YouSaid · the spoken record

Victor Haghani

lines on the record: 73
first: 2025-11-12
most recent: 2025-11-12
sittings or episodes: 1
sources: podcast

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“Thanks, folks. I really enjoyed it too. I mean, so we've got the ElmWalth.com website is like our main website where we have all of our research, the games. We have a coin flipping game, the crystal ball game. But then also we have an ETF and that has its own website, elmfunds.com.com. But you could get there from the Elm Wealth website too. But Elmfufunds.com and that has all the information around our ETF, which is a low cost diversified dynamic index investing application. The ticker is ELM and it's called the El Market Navigator Fund or ETF. And so there's information there. But for all of our research and writing and stuff like that, there's more fun on the Elm Wealth website, but the Elm funds. And then, you know, I'm pretty active on LinkedIn. I tried to do some short videos when we put.”
2025-11-12 · Forward Guidance · LTCM Co-Founder on Risk, Leverage & Simplicity | Victor Haghani · IDENTIFIED FROM THE TRANSCRIPT
“That's not good, I think. I think that leads to underperformance because it's a kind of return chasing thing that creeps in.”
2025-11-12 · Forward Guidance · LTCM Co-Founder on Risk, Leverage & Simplicity | Victor Haghani · IDENTIFIED FROM THE TRANSCRIPT
“Well, I just want to be simple. And, you know, John Bogle said, we think he said the best investment strategy is the one you're going to stick with. And I think that's such a, you know, maybe we're getting to the end of our hour together. You know, like that's such a good thought that, I mean, that's something that I've thought about a lot, that I just want to follow something where I'm going to stick with it. And that means that the reason I'm doing it is not because it's had a good historical performance, but the reason I'm doing it is because it's really resonates with me deeply as a way of investing. And if I can find that, whatever it is that resonates with you and other people, like if you find something, approach to investing that really”
2025-11-12 · Forward Guidance · LTCM Co-Founder on Risk, Leverage & Simplicity | Victor Haghani · IDENTIFIED FROM THE TRANSCRIPT
“To estimate the return of all positions prospectively, right? We're back in this I cannot estimate it. There's some people that might be able, like maybe Suskehanna can estimate it, but I don't even think Suskehanna can. I think Suskehanna just runs a market making business. So I would say that I think Vall is just how can you, it's like oil. I can't estimate the expected return. And if anything, I'd say, well, long, but who knows with VAL? I mean, you just get these worlds where the whole world is selling VAL and these crazy structures and VAL is low. Now being long vault has a positive expected return. And then other times, who knows, what the hell is going on with VAL? And so I just am not, you know. I would rather just own less equities than start volt trading around it.”
2025-11-12 · Forward Guidance · LTCM Co-Founder on Risk, Leverage & Simplicity | Victor Haghani · IDENTIFIED FROM THE TRANSCRIPT
“And it's starting to get complicated. And then I think gold from those three, you know, I think gold is the one that's like the easiest. It's like super low cost, super liquid. Got some nice characteristics. It helped a bit. But it just what helps so little. I'm kind of afraid, a little bit of vaL. You know, I think that VAL, like what eval just, what if people realize, you know, like people might very well just realize that Vall is a hedge. And so now I'm just holding something that has a negative expected return being long vault, has a negative expected return and it's hedging me. Well, I'll just have less of the risk. Like I don't really need the hedge. And there's no way nobody knows any way that we know. There's no easy way.”
2025-11-12 · Forward Guidance · LTCM Co-Founder on Risk, Leverage & Simplicity | Victor Haghani · IDENTIFIED FROM THE TRANSCRIPT
“I like it, but again, and also I can't really verify what the expected return is. You know, I think gold is gold is a little bit like oil in the sense that it's big asset and it probably should have a risk premium, but it's hard to analyze what it is. But you could say, well, I think gold is going to appreciate in the long term at per capita GDP, at the growth of per capita GDP. That's going to be gold. So gold is going to grow. So maybe the growth of gold is inflation plus a couple percent. And okay, I could use that as an expected return. And then it has these kind of nice characteristics that it's a bit of a safe haven. So I could see a little bit of that, but I just don't want to have a lot of gold. And so I'm not going to get a lot of, you know, it's not going to move that for me, it's not going to move the needle a lot.”
