We Study Billionaires - The Investor’s Podcast Network - TIP390: Quantitative Investing Tactics w/ Michael Gayed

Starting point is 00:00:00 You're listening to TIP. On today's episode, I sit down with Michael Gaiad. Michael is the portfolio manager at Toroso Asset Management and writer of the Lead Lag Report. Michael's white papers have won multiple awards, including the Charles H. Dow Award in 2016. In this episode, we discussed the interesting correlation between gold and lumber and how to use it as a key indicator, when to use leverage and when not to, how a highly active tactical rotation approach can beat the market and a whole lot more. This was a very interesting discussion because we discussed a lot of quantitative tactics that we don't often explore on the show.

Starting point is 00:00:34 I hope you find it interesting as well, so without further ado, please enjoy my conversation with Michael Gaiad. You are listening to The Investors Podcast, where we study the financial markets and read the books that influence self-made billionaires the most. We keep you informed and prepared for the unexpected. All right, everybody, like I said at the top, I'm here with Michael Gaiad, and Michael. This is your first time on the show. Really excited to have you on. Thanks for coming on. I sincerely appreciate the invite.

Starting point is 00:01:13 I wanted to kind of kick it off with a bit of your background because you kind of grew up in the finance industry. Your dad's written a couple of books and has been a broker and professor at times, it seems, to other brokers. I'm curious about what you've learned, especially from your father growing up in the business that has kind of shaped the way you invest today. I appreciate that question because there's sort of a family history to this industry that I so dearly loved. So my father worked in the mid to late 80s at Merrill Lynch and was on the same team as Bob Farrell. Now, for anybody that is old enough, I may recognize that name, you may be familiar with Farrell's 10 rules, which if you Google them for all the newer investors, I encourage you to take a look at those rules. And it was sort of this legendary technician at the time. This was before the era of the internet when you could overlay a moving average instantaneously

Starting point is 00:02:07 would click a book button. So my father worked on his team. He wrote two books on markets. One of them was on the crash of 87, which he predicted what happened two months before it did. That's why he wrote the book afterwards. And then wrote this book Intermarket Analysis and Investing in 1990 was never a runaway bestseller.

Starting point is 00:02:26 But after he passed away, I decided to honor his memory, got the rights of the book back, and republished it. So I kind of grew up under a lot of the getting sort of a lot of osmosis, so to speak, from his passion for markets. You know, every single dinner conversation, there would be some talk about some stock or some macro event or something. And I'm just a kid trying to play my Game Boy at the time, right? So you get that.

Starting point is 00:02:48 And then, you know, I joined the family firm after I graduated from college. My father was the CIO, chief investment officer. He passed away in 08. Lehman Brothers happens. my whole world's in shambles between the personal pain plus the professional disaster, right? Because I had no name. I had no credibility. I had no connections.

Starting point is 00:03:07 And who am I? I'm a guy that just got my CFA charter in 08. My father passes and Lehman Brothers happens. So it's like an unbelievable time in my life. And the question you asked, which is what's the one thing I kind of learned most from my father is you got to find a way to persevere. That he has a quote in his book, Intermarket Analysis, and investing about perseverance and having gone through the personal and professional pain and really kind of resetting my

Starting point is 00:03:32 future course, that lesson of perseverance is what got me to where I am today, whether it's where I hoped it would be or not is irrelevant. I kept on moving forward because I had no choice. You mentioned the, first of all, I'm sorry for your loss. You mentioned the Bob Farrell's 10 rules. I'm wondering if you have adopted those 10 rules for yourself, if any of them stand out to you. There's a couple of interesting ones on the list. I'm just curious if any of them are ring as truth for you or if there's any that you challenge. So if you follow me on Twitter at Lead Lagaport, there's a line that I say, a tweet that often gets a lot of engagement, which is arguably a derivative of one of Farrell's rules, which is opportunity always exists when the crowd thinks it knows an unknowable future. The rule that that's probably most tied to for Farrell is if everybody thinks one way,

Starting point is 00:04:23 it's going to be the exact opposite, which is basically an argument for contrarianism to some extent. That one always, to me, resonated because the one commonality that everybody has in this industry is nobody can predict tomorrow. I always, and I really do believe this, no amount of intelligence increases the clarity of one's crystal ball. I want to see all these DCF models, all these macro models for stocks in 2018 to see if they anticipated COVID, or if they anticipated Lehman Brothers or the Summercrest. of 2011 or anything that was a tail event in markets, which often define generations of returns candidly. So if you have that viewpoint that nobody can predict the future, well, then it's a

Starting point is 00:05:00 question of expected value, probability times payout. If everybody thinks one way, they're all betting on the same pot. Well, that means that you're splitting that pot up among many, many, many participants. Those participants could be right, but the payouts can be small because everyone else is betting on that pot. If you bet the other way, you're not making a bet that you're going to be right, you're making a bet that the expected value is going to be a lot more than betting with the consensus. And that's a nuance, I think, in the way people tend to think about contrarianism. It's not a function of just being negative or be positive at extremes. It's trying to see, you know, what is it that the crowd is so certain of? Because if they're so

Starting point is 00:05:35 certain of it, they've bet on that outcome, probably with 100% conviction. And again, the payout is going to be higher bending the other way. It seems like there's a lot of conviction out there to your point right now about the market can only go up. And there's a lot of interesting case points for that. I'm wondering if you kind of where you stand on that side of the aisle, how contrarian you are at the moment with the markets and how bullish you are on maybe the next 10 years. I'm a big fan of Nassim Talib's work, Black Swan, Anti-Fragile. And I very much take his viewpoint on predicting the future, which is that the future is far

Starting point is 00:06:13 less predictable than it ever was. Because of leverage, because of all these moving parts, we're in a chaotic system. And butterflies can create massive hurricanes in such a complex arena. Now, the one thing that we know, or at least can have a high degree of some certainty, is that we're going to probably keep on seeing ongoing manipulation by central banks, by policy makers, because they have to keep this thing going up and up and up, given the sheer amount of debt that keeps going up and up and up. So I can make an argument to you that the next 10 years, markets will probably keep going

Starting point is 00:06:44 higher, but you could have several 20, 30, 40 percent type declines in between. And that's more the world that I tend to live in from the standpoint of this kind of risk-on, risk-off mentality. What matters to me is not so much the endpoint in a trend. It's the path with which you get there, the sequence of returns. And that's kind of the joke about buy and hold, right? Because you can be optimistic about the future. I would argue that the reason buy and hold works for most is largely because very few people actually hold because the sequence of returns prevents them from holding because their emotions get the better of them. So it's kind of like on a job interview if somebody says to you, you know, what's your five-year plan? And deep down, you want to say,

