Resolve Riffs Investment Podcast

This is “ReSolve’s Riffs” – live on YouTube every Friday afternoon to debate the most relevant investment topics of the day. This week we had the great pleasure of hosting none other than Lyn Alden (founder of Lyn Alden Investment Strategy), one of today’s most prominent macro strategists and thinkers. Her background in both engineering and economics endows her with a diverse skillset and unique perspective, which helps her (as well as her readers and clients) make sense of the extremely challenging environment investors are currently facing. This wide-ranging conversation covered topics that included: Her investment framework – the integration of top-down and bottom-up Japanification – the good, the bad, the ugly, and some unexpected diamonds in the rough in the Land of the Rising Sun The weaking US dollar, its multi-year cycles and global investment implications Currency wars, economic tradeoffs and game theory dynamics NASDAQ & Bitcoin – the unbeatable portfolio of late – recency bias, and why it always pays to be diversified in the long run Fiscal and monetary policies, both pre- and post-pandemic, and what an end game might look like Lyn also delved into her views on precious metals, possible inflationary outcomes and effective hedges, and of course, Bitcoin. Her ability to explain complex topics clearly and concisely was on full display, which made for a deeply enlightening and entertaining episode. Thank you for watching and listening. See you next week.

Today’s conversation is with Razvan Remsing, Director of Investment Solutions at Aspect Capital. Aspect is a multi-billion dollar London based systematic investment manager founded by one of the original founders of AHL. Razvan’s role is at the intersection of investment strategy research, product development, and client management, which positions him to comment on themes ranging from client engagement and communications through specific details about the underlying mechanics of Aspect’s strategies. We start by discussing the unique challenge of communicating with clients about what to expect with systematic strategies. Razvan emphasizes the importance of helping clients gain  intuition about what’s happening inside the “black box” so that they know generally what to expect in different market environments. Ideally, clients will be sufficiently informed about the strategy they’ve invested in so that they may be disappointed with results from time to time, but never surprised. The conversation then migrates to an exploration of what happened to Aspect’s strategies in 2020. Razvan observes that 2020 was especially interesting because we basically lived through a full market cycle in just one year (and arguably in the span of just a few weeks). He asserts that the defining factor for success or failure in 2020 was the speed of your strategy. Strategies with short forecast horizons and holding periods had the opportunity to successfully navigate the major reversals in the year, while slower moving strategies were at a major disadvantage. We also discussed the poor performance of liquid alternatives and especially the major Style Premia products over the past few years. Razvan is unpersuaded by the view that poor performance was due to overcrowding. Rather, he attributes poor performance to an over-emphasis on classical “value” and credit type strategies, which are low Sharpe strategies to begin with. Low Sharpe strategies should be expected to endure long painful drawdowns. The conversation also ranged into Machine Learning, the value of alternative data from capital flows, sentiment, options surface, and more esoteric sources, and how strategies informed by some of these series responded more quickly to the seismic shifts experienced in markets in 2020. Razvan shared some rare insights, for example into differences in trading and sizing exposures to commodities versus financials. This was definitely one of our more technical conversations, with the rewards you’d expect from the ability to go deep into topics with a true craftsman.

This is “ReSolve’s Riffs” – live on YouTube every Friday afternoon to debate the most relevant investment topics of the day. An almost USD 2 trillion fiscal bill is moving ahead in Congress, while breakeven rates rose above the 2 percent mark for the first time since 2018 (with no signs of relenting). It is no wonder that inflation is now top of mind for investors. Uncertainty isn’t limited to whether it reawakens after almost four decades, but how it might manifest and how investors should protect themselves. This week we riffed with Nancy Davis (Managing Partner & CIO of Quadratic Capital Management) who manages the popular IVOL ETF, covering topics such as: Her early days as a prop trader for Goldman Sachs, earning her stripes trading derivatives What is IVOL: a combination of TIPS and interest-rate options Using cash to manage duration What is implicit in the shape and slope of the yield curve The risk of outliving one’s means – the importance of protecting against inflation ‘Backing up the truck’ when volatility is so low Linear vs asymmetric – not all derivatives are created equally Nancy shared her screen throughout the conversation and walked us through her general framework, including what she believes are some of the most relevant features to monitor when navigating the inflation and rates landscape. Thank you for watching and listening. See you next week.

This is “ReSolve’s Riffs” – live on YouTube every Friday afternoon to debate the most relevant investment topics of the day. With governments pressing on with huge fiscal and monetary expansion, fears of inflation have once again resurfaced. The spectacular rise in the price of grains and other raw materials, some by as much as 30% last year, have added fuel to these concerns. To discuss this inflationary macro backdrop we welcomed Bill Fleckenstein (President of Fleckenstein Capital & co-host of the End Game podcast series) to the show. A former dedicated short seller, this episode was particularly timely in the wake of the historic short squeezes that took place this week and the ripple effects across markets. Our conversation included: Running a short equity fund, adapting to shifting circumstances and ultimately returning capital to shareholders The role of short selling in markets and the disruptions caused by Fed policies r/WallStreetBets, GameStop et al – a brief anatomy of a surreal week Deflation and Japanification – why the Fed is cornered Why inflation is the most important variable to watch for in the coming months MMT, taxation and breaking the social contract Bill also expressed his views on how portfolios should prepare for what he believes is an inevitable outcome, but also entertained scenarios that might cause him to change his thesis. In the end, “in a social democracy with fiat currency, all roads lead to inflation”. Thank you for watching and listening. See you next week.

