Resolve Riffs Investment Podcast

For this week’s special episode, Adam, Mike, Rodrigo and Richard gathered to explore the building blocks of an ultimate All Weather portfolio. Our conversation included: The blind spots of the 60/40 stock-bond portfolio Regime dependency and economic shocks Diversifiable versus non-diversifiable risks How to create an optimal portfolio that can navigate most regimes Why Global Risk Parity is the natural starting point for any investor with a long-term view Different ways to implement Risk Parity Time horizons and rebalancing Tactical tilts and the beta-alpha continuum Yield as another proxy for risk Global Carry as a complement to risk parity beta The Existence Proof as a threat to alpha Trend following, seasonality, carry, counter-trend, relative value and volatility Why one man’s alpha can sometimes be another’s (smart) beta Ensembles and thinking beyond traditional factors Considering speed and size And much more This is “ReSolve’s Riffs” – live on YouTube every Friday afternoon to debate the most relevant investment topics of the day, hosted by Adam Butler, Mike Philbrick and Rodrigo Gordillo of ReSolve Global* and Richard Laterman of ReSolve Asset Management Inc.   *ReSolve Global Inc. refers to ReSolve Asset Management SEZC (Cayman) which is registered with the Commodity Futures Trading Commission as a commodity trading advisor and commodity pool operator. This registration is administered through the National Futures Association (“NFA”). Further, ReSolve Global Inc. is a registered person with the Cayman Islands Monetary Authority.  

We had the pleasure this week of speaking with Cem Karsan (the pronunciation can be a bit challenging, bit the hint is in his Twitter handle - @jam_croissant), founder of Kai Volatility Advisors. His deep knowledge of market structures and investment flows took us on a fascinating conversation that included: Joining a team early in his career that would become one of the Street’s largest options market makers Developing a profound understanding of the reflexive game of dealer positioning and its feedback effects on asset prices Launching Kai Volatility Advisors and three uncorrelated strategies A quantitative approach with a discretionary overlay The circumstances under which dealer flow becomes most relevant The upcoming June expiration and the ‘massive delta’ hovering over the market Distributions vs expectations The remarkable advances in the options market over the last two decades The ‘dramatic oversupply’ of volatility and its underperformance as an asset-class The JP Morgan Equity Hedge giant and its impact on the market Efficiency, transparency and performance – the trade-offs between ETFs and private pools Cem’s global macro perspective and his take on the current environment The explosive combination of cheap capital and technological innovation The road to inflation – inequality, populism and a pandemic-induced fiscal trigger of titanic proportions And much more This is “ReSolve’s Riffs” – live on YouTube every Friday afternoon to debate the most relevant investment topics of the day, hosted by Adam Butler, Mike Philbrick and Rodrigo Gordillo of ReSolve Global* and Richard Laterman of ReSolve Asset Management Inc.   *ReSolve Global Inc. refers to ReSolve Asset Management SEZC (Cayman) which is registered with the Commodity Futures Trading Commission as a commodity trading advisor and commodity pool operator. This registration is administered through the National Futures Association (“NFA”). Further, ReSolve Global Inc. is a registered person with the Cayman Islands Monetary Authority.

This week Adam and Rodrigo of ReSolve Global* had the pleasure of speaking with Jason Josephiac of Meketa Investment Group. Our conversation spanned topics including: His background in the industry and joining Meketa Asset Allocation: label/category diversification vs. risk/functional diversification Risk Parity vs. Traditional Asset Allocation What Portable Alpha Synthetically creating your own “bond” with risk factors not directly tied to spreads and rates Risk Mitigating Strategies (RMS) Long Volatility – 1st Responders Trend Following – 2nd Responders Beta Neutral and Uncorrelated (Diversifiers) Behavioral/psychological biases of investors Why “hedge funds” are not an asset class and many “hedge fund” programs tend not to withstand the test of time What is risk? Generalists vs. Specialists How LDI portfolios could be improved Evolution of dissecting returns and understanding factor risks, what is alpha vs. beta How can investment managers and investors become better aligned?   Thank you very much for tuning in – please like and share if you find the content valuable!   *ReSolve Global refers to ReSolve Asset Management SEZC (Cayman) which is registered with the Commodity Futures Trading Commission as a commodity trading advisor and commodity pool operator. This registration is administered through the National Futures Association (“NFA”). Further, ReSolve Global is a registered person with the Cayman Islands Monetary Authority.

Rob Van Wielingen, President & CEO of Viewpoint Investment Partners, shares his family's background in the oil and gas industry, their transition to diversified portfolios, and their investment approach. They discuss the fallacy of active vs passive investing, the trouble with lagged and infrequent data, and the differences between Risk Parity and Risk Budgeting. They also touch on the concepts of Return Stacking, Carry, Trend, and asset allocation. The podcast explores the birth of their quant philosophy and the limitations of AI in investment strategies.

