YouSaid · the spoken record

Andrew Beer

lines on the record: 130
first: 2023-09-14
most recent: 2023-09-14
sittings or episodes: 1
sources: podcast

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“Yeah, look, to me, the answer is the question can I do better than hedge funds and offer you daily liquidity, let you invest $100 as opposed to $5 million in it? You not have a K1? Can you have all of these things that make your life at the margin better and help you with your broader portfolio? There's a huge...”
2023-09-14 · Forward Guidance · Andrew Beer: Hedge Funds Charge Way, Way Too Much · IDENTIFIED FROM THE TRANSCRIPT
“No, no, I'm talking about me. Our firm today is that we've identified a handful of strategies where you can do better than actual hedge funds. In an ETF or in Europe, we do these things in mutual funds, but with daily liquidity, low fees, and all sorts of really salient features. But we haven't done our stupid things. We didn't go create products that ended up not working five years later and we had an egg on our face. And the asking.”
2023-09-14 · Forward Guidance · Andrew Beer: Hedge Funds Charge Way, Way Too Much · IDENTIFIED FROM THE TRANSCRIPT
“It was yielding nothing, right? And so that's what I mean about artificially low, right? It shouldn't be a risk asset shouldn't earn zero over time. But what Seth would say is don't buy that stock just because you want to go buy something and you want to feel busy or whatever. You've got to be able to kind of justify it as to what you're not doing. And so the way that we've approached, what we're sort of known for in this world of where people try to take hedge fund strategies to put them into mutual funds and ETFs is we've only made a few bets over time and they've all worked. And by that, I mean...”
2023-09-14 · Forward Guidance · Andrew Beer: Hedge Funds Charge Way, Way Too Much · IDENTIFIED FROM THE TRANSCRIPT
“199 So with much, much, much smaller firm, just a little boutique firm. I got recruited by some of my professors at Harvard Business School who had been actually founders of the business back in the early 1980s. And I didn't know anything. I didn't know what a hedge fund was. I didn't know who the guy was or whatever. But I went in and they basically beat the crap out of me for two hours in an interview asked me all sorts of hard questions and I thought it was kind of fun. And so I ended up going to work from. But the thing was, if you're invested in cash, right, it's a high hurdle to take money out of that. That's okay. The problem we had in the 2010s was that there was this concerted effort to make sure you didn't hold that safe asset.”
2023-09-14 · Forward Guidance · Andrew Beer: Hedge Funds Charge Way, Way Too Much · IDENTIFIED FROM THE TRANSCRIPT
“Because that's just going to lead to a lot of brain damage and anxiety and disappointment. If you're going to do rebalancing, which you should do, do it quarterly. Know and maybe change things at the margin, but take the market timing decision away from the view of what you want that portfolio to look like and how you want it to grow and how much risk you want to take over the next 10 years. Because the rebalancing, if you get queued on the rebalancing side, you can blow up the rest of the equation. I mean, it's sort of interesting. So, one of the things that I learned from this guy, Seth Klarman years and years and years ago, is don't do stuff just to keep busy. And so the year before I joined, it was sort of funny in that they”
2023-09-14 · Forward Guidance · Andrew Beer: Hedge Funds Charge Way, Way Too Much · IDENTIFIED FROM THE TRANSCRIPT
“I'm all in favor of rebalancing over time. I don't think, I mean, like if it's, but all I'm saying is I would just say don't get cute Yeah, you know, no one is going to pick the top. Of assets and markets, et cetera, and don't even think that you're going to”
2023-09-14 · Forward Guidance · Andrew Beer: Hedge Funds Charge Way, Way Too Much · IDENTIFIED FROM THE TRANSCRIPT
“That I'm going to get that right. So don't bet the house on it, right? You have companies out there, whether in Europe, US or whatever, where you got guys running them who are trying to build and increase value. Everybody wants that to happen. You've got bond investors out there who are trying not to lose your money and find the things that are... Advantaged futures, you've got guys who are trying to identify the opportunities that you're not going to see in buckets one and two.”