Starting point is 00:07:23 listen, I'm only trying to get past the next week. No one really knows very long term. But I do think from a contrary perspective, it's not so much about the direction of stocks longer term. But again, that sequence of returns, Greenspan was very prescient when he put. published his book, The Age of Turbulence, because every age of turbulence needs an age of moderation before it. Every period of high volatility needs a period of conviction of low volatility being extrapolated out into the future because of the most recent past. And again, given the sheer amount of debt there is in the system, the thing I'm most confident on, the thing that I'm most bullish on, is more downside surprises, that you're going to see more of these real big air pockets

Starting point is 00:08:03 that scare everybody that may ultimately come back and could come back very quickly just like we saw of COVID. But I think it's going to be a much rockier ride. And again, that's, I'm kind of hoping for that, right? Because that's the world I live in in in terms of the ATAC funds I run and the risk on, risk off mentality I bring to the table. So given your experience coming into the industry right at the time of the great financial crisis, the global financial crisis, and Lehman Brothers collapsing, et cetera, I have to question a bias there, especially with what you just said, because, you know, I saw a quote recently. I can't remember who it was, but it was something to the effect of the market just went down 5% last week,

Starting point is 00:08:39 and everyone started panicking, right? Everyone started, and the person I was following said, look, this is not how it works. At the top of a market, people don't panic at 5% sell-offs. They're indifferent. You know, you get to this place of euphoria. Going back to Bob Farrell's 10 points, one of them is people buy the most at the top, right? So it seems like we've, if you add those two things together, it sounds like we still have a bit of a potential, I guess for a crash up, right, before things get a little bit more of high volatility, as you mentioned. What's your take on that? It's a very good discussion point. So I know I'm biased. Everyone is biased. By the way, there's a lot of studies on behavioral finance that show that

Starting point is 00:09:19 just because you're aware of a bias doesn't mean you can prevent it. My bias is I always want to see risk off. I want to see some volatility. I say that selfishly because, and I've proven this in these different papers that we'll, I'm sure, talk about alpha comes not from being up more, comes from being down less. If you really want to outperform, it's not about taking on more risk. It's about taking on the right risk at the right time, which is after a risk off. And that's why it's so hard to beat the market on the upside, unless you use leverage. You can outperform the market over long periods if you can cut off the tails, the extreme declines, or at least, and you can do that by identifying conditions that favor. And that's how I stand out. The mutual fund I run the

Starting point is 00:09:57 ATAQ Rotation Fund last year was up 72%. Not because I did anything magical, but because I had a risk off moment. And I, you know, the signals used in that fund did what they historically do. They got ahead of that tail event. Now, having said that, it's also nuanced in terms of thinking about people buying at the top as far as when the top actually occurs. Here sitting in 2021, the reality is, ever since February, most stocks have gone nowhere. So when the S&P goes down 5%, it feels much worse for everybody else because most people are not, their individual stock positions, may not necessarily have the S&P. They have smaller cap stocks, which have gone nowhere,

Starting point is 00:10:34 emerging markets that have gone nowhere. So the pain is a little bit more accentuated because they've gone sideways for a long time. The other part of this is that keep in mind, I think the dynamics are also very curious, right? Because I saw some stats, something like 40% of fund flows automatically go to S&P links vehicles, right?

Starting point is 00:10:49 4-1K, automatic investing, things like that. So people are taking, I would argue, undo bullish risk automatically, not even realizing how much concentration risk everybody else has in those areas. So they get nervous because they're automatically exposed to the area which everyone is most exposed to putting a portion of their paycheck every day. It's not because they themselves are doing the buys manually. You see what I'm saying? So I think there's a nuance in that sort of line of thinking.

Starting point is 00:11:15 I would agree that the sensitivity towards decline and the way that the VIX spikes on very minor declines shows there's a degree of nervousness, right, which you can argue is the wall of worry that markets need to climb. But again, I go back to which markets. If it's the S&P, that's a different story in small caps, emerging markets, Europe. There's a lot of nuances in that discussion. And the final thing I'll say to that is a lot of these maxims are very hard to actually test. It's very hard to actually quantifiably say, this is the moment where everybody is all in on equities. You can point to sentiment, but the reality is even that, and I've done tests on that, even that's a little suspect in terms of the reliability there.

Starting point is 00:11:57 So this stuff sounds good in terms of conversation, but in reality, I don't think you can really create a strategy around any of that. It's funny, right? So there are these two stats, up capture, down capture. So what percentage of the upside is your strategies, your portfolio capturing when the S&P 500, for example, is positive versus when it's negative? And if you were to look at the S&P over the last 15, 20 years, and say, okay, I'm only going to capture 50% of the upside and capture 50% of the downside, meaning half both ways. is up 10, you're up 5, SP is down 10, you're down 5. You destroy buying whole performance, even though you're underperforming on positive periods. Why?

Starting point is 00:12:34 Because of the math of the downside being so brutal. I mean, we all know the classic example, right? You're down 50%. You have to double to break even. But you don't need to be down 50%, even 10% and 15%, if you can cut off some of those large declines, you have more capital to compound off it. And people underestimate the power of mitigating risk at the right time. they always want to be up more than the stock market and view that as the way to beat the market.

Starting point is 00:12:59 But again, it's very hard to beat the stock market when it's going up and to the right. It's very easy to do so when you have a systematic approach that allows you to play defense, hopefully more correctly than not. The key part of that, of course, is that you cannot have a strategy or a signal that possibly allows you to be up substantially and down substantially, down less substantially by equal magnitude. In other words, if you're going to play for downside protection, you have to give up the probably decent chunk of the upside because you're going to be wrong in playing defense. And I think that's something that a lot of people in the Twitterverse seem to forget.

Starting point is 00:13:31 If your approach is to be risk on, risk off and you need some risk off, you're going to keep slowing down, entering a storm, never having an accident, always being late to your destination, your upcapture less than 100%. But the one time it works, it really kind of saves your life. But you don't know when that time is, so you have to keep on slowing down. You have to keep on playing defense. And that is very hard mentally for most people to do, because every one time. Everybody wants to tell their neighbors, look at this hot cryptocurrency that I bought and made 10X on.

