1: maybe we get down to four or five, but that's

706
00:42:53,280 --> 00:42:55,759
Speaker 1: the number of the FED doesn't like. I like four

707
00:42:56,000 --> 00:42:59,560
Speaker 1: better than nine. Um, but that still means that they're

708
00:42:59,560 --> 00:43:03,080
Speaker 1: gonna right direction. But but we're gonna move as fast

709
00:43:03,360 --> 00:43:06,719
Speaker 1: as the FED would like. I don't think so. And

710
00:43:06,760 --> 00:43:10,560
Speaker 1: that's why I think people who have this expectation that

711
00:43:10,600 --> 00:43:13,600
Speaker 1: the FED is going to be cutting rates, uh, sometime

712
00:43:13,640 --> 00:43:16,520
Speaker 1: in the first or second quarter next year. I'm not

713
00:43:16,520 --> 00:43:19,279
Speaker 1: sure that's realistic. So so let's assume you're right, we've

714
00:43:19,320 --> 00:43:23,400
Speaker 1: seen peak inflation, but transitory takes much longer than expected,

715
00:43:23,440 --> 00:43:26,319
Speaker 1: and we slowly work our way down too. Maybe there's

716
00:43:26,320 --> 00:43:27,960
Speaker 1: a six hands ale by the end of the year,

717
00:43:28,040 --> 00:43:31,080
Speaker 1: five hands ale, and then sometime next year four percent?

718
00:43:31,680 --> 00:43:35,520
Speaker 1: What does that mean in terms of wages and people

719
00:43:35,560 --> 00:43:37,759
Speaker 1: demanding higher salaries? What does that mean in terms of

720
00:43:37,800 --> 00:43:41,239
Speaker 1: consumer spending? That has to mean mortgage rates are going

721
00:43:41,280 --> 00:43:43,320
Speaker 1: to be much higher. What does that mean for housing?

722
00:43:43,840 --> 00:43:46,640
Speaker 1: And lastly, what does that mean for politics? I can't

723
00:43:46,640 --> 00:43:49,920
Speaker 1: imagine the present occupant of the White House is happy

724
00:43:50,000 --> 00:43:55,960
Speaker 1: with that sort of inflation forecast. Yeah, I'm sure he's not.

725
00:43:56,120 --> 00:43:58,520
Speaker 1: And I'm sure you know, the Democratic Party is not

726
00:43:58,640 --> 00:44:02,239
Speaker 1: very happy going into you know, a midterm election with

727
00:44:02,600 --> 00:44:06,280
Speaker 1: really high inflation. And uh, you know, I'm not sure

728
00:44:07,000 --> 00:44:10,080
Speaker 1: for good or for bad. Politicians are really bad involved

729
00:44:10,120 --> 00:44:13,000
Speaker 1: in managing inflation. Right, it's not what they do the

730
00:44:13,080 --> 00:44:17,480
Speaker 1: central banks really but but but they but they will

731
00:44:17,520 --> 00:44:21,520
Speaker 1: take credit or blame accordingly, as you know, depending on

732
00:44:21,560 --> 00:44:24,440
Speaker 1: what side of you know, the policy you're on. But

733
00:44:24,640 --> 00:44:29,360
Speaker 1: I think, you know, we're going to have a pretty

734
00:44:29,400 --> 00:44:35,799
Speaker 1: thorny issue, which is that inflation and the uh thing,

735
00:44:36,040 --> 00:44:37,880
Speaker 1: the things that need to happen for it to go

736
00:44:37,960 --> 00:44:41,600
Speaker 1: down just they're going to move slowly. And um that's

737
00:44:41,840 --> 00:44:44,040
Speaker 1: you know, that's my base case. I could be wrong.