2025-11-12 · Forward Guidance · LTCM Co-Founder on Risk, Leverage & Simplicity | Victor Haghani · IDENTIFIED FROM THE TRANSCRIPT
“Possibly, I mean, let's start. Let me start with an easier one, I think, you know, which is like trend following. I think that trend following has this characteristic where I think it does has done and should do pretty well in these bad markets. It seems to have a negative correlation with beta and all of that. And I like it, you know, but it just isn't, I can't get it low cost and tax efficient really, you know. And so.”
2025-11-12 · Forward Guidance · LTCM Co-Founder on Risk, Leverage & Simplicity | Victor Haghani · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I think that's fair. I think just to maybe sharpen the answer, we could also contrast what you just said there against some of the more exotic forms of diversification. And I almost might tie back to year tense back in the day of the Yale Endowment thing. But when I think about other forms of diversification, whether it's adding long volatility, for example, saying trying to hedge left tailor risk and that sort of thing or gold and these days there's a lot of talk about debasement hedges and that sort of thing is there is there any place for those styles of diversification in a portfolio?”
2025-11-12 · Forward Guidance · LTCM Co-Founder on Risk, Leverage & Simplicity | Victor Haghani · IDENTIFIED FROM THE TRANSCRIPT
“This is how it is. I just close my eyes and I just take this, everything has a risk premium and everything has the right risk premium. And I'm just going to invest in that so that I have in this stylized world, I have the optimal portfolio in the stylized world, and that's risk parity. And it's like, well, maybe that's the way the world is, but I want to see it. I'd like to see it. I want to be able to verify it and not just trust it.”
2025-11-12 · Forward Guidance · LTCM Co-Founder on Risk, Leverage & Simplicity | Victor Haghani · IDENTIFIED FROM THE TRANSCRIPT
“Believe for sure. I mean, inflation sucks Unexpected inflation is a terrible risk. But I can't see the compensation. So I know it should be there. You know, the compensation for bearing inflation risk should be there. But if I can't see it, I don't want to just take it on faith. If I can't see it, nobody else can see it either. And so how are we pricing it? How is it getting priced? And I think that with inflation risk It sure feels like sometimes inflation risk is not priced into the long end of the curve at all or the risk premium for oil. Gosh, sometimes it really has felt, I mean, I don't know, but it sort of felt like times. I just don't want to believe it. I don't want to just be a belief investor and not be able to quantify it. You know, like I don't want to be like a risk parody investor that's like, oh, you know.”
2025-11-12 · Forward Guidance · LTCM Co-Founder on Risk, Leverage & Simplicity | Victor Haghani · IDENTIFIED FROM THE TRANSCRIPT
“And I think that's diversification. That's the best diversification you can get before you hit that kink. Then there's a kink. After that, there's a kink that's like, okay, now you want this other stuff. And some of the stuff is at 30 basis points, right? So like, you know, look, there's a preferred stock ETF out there, I think. I don't know where it is. Maybe it's 30 basis points. It's like, oh, you know what? That's probably not worth it anymore. There's very little diversification and it's 30 basis points. And then now you're into private credit, private equity, where the fees are much higher. And I say, well, I like that diversification, but I'm going to stop there. And, you know, ultimately, the systematic risks that are out there that we can get compensated for, the systematic risks are not just like equity beta risks, right? There are these other risk factors.”
2025-11-12 · Forward Guidance · LTCM Co-Founder on Risk, Leverage & Simplicity | Victor Haghani · IDENTIFIED FROM THE TRANSCRIPT
“And not have as much diversification as we can get. And so I think that the right amount of diversification is really like the maximum amount of diversification you can get at a low fee. So I would just keep diversifying to the maximum extent that at the margin I can keep doing it at a low fee. So if it turned out that like the S&P 500, this is not the way the world is, right? But if the S&P 500 had a fee of three basis points, then small caps had a fee of 50 basis points, and then private equity has a fee of 400 basis points, like owning the S&P 500 and small caps and private equity, that's really nice. That's good diversity.”
