Masters in Business The Concept of Return Stacking with Corey Hoffstein
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Nov 21, 2024 Corey Hofstein, a quantitative investor and CEO of Newfound Research, shares his fascinating journey from video game development to finance, driven by passion and pivotal life moments. He discusses investing strategies like return stacking and highlights the transformation of risk management in today's markets. The conversation also tackles the evolution from mutual funds to ETFs, focusing on investor psychology and preferences. Additionally, Hofstein reflects on the explosive growth of crypto trading during the pandemic, offering insights on its impact on the financial landscape.
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Accidental Beginning
- Corey Hoffstein's firm, Newfound Research, began accidentally in college.
- An asset manager offered to pay him in basis points for his models, which Corey initially didn't understand.
SEC Investigation
- Corey's largest client misrepresented his models, leading to SEC investigation and the firm's eventual bankruptcy.
- Despite having a confidentiality agreement, Corey got caught up in the investigation.
Diversification Challenges
- Diversification requires selling existing assets to buy new ones, creating return hurdles and behavioral challenges.
- Investors struggle to stick with diversifying assets during periods of underperformance, leading to performance chasing.