The Derivative

How is the ETF sausage made? Who creates the filling? The casing? Who buys it at the store? What other meat is it replacing?  We dig into all these tasty morsels and more with this episode’s guest – the ETF expert Dave Nadig, who has spent his career analyzing ETFs, their asset managers, and how investors fit them into portfolios. We’re talking with Dave about why nobody in Springfield, MA likes Tom Brady, how ETFs went from nothing to a Trillion to $7 Trillion (with a ‘T’), and why exactly they get that super beneficial tax treatment.

He covers whether they spell the end for mutual funds, whether they brought on the boom in RIAs, if they’re actually tied to indices anymore?, and how to square passive investment with active allocations to ETFs. Then onto how the SEC punted to Gensler at the CFTC re: Crytpo ETFs (and now he’s at the SEC…wtf), why the future could be ETFs by voting style, and the obligatory Cathie Wood/ARK questions on a pod talking ETFs. Finally, we’re talking what it takes to launch an ETF, who you need on your side in terms of market makers and distributors, and how the ticker has become all important. Don’t miss this informative chat with an insider in the huge world of ETFs. Enjoy.

Chapters:

00:00-04:42=Intro

4:43-15:47=Wells Fargo, RIAs vs FAs, and Voltron

15:48-24:45=A Brief History of the ETF: the First Trillion is the Hardest

24:46-40:57=The obligatory ARK/ Cathie Wood questions

40:58-51:11=When do we get Crypto ETFs? Did the Sec Punt?

51:12-01:05:11=How do you do Futures, Leverage, and Taxes in an ETF?

01:05:12-01:16:01=Are there limits on ETF innovation? All Hail the creative Ticker!

01:16:02-01:21:53=The Game Stop Moment

01:21:54-01:26:50=Favorites

From the episode:

Luke's Entrance but with the Force Theme

Follow along with Dave on Twitter @DaveNadig and visit www.etftrends.com for more information

Don't forget to subscribe to The Derivative, and follow us on Twitter at @rcmAlts and our host Jeff at @AttainCap2,  or LinkedIn , and Facebook, and sign-up for our blog digest.

And visit our sponsor, the CME Group at www.cmegroup.com to learn more about futures and options.

Disclaimer: This podcast is provided for informational purposes only and should not be relied upon as legal, business, or tax advice. All opinions expressed by podcast participants are solely their own opinions and do not necessarily reflect the opinions of RCM Alternatives, their affiliates, or companies featured. Due to industry regulations, participants on this podcast are instructed not to make specific trade recommendations, nor reference past or potential profits. And listeners are reminded that managed futures, commodity trading, and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors. For more information, visit www.rcmalternatives.com/disclaimer

We jump back into some VIX and Volatility discussion with this week’s episode but also get to talk about trend following’s rise and fall (and rise again?) over the past decade. We’ve got Scot Billington, the co-founder and managing partner of Covenant Capital Mgmt., talking through his unique journey from futures broker to floor trader of OEX options, to trend following hedge fund manager, to VIX trader and volatility focused funds. We talk with Scot about his indoor, Kentucky basketball themed half court basketball gym above his garage in the Chicago suburbs, what it was like being a floor trader back in the hay day of the CBOE options pits, having a side gig when trying to start a hedge fund, when customers cry uncle in a drawdown, turning the switch from trend to vol, why the VIX is different than options, how one can be both long vol and short vol at the same time, why Goldman Sachs doesn’t care about your VIX trading, why the short vol blowups annoy him, and why it isn’t all that crazy to look at adding short vol to the mix. Enjoy!

Chapters:

00:00-02:35=Intro

02:36-26:12 =JC Bradford, Options Sheets & the Trading Floor

26:13-44:16 = Trend Following Was GREAT, then it became Commoditized

44:17-01:08:47 = Turning the switch from Trend Following to VIX

01:08:48-01:24:35 =Selling Premium Retail, Buying Reinsurance Wholesale

01:24:36-01:30:03 =Favorites

From the episode:

LJM – THE AUTOPSY

Don't forget to subscribe to The Derivative, and follow us on Twitter at @rcmAlts and our host Jeff at @AttainCap2,  or LinkedIn , and Facebook, and sign-up for our blog digest.

And visit our sponsor, the CME Group at www.cmegroup.com to learn more about futures and options.