Starting point is 00:13:59 Look at these Tesla calls that I bought. It may work for now, but that's not really a longer term strategy. One of my favorite quotes from you is, to kill it in the stock market, you have to not get killed, which is something you're alluding to right now. And I think it's great in theory. I'd love to talk a little bit more about the actual practice of risk management. So I'm a big believer that strong habits start with these small actions. So I'm curious what your recommendation would be to retail investors, something small they could start doing today to help maybe manage or mitigate their risk.

Starting point is 00:14:32 Number one, turn off the TV, turn off the financial media, listen more to podcasts like this. And I'll tell you why I say that. Listen, I've done the rounds. I was a stage in my life. I was on CNBC in Bloomberg every other day and doing the punitively nonsense because I'm trying to grow my book of business. I'm trying to build a name. But the reality is 99% of what people say on TV. And I'm not saying that as a slight to CNBC or Bloomberg.

Starting point is 00:14:59 But the reality is a lot of these talking heads, they say things without actually having empirically tested if what they're saying has merit. And the problem, of course, is that as human beings, we have this natural desire to reach out to the suits there on the hill, the person who confidently says, this is what's going to happen. This is a buy. This is a cell. But unless you can actually empirically show that it works and can test,

Starting point is 00:15:20 it and you can program it, it's all hot air, it's all nonsense. And it gets you more to trouble because it causes overtraining, and it causes a false sense of confidence in, again, the unknowable future. So to me, it's more about what you remove than anything else. Now, from the studies that I've done, and this is what I addressed in the lead lag report, or is this kind of risk on, risk off dynamic. The joke about these five different research studies that won these different awards since 2014 is that it's basically talking about the same concept of five different ways, that the clearest sort of warning signal for risk is the very thing that drives capitalism, which is interest rates. So the 2014 Dow Award paper looks at utilities against the stock market.

Starting point is 00:16:00 Going back to late 20s, utilities are performed the market. Historically, stock market volatility tends to rise. What's the causation? Utilities are the most bond-like sector of the stock market. They move based on interest rates, changes, and the demand for money, itself changing, which means changes in liquidity, changes in volatility. Same dynamic with Treasury, same dynamic with lumber to gold, which I'm sure we're going to talk about. But all of those are interest rate sensitive relationships, right, that tell you something about changes in something that is the key driver to what drives the economy, the cost of capital. Now, I am very much of the belief that anybody that's a newer trader that wants to do backtesting

Starting point is 00:16:37 and follow an approach or signal to focus on just one approach or one or two signals. The thing that I often see is a lot of people have these wildly complicated strategies that have 10, 15, 20 variables that they can show is a perfect predictor of the future. The problem with complex strategies, is the sort of anti-fragile way of thinking about things from Nassi and Colleg. The more complexity there is, there is. Because every single variable in any equation that's meant to model out the future has an error attached to it. Well, that means every single error from every single variable then has a correlation to another error in another variable. And that's how you these butterflies effects.

Starting point is 00:17:15 And that's why a lot of these hedge funds that were sort of legendary having these very complex models end up blowing up, you know, time and time again. I'm much more of the opinion that if you're going to invest and trade, focus on one or two things that might explain 60 to 70 percent of why markets do what they do and accept the truth, the truth that the rest is probably randomness and noise, then try to overoptimize. and that's the sort of second rule, don't try to find the perfect strategy. It doesn't exist. Let's take a quick break and hear from today's sponsors.

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Starting point is 00:21:32 hearing sign up for your $1 per month trial today at Shopify.com slash WSB. Go to Shopify.com slash WSB. That's Shopify.com slash WSB. All right. Back to the show. We touched on some of that award-winning research you've written, and I want to go through each of the four papers sort of one by one. Let's start with the leverage for the long run. Talk to us about when to lay on the leverage and when we should absolutely should not. There's a lot of behavioral biases towards leverage, certainly towards bottoms. And it is factually true that pretty much every single major extreme in the economy and markets has one thing and one thing only in common, which is leverage. I can even take it back further and say that every single revolution in society has been driven by

Starting point is 00:22:25 leverage and the wealth gap that that causes, that enables widening of the wealth gap. Now, the key finding in that paper is, okay, so you don't want to leverage, obviously, when things are falling apart, because you have a massive drawdown. And the enemy of leverage is volatility. So the more volatile, the more swings are for the stock market, the more leverage hurts you because you're basically levering at the exact wrong time. You're going two or three X the market when it's down 2%, and then you're actually levering up more after you've had it. gain when it could then go back down. And that's where volatility kind of hit you. It's called the constant leverage track. So if you go with me that volatility is the enemy of leverage,

Starting point is 00:23:03 well, then the question becomes, well, how do you identify volatility? So what that paper does is it goes to everybody's favorite indicator, the moving average. Now, a lot of people, I think when you hear in the media, oh, stocks are above moving average, they're trending higher because they're above their 50-day, their 200-day moving average. They completely get it wrong as far as what a moving average really does. Moving averages don't tell you about trend. Moving averages tell you only about volatility. If they told you about trend, a simple 200-day moving average crossover would beat buy and hold. It doesn't. I can show that quantitatively, any number of markets, any number of indicators, because there are false signals. So the uniform finding in that

Starting point is 00:23:42 paper is that when you're above a 200-moving average, whether it's stocks, bonds, commodities, or below and even smaller time periods, 50-day, volatility is lower when you're above a moving average, volatility is higher when you're below moving average. So, okay, then let's use that as your trigger. Lever up when you're in low volatility when you're above a moving average, D-lever when you're below moving average. And what you find is that that's really the only way to properly time leverage for the long run.

Starting point is 00:24:07 In other words, that's the only way to really not suffer severe drawdowns because severe drawdown to happen with severe volatility, severe volatility has to happen when you're below moving average. That's sort of the key finding. A lot of people are surprised by that paper because it's actually arguing more for risk management than taking on more risk. The magic comes from the de-leveraging, not from the re-leveraging. That's the key part of that. Wow, that's incredibly fascinating. The next one that really stood out to me is the correlation between assets, because I'm really interested in that kind of thing,

Starting point is 00:24:35 especially right now. Talk to us about the thesis behind lumber. It's called lumber worth its weight and gold. So talk to us about the correlation between lumber and gold. Yeah, it's always been the paper that got the most attention, certainly this year in 2021, because Lumber, Lumber spiked and then subsequently collapsed. And it's funny because I get people that would poke holes at it as saying, oh, it's some random relationship. And these people, meanwhile, are saying that from their home, which has about 16,000 board feet of lumber.

