This week, we’re joined by Corey Hoffstein from Newfound Research, who also hosts the Flirting With Models podcast. We discuss his journey into Systematic Investing, why the year you enter the markets will likely impact how you invest in the future, and why random returns can actually be worse for your system than bad returns. Corey explains the term ‘Sequence Risk’, why investors should avoid being too short-term, why risk can only be transformed and not destroyed, and if past performance is actually indicative of future returns. We also get Corey’s views on simplicity versus complexity, how he approaches diversification, and how he invests personally.
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• 00:00 – Intro including discussion of weekly events and the latest news from the FED
• 05:35 – Weekly review
• 08:50- Corey describes his background
• 22:00 – Corey breaks down the 3 components of diversification: What, How and When
• 35:10 – Question: How do you know when your model is broken?
• 42:15 – Question: Do you think TF will continue to work?
• 52:00 – Question: What is sequence risk? & Why we should pay attention to it!
• 56:50 – Question: What do you mean by risk cannot be destroyed it can only be transformed?
• 1:01:20 – Question: How do you convince investors to include TF in their portfolio?
• 1:06:45 – Question: Please discuss simplicity, complexity, model robustness, etc.
• 1:17:40 – Question: How do you prioritize drawdown management above all else?
• 1:21:20 – Question: Why is it easier to predict markets & performance 10 years out…unlike most other things in life?
• 1:27:00 – Question: Do you think past performance is a guide?
• 1:29:15 – Question from Christian: Do you think more information in models adds value?
• 1:33:00 – Question from another Moritz: How do you invest personally?
• 1:36:50 – Performance recap