Alex Gurevich on Global Macro Investing Strategies

track record. UH. In twenty UH he was positioned in a very contrarian set up heading at the end of into he was anticipating a substantial decrease in interest rates when most of the rest of the world was positioned in the opposite way. And when the pandemic hit an emergency FED cuts came in UM his funded spectacularly well.

It was ranked second best performance of alledge funds in When you read his books and and his most recent one is The Trades of March A Shield against Uncertainty, you can see there is a tremendous amount of complexity and deep thought in how his portfolio was positioned. UH. They primarily trade derivatives, interest rates, swaps, UH currencies. It's not your standard stock and bond trading. It's a little

more complex and sophisticated. UH. And this is one of the only books I've ever read where the slack channel, that is his trading desk, where all the trades are are given, confirmed, executed, is pretty much reprinted as it was. I would say about a third of the book is slack and following. This is really a um education and

how a real world hedge fund trading desk operates. That they're located on the West coast, so they're both behind, uh, the East coast by three hours, but they're anticipating what takes place in Asia and Japan and China. And what's really fascinating about this is when the pandemic began, they

were pretty much trading UM around the clock. It's not a giant firm, it's a you know, him and a number of his employees were you know, for days at a time, trading continuously and you could see it by the time stamps in in the slack channel one am, three am, five am, seven am, ten pm, eight pm, and and that's West coast time. Really fascinating conversation. He's a super interesting UM, not just a trader, but his worldview and how he looks at what drives asset prices.

UH is really fascinating. So if you are all interested in the world of macro trading, um strap yourself in for an education because this conversation is fascinating. With no further ado, my interview with Alex Guerrevich of Hante Advisors. This is Masters in Business with very Rehults on Bloomberg Radio. I'm Barry Hults. You're listening to Masters in Business on Bloomberg Radio. My special guest this week Alex Guerrevic, founder

and CEO of Hante Advisors. Previously, he was the head of JP Morgan's Macro book in Hante was ranked second in net return by Barclays and Guerevic was one of the top ten emerging managers as tracked by Eureka Hedge. He is the author of two books on trading, the first, the next Perfect Trade, A Magic Sort of necess City. His most recent book just came out this year, The Trades of March, A Shield against Uncertainty. Alex Vervic, Welcome to Bloomberg. Thank you very much for having me. I'm

excited about this conversation as am. I. Let's let's start talking a little bit about uh, your background. You earned a PhD in mathematics from the University of Chicago. Tell us a little bit about that experience and and how you get to apply math as a fund manager and a trader. Well, first of all, I will confess the experience of being in graduate school University of Chicago was still amazing that for many years, almost decade afterwards, I

suffered from nostalgia. Even while when I was a successful Wall Street trader, I was often suffering from nostalgia for my graduates school days. So that's a quick summary. I think it's pretty amazing for me, at least to be in a very small circle stuff like minded people who had even though I grew up in a different country in backgrounds are different. But interestingly, mathematicians all around the world do the same math and they played the same

math games, all the same puzzles. So there was so much in common and so much fun to have in that environment. We were you ever? Were you ever planning on pursuing a career in pure mathematics or was the thinking I'll take this skill and education I I earned the Chicago and applied to Wall Street was tell us what you're thinking was when you were um in school. You know, honestly, since I was a teenager, there was kind of a double thinking in my mind. It's almost

like two superposed ideas that I wasn't really clear. My natural path was always to do theoretical math. I wanted to be a mathematicians since I was four years old, but my fascination with finance industry, with strategy was already there. I remember seeing the movie Wall Street in back in Russia, and I was totally fascinated by it, and just the whole idea of like financial strategy was so exciting to me. I think someone in the back of my mind I always thought that at some point I wouldn't up on

Wall Street. But at the same time I was making all emotions to pursue the career and theoretical math. So so I think I was a little conflicted about this until some point. So you mentioned you saw the film Wall Street growing up in Russia. You grew up in St. Petersburg. Did you know you always wanted to come to the West.

It's hard to imagine seeing such a just like I guess, um capitalist film like Wall Street, even with good guys, bad guys and corruption in the film, even still seeing it in Russia had to be a little um you know, a little cognitive dissonance built into that. Well. I think it was very exciting and refreshing. They did show a bit of foreign always in Russia. It was not that closed. I saw Star Wars on Russia too, so there was a little bit of cultural flow. So I did always

want to go to America. There was no question in my mind. Since I was six years old. I considered myself American, like it was deep in my heart that I'm belong only in one country, in the United States. That was not a negative statement on Russia at all. It was not even about politics fully like I mean I and also like I always loved Russian poetry and literature and architecture and many aspects of the culture. But I always felt that I belonged in the United States.