This week we had the pleasure of speaking with Andy Constan (CEO / CIO at Damped Spring Advisors) and prolific member of the FinTwit community under the @dampedspring penname. Our conversation spanned topics including: His long and interesting career in the investment world Starting with equity derivatives and eventually earning his ‘global macro education’ at Bridgewater Associates The constantly evolving challenge of generating alpha Trading and managing portfolios at scale and the importance of liquidity Separating alpha from beta Basis risk vs liquidity risk The broad macro picture vs what is priced in The unique challenges posed by the current environment The front-running of quantitative tightening The daily marking to market of risk premia The weak link between consumer inflation and the Fed’s balance sheet The interplay between the Fed, the Treasury and the bond market Interpreting the messages coming from policymakers The importance of positioning data and rebalancing flows And much more This is “ReSolve’s Riffs” – live on YouTube every Friday afternoon to debate the most relevant investment topics of the day, hosted by Adam Butler, Mike Philbrick and Rodrigo Gordillo of ReSolve Global* and Richard Laterman of ReSolve Asset Management.   *ReSolve Global refers to ReSolve Asset Management SEZC (Cayman) which is registered with the Commodity Futures Trading Commission as a commodity trading advisor and commodity pool operator. This registration is administered through the National Futures Association (“NFA”). Further, ReSolve Global is a registered person with the Cayman Islands Monetary Authority.

Vincent Deluard is the Global Macro Strategist for StoneX, where he advises institutional investors on asset allocation and risk management. He joined us for an awesome conversation that covered topics including: His early life in France - expectations for public service but ‘saved’ by a scholarship to study abroad Bitten by the ‘quantitative bug’ from the very start of his career How his macro framework evolved Inflection points in the mega trends that have endured for the last 40 years Concerns with inflation pre-date the pandemic How COVID ‘shrank’ time Sample of one – why Japanese stagnation should not be extrapolated as the path for other countries The demographic collapse in East Asia Views on MMT – analytical tool more than policy framework The ‘incestuous’ relationship between central banks and their governments’ treasuries – from the left pocket to the right The ‘fairy tale land’ of the Fed’s economic projections Inflation as the last painful path to ‘clean up’ excess debt in the system US, Europe, China, and Japan – immigration dynamics and long-term prosperity Analogues with the post-WW2 and 1970s inflationary periods and why this time is likely different The risk that inflation continues to accelerate – the expectation channel The ‘kink’ in the Eurodollar curve Are there viable alternatives to the US dollar? How investors should rethink and broaden their asset allocation approach And much more This is “ReSolve’s Riffs” – live on YouTube every Friday afternoon to debate the most relevant investment topics of the day, hosted by Adam Butler, Mike Philbrick and Rodrigo Gordillo of ReSolve Global* and Richard Laterman of ReSolve Asset Management.   *ReSolve Global refers to ReSolve Asset Management SEZC (Cayman) which is registered with the Commodity Futures Trading Commission as a commodity trading advisor and commodity pool operator. This registration is administered through the National Futures Association (“NFA”). Further, ReSolve Global is a registered person with the Cayman Islands Monetary Authority.

It had been a while since we riffed with our good friend Meb Faber (co-founder and the Chief Investment Officer of Cambria Investment Management), and as always, he didn’t disappoint. Our thought-provoking conversation covered topics such as: Meb’s big announcement – his Idea Farm, which curates investment content from a wide variety of sources, is now free Recent equity market dynamics and the pain that historically comes with inflation Why dogmatism and inflexibility are two of the worst traits for investors Never allowing your ideas to become part of your identity Diversification and ensembles are the right way forward, but most investors can’t follow because they are secretly gamblers at heart Marc Faber is not Meb’s dad Chasing the hot hand is rarely a winning investment strategy for the long run The irresistible allure of lottery-ticket stocks vs the Law of Large Numbers The incredible round-trip by ARK ETFs and a following that resembles a religion Every investment makes you richer or wiser, but never both The power of compounding and the most unbelievable investment statistic you’ll ever hear Most professional investors have a process for what they buy, but no process for what they sell The right time horizon to evaluate a strategy is MUCH longer than most investors can stick with if it doesn’t outperform from the start And much more This is “ReSolve’s Riffs” – live on YouTube every Friday afternoon to debate the most relevant investment topics of the day, hosted by Adam Butler, Mike Philbrick and Rodrigo Gordillo of ReSolve Global* and Richard Laterman of ReSolve Asset Management.   *ReSolve Global refers to ReSolve Asset Management SEZC (Cayman) which is registered with the Commodity Futures Trading Commission as a commodity trading advisor and commodity pool operator. This registration is administered through the National Futures Association (“NFA”). Further, ReSolve Global is a registered person with the Cayman Islands Monetary Authority.