Disclaimer: This podcast is provided for informational purposes only and should not be relied upon as legal, business, or tax advice. All opinions expressed by podcast participants are solely their own opinions and do not necessarily reflect the opinions of RCM Alternatives, their affiliates, or companies featured. Due to industry regulations, participants on this podcast are instructed not to make specific trade recommendations, nor reference past or potential profits. And listeners are reminded that managed futures, commodity trading, and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors. For more information, visit www.rcmalternatives.com/disclaimer

Our guest this episode is surely not a stranger to our listeners, with his voice reaching far and wide via StockTwits, the Panic with Friends podcast, his ever-changing Twitter handle (currently Metaverse Lindzon) and his eponymous blog where he dishes on everything from stock picks to software to NFTs.  Oh, and in his spare time, he’s invested in some big names like Robinhood, eToro, Koyfin, and Rally Road.

We sit down with Howard for a quick chat on exactly what he means by ‘trend following’, why that’s not the same thing the managed futures industry sees it, why sometimes it really is that easy, golfing with your son, whether it’s early or late in crypto, carb-loading your legs, ‘drafting’ behind pros for big trends, living in a rare asset world, investing in a bubble, how not to get scared off putting money to work amidst the Fed/inflation/etc, finding a career that suits your lifestyle, NFTs, Tesla, HOOD, whether RIAs are the next travel agents, or if they’re the travel agents that survived, and whether it’s a good idea to have 50%+ of your liquid net worth in crypto. Take a listen:

Chapters:

00:00-02:09=Intro

02:10-11:35 =  Playing Golf, Peloton & Pushing Tesla’s Range

11:36-33:59 = Go West Young Man (into Crypto) & Not Being the Last Guy Out

34:00-56:02 = The Golden Age of Investing, Gamification & Community

56:03-01:06:04 = RIAs as the Last Travel Agents & Investing in a Bubble

01:06:05-01:10:49 = Favorites

Follow along with Howard on Twitter @howardlindzon and visit his website at howardlindzon.com.

Don't forget to subscribe to The Derivative, and follow us on Twitter at @rcmAlts and our host Jeff at @AttainCap2,  or LinkedIn , and Facebook, and sign-up for our blog digest.

And visit our sponsor, the CME Group at www.cmegroup.com to learn more about futures and options.

Disclaimer: This podcast is provided for informational purposes only and should not be relied upon as legal, business, or tax advice. All opinions expressed by podcast participants are solely their own opinions and do not necessarily reflect the opinions of RCM Alternatives, their affiliates, or companies featured. Due to industry regulations, participants on this podcast are instructed not to make specific trade recommendations, nor reference past or potential profits. And listeners are reminded that managed futures, commodity trading, and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors. For more information, visit www.rcmalternatives.com/disclaimer

What do you do when trends stop appearing for the quarter of a billion dollars you manage? Where do you go to find markets like the ‘good old days’ for trend following? Our guest for this episode, Abingdon Global’s Fred Schutzman is in a unique position to answer those questions – and much more!

Listen to Fred share his background being a Chartist, working at CRB, why technical analysts have holes in their shoes, how easy it seemed to find successful trend models 20 years ago, the rise and fall of Briarwood, sleepless nights with a quarter of a billion on the line, why 10,000 trades are better than 1000, why 3 models are better than 1, and thoughts on Queens, Acid, Coke, Iron Ore, gaining exposure to China, to inflation, to dollar weakness, the perfect NY slice, and eating his own (Chinese) cooking.

Chapters:

00:00-02:29=Intro

02:30-29:37= Technical Analysis = Holes in Your Shoes

29:38-39:29= Trend Following Tigers Changing their Stripes

39:30-59:06= Deep Chinese Markets, Acid, & 10,000 Trades

59:07-01:31:31= The Model, Magic Darts, and Eating your own Cooking

From this Episode:

Listen to the previous podcast with Fred Schutzman here: Trading Chinese Futures Markets with Abingdon Global

Listen or Watch Modeling Markets and Accessing AI with Robert Rotella and Jag Prakasam

Listen or Watch Asian Markets, American Investments, & Accessing (Chinese) Futures with Alvin Fan of OPIM

For more information on accessing China markets, contact Matt Bradbard at RCM (312.870.1653)

Don't forget to subscribe to The Derivative, and follow us on Twitter at @rcmAlts and our host Jeff at @AttainCap2,  or LinkedIn , and Facebook, and sign-up for our blog digest.

And visit our sponsor, the CME Group at www.cmegroup.com to learn more about futures and options.

