The Derivative - Tech, Trust, and Tactical Investing: A New Era of Wealth Management with Kevin Jamali of Farther

Episode Date: June 26, 2025

In this dynamic episode of the Derivative podcast, Jeff Malec sits down with Kevin Jamali, Senior Vice President at Farther, for an unfiltered dive into the evolving world of wealth management. What begins as a journey through Jamali's career—from Chicago Board of Trade futures trader to alternative investment strategist—quickly becomes a provocative exploration of how technology and personalized advice are reshaping financial planning.Jamali and Malec dissect the limitations of traditional investment approaches, challenging the long-held belief that a simple 60/40 portfolio is enough. With wit and insider knowledge, they discuss how Farther is pioneering a new approach that integrates modern technology with deep financial expertise.The conversation weaves through Jamali's insights on alternative investments, including private equity and managed futures, revealing how these strategies can provide more robust portfolio protection. His background in trading and Brazilian Jiu-Jitsu emerges as an unexpected lens for understanding investment strategy—where adaptability, strategic thinking, and risk management are key. SEND IT!Chapters:00:00-00:53 = Intro00:54-08:45 = Navigating the Evolving Landscape of Financial Markets: Kevin Jamali's Remarkable Journey08:46-17:52 = Uncovering the CTA Advantage: Systematic Strategies for Gaining Investment Edge17:53-28:58 =Optimized Title: Revolutionizing Wealth Management: Farther's Tech-Powered Approach to Financial Empowerment28:59-42:45= Exploring Alternative Investments: Diversifying Beyond Traditional Portfolio Boundaries42:46-56:22= Unlocking the Power of Tactical Tools and Strategic Insights: Navigating Notes, Hedging, and Portfolio Engineering56:23-01:04:17 Buffered Notes Unveiled: Unveiling the Secrets of Strategic Risk Management and Customized Investment Solutions01:04:18-01:11:20  Balancing Passions and Pursuits: Exploring the Intersection of AI, Martial Arts, and Professional EndeavorsFollow along with Kevin on LinkedIn and for more information on Farther please visit farther.com!Don't forget to subscribe to⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠The Derivative⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠, follow us on Twitter at⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠@rcmAlts⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and our host Jeff at⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠@AttainCap2⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠, or⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠LinkedIn⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ , and⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Facebook⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠, and⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠sign-up for our blog digest⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠.Disclaimer: This podcast is provided for informational purposes only and should not be relied upon as legal, business, or tax advice. All opinions expressed by podcast participants are solely their own opinions and do not necessarily reflect the opinions of RCM Alternatives, their affiliates, or companies featured. Due to industry regulations, participants on this podcast are instructed not to make specific trade recommendations, nor reference past or potential profits. And listeners are reminded that managed futures, commodity trading, and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors. For more information, visit⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠www.rcmalternatives.com/disclaimer⁠

The importance of our business comes down to trust. Meaning when they come to me, it's this trust that they have in me that I'm going to do the right things regardless of what parts of it they understand and they don't understand. Welcome to The Derivative by RCM Alternatives. Send it. Hi, I'm Kevin Jamali, Senior Vice President at Farther, and we're here to talk about merging modern technology and investment advice on the derivative. Welcome everybody. Hey, Kevin, how are you? Doing good, Jeff. Thanks for having me on the show. Yeah. Where are you? At home? I'm currently at home, yes. You miss the city? Kevin and I have known each other for a long time. He used to be

a city guy like me and went to the dark side as we called it and moved to the suburbs. But has it all been good? It's all been good. I mean, I was born and raised in the city and the thought of moving to the suburbs was like a death sentence to me. So, you know, my wife was pregnant with the first child. She had to kind of pull me and I was kicking and screaming. But to be honest with you, now that I've been here, I've been sort of domesticated. And now the thought of living in a tiny apartment in the city doesn't appeal to me as much. So you can be in a house in the city, but you can be in a house in the city. Yes, that is true. But just a peace and quiet. Sometimes I catch myself when I

come downtown, like, oh my god, it's like so chaotic here. And I have to slap myself. I'm like, what happened to you? Jeff Eisenberg, who you know in our office, and he moved to Ohio, he comes for meetings sometimes, he's standing on the corner. He's like, there's more people right here in my view than I've seen in the last three months in in sleepy Ohio in my car. Yeah Jeff lives on a farm. So for him, yeah, that is a bit of a stretch Well, thanks for coming on wanted to get your thoughts you've kind of come at the industry from a different way We always have these guys who start in the stock world and kind of move into alternatives. And correct me if I'm wrong here but it seems like you kind of

started in the alts world, futures especially, and then kind of moved into not the stock world but sort of the stock world. So kind of want to dig into that kind of a reverse path that seems interesting. I think the listeners would like. So start us off where you started here in Chicago and we'll go from there. Sure. So I started my career at the Chicago Board of Trade way back in a day and my primary focus at the time was trading the yield curve. And then later on off the floor, I'll train the basis trade between the cash and futures. But actually without you know, I'm a bit of a dinosaur of the industry

I think I was one of the first people that started electronic trading the old project day overnight I don't know if you remember that or not do yeah. Yeah, so I was one of the guys that you know Be up all night and and so then eventually obviously as we all know what happened But we ever in a physical pit or you just went straight into the overnight? No. So from so after training projects today, I was in a five year pit. Got it. So initially it started out by, you know, sort of flashing the orders into the tenure pit or the bond pit. And then it was like the headsets.

And then towards the end of it, we had the handheld devices where we were able to you know, but on the trades and I remember like once again I was like one of the first ones with the device and Yeah, and then it just you know, we're guys like what the hell is that thing? Yeah, either that or guys like I want to kill that guy because you know, he's gonna right. It was more of that but my whole thing was It's inevitable. So you have two choices. You can either fight it or roll with it.

And it was just a matter of time before everybody realized that they have to either adopt it or move out of the way. Yeah, how many... What was the split originally? Like 50-50 or not even of people who were going to fight it or adopt it? No, there was a big push. I mean, initially it was like, you know, 99, 100 percent like nobody wanted it because we sort of knew what that meant. But, you know, once people started adopting it, it slowly grew. So like it was like me and maybe a few other people and then slowly more and more people

just by force, even though they didn't like it. Like I need to either have this device or not. And back in the beginning, I mean, it was insane. Sometimes like some of these orders were just all over the place where you could directly get some deep edges on the screen. It was illiquid. You know, they're trying to, I don't know who the market makers were back then, but yeah, so there were some good opportunities in that sense. And then you have some really crazy things that happened. I never forget 9-11, for instance. I literally went from being blown up multiple numbers above what my account had to, you know, eventually and not getting hurt by just a split second decision of covering a position because right when all that

stuff happened, I remember like on this screen, like let's say the market was like offered at 20 and I saw like a bid for like 30 bid or like, you know, oh two bid like the next price over which is a huge gap for you know know, those who understand the features. And we're talking about the five year market, by the way, it wasn't the bond tick side. Yeah. And obviously I clicked on it and sold it. I'm like, this is the, the mother of all edges, but something within me at that second. Um, and it was just, because we had no, nobody knew what was going on. And I covered it. Even though like, you know, I covered it like it was a profit, you know, I just lifted all the offers. Yeah.