738
00:44:44,080 --> 00:44:47,200
Speaker 1: We could we could really contract quicker. I mean you

739
00:44:47,320 --> 00:44:50,040
Speaker 1: mentioned that energy prices will come down some you know,

740
00:44:50,160 --> 00:44:52,960
Speaker 1: other commodity prices will come down a lot. But let's

741
00:44:53,000 --> 00:44:56,240
Speaker 1: also not forget you know, crewdel still about a dollar,

742
00:44:56,960 --> 00:45:00,360
Speaker 1: uh you know right now? Uh? And uh you know,

743
00:45:01,000 --> 00:45:03,880
Speaker 1: could it could it come down? Sure, but it hasn't

744
00:45:03,880 --> 00:45:06,879
Speaker 1: come down that much. Are we going to get down

745
00:45:06,880 --> 00:45:09,480
Speaker 1: to eighty cents or something like that? Maybe, but we're

746
00:45:09,520 --> 00:45:15,000
Speaker 1: not there. Really really intriguing. And and last um market question.

747
00:45:15,440 --> 00:45:19,440
Speaker 1: So we've seen equity valuations come down. I get the

748
00:45:19,480 --> 00:45:25,560
Speaker 1: sense you're expecting cheaper valuations, if not much cheaper valuations. Well,

749
00:45:25,600 --> 00:45:28,839
Speaker 1: I wouldn't go so far as to say much cheaper evaluations,

750
00:45:28,840 --> 00:45:31,719
Speaker 1: but I would say I think the risk is to

751
00:45:31,760 --> 00:45:34,040
Speaker 1: the downside more than the upside. How do how do

752
00:45:34,080 --> 00:45:36,360
Speaker 1: we get there? Do we get there through multiple contraction

753
00:45:36,760 --> 00:45:39,759
Speaker 1: or do we get there? I think it's really choppy

754
00:45:39,760 --> 00:45:44,399
Speaker 1: price behavior. I mean, yeah, a little bit. I mean

755
00:45:44,760 --> 00:45:47,000
Speaker 1: you look at some of these rallies have had vicious

756
00:45:47,000 --> 00:45:49,879
Speaker 1: bear market rallies. Is here right where the market was up,

757
00:45:50,160 --> 00:45:51,799
Speaker 1: you know, three percent one day, and soon we were

758
00:45:51,840 --> 00:45:53,959
Speaker 1: three percent the next day, and and so and so forth,

759
00:45:54,080 --> 00:45:56,560
Speaker 1: and then the next week's the exact opposite. So I

760
00:45:56,600 --> 00:46:00,359
Speaker 1: think that kind of erratic behavior. Um maybe out quite

761
00:46:00,360 --> 00:46:03,960
Speaker 1: as volatle as that is what I would expect. And

762
00:46:04,080 --> 00:46:06,080
Speaker 1: I think, you know, there's a lot of money that

763
00:46:06,120 --> 00:46:10,240
Speaker 1: needs to get deployed. And uh, if I'm an investor,

764
00:46:10,280 --> 00:46:12,919
Speaker 1: I'm an institution, I'm gonna have so much in hedge funds,

765
00:46:12,920 --> 00:46:15,160
Speaker 1: i'na have so much in private investing, but I need

766
00:46:15,200 --> 00:46:18,120
Speaker 1: to be in liquid markets and I'm not gonna do

767
00:46:18,160 --> 00:46:21,759
Speaker 1: every I'm not gonna just exclusively invest in, you know,

768
00:46:21,800 --> 00:46:25,160
Speaker 1: alternative assets if you will. So there is going to

769
00:46:25,200 --> 00:46:29,480
Speaker 1: be a continuing bid for beta um because institutions need

770
00:46:29,520 --> 00:46:32,640
Speaker 1: to invest a lot of capital. But where you know,

771
00:46:33,160 --> 00:46:37,359
Speaker 1: will the economy continue to support ever higher evaluations? Who

772
00:46:37,520 --> 00:46:39,279
Speaker 1: did the last ten years? I don't think we're there.

773
00:46:39,760 --> 00:46:42,640
Speaker 1: H So you one one last thing I have to ask.

774
00:46:42,680 --> 00:46:47,880
Speaker 1: You mentioned institution sitting with capital. Did you imagine I

775
00:46:47,880 --> 00:46:49,759
Speaker 1: don't even want to go back to the eighties, but

776
00:46:49,960 --> 00:46:55,080
Speaker 1: even two thousand, that there would ever be this many

777
00:46:55,080 --> 00:46:58,600
Speaker 1: trillions and trillions and trillions of dollars looking for a home.