2023-09-14 · Forward Guidance · Andrew Beer: Hedge Funds Charge Way, Way Too Much · IDENTIFIED FROM THE TRANSCRIPT
“Ethos for the next 10 years should be I'm going to have a meaningful slug in equities, I'm going to have a meaningful slug in bonds, however you describe it, and I'm going to have a meaningful but not as large slug in managed futures. And I'm going to basically, that's my bet for the next 10 years because each one of those things is not static. They talk about an equity allocation as static. The S&P 500 is not static. And so the S&P 500, we started talking about this idea of beta Don't know how it's going to do. My guess is it's going to do a lot less well over the next 10 years just statistically. You can't keep compounding at 13%. SP 500. It tends to be very tech heavy. It probably sounds bad. But Know those are. Being honest with myself, right? There is I'm not likely to be more than 53% right.”
2023-09-14 · Forward Guidance · Andrew Beer: Hedge Funds Charge Way, Way Too Much · IDENTIFIED FROM THE TRANSCRIPT
“It in the simplest and most straightforward way. Like, don't get cute. Like, the problem with managed futures, right, is like you say with tail risk, right? People want tail risk on March 18th, 2020, when it's already up a bajillion percent, right? They didn't want it three months before. And so I just think you have to be honest with yourself. Am I likely to get the timing right on it? And the problem is like gambling, like day trading, like all these different things. It's fun, right? And so you should have fun with, it's your money. You should have fun with it if you want, but don't fool yourself that you're going to know how managed futures is going to do in the next month, even how equity is going to do in the next month. And so for the core of your portfolio,”
2023-09-14 · Forward Guidance · Andrew Beer: Hedge Funds Charge Way, Way Too Much · IDENTIFIED FROM THE TRANSCRIPT
“So, when it comes to rebalancing, how often does the studies, the research suggests that is optimal for trend following or managed futures if you have, let's, I mean, you know, 60% bonds, 60% stocks, 30% bonds, 10% managed futures. You have a year like last year where stocks and bonds both had a horrible year, but managed futures did really well. Presumably, you take some money out of Managed Futures, put them to stocks and bonds. How often should people do that quarterly? What does the best practice for that?”
2023-09-14 · Forward Guidance · Andrew Beer: Hedge Funds Charge Way, Way Too Much · IDENTIFIED FROM THE TRANSCRIPT
“Of the world, Google, Microsoft, et cetera, and they actually pulled money from these, so they didn't capture the rebound, basically. They get pummeled last year, historically bad numbers last year. Then they're like, and they, even some of the smartest guys in the business, actually some of them actually bought into the idea that this was going to be dead money for a long time. Yeah. And look, I mean, maybe one or two of them happen to have NVIDIA in their portfolio, but the whole chat GPT thing was really came out of left field.”
2023-09-14 · Forward Guidance · Andrew Beer: Hedge Funds Charge Way, Way Too Much · IDENTIFIED FROM THE TRANSCRIPT
“There was a band of hedge funds that I was describing, these tiger cubs. Yeah, yeah, who had huge exposure to. To these large U.S. large zooms.”
2023-09-14 · Forward Guidance · Andrew Beer: Hedge Funds Charge Way, Way Too Much · IDENTIFIED FROM THE TRANSCRIPT
“Valuation convergence is going to happen in a higher interest rate world. The fact that Europe has more, I mean, Europe has underperformed for decades. It has been the cigar butt of asset allocation models, but it's going to change. It's finally going to change. They're going to come back. So earlier this year, kind of a big trade among hedge funds was this is the revival of Europe. And then they got run over. So it's in a really, really humbling environment for a lot of people. You can get it right one month, but getting it right all year long, I just don't know of anybody who got last year right and then turned around and flipped and got this year right. And then even like those guys who made a fortune on tech stocks, you know, they go down 50 and they're up 20 this year. That's not enough. You're still down 40 at 2 and 20.”