And then the next thing I know, Jeff, like, you know, let's say if I sold O2s, a guy jumps up like 5-bit, 10-bit, 20-bit. I mean, it's... And I was like literally physically shaking. And it was in the beginning. So I had to call in the middle thing, I was calling the help desk for at that time. It wasn't project day at that time, I feel, whatever it was called, like the board of trade. So like for the actual tech, like, hey, are these real? I said, did I cover it?

Like, yes, did I, you know, what's going on? You know, is this trade real? And they're like, yes. I'm like, are these real? I said, did I cover like, yes, did I? You know, what's going on? You know, is this trade real? And they're like, yes. I'm like, are you sure? Are you sure? And then, oh, and then I bought some of it on the screen, too, because it was like a bid and then it was like an offer. So I was just like, you know, making sure that I was flat

and that insanity. So, yeah, there's some crazy stuff. Which is great. I think people think that 2011, right, wasn't that far back. 2001. 2001. Sorry, 9-11 in 2001. Not that far back. But those were early days. I explained to people, like, if you had gone on the floor and seen the paper, right, there are like six inches of paper on the floor every single day, like just to save the paper, right? They're like six inches of paper on the floor every single day, like just to save the planet, save all that paper every day, made electronic make sense. And

then you had some hungover kid like me at 6 a.m. meeting other hungover kids to figure out the out trades. I'm like, that wasn't a good system either. So it was begging for electronic. It needed it. Yeah, right. Yeah, it's sad to me. Where does that next layer of me and you come from that get into the industry via the floor? That's what I think is going to be missing in 20 years. Right, absolutely.

So then from there. From that I transitioned, and I was managing a CTA strategy for 10 years where we were trading. It was a completely different approach instead of like focusing on a few markets. We're trading roughly 80 markets, that's including the spread markets. It was 100% systematic, quantitatively driven, and it was, which was a complete different transition from what I was used to, right? So I did that for 10 years and then eventually transitioned into the role I'm in today, which is you know, I predominantly the focus of my focus within the team is investment management and

management and the use of alternative investments, the proper use of true alternative investments. Expand on the CTA a little bit. Do you miss those days? Like, let's put the three careers. So there's the futures trader, the CTA, right? You're trading your own money or you just, Clark, you're trading your own money Yeah, so initially I was back. Yeah, but then you know later on it was my own money Yes, yeah It was like trading your own money futures trading other people's money with futures and now Advising others people's money with all sorts of stuff, but just on those two do you miss the days of the CTA or was?

Where the pros and cons what were the ups and downs of that life? Yeah, so each one came with its own sort of, I'd say interesting experience, right? Obviously the floor days, it was the early part of my life where you're younger and just that whole environment and so on really appeals to you, everything about it. So you know it was fast-paced and I'm really glad and fortunate I got to experience it, right? It's not something that most people have ever seen or witnessed. The CTA side of it, it was completely different. You go from that to it's more institutional and the nature of how we're

investing in the decision-making process was very different. It took me a while to get used to that notion, right? Where in the floor it's all about edge and short-term trading in that world, at least the way our strategy was positioned is more long-term trading and there was no longer that edge and that's the part that really bothered me for a long time. Like where is the edge? And then you start realizing that the edge comes through your strategy design and your strategies and the team you have in place and so on. And then this world, especially given where at the stage I'm at in my life, I think it really complements it because it's a lot more personable, right? In the first part, it was all about me. The second part, it's very sort of transactional,

institutional here. A lot of people that I'm sort of working with are people I've known as relationships and you're covering the entire gamut of the wealth situation, which is a tremendous amount of responsibility that I don't take lightly right there's a lot of different facets I mean investments is one part of it but then there's other parts of it right there's state planning financial planning and all the things that comes together and that person is really leaning on you to to guide them through this journey and it's it feels really rewarding from that perspective so yeah yeah, so they each have

their own. And I think the way they stacked up now that I talk about it, I think it really was the right way. Like given the younger years, there's this like, you know, really like charged up, you know, for testosterone floor days to eventually like this more. Is that when you learned your jujitsu? When had to fight for for some fills on the floor so It was a little bit after that. Yeah, it was shortly It was towards the end and part of it where it yes I I got hooked on to jujitsu and I don't think we want to open up that Pandora's box because yeah I want to shut up. Yeah, this entire podcast could end up being like about Brazilian jujitsu

So give us the quick you won some medals at like the what were they called the Pan Am Games or something right? Yes I did when I took second place a couple of times both in Gi and Nogi. It's called the silver medal let's give you the silver medal instead of second place. Yeah I did win the first place at a color belt in the the old man worlds which back then was in Brazil. This is before they created the world masters, which is for 30 and up. So I did win that in Brazil as a collar belt in my weight division.

And then here, I took silver a couple of times at Pan Am's and the world championships at collar belts in my age group. That's what I tell my son, like, hey, you're getting to that age. You're going to start getting in fights and bar brawls and stuff like watch out. There's some guy who knows jujitsu or something and just have you on the ground begging for mercy within three seconds. Yeah. So, you know, the wrestler like, could you beat a wrestler? Do you think we're going off script here? But like to me I was always beware the guy with the cauliflower ear because they'll they'll take you down super quick

So so that debate has been put to rest right we debate was pre 1993 And then the Gracie family's kind of prove it through the original UFC's the first UFC's that you know clearly if someone purely is a specialist in their art, that Brazilian Jiu Jitsu will come on top. Now this with all the respect to wrestlers and we have a lot of wrestlers and I really respect the sport of wrestling, but the wrestling is not designed for submission. It's a sport. It's not designed to, you know.

Yeah, if you're down, designed to, you know... And the wrestlers, once again, phenomenal athletes, they really adapt well to our sport. So yeah, jiu-jitsu does that. However, interesting enough, I think there's... and we're all going to wait off script, but when you think about fighting and so on, there's two components that always adds to it, alcohol and ego. And if you really remove that, 99% of the fights wouldn't happen, right? But a lot of it is also in security. So I, you know, before Jujutsu, I was a lot more prone into, you know, getting into fights or something like that. But the more I did it, and the more better I got at it, actually that desire went away. Because I think once you're more secure that, you know, I have the ability to

clearly handle myself, especially against someone who doesn't know, then you're like, why would I? You know, like I don't want to get my shirt dirty. But on the floor, like, right. So what all the fights on the floor were those ego or alcohol? I said there's another third component to it. Drugs. Right, right, right.

And which was like, you know, which was crazy seeing grown men. And it was from from all walks of life, right. People who were like Harvard MBAs to all high school dropouts. But behaving the way they did, it was, it was. But that all had that same, like a little bit of a screw loose like someone who would be i'm gonna go compete In brazil in brazilian jujitsu, right? Yes, there was those people that yes had a screw loose that did that too. Yeah um So getting back to and then I wanted to say on the cta world

I was waiting for you to be like, oh just the raising money and dealing with the investors was was terrible and a hassle Yeah, so the cta world just the raising money and dealing with the investors was terrible and a hassle. Yeah, so the CTA world, the challenge with that was the time, like, you know, we launched in 07 and in 08, meta fees were up, I think, by 12 or 14 percent. So that was great. Then what happened was, is we got this rip from 09 that never looked back. So it was really a tough sell. Inequities. Yeah. Yeah. Inequities. Right. So it was a really tough sell of people that, you know, that you need this asset class of what it does. And it was a very difficult

environment too. Then you got that with like, you know, zero percent interest rates. I mean, it was like a compounding effect where the strategy for the most part was really having a difficult time raising assets and so on. And you're competing with long short equity, private equity, then private credit. So when did you, what did that look like where you're like, screw this, like stop fighting with these guys and join up. Like there's good stuff here.