778
00:46:59,040 --> 00:47:03,399
Speaker 1: I never, in my wildest dreams, imagine that so much

779
00:47:03,480 --> 00:47:08,640
Speaker 1: capital would be amassed. How do you contextualize all this

780
00:47:08,800 --> 00:47:12,000
Speaker 1: money looking for a place to be well, treated Yeah,

781
00:47:12,000 --> 00:47:13,600
Speaker 1: I mean it's alms hard to fathom. I mean you

782
00:47:13,640 --> 00:47:18,240
Speaker 1: think about all of you know, the quantitative easing that's

783
00:47:18,280 --> 00:47:22,200
Speaker 1: gone on, and all of the stimulus and all of

784
00:47:22,280 --> 00:47:25,280
Speaker 1: the capital that there is, all the cash in the world.

785
00:47:25,719 --> 00:47:31,640
Speaker 1: It's it's it's it's really huge. And um, I think

786
00:47:31,640 --> 00:47:35,640
Speaker 1: that is something that is a positive fundamental for equity prices,

787
00:47:36,320 --> 00:47:40,040
Speaker 1: that cash has to get invested somewhere sometimes, somehow. So

788
00:47:40,360 --> 00:47:45,120
Speaker 1: even if earnings aren't great, even if the economy continues

789
00:47:45,600 --> 00:47:50,640
Speaker 1: to look slow, even if inflation is too high, I

790
00:47:50,760 --> 00:47:55,160
Speaker 1: think there is an argument to be made that, uh,

791
00:47:55,200 --> 00:47:56,880
Speaker 1: there's a lot of cash out there looking for a

792
00:47:56,880 --> 00:47:59,719
Speaker 1: home and that and that that cash is going to

793
00:48:00,000 --> 00:48:02,840
Speaker 1: periodically be deployed in equities. Yeah, no, that makes a

794
00:48:02,880 --> 00:48:05,160
Speaker 1: lot of sense. All right. Before I get to my

795
00:48:05,239 --> 00:48:08,200
Speaker 1: favorite questions, let me just throw a curve ball at you,

796
00:48:09,280 --> 00:48:14,240
Speaker 1: Graham Capital Management's headquarters. Is that a site named rock Ledge?

797
00:48:14,800 --> 00:48:18,320
Speaker 1: This used to be the office of General Douglas Macawthurd.

798
00:48:19,560 --> 00:48:22,439
Speaker 1: Tell us tell us first, how did you find rock

799
00:48:22,560 --> 00:48:25,799
Speaker 1: Ledge and make it the home of of GCM? And

800
00:48:25,840 --> 00:48:28,000
Speaker 1: tell us a little bit about the place. Yeah, no,

801
00:48:28,400 --> 00:48:35,600
Speaker 1: it's a back in. Uh. When I started Graham, we

802
00:48:35,640 --> 00:48:38,120
Speaker 1: moved into Stanford, and we were in Stanford, Connecticut for

803
00:48:38,160 --> 00:48:40,960
Speaker 1: some number of years, and that was a really good

804
00:48:40,960 --> 00:48:45,040
Speaker 1: place for us to recruit and retain talent. And a

805
00:48:45,120 --> 00:48:48,560
Speaker 1: lot of people you know, enjoyed as I did, uh,

806
00:48:48,600 --> 00:48:50,400
Speaker 1: the ability to have access to New York City, but

807
00:48:50,880 --> 00:48:53,560
Speaker 1: you know, also have good school systems and what have

808
00:48:53,680 --> 00:48:56,200
Speaker 1: you in the suburbs of New York and in Connecticut.