Starting point is 00:25:02 So it's not that it's some magic relationship. Why is lumber relative to gold and anticipatory of anything related to the stock market? It's because housing is the biggest driver of wealth, and the average home has about 16,000 board feet of lumber. So housing is the biggest driver and most important aspects of the wealth effect. housing is what most people's, again, wealth is in. So lumber is a key component of that. And as lumber performs, because of the long tail construction, as lumber performs, it tells you a lot about risk. It tells you a lot about credit creation, inflation, growth expectation,

Starting point is 00:25:33 so on and so forth. Now, why compare it against gold? Because historically, gold in many ways similar to treasuries, tends to be a risk off play, meaning that when you have high volatility in the stock market, at least for a moment in time, gold tends to do fairly well during a flight to safety So you compare the most cyclical commodity, lumber, to the most non-cyclical commodity gold, and it tells you a lot about volatility, same dynamic like moving averages. And it's interesting because usually when lumber is weak relative to gold, you're below a 50-day or 200-day moving average. When lumber is outperforming gold, you're risk on, you're above moving average.

Starting point is 00:26:08 Again, I go back to just kind of writing the same concept in different ways. Lumber surged this year, buy disruptions, sawmills, all this stuff, and then collapsed. Treasury yields kept dropping since mid-March. The signal was actually kind of right because it was signaling that there was sort of risk of risk off of high volatility. It was a false signal, at least so far with hindsight, but you still made money in treasuries while being wrong in the signal. That's another thing which I think is important.

Starting point is 00:26:36 Anybody that looks at the research I've put out there, people get obsessed with a single indicator and they get obsessed with saying your indicator was wrong. I don't care about the indicator being wrong. I care about being wrong and making money, which means that it's more than just evaluation of a signal. It's also about the opportunity set with which you're executing on your signal. So, for example, lumber outperforms gold. You want risk on exposure. Gold outperforms lumber, you want risk off exposure. Treasuries allow you to be risk off and make money, even if you're wrong. The other dynamic is generally when lumber to gold is weak, small caps underperform large caps,

Starting point is 00:27:11 which, by the way, has happened. Now, what's the thinking there? Well, lumber is, is a play on, again, domestic consumer strength, wealth-effect housing. Small caps are more sensitive to the domestic economy. Large caps are multinational. It would stand to reason that if lumber is doing well, that you would want more sensitivity to the U.S. economy, which is what small caps afford you. Otherwise, you want more safety from the diversification of large-cap multinational revenue streams.

Starting point is 00:27:35 Another example of how it works, even though you can say with hindsight the signal was wrong in terms of being risk off, small caps have done nothing since February. Right. So, again, I go back to there's a lot of nuances with any strategy. It's more than just on or off, you know, market going up or marketing down or even volatility going up and volatility going down. It's also about the interaction of different parts of your opportunity set. And the opportunity set in many cases can be more important than the signal itself.

Starting point is 00:28:00 When you were mentioning the 50-day, 200-day moving average as a signal, what's the benchmark there? Are you talking about the S&P being below its average and therefore look at the signal of that indicator? What's fascinating is that it pretty much is true across almost every single major. major asset class, meaning S&P, Dow, individual stocks, high-yield bonds, corporate credit, that you end of having these sort of underreaction, streakiness when you're above a moving average, more consecutive updates, whereas when you're below, you have more volatility, more seesaw, more

Starting point is 00:28:31 extremes. It doesn't matter whether it's equities or bonds or commodities as well. You see the same type of volatility change, irrespective of what asset class, what benchmark. Very interesting. Let's go on to an intermarket approach to beta rotation paper because I have a lot of questions I think around this, especially around volatility. So let's start there. So that's the, that won the 2014 Dow Award and that was sort of the one that started

Starting point is 00:28:57 it all. And it has the longest history. It goes back to 1920s. So again, utilities outperform the stock market. Generally, stock market volatility tends to rise. One of the stats in that paper shows that in the top 1% of VIX spikes, those real collapses and equities. Historically, utilities are already leading 75% of the time before that top 1% VIX spike takes place. It warns you in advance of the conditions. Now, by the way, that doesn't

Starting point is 00:29:23 mean that every time utilities lead, you have an extreme VIX spike. It's that when you have an extreme VIX spike, utilities tend to already be leading. And we should revisit that because that's actually an important distinction. Now, 75% of the time is pretty good. But of course, that means 25% of the time it misses it. And I always use that line on Twitter at the Lagraport. No signal is infallible in the small sample. Just because it's raining doesn't mean you'll crash. Just because it's sunny doesn't mean you won't. There's nothing that's foolproof.

Starting point is 00:29:51 So you have to play these probabilities based on indicators like utilities, play defense, recognizing that you could be wrong both ways, risk on or risk off. But more often than not, the odds would favor you can get it right when you most need to be right. The interesting thing about utilities as a sector going back to the 20s is that's a fairly remarkable and consistent phenomenon, meaning independent of legislative events that affected the utility sector, independent of decade. You tend to see that dynamic where if utilities are outperforming in the short term, with a lag stock market volatility on average rises afterwards, which means to me at least there's a degree of conviction that that's an anomaly that

Starting point is 00:30:28 will probably persist because it's already lasted for so many decades. I want to stick with that car analogy because I love it. And this idea of utilities telling the weather of sorts. So talk to us about how to actually track utilities and when we should be keeping an eye on the VIX, for example. The VIX, as you know, tends to be much more reactionary to volatility. It is volatility. Utilities, think of the VIX as like the mile mark you crash your car. Utilities are the rate, right, to that extent.

Starting point is 00:31:01 And a very simple way of tracking it is you can just use ETFs like the, utilities, ETF XLU, you know, relative to the S&P. If utilities are outperforming over a very short-term basis, up, more, down less. It's relative. That would be your sort of warning sign to play defense or to be careful, at least de-risk a little bit. Be mindful of that. Recognizing, again, it could be a false signal. Now, in my world, the way that I run my ATAC funds, whether it's the mutual fund or the Roro-Roe ETF or the Jojo Bond ETF, my approach is to be all in. Meaning, when I go offense or defense, when I go risk on or risk off based on these signals, it's a full-on switch between the offense, equities, or junk debt, in case of Roro or Jojo,

Starting point is 00:31:39 respectively, or all in treasuries as the expression of risk off. Most people are not going to do that, obviously. But you can at the margin, you can de-risk, meaning you either take less leverage or maybe taxically play some options overlay to essentially cut off some tail risk, or you can do something as simple as just overweight your bonds. to the extent that most investors have an allocation like a 60-40 stock bond mix. And if utilities are outperforming the broader stock market, maybe you want to go from 60-40 stocks bonds to, you know, 50-50. You go underweight your stocks, you avoid your bonds. And you'd be surprised

Starting point is 00:32:12 because at the margin, you can still generate some outperformance that way by just tactically taking on less risk at the right time. You don't have to go all in. In my case, I go all in because the approach is really designed to be ultra-aggressive on the anomalies. But for most people's individual portfolios, it can be a guidepost for where to overweight and underweight. So touching on the A tax fund, which you mentioned did 72% in 2020, I imagine, as you kind of alluded to earlier, that's because you missed the majority of the downturn. And I'm guessing it's because you were using something like this utility indicator. So at that point, were you selling off moving to cash? What was the hedge, I guess you had put on at that point?