There was never a doubt in my mind. I don't know how I knew it, but I knew knew it since I was a little kid. So so when did you move to the US. I moved in the US in the middle of college. It was eighty nine. I was almost twenty years old, and you've been here two years of college there and I had two years of college in American and I went to graduate school and so first job out of school was where Well, I went straight to graduate school. On my first job out

of graduate school. That when after I got my PhD, I went to Bankers Trust in n And that's when I was a critical point of my decision, when I decided, Okay, I've already accomplished what I needed accomplished in math. I proved my metal, and now I really want to have a good opportunity. I have a good offer. I'm gonna try Wall Street. And how did you go? Um? How did you end up at JP Morgan? Well, I post at Bankers Trust and I started trading fixed and com derivatives.

That's very important to understand that I most of my mathematicition friends went to do some kind of quantitative work on Wolf Street. I never did. I went straight into trading. That was my interested I always said, if I want to do research, I would stay in the in the math department, even if it pays less money, but the lifestyle would be worth it. I wanted to trade. I went to Bankers Trust, which became the trade on a swap desk, and then it bought, got bought by Deutsche

Bank and a Deutsche Bank. Because of all they organizing, I was pretty Joe year at that time. They offered me a different kind of job, which was very good in terms of two trade options. It was not particularly

interesting for me, but it was very educational. But I started to look for a new job soon and I got a In two thousands, I got a job at Chase basically doing basis swaps, which I did originally at banker Stas as a junior trader, but I got a senior job at Chase and then Chase merg of JP Morgan.

I ended up at JP Morgan Chase running basis swop franchise, and then I launched the agency Assets w franchise also in the two thousands one, I think, and then and then by two thousand three you mentioned in the Wall Street Journal as the star trader of JP Morgan. Tell us about that. How did that feel, um being recognized for your trading skills? You know, honestly, it is interesting. At that time I did not really appreciate so much the value of publicity, and I did almost know networking

and almost no publicity. So I moved the proprietary desk in two thousand two from UH. Because after I did really well with my market making businesses on two thousand one and build them up really well, there was formed. They were forming Global Currencies and Commodities Group in the

merged shape Immorgan Chase Bank. By the way, this group ended up to be extremely successful going forward, and UH they offered me to shift and move a micro portfolio because my even with my client partfolios, I was more and more UH focusing on micro factors. And then that was like then I had a very successful yet two thousand two and started very successfully two thousand three, and that's when they wrote an article. The article was really

based on a leak. I think somebody just told them what possessions were had and what money we're making in two thousand three, and then there was this article and it was on one and exciting and like I know,

like my parents were excited about showing this article. But on the other hand, that was like a little disturbed that there's a leak and somebody knows something about my positions that they sho not interesting And I was not really seeking publicity and I was a little shy of publicity honestly, after that, I don't think it was like a bad liok. It was a very positive article. There was nothing me no negative in it, and there was

nothing wrong about it. But I was just a little nervous about publicity after that because nobody I think they reached for comment, but I don't think there was. This was like an article the JP Morgan was specifically pushing, right. So but what I realized afterwards, like an early years later, when I started to raise money and around my own hedge funds, I realized, well, actually any publicity is kind of good and it's good to know people. So so let's let's look at that timeline. So this was back

in two thousand and three. How much longer did you stay at JP Morgan four and when did you launch your your funds? Well, I stayed at JP Morgans in early two thousand seven and then so it's been quite a while, it's now fifteen. Is that I've been doing various things on my own, but I not always run business, as I had one fund and which actually did not work out, and I talked about as a lot in my first book, The Next Perfect Trade, about my first found and kind of mistakes that when made there and

things like that. It was called Cloudy Capital, and then I for a few years basically was running my own money, and then Hunte was created around two thousands fifteen and started to take outside money around two thousands sixteen. Relatively recent battles are relatively established. Since you mentioned HUNT, let's talk a little bit about that funds. Tell us about the genesis of the name Hunte, which you described in the book The Trades of March. So, Hunte is a

Japanese strategic term. It originates from the game of go, and haun means truth and means move, so it's a true move. But the context and which is used that sometimes in the game you make a move which is not the most flashy or aggressive, but what they call an honest move, like what you really have to do, even maybe not the most impressive thing to do, but that's what gives you the best results in the long run,

and that's what I wanted to make. The strategic concept is symbol for how you run the fund like it a lot. Let's talk a little bit about what you do with HUNT. You went from being a trader uh to the head of JP Morgan's macrobook to launching this this hedge funds. Um tell us a little bit about those transitions. What how were you able to build on your prior experience with each new position. Yes, I think it was very important stepstone in my career that I

started as a market maker. Some people who move directly into hedge fund by side business, I think missed out a little bit seeing what actually happening in the trenches, what's happening on the trading floor of the band, how the client flows work was doable and not doable. I think it was very important for my formation as a trader. I remember the crisis of and when there was the

first freeze of the market that observed. That was very junior, but as it turned out, I had to make some decisions because my boss was on vacation and I had to take over some aspects of of the book that I was focusing on and deal with big hedge funds. I was like super junior trader and all this big hedge funds coming to me begging me for unwines because they were blowing up, and people would ask me questions like marketing sells. People would come and ask me questions

