YouSaid · the spoken record

Matthew Rothman

lines on the record: 85
first: 2017-09-21
most recent: 2017-09-21
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

“I guess I have my short answer to that is people need a much healthier respect for that effect that it's a model and it's going to be wrong. And understand that even the best models that are actually true or have very good performance are going to go through periods of big underperformance. And that doesn't mean you get rid of the model. How do you diversify across those models and kind of work through those periods, I think is the biggest thing that everyone who's trying to invest in quant and really kind of has appreciation for.”
2017-09-21 · Masters in Business · Matthew Rothman · IDENTIFIED FROM THE TRANSCRIPT · source
“So the thing that I want, if I'm looking for my ideal candidate. They need to know how to program. They need to know how to do statistics and econometrics. They need to know finance, right? And they need to be curious. I can't teach you how to program, right? I've tried to take people who add those other characteristics and teach them how to program. Utter failure. But how you also get people who are curious and skeptical and skeptical of their own work. I think that's the biggest thing. Like realize that you're going to make mistakes and find the errors in your work before I find them.”
2017-09-21 · Masters in Business · Matthew Rothman · IDENTIFIED FROM THE TRANSCRIPT · source
“I've gotten much better. But, you know, what I've had to learn over time is, as one of my bosses has put it, is not let the better be the enemy of the perfect or the perfect be the enemy of the better, excuse me. And so, you know, get out version one. Get out version two. Get out version three.”
2017-09-21 · Masters in Business · Matthew Rothman · IDENTIFIED FROM THE TRANSCRIPT · source
“You know, if you go back and actually read my third grade report card, amazingly, talk about someone who hasn't really learned a lot from third grade or changed their behavior. My third grade teacher said, Matthew always turns in his homework assignments late, but when he does, far surpasses our expectations.”
2017-09-21 · Masters in Business · Matthew Rothman · IDENTIFIED FROM THE TRANSCRIPT · source
“Setting up models for this to work within. That's right. Now, I'm not saying that we're there by any stretch of the imagination. Please don't mishear me on that, but I'm saying that's where we're headed And that's the frontier. That's fascinating. And the question is, how quickly would this explosion in processing power and all the text and all these things that are being digitalized, will we get there?”
2017-09-21 · Masters in Business · Matthew Rothman · IDENTIFIED FROM THE TRANSCRIPT · source
“Maybe. Maybe it depends upon what you want to do or not, right? You know, get a machine to know that when inflation comes in higher than expectations in Japan, right? That's a good thing”
2017-09-21 · Masters in Business · Matthew Rothman · IDENTIFIED FROM THE TRANSCRIPT · source
“And getting to, like, you know what I'm trying to say get the machine to parse the full context of that sentence. See, the context is very hard.”
2017-09-21 · Masters in Business · Matthew Rothman · IDENTIFIED FROM THE TRANSCRIPT · source
“Actual written Not today. Not today, but that's the frontier of where we're moving. Right? And that's what we have to do. We have machines today have trouble with just double negatives or triple negatives. It wasn't a great quarter, but it was okay. And it exceeded our expectations, which were fairly modest. Get a machine to parse that. Right”
2017-09-21 · Masters in Business · Matthew Rothman · IDENTIFIED FROM THE TRANSCRIPT · source
“It does. And that's what makes email dangerous as a form of communication, why sometimes it's better to pick up your, instead of writing an email, or if you're getting upset at an email to actually pick up the phone and ask your colleague, what do you mean? Let's have a quick conversation before you hit the send snarky reply back to them because they may have meant something quarterly different and you're not getting it. So if people have”
2017-09-21 · Masters in Business · Matthew Rothman · IDENTIFIED FROM THE TRANSCRIPT · source
“With solve my investment controversy and kind of turn things back on its head. And that's what I'm hoping the industry will start to do and not just be data for data's sake and just consuming these vast amounts of it and warehousing it, but really think what's the crux of the question, what's the controversy, and then how do I go and get that data? And that can be in so many different forms of how do I read text that I want to figure out what are people talking about? How do I read? How do I understand body language from reading the text of an earnings transcript? How do I infer even like big questions in natural language processing is how do I look at double negatives or triple negatives? How do I begin to infer what you mean versus what you actually said? Like we can do that as humans. Sometimes the written word.”
