YouSaid · the spoken record

Eric Crittenden

lines on the record: 92
first: 2023-06-12
most recent: 2023-06-12
sittings or episodes: 1
sources: podcast

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“Unless it gets cut in half overnight. Yes, we structured an asymmetric payoff, you know, and we're long gold and hopefully it goes up in a lot in value and we make a lot of money. If it doesn't and it goes down, hits our stop loss. We're going to book a small loss, shrug it off and move on to the next whatever comes after that.”
2023-06-12 · Forward Guidance · The Holy Grail of Macro Investing | Eric Crittenden · IDENTIFIED FROM THE TRANSCRIPT
“Relationship to real yields that I don't fully understand. And where it's 2023, it's not 1976. This is a different world. There's different competing products. There's crypto. There's other things of different central bank policies and philosophies. So it is what it is. I have no idea if gold's going to triple or if it's going to get cut in half, but”
2023-06-12 · Forward Guidance · The Holy Grail of Macro Investing | Eric Crittenden · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, well, so any short, medium, or long-term trend follower should be long and strong gold right now. Statistically, it should every any trend falling model should be long gold. Not silver, though, and not the industrial metals. So most of the industrial metals are short, copper, zinc, nickel, aluminum. So that's interesting. You've got precious, not even silver is not even an uptrend anymore. So there's something, somebody's going to get smoked in this trade. Yeah. The fundamentals, I don't know. You know, gold is a weird one. It's a commodity. It's a monetary asset. The only thing I believe I know about gold is that historically it hasn't been the hedge against inflation that people think it is. It's a hedge against unexpected inflation and it's got a weird”
2023-06-12 · Forward Guidance · The Holy Grail of Macro Investing | Eric Crittenden · IDENTIFIED FROM THE TRANSCRIPT
“Counter cyclical multi asset global portfolio because trend following can stop working and not work for five years. Sometimes the hedgers win. You know, otherwise, why would they do this if they lost every single time they wouldn't do it? In fact, they want like a 60% or a 70% win rate. So they need to feel good most of the time in order to justify losing 2%, 3% a year over the long term.”
2023-06-12 · Forward Guidance · The Holy Grail of Macro Investing | Eric Crittenden · IDENTIFIED FROM THE TRANSCRIPT
“You just end up matching the risk free rate of return on your T bills, right? But there's just something about the trends and the term structure. And then you can roughly or crudely approximate that to the hedging losses from participants over time. It used to be easier to do. Now it's all complicated and mixed together and consolidate a financials. But roughly, I can kind of see that, you know, and the other thing to think about is that, you know, they don't need to lose 10% for us to make 10% because those futures contracts are inherently leveraged by design, right? So I don't need some transportation company to lose 10 for me to make 10 because I'm only putting up the margin right, that's why it's important that you do more than just the trend following, I think, to have a truly”
2023-06-12 · Forward Guidance · The Holy Grail of Macro Investing | Eric Crittenden · IDENTIFIED FROM THE TRANSCRIPT
“Most of the profit margins that trend followers collect from the futures world. And I've done some other work where you can just take the data and randomize it and then stick it back in there and run it and all your profits go away”
2023-06-12 · Forward Guidance · The Holy Grail of Macro Investing | Eric Crittenden · IDENTIFIED FROM THE TRANSCRIPT
“I certainly care why it works because I want it to be sustainable. You know, this is a career for me and I could have done a lot of things. So performance chasing is not what I signed up for. So it needs to be structurally there. I need to be convinced that I'm actually adding value. So by providing liquidity to hedgers in their moment of need allows them to expand production and to lower their own financing costs like that. I earned my spot in that ecosystem by owning that little piece of real estate in the ecosystem that's sustainable. So I think that it's the hedger speculator or the risk transfer premium is real. And I think it explains most of the”
2023-06-12 · Forward Guidance · The Holy Grail of Macro Investing | Eric Crittenden · IDENTIFIED FROM THE TRANSCRIPT
“Okay, so 10% of the reason why trend following works is psychology, rough approximation. So what's the other 90%? I mean, do you know why trend following works or are you one of those people that said, I don't really care why it works, I just care that it works and I'm going to perfect it.”
