YouSaid · the spoken record

Jeffrey Sherman

lines on the record: 117
first: 2024-05-30
most recent: 2024-05-30
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

“It's funny how that works, right? That's why I like prices went out. There's more buyers and sellers by definition, there can't be. By the way, that.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Correct. Understand the other side. And you may not understand it, but listen to it. And it'll make you better for doing that because you've got to realize that no one has your experience. They have their experience. And so to put yourself and someone else's shoes and try to grow from that, it's very important. And don't just read everyone who agrees with you. It's really fun for me to walk on the desk. I was like, yeah, yeah, great job, Sherman. Yeah. Yeah. Well, if it's not truthful, it doesn't matter. Poke holes in it. And I think that's the thing we're all looking at.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes. And you know what? It changed my life. Really? Because I got what I was looking for. Now, I have some self-reference in there. And that's the other thing. But going back to your previous question”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“All right, so I was a young guy in here sitting here because I was younger than I am today. And the thing you told me about, I was at Twitter, I was like, it's so just a horrible, it's a cesspool and all of this. You said, true. That's great advice, right? You're like, yeah, true. And you said if you want to do it, block and curate.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“It was, and I remember you giving me some advice, Mary. So you can go on to the mentor list with this. I think that's where we should wrap it up.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I mean, I think something happened with the management there. I don't know. It kind of changed the dynamic. So I actually haven't been using it as much myself either.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“It's that behavioral aspect. Hands down, hands down. When I came in as a naive quant, I thought math solved the world. You can model everything, right? And I realized that, you know, the models, their guides, everything we have in the toolkit's a guide because it's people making decisions. And we are inherently strange creatures, right? We do not act in our best interest Right, we are not utility maximizers to borrow the economic phrase. And so at the end of it, I think it's understanding that dynamic of psychology is very important. How does one model psychology? You don't. But you know it, you can kind of feel it. And there's something about markets where we say we feel something's happening. That means we're talking about that psychology.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“While you watch fun flows, we watch ETF flows, we watch ETF creation units, you watch also the demand from the institutional when it comes to RFP demand. So all of these things are somewhat in our toolkit. But remember, we talked about M2. That's a powerful force as well. When we print money and create money, that has to go somewhere. Right, and you got to track where it's going.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“And when you see that in the market, when you see that, that's called momentum to the quants out there. That is the most powerful force in the universe for a short-term time frame. So if you can marry those three things.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“They just can be, they can be off for a while. And ultimately fundamentals come home to roost. Technicals teach you how to trade. Technicals, there's levels. Like they work relatively well because of the psychology. So that leads into psychology. But the one thing you can never, ever, ever ignore is money flow. Money flow is the most powerful thing. If people are buying, price go up, people are selling price go down.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Learn psychology. Learn the behavioral side, realize we're all people. There is no smart money, dumb money. It's all ran by people. Institutions are ran by people. They behave a little differently because their own career risk, your hedge fund's going to behave a little differently because if it's career risk, but understand that all these dynamics are in play. So the last advice I have when it comes to this and the CFA Institute hates it when I say this. And I've given a couple of speeches recently and I put that caveat out there. Fundamentals work.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“I think you need to stray from what you've learned thus far, meaning that if you're the mathematician, you need to learn another side of the business, learn the fundamental side, which is something that I didn't appreciate. Be a student of history. That applies to everyone unless you're a history major, then you already know that. But a student of history, financial markets rhyme a lot of times. They're not the same, but you'll learn a lot through that And you'll learn that a lot of things we've experienced these things before. And most importantly,”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“I'm a big fan of the Marine Corps. I do not want to say a thing. And shout out to the Marines out there that take care of us.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“I love it. And I think everybody should read it. That is where it's at. You talked about the chips act. I think that's the only great that's come out of Congress in this last kind of round. I think building the chip plants, getting our own security that direction and being a preeminent player there is extremely important. I've always hated the iPhone where it says designed in Cupertino, but it's manufactured somewhere else. They forgot that part out. They only kept the Cupertino part. I think this is something very powerful. Why would you not want to be the next TSMC?”