2023-09-14 · Forward Guidance · Andrew Beer: Hedge Funds Charge Way, Way Too Much · IDENTIFIED FROM THE TRANSCRIPT
“And so think about replication is like when you're looking at these guys, and we do replicate equity long short as a strategy. We have a separate ETF that does that. But what you care about is, are these guys looking at stocks every day, deciding that those tech stocks have just gotten too expensive? It's not worth it anymore. Have they made a move from, I mean, the S&P 500 went up 250% in the 2010s. Nasdaq went up 425%. Europe went up 80. Cumulatively in emerging markets went up 50. That throws, you talk about theory versus reality. You imagine those like security market lines? Oh, you take more risk, you'll make more money. Uh-uh. Okay. And it's not supposed to go on for 10 years like that. So hedge funds started to say, you know, I bet the 2020s.”
2023-09-14 · Forward Guidance · Andrew Beer: Hedge Funds Charge Way, Way Too Much · IDENTIFIED FROM THE TRANSCRIPT
“No, no, no. Less is this is in the 2010s. This is like 2014, 2015. Hedge funds, which had shunned big growth stocks since the early 2010s. Started to buy into the idea that these things were these cash flow generation machines, the world of which we had been studying. Yeah, but then once the crisis And the stocks went up even more. A lot of them said, Well, okay, not so funny anymore when these five stocks are now 40% of my portfolio. I'm going to dial them back. And they didn't want to buy Peloton because Peloton was ridiculously expensive and a weak business, well, whatever it was. And they looked around and they said, oh, Carnival Cruise Lines is down 98%. And this theater. So there was actually a big shift at the margin to value.”
2023-09-14 · Forward Guidance · Andrew Beer: Hedge Funds Charge Way, Way Too Much · IDENTIFIED FROM THE TRANSCRIPT
“It in San Francisco, and every time anybody goes online anywhere in the world, the cash register rings. Anyway, so back to my point about hedge funds, is they actually did catch that early. Some of the guys caught it early, and they had, and the thing was it didn't matter whether they own Microsoft, whether they owned whatever, whatever, whatever. They got the whole category right. These were a different breed.”
2023-09-14 · Forward Guidance · Andrew Beer: Hedge Funds Charge Way, Way Too Much · IDENTIFIED FROM THE TRANSCRIPT
“And his argument, and this became his argument was basically. When Wall Street analysts look at Apple. They don't understand compounding. They don't understand that Apple, even though it's big, can grow 30% a year or whatever the number is. So there'll always be a point three years out where they start to get it wrong. And we do these things. We go out much older. We're smarter about it. He's basically claiming that they had this edge with it. And they were right. I was super skeptical at the time. But they were right because what they recognized was that those big tech companies were a different breed of animal. They had a, you know, I mean, Warren Buffett had, having missed investing in Google, he has this great quote about Google. It's like somebody invented a cash register.”
2023-09-14 · Forward Guidance · Andrew Beer: Hedge Funds Charge Way, Way Too Much · IDENTIFIED FROM THE TRANSCRIPT
“They were until the 2010s. And then they bought it. Actually, they were very, some guys, there's a group of hedge funds called the Tiger Cups. And I knew some of the guys. And in 2014, I was sitting with one of the guys. And I was looking at his portfolio, and his biggest position was Apple. And I was like, Like, seriously? How do you have an edge in Apple? Like, when I, when you and I left business school years ago.”
2023-09-14 · Forward Guidance · Andrew Beer: Hedge Funds Charge Way, Way Too Much · IDENTIFIED FROM THE TRANSCRIPT
“Going to be a recession. Bonds are going to outperform stocks. Stocks are dead money. And also, if you are in stocks, or even your overweight stocks, make sure that you're not in large cap growth stocks. Microsoft or NVIDIA, you want to own small cap value stocks”
2023-09-14 · Forward Guidance · Andrew Beer: Hedge Funds Charge Way, Way Too Much · IDENTIFIED FROM THE TRANSCRIPT
“Asset classes with any level of confidence that are going to outperform what are going forward. However, this is the year of the bond, right? In January, it was a no-brainer that you should be buying bonds, because not only because the Fed's going to taper, rates are going to come right back down, and that's going to be the huge tailwind versus the response.”