2023-06-12 · Forward Guidance · The Holy Grail of Macro Investing | Eric Crittenden · IDENTIFIED FROM THE TRANSCRIPT
“Right, and they pay attention so they remember that moment when they bought something that was up 80% and it went up another 20 and they're like, yeah, we all pushed it higher, you know. But in the grand scheme of things, if I were to look at a trend following system over the past 50 years and do an accounting audit of the profits over the 50 years, 90% of the profits are going to come from these non-bubble-like conditions where no one was really worrying about why the trends were the way they are. And a lot of it comes from the term structure component anyway. So I guess that's a long way of saying, yes, in the moment, and it seems important, but in the grand scheme of things, I think it's a minnow in a pond.”
2023-06-12 · Forward Guidance · The Holy Grail of Macro Investing | Eric Crittenden · IDENTIFIED FROM THE TRANSCRIPT
“An element of truth to that in highly speculative markets where the retail public has access. I mean, the retail public's probably not doing that in soybeans. Or Chicago wheat. But there's an elementary truth to that. I think it's very temporary. I think it's a small component and it's a small component that people pay a lot of attention to. There are moments in the markets, in a stock or a futures contract's life where everyone is glued to the screen and they're looking at it. And when people”
2023-06-12 · Forward Guidance · The Holy Grail of Macro Investing | Eric Crittenden · IDENTIFIED FROM THE TRANSCRIPT
“Well, with respect to trading, we talked about this a little bit. My view is that the structural risk premium, there's nothing new since feudal Japan, it's the same thing. It's an insurance Phenomenon in the markets. And you can't create, it's not alchemy, you can't create new risk premium out of thin air. And I could be wrong, but that's my current view from a risk-reward perspective. I look, I think using AI to uncover risk premium that no one knows about is probably a bad bet. Now, for the people that want to be in the shallow bloody waters with the other sharks looking for inefficiencies, it's absolutely essential, right? You need to go beyond that. But again, you're pursuing something that's finite, transitory, and you're competing with the smartest people in the world. That's essentially, those are the elements of a bad business decision, in my opinion. So I go the other way. Blue Ocean.”
2023-06-12 · Forward Guidance · The Holy Grail of Macro Investing | Eric Crittenden · IDENTIFIED FROM THE TRANSCRIPT
“It's become, yeah, it's become a fan over time. And the other thing I noticed is that what lies sometimes is just wrong. And it only knows what It only has the knowledge that. Is consensus basically, is right. So it basically is a very buttoned up consensus machine. And consensus is great, but we know if you've studied history, consensus sometimes is catastrophically wrong. So it's a great tool for gathering the consensus knowledge base. Two problems with that. Knowledge is not wisdom. They're cousins, but one's much more important than the other. And the consensus sometimes is just absolutely horrifically wrong. So that's my concern about AI in general, or at least what's being presented to us right now. Structurally AI, yeah, has a lot of, I already gave it praise, you know, that I was able to solve a problem that I couldn't solve on my own despite massive effort on my part. The sky's the limit on being able to solve problems. But as long as you don't need its wisdom.”
2023-06-12 · Forward Guidance · The Holy Grail of Macro Investing | Eric Crittenden · IDENTIFIED FROM THE TRANSCRIPT
“Yes, it's to the point where I've changed its mind inside of my own little ecosystem I built. And it now can talk to it about something in a totally different context than it can take my political view on it and parrot that back to me, even though it had the opposite view in a different context. You know, it's the same logic. We just reframed the argument and used different variables, but it's now engaging me in a way that is more in line with”
2023-06-12 · Forward Guidance · The Holy Grail of Macro Investing | Eric Crittenden · IDENTIFIED FROM THE TRANSCRIPT
“Power there to acquire knowledge that has been elusive. Knowledge is not wisdom. Wisdom is more important than knowledge. And I don't see Well, and I'll share this with you too. Chat GPT has learned to tell me what I want to hear.”