2025-11-12 · Forward Guidance · LTCM Co-Founder on Risk, Leverage & Simplicity | Victor Haghani · IDENTIFIED FROM THE TRANSCRIPT
“So, yeah, I mean, I remember a long time ago I was talking to my mom and I was like, mom, you should get into these ETFs. They're very diversified by VTI. It's the whole US stock market, buy VXUS. It's the whole non-US stock market. It's good. You know, they're really good. There are low fees. They're tax efficient, whatever. And she was like, okay, I'll do some of that. And then, you know, after a while, a couple years went by and I looked at her portfolio and she was like, look at all the ETFs that I have. And she had like 20 different ETFs. She had, you know, the energy ETF, the utility ETF. All these different ETFs. And I was like, why do you, you know? Well, you told me to get ETFs, you know, and but so as you say that we can get into that we can own a hundred different stocks in an ETF.”
2025-11-12 · Forward Guidance · LTCM Co-Founder on Risk, Leverage & Simplicity | Victor Haghani · IDENTIFIED FROM THE TRANSCRIPT
“I completely agree. I will be surprised if we see a valid criticism against that in the comments. I think you are correct, and it's a great point. The last big bucket I also want to dig into here is just around correlation diversification. You mentioned a couple times here about the importance of you don't want to be taking idiosyncratic risk. You want to be taking market risk and be compensated well with the correct risk premium for that. Yeah, underline that idea of idiosyncratic risk is this idea of effective diversification. And I would just love to hear about your perspective on that idea of diversification because I think what happens a lot of the time is when people go down the route of index investing, pretty quick they land up in something that is perhaps just like a Nasdaq market cap weighted index, something of the sort, which, yes, you're earning a lot of different companies, but their correlations are actually all very positive with each other.”
2025-11-12 · Forward Guidance · LTCM Co-Founder on Risk, Leverage & Simplicity | Victor Haghani · IDENTIFIED FROM THE TRANSCRIPT
“Every day, every month, every week, every year. But we're going to always be thinking about that. And that's how we're going to come to it. We're not going to give you a portfolio that's based on how assessment of your risk aversion, but has nothing to do with prospective returns.”
2025-11-12 · Forward Guidance · LTCM Co-Founder on Risk, Leverage & Simplicity | Victor Haghani · IDENTIFIED FROM THE TRANSCRIPT
“I mean, maybe I'm missing something. And somebody will say, no, this is why 60-40 makes sense. It's not an abrogation of duty on the part of an advisor. It actually makes sense. For these reasons, and I don't see exactly what they are. But to me anyway, it just feels like there is no real benchmark. It's just, you know, what's the expected return? What's the risk? What's your risk aversion? That's the right portfolio for you today. And next month, it could be different. And next month, you might not, you know, next month your optimal portfolio could be different. And we're not going to move you all the way there because there's going to be taxes. There's going to be transactions costs, whatever. But at every point in time, we're going to know what the expected return is, what the risk is, what your risk of aversion is. And we'll be thinking about that. We might not change your portfolio.”
2025-11-12 · Forward Guidance · LTCM Co-Founder on Risk, Leverage & Simplicity | Victor Haghani · IDENTIFIED FROM THE TRANSCRIPT
“is a constant always in the future today and always. And, you know, we make and then making some assumption of the risk aversion of the investor to meet that. But nobody believes that the expected, that the ratio of expected return to variance or that the expected, I mean, the variance of the stock market to a long horizon tends to be pretty constant, maybe. And to shorter horizons is extremely variable. So it's like, it just doesn't make sense that you've got this thing that's very variable, the risk, you've got this thing that's very variable, the expected return relative to safe assets, and your asset allocation should be changing. And let me just say that if you just go back historically and look at that, then you see that, yes, the asset allocation should have changed dramatically historically based on expected return and risk. And so I just don't understand.”
2025-11-12 · Forward Guidance · LTCM Co-Founder on Risk, Leverage & Simplicity | Victor Haghani · IDENTIFIED FROM THE TRANSCRIPT
“Of the 60 of that 60 of equities, I think that's like, I don't know. I mean, I don't know. Maybe it's too, maybe I would be too inflammatory saying it, but it's like it feels like malpractice. I mean, how can you make any investment decision that is not based on the expected return and risk of the things that you're investing in? And 60-40 or target date fund is basically saying that it's saying one or one of two things. I mean, to be charitable to it, to be charitable, it's saying the expected return is always the same in the future or actually what it would be saying is the relationship between the expected return and variance of return.”