where it's such and such trading. And I was like, what are you talking about. It's not trading. The market is frozen. There is maybe one bit and if I show any offer, my boss will fire me. That's my market. That's really interesting because there's a line in the book The Trades of March that really jumped out at me. Um, tell me about this quote. Every crisis starts with fear and ends with necessity. Explain that, see as crisis. First of all, crisis always has to be something unexpected. Crisis

never happens on schedule. We know that, right, Like when people try it on scheduled crisis like white, Okay, you get no crisis. So it's always comes from unexpected direction by definition. And then it usually when there is a crisis which spills on the financial markets, people loose liquidity and then the panic starts. We need to liquidate positions. How bad things can go, and things get to the points when people are really thinking that the world is ending as we know it, and one day it might

end as we know it. But in global financial crisis, people thought, okay, whole financial system will collapse. In COVID, I don't know what people were thinking. We're all gonna die or whatever. Everything is going to be shut down. I don't know what people are thinking, but clearly people are quite panicked about what things can happen. And now, of course we have other existential threats with the current

war situation as recording this ah ah. So first it starts with fear, but then what happens is that because and some people act and fear, but then people have Eventually people have to act not because of the fear and not only because of the choices, but because of the decisions are forced. What happens is if you are fund and you're losing money and you're you're a u M decreases, you need to reduce your positions. This is not about fear. This is about necessity. So you have

to liquidate. Some various people need to liquidate certain positions, do certain transactions because the exchanges are forcing them, the margins are forcing them, bosses are forcing them. And then the policy makers step in and they buy assets or provide liquidity. And this is also this liquidity comes in not because somebody chooses it, but because this is various unstoppable flaws that's happening in the market. And this is the necessity In the end, there is no choice for things,

but to both certain ways, that makes sense. You know, it's perfect sense. We'll talk about the book later, but there are some really interesting um excerpts where you are showing your your trading in real time in the conversation you're having with your colleagues and your desk. When when you say it begins with fear and ends with necessity, can you feel that as a trader when you're plugged into the market. Are you seeing that in flows, in prices and in opportunities. Yes, and I even feel it

in my own emotion. Explain to the things that try to concentrate on the book is like show the psychology of trading the more moments and I point them out on the book when I felt like deep existential dread, like what's going to happen? I feel like that those moments were like, oh, yeah, that's just cut hundred basis points, but I'm not sure that I'll do it right. And you're feeling like will everybody cut my funding tomorrow? Right? Will will there be no balance? Ship? What's gonna happen?

That is when you see in those terms, you realize that the market is still ruled by fear. When you started thinking, Okay, I've reduced my positions. Now the FED is buying those assets that I'm holding, and they're rallying you, you start feeling the sense of necessity. Huh. Very interesting. So so let's talk a little bit about the trading in during the start of the COVID nineteen pandemic. In that year, your fund ranked second in net returns. You're

one of the top ten emerging managers. Tell us what your thought process was in what led to so much conviction that you had position right? And I believe, if I'm reading the book correctly, you were fairly well positioned for a series of rate cuts in when much of the market was still expecting rate hikes. That did I get that right? Yes? Yes, and that definitely contributed to

success in two thousand twenty. Generally, one has to realize if you're on a micro part full and there's some kind of exogenous event, you're not always will be positioned right for it. Maybe like if you always own just auptionality that are pure option funds, but even that, like events could do very different things, Like events don't go just one direction. For example, US election in two thousand sixteen, it send markets in a certain way that people did

not expect at that moment. Right, But then there was September elevent global financial crisis, there was European Dead crisis, there was of course going back, there was like seven crush. There all those events you can look at which happens suddenly they'll have different flavor and you will not always be positioned right for it. So there is a little bit of an element of luck in terms of being

positioned right. But there's also a little bit of an element of work if you always a little positive towards crisis premium, like if you tend to be have assets that have some balancing in your part for it that there are some assets that make positions that make money. Thinks those sideways in that particular case, I was didn't just have protection. I had a very strong view in two thousand eighteen that arate for heading and exorably zero.

I think this view was ex anti undisputable. I think people who thought otherwise were just playing wrong, because everything same ways. Two thousand fourteen, I was convinced the trade for going lower, and I delineated my logic in two thousand fourteen, and my first book, The Next Perfect Trade. Even back then and then over the next few years between two thousand fourteen and two thousand twenty up to COVID, we had the situations when everything that could go wrong

for bonds wetter went wrong. Like we had very robust growth, strong employment, we had US politics, fiscal boss fiscal phiscal politics and growth. Everything was actually negative for bonds if you looked at it, If you look those numbers right, and at those physical expansions and the elections and everything you will, you would think everything would be negative for US bonds. And yet they performed tremendously well, which and I had that logic and place why there was no

choice for them that to perform that well. That's why I called my first book the Magic, magic sort of necessit to you, So I should like to say, sometimes a magic sort of necessities unshoot, huh. So, so how do you conceptualize all of these macro currents and cross currents and events. Do you create a model or is it really you're just putting together a lot of different ideas and trying to game out how they're going to manifest themselves in prices of interest rates and inflation and

other factors that that drive markets. I think what I it's a kind of a hybrid I follow. I follow the markets just kind continuously. It's hard to say, because if you want financial markets for twenty five years without ever really taking a true break, there is a certain continuity to it. You see how things develop in the world.