2017-09-21 · Masters in Business · Matthew Rothman · IDENTIFIED FROM THE TRANSCRIPT · source
“I think it's really this quant 3.0, as I call it, which is really beginning to understand these disparate data sources that are out there and how we begin to use them and incorporate them into an investment process. And where that data is useful and where that data isn't useful. And I think a little bit of what's been happening in the industry has been putting the horse before the cart where there is this explosion of data, as we were talking about. And at this point, it's just so cool. Like you can literally, if you can imagine it, you can get the data for it. But we also need to slow down and start thinking about it from an investor's perspective of what is the data that I need that's going to help me.”
2017-09-21 · Masters in Business · Matthew Rothman · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, you know, the TV, you know, just keep the TV off. Don't get addicted to the law and order SVU actually read the book.”
2017-09-21 · Masters in Business · Matthew Rothman · IDENTIFIED FROM THE TRANSCRIPT · source
“Oh, no, I love fiction. I'm a huge fan of Paul Oster. What's the book? He's written this great series of books, his starting books out there called The New York Trilogy, but he's written a great book called Invisible. And he kind of, again, it's kind of postmodernist fiction where you always kind of have to figure out what's the story. He writes them as detective stories, but they're much deeper than that. I love the stories by Raymond Carver. I wish I could ever write like Raymond Carver's short stories or Richard Ford, the poetry of Marie Howe, it's what the Living Do is amazing. So there's just a lot of these just wonderful books out there.”
2017-09-21 · Masters in Business · Matthew Rothman · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, and he's written this great book called You Are Not a Gadget. And he's really thinking very hard about the role of human beings and artificial intelligence in this big data world. There's just great stuff to read out there. There's other work, a great book called Behave by Richard Saplowski. It's a big book. It's a big book. Somebody else.”
2017-09-21 · Masters in Business · Matthew Rothman · IDENTIFIED FROM THE TRANSCRIPT · source
“Like many of photography. What else do you read? What do you read for? You're talking to a guy who just loves quant and loves doing quant finance. I'm really into the work right now by a guy by the name of Jaron Lanier. He's the philosopher-in-chief at Microsoft. Oh, okay.”
2017-09-21 · Masters in Business · Matthew Rothman · IDENTIFIED FROM THE TRANSCRIPT · source
“In what was Yugoslavia, just some of the most important work. There's work by people like Don McCullen, a legendary British war photographer, documenting the atrocities in Biafra in Vietnam and around the world, heroic people. Tim Hetherington doing work that unfortunately he died covering in Africa and Libya. And these are just moving work, of course, the work by Robert Kappa, the legendary war photographer, who was in the first wave of the boats coming off of D-Day. So just very, very, very powerful work. And there are people who are still doing this work today out there that just don't get any love and attention. People like Alex Webb at Magnum, Ed Kashi at 7. I'm just missing people. James Knockway, a truly legendary film.”