2023-09-14 · Forward Guidance · Andrew Beer: Hedge Funds Charge Way, Way Too Much · IDENTIFIED FROM THE TRANSCRIPT
“It's not giving your money to that guy that you met who is super smart, who you just trust to be this great steward of your calculator. Look, the guy that I work for was if somebody said to me, here's a billion dollars, give it to one guy and you can't look at it for the next 30 years, you give it to him, right? It's easy. He'll figure it out. But because you know what? If I have a billion with him, he's got three. And there's no human being on earth who likes to lose money less than that guy, right? But how would you know who's going to be the next great guy? How would you know? Because that guy, even that guy has gone through periods of massive underperformance because he's in areas that weren't hot at the time. He wasn't big. So look, investing is really hard. Picking managers and the guys who are going to do well is a largely hopeless task on a systematic basis. And so picking the”
2023-09-14 · Forward Guidance · Andrew Beer: Hedge Funds Charge Way, Way Too Much · IDENTIFIED FROM THE TRANSCRIPT
“Your lungs went down 40%. If you were a long only manager, you were not looking good, but your shorts went down 80 And so when the world went to hell as an equity long short guy, you preserved capital. Outcome, which really sets the hedge fund industry off in the next 10 years to a necessary thing in everybody's portfolios. Because anybody staying in 2005 looks at this and says, oh my God, if they did it once, of course they'll do it again. Of course, they didn't do it again, right? 2008 came around, they should have gone down 14 based upon their level of risk. Equities went down about 40, right? So they should have gone down about 14. They went down 2022. It was an embarrassment. And so as the hedge fund industry has matured.”
2023-09-14 · Forward Guidance · Andrew Beer: Hedge Funds Charge Way, Way Too Much · IDENTIFIED FROM THE TRANSCRIPT
“And in fact, yen, I think we think was by far the most profitable individual trade. But when people talk about this space, they talk about, you know, well, did you see how much natural gas went up? It doesn't matter. I mean, doesn't it? It's like saying, look, if value stocks are going to outperform growth stocks over the next 10 years, you don't need to do a lot of brain damage trying to find the one value stock that's going to do better. Get value right versus growth or growth right versus value. And that's always been a truism of hedge funds. And that's why replication for guys who have been in the industry for a long time is very obvious to people. Because if you're an equity long short manager in 2000 and you were long small cap value stocks and short large cap growth stocks against it,”
2023-09-14 · Forward Guidance · Andrew Beer: Hedge Funds Charge Way, Way Too Much · IDENTIFIED FROM THE TRANSCRIPT
“Look, this is sort of the interesting thing about replication. We have this thing, it's like get the big trades right. And so they were betting that interest rates would go up through by shorting treasuries. They were long oil in the first quarter, sort of luckily, honestly, that when the Ukraine war hit, they ended up making a lot of profits. Then they kind of struggled with oil the rest of the year. In a world of rising rates, this is slightly technical, but generally If you're going to raise rates but another country is not going to raise rates, your currency is going to go up. And so as the Fed started to raise rates, it's just very bizarre thing where Japan, because of their situation, is like, you know, has a white knuckle grip. They are never going to raise rates as far as they can. So there was a huge move in the end versus the dollar.”
2023-09-14 · Forward Guidance · Andrew Beer: Hedge Funds Charge Way, Way Too Much · IDENTIFIED FROM THE TRANSCRIPT
“Because you will go through periods where it may not be fair, but you'll go through a period where it's not doing as well something else in the portfolio and people focus on it. But I know a lot of really, really smart people who gave up on this space in 2020 just before a very good 2021 and a decade of outperformance, 40 points of outperformance, 50 points of outperformance in 2022.”