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“If you read it, I think a lot of people read like 50 pages and thought, oh, he's a fanboy. This is Michael Lewis. He's building a character, first of all. Exactly. You know, if you haven't read any of his other stuff, then maybe you could get there. But if you read the whole book, he's pretty caustic at the end, right? 100%. It's total Lewis. And so I think that people that were criticizing up front. But Chip Wars is the one that someone recommended to me”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Everybody should read that out there. I'm a big fan of the Michael Lewis stuff. I know he got a bad rap with the latest one too about going infinite. Yeah, on SBF.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“It's not going to hurt you, and you get paid to do it. So that's a hedge that makes you money. It's what we call a positive carry hedge.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“No, you really don't. If you're having to hedge your credit, you should have known it. That's one thing I've learned because the hedge cost you money. If you want to hedge the credit, maybe you should know it. And the best hedge out there, I think, today are longer data treasuries. I think they work. I think if we have a meltdown, and I'm not saying credit spreads wide in 10 basis points, I'm saying extended duration isn't going to be going.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“That's the time where you question. And that's what we've been doing our last asset location meetings. It's like we've been sitting around going, credit looks expensive, but we don't want to sell it. And we're all cringing and we're all just saying, okay, we're just going to let it run for right now. And, you know, gun lock keeps saying, I just want to make everyone aware we keep doing this each month. I don't have another idea right now, but it's starting to say where maybe rates look pretty decent too. How do you hedge?”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“All of us are really pushed to challenge each other, and there's no dumb questions. Yeah, we'll call each other dumb at times. We're like a family that way. But it's encouraging people to come up with ideas. And we're an idea business, right? You have to create. You have to have new things in the market. And we want people to poke holes. And I think that's something that's very good about the team is that it's not being a contrain for the sake of being a contrarian. But what are we all missing when we're all nodding vertically up and down?”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Korea. Yeah, I think I mentioned this before when we were here, but there was a guy who worked with named Claude Herb too on the commodity side, really, really a guy that taught me to question everything. And then there was this guy named Jeffrey Gunlock too, very, very kind of prominent guy who said not only question everything, but question it again, you know, too. And that's very helpful. And also, I think what's been very good about gunlock and why he has such a loyal crew around him is that.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“One of my colleagues turned me on to something called the X Files and told me that you should watch this because the truth is very well. And exactly that's what I was going to end with. But yes, and it actually does hold up pretty well. So anyway, something that I've been revisiting, I don't have any of the new ones out there. It's kind of glad to come up with.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, but look, they'll beat us through different parts in time. The goal is to have a long tenure, and if you can do it over a full cycle and you can do much better, then why wouldn't you do it?”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean, it fills with us philosophically. One, as a bond manager, we are sector rotators, right? So that's something we focus on. And the other thing we focus on is valuation. So if what the Schiller methodology does is that it's looking at the relative cape ratio. So it takes the cape ratio of each sector and compares it to its own history. So it says it's for each sector of the market, where are we in the cycle effectively? And it ranks them and just says, Which are the cheapest, which are the most rich. So you avoid the rich, buy the cheapest, right? So you take the universe. There's 11 sectors, cut it in half, call it five, five cheapest what you want to look at, and you apply momentum like any good academic would do.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Or now it's down to four or five. Who even knows what? We changed it all. It was a fantastic four. It was a fantastic four, right? Went from thanks.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Still show up. They're out. So you're going to be way underweight, like service as a software as a service. I always get that backwards. Software as a service. You're going to be waiting some of these tech names. Unprofitable tech isn't in there. So you're going to have some more industrial type names. You're going to have more value kind of names over a cycle. But in general, these are still names you know. And when you look at the list, it's like, okay, but what it ends up doing is it gives you a different cohort to play with. And what you find is that these names get overlooked because they're not in the S&P 500. And so over time, you know, if you go back and compliance with Hate Me on a back test or anything, but you can generate about 150 over the S&P equal weight per annum. Wow. And look, if you can do something like that, and we all know over long term, equal weight tends to do better than market cap. Now we go through periods with the late 90s. We had the one we just been through. And so for us, a timing perspective was very interesting because at the end of the day, it's hard for us to really love the math.