2017-09-21 · Masters in Business · Matthew Rothman · IDENTIFIED FROM THE TRANSCRIPT · source
“So you have to start post-world documentary photography with Robert Frank, the Americans. That was an absolutely revolutionary book, along with Cartier Brasson, The Decisive Moment. But Frank changed photography forever. And then there comes a whole series of lesser-known masters, but utter masters from Eugene Richards' work out there documenting poverty in America. That is one has to be aware of and see to the work like people of Ron Haviv that is just legendary. His photographs were actually submitted into the war crimes tribunal in The Hague documenting the atrocities that happened in the”
2017-09-21 · Masters in Business · Matthew Rothman · IDENTIFIED FROM THE TRANSCRIPT · source
“So I love documentary photography. I am a huge fan of that. And I collect documentary photography books. I have a pretty extensive collection. And I am always on the hunt for that new great documentary photography book and collecting the masters. Give us the name of a book for”
2017-09-21 · Masters in Business · Matthew Rothman · IDENTIFIED FROM THE TRANSCRIPT · source
“I'll let you know on Monday. I found out, and it was painful at times, but I absolutely love him for it. And he made me such a better workplace person every day. And it was hard at the time, but I adore him for taking that time and attention. Everybody needs Aravi.”
2017-09-21 · Masters in Business · Matthew Rothman · IDENTIFIED FROM THE TRANSCRIPT · source
“I was a little green, and he threw me into as a managing director ahead of all the quantitative equity research at Lehman, five years out of my PhD program. And so I was green. I didn't quite know how to behave with other senior managing directors and how that whole world worked. And Ravi was absolutely harsh and brutal. And to me, but in the loving way. I was one of Ravi's children is the way I described it. He taught me how to grow up and how to behave in a major world-class institution and what was expected of me, not so much, I mean, he helped me on the quant, but really helped me mature as a manager and as a person and how one carries oneself in a role. And I remember kind of telling my team every day, like, I don't know what I did wrong this week before my weekly meeting with Robbie, but I'm about to go find out.”
2017-09-21 · Masters in Business · Matthew Rothman · IDENTIFIED FROM THE TRANSCRIPT · source
“Graduate class in stochastic calculus. And it was filled with PhD students. And somehow I got the high grade. I'm still to this day not sure how I did that. And he took me under his wing and taught me a lot. And now he's a friend and colleague and just been a trusted kind of mentor and advisor throughout my career. And then there was a gentleman at Lehman Brothers where I was much too young in many ways to get the position I did as head of Quantum. How old were you at the time?”
2017-09-21 · Masters in Business · Matthew Rothman · IDENTIFIED FROM THE TRANSCRIPT · source
“Obviously, resonated with you. Oh, of course. And my father was absolutely influential in my life and my thinking and teaching me how to write and just taking a red pen to my writing and just arguing with me about ideas. Who else was a mentor? I had a professor at college who was a huge mentor to me. I went to Brown, an Ed Bisor. I did a lot of independent studies with him who just grilled me on ethics and rigor of thought and the law and what our rights versus non-constitutional rights and just took Nendo's wing and really shaped my thinking in many, many hard ways. I think some of my other mentors had to have been a guy by the name of Sid Brown, who was a professor at Columbia, who saw something in me when I was a master's student there. I wandered into his”
2017-09-21 · Masters in Business · Matthew Rothman · IDENTIFIED FROM THE TRANSCRIPT · source
“Of course. Of course, of course. Of course. I mean, that's a little cliche to say that your dad was a mentor. Well, but someone dedicated.”
2017-09-21 · Masters in Business · Matthew Rothman · IDENTIFIED FROM THE TRANSCRIPT · source
“Along those lines. And I think I know one of your questions to me, I don't mean to jump the gun on any of your questions, is favorite books. So let's jump the gun.”