2025-11-12 · Forward Guidance · LTCM Co-Founder on Risk, Leverage & Simplicity | Victor Haghani · IDENTIFIED FROM THE TRANSCRIPT
“You know, it's not that easy to think about the whole risk aversion thing, you know, especially when you're younger, you've got all this human capital and financial capital. How do you bring your human capital into your investing decisions? Well, in some ways it's hard. In other ways, it's kind of could be easy. It's like, well, I'm just going to be 100% in equities because I've got all this human capital and I don't have much savings. I should, you know, depending on the nature of your human capital, if your human capital is like the stock market, then it's like, well, I'm invested in the stock market. I don't have to be super invested in my financial capital. But those are all the ways of thinking about it. And so, you know, I think that in some ways, the idea of the static asset allocation, like a 60-40, like some advisor says you're a 60-40 person, and that there's no discussion of the expected return and risk of”
2025-11-12 · Forward Guidance · LTCM Co-Founder on Risk, Leverage & Simplicity | Victor Haghani · IDENTIFIED FROM THE TRANSCRIPT
“Well, I think that portfolio sizing is no real concept of a benchmark really, that the risk that we take should just be a function of expected return, risk, and risk aversion. I don't know of any alternative to that. Like there's no such thing as a benchmark, you know, that 60-40 has no meaning in any way. I mean, it's just, what's the expected return? What's the risk? What's my risk aversion? What's my risk preferences, which could be different at different levels of wealth? I could be one level of risk avert.”
2025-11-12 · Forward Guidance · LTCM Co-Founder on Risk, Leverage & Simplicity | Victor Haghani · IDENTIFIED FROM THE TRANSCRIPT
“I am curious just on that point of sizing, like contrasting it to what I would say is the baseline these days, which is just this classic target date fun style where maybe you have 60% equities, 40% bonds. And as you get older and closer to retirement, that rebalances into more bonds. Is that like the correct baseline to think about sizing? Or if not, how do you think about portfolio sizing?”
2025-11-12 · Forward Guidance · LTCM Co-Founder on Risk, Leverage & Simplicity | Victor Haghani · IDENTIFIED FROM THE TRANSCRIPT
“verify the risk premium forward looking, not backward looking. And so that gives me the portfolio. And then I have to decide, okay, how much of these things do I want? And that's not so difficult, really. Because I've got my expected returns. I have some idea of risk. I have some idea of my own risk aversion. And the portfolio just kind of falls out from there.”
2025-11-12 · Forward Guidance · LTCM Co-Founder on Risk, Leverage & Simplicity | Victor Haghani · IDENTIFIED FROM THE TRANSCRIPT
“It is possible to estimate the expected return of equities over a long horizon because it's coming from earnings and earnings growth and retained earnings and all of that. So I want to be able to verify, and that takes me to that really narrows things down. Now I'm into things only that have perspective cash flows, and that leaves me with very few, there's very few assets at that point. Then I'm like, okay, I want I don't want to pay high fees. I don't want to take a lot of idiosyncratic risk. I said that already, but I'll say it again. And I want the things to be tax efficient. And when I go through all of those screens, you know, I wind up with broad equity market ETFs. I wind up with some real estate. And that's about it. You know, some REITs and that's about it in terms of risk premium stories being able to verify the risk premium, you know, having a good way.”
2025-11-12 · Forward Guidance · LTCM Co-Founder on Risk, Leverage & Simplicity | Victor Haghani · IDENTIFIED FROM THE TRANSCRIPT
“Pimco Capital Market Assumptions bring it up on my screen and I see Pimco has a tenure forecast for US equities and I'm like, wow, look at that That's not too far from mine and I can go to Morgan Stanley and I can go to AQR and I can go wherever I you know and I can get 20 or 30 of these numbers. I can compare it to my number and you know what everybody's kind of coming up with pretty similar numbers more or less because”
2025-11-12 · Forward Guidance · LTCM Co-Founder on Risk, Leverage & Simplicity | Victor Haghani · IDENTIFIED FROM THE TRANSCRIPT
“Thirty year government bonds should have a risk premium. You know, there's inflation risk in them, there's default risk in them, but it's very difficult. I mean, there's ways, you know, but it's very difficult to see what to estimate what that risk premium is for people to agree on it. Now, broad equity markets actually, you can, you know, that you can estimate it. You could look at earnings yield. You could look at dividends and growth and buybacks. You could put these, there's different ways all coming back to where I can make an estimate of the expected return of equity markets, broad equity markets for the next 10, 20 years with some simple metrics. And I can agree with other people about it. I could go to PIMCO and say, hey, what do you guys think? I mean, not that I call them up, but I could say, Pimco, what do you guys think? And I just say.”
