YouSaid · the spoken record

Matthew Granade

lines on the record: 58
first: 2019-03-15
most recent: 2019-03-15
sittings or episodes: 1
sources: podcast

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“Absolutely. Look, I think one of the most interesting things is just how different periods of time will feel and be. And this goes a little bit to what has passed as prologue and using history and things like that. I graduated from college in 2000. That was just as the bubble was peaking and the tech bubble and that sort of felt one very one certain way. And then you get to 2008 and you're just in a very, very different regime. And I think the differences between these regimes and how it's going to work in these regimes is quite different. You really have to kind of get your head around that and kind of really appreciate that.”
2019-03-15 · Masters in Business · Matthew Granade Discusses Quantitative Investment (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Love what you do. I've also never really met someone who is successful who didn't really love what they did. And I think Steve Jobs had something that he said. I think in the Stanford commencement speech, it was like, if you haven't found what you love yet, just keep looking. And I think that's right. I think all those things are.”
2019-03-15 · Masters in Business · Matthew Granade Discusses Quantitative Investment (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“I'm not sure it would be so specific to any field. I mean, I think the career advice I would give, and I'm not a huge fan of giving advice, but since I'm on the show and on the spot, look, number one would be... Set your goals as preposterously as you can set them. You will continuously surprise yourself in what you can do. And I think so aim big and dream really big. So that would be one. I think second is work hard. No one I've ever met who I've ever worked for, Ray, Steve, these guys, none of them are not slackers. Slackers. Steve starts every, he starts the week on Sunday morning at 7.45. And that's when he works all day Sunday and he works a fair bit of day Saturday. And so I think it would be to set really almost preposterous goals, you know, be willing to work really, really hard. And then I think the third would probably be.”
2019-03-15 · Masters in Business · Matthew Granade Discusses Quantitative Investment (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think the thing that's the most interesting question right now is the people plus machine question. What are the people good at? How do you get the most out of them? How do you... How do you think about those capabilities and how do you couple those with what machines are good at? And I think that, like I said, I think the next generation hedge fund is going to be a mixture of those two things. And that's a really, it's hard in a lot of ways, but it's a very exciting question.”
2019-03-15 · Masters in Business · Matthew Granade Discusses Quantitative Investment (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“So he has his five volumes, five or six volumes set that's very intense and completely overwhelming. Then he has a home version, which I have done a couple of things out of the home version.”
2019-03-15 · Masters in Business · Matthew Granade Discusses Quantitative Investment (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, you know, our traditional dinner party would be fried chicken with macaroni and cheese and biscuits and blueberry cobbler. But real southern cooking. But real southern cooking, but I'll also do maybe some molecular gastronomy with like a watermelon drop or something. Right. So you got to keep it modest.”
2019-03-15 · Masters in Business · Matthew Granade Discusses Quantitative Investment (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's usually a combination. So I like to kind of mix in some more modern cooking with some of the more traditional recipes. Give us a few.”
2019-03-15 · Masters in Business · Matthew Granade Discusses Quantitative Investment (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“I like to cook. And this is going back to being from the South. So my grandmother taught me to cook. And so my wife and I will throw parties and we'll cook, in particular fried chicken and things like that. And that's probably what I enjoy to do.”
2019-03-15 · Masters in Business · Matthew Granade Discusses Quantitative Investment (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“And that the business people wanted to have great people in those seats. But then more deeply, what we learned was that we actually had no idea what we were doing and that we were really trying to build a business in an area that we weren't experts in and that starting a business is just so, so, so hard in like a thousand different ways. And so you have to take advantages where you can. And so what we started asking ourselves, well, what do we actually know about? And in those areas of what we actually know about, where are there actual problems? And that led us to domino in the data science space.”