Starting point is 00:32:52 This kind of goes back to the opportunity set discussion. Again, ideally you want to have an that allows you to be wrong and make money. But when you're right, allows you to have a degree of convexity, meaning you get some sort of extreme move relative to equities when everything is breaking down. Long duration treasuries typically give you some degree of convexity and, again, the potential to be wrong in any single signal, but still make money. So utilities were outperforming really mid-January last year. The risk-off signal was there way before anybody got was that worried about COVID, and the markets were still hitting new highs. So the mutual fund went all in treasuries long duration and stayed there because it's evaluating

Starting point is 00:33:30 the relationship every rolling week on a rolling basis, utility stayed strong. So it stayed in treasuries in advance of the COVID crash. And that's sort of the key thing in my world. It's meant to be anticipatory and not reactionary. So it's in treasuries. The world's ending, right, at least for a moment in time. Treasury yields collapse, flight to safety. Treasuries are basically like an inverse SMP.

Starting point is 00:33:50 It's like a short position without the risks of shorting. March 31st, pretty much a week after the low, the signal flips to risk on. Treasury start weakening. The fund after having made gains in treasuries in the midst of everything collapsing, then rotates risk on, all in large caps, then all in small caps. It has this additional relative momentum component. And close the year up 72% because of that. It's not because it was in Tesla or Bitcoin or anything again.

Starting point is 00:34:13 It's because it did what it was supposed to do. Now, this is, again, the key point of this. If you have a risk-on, risk-off approach, you need some risk-off. you need some of those periods where the market does go down. It doesn't have to be as extreme as COVID, but you need some of those periods to thrive on by getting that Treasury trade right. You need market to actually break. Contrast that to this year. This year, as we speak, the mutual fund is down something like 9, 10%. Now, in one hand, it's kind of like Crimea River. I mean, it's up 72% last year. It's slightly down, not slightly, it's down, 910%. I'm not going to say it's slight. It is down. Why is that? Because you're in a pure risk-on world that's just the S&P. And this is also an important thing. to keep in mind, every strategy has an Achilles heel, every asset class has an Achilles heel. I'm very upfront in the case of the mutual fund, and really anything that's risk on, risk off. The Achilles heel is very simple. If you don't have risk off, you lag, because you keep playing defense.

Starting point is 00:35:04 You keep slowing down entering the storm when the signals tell you to play defense, and you're wrong. The one time again that you're right, you're really, really right, but you need to have some of those junctures. So, and it's funny, right? Because I always use this point on Twitter, it's like in years like this year, 2021, where it's just about the S&P and the S&P is the only game in town. People naturally compare you against the S&P.

Starting point is 00:35:24 Bizers have clients that compare their portfolios to the S&P. Home bias, it's what's being shown to them every single day in the financial media. But I'm pretty sure diversification means more than the SMP, 500, let alone the five stocks that are driving the S&P. Everybody wants correlation on the upside, but they don't want the downside, but they don't know how to identify those periods. So what ends up happening is people take too much concentration risk, and this even goes back to your earlier point, about everyone being all in. They end up over-allocating to the winners, payout ends up being less because too many people are betting on that pot, and then strategies like mine suddenly come into the forefront

Starting point is 00:36:00 because I get some risk off. And the risk-off happens because nobody's really paying attention to the anomaly, which I can prove going back to the 20s exists. It's a fascinating industry because when you know your strategy, you know your signal, you have the data, all that is basically meaningless if you're in the small sample and if end investors are simply too impatient to diversify into things which are not working because the environment doesn't favor it for a moment. Even that you focus so much on volatility and the VIX is a lagging indicator, which I think

Starting point is 00:36:28 is really interesting and I want to learn more about. I just have another question about the VIX, which is that I've read that is essentially mathematically bound to go to zero, but they just keep essentially doing stock splits so that it never will. But I'm guilty myself of playing the VIX here and there, especially in the VIX, especially in spikes, especially back in March, I gambled a little bit in the VIX, made some money for fun. And it's always an interesting hedge, in my opinion, although I'd never recommend it because it's

Starting point is 00:36:55 really hard to anticipate. But I guess my question, going back to the earlier point, this question was, is shorting volatility long term the closest thing to a sure bet? Opportunity always exists when the crowd thinks it knows an unknowable future. There's nothing as a sure bet. The clearest example of that happened in what they called vomit. again in 2018 when these short volatility, short VIX ETFs blew up because you had a massive spike. I think it was, it basically took out an entire product. The problem of the VIX ETFs

Starting point is 00:37:28 of strategies, as you noted, is that they're designed to go to zero in some ways because when you're going along VIX, you're not going along spot fix. You're going along the rolling over of the futures VIX contract, which constantly bleeds because the natural state of markets is to be low volatility until that moment hits when volatility spikes. But the problem is, again, you're wrong in losing money. Whereas, again, I go back to the treasuries, allow you to be wrong, but still make money. That's why it's very hard to, like, if you were to take any of the signals from the papers and say, okay, instead of risk off being treasuries, let me make it go long vix or make it go short

Starting point is 00:38:00 the S&P, you're dead in the water. The strategy is fail miserable. Now, let's say your risk on is short fix, short volatility. Yes, your upcapture is going to be a lot more, right? Because you have a lot more potential to make gains selling that premium essentially by shorting volatility. But again, when you have a false signal, meaning you risk on at the wrong time, well, now you're in a lot of trouble.

Starting point is 00:38:20 A good example of that is both lumber to gold and utilities. Okay, so the Jojo ETF goes junk on, junk off, high yield, on for treasuries. It used the utilities stricter. The utilities outperforming the market, risk off goes treasuries, utilities underperforming the market, risk on high yield junk debt. The week of Lehman Brothers, the index that Jojo tries to track is risk on, meaning it's in high yield. It loses money as the world's ending.