2023-06-12 · Forward Guidance · The Holy Grail of Macro Investing | Eric Crittenden · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, well, pessimistic. I don't know if that's the right word. I mean, I use AI every day. I was using it this morning before the podcast, trying to learn, you know, trying to use it productively. And I've found that, you know, there were some questions that have been dogging me for almost a decade, eight years, that I've got a whole library of books. You can't see them, but they're over there on financial engineering and macro stuff that I've been reading for a couple decades now and I've never been able to answer a couple of questions to my satisfaction. I've probably spent over a thousand man hours on Google, you know, talking to people on the internet, looking for answers, and I just couldn't get answers that I wanted. And then 45 minutes on chat GPT, I was able to get all the answers I wanted because I can redirect it and it can tell me where to look. And, you know, it's like, so there's.”
2023-06-12 · Forward Guidance · The Holy Grail of Macro Investing | Eric Crittenden · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, yeah. So the diversification, it cuts both ways, right? Like it lowers the risk. It also lowers the big down days when in a pure futures program. Like we have them. They're just in there mixed in with the rest of the stuff that was helping, not hurting on the same day.”
2023-06-12 · Forward Guidance · The Holy Grail of Macro Investing | Eric Crittenden · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, but that's just one day, right? And for them, yeah, some of them lost five, six, seven percent in a day. We have the futures program, but we combine it with Treasury bills and equities. So we had a much tamer day.”
2023-06-12 · Forward Guidance · The Holy Grail of Macro Investing | Eric Crittenden · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, and so did we on that particular day. I think we had a lot less financial exposure. That goes back to what we were talking about at the very beginning of this podcast, where there is a tiny bit of discretion about leverage. And what we're running is a not very leveraged. I mean, it's pretty tame futures program. And it looks like, and I was watching that day, a lot of my peers in the industry for some reason had a lot of leverage on and they were very short, a lot of different fixed income products, in particular. short dated interest rates like euro dollar, euro yen, eurobor, short sterling, and those things had like an amazing, it was like their biggest two-day up move in 50 years, and they were on the wrong side of that. And we just didn't have anywhere near as much exposure as some of them. So we still felt the pain. We were short bonds, you know, over in Europe and in the US, but just not as bad.”
2023-06-12 · Forward Guidance · The Holy Grail of Macro Investing | Eric Crittenden · IDENTIFIED FROM THE TRANSCRIPT
“Having the big boys, didn't they? The big boy CTAs kind of get their, you know, really get a lot of pain handed them in March and April because the trend trade was to short rates and rates exploded lower. So the prices exploded higher. And I just know sort of there's a huge unwide end. CTAs did pretty badly in March and April, right?”
2023-06-12 · Forward Guidance · The Holy Grail of Macro Investing | Eric Crittenden · IDENTIFIED FROM THE TRANSCRIPT
“Under one roof with the same pool of capital. And all you got to do is play around with Excel, three uncorrelated variables with a positive expectancy. Hit F9, rerun, and you just see magic. It's just the magic of compound returns applied to diversification. And it's what everyone in the world preaches. They just don't actually do it.”
2023-06-12 · Forward Guidance · The Holy Grail of Macro Investing | Eric Crittenden · IDENTIFIED FROM THE TRANSCRIPT
“Good futures program that's totally uncorrelated with equities. I pair it up with equities and I have a lot of cash left over and then I pair that up with treasury bills. And because they work so nicely together as a team with the volatilities offsetting and the drawdowns offsetting but the returns building on top of each other, it creates that track record that you were just alluding to that seems to be compelling. And that's really important to me because I'm okay owning equities. I'm okay owning T-bills, and I'm certainly okay with the futures program. So each one of those, I'm okay with, and I'm a very conservative person. I'm not looking to take risks. I'm not looking for excitement. You shouldn't get an edge from doing that.”
