Resolve Riffs Investment Podcast

Whether stemming from a recession, a policy shock, a terrorist attack, or a global pandemic, financial markets periodically go through major selloffs. It has always been this way. Euphoria eventually leads to panic, every time. Another way to look at these crashes is through the lens of volatility (and its commensurate rise), which has become a fundamental component of investment decisions. As time goes by, innovations can (and will) suppress volatility and can sometimes give the impression that risk has been eliminated, but that is always a fool’s dream. Eventually the piper must be paid.

Our guests this week were Benn Eifert (Founder & CIO) and Scott Maidel (Head of Business Development), of QVR Advisors, a boutique asset manager that specializes in strategies seeking to profit from volatility and all its downstream effects – including attempts to suppress it. We covered:

• How markets fundamentally changed following the Great Financial Crisis
• Call overwriting – the favorite strategy of yield-thirsty institutions
• Why ‘selling vol’ is too broad a term and has all but lost its meaning
• Everybody wants protection – reflexivity and the options tail that wags the equity dog
• The behemoth equity hedged strategy that now moves the market at the end of every quarter
• “Gradually, then suddenly” – the nature of volatility
• Gamma & Vanna – the second-order ‘Greeks’ and their outsized influence in short-term moves
• Execution is key – don’t trade against the Flash Boys
• Buying what you don’t want to build
• Systematic vs Quant

Benn and Scott also described in detail QVR’s two main lines of business – absolute return and tailored solutions – providing insight into their processes and competitive advantages. We also discussed the distinct nature of different market crashes, trade monetization, rebalancing, and much more. It was a fascinating conversation and a true lesson on the current structure of equity markets.

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, 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 had a very special guest this week – Roy Niederhoffer, founder and president of R. G. Niederhoffer Capital Management, a NY-based quantitative investment firm. With a strong musical background and an original plan to become a neuroscientist, Roy might have led an academic life if it weren’t for his programming skills and an offer to join his older brother’s hedge fund, one that he couldn’t refuse. He joined us for a fascinating conversation, covering topics such as:

• His early life, a diverse set of interests and becoming a highly-skilled generalist
• Striking out on his own – why would an institution ever invest with a 26-year old running computers in his living room?
• Developing short-duration strategies that are uncorrelated to both traditional and alternative investments
• Long volatility vs short volatility strategies
• The inescapable dopamine rush of capital markets and the importance of managing emotions
• Trend-following, convexity, and why the frequency of observations matters so much
• Behavioral neuroscience applied to markets
• Leaning into the work of Danny Kahneman and dissecting his magnum opus over dozens of weekly sessions
• Identifying price patterns that will trigger predictable emotional responses from market participants – therein lies the edge
• The difference between strategy management and risk management
• Printing of fiat money and the conditions for an elimination event that can wipe out multi-generational wealth

He also summarized his general investment theory, which seeks to identify asset-class characteristics that can be generalized, those that will remain idiosyncratic, and some that might eventually spill over into other markets. Roy is a true polymath, with a unique perspective and a generous disposition to share his knowledge.

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, 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.

“The unfortunate truth is, very few want to hear an optimistic take on the world during a pandemic.”

Human beings evolved to pay closer attention to negative vs positive information. For our ancestors, the cost of seeing danger where there was none was a cortisol spike and an unnecessary sprint, but dismissing a real threat might have led them to be a predator’s next meal.

Our guest this week was Laurence Siegel, Director of Research at the CFA Institute Research Foundation and author of “Fewer, Richer, Greener: Prospects for Humanity in an Age of Abundance”. We discussed the main themes from his book, including:

• The case for techno-optimism
• Demographics, healthcare and lifespan
• Inflation, deflation and hedonic adjustments
• Pollution, climate modelling and the wide range of possible outcomes
• Why nuclear power is a crucial component of a greener energy matrix
• Differences across geographies
• Economics, capital markets and realistic expectations

We also debated the future of cities, real-estate costs and possible changes to the jobs market if we extrapolate current trends.

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, 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.

“Don’t hide from risk; find it and attack it.”