2023-09-14 · Forward Guidance · Andrew Beer: Hedge Funds Charge Way, Way Too Much · IDENTIFIED FROM THE TRANSCRIPT
“With big tops, it's people have learned to buy dips. People have learned to step in to preserve capital. So the business will keep changing over time. The reason, again, going back to this strategy, the reason I like it is that you need something that can that you can put in your portfolio today and just leave it there. That's the ideal diversifier. You are a financial advisor, is something you can put in your portfolio today. Talk about it when you want to and never talk about it the rest of the time.”
2023-09-14 · Forward Guidance · Andrew Beer: Hedge Funds Charge Way, Way Too Much · IDENTIFIED FROM THE TRANSCRIPT
“And so, yeah, and go to Burning Man. So, you know, so we look back at it and we want to believe that we would have known what to do. And the reality is the guy that I worked for, this guy is an incredible investor named Seth Clarman. Warren Buffett, like there were a handful of guys who wait for the day, as Warren Buffett said, when the economic storm clouds darken it rains, bars of gold. Good. A funny thing happened in 2020 The economic storm clouds darken. Gold bars coming down, and there are 150 people out there.”
2023-09-14 · Forward Guidance · Andrew Beer: Hedge Funds Charge Way, Way Too Much · IDENTIFIED FROM THE TRANSCRIPT
“Oh, look, I mean, rebalancing is a nightmare, right? And I mean, so the thing is, you know, we look back at these periods in history. As though we had a clue what was going to happen, I can tell you on March 22nd, you know, good luck getting people out from underneath their desks. It was, we were in, I mean, the Treasury market was in trading. I mean, we were on this market.”
2023-09-14 · Forward Guidance · Andrew Beer: Hedge Funds Charge Way, Way Too Much · IDENTIFIED FROM THE TRANSCRIPT
“That's a key problem, Andrew, because let's say the best, you know, a lot of tail risk managers who I like, who I've interviewed. And then when you have a crash, they make 60 or 100. How much value is that if you're not allowed to rebalance when the market crashes and your tail risk sleeve of your portfolio goes up, but you have a lock up, right? Isn't the whole point that you're supposed to rebalance on that March 23rd, 2020 when the S&P is at 2300 and the VIX is at 85. But no one actually does that. And if you're not using an overlay, you're literally not even allowed to. Or it's going to be five years until you see that money, right?”
2023-09-14 · Forward Guidance · Andrew Beer: Hedge Funds Charge Way, Way Too Much · IDENTIFIED FROM THE TRANSCRIPT
“And the FT has covered them recently. A guy at Plumberg named Michael Kumar covers them a lot. These are the modern-day George Soros' Ken Griffin's one guy, Millennium, Citadel, these guys. It just seems to follow the kind of historical playbook that when you've got institutions lining up around the block, and then these guys are, you want to invest with hedge fund managers who are rapacious, ruthless capitalists, right? That is their job description. You want them to be that. But there also can be rapacious and ruthless with their clients. And so they've got their clients now to have locked up. Some of them used to be able to get your money out relatively frequently now because of the demand. Anybody who stayed is not getting their money back for at least five years.”
2023-09-14 · Forward Guidance · Andrew Beer: Hedge Funds Charge Way, Way Too Much · IDENTIFIED FROM THE TRANSCRIPT
“When we're talking with these guys, we're talking about hedge funds that have some kind of valley targeting strategy where they're going to make that 12% CD. They're actually making 20%, but they're borrowing at 5x. Those are the people because hedge fund is like a million different things.”