2025-11-12 · Forward Guidance · LTCM Co-Founder on Risk, Leverage & Simplicity | Victor Haghani · IDENTIFIED FROM THE TRANSCRIPT
“And shouldn't have a risk premium. I don't want to take zero some bets against other people because I bet they're smarter than me. So I just want these systematic risks with as little idiosyncratic as possible. So then the next thing is, okay, I want to be able to estimate the expected return of those things. So it's not enough that they should have a risk premium. I want to also be able to verify that it has a risk premium prospectively. Well, that knocks out a bunch of these great asset classes like oil, right? It should have a risk premium, but there's no way to calculate that. You just like should have a risk premium, but it's impossible. You know, sometimes it's in Contango, sometimes it's backwardated, sometimes it's low, sometimes it's high price. It's not possible to come up with a satisfying way of calculating its risk premium.”
2025-11-12 · Forward Guidance · LTCM Co-Founder on Risk, Leverage & Simplicity | Victor Haghani · IDENTIFIED FROM THE TRANSCRIPT
“40%. That's a really nasty risk, and it should earn a compensation. Real estate is another asset that should have a risk premium. Oil should have a risk premium. It's a huge asset. There's $100 trillion of reserves out there that people have to own. If you own it, you should be getting a risk premium compensation for that. So, you know, private businesses should have a risk premium. They're part of the whole equity market. So that's the first screen. I want something that has a valid reason to have a risk premium. I don't want to take idiosyncratic risk that people can diversify away. Not to say that there aren't alpha opportunities in them, but for me, I'm not going to get the alpha. I don't want to take risks that I could diversify or that other people could diversify.”
2025-11-12 · Forward Guidance · LTCM Co-Founder on Risk, Leverage & Simplicity | Victor Haghani · IDENTIFIED FROM THE TRANSCRIPT
“It's very liquid and efficient as a low risk investment. So that's that. When it comes to risky assets, I have a screen that narrows things down for me. The first one is when it comes to risky assets, I want to own risky assets that should logically pay a risk premium that should offer compensation for taking that risk of owning that thing. So that means that the risk that I'm bearing has to be like a systematic risk. It has to be an undiversifiable risk. It has to be an ugly risk. It has to be a risk that really hurts when it goes wrong. You know, it should be a risk that the stock market in aggregate is that kind of risk, right? People lose their jobs when the stock market goes down 40%. The price of people's homes goes down when the stock market gets down.”
2025-11-12 · Forward Guidance · LTCM Co-Founder on Risk, Leverage & Simplicity | Victor Haghani · IDENTIFIED FROM THE TRANSCRIPT
“So, you know, in terms of the building blocks, right? Millions of things that we can invest in. So we need to have some kind of a screen to narrow things down to an investable universe that's manageable for us. And everybody has to do that in some way because we can't look at every investment out there and analyze it. So for me, my screen for building a portfolio was okay, first there are some safe assets and I want my safe assets to be as safe as possible. I know that nothing can be totally safe. I want them to be as safe as possible. I want them to be low fee, liquid, right? So that kind of takes me into treasuries, some treasury portfolio mostly. Not to say the treasuries are risk-free, but I think they're as low as risk as anything and they're relatively tax efficient. They're low cost. I can get into.”
2025-11-12 · Forward Guidance · LTCM Co-Founder on Risk, Leverage & Simplicity | Victor Haghani · IDENTIFIED FROM THE TRANSCRIPT
“No, I think that's really great. And I think those vignettes are important for people to consider in light of, especially in this day and age, the idea of just these federal reserve press conferences, they just feel like the Super Bowl for discretionary macro trading and everybody gets on top of them. So I think it's really valid to just unpack the validity of these. And I think it does pair nicely into you didn't mention earlier about your modern approach, which is this dynamic index investing. And I do want to unpack a little bit about how do you derive, you mentioned already, like what to buy, but also how much. I want to focus first on the what to buy and how you decide on asset allocation.”