2023-06-12 · Forward Guidance · The Holy Grail of Macro Investing | Eric Crittenden · IDENTIFIED FROM THE TRANSCRIPT
“But if you truly look at our portfolio, what you're going to see is these guys own a bunch of index ETFs and they're essentially buy and hold. They don't trade them. They're not generating tax consequences. They do their tax loss harvesting. Well, that's pretty boring. Why would I pay for that? And then you look across and you say, well, they just own a bunch of T-bills. What's the big deal there? Why would I pay for that? Then you look at the futures portfolio. And I feel like we have a rock solid old school plain vanilla, very durable and reliable futures program that is based on 50 years of research. Not that I was doing research for 50 years. So we go back to 1970 and really analyze what worked and what didn't work and why and try to figure out why. So think back to what we were just talking about a few minutes ago about the capital efficiency. So I can get all the magic is getting all three with the same pool of capital. I just have this durable, humble.”
2023-06-12 · Forward Guidance · The Holy Grail of Macro Investing | Eric Crittenden · IDENTIFIED FROM THE TRANSCRIPT
“I would say that what we're doing is very different from what your typical active manager is doing. Look, there's nothing special about me. If you forced me to be an active manager just taking stocks, I wouldn't expect to have results any different from the media and active manager, which yes generally underperforms and delivers high tax consequences and whatnot. So that phrase active manager can mean so many different things.”
2023-06-12 · Forward Guidance · The Holy Grail of Macro Investing | Eric Crittenden · IDENTIFIED FROM THE TRANSCRIPT
“Well, I put about 500 grand into equity ETFs. So I still have $400,000 left over. That's what goes into the treasury bills. It's just cash, right? Or not all of it, but most of it goes into the treasury bills. So they are different buckets, but they're not competing for the capital because futures are so capital efficient. You've always, at least for a program like ours, which is not a super high risk program, our margin deposits are very small Know that's four or five six percent of the money needed to run the whole futures program, which means we've got 90 to 95 percent that potentially just sitting in cash, which we deploy into ETFs and then the balance goes into treasury bills. So they don't have to compete with each other for capital. Does that make sense?”
2023-06-12 · Forward Guidance · The Holy Grail of Macro Investing | Eric Crittenden · IDENTIFIED FROM THE TRANSCRIPT
“Indirectly, it does kind of feel that way, but let me tell you structurally what happens. So if you, let's say you took a look at our futures program, just the futures program, ignore the T-bills and ignore the ETFs for a minute. And you said, hey, Eric, I love your futures program. I'm giving you a million dollars. Go run your futures program. I would take your million dollars, but I only need 100 grand to run the whole futures program. That's it. All you got to do is make the margin deposits, and that 100 grand would give me double what I need for the margin deposits, right? So what do I do with the other $900,000 of your money?”
2023-06-12 · Forward Guidance · The Holy Grail of Macro Investing | Eric Crittenden · IDENTIFIED FROM THE TRANSCRIPT
“That play into your models at all? Like, you know, if when interest rates were at zero, you could either put it into bucket one, the futures bucket, the CTA, whatever macro trend bucket, or the equity bucket, or the treasury bucket, bucket number three. Bucket three used to yield zero. Now bucket three, as you say, yields 5%, 5.5%. Does the system want, does the system chasing for yield and say, actually, you know, let's put a little more into bucket three or is it no?”
2023-06-12 · Forward Guidance · The Holy Grail of Macro Investing | Eric Crittenden · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so it's generally going to be two to nine month T-bills, three to eight typically. And it's nice, you know, right now we're getting $500, $550 basis points on what should be risk-free, although I'll tell you, it's not completely risk-free. But that's as close to risk-free as you can get. And it's nice to get 500 basis points of yield on a 30-year money. It's a nice tailwind.”
2023-06-12 · Forward Guidance · The Holy Grail of Macro Investing | Eric Crittenden · IDENTIFIED FROM THE TRANSCRIPT
“We can take short positions in those, and those act as a hedge against those to some degree a hedge against those ETFs in declining markets. We can also buy them like we have recently, earlier this year. They can add to get you to almost be 100% invested in equities if you're in an actual bull market where your cash equity is that you own are going up, but also the futures markets are hitting new 6, 9, and 12 month highs. So that's why in 2020 you said, how did you end up getting long towards the end of the year? That's how it happened is that we got way down there, but things reversed. You started getting bicycles. The futures come in. They pad the thing and bring your equity exposure up to something that's going to be suitable in bull market conditions.”