We were joined this week by none other than Tom Basso (Enjoytheride.world), trend following legend, author of Panic-Proof Investing and The Frustrated Investor and known as ‘Mr Serenity’ from his depiction in Jack Schwager’s best-selling Market Wizard series. From his ten-dollar a week paper route, to earning enough money to buy his first mutual fund, our conversation spanned a few decades and included:

• A chemical engineer’s approach to capital markets
• Commodity futures as the ultimate training ground in the 1970s
• Black Monday, Dotcom Crash, GFC and Covid – a career shaped by ‘crisis alpha’
• A business mindset to asset management, and early struggles as a salesman
• Retiring from money management, and smiling ever since
• Taking much more risk in retirement than when he managed funds
• Improving his techniques and the evolution of his edge
• Solving the investment puzzle – codify your rules, size trades appropriately, and most important, work on your mental game

We dug deeper into the latter point, discussing the benefits of stoicism, meditation, journaling and other techniques that can improve one’s mental game, both in trading and in life. Tom also shared insights into some of the different strategies he runs and parameters he watches closely, as well as his friendship with Eric Crittenden and becoming chairman of Standpoint Funds.

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, 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.

As a growing percentage of Baby Boomers prepare for retirement, they are confronted with the uncomfortable prospect of record stock and bond valuations. Even the most optimistic capital market assumptions suggest the 60/40 portfolio is unlikely to deliver the returns many nest eggs have been built for.

To help us get a clearer picture of the challenges and opportunities faced by retirees in the coming decade, we had the pleasure of speaking with Michael Finke (Professor of Wealth Management) and David Blanchett (Managing Director and Head of Retirement Research at QMA). Topics included:

• The crucial importance of updated and realistic capital market assumptions
• Lifespan, “healthspan” and the prospects of retirements that last well over 30 years
• Why ‘probability of success’ is no longer an adequate yardstick for retirement planning
• How to prepare if we are indeed stuck in a perpetually low interest rate environment
• The fundamental dynamics of sequence of returns
• Guaranteed incomes, utility and nuance – true outcome vs probability of failure
• The difference between a TIPS ladder and an annuity
• Longevity annuities and optimal spending rates
• Purpose Investment’s Longevity Pension Fund – combining a tontine, an annuity and a balanced portfolio
• Analyzing other tailored products

We also discussed how any tool, no matter how sophisticated, is still bound to the ‘GIGO (Garbage In, Garbage Out) problem’, why these problems are not limited to retail investors, a highly effective cake analogy to describe solutions to longevity risk, and much more.

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, 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.

A casual observer of modern economies might be forgiven for feeling that life is pretty good. And they might reasonably credit neoclassical economic principles for facilitating what appears to have been a great leap forward in global prosperity. At the same time, we are occasionally confronted with news of looming global calamities, which are a product of the exact same policies that brought about this apparent prosperity: irreversible climate change, unprecedented global private credit, global asset bubbles to name just a few.

Our guest this week, Professor Steve Keen, has spent a lifetime demonstrating why neoclassical economics is fundamentally self-terminating because it fails to account for realities imposed by the physical world. He walks us through the root issues and describes an economic framework for sustainable growth and more even prosperity. In particular we discussed:

• The roots of the 2008 global financial crisis and how he predicted it in advance
• How the 1972 report “Limits to Growth” successfully forecast how the global economy would run headlong into resource boundary conditions
• Richard Vague’s findings that accelerating growth of private credit has presaged every major financial collapse in the past few centuries
• How the misguided work of two economists in the early 1990s has led to catastrophic policy and climate consequences
• The financialization of housing and its impact on home prices, demand for private credit, and a return to feudalism
• How to incorporate resource consumption and waste into modern economic models
• The character and potential positive impact of a modern debt jubilee

Professor Keen is not a man who minces words. Pour yourself an Irish coffee and settle in for a jarring ride.

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.

Thank you for watching and listening. See you next week.

*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.

One of the major trends catalyzed by the era of low interest rates and excess liquidity has been the drive towards real assets. Uniqueness and scarcity premiums are paid in assets as diverse as real estate, art, digital assets, and fine wines. With our friend Jason Buck (CIO of Mutiny Fund) as co-host, we were joined this week by Atul Tiwari (CEO of Cult Wines) for a deep dive into the world of investable fine wines. Topics included:

• Atul’s journey – from reformed lawyer and finance executive to managing liquid, wooden-barreled assets
• Separately Managed Wines – tailored solutions for different objectives
• The industry’s original 800 pound gorilla and his point system – reverse-engineering for a single palate
• Specialization and diversity – the multiple voices currently driving wine culture
• The surprising existence of wine futures
• Vintage ranges, consumption windows, storage and handling
• Value vs growth dynamics, with no easily accessible beta – and some serious negative carry
• Insurance, free ports and bonded warehouses – geographic diversification and avoiding double taxation
• Bypassing auctions and buying only when authenticity can be verified

Enriched by Jason’s experience as a former restauranteur and Mike’s passion for the subject, the conversation also touched on underappreciated vineyards, great documentaries, and tips for finding appropriately aged wine in restaurants. A special thanks to sommelier Amanda McCrossin (@SommVivant) for joining our live chat (and adding tons of pedigree to Jason’s views). If there was ever an episode that you should consider pouring a glass for, this is it.