Yeah. So back then, so yes. So there's two differences. Like now retail has exposure to private equity, private credit, right? Back then they didn't, the wealth management side. But back then, and yes, private equity hedge funds were always around. And it was just competing with like just the equities in general, because even like the more sophisticated, you know, places were just like were just like well right now let's just ride this

thing as long as we can ride it right so at that point it was like okay there's clearly something here but I think could be applied much better and more efficiently on the other side because of more importantly the democratization of alternate investments that's now available in retail just in the past five, six years where it wasn't available back then. So I'm like, okay, you know, there's clearly a value add and most importantly is right now I'm offering only one component of the universe of alts, at least the way I perceive it. I always say there's like multiple components and each one does a different thing. So now if you go over here, instead of me being a

guy fighting with them, let me be the guy to try to pick the best horses for the end client. And that's kind of where we are today, which is great. I mean, once again, the minimums are much lower, retail can get in. And now, instead of me being competing against one component of it, I'm on this side being able to pick from the best of the four or five components. Right, instead of like, hey, you need managed futures. Now, you need some managed futures. You need some of this.

You need some of this. Yes. To provide a different thing. Take us back farther was a tech company that became an RA. What is farther? What's the story there and how did you get hooked up with them? So farther was founded by Brad and Taylor back in 2000 2019 right before COVID. And it's backed by VC. And the premise for them was that the industry as a whole, from a technology perspective, is antiquated, it's outdated, and it's-

The RIA industry or the investment industry? Just the wealth management industry. Whether it's on the banking side, RIA side, I mean, you know. Yeah, yeah. Came from Goldman, Taylor, what was that, Fidelity at one point. So they're like, you know, it's broken and it's really ripe for disruption. So, and initially it was sort of, it's a parent company, it was a fintech company. But were they trying to be a robo advisor? Like a, no, no, so they can't even remember some of their names.

That was the biggest thing. Yeah, no. So the robo advisory model, it's that one. I don't think it has panned out to be what people thought it would be. And the reason being is because, you know, if you have a very simple financial situation or if you don't have that much money, yes, you can just use robo-advisory. But people with complexities, people with a decent amount of wealth, they like the technology component, of course, but they also need that human interaction, right? They need that expert advice in kind of bringing the two together. And I think what

makes FARTHER really unique is this is sort of like where we're integrating like the modern wealth experience with expert advice all into one place. And this story has been really amazing because when they launched in 2019, they launched with $400,000 in AUM. And then when I joined just two years ago, we were about $600 million the UM and today. We're about 8 billion so there's been a tremendous success and growth because a Because of you you like as soon as you join boom yes point four billion came in that that's

Exactly, I'm glad I'm glad you get that Jeff I don't know for some reason most people don't understand that well It's gonna come back to me because we use you for some of our personal stuff, so yeah. If only I had the 7.4 billion. So a few things you said. One, interesting to me that you're saying people want advice because that whole robo model was like,

hey, which I see with younger people, I don't to talk to somebody I want to do it on an app I don't want to have these big conversations I just want to click click click and get things done so are you saying at some point that tips over of like okay once you need some trust once you're putting money offshore you're setting up this or that like it just becomes too complex in the tech world to do. Yeah, so think about it this way, let's take a dentist for instance, that's going through, you know, like there's a lot of these roll-ups, the DSOs and then private equity is coming up. Aspendental. Yes, so let's say they want to go, they're going to go through liquidity of that. So right off the bat, you know,

because once again, you again, we're looking at it and that was the thing that I learned by the way through the process. I wrote an article on LinkedIn that I came at this industry purely from an investment perspective and the investment piece is important, but there's a lot of other components when we now we're talking about wealth versus purely money management. So through that lens, they want to talk to someone, okay, how much is my practice worth? You start from the valuation process, then you start talking about the exit planning and then the tax mitigations.

Like once I go through an exit, how do I position myself? You know, how does the world of the DSOs and the private equity roll ups work? So this is where the advice part comes in. If your team has those like, you know, components to it. What's a DSO for my friend, George? The DSO is the dental service organization. Got it. Yeah. Yeah. And so I want to throw in the sign.

Yes. So so long. You're a rabid anti-dentist. Right. So so when that part so you go through all those components and there's a estate planning and all of that Then the last part of it then becomes the investment part now that they've gone through a liquidity of that They've had the transaction you make sure everything has been Set up properly on the periphery now

We're talking about the investment piece and then even that part of it instead of just using robo advisors Where you're basically at the mercy of the market, riding the market up and down, then we can kind of start taking a more conscious approach of obviously what are your objectives. And then through that, how do we mitigate and manage risk? And then comes the implementation of different alternative investments. How do you overlay it? What kind of market environment we are, and then these are all the things that Roboradvisory just can't provide. Now if you're in your 20s and then you just want to like, you know, you're a W-2 employee and trying to

sock away some money, sure that could work in that context. Well it's weird to me because maybe we should start a new group. The alt should be available in a Robo, right? Like you can do, there's maybe we should start a new group of like the the alt should be available in a robo right like you can do there's etfs now there's all sorts of stuff you could do it's just their models or they're not willing to stick their neck out and and throw the alts in as a big component so yes and no so there's a couple issues with that uh first of all when we say alts are available uh and you know this stuff better than anybody, not also create an equal, right? There's different types of alts, each alt does a different thing is the first part. The second thing is the alts that would be, I'm assuming, available in a robot

advisory model will be purely just liquid alts, managed futures, which is only one segment. The other part is sort of like the custom that I do, or the private equity, private credit, infrastructure, and all these other components, I doubted if you could get that through Roll Advisory because I go, you know, I know the process of getting into those as you know. Yeah, well some like the, right, I think it's moving that way. You can get, there's like venture capital replication, ETFs and private credit replicate. But then we wait into the whole world of replication versus the real thing. But yeah, there's replications there. They're not structured the most efficient and effective way.