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Not market cap ranked and how they deduce it. You don't have some subjective committee like an S&P that comes in there. So names that are growing and actually generating revenue show up sooner in this index than it would in the S&P.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“So, first of all, what it does, the Fortune 500 list published annually, right? It includes public and private companies. So before I say that, we're not investing in the private companies. Okay. So it's all public. But what happens is that it's U.S. domiciled names, so you don't have any conglomerate, you know, like a Schlumberger or something that's creeping into there like an S&P. And it's very rules-based, right? You just rank on revenue. So what this does, if you compare this to like the S&P 500, there's about on average in any given year, it's called 110 to 130 different names that are in the S&P. So we all know that there's equally a way to S&P out there. Sure. And what we find is that this through a cycle does significantly better than equally weighted. And in today's environment.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“But why does it matter? It doesn't change anything we're talking about. 25 base. Not 25 basis points does not change the housing market, Barry. Come on. All right. But here's the thing T Bill and Chill, you should be moving out the curve a little bit. Look, buy one year, like we run low duration funds for these reasons. Right. You know, look, they've been great for clients. You can pick up yield. So from my standpoint, there's better things to do. But look, my cash sits in money market. And look, I'm ready to move some of that out. And look, I'm looking for yields like 475 on 10s. I think it's a great point. I think when we have our next conversation was every five or six years you invite me. We can do that. But when we do that, what we'll do is we'll review this. And I know you have it all recorded, so I'll be on tape for that. But I think you're going to want that for this period. All right.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“I don't even sat. I can't pronounce the last name. That's great. But what you see is that they don't. And who shocks the market today? The BOJ. And look at what it creates. It's not what the Fed wants because there's ripple effects. If the Fed shocks, then the ECB does too. If you notice, the ECB follows our lead in all of this right now. So it's much more dangerous for Jay to shock the market. And they feel like they want forward guidance to be there. And that's what they set off back in November. 25 bit.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“When's the last time Jay shocked the market? They didn't even shock the market with the 50s and the 75s. They'd went to Nicki Leaks, right? As one of the banks called him. Nikki Leaks.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Months, right? At least a few more months. But the question is what if they surprise you, right? So, again, we all think we know, but what we'd all know is we don't know.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“At some point it does. And it has risk. And I tell people that, and they're like, well, yeah, we could default on like, no, that's not the risk I'm talking. It has refinancing risk, right? Every month your T-bill and chill, if Jay cuts rates, you don't get to chill as much. So at some point, you got to move it out a little bit. But that phrase alone is working. And Jay has given you a renewed sense on life there.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Look, it's been a great place. If you're a T Bill and Chill person, meaning that you just buy T-bills, forget your bond allocation. It's worked for you. Congratulations.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Much less. You could have made it better. And again, I'm not trying to give them a lot of credit, but I'm giving you the reason why some of it is there. And it's this entrenched thinking that they have to issue short.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“I get it, but you can't. They But you would have no liquidity for the next few years if you took the entire. I'm saying at the extrema, right? So if you went out there, you could put some into it. But the treasury market, you have to have this functioning market of people rolling paper and moving around. There are people that buy 30s and lock them up. They're called sovereign funds. But in general, you've got to have some dynamic of providing that liquidity to different points on the curve. Don't disagree. And so there is something you said. Now, should they have done as much on the front end? Absolutely not. But they were short-sighted thinking about the zero. Look, you could have done a 50-year sub two at that point. Oh, yeah. You definitely could have been in the market. Remember, the long bond in 2020 got to one.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Hold on real quick. Let's go back to the term structures because they need to have the market. You can't just say all we're going to do is issue 50-year treasuries. You can't just do all that. Should they have issued some? Yes. When the fed was...”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, and this one looks a little scary. Janet's got a lot of work to do. She's issuing a lot of front end paper this week. We'll see how that gets digested.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Lehman, there was liquidity in that stuff you couldn't trade off the runs. They wouldn't even trade. You couldn't make an appointment. You couldn't call someone to try to do it. On the run stuff, you were hard-pressed to do 10 million bucks. No desk wanted risk at all and even treasuries. But where I'm going with this on the whole liquidity is, remember, we have a term structure of rates. We advertise our auction calendars, right? The quarterly refunding assets, which there's one coming up, by the way.