2025-11-12 · Forward Guidance · LTCM Co-Founder on Risk, Leverage & Simplicity | Victor Haghani · IDENTIFIED FROM THE TRANSCRIPT
“It was like almost like trading places, the movie. I think that's a really interesting aspect of the whole thing As well. So, anyway, I don't know. I hope that's a long answer to that question.”
2025-11-12 · Forward Guidance · LTCM Co-Founder on Risk, Leverage & Simplicity | Victor Haghani · IDENTIFIED FROM THE TRANSCRIPT
“Here's your jacket, but you got to cut your losses early, let your profits run. And the turtles, the turtles all made a lot of money, and they didn't know anything about anything. You know, they were just off the street.”
2025-11-12 · Forward Guidance · LTCM Co-Founder on Risk, Leverage & Simplicity | Victor Haghani · IDENTIFIED FROM THE TRANSCRIPT
“I think that macro traders who have wound up getting some kind of aligned with trend following one way or the other has been a successful approach to macro trading and it's difficult because we're programmed to let our losses run and cut our profits early. And it's difficult, it's only some people are wired or are able to function in that way. And there's a huge literature around this. I don't know if you've heard of the turtles experiment. In the Chicago pits, there were the whole, forget the names of all the guys, but there was the turtle experiment where they basically just took people off the street and said, here, here's your do whatever you want. Here's your jacket.”
2025-11-12 · Forward Guidance · LTCM Co-Founder on Risk, Leverage & Simplicity | Victor Haghani · IDENTIFIED FROM THE TRANSCRIPT
“That's really made me feel that it's a very challenging thing in general to read the macro tea leaves and to know what the market's going to do. I do think that there's an element that one thing that's been a tailwind for different macro traders who are doing kind of this general macro trading, but behind their macro trading is a philosophy of cut your losses early, let your profits run. And if you have this framework or paradigm of cut your profit's early ledger, sorry, cut your losses early ledger profits run, that basically lines you up with trend following. And we know that trend following has been very successful over the last 30, 40 years or even longer than that.”
2025-11-12 · Forward Guidance · LTCM Co-Founder on Risk, Leverage & Simplicity | Victor Haghani · IDENTIFIED FROM THE TRANSCRIPT
“We're still the same pattern. It's very, very difficult. You should try your hand at it. And I think that It's very difficult. And one thing that we did after we had kind of run the experiment, we were like, you know, I wonder what would happen if we went to some really successful macro traders and had them play the game. So I think we had like three or four or five very successful macro traders play the game and they did well. So there's something, you know, like they were really, it was really interesting to see the decisions that they made in playing the game. For one thing, I mean, there were a bunch of different things that were different about them than everybody else. So you could trade stocks and bonds. Those guys almost exclusively traded bonds was one thing. And the other thing they did was that they didn't trade on all the 15 days. You know, they really limited their trades to days when they had a high expected sharp ratio that they were going to get things right.”
2025-11-12 · Forward Guidance · LTCM Co-Founder on Risk, Leverage & Simplicity | Victor Haghani · IDENTIFIED FROM THE TRANSCRIPT
“Let people play this. Now we blacked out anywhere where it said stocks up, bonds down, but we left everything else. Just we just didn't let it say stocks up or bonds up or bonds down. And we let people play this. So 15 different times when you had a crystal ball, you could actually see the macro news, what that newspaper was going to say, you know, then. And people just couldn't make money on average. People couldn't make money playing that game. So we had, well, at this point, I think we might have had 100,000 people play the game, but we had about 100 people play it for money at the beginning. And those people really couldn't make money on average. Some people did, some people didn't. And when we've had tens of thousands of people have played it since then, we haven't looked at it lately.”
2025-11-12 · Forward Guidance · LTCM Co-Founder on Risk, Leverage & Simplicity | Victor Haghani · IDENTIFIED FROM THE TRANSCRIPT
“Happened on Tuesday. We would let you trade at the prices on Mondays close. And then your trades would be liquidated at the end of Tuesday. You know, after all of the news that the Wednesday paper told you about had happened. And we let people do this on 15 different, we found 15 different days. We kind of had a random approach to choosing the days and getting the newspapers. And we tried to find days where stuff had happened, you know, so it wouldn't just be boring days. So we chose days of employment reports and Fed actions, et cetera.”