809
00:48:56,239 --> 00:48:58,480
Speaker 1: And a lot of hedge funds were in Connecticut. We

810
00:48:58,560 --> 00:49:02,399
Speaker 1: outgrew the space and Stamford and so, uh, somebody called

811
00:49:02,440 --> 00:49:04,440
Speaker 1: me and said, you know, this building in Row eight

812
00:49:04,440 --> 00:49:07,080
Speaker 1: in Connecticut is available and it's pretty amazing. And I

813
00:49:07,080 --> 00:49:09,239
Speaker 1: went up and I saw it and it's just, you know,

814
00:49:09,320 --> 00:49:12,600
Speaker 1: beautiful campus setting, you know, about a hundred thousand square

815
00:49:12,600 --> 00:49:16,080
Speaker 1: feet of office space, and you know, it needed a

816
00:49:16,080 --> 00:49:18,399
Speaker 1: lot of work, but it was really pretty cool. And

817
00:49:18,480 --> 00:49:23,719
Speaker 1: so I thought, Gee, what a better place, What a

818
00:49:23,760 --> 00:49:26,920
Speaker 1: great place to try and attract the best people you

819
00:49:26,960 --> 00:49:29,720
Speaker 1: want to you could find, uh to work in your fund.

820
00:49:30,360 --> 00:49:34,319
Speaker 1: Uh from a quality of life work life perspective, this

821
00:49:34,440 --> 00:49:38,120
Speaker 1: was just an amazing place to run a hedge fund

822
00:49:38,400 --> 00:49:42,760
Speaker 1: to attract really talented people. Um, you know, the success

823
00:49:42,760 --> 00:49:44,600
Speaker 1: of a hedge funds. All about the people who worked there,

824
00:49:45,160 --> 00:49:48,359
Speaker 1: and having a great place to work is not unimportant.

825
00:49:48,560 --> 00:49:51,800
Speaker 1: It looks like a college campus. It's it's quite beautiful. Yeah,

826
00:49:51,840 --> 00:49:54,319
Speaker 1: it's been fantastic. We've been there a long time now

827
00:49:54,360 --> 00:49:57,080
Speaker 1: and I've enjoyed every minute of it. Huh, well, glad

828
00:49:57,120 --> 00:49:59,799
Speaker 1: to hear it. Let's jump to our favorite questions that

829
00:49:59,840 --> 00:50:03,799
Speaker 1: I ask all of our guests, starting with tell us,

830
00:50:03,800 --> 00:50:07,160
Speaker 1: what kept you entertained during the pandemic? What were you

831
00:50:07,560 --> 00:50:11,800
Speaker 1: uh watching or listening to? Well, mostly the markets, uh

832
00:50:11,880 --> 00:50:16,319
Speaker 1: you know, so obviously being in the position a man

833
00:50:16,400 --> 00:50:20,520
Speaker 1: of of monitoring risk and performance and you know, uh

834
00:50:20,640 --> 00:50:23,960
Speaker 1: position taking of all these traders and trading systems, you know,

835
00:50:24,360 --> 00:50:27,319
Speaker 1: that's always front and center and my uh you know,

836
00:50:27,640 --> 00:50:32,399
Speaker 1: uh conscious but uh, you know, uh, there's been some

837
00:50:32,560 --> 00:50:35,920
Speaker 1: really good shows that have come out. I've enjoyed, uh

838
00:50:36,040 --> 00:50:39,680
Speaker 1: you know that. There's recently something I've been watching. It's

839
00:50:39,719 --> 00:50:43,680
Speaker 1: called Tehran. It's on Apple Plus. It's a pretty good show.

840
00:50:43,960 --> 00:50:46,160
Speaker 1: Jeff Bridges in a good show. I think it's on

841
00:50:46,480 --> 00:50:49,120
Speaker 1: FX or something like that called The Old Man. That's

842
00:50:49,120 --> 00:50:53,479
Speaker 1: a great show. So uh, you know, uh, everyone needs

843
00:50:53,480 --> 00:50:54,920
Speaker 1: a break from the markets. Once a while. It's a

844
00:50:54,920 --> 00:50:57,440
Speaker 1: couple of things I've been watching. Uh tell us about

845
00:50:57,560 --> 00:51:02,759
Speaker 1: your early mentors who helped shape you a career. Well, uh,

846
00:51:03,200 --> 00:51:06,319
Speaker 1: you know, I think about some of the people who

847
00:51:06,560 --> 00:51:13,880
Speaker 1: uh really uh were just you know, great great mentors

848
00:51:13,920 --> 00:51:17,000
Speaker 1: and great people to learn from. Paul Jones comes to

849
00:51:17,400 --> 00:51:22,160
Speaker 1: my mind. I met Paul about forty years ago, and uh,

850
00:51:22,239 --> 00:51:27,520
Speaker 1: you know what an amazing person, philanthropist, great trader, visionary

851
00:51:27,640 --> 00:51:31,040
Speaker 1: for the world of finance, and you know, it was

852
00:51:31,160 --> 00:51:34,480
Speaker 1: very fortunate to have him help me get Graham going

853
00:51:34,480 --> 00:51:39,000
Speaker 1: back in he's he's been an insane role model, not

854
00:51:39,080 --> 00:51:41,000
Speaker 1: just for me, but for a lot of people in finance.

