YouSaid · the spoken record

Jeff deGraaf

lines on the record: 88
first: 2016-05-20
most recent: 2016-05-20
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“Is that right? Yeah, early days. And then in 1998, I moved over to Lehman Brothers under Steve Shobin, who had been at Merrill. So I knew Steve from my Merrill days, started out doing international work at Lehman Brothers and then moved into the hot seat in 2000 there.”
2016-05-20 · Masters in Business · Interview With Jeff deGraaf: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, out of Kalamazoo. But, you know, I like the intellectual challenge. I like the lifestyle. I remember the first interview. I was in Chicago looking at opportunities. And the first interview, the guy said, you'll never meet an industry where there's the funniest and smartest people at the same time. That's interesting. And I said,”
2016-05-20 · Masters in Business · Interview With Jeff deGraaf: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, well, we rely on our database and we rely on computer programmers and we rely on the quantification of the data. I mean, I'll give you a great example. Our single stock database goes back to the existence of the S&P back to the early 1960s. So when we go through and look out, hey, do breakouts work? Do breakdowns work? How does this play itself out? We're not talking about the next or the last 10 years or 15 years. We're really talking about longer than my lifespan so far, the beginning of the S&P, some 55 plus years. And so I think that's one of the things that differentiates us and puts a different spin on things is that when you get the work from us, you've got the totality of work and we'll lay it out and say, hey, this works or this doesn't work. Or this works, but only in these conditions. And, you know, not many people are doing that.”
2016-05-20 · Masters in Business · Interview With Jeff deGraaf: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Or credit that. Yeah, I guess what we try to do is we try to be as intellectually honest as we possibly can. We are very, very committed to making people money. That is job one as we see it. And I think the other important part of it is we try to quantify the process. We try to demystify the technical process. And so, you know, if you don't have a lot of technical experience, we don't try to use the jargony words. We try to say, hey, here's, you know, here are the probabilities of this taking place based on these certain factors of which they are technical. And so I think a lot of that has to do with the quantification, the demystification of the process.”
2016-05-20 · Masters in Business · Interview With Jeff deGraaf: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, you know, look, research was forever a byproduct of banking, right? And the settlement in early 2000 sort of drove a wedge between the official link between those two. So ever since then, research has always been considered a cost center, right? So there's been this juniorization of research taking place where people are swapping out senior analysts for junior analysts just to have the coverage helps the bank, but they don't have to pay for it. You know, look, we still believe in good old-fashioned research and think that there's a premium to be had for that. And our business is proving that that's true.”
2016-05-20 · Masters in Business · Interview With Jeff deGraaf: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Right, right. And we actually think that that's one of the reasons why we looked at starting Renmac. We think that there's still opportunity for good research, particularly if you're willing to invest in it. And the big banks just don't have that much interest in doing that here”
2016-05-20 · Masters in Business · Interview With Jeff deGraaf: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“No, this just seems to be almost more. I don't want to use the word systemic, but more sort of generational in terms of what's happening to banks, that the banking business has just become a bad business.”
2016-05-20 · Masters in Business · Interview With Jeff deGraaf: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“And remember, intrabank lending rates were spiking, the LIBOR OIS spread was spiking, the euro basis swaps. So there were a lot of things that just said the mechanism was having trouble. There was distrust amongst counterparties. And that's actually a much different scenario than we have today. While the European banks don't look good to us, the internal mechanism of that counterparty risk is actually in pretty good shape.”
2016-05-20 · Masters in Business · Interview With Jeff deGraaf: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Of 07, something like that. Exactly. We're seeing that stress in the credit markets and the swap markets particularly ahead of time. And, you know, it just worked its way down from 10s to fives to twos and then sort of went away and said, well, what, that's weird. Like there's always something goes kaboom here. And then two weeks later, we see here move along. Right, right. And then boom, you know, it happens. And then you had the continued deterioration in these financials on the way down. So talking about big top formations and the things that, you know, sort of traditional technical analysis looks at, those were in place in a lot of these financials in the mid part of 2007 and obviously extending into 2008. You had what was considered at the time the whale of Bear Stearns. We rallied off of that into the summer of 2008 and then just with this lethargy started to roll over again, which was the uh-oh moment that, you know,”
2016-05-20 · Masters in Business · Interview With Jeff deGraaf: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Think there are two things. The first was, if you remember the internal hedge fund at Bear Stearns blew up. And we were seeing that.”
