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. As life expectancy increased throughout much of the past century, so did the importance of saving and growing one’s nest egg for retirement. Though most who retired during the last 40 years enjoyed a massive tailwind from stocks and bonds, those that switched from accumulating to drawing down their savings between 2000 and 2002 suffered a rude awakening. Currently, there is widespread concern that typical stocks-and-bonds heuristics will not suffice. Ben Carlson (Director of Institutional Asset Management at Ritholtz Wealth Management) has given this a lot of thought. He joined the ReSolve crew to talk about his recently launched book, covering topics that included: Investment principles as a distant and foreign language outside of finance: the importance of narrative to bridge the comprehension gap (which can often be a chasm) The dual role of financial advisors: fiduciaries and behavioral psychologists Incentives to create and nurture a savings habit: mindset is key The myths surrounding risk tolerance: willingness vs ability Savings rate, lifestyle and portfolio returns: understanding the levers we can actually control A crucial yet often overlooked factor: sequence of returns CPI inflation vs the inflation that individuals experience: the blind spot for most portfolios We also discussed how remaining active into an older age is correlated not only with a longer lifespan, but also with prolonged health and mental acuity. 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. Our guest this week was none other than Meb Faber (co-counder and CIO of Cambria Investment Management), a well-known quant and prominent member of the FinTwit community. In addition to being an asset manager, he is an entrepreneur and venture capitalist, not to mention host of a popular podcast – and therefore an entertainer at heart. We enjoyed a wide ranging conversation including topics such as: The ‘mental gymnastics’ of contemplating ideas that are likely being ignored by most investors Crowded vs contrarian trades Preference falsification in polling, the role of inertia and the endowment effect North America’s impossibly complicated retirement systems vs Australia’s superannuation Financial education, incentives, and the enormous room for policy improvements We also discussed the importance of properly framing conversations, especially in the realm of policymaking (Universal Basic Income vs Freedom Dividend), some of Meb’s recent venture capital investments and a whitepaper that’s coming down the pipe. Thank you for watching and listening. See you next week.

Today’s conversation is with Alexander Mende, Senior Investment Analyst and Head of Investment Research at RPM Risk and Portfolio Management in Stockholm, Sweden. RPM is an alternative investment firm, focusing on directional investment strategies, specifically Managed Futures and Global Macro. Alex is responsible for portfolio management, quant and macro research, manager screening and selection at the firm. We spend the first few minutes discussing the experience of living with COVID-19 in Sweden before moving onto the technical discussion. We explore the evolving role of managed futures and trend following both in terms of client expectations and how managers have adapted strategies to deal with the current macro-environment. In contrast to many similar firms, RPM takes an active approach to manager risk exposure. Alex describes how the firm manages risk both “horizontally” – by changing relative manager allocations through time – and “vertically” – by scaling exposure to the overall portfolio in response to proprietary models. Alex “opens the kimono” on two of RPM’s most useful indicator suites, the CoMaSe model designed to identify conditions that may lead to coordinated market selloffs; and the MDI model that measures the aggregate “trendiness” of market conditions. We walk through case studies to better understand how RPM uses the tools in practice and their potential value-add. Alex is clearly a passionate, no-nonsense quant and it’s clear RPM thinks about the problem in a novel way, with commensurately attractive results.

This is “ReSolve’s Riffs” – live on YouTube every Friday afternoon to debate the most relevant investment topics of the day. The year that saw the fastest decline, followed by the steepest recovery in market history has left one topic top of mind for most investors – volatility. Though down from its eye-watering spike in the first quarter, the VIX (CBOE Volatility Index) has remained significantly higher than in previous years, and not without good reason. The ongoing pandemic, a bifurcated and fragile economic recovery, the most polarized US presidential election in living memory, continued geopolitical saber-rattling between China and the US, and the list goes on… We had the pleasure of hosting one of the foremost volatility experts in the industry – Wayne Himelsein (President and CIO of Logica Advisors) – for a deeply insightful conversation that covered: His background in the industry, and how he met and partnered with Mike Green Why “absolute” doesn’t mean steady returns – the lumpy nature of positive convexity Why Logica loves gamma and how to “scalp” it Unknown unknowns, unrealized vol and protecting against events that are by definition, outside of your sample distribution The difficulty in sizing a long-volatility strategy within a broader portfolio Wayne also delved into his investment process in some detail, including how Logica measures and adapts to market phase-shifts. You should probably just stop what you’re doing and press play. 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. As US equities and bonds continue their apparently unstoppable rally, their expected return over the coming years grows vanishingly small, Especially if markets are faced with anything other than the goldilocks environment of growth, deflation and abundant liquidity that has ruled the past 12 years. Readers of our research (as well as any student of history) will know that stocks and bonds can go through prolonged periods of synchronized underperformance, while Risk Parity can navigate virtually any form of inflationary or growth shock. But when executed properly, with periodic rebalancing, Risk Parity can benefit from a substantial tailwind, as we showed in our recent paper – Maximizing the Rebalancing Premium. Our discussion of the rebalancing premium and its implications for investors included: The traditional thinking on rebalancing is likely outdated – adjusting for drift is not enough Defining the rebalancing premium and how it can be maximized The benefits of rebalancing for different implementations of Risk Parity Why buy-and-hold investors are paying this premium Risk Parity vs the ubiquitous 60/40 The debate also delved into the importance of reducing volatility drag to smooth out the path portfolios take and improve geometric returns. Thank you for watching and listening. See you next week.