855
00:51:41,640 --> 00:51:44,000
Speaker 1: When I was a teen winner, I had a really

856
00:51:44,160 --> 00:51:47,560
Speaker 1: tough boss named Charlie fum Afraido that ran asset management,

857
00:51:48,200 --> 00:51:52,000
Speaker 1: Charlie Brook no nonsense. Uh. He had a Monday morning

858
00:51:52,040 --> 00:51:56,600
Speaker 1: meeting at eight a m every Monday, and you know, uh,

859
00:51:56,719 --> 00:51:58,600
Speaker 1: all of his division heads, I was one of them,

860
00:51:58,760 --> 00:52:00,840
Speaker 1: had to be down there in the World Trade Center

861
00:52:01,400 --> 00:52:04,319
Speaker 1: at eight o'clock. And man, I left my house at

862
00:52:04,320 --> 00:52:06,560
Speaker 1: six because if you got to that office at eight

863
00:52:06,600 --> 00:52:09,160
Speaker 1: oh two, you waited for an hour till the meeting

864
00:52:09,239 --> 00:52:12,360
Speaker 1: was over. Outside his office and then got to explain

865
00:52:12,800 --> 00:52:15,440
Speaker 1: what you were doing, uh, you know, a one on one,

866
00:52:15,480 --> 00:52:17,840
Speaker 1: which wasn't that much fun. So you know, he was

867
00:52:18,040 --> 00:52:20,920
Speaker 1: he was a great boss because he was no nonsense

868
00:52:21,000 --> 00:52:23,680
Speaker 1: and tough as Now, tell us about some of your

869
00:52:23,719 --> 00:52:28,400
Speaker 1: favorite books and what are you reading recently? You know, Uh,

870
00:52:28,440 --> 00:52:32,400
Speaker 1: I like spine novels. Uh So the Portrait of an

871
00:52:32,440 --> 00:52:35,799
Speaker 1: Unknown Woman David Silva just came out. That's that's a

872
00:52:35,800 --> 00:52:41,560
Speaker 1: great book I've always uh you know, loved uh you know, uh,

873
00:52:42,000 --> 00:52:45,040
Speaker 1: the Trilogy I told him was something I read when

874
00:52:45,080 --> 00:52:48,200
Speaker 1: I you know, I'm totally stressed out and I want

875
00:52:48,239 --> 00:52:50,919
Speaker 1: to get into another world. That's a it's a great

876
00:52:50,960 --> 00:52:53,759
Speaker 1: place to go. Uh. And then I just devour all

877
00:52:53,800 --> 00:52:58,000
Speaker 1: financial news and technology news and things like that. Interesting.

878
00:52:58,520 --> 00:53:00,880
Speaker 1: What sort of advice would you give to a recent

879
00:53:00,960 --> 00:53:05,480
Speaker 1: college graduate who is interested in a career in macro

880
00:53:05,640 --> 00:53:10,680
Speaker 1: investment or quantitative trader? You know? Here, the advice I

881
00:53:10,680 --> 00:53:15,759
Speaker 1: would give is try and get a job at a

882
00:53:15,800 --> 00:53:18,480
Speaker 1: really good macro fund that has some really bright people.