2016-05-20 · Masters in Business · Interview With Jeff deGraaf: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“You're also putting people into these index products where they're looking at these returns, right? And they're saying, again, why should I pay active management? Forget hedge funds, but just active management when I can buy an index product for 15 basis points and call it a day. And I'm actually outperforming most people. And that's fine. That happens, but that also happened at the end of 1999, right? That also happened at the end of 2007. And so when we look at our metrics of how much fuels in the tank, this actually isn't the point where you want to start endorsing indexes. This is the point where you want to start endorsing active management hedge funds to look for an opportunity set that will produce something that's better than what we think is the excess returns on a volatility adjusted basis going forward.”
2016-05-20 · Masters in Business · Interview With Jeff deGraaf: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think it's been policy related, and if you look at the excess returns on a volatility adjusted basis for the S&P, the pure index, they've been one of the five best periods that we've had since the 1920s.”
2016-05-20 · Masters in Business · Interview With Jeff deGraaf: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, it's about opportunity and thinking that you can use the news environment to make money, which is usually pretty difficult. Late to the party? Yeah, getting back to the discounting mechanism, right? So, you know, I think that's one area of trouble or this problematic. Look, the macro, the reason that we specialize in macro is because 95% of the street pays attention to their industry. They pay attention to their individual stocks and they pay attention to their models. They don't really incorporate what's going on in the globe and whether or not the central bank assets are expanding or contracting or negative rates and the potential impact of that. So what we're trying to do is really cut out that niche and give them the opportunity to look for somebody who's got expertise in that, who does this on a daily basis so that they can incorporate that into their small little world, which”
2016-05-20 · Masters in Business · Interview With Jeff deGraaf: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, we have ways to measure sentiment, which obviously was a disaster. I mean, people were apocalyptic, as we like to call it, at the time. We have ways to measure the severity of the downtrend, the risk-adjusted returns. And we look at those. And when they're so bad, believe it or not, our system flags it. So we have an understanding that there's probably some capitulation taking place. And then we look at the credit markets. Credit markets are a huge part of our input that I don't think a lot of people pay as much attention to as they should. And look, the credit markets made their low in November 2008 and were healing for a good three months prior to the...”
2016-05-20 · Masters in Business · Interview With Jeff deGraaf: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“You have to quantify it. You can't do it by the seat of your pants. You have to have a quantification of the discipline and you have to test that over time. And we've done that. And so a big one for us is our trend model where we have basically a bullish bearish trend. It can go neutral, but we don't really have a neutral state. We'd like to have it either black or white. And what we find is that other indicators that if you looked at over the entire spectrum of bullish and bearish might not be worth a damn. But when you break it down between bearish and bullish, some indicators work very, very well in a bear state. Other indicators work very, very well in a bull state, but they don't work well across those different states. So for us, the quantification trend is a big one. The quantification of trend and then understanding what conditions work within that trend are a huge part of what we do.”
2016-05-20 · Masters in Business · Interview With Jeff deGraaf: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, we don't do the fundamental side per se. We have Neil Dutta who does our economic side. And look, there's a lot of high frequency data in economics and even more so when you think about the globe. And those are important data points. So what we do is we use those data points. We test those data points. We look at them within the context of what's happening to trends to see if they're useful. Again, some of those conditional factors that I spoke about in the earlier segment. And that's how we merit together.”
2016-05-20 · Masters in Business · Interview With Jeff deGraaf: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Enough time is spent in the process of just understanding what the macro environment is, what the trends are. And so from our standpoint, we wanted to be able to quantify that for people so that they didn't have to become technicians, but they could look at it and say, okay, I understand that the risks are high in technology, that the opportunity set is actually high in industrials and have some quantification around that. And that's really what we provide.”
2016-05-20 · Masters in Business · Interview With Jeff deGraaf: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, you know, look, the research budgets are contracting, but when you're bloated and have too much capacity, that's a bigger problem. When starting with eight people, which we did and are now up to 27, that's a different game. And so focusing on one of the keys to starting RenMac was we wanted to build a world-class database. And you just have to do that yourself. You can't do it under another entity or you're basically building it for somebody else. And so the idea was build a world-class database, quantify, approach this in a much different way to work into people's process so that they have another overlay. Look, 99% of the street spends its time, and I don't fault them for this, on fundamental research and the nitty gritty. The quote unquote, knowing the companies better than anybody else. But the reality is it's not.”