We were joined this week by Kris Abdelmessih, who spent most of his career as an options trader and now writes about the relationship between money, work and creativity in the Moontower blog and weekly newsletter. Our conversation covered topics that included: Becoming a derivatives and options trader straight out of college Defining the difference between trading and investing Identifying alpha – understanding your edge and capitalizing on it The business of trading Not just surviving but thriving during the Dotcom Crash Learning under the wings of Reggie Brown The high natural rate of attrition in options trading A portable skillset – from derivatives to the underlying The highly disruptive period of the early 2000s The trading pit as the home to misfits and ‘X-men’ Speed as a quintessential skill How the ‘shale boom’ compressed volatility in natural gas Trading can be defined as ‘seeing the present clearly’ Joining FinTwit to learn about the broader investment landscape And much more   This is “ReSolve’s Riffs” – live on YouTube every Friday afternoon to debate the most relevant investment topics of the day, hosted by Adam Butler, Mike Philbrick and Rodrigo Gordillo of ReSolve Global* and Richard Laterman of ReSolve Asset Management.   *ReSolve Global refers to ReSolve Asset Management SEZC (Cayman) which is registered with the Commodity Futures Trading Commission as a commodity trading advisor and commodity pool operator. This registration is administered through the National Futures Association (“NFA”). Further, ReSolve Global is a registered person with the Cayman Islands Monetary Authority.

Our guest this week was Rohan Grey, assistant professor at Willamette University College of Law where he teaches Contracts, Business Associations and Securities Regulation. Rohan is also a prominent advocate of Modern Monetary Theory (MMT) and has also recently been involved in drafting regulations in the digital asset and currency space. Our wide ranging conversation took us through historical periods, current policy debates, and included: Why laws have historically been ‘kind to the rich’ and ‘just to the poor’ The notion of ‘legal realism’ The fog of legal liability risks MMT vs Classical Economics Defining money from the MMT vantage point Personifying ‘the taxpayer’ Private credit vs official money Why the US actually left the gold standard in the 1930s and not the 1970s The greenback and the paper money movement Currencies backed by precious metals and ‘Schrodinger’s Gold’ Governments have monopoly over the use of force, but not the creation of money The policy paradigm shift precipitated by the pandemic MMT is not just about deficit spending, and other major policy components Unemployment as a policy choice Biden’s “whatever it takes” moment Neoclassical monetary tightening and the ‘shadow of Volcker’ E-Cash, CBDCs and policy frameworks for the digital realm Central Bank vs Treasury – who should have sovereignty over the currency Why it can be wrong to be right too soon And much, much more This is “ReSolve’s Riffs” – live on YouTube every Friday afternoon to debate the most relevant investment topics of the day, hosted by Adam Butler, Mike Philbrick and Rodrigo Gordillo of ReSolve Global* and Richard Laterman of ReSolve Asset Management.   *ReSolve Global refers to ReSolve Asset Management SEZC (Cayman) which is registered with the Commodity Futures Trading Commission as a commodity trading advisor and commodity pool operator. This registration is administered through the National Futures Association (“NFA”). Further, ReSolve Global is a registered person with the Cayman Islands Monetary Authority.

Dr. Antti Ilmanen, Principal and Global Co-head of the Portfolio Solutions Group at AQR Capital Management joins ReSolve Global CIO Adam Butler to discuss the core themes from Antti’s new book, “Investing Amid Low Expected Returns.” In this 100 minute conversation we explore the following themes at length: The pros and cons of several models for forecasting stock returns The role of bonds in portfolios when yields are low. How to measure and optimize the credit risk premium The sources of return for commodity portfolios and the critical role of inflation sensitive assets for optimal portfolio diversification Why the illiquidity premium is probably an illiquidity discount Why PE returns are probably overstated and can be mostly replicated with public market portfolios Style premia as distinct from academic factor models A lengthy discussion on the role and character of global carry strategies, and myth-busting Is global carry the ultimate risk premia strategy? The many benefits of trend and macro trading strategies, especially during inflationary regimes Why Carry and Trend work so well together in portfolios The origins of ‘Defensive Premia’ Which style premia are most overlooked relative to their potential value in a portfolio Which style premia have historically offered the highest sensitivity to inflation Why global risk parity allocations across risk premia and style premia represents the most efficient portfolio The regulatory imperative to maximize diversification Why most investors can’t or won’t invest this way   There is not one wasted moment in this conversation, and it is chock-full of practical take-aways for investors of every type. If you listen to one podcast this week, and are motivated to make the most of your invested capital, make it this one!   You can find Antti’s book on Amazon here:  https://www.amazon.com/gp/product/1119860199/ref=dbs_a_def_rwt_bibl_vppi_i2   Additional book-related content; including “deleted scenes” that didn’t make the final book: Aqr.com/Serenity   Hosted by Adam Butler of ReSolve Global*   *ReSolve Global refers to ReSolve Asset Management SEZC (Cayman) which is registered with the Commodity Futures Trading Commission as a commodity trading advisor and commodity pool operator. This registration is administered through the National Futures Association (“NFA”). Further, ReSolve Global is a registered person with the Cayman Islands Monetary Authority.