2017-09-21 · Masters in Business · Matthew Rothman · IDENTIFIED FROM THE TRANSCRIPT · source
“Questioning and dubious of your sources. And so when I was 10, he dedicated a book to me and is called The Sources of American Social History. And it says to Matthew to understand that American history is more than the study of great people. And it's a book of unconventional sources that try to study how institutions work and study history as a study of institutions, not as acts of Congress or acts of war or what great people are doing, but study the church, study the prison, study the hospital, and the experience of people within those settings and understand the biases of these sources and look for unconventional sources. And so I like to think that that kind of training about data was Embedded into me at a very, very, very early age and looking for”
2017-09-21 · Masters in Business · Matthew Rothman · IDENTIFIED FROM THE TRANSCRIPT · source
“People who know me know that. And actually, Springsteen lyrics are always pretty much hidden somewhere in my notes. Oh, really? Like, if you're a Springsteen fan and you read my notes, you'll capture Springsteen reference in there. And sometimes they're not so subtle. But what people probably don't know about me is that I was very lucky to be born to two academics who teach at Columbia. And my father was a professor, I guess is, professor of American social history and really kind of founded the field of American social history. And taught me at a very young age to be”
2017-09-21 · Masters in Business · Matthew Rothman · IDENTIFIED FROM THE TRANSCRIPT · source
“You know, you literally just ask Siri, what plane is above me? And she'll tell you the planes that literally are right above me. That's amazing. I mean, so all this data is what people are beginning to look at. And it's a bit of an arms race for everybody to try to keep up with this and to try to understand what's out there and how you process it. Because there's probably no one data set that's going to give you the holy grail of everything. It's really about how you take all these disparate data sets, combine them in a thoughtful manner that's really going to give you your answers to do that.”
2017-09-21 · Masters in Business · Matthew Rothman · IDENTIFIED FROM THE TRANSCRIPT · source
“To these services. Sometimes more Yeah, I mean, the data sets that, like I said, that are available are really quite remarkable that people have in terms of literally where your foot traffic, your credit card spending data, reading email receipts. that are available. As you said, traffic data. If there's a data set that you want and you don't think that you can get it, you're not looking hard enough at this point. We can track literally every bill of lading for every cargo container that is coming into the United States really at T plus 1 tomorrow time. I mean, the apps for planes.”
2017-09-21 · Masters in Business · Matthew Rothman · IDENTIFIED FROM THE TRANSCRIPT · source
“Right. So, how do you now process that data, right? That requires a lot of computing power and a lot of storage capabilities. That's now economical to do where five years ago that was a pipe dream.”
2017-09-21 · Masters in Business · Matthew Rothman · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, three meter resolution is what the law allows, right? So a car. But you can tell whether that's a car or a bus, right? We can't see people. But the storage on that is a yodabyte. How big is a yodabyte? It's a trillion.”
2017-09-21 · Masters in Business · Matthew Rothman · IDENTIFIED FROM THE TRANSCRIPT · source
“In computing power, that is really, really hard to overstate. And it's just been accelerating even over the past 18 months. So we're just beginning to understand and unlock the horizon here. And so this has allowed you to just process amounts of data that is hard to imagine. An example, there is a company out there that is now literally taking pictures of the entire globe.”
2017-09-21 · Masters in Business · Matthew Rothman · IDENTIFIED FROM THE TRANSCRIPT · source
“Computing at the same time, the price just fell off the cliff for storage, right? So we can go to the web on AWS, Amazon Web Services, or Azure or other places out there, Google. And you can buy terabytes, tens and tens and hundreds of terabytes of storage extraordinarily cheaply. rent it when you're done just kind of you know that's it that's all you need you can have there's now we've moved now from processing on cpus in computers where everything had to be done in a hierarchical structure what we've now rewritten the code so that everything can run in parallel and use GPUs graphical processing units much faster much faster in tandem cheaper and so you've seen exponential growth”
2017-09-21 · Masters in Business · Matthew Rothman · IDENTIFIED FROM THE TRANSCRIPT · source
“So I think this is a really exciting time to be a quant because the world is becoming more and more and more and more digitalized every day. And we are able to get our hands on data sets as quantitative investors that we could only dream of five, seven years ago. And so the real question is then you have these huge data sets. How do you begin to process them and look for signal within them? And so you've really seen, to make that happen, you've had to have two other revolutions that have had to come along at the same time. One is that computing power in general hardware and software has had to just kind of go through a revolution. And we've seen that.”
