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. 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.  

Today’s conversation is with Marat Molyboga, Chief Risk Officer and Director of Research at Efficient Capital Management. Marat is a soviet trained mathematician who achieved his Masters in Applied Mathematics in Moscow, and holds an MBA in Finance from University of Chicago, a CFA, and a PhD in Finance from EDHEC business school. He has authored or co-authored 20 published papers. Efficient specializes in building multi-manager investment solutions for institutional investors with a particular focus on managed futures. Marat describes the fundamental building blocks in the qualitative and quantitative framework that Efficient uses to select managers, and form and monitor portfolios over time. In addition, we explore four papers in detail on topics like combining carry with trend, how the makeup of Chinese commodity markets impacts risk-premia for Chinese CTAs, the potential benefits of short-term trend signals, and how novel portfolio construction techniques may help investors construct more resilient portfolios of CTAs.   Marat has a unique perspective on commodity trading advisors and listeners will learn about how institutions utilize and evaluate CTA portfolios, and specific techniques that can drive improvements in trend strategies and portfolios of CTA funds.

This is “ReSolve’s Riffs” – live on YouTube every Friday afternoon to debate the most relevant investment topics of the day. Ever lower interest rates and debt-fueled growth have been the major driving force for asset price appreciation over the last four decades. Many have now come to believe that the system is close to a breaking point, teetering at the edge due to a virtually unpayable debt overhang that has created multiple asset bubbles across the world. To make sense of the current macroeconomic backdrop and where we might go from here, we had the pleasure of hosting Diego Parrilla (Managing Partner at Quadriga Asset Managers). Topics included: His previous life as an energy analyst and his thesis on The Energy World is Flat Bubbles and Anti-Bubbles Central banks, monetary expansion and inflation – how to boil a frog False diversification, correlations breaking down and constructing true balance Soccer teams can’t depend on 11 strikers – how his strategy creates positive convexity to become an effective goalie for a diversified portfolio His concerns over inflationary pressures in the coming years and his asset allocation approach reminded us of our own Risk Parity framework. While the topic proved initially contentious, we eventually found common ground in the principles that will help drive positive outcomes for investors in the coming years. 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, without a doubt, the most logical starting point for any portfolio that seeks both global diversity and risk balance. Preparation before prediction. First, do no harm. Yet there is a wide range of ways to structure and deploy Risk Parity – as always, the devil is in the details (for a deeper dive check out our recent whitepaper). We had the pleasure of speaking with Alex Shahidi and Damien Bisserier (co-founders of Evoke Wealth and ARIS Consulting), creators of the popular RPAR ETF, on topics that included: Their history and journey before joining forces Multiple definitions and iterations of Risk Parity The consistent mispricing of global diversification benefits (why Risk Parity works) Why the investment industry is wired to overweight prediction and underweight preparation Behavioral hurdles and the real struggle with FOMO Of course, it wouldn’t be a true Risk Parity debate without addressing the role of bonds in the current zero-bound environment and the importance of duration adjustments on bond holdings, as well as the role of currencies and different ways of obtaining exposure to commodities. A true Risk Parity primer. Thank you for watching and listening. See you next week.

Today’s conversation is with David Berns, an emerging thought leader in asset allocation and behavioral finance, who is pushing the boundaries on how to best measure real-world behavioral preferences and build optimal portfolios that actively incorporate this extra information. We open the conversation with a discussion of his involvement in the design and launch of three new ETFs, which seek to deliver an investment experience that addresses both traditional mean-variance preferences, and also accounts for real investor behavioural and cognitive biases. We then discuss core themes from his new book, “Modern Asset Allocation for Wealth Management”, which marries advances in portfolio optimization with a scientific approach to measuring real investment risk preferences. I was impressed with David’s thinking about fundamental investment principles and driving ambition to go beyond traditional portfolio formation techniques to account for loss aversion and reflection, and higher moments of the return distribution. It’s clear David genuinely cares about client satisfaction with their investment experience and is advocating for ways to treat clients as unique individuals with novel preferences and goals. This discussion has something for everyone from advisors to portfolio managers to planners and even for end investors.

This is “ReSolve’s Riffs” – live on YouTube every Friday afternoon to debate the most relevant investment topics of the day. Every time equity markets experience a major selloff, investors’ attentions are drawn to the handful of strategies that actually benefitted from the event. So-called crisis alpha comes in many flavors and iterations, which further complicates the allocation decision. Our friend Jason Buck (CIO of Mutiny Fund) sought to solve this problem a few years ago. He joined us for a conversation that included: The different kinds of risks to portfolios and how to protect against them What actually constitutes a tail event Moneyness, sizing and using wrinkles to reduce volatility drag Finding an ensemble of strategies that doesn’t bleed money outside of major drawdowns Rebalancing – a true and underappreciated source of return We also discussed how to position a tail protection strategy (or an ensemble of them) within an overall diversified portfolio and what form that portfolio might take. The difference between time-series and ensemble probabilities was also debated – and the term ergodicity may have been thrown around a bit. Thank you for watching and listening. See you next week.

Many traditional value or factor based investors have been scratching their heads for the past few years, wondering whether a shift in fundamental dynamics may have permanently altered the way markets behave. Corey Hoffstein has been wondering the same thing, which prompted him to spend the last several months speaking to experts in options trading, market microstructure, and the hidden effects of passive index investing about how these forces may be reshaping the underlying market ecosystem. These conversations and subsequent analyses led to the publication of Corey’s latest whitepaper on Liquidity Cascades, where he seeks to triangulate impacts from several potential paradigm shifts to identify what’s driving price action in today’s markets. We cover all the major themes from the paper and discuss practical implications and key risks for investors over the next few years. Corey shares some new charts and analysis, and elaborates on key figures and themes from the paper that you won’t want to miss. As soon as Corey published the paper I couldn’t wait to do a deep dive with Corey just like this. And as usual, the conversation did not disappoint. Please enjoy this conversation with Corey Hoffstein on Liquidity Cascades.