2025-11-12 · Forward Guidance · LTCM Co-Founder on Risk, Leverage & Simplicity | Victor Haghani · IDENTIFIED FROM THE TRANSCRIPT
“And we would give them money, and then they would play the game, and then we would pay them out based on how well they did. So they could, you know, with a half an hour playing the game, they could make $100 or something. So the game was that we would show you the front page of the Wall Street Journal from one day into the future, you know, past Wall Street Journals, but one day into the future relative to when you could trade stocks and bonds. So we would show you the newspaper from Wednesday morning for the Wall Street Journal, you know, November 15th, 2004, Wednesday morning, and we would let you do trades of going long or short stocks and bonds with leverage as of Monday's clothes, right? So the Wednesday morning paper would tell you what happened.”
2025-11-12 · Forward Guidance · LTCM Co-Founder on Risk, Leverage & Simplicity | Victor Haghani · IDENTIFIED FROM THE TRANSCRIPT
“Okay, so I'm trying to remember when it was. I think it might have been two, I think it was two years ago right around this time of year, we built this game, and I'll tell you what the game is. And we went around to different graduate programs. Well, we had a lot of people play this game for real money to see how they would do.”
2025-11-12 · Forward Guidance · LTCM Co-Founder on Risk, Leverage & Simplicity | Victor Haghani · IDENTIFIED FROM THE TRANSCRIPT
“As a discretionary macro approach, there was never, like I never looked back and was like, wow, I wish I had been doing some discretionary macro. Look, I got that right. I got that right. I got that right. No, I mean, I never, I mean, I just felt, I always have felt that I was, I would have been wrong more than I would have been right. But thankfully, I never really engaged in too much speculative, short-term speculative macro. You know, clearly some people seem to be good at it, and I'll talk about that in a moment, what might be going on there. You know, one thing that we did that was really, really fun was we created an experiment that we called our crystal ball challenge. And you can still go to our website and play this thing. I don't know if you've tried your hand out at Felix or not”
2025-11-12 · Forward Guidance · LTCM Co-Founder on Risk, Leverage & Simplicity | Victor Haghani · IDENTIFIED FROM THE TRANSCRIPT
“You know, I think that short-term macro trading is something that I never was good at. I never was successful at that. I never really did it because I never thought that I would be successful at it as well. But whenever I would think.”
2025-11-12 · Forward Guidance · LTCM Co-Founder on Risk, Leverage & Simplicity | Victor Haghani · IDENTIFIED FROM THE TRANSCRIPT
“over allocations and under allocations to different broad equity markets and broad asset classes that are all available low cost in a low cost tax efficient format”
2025-11-12 · Forward Guidance · LTCM Co-Founder on Risk, Leverage & Simplicity | Victor Haghani · IDENTIFIED FROM THE TRANSCRIPT
“have and or taken concentrated risk and again you know going back to my education and finance you know in the in the early 80s you know i had learned that idiosyncratic risk is not in general is at least stock idiosyncratic risk is not supposed to get a risk premium and so all these things came together as like all right i'm going to go into index funds and then i had this next question okay i'm going to be an index funds how much which ones how much should i own how much should i have in us stocks how much should i have in non-us stocks how much should i have in bonds in treasury bills in in reits in all these things and then that kind of led to this idea that it had to be driven by expected returns and it had to be driven by risk and then that is how we do dynamic index investing we have a simple expected return driver and a simple risk driver and that drive”
2025-11-12 · Forward Guidance · LTCM Co-Founder on Risk, Leverage & Simplicity | Victor Haghani · IDENTIFIED FROM THE TRANSCRIPT
“Much higher than I thought it would be and relatively high. And I was like, wow, you know, if I were just invested in an index fund, I would be first of all, most of my dividends would be qualified. And then also I would be paying long-term capital gains on some deferred basis, like when I wanted to sell those assets or spend the money or whatever. So I would also be getting deferral. And so I was like, wow, I'm going to have like a 20% lower tax rate if I just start investing in long-term investing in equities. So that was like really the aha moment for me, Emmanuel. I also just felt that I had a lot of idiosyncratic risk in my portfolio and that I felt like, you know, the only way that I was going to get alpha was either through leverage, you know, through people taking leverage on my behalf.”