ReSolve’s Riffs” – live on YouTube every Friday afternoon to debate the most relevant investment topics of the day

This is “ReSolve’s Riffs” – live on YouTube every Friday afternoon to debate the most relevant investment topics of the day. In an upside-down market it’s hard to know which way is up. Many investors rely on Kevin Muir, otherwise known as the Macro Tourist, to help them navigate these uncharted waters. Kevin is a pragmatic macro analyst and trader who is focused on trading markets as they are, rather than how you might wish they were. This means being conscious of your own ideologies and biases and actively setting them aside so you can see with clear eyes, and adapt your thinking in response to shifting data and insights. Modern Monetary Theory (MMT) was the center of gravity for the conversation. Kevin describes his journey of discovery and how the underlying mechanics reflect the actual plumbing of the global economy. He explains that Sovereigns that borrow in their own currency and are able to print money are not constrained by deficits. Rather, Sovereign borrowing acts as a direct credit to the private sector. As such, governments are constrained by whether the aggregate productive capacity of the economy can absorb the demand from the private sector that results from their borrowing. Inflation arises when demand exceeds this productive capacity. As a result, long-term prosperity depends on how quickly a country can increase its productive capacity, since this rate will dictate how quickly the government can create wealth for the private sector without creating inflation. MMT is often embraced by those on the left, who believe it provides an imperative for spending on government programs. Kevin explains that deficits can also arise from cutting taxes, so it is a bipartisan theory. We address several concepts including: How does MMT impact the role of confidence in a currency? What would happen if Japan canceled the debt held by the Bank of Japan? What was the impact of fiscal cuts during the Obama administration? How do we direct spending to areas of the economy that are more likely to achieve capital formation? How do we implement MMT without exacerbating the already large wealth gap? If MMT is coming, what is the highest convexity trade? Mike, Rodrigo, Richard and Adam stick around after Kevin leaves to discuss MMT in a broader context and raise even more questions. 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. Even the term used to describe this asset-class is loaded with controversy. Some say cryptocurrency is a misnomer, since Bitcoin and its lesser known brethren can neither be considered a medium of exchange nor a store of value. Rob Furse (co-founder & president of Echelon Wealth Partners) and Matthew Edwards (CEO & CIO of Dalpha Capital Management) would certainly disagree with the latter. We invited them to discuss this and other topics including: The role of crypto (currencies or assets) in investors’ portfolios Can bitcoin really be thought of as ‘digital gold’? How to position these assets using both legacy and newer investment frameworks What the endorsement of well-known money managers does for Bitcoin Regulatory hurdles and the road to institutional acceptance We also debated the current global macro backdrop and why ideas like MMT will likely push an ever-growing number of investors to venture into the crypto space. There may also have been some brief speculation regarding the identity of the elusive Satoshi Nakamoto, author of the original Bitcoin whitepaper. 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. Before you begin, we highly recommend that you first watch this short video, which serves as a  foreword and sets the table for this episode. After enjoying many years of immense popularity, factor investing (also known as alternative risk premia or smart beta) is suffering from significant underperformance, both across asset-classes and especially within security selection. While some factors have fared worse than others, there’s no doubt that the space as a whole is enduring an intense and prolonged winter. The team at ReSolve has been thinking deeply about this theme for the past two years, and this episode expands on the framework we have developed to understand the current environment for factors – and for the generation of sustainable alpha more broadly. Topics include: The origins of factor investing and why they used to work The adoption curve – similarities and differences between investment edges and new technologies Reflexivity and the “hard problem of investing” Value investing – why the most intuitive risk premium has suffered the most How changes in markets’ microstructures and the macroeconomic backdrop affect these dynamics We also offer ideas on how investors might seek sustainable edges going forward and how to position their portfolios to this new reality. This is an ongoing and open-ended discussion, and we certainly welcome your thoughts and feedback. 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. It is said that creating a job for yourself is always better than getting one. Whoever said that probably never lived through the trials and tribulations of being an entrepreneur. But some people just can’t help themselves. Phil Bak is one of these serial entrepreneurs. He joined us to riff on topics such as: Building businesses from a young age and knowing when to sell them The recent sale of his company and his next project Overcrowding and saturation within the ETF space Seemingly endless opportunities in fintech Insurance landscape ripe for massive disruption We also discussed the current state of smart beta strategies, their significant underperformance and how investors should think about sustainable edges in the coming years. We will be further exploring this topic in our next episode. Thank you for watching and listening. See you next week.