In this episode, Rodrigo Gordillo had the pleasure of being interviewed by Ignacio Villalonga from Zona Quant, a quant blogger who is part of a growing community of quantitative investors from Spain. In this inaugural Spanish speaking episode, Rodrigo fielded a series of questions sourced from the Spanish speaking FinTwit community that covered everything from proper global diversification and how to minimize data mining, to the benefits of the Rebalancing Premium, and much more. Zona Quant: https://www.rankia.com/blog/zona-quant

This is “ReSolve’s Riffs” – live on YouTube every Friday afternoon to debate the most relevant investment topics of the day. This week we riffed with Patrick Ceresna of Big Picture Trading, fellow podcaster and co-host of the popular shows Macro Voices and The Market Huddle. His trading framework combines a seasoned, top-down macroeconomic perspective with deep knowledge of technical analysis and prolific use of options to express his market views. Our conversation included: Living in the trenches – the differences between trading and investing Stress-testing ideas and the humility required to make a living as a trader Sharpening macro hypotheses through weekly conversations with bright minds Technical analysis – an incomplete yet powerful tool Analyzing money flows and sentiment indicators The flexibility and asymmetry offered by options Sizing positions and the importance of timing – don’t fight the trend Gold, Bitcoin and Giffen goods – market psychology at play in the era of easy money A great communicator, Patrick shared stories of his formative trading years and drew a compelling analogy between the dotcom euphoria and today’s “everything bubble”. He also brought along a few charts to walk us through his methodology and some of the macro themes he is currently focused on. Thank you for watching and listening. See you next week.

This is “ReSolve’s Riffs” – live on YouTube every Friday afternoon to debate the most relevant investment topics of the day. Convexity is one of those concepts that even if you understand it, explaining it to someone can still be hard, especially for a layperson. Unless you are the Convexity Maven, in which case it is second nature and you can apparently explain it to your mom. We had the pleasure of hosting Harley Bassman, creator of the popular MOVE Index, for a wide ranging and truly entertaining conversation that covered topics such as: Sharpening the blade - the value of working with people that challenge your ideas Calculus for everyday use – it’s actually simpler than most people think Policy responses (and mistakes) following the Great Financial Crisis His predictions for Treasury rates, MMT, and what indicators might cause him to change his mind Millennials, Baby Boomers, demography and inflation How fiscal and monetary tools might affect the US dollar How Risk Parity might navigate the coming years Gold as a currency Favorite themes and trade ideas for this environment Harley also brought a slide deck and walked us through some interesting charts as he described his investment thesis, so you might want to check out the video version of this episode. Thank you for watching and listening. See you next week.

This is “ReSolve’s Riffs” – live on YouTube every Friday afternoon to debate the most relevant investment topics of the day. Like virtually all segments of the investment industry, the financial advisory business has undergone significant shifts over the past two decades. Gone are the days where a pasteurized, assembly-line approach with catchy branding is enough for a thriving enterprise. In the digital age, investors – like everyone else – want authenticity. They seek a personal touch. They yearn for a real connection. Alex Chalekian (founder and CEO of Lake Avenue Financial) lives by these principles. In our conversation, we explored: His journey: from studying to become an accountant, to investment entrepreneur Allowing others to learn from your mistakes and trying to extricate one’s ego Understanding the unique skill set you and your team members bring to the table The importance of proper communication: staying true to your message while navigating the regulatory landscape The appropriate digital forums and the difference between them Building and giving back to your community Alex also shared some of the investment themes and new projects his team is excited about, and there was even time for a brief discussion on the hottest investment topic of the day – Bitcoin and the world of crypto. Thank you for watching and listening. See you next week.

This is “ReSolve’s Riffs” – live on YouTube every Friday afternoon to debate the most relevant investment topics of the day. 2020 has been a year like no other in living memory. Though the global pandemic has obviously been the most important story of the year (and quite possibly of a generation), stocks have rallied to new all-time highs, companies have raised record amounts of capital and the technology sector has minted a handful of TRILLION-dollar firms. Though some investors find this fitting with the ‘new normal’, others are convinced this is the ‘mother of all bubbles’. To make sense of these unusual times, there’s nothing like a good dose of historical perspective. For the final show of the year, financial historian Jamie Catherwood (O'Shaughnessy Asset Management & Investor Amnesia) joined us for a great conversation that included: The origins of capital markets and its countless manias The South Sea Bubble, John Law and the Mississippi Company Why the history of the Dutch Tulip Mania has been widely exaggerated Charlie Munger’s three I’s – innovators, imitators and idiots How wars invariably lead to periods of low interest rates (and eventually bubbles) Yield-seeking in the 18th and 19th century – and plenty of sovereign debt defaults Jamie shared numerous interesting anecdotes that seem to draw clear parallels to the current environment – which has been described by some as ‘the golden age of fraud’. You can find more of these in his new course. Happy Holidays! Thank you for watching and listening. See you in January.

This is “ReSolve’s Riffs” – live on YouTube every Friday afternoon to debate the most relevant investment topics of the day. Most investors have 30 - 50% or more allocated to bonds. With U.S. equities at nosebleed valuations, investors need to wring the most efficient returns out of every sleeve of their portfolio. Brian is the Associate Director, Fixed-Income Strategies, Manager Research at Morningstar so we focused on the fixed income sleeve of portfolios. Specifically, we wanted to know how investors can generate the returns they need in a near-zirp world. Brian offered great color on the flawed construction of credit indices, and why this opens the door for outperformance by active credit managers. We discussed the most durable credit strategies and what looks especially attractive now. Brian also filled us in on the differences between different types of structured credit, such as CLOs, CDOs and CMOs, and how to approach the sectors at the moment. Run don't walk to learn what to do with all those bond funds in your portfolios!