It's just like go to market. Let's just provide this format of it. But you know, why settle for that when you could get the firm that yeah this close Jeff no it just was like member was such a big thing and now you hear nothing about it anymore right and you'd think it'd be like infinitely more now with AI and everything that it would be top of mind for everyone but sort of died out yeah but you said something super interesting to me and this comes back to your days of CTA like when you're selling the CTA especially into high net worth family offices and I probably still fall into this trap You're trying to sell this track record and this and look at how good the sharp is and the correlations here

it's you're so myopic on the Benefits and the investment benefits that you and that's like ninth on their list of important things, right? So as you said they want to talk about their valuation, the tax mitigation. So where do you think that investment performance is, I'll say at farther and versus like the whole rest of the world? The investors you're talking to, where is investment structure on their list? Pretty low? Okay, so now you're really getting into the weeds and these are very okay. There's a couple of things. What I'm about to say it relates to me and my team at farther,

like you know there's different advisors. So to be clear I'm not speaking on behalf of farther in this sense. So when I think of the investment piece and you mentioned Sharpe ratio, to give you an example and this is the world we're operating in and this is why I really think there's a valiette for what I do. I was in a group thing discussion and a very successful, I mean extremely successful advisor and here success being defined by AUM or revenue generation, right? It was mocking me for wanting to know the sharp on my client accounts. The sharp is like, you know, he goes, I've been doing this for 20 some years and no one's ever asked me. And, you know, and, you know, so this

is the environment that he's bragging about, you know, clearly he doesn't know what the sharp is and so on for his client accounts and he's saying why you need it. But that's where I see that's where my responsibility comes in, regardless of how important it is for them. Like you and I know that those things are important when you're creating an investment for the client. Right. So part of the I think the importance of our business comes down to trust,

meaning when they come to me, it's this trust that they have in me that I'm going to do the right things regardless of what parts of it they understand and they don't understand. So through that lens, it matters of how I view all those metrics and I take the exact same approach as I did running the CTA. And, you know, to go into the extreme lines of Jeff, I like I spent the first three to six months compiling a data set for the private equity firms because you just can't get data in this industry. And there was a, because everybody looks at the one, three, five, 10 year numbers. Like, what does that mean? You know, like, well, I'm like, no, there those, I need money. That is the biggest jump from our world to that world is just, I'm

used to looking at the monthly table. Here's the years. Here's every month. Right. And then all the metrics. And now it's just like three, five, 10 year per I'm like, wait, what? I want to know. And they, and they push back like, you know, like we've been doing this for 20

years, like who are you? I'm like, okay, that's fine. You've been doing it, but this is the way I know how to do it. Right. Yeah. So I had to create it and you can't even get data. It's like pulling teeth of, you know, obviously with symbols, you could pull it, you know, I have different platforms here. I had to reach out to, you know, and then with private equity, they have all these

different vintages, this, so it's even hard to get a continuous track record. That's a whole different story. So to create this dataset, to be able to do some modeling and look at all the things that you mentioned, like what's been the standard deviation and dialed in. So those are the things that I talk about it. I know most of the times a lot of the end client or investors don't understand it, but that's okay for me. As long as I did my job of explaining it, but more importantly, it's my job to keep an eye on it and make sure it's it's being done the appropriate

way whether they appreciate don't appreciate realize it don't realize it because that's the right thing to do. Let's go back to the guy who doesn't care about it or maybe doesn't know it he or maybe they intuitively know that when I put these things together, it works out and they don't actually know the math. It's kind of to the point of that guy like, well, the investor doesn't care. Why do we need to worry about it? See your point, because I can't sit there across from the client with a straight face

without knowing it to the core, without knowing the math. Right. So if, so the, so one, one thing is, like, once again, a big part is education in, in, like I said, at least in this world, once a lot of it is based on trust and relationship. So even though they don't get it, if I tell them, if you trust these are the things that are important, and especially because of my background, they'll understand it. But like this, uh, from what happened just a couple of months ago, it was a tremendous opportunity for me to finally showcase why we do all the things that we do. Because for a lot of like the, the portfolios, um,

you know, the drawdown was like roughly, you know, 30 to 40% of what like the S and B drew down 19% and a lot of like, you know, average accounts were down anywhere between 6 to 8% only, right. But on the flip side, we were able to capture, you know, 60 to 75% of the upside. So and this was actually an extreme example. It turned out really well, because you know, like your drawdown could be only 6% but you're in cash. Yeah, you did it. And you did it. So that yeah, so I've had people come to me and say, I didn't lose any money during this period. I go, okay, how much have you made? How much did you not participate leading up to it? So you understand.

So it's dialing in the upside down side capture of it. And when that happened, I took that as a tremendous, I went to everybody to say, see, I know I keep poking you guys, you get to sign all those docu-signs, but this is the end result. And because the other problem is, and I still have yet to see in any religious scripture, regardless of your religion or the atheist book for that matter, for the non-believers, where it says the market will and has to be higher five or ten years from now. Yeah.

I'm not saying it's... But that is treated as scripture, you're right. It is, yeah. And I'm not saying that it's not. I'm saying I don't know. If it is, great. Let's make sure we ride it. But what if it's not? Let's have some guardrails and things to sort of mitigate it if that doesn't happen.

Because, you know, the one thing is, oh, in the long term, because everybody's been so conditioned, just bite a dip and eventually it will come back. And people tend to forget from, you know, 2000 and 2013, the market really didn't go anywhere where had you had this conversation at the beginning of 2000 it took almost a 2000th I mean oh wait we made a slightly new high and then it took you know 50% drawdown and then it took until 2013 where the market made a new high and during that time we witnessed two 50% peak to trough drawbacks. That can't happen again. No, it can't happen again, especially now. Yeah.

I can't let this go. I'm going to try one more time. Do you think the clients get so much benefit out of the tax advice and estate planning and trust setups, all that, that they forget about the investment performance? It always still boggles me why they don't care as much as they should. Or is it because the industry's created these documents that make it hard to actually know what your own performance is? So it's beyond that.

And by the way, everything I'm saying now, it's on my behalf. I don't want to, I'm not representing farther in the things that I'm saying now, but it's actually the industry's fault because most of the, even a lot of the advisors in the industry don't even understand that. They're like, what, you know, and like the markets are going to do what the markets are going to do. And I've had advisors talk to me like saying,

well, investments is not important. Like, you know, there's plenty of advisors who've done amazing in investments. And I'm like, no, what they failed to realize, they haven't done anything. It's the market that's basically, you know, and now I see so many client accounts that from other places and so on that when I run analysis, and for the most part, you know, they've underperformed on the upside and they've pretty much captured the same downside. So this, this actually, the client is the last part of it. Actually, the client here at that point, since it's your client and it has trust in you, takes your, what you're saying, that it's

worth it and it's important and like, okay, Kevin, you do what you have to do. I trust you on that. But it's more of like, so like going back, I talked to, I think it was like 20 firms before I settled on farther. Right. And when I would bring up these conversations, I mean, and these are like, you know, like, they just like look at me like, are you nuts? Like, what are you talking? Yeah, like your job is part of it, like, don't upset the golden goose, right? Like this is, and whether they're lucky or good, they paid everyone's bills for 30 years. Like just ride the market. That's what makes you money. That's what makes your clients money. Don't mess with it. Right. Your job is to gather assets, not to fiddle with

these types of things. Like, you know, like, and, and so I, and to father's credit, they were the only firm when I talked to them about this, even though they, at the time, were coming at it from a different perspective, the technology end of it, they were like, hmm, okay, this makes sense. We are sort of thinking along those lines, not as like deep as the stuff that you're talking about,

but it's a good fit, you come here, and they've been really open to adopting a lot of these aspects and components, and a firm-wide, and so on and so forth. So yeah, but it predominantly, and I think if we, when, not if, because I mean, and I have a chart I show people from 1928, the consolidation period, it's the 1920s,

and then you have the stack-relationary period, I think like in the28, that the consolidation periods, the 1920s, and then you have the stack relationary period, I think like in the, sometime in the 70s, early 80s, and then, you know, even in the mid 90s. So if we go back to more normal market cycles, where you have consolidation or drawdowns, I think, you know, some of these things are gonna start resonating. And just as you know, like when I was talking to those firms,

like 2022, every time there's a big drawdown, all of a sudden, everybody when I was talking to those firms, like 2022, every time there's a big drawdown, all of a sudden, everybody's all ears. Let's talk about risk management. Let's talk about all of them. Market reps are like, ah, I don't need that. Just right. Could you argue that all the trillions in wealth management and because they're blind to this, like that won't happen again. Like there's a right. Josh Brown wrote a blog a long time ago, the constant bid the never-ending bid That's just all this 401k money all this w-2 money just going straight into equities Forever will just keep this constant bid

