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Invest Like the Best

Exploring the ideas, methods, and stories of people that will help you better invest your time and money. Learn more and stay-up-to-date at InvestorFieldGuide.com
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Now displaying: June, 2018
Jun 26, 2018

My guest this week is Eric Balchunas, the senior ETF analyst for Bloomberg and the author of the Institutional ETF toolbox. This episode is intended for those in the asset or wealth management industry who have considered using ETFs in their portfolios, or for the individual investor who likes to stay up to date on trends in the market for asset management products. We cover all aspects of ETFs in some detail, and luckily in ways that have little overlap with a few other recent ETF-centric episodes on two of my favorite podcasts: the Meb Faber Show and Capital Allocators with Ted Seides with Matt Hougan and Tom Lydon respectively.

We open with Eric’s favorite ETF tickers, discuss the pros and cons of ETFs versus other investment vehicles, and explore the largest areas of opportunities for new ETFs coming to market in the years to come. ETFs have become the vehicle of choice for many investors, so it was about time we covered them in depth in this forum. As you’ll hear, Eric is the right person to teach the world about ETFs, thanks to deep domain knowledge and unflagging enthusiasm. Please enjoy my conversation with Eric Balchunas on the past, present, and future of ETFs.

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.

Follow Patrick on Twitter at @patrick_oshag

Books Referenced

Quantitative Momentum: A Practitioner's Guide to Building a Momentum-Based Stock Selection System

Links Referenced

Chart – There Are Now More Indexes Than Stocks

Show Notes

2:32 - (First Question) – Eric’s favorite ETF tickers

4:07 – How Eric got started into his career and how it led him into the ETF world

8:04 – An overview of the ETF landscape

10:10 – Active managed ETFs

            12:17 – Chart – There Are Now More Indexes Than Stocks

13:32 – Key variables he thinks about when assessing a new ETF

15:18 – Evaluating shiny object ETFs

17:30 – The appeal of ETFs

20:18 – Future regulatory concern of the tax treatments of ETFs

22:10 – The liquidity advantage of ETFs and why that can actually be bad for investors

24:19 – What would Eric do to build the perfect ETF

26:03 – What are the future trends for new ETF’s launched

29:40 – Categories that work well in the ALT world of ETFs

31:32 – Most effective marketing strategy for ETFs

35:50 – Quantitative Momentum: A Practitioner's Guide to Building a Momentum-Based Stock Selection System

36:28 – How will the winning asset managers have done differently in this space

41:56 – How the next downturn could impact ETFs

46:17 – Do ETF’s create pricing distortions

50:33 – What trend is Eric most interested in right now

53:21 – Alpha through Beta

55:51 – Kindest thing anyone has done for Eric

Learn More

For more episodes go to InvestorFieldGuide.com/podcast

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub

Follow Patrick on twitter at @patrick_oshag

Jun 19, 2018

My guests this week are Kyle Samani and Tushar Jain, both managing partners at Multicoin Capital.

I’ve taken a bit of a break from crypto because I hadn’t sensed many new angles to explore in this forum, from an investor’s point of view. I felt that while things keep evolving, the major investment theses have been established and explored.

Kyle and Tushar are interesting because of their often divergent views. For example, Kyle has been an outspoken supporter of Ethereum relative to bitcoin.

This conversation, which is meant for those still curious about crypto, offers lots of new food for thought. We discuss smart contract platforms, network effects, the coming platform wars, and why blockchains may not matter in ten years. Please enjoy my conversation with the partners of Multicoin Capital.

Hash Power is presented by Fidelity Investments

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.

Follow Patrick on Twitter at @patrick_oshag

 

Links Referenced

Paths to Tens of Trillions

An (Institutional) Investor’s Take on Cryptoassets

On the Network Effects of Store Value

If SaaS Products Sell Themselves, Why Do We Need Sales?

Money, blockchains, and social scalability

Nakamoto Institute

Token Economy

Multicoin.capital

Crypto Cannon           

 

Show Notes

2:11 - (First Question) – What would get the entire cryptocurrencies ecosphere to 5-10 trillion dollars

            2:53 – Paths to Tens of Trillions

4:37 – What will be the effective uses for crypto currencies, store value vs utility value

            4:38 – An (Institutional) Investor’s Take on Cryptoassets

8:48 – Why they are negative on bitcoin and more positive on Ethereum

10:07 – Where will start to see widespread adaption of the utility value of cryptocurrencies

14:44 – What is the major breakthrough that cryptocurrencies create

21:21 – How do we gain confidence that a utility token will become a sound investment

25:16 – The different type of network effects

            25:47 – On the Network Effects of Store Value

31:18 – How do you convince institutional investors to consider the crypto space

34:21 – Factors that they care about when first evaluating a crypto currency

39:21 – How does technological development and marketing factor into their decision when picking a crypto currency

            40:31 – If SaaS Products Sell Themselves, Why Do We Need Sales?

41:42 – Where these two men disagree the most right now

44:07 – Why there’s a chance blockchain technology as we know it today could be irrelevant

            44:25 – Money, blockchains, and social scalability

47:56 – Most compelling trends in this world today

51:51 – A favorite resource or person people can look into if they want to learn more

            52:22 – Nakamoto Institute

            52:57 – Token Economy

            53:24 – Multicoin.capital

            53:30 – Crypto Cannon         

54:14 – Kindest thing anyone has done for them

 

Learn More

For more episodes go to InvestorFieldGuide.com/podcast

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub

Follow Patrick on twitter at @patrick_oshag

Jun 12, 2018

My guest this week is Michael Recce, the chief data scientist for Neuberger Berman. The topic of our conversation is the use of data in the investment process, to help cultivate what is commonly referred to as an information edge.