2023-06-12 · Forward Guidance · The Holy Grail of Macro Investing | Eric Crittenden · IDENTIFIED FROM THE TRANSCRIPT
“No, it's not. It is essentially buy and hold. But context is everything. So we start off with a 50% allocation, and that's what we did in 2020. And then we allow it to fluctuate around on its own. We have a hard cap at 66%. We won't let it go above two-thirds and a hard cap at 33%. We won't let it go smaller than 33% of our AUM. Assets under management. So we don't rebalance back to 50 50 though. Those are just guardrails. We won't let it go any further. If it's going to go from 33 to 66 or from 66 to 33, it's got to do it on its own. That's very tax efficient. It results in very low turnover and it's trend following in nature, but we're not actually in there trading it. But here's what's interesting. The same indexes that underlie those ETFs are also in the futures program.”
2023-06-12 · Forward Guidance · The Holy Grail of Macro Investing | Eric Crittenden · IDENTIFIED FROM THE TRANSCRIPT
“So we put about half our money into eight different ETFs. Four of them track the US stock market and the other four track developed Europe and develop Asian markets. And so they're just low fee tax efficient liquid ETFs. And our goal is to have about half of our money in those ETFs. And we allow that to fluctuate. It can go as high as two-thirds of our money or it can go as low as one-third of our money, depending upon whether we're in a bull market that's pulling that allocation higher or in a bear market that's pulling that allocation lower. And we expect to get Basically, the MSCI World Index delivers the same thing, and we characterize that as the global equity market risk premium.”
2023-06-12 · Forward Guidance · The Holy Grail of Macro Investing | Eric Crittenden · IDENTIFIED FROM THE TRANSCRIPT
“on top of each other, their accretive, but the volatilities delude each other and shrink the overall volatility, and the drawdowns actually fight each other and it becomes much smaller, like a third of what any individual input drawdown would be.”
2023-06-12 · Forward Guidance · The Holy Grail of Macro Investing | Eric Crittenden · IDENTIFIED FROM THE TRANSCRIPT
“So now I would say that for us it's really simple. We got the risk transfer premium on the futures portfolio, right? And then we're collecting the equity market risk premium on half our money. And then the balance is going into a laddered treasury bill portfolio and we're just getting the risk-free rate of return, which I consider a premium over cash. And that's it. There's three that we're harvesting. What's powerful is they work well together as a team, right? So you could look at a futures program and see, you know, modest returns, modest volatility, modest drawdowns. And then you look at the equities and they have modest returns, high vol, high drawdowns. And then T-bills have very modest returns, but no drawdowns and no volatility. They're all uncorrelated with each other, though. And when you pull them into one program and you use the same pool of capital to find all three, there's magic happens where the returns actually stack.”
2023-06-12 · Forward Guidance · The Holy Grail of Macro Investing | Eric Crittenden · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, well, because you don't see it actually play out, right? Yields went up. Did the equity market? Did valuations go down? I would argue they've actually gone higher. They did for a little”
2023-06-12 · Forward Guidance · The Holy Grail of Macro Investing | Eric Crittenden · IDENTIFIED FROM THE TRANSCRIPT
“Well, I'm familiar with that model. I actually think it kind of works the other way around, whereas you start with equities and it goes the other direction, but I don't have a strong opinion on that.”
2023-06-12 · Forward Guidance · The Holy Grail of Macro Investing | Eric Crittenden · IDENTIFIED FROM THE TRANSCRIPT
“Got it. When I think risk premium applies to equities, it's okay, bonds pay a certain percentage. Now it's five. It used to be zero. And equities have to pay me a certain amount above that because equities are inherently more risky. So equities got to pay me 8%, whether it's dividends plus buybacks plus earnings, retained earnings, whatever. And so that's why when bond yields go up by valuation models, other assets are worth less too. If bonds are less, how does risk, equity, risk premium apply in the way you're saying it?”
2023-06-12 · Forward Guidance · The Holy Grail of Macro Investing | Eric Crittenden · IDENTIFIED FROM THE TRANSCRIPT
“No, it's the ETFs that we use. So we have a dedicated long only global equity ETF position in the fund, which is generally about half our money is just dedicated to long-only global equities.”