2016-05-20 · Masters in Business · Interview With Jeff deGraaf: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Top tick in Lehman. My origination letter was the day after the high in the stock price. So that's lucky, not good, but that is a true story.”
2016-05-20 · Masters in Business · Interview With Jeff deGraaf: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Absolutely. We think we're known for market calls. I mean, that's sort of what people want to hear. But the reality is the way that we really make money are through sectors. And we look at sector relative performance. We look at global relative performance. So we bring it all together and find that there's a huge correlation between regional markets and the sectors. And so we'll use all that to identify where the best and where the worst sectors are. And we quantify the process. We have ways in which we've quantified. So it's not Jeff DeGraff waking up in a bad mood someday and saying everything looks terrible. We haven't quantified so we can backtest it and we can give people the confidence and assuredness that, hey, if you follow this system, here's what you're looking at in terms of probabilities.”
2016-05-20 · Masters in Business · Interview With Jeff deGraaf: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, let's take valuation and lump it with fundamental analysis. And we would look at fundamental analysis as one silo in what we call conditional factors. The other side of that is momentum and trend. And we think about that as how hot the spark is in the engine. Each one of these independently is useless, right? But it's the combination of both that's important. So if I've got strong conditions, if I've got a lot of bearishness, I've got good valuation, I've got seasonality, credit conditions are good, and I've got that hot spark. I've got momentum. I've got trend. That's a great combination. So for us, that's about position sizing, right? That's a bigger call. That's something that we're more comfortable in. We'll make a bigger bet with. If I've got the market today, if I've got a hot spark, in other words, we've got good trend, we've got good momentum, but the way that we see the fuel in the tank is being maybe a quarter full, I'll still play, but I have to understand that the probabilities of this being an 09 type of trend change or an 03 type of trend change really are low.”
2016-05-20 · Masters in Business · Interview With Jeff deGraaf: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“If I start getting into six months, 12 month time frames and look out for the next six to 12 months, that probability actually shifts to being more momentum oriented, right? So you want to be careful when people talk about, well, I'm not a trend follower, I'm not a momentum player. You know, you really have to define what your time frame is because if you're a swing trader, if you're a short-term player, then you can be anti-Momentum. But I wouldn't suggest that you use 12-month or nine-month momentum and try to fade that. Historically, that doesn't work out so well.”
2016-05-20 · Masters in Business · Interview With Jeff deGraaf: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Three months in, in other words, one month, two months, three months, the returns of equities over that period tend to mean reverting. In other words, if I have strong one-month performance, the probability of me having another outperformance the next month is actually pretty low.”
2016-05-20 · Masters in Business · Interview With Jeff deGraaf: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Without question trend, if you look at mean reversion without the presence of trend, in other words, try to identify mean reversion without looking at first what the underlying trend is, it is quickly a recipe and a system for losses. The trends are historically, and this is across assets. It's not just equities, but the trends are historically prescient in giving you some foresight into the next move higher. That can be everything from intraday to long-term, multi-year. What we find the sweet spot, and this isn't, you know, I'm not breaking any rules here or breaking any new ground, but we find that from three months”
2016-05-20 · Masters in Business · Interview With Jeff deGraaf: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean, it's a great point. The academics would say there's the efficient market hypothesis, which says that the weak form, the strong form, that that information should already be discounted in the market price. And the reality is, it just isn't. Right”
2016-05-20 · Masters in Business · Interview With Jeff deGraaf: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“The probabilities overwhelmingly, whether it's academic research, our own research, or that there's a persistence in trends in the market, it's called momentum in a lot of academic studies. And it drives people nuts because it quote unquote shouldn't work, right? But the reality is that it does. And that's what we exploit.”
2016-05-20 · Masters in Business · Interview With Jeff deGraaf: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“We're just simply measuring that price, taking that temperature, and understanding or trying to understand whether or not the probabilities are a forget continuation in that price or for a reversal in that price.”