I call the episode “Tim Cook’s Dashboard” because of an interesting question that Michael poses: if you armed the best apple analyst in the world with Tim Cook’s private business dashboard, what might that be worth? Effectively Michael’s goal is to recreate the equivalent of a company dashboard for many businesses, helping analysts understand the fundamental health and direction of companies a bit better than the market does, and in so doing create an actionable edge.

This is a daunting task, and you will hear why. It requires both a fundamental understanding of business and of data, statistics, and methods like machine learning. In our own work, we’ve found machine learning to be useless for predicting future stock prices, but extremely useful for other things, like extracting and classifying data.

This conversation can get wonky at times, but as listeners know that is the best kind of conversation, even if it requires a second, slower listen. I hope you enjoy this talk with Michael Reece. Afterwards, I highly recommend you invest the time to read a series of posts called Machine Learning for Humans, which I will link to in the show notes. It helps demystify the buzz words and explain how these new technologies are being used.

 

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.

Follow Patrick on Twitter at @patrick_oshag

 

Books Referenced

Crossing the Chasm

One Two Three Infinity

 

Links Referenced

Sam Hinkie Podcast Episode

 

Show Notes

2:44 - (First Question) –  Changes in data science through the lens of Michael’s career

5:17 – The basic overview of using data and machine learning to create an edge

6:58 – How the state of business is more than just a single data point

7:53 – How you know when you’ve pulled a real signal from the noise of data

10:49 – The advantages that data provides

13:01 – Is there still an edge in decaying data

15:34 – Building data that would predict stock prices

19:43 – Prospectors vs miners in data mining

22:18 – Knowing when your prospectors are on to truth

27:09 – Understanding machine learning

30:10 – Defining partition

32:17 – Applying the parameters of selection process to stocks

36:05 – What’s the first step people could take to use data and machine learning to improve their investment process

38:54 – Building a sustainable advantage within data science

41:35 – Predicting the uncapped positive vs what’s seemingly easier, eliminating the negative

43:58 – How do we know to stop using a signal

46:22 – The importance of asking the right question

47:09 – Categories of objective functions that are interesting to measure data against

            47:42- Crossing the Chasm

48:37 – Most exciting things he’s found with data

51:17 – What investors, individual or firms, has impressed him most with their use of data

52:17 – Will everyone eventually shift to being data informed or data driven

55:33 – Wall Street’s use of data vs other industries

            55:36 – Sam Hinkie Podcast Episode

57:48 – Why everyone should know how to code

58:52 – Kindest thing anyone has done for Michael

            59:22 – One Two Three Infinity

 

Learn More

For more episodes go to InvestorFieldGuide.com/podcast

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub

Follow Patrick on twitter at @patrick_oshag

Jun 5, 2018

My guest this week is Ash Fontana, a managing partner at venture capital firm Zetta, who invests in companies which build software that uses artificial intelligence methods like machine learning to predict and prescribe outcomes. Ash’s combined experience as a founder, entrepreneur, and investor give him the perfect background to discuss with us one of the hottest topics in business and investing.

This conversation is useful for anyone trying to evolve their own way of dealing with data. Of particular interest are the ways that Ash and his team evaluate data sets and how they think about competitive advantage in this new world—where he advocates a new term to replace the concept of moat: loops. 

If we can use data to do things better than humans, or if we can supercharge our intuitions with predictive models, we can harness the power of this new technology. What Ash has taught me is that data itself is dumb. But great data sets can represent the fuel for incredible companies. Let’s dive into how that may be. Please enjoy this conversation on how AI is changing business, and how we might profit from that change.

 

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.

Follow Patrick on Twitter at @patrick_oshag

 

Books Referenced

The Most Important Thing: Uncommon Sense for The Thoughtful Investor

 

Links Referenced

Jerry Neumann Podcast Episode

Ali Hamed Podcast Episode

 

Show Notes

2:25 - (First Question) – A look at their very specific investment strategy

3:35 – Future of competitive advantage in the SaaS industry

6:45 – How startups and new companies can compete against software giants that are pretty well entrenched in the market

8:38 – How do copies with narrow focuses attract VC money which is looking for massive returns

12:28 – The stages in which AI will be enabled

15:55 – Framework of an AI company

18:49 – Importance of the feedback in the AI company framework

20:56 – Examples of AI companies

23:50 – Why companies that are AI from the start will have a significant advantage in the space

26:21 – How do companies change their thinking about compiling useful data

32:18 – Regulation of AI

35:03 – Preventing other companies from leap frogging you in the AI space

37:57 – Some of his favorite AI companies

40:43 – How much has he seen in the finance world

            41:07 – Jerry Neumann Podcast Episode

43:10 – Why the focus on B2B AI companies

45:34 – Major components of the enterprise stack that he focuses on for AI

49:30 – What impact will all of this AI have the daily lives of people

51:38 – Biggest problems that he is excited to see AI tacklet

53:04 – How do you value the intangible asset of an AI model

57:13 – How Ash thinks about getting other investors into firms they seeded

1::00:27 – Other investors that Ash really respects

            1:01:15 – The Most Important Thing: Uncommon Sense for The Thoughtful Investor

            1:03:29 – Ali Hamed Podcast Episode

1:04:04 – Where would Ash invest outside of AI

1:07:11 – More about his family nut business

1:11:18 – Favorite macadamia nut story

1:12:05 – Kindest thing anyone has done for Ash

 

Learn More

For more episodes go to InvestorFieldGuide.com/podcast

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub

Follow Patrick on twitter at @patrick_oshag

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