Starting point is 00:38:45 It's a false signal. It's a weakly approach. It writes itself and then goes fully into treasuries towards the tail end of 08 when you had QE1 and treasury yields collapsed and the index ended up closing the year very positive. If you're short volatility, the weakly, even brothers, you're wiped out. False signal. The case of Ro Ro Roe, the ETF, risk on, risk off equity, treasuries, uses lumber

Starting point is 00:39:04 to gold. The index that Roe Road attempts to track was risk on end of February last year as the COVID crash is just starting. Your short vault, you're done in the water. That was a severe hit the moment things really started kind of shutting down. Again, it righted itself because it's a weekly approach and then went treasuries and then recovered the lowest the index ever got on Roro's index is like 20% as far as the drawdown. But again, my point is that no signal is infallible. Your opportunity is just really critical. There's no such thing as a short bet. Short volatility is like playing with fire because if you're wrong, that can wipe you out. And that's sort of where I would caution people

Starting point is 00:39:39 in terms of thinking about taking that as your risk-on opportunity. There's another paper you wrote called an intermarket approach to tactical rotation. Is there anything in that paper we haven't discussed that you want to highlight? It's a similar idea, right? So instead of utilities against the market, it goes with jugular and says, well, this is about interest rates. Let's play with treasuries. And instead of looking at the yield curve on the shorter end, let's go longer out and

Starting point is 00:40:04 look at 30-year treasury total return relative to intermediate tenure. So it's the form of yield curve fighting when very long duration is outperforming intermediate. Same dynamic with the lag stock market volatility tends to rise. And again, same dynamic when long duration treasurers are outperforming intermediate, and to see utility is already outperforming. And to see lumber to gold weak, you tend to be below the moving average. It's all the same idea. But it's a similar finding, right, that it tends to move in advance.

Starting point is 00:40:30 The key thing is you have to manage risk in advance or the risk actually matter. And it's kind of an interesting dynamic because I used to be on the road and present the CFA chapters across the country. And I used to always reference the study I had seen that looked at when most people hit the brakes after, you know, when they have an accident, a car crash. When do most people hit the brakes? And the study, basically, looking at all these car crashes and looking at data from the cars, found that most people hit the brakes after the car crash has already taken place, which kind of makes sense, actually, because your body's in motion, right? And people tend to respond the same way in their portfolios. They tend to take on,

Starting point is 00:41:06 So it's like, you know, why is it that after 2008, all these Black Swan funds got so much, so much assets? Because they're hitting the brakes after the crash already happened. You have to manage it beforehand. But again, if you're going to manage it beforehand, you have to be willing to lag on the upside, which means you have to have to have the patience to go through the false signals. Again, it's all the same dynamic, but the key thing remains you've got to be aware that you're going to be wrong. But when you're right, you're really, really right. But you don't know when that really happens. So you have to keep going through the false signals along the way.

Starting point is 00:41:34 You have to give up a little to get a lot. I started out my career. Before I ever learned about Warren Buffett or anything like that, I was going through programs that were teaching technical analysis. And I was really into it there for a long time. I've kind of shied away from it now being more of a buy-and-hold investor, caveat to what I play with the VIX every now. But sometimes I use it.

Starting point is 00:41:56 I'm just kind of curious how you look at technical analysis, what tools, what studies you typically rely on the most. I'm very much quantitative in my thinking, even though I put a lot of qualitative narrative in the lead lag report. But I think there's two schools to technical analysis, right? One is pattern recognition and triangles, pendants, and things like that. There's oscillators, and then there's more sort of quantitative testing. I think the problem, and I share some of the cynicism sounds like you have with the field, I think the problem with technical analysis is that if somebody tells you it's more art than science,

Starting point is 00:42:32 run away. Because unless you can test it scientifically, which would be a back test, rules-based, you can't really have faith that any single drawing or pattern that you see on a chart means anything. Right. And that's, I think people, under a few understand this. It's one of those things that really, very few people, I think, really understand when it comes to investing. You've have to empirically test if what somebody says is valid has any merit from historical data. And my point is that with some of these more kind of wishy-washy types of patterns, it's hard to actually do that. Now, having said that, I do believe that a lot of people use tick analysis in a way that actually makes second analysis valid because everyone else is falling.

Starting point is 00:43:11 The self-fulfilling prophecy. Exactly right. That's exactly right. And from that standpoint, I think you have to be aware of some of these things, right? Because if a lot of people are starting to buy something because technically it looks oversold, well, it's probably going to start rallying because everyone else is seeing that it's oversold and they start buying. Right. So exactly. Exactly to your point, what one believes to be true is either true or becomes true. That great quote, I forget who said it. But I think from that step point, awareness is needed.

Starting point is 00:43:35 My approach is much more intermarket analysis, which is a branch of technical analysis along the lines of John Murphy, Martin Pring, and of course, my father, under this idea that certain parts of the marketplace will move first and then there will be a lag. A good example, actually, as we're chatting here late September in 2021, a good example of that is what's happening with oil, net gas, and treasury yields. yields have been spiking the last several days, which makes sense because oil's been spiking. And why does that make sense? Oil spiking affects bonds because oil is a driver of cost-push inflation. If oil is rising, that means cost-push inflationary pressures increasing, yields should be rising to reflect that. But it happens with a lag.

Starting point is 00:44:16 Oil moves first, then bonds react. That's sort of different than the more reactionary patterns that I think you tend to see in technical analysis. I'm a fan of being aware of most things, but be skeptical of everything. Yeah, my favorite quote on technical analysis is that it's astrology for men. I think it's a me and I saw somewhere. You know, you talked about the 50 and 200 day moving average. I've always had a question around that.

Starting point is 00:44:37 Why 50 days? Why 200 days? Is it just back tested to hell? Did they try 49? Did computers just run through every single number and say, hey, this one looks the most accurate? I suspect that there's an element of the mind likes numbers that end in zero. I'm sure you can find some kind of psychology test that shows that. With that leverage for the long run paper that looks at moving averages, the finding goes from,

Starting point is 00:44:59 I think it was 10 days to, I think, 260 days. Even if you did like a simulation, it said, okay, let me do 11-day moving average, 12-day moving average. There's nothing magic about 10, 50, or 200. The phenomenon about volatility rising and falling based on whether you're above or rather below and above, respectively, with moving average, that's there no matter what. It just will happen at different times, but overall the finding remains the same. But yeah, no, I don't think there's anything magical about it.