That but I mean yes until right yeah, and and here's the thing so So that's that's real quick. That's my problem with some of the 20s comparisons. I'm like, it was very different. There wasn't auto debit into your investment account and all that stuff. It was like the whole world since then has been built to make you stay in stocks and put more money into stocks.

Right. So that's a big part of it. And then the other issue is that the people, like the part of the industry that's now adopting it and understands these things, right? They're slowly saying, okay, we do need uncorrelated investments and so on. Because the whole point is, you know, I say you can't manage your portfolio on a two-legged stool of stocks and bonds. You need that third like. I know Rodrigo right now is doing backflips. But especially given the fact that the other two

likes in the past couple of years have become even more correlated, right? So it's even more important to have an uncorrelated investment scene. So part of the industry is slowly waking up and understanding that. But the problem is that they think the savior now is private equity, private credit. Where I really like private equity, private credit, but I don't consider them as true game changers or alts. Meaning if we get hit with an OA type scenario, those asset classes are also going to get hit. Maybe not as much. And especially now, another thing that makes me a big concern is it's like they finally realized, wow, there's trillions of dollars sitting on wealth side. So they've opened up the spigots and they are just courting the retail wealth space. And there's a

lot of money flowing in. So what are the ramifications? So you got to make sure you go with the right managers who know what they're doing. I was joking around with someone the other day I said, you know 10 12 years ago everybody and the grandmother was roasting their own coffee beans, right? Then came the micro breweries everybody's like brewing their own beer now. Everybody's starting a private credit fund, you know I tell you how many like hey, you know, I got private like really what yeah Yeah so even like so even though I go in all these like conferences now and the entire alternate investment conversation is around private equity,

private credit. And, and I'm like, okay, well, you guys are getting a part of it. So I call like actually private equity efficient beta. To me, it's more like, you know, it's more beta, but capturing it in a more efficient manner versus public markets especially given the ridiculous valuation of where things are today and so on. Are you seeing which we've had a couple people on the pod like distributions dried up like the seems like there's cracks starting to show in the private equity model in the funds? Yeah so right now what you're seeing is and which which is interesting, coming into this year, it was supposed to be a great year for private equity. But given all the uncertainty around the tariffs, and you're starting to see this huge divergence

between the public markets and the private markets. Right now, liquidity is dry. There's no M&A activity. So a lot of these vintages are know, it's like year seven and so on they have to get out. Now they're stuck. They can't offload. So within the private equity world, you know, right now the opportunities like in the secondaries,

right? So the secondaries are able to buy these at discount. So there's nuances in that world. But yeah, you're seeing cracks at some of the direct buyout growth space but then at the same token that creates opportunities in the secondary market and so on. So even when you start thinking about creating the private equity sleeve of one's portfolio, you have to sort of think about these other nuances within it, not to mention the quality of the manager and so on and so forth. One more bit on private equity, then we'll switch.

We used to always rail against they don't have to mark to market, blah, blah, blah. Do you see that now as a benefit instead of a, right? Because it helps smooth out portfolios, it helps everything look better in the back test with the private equity in there. Yeah. So it's interesting. So first of all, there's been a lot of evolution in that space. Meaning in the old days, it was all the drawdown vehicles, right? Seven-year commitment, drawdown, you know, that's a whole different. Now there's a lot of these evergreen structures where they show up on your custodial statements and you get monthly mark to market, right? Having said that, I think private equity

they always have this notion of they can market wherever they want. So that's a different story. However, yes, you picked on something that most people don't understand is by a function of monthly reporting in itself, that's one way you reduce volatility. And that's why they're mistaking that,

they think it reduces a, it reduces volatility, it was less correlated. It's not that it just from the monthly reporting is one factor of it. The second thing is, and I looked into this, is the private equity is really outperform the public markets. And I like this space, as I mentioned, however, it goes back to blending in managed futures into a portfolio. So through the lens of if you were to compare on like the purely, let's say the bottom of just like two years ago prior to January, you see that private equity lagged the public markets. We're on a tear.

It's only after when you get drawdowns in the public markets where private equities drawdown is less that it allows it to start outperforming and recapturing the high water mark. So these are the subtle nuances which I could argue that was not real. Like the private should have been marked down at the same public market. Right. That's that's the rub like that. It's a feature not a bug that they're marking it less so in the drawdowns on purpose and the pensions all the endowments know that they're doing that but it helps them keep their job look at how less volatile we are so everyone's in on the on the game.

I don't know if I look at it that way because at the end of the day wherever they're marking it if you want to get out you know a lot of them after like especially in these structures I mean I use mostly like these evergreen structures now. Like, you know, if you give them like a month notice or quarterly redemption, you can't get out of these marks regardless of where they're, you know, so it's not as I see what you're saying. And definitely that's a part of it. The fact that what it were the price discovery really is.

Yeah, Cliff Asness calls it volatility laundering. Right, right. But to be fair, you can get out at those prices and so they, I think they provide a value add, but not through the way I think a lot of retailers looking at it as a savior of, that's all I need for my alt and that's it. That's all I need for my alts and that's it. So let's switch gears. So you found, farther and farther found you and you're starting to create client portfolios. You said what it was like three to six months of creating portfolios before you even started talking to clients. What did you find? What hit you right away of like, oh, this

is way better than I thought when I was just stuck in the futures world, or this was good? Like you mentioned private equity. What else stuck out to you? And then how do you kind of think of this puzzle? Of like, which pieces did you find attractive, and which pieces are you keeping in portfolios for the clients? So I think initially, I was like a kid in a candy store.

I have access to all these different, I was like, wow, this is amazing, right? On the flip side, I think I aged like 30 years just trying to get these things implemented and executed in one client account because there's a lot of, you know, there's taxable, non-taxable, there's various accounts and so on. That's a whole different story. The couple of things that was surprising, actually, I was surprised with some of the hedge funds, to be honest with you, I'd never really taken a deep look at the hedge funds. And

then I come to realize there's a reason why a millennium is millennium, you know. And because you know, the stats are ridiculous. Yeah, I mean, that the numbers are like, you know, there's a few of them. This was a plug for Millennium. But anyhow, there's a there's a couple of them that I use that the numbers are really, really solid. And through different market cycles, kind of they provide what the managed features world does. But a lot more consistent. And if the only thing thing is you're not going to get that crisis alpha component of managed features within them, but some of them. Then another thing I don't understand why they do this is, a lot of them are running a very low vol strategies. I know why they do it. So you put more money with them. More money in it. Right. We know why we do this.