Disclaimer: This podcast is provided for informational purposes only and should not be relied upon as legal, business, or tax advice. All opinions expressed by podcast participants are solely their own opinions and do not necessarily reflect the opinions of RCM Alternatives, their affiliates, or companies featured. Due to industry regulations, participants on this podcast are instructed not to make specific trade recommendations, nor reference past or potential profits. And listeners are reminded that managed futures, commodity trading, and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors. For more information, visit www.rcmalternatives.com/disclaimer

Over 100,000 investors in 180 countries listen to Ben Hunt, founder of Second Foundation Partners and the Epsilon Theory blog, debunk the latest narrative machines in each of his opus-like post. So with Covid cases climbing and inflation expectations rising, it seemed like as good a time as ever to bring Ben back on the pod to talk through all that is going on, and all that they are trying to tell us is going on.

Listen in to Ben get animated about our current auto-tuning society, the Grand Canyon-sized chasm between market world and the real world, llamas, the Delta variant and why Covid has become so politicized, building fences (literal fences), Bill Gross’ staple obsession, finding a pack to carry on meaningful conversation, getting your Robinhood calls on today!, why even a war with China won’t derail risk assets, inflation, inflation, inflation, narrative missionaries, wage growth, Robinhood, the housing market, wage growth, burning it the F down, Jamie Dimon is just a bank manager, the video game of life, taking the red pill, waiting for narratives to shift before piling into Trend Following, and how jazz hands work in Bitcoin world. Have fun!

Chapters:

00:00-3:00=Intro

03:01-08:26=Finding your Pack

08:27-24:09=Politicized Covid in an “Auto-tuned” Society

24:10-42:29=There is NO Deflationary Shock that can Derail Risk Assets, but Inflation….

42:30-56:26=In the poker game of [stock buybacks], Corp. MGMT. is the Rake

56:27-01:04:40=Trend Following, Bitcoin, and Jazz Hands

Listen or Watch our previous episode with Ben Hunt, follow Ben on Twitter @EpsilonTheory, and visit the Epsilon Theory website.

Don't forget to subscribe to The Derivative, and follow us on Twitter at @rcmAlts and our host Jeff at @AttainCap2,  or LinkedIn , and Facebook, and sign-up for our blog digest.

And visit our sponsor, the CME Group at www.cmegroup.com to learn more about futures and options.

Disclaimer: This podcast is provided for informational purposes only and should not be relied upon as legal, business, or tax advice. All opinions expressed by podcast participants are solely their own opinions and do not necessarily reflect the opinions of RCM Alternatives, their affiliates, or companies featured. Due to industry regulations, participants on this podcast are instructed not to make specific trade recommendations, nor reference past or potential profits. And listeners are reminded that managed futures, commodity trading, and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors. For more information, visit www.rcmalternatives.com/disclaimer

Who hasn’t been pitched a buffered note at this point? Participate in the upside and get credited back the first 10% in losses. What could go wrong?  There are billions of dollars of these things out there, and they’re even creeping into the ETF and mutual fund space. How exactly do they work? Which options are being bought and sold? Is there hidden risk? What about exotics and knock ins and all the rest…. Do they cause extra liquidity issues for the market as a whole?

We sat down with Exceed Investments Joe Halpern in the lively chat to find out just how these buffered notes work, and what investors need to be careful of. Listen to Joe talk about finding the right call to sell to cover the spend, why tail risk is much more important than a 10% buffer, field hospitals in Central Park, what it was like unwinding Lehman Brothers structured products, crafting exotic derivatives at ING, Stevie Cohen as the Mets owner, why duration matters, and how the risk/reward profile of a buffered note changes as the market moves. Enjoy!

Chapters:

00:00-02:25=Intro

02:26-09:32=Mets, Cohen, Bobby Bonilla Day & Madoff

09:33-27:47=Custom Structured Notes & In the Trenches at Lehman

27:48-49:28=Behind the Scenes on a Buffered Note

49:29-01:08:00=Exceed = A Floor instead of a Buffer

01:08:01-01:16:27=Favorites

From the episode:

Webinar: Buffered Strategies: What They Are, How They Work, & When to Use Them - 1 CE Credit

Catalyst Buffered Shield Fund

Follow along with Joe on twitter @halpjoe, and visit Exceedinvestments.com for more information.

Don't forget to subscribe to The Derivative, and follow us on Twitter at @rcmAlts and our host Jeff at @AttainCap2,  or LinkedIn , and Facebook, and sign-up for our blog digest.