2017-09-21 · Masters in Business · Matthew Rothman · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, it means this is a bad stock. Don't own it, right? Or it is trader speak for, you know, what are you doing, market research? You're watching YouTube. Where this comes up is that there's a whole new field in finance, not that new, but it's really taken gained a lot of momentum over the last five, seven years of trying to understand text and parsing text and trying to understand the meaning within it and what people are saying. So whether it's reading earnings transcripts or reading annual reports or reading news in general, or from a compliance perspective, if you're just trying to read instant messages. And so the question is, how do you begin to understand context and what people are really saying? And so if you're reading trader speak, your dictionary of words to try to understand what a traitor is saying is different.”
2017-09-21 · Masters in Business · Matthew Rothman · IDENTIFIED FROM THE TRANSCRIPT · source
“There's a whole bunch of academic research out there that has been absolutely making that point as well for a number of years. Professor Gruber died at NYU has published some of the seminal studies on that as well and others have. He's not alone in that, but that really kind of made the point that fees, low fees are one of the biggest predictors of future outperformance.”
2017-09-21 · Masters in Business · Matthew Rothman · IDENTIFIED FROM THE TRANSCRIPT · source
“Investors have definitely flocked that. And you've seen even this past year, the funds that have actually attracted the greatest inflows have not only been passive, but the absolute lowest priced passive funds. So even within low fee, it's been the absolute lowest fee that have attracted inflows.”
2017-09-21 · Masters in Business · Matthew Rothman · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I mean, the way I have really kind of understood the rise of indexing, and I'm probably not unique in my insight here, is that in 2008, what you would really, what investor is in 2009 really had hoped for was managers that were going to be able to give them some level of insurance and protect them in those moments in time. And that just didn't happen. And so I think people have been driven by lower fees. And I think the fiduciaries, the planned sponsors who are managing many of the retirement accounts and pension funds have been disappointed by that fact as well. And so you've seen this move towards lower fee types of investing that can deliver you what seems like to be the same kind of outcome for a lesser price.”
2017-09-21 · Masters in Business · Matthew Rothman · IDENTIFIED FROM THE TRANSCRIPT · source
“The appropriate stock valuation should be. And so it's a wonderful tool that's very interactive and that people can really kind of compare companies all across the globe really on an apples to apples basis and look at it from a fundamental accounting perspective. It's very, very powerful and has a wide following across the investor base.”
2017-09-21 · Masters in Business · Matthew Rothman · IDENTIFIED FROM THE TRANSCRIPT · source
“When I started It's a great product. Yeah, no, no, it's a great product. It's not part of my domain. There's a team there that has been doing and that's been together for close to 25 years, maybe more than that. Pretty successful. Very successful. And what they've really done is collected accounting data for companies over that 2025 plus year period and figured out how to normalize it and really begin to look at companies across different industries and different countries and put them all on an equal footing and then really look at what are take those cash flows and look what really is the return on capital for these companies and the implied growth rates for them and kind of come back and then look at what is then being implied for”
2017-09-21 · Masters in Business · Matthew Rothman · IDENTIFIED FROM THE TRANSCRIPT · source
“That thread is fascinating. And I think that's even more true today than it ever has been. Today you shouldn't be putting Excel on your resume or a word, right? That's a given. Today, if you want to stand out, you better be talking about how you can program in Python in R and all those sets of skills that you have if you really want to be successful. So I think on Wall Street today and kind of going forward.”
2017-09-21 · Masters in Business · Matthew Rothman · IDENTIFIED FROM THE TRANSCRIPT · source
“You know, I'm not saying that he's look at the company he's built and all of those things. I'm sure he drives people to produce results. I would expect nothing else of a multi-billionaire who had the vision to build the incredible company that he and his partners have built. But you're right, the charming side of Cliff does not come through that. The witty, the hilarious, charismatic part that makes Cliff the legend that he is doesn't shine through in that book. And so those are the types of things that bother me about it.”