In one challenge is like, know why they do it. So then so you put more money in it. Right, right, right. We know why we do this. Right. So in one challenge is like, what I do this, I'm getting a vol crush on my portfolios, right? So my portfolios are running like, you know, eight, nine vol versus I'm like, okay, how do I goose this up? So the surprising part was some of the hedge funds the way they behaved. Obviously, I, you know, I started like modeling the private equity behavior. I'm like, is private equity really this alternative investment? And I realized very fast that that's not the case, but it's efficient beta.

So I could shave off part of the beta on that. And then the other component, I really like using the notes, the structured notes that I do customize notes. So that part being able... And the way I view it, by the way, going back to your question is sort of like private equity is sort of like the beta part component of the alt sleeve. So if we have like up markets, that's going to, you know, we're managed futures, someone we're going to be lagging, that's going to drag it up. Private credit is sort of like the fixed

income part of your alt sleeve, but with its own nuances, meaning, you know, right now you're getting about 8 to 10 percent steady yield with a steady NAB. However, if we get through like a COVID or 2008, you will then NAV will take a dip where traditional fixed income might get a bit, you know, flight to quality aspect. So that's how those pieces then. So I'll interrupt you real quick. Like, why do you have an equity in a bond portion of your old sleep? So, right, so is there a traditional? Yeah, no, so two reasons. So the way I think about it is, let's say, take a simple 60 40. I'll shave off maybe five to 10% of the 60 to redeploy it in private equity. Okay,'m getting it's sort of like I get both feet and part of it is pure beta capture. The more efficient matter that technically isn't within my alt sleeve, the way that it gets compartmentalized in our space. Not all of them. So like some of the

private equity funds that I use, they get like a 0.55 correlation or something like that. So it's not as correlated. So that's why I use it. And then so that's private equity, private credit. So I use them to manage futures piece, which is a smaller piece of it for two reasons. A, since there's look through, most people can't stomach it, the volatility and the drawdowns. But I use that for like the tail risk. To my earlier point, yeah. Right. Right. I use that for the tail risk hedge. And I say it upfront. I say, listen, you see this?

This thing could be down 20% on a daily. And we're going to be OK with it. There's a reason why it's there. So I actually over exaggerate the horrors of it. And then you point it to April May. He's like, see? I told you. Right.

So I said, there's a reason for it. But you know, you can never, I don't want you to complain about individual components, right? You need to see this thing as a combination. And so long as our upside down side capture is far better than a typical 60-40, that's the objective or 70-30 or 80-20, whatever we're targeting against. So managed futures will be sort of like the tail risk part of it and then Hedge funds is kind of like your all-weather Yeah component within that and then I love the the notes that use it tactically given different environments And I kind of dial it in and so on and then on the hedge funds. Are you?

dialing into different Strategy types like what does that look like? I've just purely off the numbers of the best absolute return? Are you looking for, oh I'm missing a distressed debt manager or I'm missing a... Yeah, so I don't go, no, pretty much a lot of them are these multi-strategy sort of like macro, they do everything among the sun. And really when it comes to due diligence, that's another hard part, right? People are just like generically. So due diligence is very important for me. But I've sort of made this decision that obviously the numbers, you know,

the numbers are numbers, that's important. But also I'm going to go with the biggest and most well known names just from a blow up risk. I'm willing to forego the outsized return of some emerging manager, because I don't have the time to watch them 24 seven and be on top of them and do the proper due diligence. So I'm going to lean on, you know, multiple layers of like, you know, Mercer, for instance, like a lot of the funds that I use, like mercer has done a full due diligence report on him, right?

So check. The manager, ideally I want them to see, I've been in business prior to OA2C how they've done OA, check. Length of track record and then go with the more bigger and well-established names and then really use diversification. So a lot of times people like, you know, a lot of clients hate me in the beginning because I have to, you know, get into all these different, like, why do I need all, you know, I hold advisor out, do you put me in one private equity? And that was our old sleep. I'm like, well, you know, yeah, that's not

the way to do it. And then you're talking to me like, no, we want more. Right. Send me more DocuSign. Right. So that do you view so that hedge fund bucket, do you run that separately as correlations or each one runs its own correlations and analysis inside the portfolio? Like do you bucket that whole sleeve? No, so I run the whole thing. So I run like, you know, and the hedge funds normally is like only one or two because like, you know, the minimum investment size and if you want to fit all these pieces. So you run the correlation, make sure that if you're using like the two hedge funds or three hedge funds, they're uncorrelated. Then you take the correlation of that to the broader portfolio and then with the rest of your alt sleeves. Another thing that was very interesting when I was doing all this exercise, and I thought

the hedge funds would be very highly correlated to managed features and they're not. That was a good thing. So when I run across correlation across all these different asset classes, they're all truly uncorrelated. And they weren't, right, my fair be they're more correlated to equities than I would prefer. No, so the hedge funds actually, no, they're in their own sweet spot, which was interesting. But do you think that's because of the ones you're looking at? Like, was that your own? Oh, no, no, yes, yes, of course. Yeah, there's plenty of hedge funds that could have a much higher, yes.

Now you have to think. So you select that on purpose, the ones that are multi-strat non-correlated. Right, right, right. So that's what I'm looking for. Yeah, no, there's a lot of hedge funds. I mean, a lot of hedge funds get clobbered in no way as well as we know. So, yeah. And then do you think if you hadn't come from the futures world

that you would still put managed futures in there? Or do you think you were biased and had this like, I know how this works. Let me start putting in the like hard, hard for you to answer, right? But if you didn't know about them, would you have found them as this non-correlated piece? I think with Manage Futures, you know, obviously living it and having the education of it and understanding it is very important.

One thing I always tell people, Jeff, and this is really important, I'm like, I'm known as like the alts guy or the, you know, you like alts. I'm like, no, no, no, no. I'm neither either the false guy nor I like all so nothing but a pain in the ass Hey, there's nothing more. I would love to do is to sit there like a lot of people just click one button 60 would he move on and move on with my business instead of spending, you know a month pulling my whatever is left of You know follow it out of your face.

Yeah. The trade ticket, this, this. I said the reason I use it is because it's needed. Unless someone shows me otherwise how I can manage risk, improve risk adjusted returns, not using any other investments through stocks and bonds, I'm all for it. Please reach out. But I do it because it's needed. And then through that lens, I use all these different assets, these categories, which is additional

extra work, because I really think each component adds something of value that is needed, not because I like it or I have a predisposed love towards that industry. We all know, you know this, from a tail risk protection and a prolong, in capital letters people, prolonged sell-offs, managed futures have done well and they'll continue to do well. But they're going to be a drag on the portfolio as the times that we've seen. Now is that a big part of my portfolio? No, but it has its place along with everything else and depending on how you construct it to do what it has to do When we wanted to do it, right? I

Think you're the promise you're be like it's needed in the portfolio Which I agree anyone who does the math agrees but like all those people who don't or don't do the math It's just like you must be the old sky because that's all you talk about Well because it's needed well, no, is it needed right because and there's nothing else to talk about. Well because it's needed. Is it needed? Right, because there's nothing else to talk about like in the equity side. I mean I've seen, you know, and that's why for like the other parts of it, I pretty much use the cheapest ETFs possible because through that world, I've found very few managers have been able to beat the broader indices.