And visit our sponsor, the CME Group at www.cmegroup.com to learn more about futures and options.

Disclaimer: This podcast is provided for informational purposes only and should not be relied upon as legal, business, or tax advice. All opinions expressed by podcast participants are solely their own opinions and do not necessarily reflect the opinions of RCM Alternatives, their affiliates, or companies featured. Due to industry regulations, participants on this podcast are instructed not to make specific trade recommendations, nor reference past or potential profits. And listeners are reminded that managed futures, commodity trading, and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors. For more information, visit www.rcmalternatives.com/disclaimer

Dive into this fun chat with the equally irreverent and intelligent Bill Brewster, the self-made value investor in the style of Warren Buffet who dishes on twitter @BillBrewsterSCG hosts the Business Brew podcast in his spare time. We go into Chicago vs Florida real estate and taxes, commercial banking, TastyTrade and options, just how big of a Buffet fan you have to be to name your son Warren, Marvel vs Star Wars, the ultimate recurring revenue game that is cable companies, the brilliance of Disney+, how exactly can some random guy compete with huge investment firms, the dangerously gamified Robinhood, lessons learned from the pros, Cam Newton, not caring about drawdowns, owning poor franchises, the value trap, long term options, the Twitter machine, second order vs no order thinking, and of course, maybe just being some lucky retail idiot.

Enjoy

Chapters:

00:00-01:52=Intro

01:53-13:38=Options, TastyTrade, Law School and Value Investing

13:39-26-40=Wait til companies get cheap, then buy them

26:41-38:04=Some Lucky Retail Idiot & Disney+

38:05-47:56=“The Buff Dog” would still Wax All of Us

47:57-01:06:28=The Business Brew Podcast & Platform concerns

01:06:29-01:16:35=Favorites

From the episode:

The Business Brew podcast, Arnold Vanderburgh Episode, Adam Robinson Episode

Ice Man/Maverick blog post

Follow along with Bill on twitter @BillBrewsterSCG and visit his podcast page The Business Brew

Don't forget to subscribe to The Derivative, and follow us on Twitter at @rcmAlts and our host Jeff at @AttainCap2,  or LinkedIn , and Facebook, and sign-up for our blog digest.

And visit our sponsor, the CME Group at www.cmegroup.com to learn more about futures and options.

Disclaimer: This podcast is provided for informational purposes only and should not be relied upon as legal, business, or tax advice. All opinions expressed by podcast participants are solely their own opinions and do not necessarily reflect the opinions of RCM Alternatives, their affiliates, or companies featured. Due to industry regulations, participants on this podcast are instructed not to make specific trade recommendations, nor reference past or potential profits. And listeners are reminded that managed futures, commodity trading, and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors. For more information, visit www.rcmalternatives.com/disclaimer

We’re excited to have one of the pioneers of options trading on this episode, Jerry Haworth -  Founder and CIO of renowned option and tail risk firm 36 South. In this wide-ranging talk, we dive into Jerry’s roots in Zimbabwe, trading South African bonds, structuring derivatives, the point in his jazz career where talent and drive diverge, how 36 south got started, canoe marathons, why long term options rule, non-recourse leverage, Victoria Falls, swaptions, asymmetry, Chicago Blues bars, liquidity cascades, slow-moving south sea bubbles, leptokurtic curves, changing correlations and, of course - Teams of Options. Enjoy!

Chapters:

00:00-02:19=Intro

02:20-18:31=Zimbabwe to Auckland to London

18:32-44:10=Positive, Neutral Carry & Teams of Options

44:11-56:16=Long-Term Options & Non Recourse Leverage

56:17-01:04:29=What’s changed in 30yrs of Option Trading

01:04:30-01:08:46=Favorites

Learn more about 36 South at 36south.com 

And last but not least, don't forget to subscribe to The Derivative, and follow us on Twitter, and our host Jeff at @AttainCap2 or LinkedIn, and Facebook, and sign-up for our blog digest.

And visit our sponsor, the CME Group at www.cmegroup.com to learn more about futures and options.