2025-11-12 · Forward Guidance · LTCM Co-Founder on Risk, Leverage & Simplicity | Victor Haghani · IDENTIFIED FROM THE TRANSCRIPT
“And the tax inefficiencies were coming from two places primarily one place was that there was a lot of expenses that were coming through as miscellaneous itemized deductions, right? So for some of the funds, for some of the things, the management fee was not deductible against income. It was an expense that I couldn't deduct against anything. And there were all kinds of these non-deductible expenses that weren't going against income. And so those expenses all were like needed to be grossed up by like 50%, you know, to be, if I wanted to think about how to take them against a pre-tax income. And then there was also just a lot of ordinary income, non-qualified income and short-term capital gains that also came through everything. And so it wound up making my tax.”
2025-11-12 · Forward Guidance · LTCM Co-Founder on Risk, Leverage & Simplicity | Victor Haghani · IDENTIFIED FROM THE TRANSCRIPT
“By tax return for like 2005 or something or 2006 and I was like, you know, David, I thought that I made a 9% return on my savings this year. Why am I paying so much in tax? It seems like my tax rate is really high. I don't know. It was like 9% return and my tax rate was like, I don't know. 40% or something. It's like, I don't understand that. Didn't I have capital gains? you know, whatever and, you know, aren't the lower income numbers taxed at a lower rate? And as we went through my tax return for that year, my family's tax return for that year, you know, I realized that a lot of these alternative investments that I was in were very tax inefficient for an individual relatively normal taxable investor that I was at that time.”
2025-11-12 · Forward Guidance · LTCM Co-Founder on Risk, Leverage & Simplicity | Victor Haghani · IDENTIFIED FROM THE TRANSCRIPT
“And all of these things. And, you know, like the, for me, I was sort of getting dissatisfied with it over time primarily because it just felt like so, I just didn't feel like I was, that I had that I didn't feel financially free, you know, with a pile of papers on my desk, subscriptions, redemptions, prospectuses, all this stuff. Like it was just taxing on me to be doing a lot of this stuff myself investor calls, monitoring stuff. So first I was just really starting to fade on the whole lifestyle aspect of being David Swenson, but on my own. But then the icing on the cake for me was I was talking to my accountant David who had been my accountant forever, terrific accountant. We were going over my”
2025-11-12 · Forward Guidance · LTCM Co-Founder on Risk, Leverage & Simplicity | Victor Haghani · IDENTIFIED FROM THE TRANSCRIPT
“And what I saw around me was that everybody that was similar to me in terms of having grown up in the financial markets, you know, higher net worth, you know, not super high net worth, but higher net worth, everybody was more or less trying to be David Swenson and the Yale endowment. And so that's what I tried to do. from 2000 until like 2006 you know i was like you know a little um uh david swenson fanboy or something you know like trying to you know invest in uh you know an oak tree and this and that you know and and uh you know hedge funds and distress and private equity and venture and um”
2025-11-12 · Forward Guidance · LTCM Co-Founder on Risk, Leverage & Simplicity | Victor Haghani · IDENTIFIED FROM THE TRANSCRIPT
“So, I guess the first thing is that how did I sort of come to be an index fund investor before getting to the dynamic part, I decided at a point, maybe it was around 2006 or 7, that I wanted primarily to have my family's savings invested in index funds. And that's what I wanted to be the building blocks of my family's investment portfolio. You know, that was about five years or so before Elm Wealth got started in 2011. And as an individual investor, as a nonprofit individual investor, which is what I was at that time, I mean, I left the hedge fund world shortly after the whole LTCM thing was like over and transitioned out of. I was an individual investor at that point. And the first thing that I did around 2001 is I looked”
2025-11-12 · Forward Guidance · LTCM Co-Founder on Risk, Leverage & Simplicity | Victor Haghani · IDENTIFIED FROM THE TRANSCRIPT
“Sometimes modern is going back to some. Really good evergreen kinds of ideas. But I think that what we're doing in a way is also very modern in the sense that nobody else is doing what we're doing, which is really rather amazing.”
2025-11-12 · Forward Guidance · LTCM Co-Founder on Risk, Leverage & Simplicity | Victor Haghani · IDENTIFIED FROM THE TRANSCRIPT