2023-06-12 · Forward Guidance · The Holy Grail of Macro Investing | Eric Crittenden · IDENTIFIED FROM THE TRANSCRIPT
“That one's beautiful because you can do it amongst a lot of uncorrelated markets that are independent from one another, but also independent from the stock market. So that's kind of our primary risk premium that we're going after. The other ones are super simple and not exciting at all. We have the equity market risk premium. I believe that if you delay gratification and you're willing to take risk over time by providing companies with capital and subjecting yourself to 50% drawdowns, 20% vault, and 10-year flat periods, that it's reasonable to expect that you will be rewarded with some sort of equity market risk premium over time.”
2023-06-12 · Forward Guidance · The Holy Grail of Macro Investing | Eric Crittenden · IDENTIFIED FROM THE TRANSCRIPT
“So, the one you just described, I call the risk transfer premium. So you're essentially providing an insurance-like service to people that want to hedge off meaningful risks in their core business. And in return, you know, whatever risk premium they pay should flow to you over time.”
2023-06-12 · Forward Guidance · The Holy Grail of Macro Investing | Eric Crittenden · IDENTIFIED FROM THE TRANSCRIPT
“Back to the interview. Right. So one of the risk premiums you said you'd like to harvest is the grain farmers, they all like to short into a rising market, for example, and you get to harvest that risk premium. I guess you're getting the premium, but by taking a risk and that risk is, oh, I could buy grain and it could go down. So you are taking risk. What are some examples, some other risk premiums that you like to harvest?”
2023-06-12 · Forward Guidance · The Holy Grail of Macro Investing | Eric Crittenden · IDENTIFIED FROM THE TRANSCRIPT
“The business and do it this way. They prefer the gladiator pit on the other side. So it's less crowded, which I like. It's scalable, which I like, and it's psychologically tough, which I like, which means I think that it's reliable and structurally real. So I'm very happy that everybody wants to go the other way. I say everybody, but it's like two-thirds, wants to go the other way That's it. I mean, it's that simple in my mind.”
2023-06-12 · Forward Guidance · The Holy Grail of Macro Investing | Eric Crittenden · IDENTIFIED FROM THE TRANSCRIPT
“And you look at the numbers and conclude that's even worse than what randomness would provide on its own, right? So that's the kind of stuff, the kind of base rate statistics that scare me away from this really interesting potentially exciting world of machine learning. And I know I'm going to get a bunch of hate mail for this, but I'm being honest. That's the exploiting and inefficiency philosophy is something that doesn't appeal to me because it's temporary. You know, inefficiencies in the market are temporary and they're finite. And they rely on skill and advantage and speed and strength and networking and intellect to exploit. And I look at that and say, it's a diminishing opportunity. On the other hand, there are structural risk premium that are psychologically tough, but they scale nicely. It's not crowded for whatever reason the glory seekers don't want to come over to the side.”
2023-06-12 · Forward Guidance · The Holy Grail of Macro Investing | Eric Crittenden · IDENTIFIED FROM THE TRANSCRIPT
“Yes, so having a good intuitive understanding of what randomness actually looks and feels like is very sobering. I spent more than a year in my life just studying randomness. And it is not what people think it is. And just out of a pure randomness, you can create massive amounts of perceived success out of pure.”