Of course, you can miss certain important developments, but you have a general sense what's happening to interest rate, what's happening to currencies, what is the mood of the world, and you try you form certain opinions. Now, I have a strategic system, which again delineated in my first book, but I refer to how I applied it a lot on the second book, in which I ranked trade. What I tried to do I try to select trades which x ANTI look good. And the bond trade of two

thousand fourteen was the best example of this. This was the highest strength trade I ever had in my ranking. I have a numerical ranking system, and this was the highest strength trade in basically all history of financial markets that I know of. And it has been proven to work this way because just the highest strength trade that rades that make money even if everything goes against them.

A right, So that is the strongest test. It's very easy to like make money on a trade if if you if the events helped you, But how does the trade perform with events don't help you? Probably the most selling and test. So UM I ranked trades based on certain factors that I believe predetermined which trades them more likely to make money. None of those as certainties. It's all about probability skills. It's all about kind of trying to shift the odds from being the player in the

casino to being the casino. Interesting, when you were running macro strategy at JP Morgan's trading desk, were there any similar uh perfect trades lining up? What did you see from your macro perspective as UM low risk, high return trades. Well, I think definitely my first perfect trade and probably they are like there were two great junctions for perfect trades in my career. In the first time happened in two thousand two, and in a simple words, that trade into

thousand two or risk parity here mm hmm. And back then I had no idea that some people were already doing risperraty. I think they were. It was totally independent thinking, but I didn't know of course the weather asperity. I don't I didn't know what Cliff Astness was doing, what Dalia were doing at the time. I still don't know exactly what they were doing back then. I'm not like a historian of hedge fund world, but internally a JP Morgan. In two thousand two, I gave a presentation about and

looking back at this, it was exactly a rispiracy. I talked about volatility portfolio weighted by implied volatility portfolio of SMT futures, and you're adollar futures. Huh. Really interesting. Um On. One of the things that we always kind of laugh about is the people who tend to be one particular type of trader, but for whatever reason, they can't help but getting sucked into the macro trade. And I've heard various trading desks called them macro tourists. I don't know

if you're familiar with the phrase. Yes, tell us your thoughts. First of all, why are people so compelled to believe they have the ability to anticipate and trade around macro events. It's it's one of the most challenging types of trading if you're not in it every day. Well, I think there are two things going on. First of all, successful people have a tendency to become ultra crepidarian, which means like they just think that they're skilled at more things

than they actually are. Like if you are, and I've fallen prey to this many times in my life too. When I think like, I'm really good at many things, you try some new things and you think, well, should I'll be good at that too? Should I can apply this logic? For example, if I use my logic and apply my logic tonnelized stocks, right, individual stocks? Should I can do that? Right? My intuition. It's very easy for me to, for example, to say like, oh, this is

my intuition about geopolitical developments. For example, think about this, I'm a micro trader, right, obviously my portfolio will be impacted a lot by current military whatever and political developments. Ah So, unavoidably it starts forming views about what can happen, what's the next step in the conflict? Now? Do I really have any qualification to know what the next step

in the conflict is? Absolutely not. Furthermore, I don't even have qualifications to know what the next inflation release will be. I mean, I don't have any I don't know any more than thousands of other economists and analyze it. What I have qualifications for its construct trade and portfolios. But it's very easy to go into other areas which I related. Now to imagine that you as an individual stock trader, and you know that your stock is affected by interest rates,

or currency or even just overall direction of economy. It's very hard not to start forming views on those things. And what I think is very hard in your mind to come partamental eyes between the areas you expert in and the areas you're not an expert in. Huh, really interesting. Let's talk about your first book first, the next Perfect

Trade A Magic Sword of Necessity. What what's kind of interesting about this book is you use all of these medieval weapons, armored shields, other types of weaponry as a metaphor for trading. To tell us how you developed that sort of mindset, I think, first of all, honestly, people, when people use metaphors, they just reach to whatever is fun for them. For example, if you have found, like I hear, people a lot used, for example, baseball metaphors.

I know nothing about baseball, so and I don't I don't really watch team sports, but I do like medieval warfare, and I read a lot of fantasy books which involved with so that's on my mind. So I think the idea is you want to use metaphors which are fun for you but also kind of power of all, I think going to battle as a powerful metaphor people can relate to it. You go to battle, you need to train, you need to have a weapon to attack, and a

shield an armor to protect yourself. So and that is very simple kind of I think anyone can relate to it. But honestly, for me, it's just fun to write this way. So it's it's metaphors for both risk, which is um, the shield protects you, when reward, which is how the sword obtains gains. Is that a fair description. Yeah, that's

a very good way to put it. Yes, huh. So I noticed in the new book which we're going to talk about, um, there's a lot of astrophysics in their accretion disks, tidal gravity, wormholes, event horizons, a lot of black hole related why the nomenclature of astrophysics. Well, that's another area which is super fun for me. I really love black holes and I love reading about them. But also I started thinking about it is a lot because

of the time distortion factor. One of the reasons like why I started wherever I thought about writing this book The Trades of March twenties twenties, because the month of March was seemed like infinite. Every trading day was like a few months volume of trading every day. And that's when I said, like, at the end of that month, it's like, well, we survived March. The month of March,

somebody should read write a book about this month. And then it's like, Okay, I can write a book about this month because there's so much happening and thinks that it would normally take Sometimes the trades that sometimes will take years to unfold wood unfold within hours like sudden trains would unfold so rapidly. So I'm a long term trade I tried to be patient. A lot of times I put a trade on and it's there for two years.