So why pay fees for something that you could get like, you know, for eight or nine bips like, you know, a simple ETF. So we're going to allocate the the beta part of portfolio through various ETFs. Now there will be some like tactical shifting, like, you know, international versus this or that or whatever you want to do. And then the rest of it, this part of it is where you really have to be very selective, do your homework, pick the right managers and so on and so forth. And then do you run into clients that are like, I just want a video. That's all I want.

I want all AI. Like how is that or is that not a fit? Like, well, that's not what I do. No. Yeah. So it's not everybody's a fit. But you know, to get haven't ran into any of that. Like I've had some people and they say I want all Nvidia, you know, or like not all Nvidia, but like I want to like do this. I want to get into any of that. I've had some people and they say, I want all on video.

Or like not all on video, but like I want to do this. I want to get into this stock. We're like, okay. I say, what is your exit? He's like, what do you mean? I'm like, well, what's your target? Just forever? Because I don't know.

I said, okay, where's your risk? What's your risk management strategy on this stock? If we get a stock that you love it, where's your out? He's like, well, what do you mean? Look at the guy who got into Tesla at 850 or something. Yeah. Right. So once I go through this exercise, it's okay. And by the way, so I use a lot of stock programs on the direct indexing side. Now that is something that's worthwhile, right? Because you're harvesting losses, offsetting capital gains. So for me, if I'm going to

deploy a lot of, and I have like large equity positions in those, but those are being professionally managed and there's a direct indexing side. So it's serving a purpose. A, we're tracking the indices because it's about expectancy of behavior, right? And on top of that, we're generating losses. But outside of that, sure, and we'll do individual names with clients. But then we go through the exercise of what is your risk? What is your objective?

And so on. It needs to be a well-thought out methodology and process to implementing a security in there. Or like I do personally, I have my play account. So there's not much money in there. And I can take flyers and have fun and be like, oh, I was in this small nuclear reactor company that went up 40%. But I know and I have none of what we just talked about and being a systematic guy, I

know I need it. But it's like super small part of my overall portfolio. It's for fun. It's to kind of be in the game when I know that that's not really how to build the wealth and then the rest of it is systematic in everything you're talking about and you're right, that's how I compartmentalize the two. Right, and I do, yes, so I always recommend that too, just have a play account, but then I say within that play account, depending on the size of your play account, take half

of it and go to Las Vegas, at least you'll get cops, you know, they'll take care of you. At least you'll get some rooms, hey, they'll take care of you. At least you'll get some rooms. Hey, that's a new... So if you're going to like, you know, blow your money that way, then at least let's get some benefits out of it. Before you go, you mentioned the buffered notes. I was a little sad to hear you say that,

because I'm like, oh, he's really gone to the dark side now. He's doing the buffered notes. I was a little sad to hear you say that cuz I'm like Oh, he's really gone to the dark side now. He's doing these buffered notes I've gone back and forth on them. I want to really understand how they work Give me your journey with the buffer notes how you got there so I Personally in my own accounts I would go 50 60 percent notes and I know the note thing I've talked, some people hate it with a passion.

They think it's the biggest ripoff creation of Wall Street. And there's the other side, they think it's a Holy grail. And the truth is obviously, as we know, with most things, it's somewhere in the middle, right? It all depends on how you use it, and when you use it, and so on and so forth. So the way, and I've looked into it, and like you said, how do they do this? Because initially I was a bit skeptical too, but then when I looked into it, it was two things. A, and we can, you know, at different times get into the weeds

of, you know, how they use derivatives to do it, but you. But a lot of times your capital is tied in, you're not getting the dividends on them and so on and so forth. And then at the end, it came to, and I checked it and double checked it and rechecked it. I talked to an attorney and they said, listen, so long as the bank is still solvent and standing, they have to pay you out based on the terms of the note.

So it sort of puts your mind at ease of not trying to drive yourself crazy on how are they conducting the trade on the backend. Meaning if they say, if the S&P is up X, we have to pay you X by this date, they have to do it. Yeah, no matter how they got there, whether they bought the options or not. No matter how they got there, so long as they're solvent,

right, but even if they were to go under, and that's why I only use a handful of banks, like JP Morgan, like RBC, like, you know, well, you know, AAA rated and so on and so forth. So regardless of how they got it, they got to pay. Even if they file for bankruptcy, by the way, let's say if we're, if I am holding a JP Morgan note and you're holding a JP Morgan stock, I will get paid ahead of you because it's considered unsecured debt. And the last scary thing that we saw in that space was credit suites. When they went under,

but even in that case, all the credit suites notes were made whole by UBS and so on and so forth. And for the most part, I only use it on the indices. And I use it in a lot of times, I use custom notes. I don't use off the shelf notes. And by the way, you have to be aware of like, depending on like, you know, a lot of the wirehouses, there's fees baked into it and so on. So that's a whole other game that you have to be aware of. Yeah, that's my brain is like, well, if it seems too good to be true So someone's making money off of me like if I could structure it myself, I would make This yeah. Yeah. Yeah some of these things like, you know, there's no way like it's gonna be very difficult for you structure yourself And then you have to be in top of all aspects of the trading part of it, right?

So yeah, they have these banks and big sophisticated And what we talked about before like the bank has some other exposure from some other clients that they might be offsetting. So they might not have an economic incentive to do exactly the structure you're thinking of. Right. So like, you know, we were talking about before, like right now, there's like a custom note that, you know, just created that it has like a look back period, meaning from the trade date, you know, the next six months, wherever the market lowest price is, that you're going

to get that entry. In top of that, you're getting a 10% hard buffer at maturity, which is five years from now. So to me, for a lot of cash coming in, given all this uncertainty, this potential war and everything that's going on, I'm like, okay, if someone could obviously is okay with the five year time horizon, it's not all of it as part of the beta, let's capture the beta and it's tied to the S&P.

And then I, like I said, most of my notes are tied to the S&P or the three indices, right? Let's get in this way where if once we get in, if the market continues to go higher, fine, we'll participate in it. But if there's any big drawdowns in the next six months, and given some of these things, it's going to work itself out in the next

hopefully a couple of months, at least on the geopolitical front, not domestically, then this thing would reset and we'd get the lowest price. So it's kind of using it tactically versus if, let's say we were in a 30% drawdown, I'd be looking at structuring a completely different type of note where maybe we're getting a 2X upside exposure. So you could really dial it in, especially the fact that you could use custom notes or create custom notes, in our case, you could really dial it into different market environments. And then on top of that, there's like yield notes too, right? Especially when the vol spikes. I mean, you could get yield nodes even, you know, right now, like around eight, nine percent. So two things on that one, my worry is that there was a podcast or there's probably exists something back in 07 06, like, no, it's just the bank solvency is all that matters. Right. And everyone's like these mortgage backed securities, as long as the bank

solvent, you're going to get paid out. So that's, yeah, known risk, you're mentioning that risk, but it's as they become more popular, as they get much, much bigger of a piece of the market, like that is a worry to me, like, not just solvent, but if they have to pay out all of these at the same time, it could get ugly. Yeah. So I've looked into this, actually, note business, from my understanding, is much bigger in Europe than it is in US. Yeah. It's a small part that's growing.