Starting point is 00:45:20 But, you know, it's funny, right? because to the extent that things like 200 and 50 day are in the lexicon, it will impact price movement short term because algorithms will trade off them. So again, I go back to you got to be aware of it because others may be coding things based on something that probably has no real causation behind it, but suddenly there's causation because now there's money actually flowing, acting on it. Great point. A lot of people, especially on Twitter, and really only on Twitter, I guess, a lot of the Bitcoin crowd on Twitter has laser eyes in their profile pictures these days. and your profile picture, you have one lumber one gold coming out of your eyes. I love it.

Starting point is 00:45:55 So leaving Bitcoin aside, what is the current bull case for gold, in your opinion? Because it has been lagging after that initial run-up last year. You answer the question by saying that. So look, there's a, there are a lot of studies on mean reversion in markets. There's something known as the morning star curse as an example, where if you were to look at the five-star rated funds for the last three years, they tend to be the one or two-star rated stars, star funds for the next three years. So mean aversion is always a thing that you can kind of count on when it comes to markets. The closest thing to a guarantee is mean inversion. Problem of course is that you have to know where the mean is and the mean is always changing. That's a whole different discussion, right? But okay, so let's go with that. And by the way, I was just to make this joke on the road that mean reversion is a concept that's as old as the

Starting point is 00:46:40 Bible. He who is first shall be last and last first is mean version. Okay. So you had basically a lost decade for gold. It doesn't get a lot of a last decade for stock. from 2000 to 2008 or 10 or whatever, the period when I ended it. So my point is that the fact that gold has lagged for so long, arguably maybe the reason why it starts to work. And you don't need to have a catalyst. And this is the thing that always gets to me. People always want to find a reason for why something should go up or down. The reason is only determined after the fact. Narrative always follows price, period. So seven years of famine become seven years of feast because there's mean aversion in cycles. Now, if you think about the rule of gold in a portfolio,

Starting point is 00:47:19 Where does that mean a version argument kick in from a cycle perspective in terms of equities? You want correlation when you were towards the tail end of a bear market. You want as little correlation towards the tail end of a bull market. You don't want to be concentrated in beta as a factor risk after an extended bull market. Okay, so how do you diversify a portfolio with lower correlated or negatively correlated assets? Gold fits the bill. So I would actually argue that the cycle that has been so unrelenting since QE3, favoring equities taking out COVID for a moment, is so extended, and you can look at valuations across the board that there's going to be

Starting point is 00:47:53 at the margin increasing demand for non-correlation because of how long equities have run up from a cycle perspective. Again, it doesn't mean the stocks have to go down, but more volatility in stocks would suggest you want more uncorrelated assets. Well, that becomes a driver of demand for bold for many years conceivable. So I'm basically making the argument that that which has lagged ends up leading and that which leads lags. That dynamic is probably the biggest reason to want to have an allocation.

Starting point is 00:48:20 I'm not making a sort of an argument to say, well, you should be 50% in gold. No, you should think about putting 5, 10% in anything that hasn't done well for the last decade. That includes value stocks, that includes emerging market stocks. And thinking about trimming that, which has been your winners, that includes stock, U.S. stocks, that includes Bitcoin, cryptocurrencies. It's pretty balancing. That's all it is. Let's take a quick break and hear from today's sponsors.

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Starting point is 00:52:08 I'm curious what your take on something like the all-weather fund over, say, Bridgewater Associates. That's playing into this narrative you're talking about a little bit where you're diversified to uncorrelated assets enough where they kind of counterbalance each other along the way. What's your take on that versus something that's constantly rotating in and out of things? I would say it depends on the time frame. I'm actually a big fan of the thinking mind of risk parity because the argument is that you have a exposure to something that will always do well no matter what cycle you're in. One of those four or five, depending on how you're defining risk parity, you know, quadrants will work and outpace everything else. And yeah, you're not going to be, you're going to be lagging that investment because

Starting point is 00:52:44 you're blending a course against other things which are not participating in the cycle. But you'll always have exposure to something that would work. And I would agree that diversification means having as much exposure to as many future different paths as possible. That's really what diversification is. And from that standpoint, I would argue, risk parity certainly fits the bill better than 6040 because stocks and bonds are very correlated. So now, that's a longer-term cycle argument. And the thing about identifying cycles is you often don't know if you're in a new cycle until two to three years after it's already changed. So the idea is you want to have exposure because you don't know exactly when the switch happens. Now, in my world, the sort of all in risk on risk off, it's a different dynamics.

Starting point is 00:53:22 It's almost the exact opposite. It's saying, no, the short-term dynamics favor some kind of risk, risk off, some kind of risk condition. I very much believe that markets are largely efficient, longer term, but in the short term, they are not. That's why all the papers, basically, for the most part, look at shorter term timeframes and look back periods to determine the offense and defense. So while risk parity says you can't predict, so have exposure to everything, risk on, risk off says you can identify the weather to slow down entry in the storm. They're actually very much compliments to each other, but it's really because they take different timeframes into account. One's much longer term

Starting point is 00:53:54 prosperity. One is more tactical short term based on very visible anomalies that historically have persisted over time. And I'm guessing you packaged some of these things up into an ETF because of those rotations, the transactions are more tax efficient that way. Certainly for Roe and Jojo, the risk-on-risk off ETF and the bond fund Jojo. It's funny, I actually think that Jojo will probably be the most interesting over time for most people, I think, because nobody knows what to do with bonds. And if you can, if the two biggest risk for bonds are credit risk and duration, well, I'm rotating around credit risk and duration, which kind of makes it intriguing. But yes, you're correct. And, you know, Toroso, which is the parent company, and, you know, we're the ones

Starting point is 00:54:33 behind not just the ATAC funds, but the blockchain ETF, BLLK is our funds, the risk parity, ETF RPR, we help bring to market. You know, we're very much in the space. But the ETF structure is certainly more ideal. Now, there is something that's a caveat to that. In many ways, ways too much transparency can be very damaging to investor return. Now, that sounds very strange for me to say. There was a study done in the early 90s that looked at 401K participants. Those that looked at their statements monthly, those that looked at their statements quarterly. If you were to guess who had the better longer term performance, who had better performance longer term, those that looked at statements quarterly or those that looked at statements

Starting point is 00:55:11 monthly quarterly? They're not seeing as much data points. They're not seeing as much noise and volatility, which causes them to take less risk because they get scared out of a position. Now, that's a good example, too much transparency can actually be harmful because people feel like they need to act on what's probably noise. The issue from my standpoint is Roro and Jojo disclosed their holdings. They're risk-on, risk-off positions every day. You know from our site, atacfunds.com, what the holdings are, and it's all rules-based. I'm already seeing it from some people that are looking at those funds. They're looking at the positions at a moment of time saying, I don't want to be exposed to risk-on equities this week. I don't want to be exposed to risk-off treasuries this week. Even though it's not about their opinion,

Starting point is 00:55:49 It's about what the rules-based approach is saying. My point is that people end up panicking out because they think they know something more than something you can quantitatively test versus their own subjective opinions on markets and gut feel. So it creates a lot more noise in volume and asset growth and all this stuff. So that's why I go back to what I said before. Sometimes less information is more because it means less likelihood of taking the wrong action because of noise as opposed to signal.