And in March twenty a lot of trades had to be changed around quite a bit within days, and that so it felt like a time warp. And when you have this time warp stort of the time that Magaly makes me think of black hole. Sure, and then the realized not just time was worked, but the whole market structure was worked. Things were just getting really disconnected. Like one thing was trading the way one thing was trading it has nothing to do with the way the other

thing was trading. And that also makes me think of like time space ruptured by a black hole. Huh, really really interesting. I think this is the first book I've ever seen that has I don't know, maybe a third of it is actual internal slack messages on on the trading desk. That that's pretty unique. Tell us why you decided to embrace that approach? Well, I realized that there's a lot of good books written about trading, and some of them are written by journalists and reviewing traders. Some

of them are written by money money managers themselves. But any book, even and that includes m on my first book, any book that one reads shows a person's perspective, a person's recollection the biases they've used. And that's okay. You read that. If you read somebody's book, you want to read the views, right. I I wanted to get the closest to get writing an objective book, even though my

commentary is obviously subjective. But the book that you really could not say, well, he fudged that you could really see time stamp on everything I say. And I think the value of that is what I think about in terms of safer is some reason they've been using this analogy a lot. If you think of aspiring traders and medical students, they could read an anatomy book, which could be my first book or some other trading book, or they can actually go into the operating room seeing the

actual trade chatter. Well, for anyone who actually wants to be in financial markets and wondering what it's like, they can actually go and see what is happening in a hedge fund when there is a crisis. It's similarly imagined. Do you want to be interested in being like an oval office of the White House when there is some kind of military crisis developing like Caribbean crisis, a current crisis? Right? Uh? Similarly, I don't maybe like you want to be like a

CDC headquarters when pandemic was unfolding. Right. It's interesting to take a pick at those places, and I fl my slack chances, let my slack records allow people to see it in a very faithful way which I cannot paint. I cannot paint myself like Kira was making all the right decisions. You could see all the confusion, all their commotion,

all the mistakes. Although like we did the straight today, but you know what, would have to unwind it because it's not working at all the way we want it right, All of those things happening in real life, what it's like in the trenches. One of the things that really stood out is at least to my eye, was the attempt to make sure that there weren't simple trading errors. You would put in an order, it would get called back to you in a very specific way. Someone else

was tracking the price, the time, the margin lines. You had to make sure you never went over buying power like there are a lot of move being pieces throughout. Do you think the slack channel captured all of those, because I don't know if people who aren't familiar with trading desks pick up a lot of the the complexities there. You you specifically refer to it in the text, but it goes by really quick and and a lot of

the trading desk slack chatter. When you look at the time stamps, there's a ton of stuff happening in a very very short period of time. Yeah, it is actually select this trading SLAC there's only a fraction of what is happening because it does not show any of the operational talk right, and it doesn't take any of the strategy research talk, and it doesn't actually have operation talk that it's all the strade that getting checked and booked unders tons of work done by the by our middle

of his people, right by operations people. So there's a lot of stuff going on in the background in terms of operations. But I did think it was important to uh particularly important to show slap chat and all its entirety without cutting this boring upper almost like boring confirmations

and operational discussions, just to see what the processes. Like I always like get laughing, like when they do in TV shows and somebody says, picks up the phone and says wire five million dollars to such inside and click off. You know what happens in the real world. They'll call you back, they will confirm the they will ask you

why the wire is for. They will make sure ask for your birthday, even if they talk to your hundred times before, Like there is a lot of due diligence goes into any kind of financial transactions, which I think a lot of media portrayals of the world's skips, and again there says yes, if you're an operating room and you are persforming a surgery, they cut, they cut a person, They put those little like I don't know what it's caused, pieces of gas on side and they count all of

them so they don't miss one. Right, there's a lot of that going on. You can have breakdowns, right, and you could see the moments when we're finding an error, confused about something and fixing it on a commotion, and that again, it's just part of showing what it is really like to do the work. One of the things you say in the book that I thought was intriguing is people may be surprised how little time we spent discussing the stock market. Tell us a little bit about

your thinking. They're well. One of the things is I've always thought that stock market is what it is, it's a fraction of financial markets. It's very important one because stock market is a really good indicator of what's going on in the world, and it's tends to be very good leading indicator of certain things. Uh. But trying to figure out on a given day, whether stocks are going to go up and down. Yes, I spent about very

little time on such discussions. That's extremely rare for me to talk about whether stock market is going to go up or down to there tomorrow, has no idea and I kind of not even think in those terms. I find that stock market is an important component of the portfolio, and I mentioned earlier on that I have been involved in a disparity type of trading early in my career and I still and I look. But for me, stock market is not special. It's not like the main investable asset.