2023-06-12 · Forward Guidance · The Holy Grail of Macro Investing | Eric Crittenden · IDENTIFIED FROM THE TRANSCRIPT
“So exploiting an inefficiency is something like arbitrage strategies or having satellite data that other people don't have so that you can be faster or smarter than them and ahead of them. You know, it's this kind of race to zero. But what you're pursuing is finite and it requires an advantage. So either some sort of structural advantage information advantage, speed advantage, or intelligence advantage. And that's the shallow, bloody waters full of sharks that I'm talking about where It's a gladiator pit. And there are people that are much smarter and faster and better networked than I am that I guess can concede, can succeed in that. I personally think it's going to be a rotating crop of winners and that as soon as your luck runs out and someone else outflanks you and then now it's your time turned to fail. That just that's fine. It doesn't appeal to me. I never wanted to be able”
2023-06-12 · Forward Guidance · The Holy Grail of Macro Investing | Eric Crittenden · IDENTIFIED FROM THE TRANSCRIPT
“You just described as an important point. So there's two schools of thought in this kind of alternative investment industry. There's the I'm exploiting an inefficiency school. And then there's I'm harvesting a structural risk premium school. I'm firmly in this camp over here. Can”
2023-06-12 · Forward Guidance · The Holy Grail of Macro Investing | Eric Crittenden · IDENTIFIED FROM THE TRANSCRIPT
“Artificial intelligence machine learning all the smart quant PhDs, they're all get in a room together and run all these algorithms, do all these backtests showing, oh, actually, if you short the S&P 500 at 931 and then you double down buyback at 938, actually you're with the sharp of seven, you'll return 30% in a year. Where are those people go wrong? And when you say we like to keep it simple, and most people want to be more complex, what are they hunting for? What's the holy grail they're hunting for that you say, you know what, I'm fine, just where I am.”
2023-06-12 · Forward Guidance · The Holy Grail of Macro Investing | Eric Crittenden · IDENTIFIED FROM THE TRANSCRIPT
“Berkshire Hathaway has almost a monopoly on this type of thinking that just do the old school blocking and tackling, that no one else seems to want to do because it's not exciting and you'll do better than other people. I don't disagree with that philosophy.”
2023-06-12 · Forward Guidance · The Holy Grail of Macro Investing | Eric Crittenden · IDENTIFIED FROM THE TRANSCRIPT
“Or my intuition tells me that it's a lot safer and more durable to go after the structural risk premium that I know to be there, that I believe in, that I know how to harvest, and that I believe is sustainable than it is to get into the shallow, bloody, shark-filled waters with all the brilliant data scientists out there that are trying to uncover risk premium we don't know about, or fooling themselves into seeing risk premium that aren't really structurally there. And I think it's about 50-50 on what's happening there. So, and I'm happy with the way I'm doing it, the way at standpoint, we're very happy with this kind of simple, humble approach. And I think it's simple and humble enough that it's off the radar of a lot of firms that are looking for something much more exciting, much more marketable. But does it work better? I would contend no, it doesn't work better. I think that.”
2023-06-12 · Forward Guidance · The Holy Grail of Macro Investing | Eric Crittenden · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, that can be misleading though. So AI and machine learning are very, very interesting to me. I'm kind of sort of a data science scientist. I did a lot of that work. I took a lot of those classes twice in my life. It's very interesting, but I'm very skeptical about it because in this kind of relates back to what we were talking about earlier, we're extracting a risk premium from the hedgers, right? I believe there are three, four, maybe five structural risk premium in the world. And that hasn't changed since they had rice forward contracts in feudal Japan. It just is the way it is. So you can't create new risk premium out of thin air by banging away on a keyboard. So data science and machine learning can uncover things that are there that you don't already know about, but they're not creating new things. So in my experience,”
2023-06-12 · Forward Guidance · The Holy Grail of Macro Investing | Eric Crittenden · IDENTIFIED FROM THE TRANSCRIPT
“You mentioned AI artificial intelligence, machine learning, how much machine learning and artificial intelligence do you use? I mean, it sounds like rules-based, ultra-systematic, it sounds like there's a lot of use of computers there, right?”
2023-06-12 · Forward Guidance · The Holy Grail of Macro Investing | Eric Crittenden · IDENTIFIED FROM THE TRANSCRIPT
“So, and then you ask the question well, how then did we turn around and get long later in the year? Same thing. Things changed. The government did what they did. The markets cleared the market supply and demand. And next thing you know, you've got energy prices going up. You got stock markets going up. You got all kinds of risk assets going up, food products, agriculture. Inflation was, at the time, no one was worried about inflation, but it really started to pick up on the internal statistics.”
2023-06-12 · Forward Guidance · The Holy Grail of Macro Investing | Eric Crittenden · IDENTIFIED FROM THE TRANSCRIPT