And the concern has never been, the other thing, the solvency risk for me is big. I mean, you'd be surprised how many times initially people are hesitant getting in. And then when they see its behavior, so we had some notes mature like right at like in April where the market was down 19% and they're getting like 10% return. Like, and now they're saying, hey, put all my money in these notes. Yeah. No, right. I'm like, so, and they're like, well, if JP Morgan goes under, then we have bigger problems.

I'm like, yes, but just there are certain rules I put in place. I'll limit exposure to X percentage and so on regardless. And by the way, within that, let's say if 10% of portfolios in notes, not all 10% is JP Morgan. It's part of his JP, RBC, BNP and so on and so forth. So we use the same concept of diversified alt sleep. It's a diversification that goes on different timeframes, different issuers on the notes side.

And then plus having the alts there and the managed futures there, right? In some scenario, likely those tail risk things are gonna pay out, right? That you're gonna have. We got a lot of these notes. So there was another case with a client who had a, you know, it was a taxable account and it was complicated but they

couldn't sell for various reasons but they had some cash. And then there was like the, you know, whether you do an option that she wanted some protection against a falling market, right? So you could create like a bearish note where, you know, you get your principal back if the market goes up or you participate on a downside, stuff like that. Now, you could do that through options, but then this was like an easier way versus like you have option accessibility at a time, we had to launch one.

So once again, I think it's all how you use it, how tactical you are within it, and where you are and what scenarios we are versus just calling the desk if you're on that model how tactical you are within and how aware you are in what scenarios we are versus just calling the desk if you're on that model and say which note pays the highest commission and load up your clients in that note. So clearly in that sense, yeah, it's a disaster. But if used appropriately, consciously, tactically, I think it's another, just another piece. It's not the holy grail, another important piece of the portfolio that could really have a positive impact.

["The Holy Grail"] Gonna end here with our little fun bit here, like ask you what rabbit hole you've been going down. New martial arts, UFC, something like that. Anything, what do you got? As far as rabbit hole, actually, unfortunately, it's nothing fun like those. You know, it's been all around really how do I execute all the institutional quality type portfolios in this world. And I think I'm driving my firm crazy too. Like I think engineering hates me, product hates me because I'm constantly... Now, by the way, one good thing

about Farther is like, you know, we have a whole like, which RRA can tell you that they have like, you know, tons of software engineers where you can go to them and say, hey, can I have this? And if it makes sense firm-wide, they may work on it and features and so on. So I'm like, I'm at a place that, you know, I have access to that. Yes, they hate me. But and I mean, I joke, I mean, you know, they're great to work with. But so the whole thing is, can I find your job security for them? What's that your job security for them? Right. So how can I really close this gap of finally being able to execute as closely as the institutional side in this space? And we're not there yet because there's so many factors, right?

But I feel like I'm getting close. And I think once we finally bring it all together with a lot of the ideas that I have and sort of like, you know, Fogger's really stepping up to the plate and creating some really cool tech. I think that's something that's going to be really a huge differentiator that it's going to be a beautiful story added to, you know, the rest of the firm's history. My rabbit hole has been AI video creation. Yeah, I was like, it's great. I there's a picture of me just sitting on a panel down in Austin Right still picture. I threw it in the a I think and said Finish this conversation in the Death Star and it like has me stand up walk around and then walk into a hallway of Star Wars

Death Star and looks I walk a little weird It looks a little unnatural but the rest of is like what just from one still picture, right? Right? No, I mean, yeah we could talk like that is gonna be It's interesting. I get that's I'm sure we could talk hours about the AI and what it's done and how it's like, you know even little things yeah, I use it all the time and different functionality and different aspects even like, you know, obviously, you know, for me, like my jujitsu and the health part and optimizing that side of it, how you could really implement it into overall. Yeah. So it should be an interesting time. You still do the jujitsu? I do. The body is pretty wrecked. So I've had to kind of modify it a bit. I mean, I

have like torn labrums in both hips and the shoulder like bone on bone like so it's it's taking a beating throughout the years but but I still could kick a lot of younger guys but yeah way much younger than me and bigger than me so as long as I can still do it. We can go in for hip replacements together mine's mine's getting there I got like one or two more good ski seasons before I need to get the new hip. Yeah, yeah, but no, it's and that's like part of like, that's always gonna be part of me, right? I think you're gonna have to even if I was in the wheelchair, I still be rolling myself on the mat and because of what it does and going back to the fighting thing, like

initially when I started, you know, obviously it's I've been doing it for I don't know like 20 Years it was different right the reasoning now is different and there's a there's an element of like Zen to it Mmm. Yeah, it's the one time that you're in a place Like you're really like You're not worried about all the things you got to do You're not thinking about the past you really in the moment because somebody else is trying to take your head off You don't have time to you're not thinking about the past, you're really in the moment because somebody else is trying to take your head off. You don't have time to think about it. So your zen is grappling with another sweaty man. I'm in my happy place.

Right. Yeah. There's actually an interesting, I'll send it to you. I'll send you it anyhow. But depends on- I've always thought you could win I'll send you an email. But depends on you. I've always thought you could win really easy if you just had the worst body odor. Right? And then you're like, oh, I don't really want to get in there and do this grip. It's too smelly. So you know, you know what the funny thing is, and I don't know if there's a poor PSA, I'm one of those guys, like if I use a public bathroom, I use like 18 rolls of paper and

like using elbows. So I'm sort of that. But in that rolls of paper and like using elbows so I'm sort of that but in that environment it's like all that goes out the window I don't like you another guys could be on top of you is like a sweat is like dripping on your face don't yeah you're thinking about how to get out yeah so I was like how is it that you know I'm the guy using elbows and like you know versus like and I think that's just another aspect of it, but but we should get you on the mat one time. Oh my god Yeah against a child the I was on the airplane doing the chess on the back of the seat against

Magnus and whatever the champs in it's like I've won one and I won again I'm like man, I'm good at this and then I'd look closer It's like do you want to play again verse Magnus as a third grader? Do you want to play against him as a fourth grader? I'm like And I think I made it up to fifth grade until he was beating me every time like oh boy. Yeah That would be me on the mat I saw that 60 minutes documentary. I came out on him It was a couple years ago

it was fascinating like he had his back to like bunch of professional chess players and he was still beating them or something It was insane. Yeah Unbelievable. All right, we'll leave it there. Thanks Kevin. Thank you. We'll talk to you soon come downtown Appreciate it. Bye. Bye You've been listening to the derivative links from this episode will be in the episode description of this channel Bye bye. And be sure to leave comments. We'd love to hear from you. This podcast is provided for informational purposes only and should not be relied upon as legal, business, investment, or tax advice. All opinions expressed by podcast participants are solely their own opinions and do not necessarily reflect the opinions of RCM alternatives, their affiliates, or companies featured. Due to industry regulations, participants on this podcast are instructed not to make specific trade recommendations nor reference past their potential profits, and listeners

are reminded that managed futures, commodity trading, and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors.