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Joe Lonsdale: American Optimist

Ep 68: How to Generate Alpha in Volatile Markets with Jacob Miller of Opto Investments

Nov 2, 2023
Jacob Miller, Co-founder of Opto Investments and head of its Advisory Practice, discusses how the U.S. is heading into a long-term debt cycle, challenges that investors face, and the importance of finding differentiated investments to generate alpha. He explains how Opto is enabling wealth managers to access and invest in private markets with confidence. The podcast also touches on the culture at Bridgewater, the appeal of private credit, and the importance of optimism in productive discourse.
30:15

Episode guests

Podcast summary created with Snipd AI

Quick takeaways

  • In an inflation and debt-driven world, it is important to seek investments that offer a different correlation to stocks and bonds to mitigate losses.
  • During a long-term debt cycle, challenges arise as debt levels increase, and a significant restructuring of spending or a crisis may be necessary to navigate the challenges.

Deep dives

The need to think beyond static correlation in portfolios

In the podcast episode, the speaker emphasizes the importance of not assuming static correlation between stocks and bonds in portfolios. While this correlation works when growth is dominant, it doesn't hold in an inflation and debt-driven world. With both assets being long-term in nature, higher discount rates will drive down their prices. This was evident in the 1970s when stocks and bonds moved in perfect correlation. In order to have a healthy portfolio, it becomes necessary to seek investments that offer a different correlation to mitigate losses in both stocks and bonds.

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