2023-09-14 · Forward Guidance · Andrew Beer: Hedge Funds Charge Way, Way Too Much · IDENTIFIED FROM THE TRANSCRIPT
“Really needs to fight a different job. Right. I mean, we had in the 2010s, right? I mean, bonds were earning, I mean, cash was earning close to zero, like let's say 1% over that period of time. And the S&P was up, like 13% a year or something. There's not a person in the world who predicted a 10-year period with a 12% equity risk premium, you know, a modeler who kind of predicted the world would look like that. Anyway, anyway, so like the tiny turn has gone the other direction. So what I basically, I said like, What's the answer to this? What's the answer you get? Now, the funny thing, maybe not so funny, is that there has been so much demand to people lined up around institutions lined up around the block to throw money at these guys, that these guys were not only increasing fees, but they got guys to tie up their money. So you type your money for five years, and even then, if you want to get out, you can take out maybe 5% a quarter.”
2023-09-14 · Forward Guidance · Andrew Beer: Hedge Funds Charge Way, Way Too Much · IDENTIFIED FROM THE TRANSCRIPT
“Like in theory, right? There's academic theory is like, well, you know, if what if we do the flat yield curve and everything's at 5% and then, well, of course, my return on equities is going to be 5% plus the equity risk premium. So of course I'm going to get a 10% return on equity over the next 10 years Anybody who's hanging their hat on theory working today.”
2023-09-14 · Forward Guidance · Andrew Beer: Hedge Funds Charge Way, Way Too Much · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, interest rates at 5.5% make leverage investments much less attractive, and that goes for stocks. It goes for real estate. Interestingly, like if you had a parallel shift in the yield curve, maybe it doesn't for like carry trades or leveraged credit investment or banking, but we don't. We have an inverted yield curve.”
2023-09-14 · Forward Guidance · Andrew Beer: Hedge Funds Charge Way, Way Too Much · IDENTIFIED FROM THE TRANSCRIPT
“But here's a question, right? If you're leveraged five times. Isn't that sort of a problem today? Your borrowing costs, right? We all know if you were a mediocre real estate investor in the 2010s, you are a rich guy who looks like a genius today. Everybody, private equity firms like zombie companies, like people who were borrowing money in the 2010s on size did really well. The question going back to the point that I was saying is like if rates, now if you think rates are actually going to stay where they are and most hedge funds actually do, right? Most hedge funds think we hit an inflection point, we're in a new world, deglobalization, blah, blah, blah, blah, blah, all these different things. Governments apparently, you know, the restraining governments has gone out the window, whatever. But if that's the case, how does it affect hedge funds?”
2023-09-14 · Forward Guidance · Andrew Beer: Hedge Funds Charge Way, Way Too Much · IDENTIFIED FROM THE TRANSCRIPT
“Then managed to make a little bit of money on each of those dollars, take about half of themselves, and then leave the rest for you. And that's, you know, that's like if you looked at like a Goldman Sachs trading business from the 1980s or 1970s, it's the same kind of idea. Like we're going to hundreds of things. We're going to have great information, great execution, great borrowing costs, et cetera. We'll make a 30% return on equity. We'll make a 40% return on equity. We'll take half and pay our guys. And everyone is happy.”
2023-09-14 · Forward Guidance · Andrew Beer: Hedge Funds Charge Way, Way Too Much · IDENTIFIED FROM THE TRANSCRIPT
“And so So, those are the two big issues. And the third big issue is these are very leveraged funds, right? And so they've done so, but it's sort of an interesting historical note. This is the 25th anniversary of long-term capital. And so if you want to understand risk management in 2023, read about long-term capital because everybody who does risk management and anything on the quant side grew up reading about this as, you know, if you study history, you study World War II. You study the Vietnam War or whatever. So the interesting thing about it is that these These hedge funds in order to generate those kinds of returns take a dollar of your capital. Turn it into 5 or 10.”
2023-09-14 · Forward Guidance · Andrew Beer: Hedge Funds Charge Way, Way Too Much · IDENTIFIED FROM THE TRANSCRIPT
“The crazy thing about these things, and a lot of, you know, I think anybody who wants to be good in the investing business should spend a lot of time looking at history because you have to kind of understand how we got here. So a lot of these firms can actually pass through the cost of their employees and their bonuses, et cetera, back to their investors. So these funds, when I say it's a 12% CD, they may be making 20 or 24 and taking half. Okay, but now think about how strange that is, right? I'm not bearing the cost of my employees. My investors are. And I see a guy out there who looks like he's great at what he does. And I and the next guy, we're not footing the bill for it. It doesn't come out of our pocket. There is no better recipe for overpaying.”