Is just one of the assets. And sometimes my portfolio will not have any stock, any positions related to stock market at all, and sometimes it will be heavily positioned on some species. It could be not exactly stock market. It could be something like dividend futures. It could be any kind of stock indices around the world. Uh. For me, that it's just a component, and I don't spend a lot of time speculating on the short term direction of it.

Let's let's talk a little bit about options. I love this quote, so after acknowledging my shortcomings and swearing up and down to never touch options again, in my life. What was I to do but answer the simple question and by more options. Tell us a little bit about your experience with options and why you sometimes felt you had no choice but to participate in the options market. Yes, uh, I mentioned I've talked earlier that I used to be an options market maker, and I think that gave me

like a lot of I know. There's actually a pattern hedge fund managers who are options market makers in the past tend to use options much less when they become go to the buy side. The reason is that you kind of know the fallacies, all the fallacies associated that using options. Every option looks If you buy an option, it always looks great if your underlying market assumption is correct. If you think the market goes up thirty percent and you buy a call, of course the call will look great.

But that kind of idea of value and called based on your original speculation that market is going to up go up is fallacious, and when you own option there's a lot of ways for them to go wrong. You could be right about the direction, but it just can move not fast enough or not far enough, or not on the timing you need, and you will end up having the correct view in a losing trade. And don't even get me started on complex options. Absolutely hate all

those knocking knockouts barriers. I think that is just uh of the time, is just setting cash on fire to do complex options. There could be some exceptions. So why did you feel compelled at times to say I swore off options? But I had no choice. The trade presented itself and I had to participate with options. Yeah, I discussed in my book why what on occasion options? UH?

On occasion options associately miss priced? There is no choice to use them, and usually it has not not to do with it actually directly, like what is the implied volatility of that the money option is? But sometimes option structure is totally wrong because the typical option pricing is always built on some kind of normal distribution, that there is a central scenario which is most likely, and other scenarios that get like as likely as you move away

from the central scenario. And yes, people have always like fat tales skew cartosis. I don't even know all of those terms. I used to know the better twenty years ago. So, but there are all those things that just to not use classic normal distribution. But it's still the idea is that there is a certain central most likely price. Occasionally that is not the case at all, and that's what

I was recognizing into thousand eighteen. There was no most like if you looked at where the interest rates should be in two thousand twenties, there was no most likely price. The safety of praise too close to three percent. The three percent was not a tiny seniest bit more likely than one percent or four percent or two percent or zero.

So the forward that we had an interest rate had absolutely no, no uh prerogative in terms of the actual outcome, except that it was the forward that was there market price, but in terms of where the price will end up gave us absolutely no signal about that because we could be easing more, we could be we could be easing which I thought, what would happen, and we could be tightening. And that originated my option trades for contracts of tho

thousand twenty. And what happened in two thousand nineteen that the vault just on those options trades came down so much that the trade was just undeniable, and I had to say, okay, I gave up some of my previous games and options because the vault collapse so much, but that that is not what I should be thinking about. What I should be thinking about is not what I made on what I lost. But here's where we stand now. This is the market price and this is the portfolio.

I've done this before, sometimes with success. Sometimes I was wrong. Of course, I can have some petition going against me, but I say, now the levels are really good, and I'm gonna dramatically increase the position, really, really really intriguing.

My extra special guest this week is Alex Kuerevic. He is the founder and chief investment officer of Hunte Advisors, a macro hedge funds which was one of the top ranked performance funds in So we're recording this when we're about to get the March Federal Reserve decision on interest rates.

And one of the things that one of the things I'm gonna say that again, one of the things that struck me from the book was your line the Fed might occasionally surprise the the Fed might occasionally surprise the market with rape cuts, but they almost never surprised the market with unexpected increases. Explain that situation to us. Yes, so we're very close to the Fed and myden'mal in the studying starting to pump, and the logic is that, um,

they're at case. Once FED did intermeding cuts to support UH markets to dissolve crisis, dissolve arious liquidity problems that were happening, and usually no matter how much expected, they tended to surprise by doing even more aggressive rate cut measures when UH crisis is like in two thousand one or two thousand eight or H two twenty would occur. I think they have very little upside of hiking when market doesn't expect them to hike, because tightening interest rates

has a very slow effect. Whether they're gonna raise rates twenty five basis points today or extra twenty five basis points I mean today or at the next meeting they have plenty of that's not going to have any major effect on financial markets. Sorry, it's going to have effect. I apologize. They're gonna have effect on financial markets, but they're not going to have a long term economic effects

that actual tightening. So it seems like a very bad risk rep word for position for if they hike more than expected and cause the stock market crush or some kind of disruption, it will all be on them. While they have plenty of time to do what the market expects them to do and then signal if they if they for the next meeting, what they actually want to

