YouSaid · the spoken record

John Fawcett

lines on the record: 21
first: 2018-02-17
most recent: 2018-02-17
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

“Yeah, it's just a different kind of job, right? It's a much more, in my opinion, like creative job. And the thing that we want to accomplish over the next 10 years is if you think about the explosion in data from the real economy, we want to have total coverage. We want every single data set that exists to have several humans look at it, try to extract signal from it, try to drive meaning from it, and then apply that into many, many different investment vehicles. There's just an enormous arbitrage of free for the taking and it really has to do with coordinating enough people to do the creative work. And I think the machine can really, really add the beginning and the end of the process. So cleaning the day and tagging the data, getting it to our community to do the creative part of turning it into signals and then taking those signals and combining them. Those are the right jobs for fallout automation. And hopefully we'll have a massive amount of assets to deploy.”
2018-02-17 · a16z Podcast · a16z Podcast: How Technology Is Changing Investing · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I think if we manage our business properly and we diversify these funds, there's an incredible number of people around the world who are being trained in different analytical and monitoring fields that just aren't getting into the market.”
2018-02-17 · a16z Podcast · a16z Podcast: How Technology Is Changing Investing · IDENTIFIED FROM THE TRANSCRIPT · source
“And the pensioners themselves are going to be voting in real time on environmental and social, political issues on their smartphones. And we'll just be managing and rebalancing the entire fund and netting off the trades. And it's passive for everyone. But this is the type of power you start to be able to put the fingertips of actual asset owners when you have this hybrid model where you can have active management with a passive holding. Let the software abstract away the financial complexity. These guys, they don't know about finances. Most people shouldn't be stopping. Your guys should, but most people don't. Let the software abstract that away, but let people weigh in on the things they know and they care about. And then you're also just going to strengthen your client relationships.”
2018-02-17 · a16z Podcast · a16z Podcast: How Technology Is Changing Investing · IDENTIFIED FROM THE TRANSCRIPT · source
“So with retail investors, there's a lot of clustering around climate change. It's no more an issue. It's not just millennials, by the way. Our second biggest segment is 55 to 65 year olds. And they're more focused on military and tobacco and younger people have different issues. So, for example, we're currently onboarding entire pension fund.”
2018-02-17 · a16z Podcast · a16z Podcast: How Technology Is Changing Investing · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, instead of buying a fund, you're just going to be renting a strategy from the cloud, which will be buying and selling securities and optimizing for your goals. Financial or values and otherwise. This is coming, and we're at the forefront of it. And our belief is that the banks are not going to lead it. And if you talk to strategy groups at the banks, they know it. They see it. But half their staff is based on slogging funds and maintaining that entire ecosystem. And you have a population that doesn't have the financial literacy to necessarily demand it, even though there's advantages. So I think what's going to drive uptake towards the third paradigm is the values-based conversation. 85% of millennials want to invest in companies aligned with their values, right? It's not going away. And when you really open that Pandora's box with your stakeholders or with your family, everyone has different values. The next week you watch a documentary on private prisons, you don't want that.”
2018-02-17 · a16z Podcast · a16z Podcast: How Technology Is Changing Investing · IDENTIFIED FROM THE TRANSCRIPT · source
“So, if we have a paradigm of mutual funds, then the next revolution was ETFs. Index investing. And then there's a third paradigm coming, which is there's a post fund future coming, right? Why are we all in these cookie cutter vehicles? Why is the banking system built on slogging them? Because you're pulling against certain costs, namely transaction costs. What happens as transaction costs go to almost zero?”
2018-02-17 · a16z Podcast · a16z Podcast: How Technology Is Changing Investing · IDENTIFIED FROM THE TRANSCRIPT · source
“I think there's a trend, especially among millennials, but even broader of just being more globally conscious, more cause-oriented. Like, how do you see open invest progressing? Do you foresee more and more investors are going to care about what they're really investing in? And that's going to be a big attraction away from passive investing because you're sort of this mix between your active because you really care about the causes, but it's passive because it somewhat creates a new index.”
2018-02-17 · a16z Podcast · a16z Podcast: How Technology Is Changing Investing · IDENTIFIED FROM THE TRANSCRIPT · source
“These instruments. So I think there is just inherent good from lowering the cost, particularly for retail investors. And so I think that there's an equilibrium somewhere that we have to reach where it's probably higher than it has been historically, but it's not 100%. And I think for institutional investors, there's a real need for actively managed portfolios because they have different needs, right? So they're not just trying to appreciate their assets. They have to be defensively postured. They have to be prepared for their obligations year to year. And so there's always going to be a need for active management. It's interesting to see where we're going to settle out in terms of the mix.”
2018-02-17 · a16z Podcast · a16z Podcast: How Technology Is Changing Investing · IDENTIFIED FROM THE TRANSCRIPT · source
“I see it from two angles. One angle is actually indexing is gray when the markets are all going up. So then if we have like a 25% correction, what are all these index holders going to do? And so I think that's a real and important risk. And just in sort of my gut, everyone doing the same thing, when has that ever been a good outcome for markets? I think it's legitimate to have some concerns. There's a lot of talk about like the change to the market structure and what will happen if everyone's the next thing at the same time. The other angle that I take on it is this is automation. This is applying data and software to building portfolios at a mass scale for both retail and institutional investors. It's lowering costs. I mean, it's really, really incredible how low the cost is to be exposed to indices via”
2018-02-17 · a16z Podcast · a16z Podcast: How Technology Is Changing Investing · IDENTIFIED FROM THE TRANSCRIPT · source
“The spring is the big season. And there was actually a seminal vote last spring with Exxon on climate change where 63% of the votes were in favor of Exxon reporting on the risks to their business from a regulated two-degree world, which was a big deal. We just had to vote on Oracle and whether they should report on the gender pay gap in their company and what they're going to do about it. These things are going on all the time and people know these brand names and they care about the issues. It's just that no one's given them the ability.”
2018-02-17 · a16z Podcast · a16z Podcast: How Technology Is Changing Investing · IDENTIFIED FROM THE TRANSCRIPT · source
“So, I don't know if you own individual shares and companies, but if you do, you get this giant paper packet in the mail. And nobody reads, I mean, you need like a law degree and a free weekend. And actually disrupting that paper packet was one of the initial conversations that led to this whole company. It's a nightmare on the back end, but we just released the ability for clients to vote and shareholder resolutions with a swipe on their smartphone, like Tinder. Part of its curation. So you just see the boats you care about. Procter& Gamble is having a vote on LGBTQ rights in the workplace, which just happened. Did you get the two cent summary, a link to learn more? Swipe your vote, share with others, move on to the next vote. Even just taking the individual shareholders directly and indirectly own nearly 80% of U.S. equities markets. We have collective control of a lot of these companies, and no one's using their legal rights because it's been obfuscated, but we've been cutting through all of that as part of this broader mission.”
2018-02-17 · a16z Podcast · a16z Podcast: How Technology Is Changing Investing · IDENTIFIED FROM THE TRANSCRIPT · source
“We can run a historical simulation of that portfolio of algorithms. And that's really important because we can pick up the entire investment process and apply the same rigor where we can do in and out of sample testing on our process. And that's really key for making investment into a software business where we're doing incremental improvements on this piece of software that is our investment process.”
2018-02-17 · a16z Podcast · a16z Podcast: How Technology Is Changing Investing · IDENTIFIED FROM THE TRANSCRIPT · source
“There's everything. One key thing I mentioned overfitting, that is a huge trap. There's a lot of statistical traps for these types of strategies. First step is to try to eliminate that as much as possible. So when someone comes to Quantopian, they actually are creating their strategy in the browser on our system. And so we're building this big database of strategies. So it's in a database and it's marked with the date. And that one piece of information is incredibly important because it makes a bright line between the data that's in sample that the author could have known about when they were working and then everything that happened afterwards. And so then you can do comparisons statistically between the out of sample and the in sample, and you can eliminate many overfit strategies. So that's key to the evaluation. And then downstream from that, there's like 50 features now from each strategy and starting to do tests on the predictive efficacy of each of those features and building up our own sort of meta algo for the evaluation. We can run from the database of algos all the way through to here's a recommended portfolio.”
2018-02-17 · a16z Podcast · a16z Podcast: How Technology Is Changing Investing · IDENTIFIED FROM THE TRANSCRIPT · source
“The training. And so some people will spend all their time in the algo editing and tweaking it and backtesting over and over again. And kind of intuitively, they end up with something that's very overfit. Whereas the people that spend all their time in research come up with a bunch of ideas that they eliminate for different reasons in the research step and they do far less, relatively speaking, backtesting, and they tend to have greater success. So I find it somewhat reassuring because that is the creativity step, right? That's the step that really is still very, very dependent on human creativity. And that's the thing that ultimately prevails.”
2018-02-17 · a16z Podcast · a16z Podcast: How Technology Is Changing Investing · IDENTIFIED FROM THE TRANSCRIPT · source
“There's a couple of things you just absolutely have to have if you're going to be doing quantitative investing. The first is you need market data. So you need the basics of the data ecosystem. You need corporate fundamentals in order to build up a universe. And then you need data from which you can draw a signal. So we have a platform that has a consolidated data plan, quantitative investing, you're running a lot of historical simulations. When you run the simulation, you want to have as traded data on the simulation day. So that's key. And then there's a workflow. And one of the things that we get to do that's really fun is we can observe the behavior of the quants that are on the platform, and then we get to see how their stuff performs out of sample. We've noticed that the people who have good outcomes out of sample when we're testing after they've created an algo spend about 100 times the amount of time on the research step. Then we have a second piece, which is actually about making the algo that's going to”
2018-02-17 · a16z Podcast · a16z Podcast: How Technology Is Changing Investing · IDENTIFIED FROM THE TRANSCRIPT · source
“The saying around Quintopian is you get what you ask for with the internet. About half of our new traffic land on discussions about things like Markov chain models or common filters and trading or different research topics that people are trying out or papers they're trying to reproduce on the platform. And so the content in the community and just the continuing discussion and frankly just an incredible, incredible challenge to try to produce a good strategy. That's the magnet that draws people in.”
2018-02-17 · a16z Podcast · a16z Podcast: How Technology Is Changing Investing · IDENTIFIED FROM THE TRANSCRIPT · source
“There's just a huge imbalance between the amount of data that could be used in investing and just the number of people that are trained and equipped with the right tools to do it. We have a platform that we give away for free, sort of the opposite of every other hedge fund in the world. And that's a magnet for talent. So we attract people from all over the world who want to learn about the field and try their hand at creating strategies to produce superior returns.”
2018-02-17 · a16z Podcast · a16z Podcast: How Technology Is Changing Investing · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean, there's no limit there for us. We're moving into a world, obviously, with greater and greater transparency, more and more data. The key is to curate and have amazing design so that you can put the decisions at people's fingertips that they really want at the moments that they want it. That's how we can empower the actual end owners of capital to have more of transparency and more say in what's happening with their money, and that's our goal.”
2018-02-17 · a16z Podcast · a16z Podcast: How Technology Is Changing Investing · IDENTIFIED FROM THE TRANSCRIPT · source
“You start with an index, you start with the universe, and we don't just pull out the four weapons companies that would be in the index. That would be stockpicking. That would be active management. Our system will instantly break apart the entire portfolio and tweak the other holdings that are correlated with those four weapons companies on all the important vectors to match the characteristics of the index. So that the client is restored to a beta of one or to broadly tracking that index, but they no longer hold weapons companies. And so this has allowed it to become much more cost efficient and much more customized for clients of all sizes to implement their values in their portfolios.”
2018-02-17 · a16z Podcast · a16z Podcast: How Technology Is Changing Investing · IDENTIFIED FROM THE TRANSCRIPT · source
“Sure. So I spent the last decade in the impact investing and sustainable finance space dealing with a lot of the world's largest institutions, banks and investors. And I was constantly getting pummeled by individuals and small and mid-sized institutions asking how to do this stuff. How can we get involved? How can we do values-based investing? And there's basically no solution for them. I think the three big megatrends in wealth management you should know about is a move towards passive investing, a move towards interest in socially conscious investing, and then just better digital tools, awesome digital interface. And we realized that we could take their skill set and point it towards instead of beating the market, point it towards passive investing, towards buying and holding the market, but actually point the customization towards people's values.”
2018-02-17 · a16z Podcast · a16z Podcast: How Technology Is Changing Investing · IDENTIFIED FROM THE TRANSCRIPT · source
“Hi and welcome to the A16Z podcast. As the average consumer gets access to more and more information that used to be reserved for trained specialists, we're starting to see new asset classes form that are changing the way that we think about banking and investing. In this episode, Chief Strategy Officer and co-founder of Open Invest, Josh Levin, CEO of Quantopian John Fawcett and A16Z, Angela Strange, talk about interesting new models for both retail and institutional investors and what impact they might have. This conversation was recorded at our summit event in November twenty seventeen.”
2018-02-17 · a16z Podcast · a16z Podcast: How Technology Is Changing Investing · IDENTIFIED FROM THE TRANSCRIPT · source