2023-09-14 · Forward Guidance · Andrew Beer: Hedge Funds Charge Way, Way Too Much · IDENTIFIED FROM THE TRANSCRIPT
“Exactly. I mean, these things have been unbelievable. What I just wrote this note that we'll put up next week. Kind of some serious questions that people should be asking about it. So, one is these guys have all grown massively, right? They've all hired tons and tons of people. And so you start asking questions. It's like you were so good when you were one fifth the size. And you had these great team of guys. Is team 56 really as good as team four?”
2023-09-14 · Forward Guidance · Andrew Beer: Hedge Funds Charge Way, Way Too Much · IDENTIFIED FROM THE TRANSCRIPT
“So, one of the other things about replication, because we have this expression size is the enemy of performance or asset growth is the enemy of performance and hedge fund. So, like the great hedge fund strategy du jour has been these multi-strategy hedge funds, which have been These guys look like magicians. They've basically given you what has looked like a 12% CD for the past several years during a period of time when you weren't making any money in your bond portfolio and most hedge funds weren't doing well.”
2023-09-14 · Forward Guidance · Andrew Beer: Hedge Funds Charge Way, Way Too Much · IDENTIFIED FROM THE TRANSCRIPT
“900 basis points of alpha or something relative to the SP 500 since we launched since it was launched in 2019 that's like millennium citadel like that but it's a daily liquid etf with an 85 basis point expense ratio We are right now, if you look at the size of the ETF, we are 0.01% of the ETF world. So you have something that if you package it as a hedge fund, should be a $50 billion hedge fund. But in the ETF world, it's People haven't even begun to make these kinds of investments And part of the reason is this mess. I talk to people who have spent their lives buying ETFs and they have never Role on a futurist contract is an alien concept to them. A futures contract is an alien concept to them.”
2023-09-14 · Forward Guidance · Andrew Beer: Hedge Funds Charge Way, Way Too Much · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, like in other words, if hedge funds do five, you know, somehow these guys manage to do two. And so, and it's so think about replication, which I think is unique in the liquid alternative space, is it's blindingly simple. If these guys make 10 in a hedge fund, you're paying four and the clients are paying four and they're ending up with six. Maybe you can replicate eight or nine with cheap, low-cost instruments and end up with seven or eight as opposed to six. You're not going to get everything that they do, but you don't have to when you're that much cheaper So, what we're trying to do is basically, if you look at our ETF and the Managed Futures space, this is an ETF that's delivered.”
2023-09-14 · Forward Guidance · Andrew Beer: Hedge Funds Charge Way, Way Too Much · IDENTIFIED FROM THE TRANSCRIPT
“Because most things that hedge funds do don't work well in an ETF. If you've got a guy who has some deeply illiquid assets and then you drop him into an ETF and everyone can see those positions every day, or a guy who owns 20%, it's just hedge funds don't want the transparency. The constraints of running it, you can't invest in a lot of things like. So in general, what people have tried to do is say, oh, we'll take this kind of established hedge fund, try to drop it into an ETF. And no matter how low the bar is for the actual hedge funds, these guys skate way underneath it.”
2023-09-14 · Forward Guidance · Andrew Beer: Hedge Funds Charge Way, Way Too Much · IDENTIFIED FROM THE TRANSCRIPT
“Who are the ones who are getting caught up in it? Because they were thinking about yeah, well, I bought that house at the very peak of the market, or I bought that stupid stock after it got up 500%. And so trends are not inherently good. You want the good trends. Anyway, so one of my projects, because if you look at our ETF, and again, you talk about hedge funds have not been great investments in general because of the fees and other things. When people have tried to put hedge funds into ETFs, it's been a catastrophe. It's been...”