883
00:53:19,200 --> 00:53:21,560
Speaker 1: And if you want to get a hat and you

884
00:53:21,560 --> 00:53:25,839
Speaker 1: want to be successful, it's really simple. You show up

885
00:53:25,880 --> 00:53:29,799
Speaker 1: before anyone else, you leave after everyone else. You never

886
00:53:30,000 --> 00:53:33,319
Speaker 1: are screwing around on the internet. You're paying attention to

887
00:53:33,440 --> 00:53:38,320
Speaker 1: everything that's happening. And trust me, if you have brains

888
00:53:38,360 --> 00:53:41,240
Speaker 1: and creativity and innovation, there is no industry that rewards

889
00:53:41,239 --> 00:53:45,480
Speaker 1: you better. Quite quite interesting. And our final question, what

890
00:53:45,560 --> 00:53:48,279
Speaker 1: do you know about the world of investing today? You

891
00:53:48,440 --> 00:53:51,399
Speaker 1: wish you knew forty years ago when you were first

892
00:53:51,400 --> 00:53:55,239
Speaker 1: getting started. You know, there's a tough question. I mean, obviously,

893
00:53:55,680 --> 00:53:59,719
Speaker 1: on one hand, our trading systems are traders are so

894
00:53:59,800 --> 00:54:05,480
Speaker 1: much more sophisticated and so which it's more complicated. Uh,

895
00:54:05,520 --> 00:54:08,279
Speaker 1: And you know, we've learned a lot of lessons about

896
00:54:08,360 --> 00:54:11,200
Speaker 1: managing risk. We've learned a lot of lessons about being

897
00:54:11,320 --> 00:54:14,879
Speaker 1: opportunists in certain market cycles and really conservative in other

898
00:54:14,920 --> 00:54:17,879
Speaker 1: market cycles. And you know, the only way to learn

899
00:54:17,920 --> 00:54:22,120
Speaker 1: those lessons is through experience and making some mistakes and

900
00:54:22,239 --> 00:54:25,719
Speaker 1: overcoming those mistakes and ultimately prevailing. So you know, it

901
00:54:25,760 --> 00:54:29,040
Speaker 1: would have been great they never have to learn through, uh,

902
00:54:29,200 --> 00:54:32,800
Speaker 1: you know, making mistakes. But that's the way the world works.

903
00:54:32,920 --> 00:54:37,879
Speaker 1: And I think we've been successful because we've been intellectually

904
00:54:37,880 --> 00:54:39,880
Speaker 1: honest with ourselves. We when we make a mistake, we

905
00:54:39,920 --> 00:54:44,040
Speaker 1: own it. Really really intriguing. Thanks, so much Kenn for

906
00:54:44,120 --> 00:54:47,040
Speaker 1: being so generous with your time. We have been speaking

907
00:54:47,040 --> 00:54:49,840
Speaker 1: with Ken Tropin. He is the chairman and founder of

908
00:54:49,920 --> 00:54:54,319
Speaker 1: Graham Capital Management. If you enjoy this conversation, well check

909
00:54:54,360 --> 00:54:56,879
Speaker 1: out any of the previous four hundred we've done over

910
00:54:56,920 --> 00:55:01,839
Speaker 1: the past eight years. You can find those at iTunes, Spotify,

911
00:55:01,960 --> 00:55:05,600
Speaker 1: wherever you get your favorite podcasts. We love your comments,

912
00:55:05,600 --> 00:55:09,840
Speaker 1: feedback and suggestions right to us at M I V

913
00:55:10,040 --> 00:55:13,720
Speaker 1: podcast at Bloomberg dot net. Sign up from my daily

914
00:55:13,760 --> 00:55:17,520
Speaker 1: reading list at rialts dot com. Follow me on Twitter

915
00:55:17,640 --> 00:55:20,040
Speaker 1: at rit Halts. I would be remiss if I did

916
00:55:20,080 --> 00:55:24,239
Speaker 1: not thank the crack team that helps these conversations come

917
00:55:24,280 --> 00:55:28,480
Speaker 1: together so well each week. Sarah Livesley is my audio engineer.

918
00:55:28,680 --> 00:55:32,440
Speaker 1: Artica val Bronn is my project manager. Paris Wald is

919
00:55:32,440 --> 00:55:36,799
Speaker 1: my producer. Sean Russo is my head of research. I'm

920
00:55:36,840 --> 00:55:40,560
Speaker 1: Barry Riholts. You've been listening to Masters in Business on

921
00:55:40,719 --> 00:55:41,680
Speaker 1: Bloomberg Radio.