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Okay, that is, but let me give them a little bit of credit, and I'm not here to give Congress credit or the treasury at all. But historically, the Fed, I'm sorry, here I am screwing this up. Historically, Treasury has issued more short than long, right? And that's because of the shape of the old curve. Effectively, but also there's an argument that most people miss in this, Barry. And what it is is remember, the Treasury market is one of the most liquid markets in the world, except during March of 2020, nothing was liquid. Our Treasury folks that traded in the 80s, by the way, they were telling us that they've never seen such a horrible market.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“To work. And it does work. That teens guy. He knew what he was talking about. What he's talking about. But also, there is a ramification on the other side of inflation. And the bond market will sniff that out quickly. So I think you can get a rally going into a recession. But once the fiscal authorities start to act, you may not want to be owning that bond. You may want to rent it over that period.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Thing is that we aren't keeping the house in order. And so I think it's going to be fearful next time we have a recession. So my boss has been talking about this for a while now. And it's not that this is a 2024 problem. The deficit is not a 24 problem. But when we have another recession, what if Congress sees what we did during the pandemic and says, you know, we should print 15% of fiscal fiscal fis”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“No, no, no, no. No, I'm saying the path that Trump had is, almost say Trump. Let's say the entire Congress. We were spending more money. We were increasing the budget deficit on an annual basis. It's the first time really in the last 70 years, we've seen it absent a war. Fair enough. And then we've continued it during this administration. So there's no change on which team you play on here politically. They're both bad for Bondwood.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“I don't know if it rallies like it has historically because of the debt loads that we see out there, because of the big deficit. And this is the other side of it. We need some inflation, Barry. We need nominal GDP growth. We've got to grow ourselves out of these deficits. But the problem is that we've changed the script and something changed under the previous administration, where during the good times, which that era was pretty good, right? In the 16 era, we actually expanded the deficit historically. Historically, we decreased the deficit. To be fair, a lot of...”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Or Fed funds at zero. You're starting where you get yield. So basic math today says if I own a 4.5% tenure and it has a duration, you can call it seven and a half. Maybe it's closer to eight today. That says that, okay, if I think about that ratio between the yield and the duration, that tells me how much yields can go up in a calendar year and my yield will offset it, right? So that's how I break even with a duration trade. And so from that standpoint, there is some value in it because I do believe that if we do fall apart in the economy, if we have problems, I do think the 10-year rallies.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, look, remember, even though we have some of that, you have guardrails and you have to own some duration. And there's limits to how unconstrained really is. And so, you know, what we were seeing in that market was just pain, right? And what you also have to remember, if you're running a bond fund, you're providing liquidity And remember when bonds go down, people sell bonds, just like when stocks go down, they sell stocks. And so what happens during this too is that you're forced to sell, everybody's forced to sell. There's no money to go buy things. And so we all complained about the same thing. Look at the value in some of this stuff, but it keeps going down, right? And so I think what you see in today's market, I don't think we're going to have a repeat of 22 at this point. Why? We're not starting with a 1% tenure. Right.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“But just take the services exit. Let's look at the super course up. It's not comforting. Right? They are spending. And so forget the OER side, strip it out. That's what Jay was trying to do. But Supercore is now analyzing it like 4%. If you take Super Core CPI. So he has a problem still. And if the economy is still performing, people aren't losing their jobs. Why are we asking for rate cuts?”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“A little hot, right? And so ultimately, look, if I'm sitting at the Fed, there is zero urgency of cutting rates at this point.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Don't forget. So we got rates pretty dang low in January and then it just got sucked out all of a sudden because the inflation data came in. Right.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, it did. It did. And Jay just added fuel to the fire in December. And so I was kind of licking my wounds for a little bit and say, man, that was a bad call. I'll own it. Here it looks like a good call now. But the thing is, is that if you roll back the clock, bonds have done very well in the last 18 months or so since we really got to those kind of peak levels. Yeah, we had that 5% tenure last year for about, I don't know why you were sleeping. Right. Yeah, it was overnight really what you saw. And look, I think we're going to try to test it again. And so we've been in the stance that coming in the year that bonds probably have, you know, rates probably fluctuate around. They probably go up in the first half of the year. Maybe you get something that stabilizes here. It just depends on the outcome of the economy. But as a bond investor, there's nothing wrong with having higher yields, you know? And so if you were patient and you weren't aggressive with this bond allocation, you got a good rally in January.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source