2016-05-20 · Masters in Business · Interview With Jeff deGraaf: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Some of There are oscillations that people sort of believe must mean revert, and that's really, we've done a lot of work on that and that doesn't prove to be true. There are certain conditions that you can overlay to help create better probabilities or opportunities. But really what it comes down to for us is technical analysis works because it's about trend analysis. And if you think about just the world in which we live, there are trends in place everywhere, right? I mean, earnings are generally trending. And so, you know, to expect that there's sort of this randomness in earnings, there isn't, right? There generally is a trend. Now, there might be missed opportunities in those earnings trends here and there, but for the most part, a company's fundamental trajectory will be a trend. And we're capturing that through price. And the idea is that the markets are efficient. And so what you know, what I know from a fundamental sense is probably already embedded in that price. And what we're doing is.”
2016-05-20 · Masters in Business · Interview With Jeff deGraaf: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, there are definitely elements within technical analysis that I would even say probably don't work. And I want to be careful with some of those.”
2016-05-20 · Masters in Business · Interview With Jeff deGraaf: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think, and this will send shivers down to some people's spines, I think people believe that technical analysis can predict the future. And I really don't see it as that. I see technical analysis as identifying trends, identifying opportunities within those trends and taking advantage of them. So to say it's predicting the future, I think is a little misguided.”
2016-05-20 · Masters in Business · Interview With Jeff deGraaf: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“There's some truth to that. I would add to that, though, too. In fact, I was just talking to somebody about this with gold. Oftentimes the technicals will tell you what to buy and maybe you don't know the fundamental story yet, right? I mean, if you think about when Apple first broke out of this huge base formation, nobody had a clue about the iPhone. And I mean, it just was unbelievable, you know, sort of the ramp into product and changing the world. Same thing with gold today, you know, the gold trends have changed and they changed in the first quarter for us. But somebody asked me, well, is it currencies? Is it negative interest rates? I don't know officially what the answer is, but the charts are telling you that something is out there that has a high probability of continuing.”
2016-05-20 · Masters in Business · Interview With Jeff deGraaf: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, look, I describe it a little differently. The difference between the pot odds and the odds in my hand, right? There's a certain probability of pulling a card to complete an inside floor. The reward is high enough. Absolutely. Even though it might be a very slim chance of pulling that straight, the chance to stay in makes an awful lot of sense. And that's how we think about it.”
2016-05-20 · Masters in Business · Interview With Jeff deGraaf: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Unbelievable. And what that did for me really solidified it was And I've always been this type of person. It was about probability, right? And the best way for me to manage risk and thinking about it, whether it's at the poker table, the blackjack table, or in the markets was through technical analysis. And that just really hit me over the head as to the type of discipline, essentially counting cards in the market is the way I viewed it.”
2016-05-20 · Masters in Business · Interview With Jeff deGraaf: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“And so I bought into that as I was searching for grades more than anything else. And once I got into the business, I just found that the technicians who I appreciated, Bob Farrell, who I grew up under, Steve Shobin, who was my mentor at Lehman Brothers and just a fantastic individual and great technician, I just, I found that there was something to what they were saying. In fact, it was usually more prescient than what you're seeing out of the fundamental side. So I picked up the Edwards and McGee book. I read it. It was interesting. I didn't, you know, I didn't buy into it wholeheartedly, but certainly there were parts of it that I appreciated and could see the light with. I thought the books, the Schweizer books or I think it's Schweizer Schweiger, Jack Schwagger, Mark Swagger. Right, Market Wizard books. I thought those were fantastic.”
2016-05-20 · Masters in Business · Interview With Jeff deGraaf: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“The distance, all three My background is formal education is in finance. So obviously that's more fundamental than technical. And like everybody who comes through any business school, it was relatively poo-pooed the art of technical analysis.”
2016-05-20 · Masters in Business · Interview With Jeff deGraaf: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's never the same day to day. It's never the same, right? And so it's really upon us this weekend, great example. I go through about a thousand charts on the weekend, right? And I put a pile of charts in the I Need to Figure This Out pile, right? And there's usually five to ten, why do Chinese steel stocks look good while the rest of the world doesn't, right? And so, you know, and then we then start to backtrack and figure out what's going on. So I think what we do that's different is we believe in fundamentals, but we start with the charts. And I think that's the difference.”
2016-05-20 · Masters in Business · Interview With Jeff deGraaf: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, we really pride ourselves on looking at the big picture. And within that, what I mean is currencies and bond markets and commodity markets and then trying to put all the pieces together. I mean, I think the world's always a puzzle. That's why I love this business. It's a chess match. And it's no”
2016-05-20 · Masters in Business · Interview With Jeff deGraaf: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
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2016-05-20 · Masters in Business · Interview With Jeff deGraaf: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source