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.

If you’ve been following international news over the past few years, you’ve likely noticed brewing tensions between major countries, even before the pandemic struck. Proxy wars, diplomatic tensions and regional skirmishes have been flaring up across the globe. To help us make sense of these events and how they may impact financial markets, we had the distinct pleasure of hosting none other than Dr. Pippa Malmgren, former presidential advisor, best-selling and award winning author. Her expertise sits at the intersection of geopolitics, economics and technology, leading to a wide-ranging conversation that covered topics such as:

• Family business – growing up in Washington, D.C. as the daughter of an advisor to four US presidents
• Why members of the armed forces are operating as if there is already a global conflict at hand
• Disputed borders, near misses and the risk of miscalculations – skirmishes below most peoples’ radar
• Thucydides Trap – Rising China, declining US and the possibility of superpowers clashing
• Political polarization in the US and globally
• Information bubbles and the search for common purpose
• The Great Gatsby vs The Grapes of Wrath – two opposing narratives emanating from the same catalyst
• AI, Quantum Computing and Robotics – a closer look at the 21st century’s battlefield

We also discussed the positive and negative effects of the digital age and the exponential increase in available information, the race for natural resources in the Arctic, opportunities and risks investors should be mindful of, and much more. Pippa was on her usual top form and very generous with her time, which made for a fascinating and highly entertaining 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, 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.

With our good friend Dave Nadig (CIO and Director of Research at ETF Trends) as co-host, we had the pleasure of speaking with Matt Hougan, CIO of Bitwise Investment, which manages the world’s largest crypto index fund. A veteran of the ETF industry, Matt brings institutional gravitas to a nascent sector and has recently authored the CFA Institute’s curriculum guidelines for digital assets. Our conversation included:

• Crypto as a currency looks highly unlikely to succeed, but as a technological advance it is highly unlikely to fail
• One of the most interesting problems in the space: very few people actually understand blockchain technology and its multifaceted capabilities
• The biggest risk in digital assets is behavioral
• Why market-cap weighted may be quasi optimal – size matters in a sector driven by network effects
• The delusional notions of Bitcoin replacing the USD
• The crucial importance of frequently rebalancing a portfolio that holds highly volatile assets
• A shifting zeitgeist and the typical question – from “will it go to zero?” to “what is a reasonable weight range?”
• Why UniSwap may be the greatest entrepreneurial story of the past decade

We also discussed DeFi (Decentralized Finance), technological updates and the excitement around the Ethereum ecosystem, tax implications and much more. A big thanks to Dave Nadig, not only for the introduction to Matt and co-hosting the episode, but for flexing his healthy skeptical muscles and pushing back at times – it made for great entertainment!

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, 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.

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.

Following our first conversation with David Fauchier (Portfolio Manager at Nickel Digital Asset Management), he insisted that we had to speak with Thomas Braziel, Founder and CIO of 507 Capital, who he claimed was one of the most interesting and independently-minded investors he had met in the digital asset space. With David as co-host, our awesome conversation with Thomas covered topics such as:

• Why almost all his stories begin with a bankruptcy
• Opportunities that don’t scale tend to offer the juiciest returns
• The reason some of these trades work is precisely because they are not scalable
• His perspective on the Mt. Gox debacle and why he has been buying claims on it for years
• Claims investing – why many distressed assets fly under the radar of most allocators
• His unique investment style – if Soros and Buffet had an ‘investment love child’
• Different models for claims investing – from complex factoring to ‘loon shot buccaneering’
• Getting along with all the players in the space can be a form of alpha

We went deep into the inner workings of the space, including how different countries treat personal liabilities in bankruptcies, the contrasts between English Common Law and the US legal system, and what it means to go ‘forum shopping’. Yet another highly entertaining and educational episode and we hope you enjoy it.

Thank you for watching and listening. See you next week.

*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.