do at the next meeting. Because of this mentality, there haven't been any intermeding hikes or surprised seeingly hikes and size since I believe and tell us what happened, because I think recall there was a little bit of a disruption in the bond market then, wasn't there, Yeah, that caused the bond market collapse, and I think they kind of just learned the lesson why. It's very hard for

me to imagine why would they bother? So the event is to happen in four minutes and I could be proven wrong, but the market is pricing maybe like ten percent of chance of them doing fifty basis points. So how do you position yourself in anticipation of an outcome where there are only a couple of possible results. Are you positioning for all the results? Are you doing the ones that are the most miss priced that give you

the best risk reward profile. I'm trying to position for miss priced results, and usually that means that I could take some losses that time wrong. I do like to have trades that go in every possible direction, but like something that will make money if this, if the other thing happens right, But it's it's not always possible to have portfolio balanced. The dichotomy that one phases on such situations when you're pretty sure which way the way will go is that, well, on one hand, you have really

good outs in your favor. On the other hand, the risk symmetry is very bad. So if you make a bad for example, that the just very specific bad on on the performacy outcome that they're going to go to twenty five basis points, I might make such a bad but it would be very moderate and size because so that if they do go fifty, which would be an outlier, I cannot afford to blow up. Can It has to

be a moderate manageable loss if that happens. And you also spend a lot of time betting on intermarket relationships various currencies and various interest rates around the world, tell us how you approach those sorts of trades in the

face of Federal reserve action. Well, there is a strong relation obviously, relations between interest rates and interestrate differential, between currencies and UM and and actually currency performance, interest rate differentials the carrying currencies tend to be actually probably the best long term predictor of currency performance if you look at the total return, even not even the real carry but it's just simply the nominal career seems to be

a very good predictor of long term performance. So, of course central bank decisions have a very meaningful impact on currencies, and sometimes this is where you can look for opportunities, like I did in two thousand fourteen. One one central bank is priced in to do all those trade hikes, but the currency is actually weaker than it should be, like dollar was much weaker than it should be in

two thousand fourteen. So long dollar long bonds was a very good trade because if the FAT cut raised rates as it was projected to uh post two thousand fourteen, as fast as they projected to should it, dollar would be as stronger, even stronger than it was for than it was trading. But there was also plenty of opportunities for dollar to strength, and even without that, even if

the FAT did not really raise rates as much. So those type of relationships um allow you to understanding this type of dominance that being long dollar is dominant over being shot bond, and being long bond is dominant over being shot dollar. It's it's a little difficult to grasp. You'd probably have to read the book and work through the logic to understand how this logic works. But this type relationship allow me to get a lot of edge

when I get them right. Huh, really really interesting. Um, you have very significant fixed income derivative experience from your prior roles. How large of a piece of your fund strategy does that play? It does play, specifically on the fact that we're much more granular when it comes to us fixed income than other products. When we deal with products that we don't know about, we try to deal with simple liquid things like liquid. Say we go to the country, we try to see what are the liquid

bond futures on that country. Okay, so the interest rate decision is twenty five, as we expected. I think the next big thing will really be waiting for their waiting for the press conference. They won't be that much happening, I think until press conference. I mean, market can do all sorts of weird things, but otherwise, now that might

all be happening ntil press conference. So let's let's talk a little bit about inflation and what the Federal Reserve is doing, because this is the perfect time to bring this up. You know, on the one hand, it looks like the FED is long overdue to get off of their emergency footing and and bring FED fund rates up

to at least closer to a normal level. And on the other hand, everybody's jumping up and down about inflation, but it seems like much of the inflation that's out there isn't very much going to be affected by what the FED is doing. Automobiles and and semiconductors seem to be outside of the FED. Energy prices and the war, the Russian invasion of Ukraine, FED rates aren't going to impact home prices. Really is an inventory problem and a massive surge in in pent up demand from both both

the pandemic and a decade of weak household information. When you see the sort of things that are taking place, you know, what's your thought pricess as to what's really going on at a fat Yes. So one of the things that I can always repeat, and honestly, it's one of those things do as I say, but not always do is I do? I repeat this advice don't focus on what the FAT should do, focus on what the

FAT will do. We'll have our opinions about policy, and I have some strong opinions about policy, but what is really important to understand, like what actually will happen. For example, I could say today I could be talking and they should not hide at all, or someone else should say they should really hide fifty basis points. But the reality is they were going to hike twenty five basis points on March and that's what they did. There was really

very little doubt that that's going to happen. And you the interesting part about the discussion that you had a discussion unfold life. You've heard me my reasoning before it happened, not after it happened. Uh, it is my Yes, I totally agree with you. I think it's kind of a little insane that fat field urgency to raise interest rates to do anything about the current situation because exactly as you said, the situations that's absolutely not on their purview.