2017-09-21 · Masters in Business · Matthew Rothman · IDENTIFIED FROM THE TRANSCRIPT · source
“But I can understand it's someone who was so close to the story and so close to the characters that you see the embellishments. Sure.”
2017-09-21 · Masters in Business · Matthew Rothman · IDENTIFIED FROM THE TRANSCRIPT · source
“And Right. It's not like you Exactly. And so it's just little things like that which you just pick up and you're like, he's got the details wrong. And when someone starts getting the details wrong on little things that are so obvious. You start distrusting some of the other stuff where it's harder, where it's harder to see.”
2017-09-21 · Masters in Business · Matthew Rothman · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes. And, you know, those of us who are close to it, and you see, I mean, there's a detail in the book just as a small example that drives me crazy, where Scott has me coming off a red-eye flight from New York to San Francisco. There is no.”
2017-09-21 · Masters in Business · Matthew Rothman · IDENTIFIED FROM THE TRANSCRIPT · source
“Maybe. I mean, I know some of the characters in there. And some of them do have tempers. But I read the poker game that starts. When I was looking.”
2017-09-21 · Masters in Business · Matthew Rothman · IDENTIFIED FROM THE TRANSCRIPT · source
“No, no, no, no. It's fine. My frustrations with the book are that I found it a little overridden and a little over-sensationalized. So here's what I have.”
2017-09-21 · Masters in Business · Matthew Rothman · IDENTIFIED FROM THE TRANSCRIPT · source
“That was the relationships that I had with my clients that they actually gave me the outputs to their models because we all thought this was a really important problem to figure out of what drove us into these same trades. And what I saw was that the actual outputs of the models weren't all that correlated. It wasn't an alpha modeling problem. Because we talked about before, have different ways of predicting returns. If you and I were to say, what is the stock that's going to have the highest return over the next six months or ask your listeners, right, there'd be a lot of people who would have very different opinions on a stock like Netflix or Tesla or Amazon, any of the Fang stocks, any of those kind of things. We might all have very different forecasts. But if we were to ask what are the most risky stocks, we'd probably list a lot of those names. The dispersion in outcome, we don't know which way it's going to go.”
2017-09-21 · Masters in Business · Matthew Rothman · IDENTIFIED FROM THE TRANSCRIPT · source
“What I tried to do was decompose why we were into crowded trades. So I don't think there's denying that quants were holding the same portfolios. The received wisdom was that it was because our return prediction models, our alpha models were all the same, that we were looking in this, we were fishing for alpha in the same pond. And what I actually managed to do was convince The biggest quant firms out there that they should actually give me the outputs of their models for a period of a year. And they did. That's a lot of trust.”
2017-09-21 · Masters in Business · Matthew Rothman · IDENTIFIED FROM THE TRANSCRIPT · source
“I think where the models were off is in understanding liquidity. Wasn't appropriately kind of factored into that. And notions of crowding were very, very, were just not in the models, to be honest with you. We didn't know how to think about that. We didn't know how to think about crowding risk. We didn't know really how to think about liquidity the way we do today. We held more concentrated positions at that time. While we might have only held a fraction of average daily volume ADV and traded those carefully, we let those positions build up to much as a portion of our book.”
2017-09-21 · Masters in Business · Matthew Rothman · IDENTIFIED FROM THE TRANSCRIPT · source
“I think that's going to be on my tombstone. And, you know, some people have actually criticized me as not understanding that returns are not normally distributed for that statement. Of course, what I meant was that things were misbehaving on our models and our models were misspecified and wrong. And obviously we did not have the appropriate distribution of returns if that's what our models were saying. I clearly understand statistics and clearly it was a pithy way of trying to say our models are absolutely wrong if that's what we're predicting and we're seeing them three days in a row. We don't understand what's going on our models are wrong.”
2017-09-21 · Masters in Business · Matthew Rothman · IDENTIFIED FROM THE TRANSCRIPT · source