2023-09-14 · Forward Guidance · Andrew Beer: Hedge Funds Charge Way, Way Too Much · IDENTIFIED FROM THE TRANSCRIPT
“What in that sounds remotely appealing? They said, Oh no, we're gonna, we have a better term for, we're gonna call trend following. Well, it's actually how they make money. Don't you know a million guys who bought things at the wrong time because the trend was going in their favor? It's funny. So when I first talked about this, do you remember in trading places the movie in the 1980s, there was that scene where everyone's like, bye, bye, sells, sells, sells, help. And so when I first started talking to people about Manner Futures, I said, I said, like. Sort of an example of the emotional nature of the markets. And I realized I was making people really nervous because they weren't thinking that they were Eddie Murphy and Dan Aykroyd controlling it. They thought they were the guys in the pits.”
2023-09-14 · Forward Guidance · Andrew Beer: Hedge Funds Charge Way, Way Too Much · IDENTIFIED FROM THE TRANSCRIPT
“Private. Maybe you can join our club. It's just it. I mean, it's you know hard asset based lenders, you know, knuckle dragging guys who will break your kneecaps, but they'll lend your small, sorry, we're private credit now, right? We're sophisticated. Value stocks used to be called cigar butts. They're so cheap that you've got the worst management team in the world with the worst business and you're still going to make money on it. But now it's value stocks. Value is good. Growth is good. Quality.”
2023-09-14 · Forward Guidance · Andrew Beer: Hedge Funds Charge Way, Way Too Much · IDENTIFIED FROM THE TRANSCRIPT
“That's why they could be so tough. Everyday low pricing, you know, you buy growth stocks that go through a hit and everyone can say, oh, remember when Apple, if you bought Amazon at the bottom, you know, you'd be a trillionaire today. And the thing is, like every other asset class has this great language around it. It sounds great. Remember leverage buyouts. I'm sorry, we're private equity now.”
2023-09-14 · Forward Guidance · Andrew Beer: Hedge Funds Charge Way, Way Too Much · IDENTIFIED FROM THE TRANSCRIPT
“Hard to explain, and so but this is, I think, the point you said if you then say, Oh, because there was a sharp reversal in the wheat markets and blah, blah, blah, blah, blah, and if I'm a client, I'm like, why am I bothering with that? This is just stressing me out to what's in there. Yeah. And for the advisor, it's often stressful because how is that comforting? You buy cheap value stocks and they go down. There's a great narrative around it. They're cheaper, right? They're cheap.”
2023-09-14 · Forward Guidance · Andrew Beer: Hedge Funds Charge Way, Way Too Much · IDENTIFIED FROM THE TRANSCRIPT
“Course, right? These guys, these guys hate if you like waves, you hate whipsaws, right? You hate, and that's why they hated a lot of the late 2010s was because every time the markets would really start to get to go down, the Fed would step in or something would happen. The way to think about the strategy is that it makes your life better. Because it does things that you're not going to do on your own. Now, when I mentioned it being annoying 80% of the time, the problem is for you're on a golf course with a guy who's your client, and he says, oh, what's that thing in there that's a 5% allocation? And how come my equities are up 15% and this thing is down 5%?”
2023-09-14 · Forward Guidance · Andrew Beer: Hedge Funds Charge Way, Way Too Much · IDENTIFIED FROM THE TRANSCRIPT
“And it turns out when you look at the returns of it over time, the times when it does the best are a year like last year or the great financial crisis. So when you look at this thing over a long period of time, it's an annoying investment 80% of the time because it does a little bit better than cash in hedge funds, right? So if cash is earning five now, next three years maybe you do 5%, 6% or something. But it's not like a CD, right? They drop 10% in March. They come roaring back a bit. They give it up again. So now the problem, the problem with a strategy.”
2023-09-14 · Forward Guidance · Andrew Beer: Hedge Funds Charge Way, Way Too Much · IDENTIFIED FROM THE TRANSCRIPT