In this episode we chat with Wayne Himelsein, president and chief investment officer at Logica Capital. Wayne has spent over two decades managing long/short portfolios and so brings a wealth of experience to the conversation.   We talk with Wayne about a concept called negative skew and how it leads many investors to underestimate the risk in their portfolio (as well as what investors can do to protect against it).   We dived into the concept of ergodicity, an idea that I initially discovered through Nassim Taleb but that has become a very valuable mental model for me for looking at both markets and life in general.   We dove into the pitfalls of diversification and how many investors engage in naive rather than what Wayne calls thoughtful diversification as well as why you only need to be right 54% of the time.   You can find more of Wayne on Twitter (@WayneHimelsein).  

In this episode I chat with Wayne Himelsein, president and chief investment officer at Logica Capital.  To our conversation Wayne brings over two decades of experience managing long/short portfolios, ranging from statistical arbitrage to factor long/shorts. For as deep in the weeds as he liked to go as a quant, Wayne has a philosopher’s streak and Twitter is his soapbox.  Of course, 280 characters can be limiting, so I start out conversation by putting Wayne in the hot seat and ask him to explain the deeper meanings behind some of his recent tweets. Using these philosophies as a foundation, we then dive into long/short portfolios.  We talk about the practical difficulties of managing these strategies and Wayne explains why he believes that beta-neutral is a fool’s pursuit.   We then switch topics to tail risk hedging.  These sorts of strategies are notorious for their bleed, and we discuss whether the payoff is ultimately worth the cost of insurance.  Wayne describes a few ways in which the bleed can be managed and the ensuing tradeoffs with each method.   In discussing both long/short and tail risk hedging strategies, I ask Wayne what due diligence questions he would ask if he were evaluating another manager.  I find this question always provides great insight into what managers of these strategies actually think is important.  Wayne does not disappoint. I hope you enjoy my conversation with Wayne Himelsein.  

Wayne Himelsein, the President and CIO of Logica Capital Advisors, specializes in long volatility options trading strategies. He discusses the balance of systematic rigor with human oversight in trading. Wayne explains his gross long volatility approach, focusing on full protection during market downturns. He also highlights the importance of navigating realized and unrealized volatility, and the psychological aspects of market behavior. Wayne offers practical tips for new options traders, emphasizing foundational knowledge and strategic adaptability.