Starting point is 00:56:13 This rules-based approach, I have some curiosities around. Is this how you've always approached the market? or have you been burned a few times by your own personal opinion on something that you said, you know what? I can't rely on this. I got to go by the data. Talk to us a little bit about why you've come to use these approaches. So a lot of this really came from my having to survive coming out of 08. So I was one of Trade Station's clients, users, and I learned easy language and tested everything imaginable. I read every single white paper I could imagine because I had to live my life and I had to look for a job. I don't want to sit there in front of a screen and trade

Starting point is 00:56:49 on an opinion. I wanted something that would automatically do it for me. So I was trying to find a way to do that throughout 2009, as the world is still shivering from the great financial crisis, just like I try to find a job anywhere I could. So it was almost out of necessity that made me seek out something that could be automated, that could be rules-based, so that I could do other things. And it's interesting because that was that period when I realized that the vast majority of things really don't have predictive power. It really is true. I encourage everybody to take time and try to actually back testing. Most things don't have any anticipatory power at all. It's great conversation, but it's all a lot of nonsense. So, which is why I'm very skeptical of a lot

Starting point is 00:57:25 of strategies that are out there. But that's always been sort of my preferred way. I've always liked looking at things relative to each other because I think that's the only way you can see sort of the trends of alpha as opposed to just looking at what's pure beta. But it was really, again, much more out of necessity. And, you know, thankfully, that period is what kind of drove me to at least get to this point, creating funds with the area, the anomaly that I'm most confident in having tested everything else imaginable. In your own personal portfolio, do you ever go into individual stocks or individual companies? I used to. I'm not a meme trader, I guess, is the way to say it. If you want to beat the

Starting point is 00:58:02 market, you have to choose the right market, which is really an argument for asset allocation. So you always go back to the proven studies. Brinson B. Baron Hood in the late 80s basically show that asset allocation is the key to everything. It's not about the individual positions. It's about the average of the positions. And I tend to not want to try to reinvent the wheel because I believe there's much more I can do to uncover and make progress. So because the studies are pretty uniform on that point, why should I do individual stocks? Now, by way, I will say on that note, I do write about individual stocks. One of Seeking Alpha's writers, in addition to lead Lagraport, which is much more ETF and asset allocation oriented. I do that because the reality is

Starting point is 00:58:36 a lot of people still like to talk stocks. I try to add some, some color, some interesting points about narratives. But as far as my own personal investment style, I would much rather be choosing the right average than choosing the individuals in the average. For a fund that has so many different allocations across different asset classes, what do you choose as the benchmark if it's not the S&P? This is the challenge. This is because to your point, the turnover on all three funds, the ATAC rotation mutual fund, risk on, risk off, Roro ETF, the Jojo, junk on, junk on, junk off bond ETF. The turnover on all the funds is expected to be well north of a thousand percent. We're active. It's like, I always laugh when people debate

Starting point is 00:59:14 active versus passive because the overweight Apple by 50 basis points. It's like, dude, that's not active, right? That's not active share. So, and they're very active because the anomaly only lives in the short term. It goes back to markets are efficient, longer term. It's in the short term where you can see the weather up to the horizon, and you have to keep on slowing down. So because of that, you're right. It's very hard to benchmark because how can you benchmark something that's that active? Unfortunately, most people will benchmark it against the S&P, which I love in years like last year in the midst of the COVID crash, but it's not the right benchmark. And that's an important point. I think the way to think about this stuff is you compare it

Starting point is 00:59:45 against other tactical strategies, other active, non-correlator, low-correlated approaches. And you blend those of the competition, basically, and that's that your benchmark. It's not something that you can really compare against a passive vehicle or passive index by any means. This is a bonus question, but to the best of your ability, do you think your approach has any similarities as something that, you know, say Jim Simons is doing? I am sure that certain indicators are parts of Simons and others, right, when they do their hyperactive trading. I am certainly not smart enough to have as many variables, but I also think I'm probably

Starting point is 01:00:21 fairly anti-fragile from that standpoint because I'm only focusing on one or two that define the bulk of why markets do what they do. Interesting. Well, this has been a really eye-opening conversation, Michael. I really enjoyed it and really enjoyed your papers as well. I really recommend everyone to go read them and check out the Lead Lag Report. Before I let you go, I'm going to give you the opportunity to hand off to our audience where they can learn more about you, where they can follow along, find all your research,

Starting point is 01:00:45 etc. I appreciate that. So on Twitter, I'm almost as active as my funds through at LeadLag Report. You can check out the funds at ATAC just stands for atactical, atacfunds.com. and then for the premium research, it's leadlack report.com. Everything is basically just variations in the same concept. Kill it on the stock market. You have to not get killed.

Starting point is 01:01:05 You have to also be in the environments where you could be killed, which is those down periods. And look, at the end of the day, all I'm trying to do is give voice to math. And the stuff that I present out there, it's not magical. You can test it. You can see it's valid. Go beyond the small sample, think longer term, and realize the future, again, is unknowable. Michael, this is fantastic. Thank you so much.

Starting point is 01:01:26 Let's do it again sometime. I appreciate it. Thank you. All right, everybody. Hey, if you're loving the show, please go ahead and follow us on your favorite podcast app. Maybe even leave us a review. We'd love to hear from you. You can also find me on Twitter. That's where Michael and I first connected at Trey Lockerby. And if you haven't already done so, please go check out all the tools and resources we've built for you at the investorspodcast.com. Simply Google TIP finance and it will pop right up. And with that, we'll see you again next time. Thank you for listening to TIP. Make sure to subscribe to Millennium.

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We Study Billionaires - The Investor’s Podcast Network - TIP390: Quantitative Investing Tactics w/ Michael Gayed

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