2019-03-15 · Masters in Business · Matthew Granade Discusses Quantitative Investment (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“There's been a bunch, but I'll do this one. So before we started domino data labs, my co-founders and either two of us, three of us total, all of us from Bridgewater, we started a previous business called Cerebro. And cerebro was in the talent evaluation space. And so it was trying to sort of figure out smarter ways to help companies assess their talent. And we had some great clients in mainly technology firms. And we mainly had leaders from the business lines. And so we would sort of do this work. They would love it. Then we would get passed to the recruiting department. And the project would just die. And we did this like over and over and over again. And what we finally realized was realized a couple of things. One was that at a micro level that the incentives between the recruiters and the business people were very different, that the recruiters wanted to put people in seats and that the”
2019-03-15 · Masters in Business · Matthew Granade Discusses Quantitative Investment (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“And then we'll go for a classic. I love the Tempest by Shakespeare. And it's where there's a lot of things that go on in that book. It's where he wrote, what is past his prologue, which I think is generally true.”
2019-03-15 · Masters in Business · Matthew Granade Discusses Quantitative Investment (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Wild swans, which chronicles the life of three women in China in the 20th century. I think China is such an interesting story because it just there's been so much dramatic change. And you look at those three lives and one of which is a fair bit of which has been on the cultural revolution. And you sort of think the world you're living in is the world you're living in and it can just change so dramatically. I want to make sure.”
2019-03-15 · Masters in Business · Matthew Granade Discusses Quantitative Investment (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Let's go outside of investing in finance and those sorts of things. One of my favorite sort of historical books is Wild Swans, which is wild.”
2019-03-15 · Masters in Business · Matthew Granade Discusses Quantitative Investment (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“I'm just annotating that for you. So let's try to do three from fairly diverse areas. So more finance data sciencey. I love super forecasters, which is basically TETLOC, which talks about how you essentially get good predictions. And he spent his life studying how you get good predictions, which someone in the markets, you know, it's critical.”
2019-03-15 · Masters in Business · Matthew Granade Discusses Quantitative Investment (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“With Ray, I think two big lessons. One is being systematic, being process driven, that you don't look at outcomes, you look at how you got to those outcomes, and then also being fundamental. And as we were talking about earlier, in the world of data science, you can torture the data to say anything. And so you really have to think about how the world actually works and why what you're finding matters. And then with Steve, it's the sort of tenacity to really dig in and do the work, you know, which, as I mentioned, is one of the things he says over and over. You don't go talk to Steve about a name or a venture investment or a new strategy without having sort of turned it over a hundred different ways. And his bar for just having you dig deep is very high. And those are probably the lessons I've learned most from those guys.”
2019-03-15 · Masters in Business · Matthew Granade Discusses Quantitative Investment (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“So Bo Jones, who was publisher The Washington Post, he had been a president of the Crimson as well. I worked for him for a summer. One of the things, a couple things are very interesting about working from. One was he and Don Graham and the Graham family in general sort of really understood the ecosystem of their business well and sort of how all the parts interconnected in sort of basically how the subscription revenue was important, but you didn't want to you wanted to make sure that you kept that price low enough to have the advertising”
2019-03-15 · Masters in Business · Matthew Granade Discusses Quantitative Investment (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“People are usually surprised to learn that I'm from the South, you know, having gone to Harvard twice and worked at hedge funds and things like that. And my family's been from the south for a very long time”
2019-03-15 · Masters in Business · Matthew Granade Discusses Quantitative Investment (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, well, I have a, you know, I think it's an interesting way to sort of think about why people are successful. I also, as a parent, it's something you think a lot about what can you actually teach your kids and probably at the top of my list of things I want my children to have and to learn. And so we have rules now about sticking with things and stuff like that, largely because of her book.”
2019-03-15 · Masters in Business · Matthew Granade Discusses Quantitative Investment (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“That's a great question. Look, I think it makes you much more skeptical about their advantages and about the durability of their... Of their moats, quote unquote, right? And you look at how fast the changes happened in retail and how deep and dramatic some of that took place. And you go back and you look at some of these companies and all the moats they were talking about on the customer loyalty and then poof, you know. And so, you know, one of the things we try to do at 0.72 is we try to sort of cross-pollinate some of the big thematic learnings from the venture work in with the public market investors. We had a dinner a few months ago on robotics and we had three or four CEOs of robotics companies and we had our industrial, a couple of our industrials PMs and our healthcare PMs. And it's essentially a discussion exactly along the lines you said of how is robotics going to, you know, obviously there's going to be a bunch of private companies that get created, but it's also going to really change in those two areas. A lot of companies as well.”
2019-03-15 · Masters in Business · Matthew Granade Discusses Quantitative Investment (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Exactly. Why can't I maintain the sill signal on the train back to Connecticut? But so I certainly agree that it's unevenly distributed. But there's also tremendous amount of very exciting things happening. And look, that's what makes the venture investing so much fun, is seeing all that and being involved in that world.”
2019-03-15 · Masters in Business · Matthew Granade Discusses Quantitative Investment (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“I can't remember who said it, but somebody said the future is here. It's just unevenly distributed. William Gibson. Yeah, I think there's a lot of truth to that. When you're in San Francisco and you see the self-driving cars that cruise and Google and others are making. We're Japan for that man. That feels very in the future. And then like you said, you look at some other industries and you sort of scratch your head about why can't I get a good”
2019-03-15 · Masters in Business · Matthew Granade Discusses Quantitative Investment (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“So Mark Andreessen wrote a piece several years ago called Software's Eating the World. And it's basically the idea that software is going to change every business. And Steve and I were thinking about kind of what's the equivalent today because I think that was written almost seven years.”
2019-03-15 · Masters in Business · Matthew Granade Discusses Quantitative Investment (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, in people processes, you know, look, I think there's still a lot of human intuition into it. We do try to be as rigorous and as systematic as possible. And what I mean by that is we try to start with the job and the outcomes we expect. And as you think about those outcomes, what capabilities are required? And as you think about those capabilities, what's the best way to evaluate those capabilities? I personally don't like interviews. I don't think they're particularly useful. I think that work samples and projects and more testing and those sorts of things are very valuable. But obviously there's also, you know, you do need to meet the people. And that's a part of it. But for us, the hiring process or the evaluation process of people in Venture just has a certain methodicalness to it that's very important.”
2019-03-15 · Masters in Business · Matthew Granade Discusses Quantitative Investment (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's a tool set that basically data scientists build their models using the languages and tools they want in Domino. And then Domino revisions those things, means they keep track of the data and the code and the results. And then you can also publish out. So you can run models from that. And so it's sort of your central repository or your system of record for models.”
2019-03-15 · Masters in Business · Matthew Granade Discusses Quantitative Investment (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Still an independent company backed by Sequoia and Kotu. Oh, really? Primarily, and some others, actually including Bloomberg Beta. And, you know, and it's been very successful and probably one of the most interesting things about it is just the diversity of industries now that are represented in the client base. You know, it started out, a lot of finance firms, insurance firms were interested, but now we have everything from retailers to grocery stores to automakers to pharmaceutical makers because basically the thesis we were betting on was that the world was going to become model driven. And this is a tool.”
2019-03-15 · Masters in Business · Matthew Granade Discusses Quantitative Investment (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes, so the thinking behind that was really sort of two big ideas. One was that we were moving to a model-driven world where algorithms that were trained, fed and trained data that made predictions or decisions for businesses, that that was going to be a very important thing that took place. And so you see the rise of Netflix and Amazon and all these things that I would call model-driven businesses. The second sort of big idea was that as that happened, the people who did that work, the data scientist, needed a system of record. So salespeople work in Salesforce, HR people work in workday. There was not an equivalent for data science. And so we were building and are building the system of record for data scientists. And those were really the two big ideas behind it.”
2019-03-15 · Masters in Business · Matthew Granade Discusses Quantitative Investment (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“So we don't do any high frequency trading. We do a fair bit of computer driven trading in our systematic unit and then in some of the units I oversee, they're systematic as well. So driven by computers, but nothing that would constitute high frequency. It's certainly an area where a bunch of people made a bunch of money, but it wasn't something that we did.”
2019-03-15 · Masters in Business · Matthew Granade Discusses Quantitative Investment (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, and that's what makes it fun, right? I mean, that's what makes it the competitive drive and the knowing that the bar is always going up. It's that challenge that I think draws a lot of people to the industry.”
2019-03-15 · Masters in Business · Matthew Granade Discusses Quantitative Investment (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“I remember the very first time I met Steve, I asked him the question of how he had been able to sustain his fund for so long. At such a high level. And he said, well, because I've rebuilt it four or five times. Really? And, you know, and the point he made is that this is just a constantly changing game that's always attracting competitors. And if you think that whatever success you have today is going to be true tomorrow, you are really naive. And so, you know, there's part of what I like so much about working with him. And there's just a restless energy to him because he knows that that's what's required to continue to survive. And so that's how we approach the firm. We have tons of new initiatives and experiments going on and things will succeed and things will fail and we'll kill them and things that'll succeed will scale. But I think his view and I agree with it is that it's that activity that's how you maintain an advantage.”
2019-03-15 · Masters in Business · Matthew Granade Discusses Quantitative Investment (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, well, Steve always jokes that he'd just like to go back to the 90s. It was easier when it was a lot easier. Sure. And look, I mean, success draws competition. That's just capitalism. And I think that I think there's not a whole lot of mystery to why it's harder. I think it's harder mainly because a lot more people are doing it. There's certain, I'd say, sort of boogeymen in the market, you know, like ETF flows and things like that that people also talk about. But I think the core thing that makes Alpha harder is just the scale at which it all takes place today. And I think in terms of maintaining an advantage,”
2019-03-15 · Masters in Business · Matthew Granade Discusses Quantitative Investment (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Whether it be credit card or geolocation or email receipts or all these different satellite, like you were talking about, you know, all these different things that you can bring to bear. So I think that's a really important trend. I think the other important trend, like we were talking about earlier, is people plus machine. What are machines good at versus what are people good at? Machines quite good at repetitive math and complicated math and have a lot to bring to bear in terms of portfolio construction and trading and those sorts of areas. So those are probably the two most important trends that we're seeing and thinking about.”
2019-03-15 · Masters in Business · Matthew Granade Discusses Quantitative Investment (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think it's some of the things we're talking about. I mean, I think the explosion of big data or what we call alternative data is a big impact. It used to be that most of the investing was a conversation between the investor, the company, and the sell side. And now, you know, you have, you know, just.”
2019-03-15 · Masters in Business · Matthew Granade Discusses Quantitative Investment (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“It just varies so widely. I mean, we're trading, you know, in the US, we're trading almost 1,800 names, and we also trade in Asia and Europe. And so I can't give sort of a one size fits all answer to that question because there's so many different sort of subsegments.”
2019-03-15 · Masters in Business · Matthew Granade Discusses Quantitative Investment (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think his philosophy is very similar across both. He is an IRR focused investor and he has a hedge fund that does well and produces a good return every year. And he expects us to be the same, to bring the same discipline to the private investments. And so we think about IRRs, we think about exits. We think when we can get cash back out, we think about applying leverage. We think about all these different things. But it all comes back to producing a good rate of return. And that's how he thinks about the world.”
2019-03-15 · Masters in Business · Matthew Granade Discusses Quantitative Investment (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“So the venture investments are all Steve's personal investments. Not 0.7. They're not. Well, I mean, we use 0.72 ventures. We use the brand, but it's not in the fund. So it's Steve's personal money. And it's not super large. I mean, it's a couple hundred million.”
2019-03-15 · Masters in Business · Matthew Granade Discusses Quantitative Investment (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“I wouldn't say so. I think the similarity between both of them is that in both cases, we're very process driven. In the process looks different in each case. But I'm a very big believer and I think this comes from my Bridgewater training in sort of process over outcomes. And you have to think ahead of time about how you're going to approach a problem and why that's going to give you an advantage in your approach. And on both sides of the business that I'm involved with, that's how we come at it. And we have very elaborate pre-designed sort of ways that we're going to develop algorithms. We have very clear ways that we're going to make investment decisions on the venture side. And so for me as a manager of both of those areas, that's mainly what I'm trying to do is make sure that process is really solid. And that's the similar.”
2019-03-15 · Masters in Business · Matthew Granade Discusses Quantitative Investment (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Little very little, very little. Part of it is the areas we're investing in. I mean, we're generally investing in enterprise companies and their early stage. And so lots of times they'll have three or four customers and there isn't a whole lot to sort of torture the data for. That doesn't mean we don't do research. We do a tremendous amount of research, but it tends to be more interviews with people and customer follow-ups with customers and probing on how a certain product works or market sizing exercises or things like that. But we've not brought a lot of the big data to bear on Venture, though I do think in the consumer space, there could be opportunities for that. And that might be something we explore down the road.”
2019-03-15 · Masters in Business · Matthew Granade Discusses Quantitative Investment (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Varies, but I would say we're fairly active. And the reason we end up being active is, it goes back to this expertise thing that I was describing, which is that because the team is made up of people who are very deep experts, it tends to be that the entrepreneurs want them on the boards because they're very useful in sort of sorting through the strategic questions and knowing where the business should go. It's interesting because when we started out, I was actually pretty reluctant to take board seats because I actually, you know, I think it can be a bit of a distraction from doing the next investment. But it turned out it was an important ask from a lot of our entrepreneurs. So we do end up taking a lot of board seats, which means we're pretty involved.”
2019-03-15 · Masters in Business · Matthew Granade Discusses Quantitative Investment (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Extremely proactive. Almost all of it is an outbound motion, like 98% of it. And then, and so those would be the two big differences. I'd also say that probably as firms go, our diligence is more intense than a lot of venture firms. I think that comes from Steve. You know, Steve, one of Steve's sayings is do the work. And when we go into an investment committee to talk about something, there's kind of only one answer, which is I did the work, otherwise the meeting is going to end very soon. And so we hold a pretty high bar in terms of the amount of research we're going to do when we're looking into a company. So those would be the three things I'd point to.”
2019-03-15 · Masters in Business · Matthew Granade Discusses Quantitative Investment (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“One of the biggest concerns you got to have in venture investing is adverse selection. And you probably don't want to be taking what's coming through the door. So, you know, what we focus on is themes that we think are going to be big money makers where we think real change is happening, where technology is driving really important impact. And then we go try to find the companies that we want to invest in and knock on their door. You're proactive.”
2019-03-15 · Masters in Business · Matthew Granade Discusses Quantitative Investment (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think a couple of things make us different than traditional VCs, but probably the most important is we are extremely expertise focused in how we are designed. So we have no generalists. We have certain practice areas. Right now we have three or four different practice areas, all of which are led by people who have worked in that space and invested in that space for quite some time and kind of one of the standards I use is when portfolio companies are meeting with the investors on our team, do they believe that the person they're sitting across from is one of the world's leading experts on the area that they're working in? So that's one difference. I think the other difference I would point to is we're extremely outbound in how we operate. So one of our challenges was we don't have a brand in VC, the way a Sequoia does or something like that. And so, you know,”
2019-03-15 · Masters in Business · Matthew Granade Discusses Quantitative Investment (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Indefinitely is a very long time. So I'm not going to comment on indefinitely. What I will say is that our thesis as a firm right now over the next seven to ten years is that it is people plus machines and that the people are very good at the nuanced situation, at the idea generation, at the interpreting the thin data, at the synthesis, and that the machines are very good at conducting, correcting for behavioral bias at portfolio construction, at trade execution. And what we're trying to do is figure out how you marry those two up in a really smart way and that that is essentially the next wave of hedge fund. But where we are 10 or 15 years in terms of what people can do versus machines, I don't think I can comment on that.”
2019-03-15 · Masters in Business · Matthew Granade Discusses Quantitative Investment (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“And over time, we've built that up into a systematic best ideas book. But a lot of the input of that is from discretionary investors. And so one of the kind of key questions we're always asking is, what are the people best at and what are the machines best at? And our view is that in terms of really being able to interpret fairly nuanced and complicated situations inside a specific company, the people are still really, really good. There's other things that machines do very, very well. But if you're going to meet with a management team and interpret a large set of data that has a lot of sort of nuance and specifics to it, the people still beat the machines at that. And so we have several hundred people that do that.”
2019-03-15 · Masters in Business · Matthew Granade Discusses Quantitative Investment (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“So it points any two, we do a mix of three things. We have a very large discretionary business that's global, long short equity, people driven, it's portfolio managers and analysts looking at some subset of the stock universe, meeting with management teams, looking at data sets, and then making decisions in a fairly discretionary fashion. We also have a systematic business that's running on algorithms. And then we have a people plus machine business, which is the one that I oversee, which is what you call the central book earlier, where what we're doing there is we're looking at what the behavior of all the people is as one of the important inputs, but we're also looking at the data sets and we're running algorithms to essentially help make decisions out of that. So one way of thinking about it is that historically Steve had a best ideas book that he ran as a discretionary investor.”
2019-03-15 · Masters in Business · Matthew Granade Discusses Quantitative Investment (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I think this goes back to the point I was making about an intuition. At the end of the day, at point 72, we are fundamental investors. We believe that companies ultimately trade on how they're doing as a business and the kind of cash flows they're going to produce. And everything we do, we'll use very sophisticated data science to predict a revenue stream or something like that. But we're at core trying to do something fairly simple. We're trying to understand what the revenues are, what the costs are, you know, what the growth profile of the earnings are. And we never sort of lose that grounding. And so, you know, look, there's a lot of ways to make money in the markets. And I'm not an expert in a lot of them. I'm only familiar with some of them. But for us, I think that grounding back to pretty simple principles.”
2019-03-15 · Masters in Business · Matthew Granade Discusses Quantitative Investment (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Relationships. I think you can get quite a soteric. I mean, I think satellite, you know, satellite's been around for a while. And to your point, I mean, it's very widely used what we think much more about now is sort of much more specific data sets that give you a read into a limited number of tickers, often via some sort of payment system or something like that. I think that we're probably in the third inning of something like that in the data movement and investing.”
2019-03-15 · Masters in Business · Matthew Granade Discusses Quantitative Investment (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so let's say you were using credit card data to trade Chipotle or something like that, what you would do is you would sort of build some rules and you would sort of fit those rules to some set of data some time period, you know, three or four years, then you would stop fitting the rules and you would sort of look at the next three or four years and sort of see it, does those two match? Do they look the same or is the behavior very different? And then you would basically start running the model live from today and then see, again, if those match the other two periods. And so you're looking sort of for a consistency across that. And if you're not seeing that, then that's a good sign that you're overfitting it. It's also, you know, going back to my original point, you want to think about whether or not there's a real intuition there. I mean, should credit card and Chipotle make sense together, right? Probably does because a lot of people use a credit card at Chipotle. But, you know, if you were using a credit card to trade GE, you might start scratching your head about what you're doing.”
2019-03-15 · Masters in Business · Matthew Granade Discusses Quantitative Investment (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so I think there's a couple of different ways you do that. I mean, one is you want to have a fundamental intuition of some variety around what you're doing. You're not just sort of running everything through a machine. I mean, some people do, but that's not how I like to do it. You're not just sort of running everything through and sort of seeing what fits. Because to your point, something will fit. And it may be a real thing or it may be a very short-lived thing. And then, you know, you have to have a lot of discipline in terms of looking at your sample, basically in sample, out of sample, and live. And what that basically means is where are you allowing yourself to fit the parameters? Where are you sort of just looking at the results? In a backwards looking way, and when are you sort of really trying it out? And we have very strict rules about how we segment those different things before we start using, putting money against a certain strategy.”
2019-03-15 · Masters in Business · Matthew Granade Discusses Quantitative Investment (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Extracting signal from data sets or all the way up to making trading decisions. And so we're investing like a lot of hedge funds, we're investing a lot in people with the data science capabilities and with the machine learning capabilities as well.”
2019-03-15 · Masters in Business · Matthew Granade Discusses Quantitative Investment (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think the thing to sort of contextualize all those terms, and I agree with you, they're very buzzy. But the way I like to think about it is being what I call model driven. And so you can talk about model-driven businesses or model-driven processes. And really the idea of a model is it takes in data. It could be big data. It could be not big data. It runs a certain set of logic on that. And then it produces a prediction of some variety. And, you know, basically it tries to close the loop around that data so that you're constantly improving the logic or the algorithms. And so Netflix is a model driven business in Tencent is a model-driven business. And obviously finance and the hedge funds we're talking about, they're very model driven. What I would, you know, what I would say is that the state of the industry in that regard is that these techniques are highly, highly relevant to kind of almost everything we're doing, whether it be”
2019-03-15 · Masters in Business · Matthew Granade Discusses Quantitative Investment (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source