Disclaimer: This podcast is provided for informational purposes only and should not be relied upon as legal, business, or tax advice. All opinions expressed by podcast participants are solely their own opinions and do not necessarily reflect the opinions of RCM Alternatives, their affiliates, or companies featured. Due to industry regulations, participants on this podcast are instructed not to make specific trade recommendations, nor reference past or potential profits. And listeners are reminded that managed futures, commodity trading, and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors. For more information, visit www.rcmalternatives.com/disclaimer

Saddle up everybody, because we’ve got the UrbanKaoboy on this episode, who’s ridden everything from ponies to draft horses to mustangs over his 30+ years in the investment game, doing commodities and derivatives at Goldman in the 90s, risk arb at Canyon Partners, and then opportunistic/value at his own fund Akanthos Cap Mgmt, before hanging up his spurs and focusing on running his own family office. We’re talking with Michael Kao about the credit culture in LA investment firms, trading the Goldman roll in commodities, how corporate debt = short puts and equity = long calls, the trading pits, finding long gamma in a short gamma arb strategy, convertible bonds, arb trade structures, Star Wars, pricing synthetic options, credit spreads blowing out, needing good marginability, Michael Saylor's diamond hands, the potential train wreck that is MSTR's balance sheet, and more. This was a fascinating look into the mind of an opportunistic investor.

Chapters:

00:00-02:24=Intro

02:25-13:41=Drexel, LA, and the Goldman Commodity Roll

13:42-36:50=Canyon, Akanthos, and Convertible Arb

36:51-55:45=MSTR, Saylor, and the Capital Structure

55:46-01:01:19=Tokenized Residential Real Estate

01:01:20-01:08:02=Star Wars Fanboy

Follow along with Michael Kao on twitter @UrbanKaoboy 

And last but not least, don't forget to subscribe to The Derivative, and follow us on Twitter, and our host Jeff at @AttainCap2 or LinkedIn, and Facebook, and sign-up for our blog digest.

And visit our sponsor, the CME Group at www.cmegroup.com to learn more about futures and options.

Disclaimer: This podcast is provided for informational purposes only and should not be relied upon as legal, business, or tax advice. All opinions expressed by podcast participants are solely their own opinions and do not necessarily reflect the opinions of RCM Alternatives, their affiliates, or companies featured. Due to industry regulations, participants on this podcast are instructed not to make specific trade recommendations, nor reference past or potential profits. And listeners are reminded that managed futures, commodity trading, and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors. For more information, visit www.rcmalternatives.com/disclaimer

What is it about engineers and seeing the world through a quant lens?  We’ve talked to plenty of quants who have an engineering mindset; but this episode’s guest is an actual engineer – doing his mechanical engineering work by day and dishing on portfolio construction at night via his excellent Breaking the Market blog and @breakingthemark twitter handle. Whether it is diving deep, real deep on arithmetic versus geometric returns, comparing performance measurements to Tiger Woods major’s performances, or calling Trend hot air, Matt Hollerbach puts his thought processes for all to see on the web. He does it to not only document his journey to quantlightenment, but also to get called out by pros who are increasingly finding a familiar voice in his writings, and teach those coming into the space. Jeff and Matt talk golf, the DC area, being anonymous versus having a name, LMGTFY, mechanical engineering, rebalancing, Gold, rebalancing, expecting a miss in your portfolio construction, Bryson DeChambeau, why its never as easy as it seems to write a great blog post, a library of quant research, Renaissance, Claude Shannon, rebalancing, and more. Enjoy!

Chapters:

00:00-02:05=Intro

02:06-11:26=Tweeting while Engineering

11:27-22:48=Meeting End Goals & Golf Specs

22:49-34:45=Breaking the Market

34:46-50:23=Arithmetic vs Geometric  / Trend is Hot Air

50:24-58:43=Rebalancing, it’s All About Rebalancing

58:44-01:15:52=The Strategy

01:15:53-01:24:35=Favorites

Follow along with Matt on Twitter @breakingthemark and visit the blog at breakingthemarket.com. Check out his Pronghorn strategy at https://pronghornanalytics.com/

Don't forget to subscribe to The Derivative, and follow us on Twitter @rcmAlts, and our host Jeff at @attainCap2, or LinkedIn, and Facebook, and sign-up for our blog digest.

And visit our sponsor, the CME Group at www.cmegroup.com to learn more about futures and options.

Disclaimer: This podcast is provided for informational purposes only and should not be relied upon as legal, business or tax advice. All opinions expressed by the podcast participants are solely their own opinions and do not necessarily reflect the opinions of RCM Alternatives, their affiliates, or companies featured. Due to industry regulations, participants on this podcast are instructed not to make specific trade recommendations, nor reference past or potential profits. And listeners are reminded that managed futures, commodity trading, and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors. For more information, visit www.rcmalternatives.com/disclaimer