You cannot fix supply bottlenecks with raising interest rates usually cannot fix them quickly. You could crush demand, but the underlying problem is already well. First of all, if you

ask why is inflation even bad. Well, people are not happy that they cannot buy things, right, they don't want to right, So you make it even harder for them to buy things, inflict even more pain on people, just so that you end up inflicting even more pain on people, uh, just so the demand would go down and maybe then the price will come down. It's really ridiculous logic, and it's very slow logic. It's not gonna work very much.

A lot of what we're seeing right now, a lot of inflation that wasting right now, a lot of generally economic outcomes, part of a more even part of a more general rule. Economic outcomes typically the result of what was happening a year or two ago, not of what's

happening today. Right. So the inflation that we see, the economic numbers, they see the result of the result of stock market rallying over the last two years, of incredible monetary expansion, of incredible physical expansion of two thousand, two thousand twenty one. Of course, why seeing high inflation all those numbers? Now right now we have a very different environment. We're seeing relative physical contraction, we're seeing raising rates where

seeing monetary contraction coming up. We're seeing stock markets no longer cooperating with people. I think that one or two years from now, we'll see a very different picture which will unwind what we see now. What the FED is doing now is not relevant to the shouldn't be relevant to the numbers where I see in today with a result of what they were doing two years ago. But I think I think this is the case. I'm a like criticizing too much, but I think this is the case.

Is on political pressure and kind of the sense of site guides and the chat are blindsided them a little bit. So let's talk about Let's talk about that, because that's really interesting. And as you said earlier, if the FED really thought that they're raising rates now here in March of would do something about inflation. They could have done an increase at the previous meeting they didn't. They could have done an intermeding increase they didn't. They could have

done fifty basis points they didn't. This seems to be you know, when I was on a trading desk, they used to call it throwing a virgin in the volcano. Sometimes you just have to appease the market, give them a little bit so they don't think you're too far behind. The crowd, and that's what this I don't want to put words in your mouth, is this quarter point essentially addressing that that the fact that they were surprised by the political pressure and the noise about inflation. Is that

what you're suggesting something like that. Yes, I think it was the political pressure that got to them. It does not make, honestly a ton of sense to me, this whole thing, because but yeah, I think it was a political pressure that and kind of the mentality a lot of people started to get really concerned about inflation. Honestly, I was concerned about inflation, but that's a concerned about it in two thousand twenty. I'm not concerned about it now.

It already happened, and I'm not concerned about inflation going forward because all the conditions point towards negative inflation going forward, not towards positive inflation going forward. So I would be now I'm concerned about deflation in the next two years. It's it's funny you say that because I pulled out this quote from the book which came out a while ago, which obviously you wrote long before that. In fact, when I realized that, if anything, the stimulus and liquidity triggered

by the crisis would have long term inflationary consequences. So clearly this most recent bout of inflation you anticipated. It sounds like you're in the transitory camp. Is that is that fair statement. I'm definitely in the terms of the camp with a passion, and I just to be a bit humble about that. I anticipated the inflation, but I

did not really get the past right fully. And what was I did not anticipate this reaction, So I did not anticipate, like what I was thinking that even if the events, like if you told me that the events would unfold like they were with unfold the unfolded, I would expect rates to be solidly zero now and holding. I had no idea that the fact would panic into the trade rising and the main reason why I didn't think that would happen, and I still think that, But

I'm also aware of the sending opinions with me. I think that there would so much more focus on this environment reducing the balance, because when else they're going to have a chance to reduce the balance. Right now, the raise rates crush the economy, have the rollover, then they won't have never chance to sell any of the balance it, and they're stuck with this thing with the success reserves that they have paid interest on which they're currently raising.

The point of this exercise makes very little sense to me. Why raise uh interest rate on reserves on trillions of those those deserves the interest rate actually paying two banks? The banks don't really need a bailout right now, So why they in the fact bailing out banks by raising interest rates? Why they could be tightening monitory conditions if so needed, by doing the much needed reduction of the balance she it so so they've already begun to roll

back quantitative easing. At what point do we start to see quantitative tightening? And again this may enough be your specialty, but clearly what the FET is doing in the bond market impacts how you build a portfolio and put on specific trades. Well, we will probably know more about the quantitative tightening schedule quantitative tightening schedule UM when we look

at their um post game press conference. When I look at the press press conference and probably be a lot of questions about this, I believe that they're gonna so far their own track too uh start at least running off the balunce it. But there might be a lot of and I don't think like details of how they're gonna do it at what places are the important. But I think they will start running off the balance it. I just don't know how long the time they will

have to do it. What's gonna happen is they're gonna they started to raise race, they're gonna start running off the balance at the moment they see the inflation of the economy showing some cracks. They might stop raising interest rates, but stopping the runoff of the balances will be probably a little bit more of a wonderous process. Really interesting, let's talk a little I don't know, I don't so we might have like tightening still going on in the

background even when they stopped tightening. That's why I'm actually so much in the camp that they're going to be easy next year. That's really interesting. Let's talk a little bit about because you trade currencies, I want to talk about cryptocurrencies and central bank digital cash. Tell us your thoughts about what you think is happening in that space and what you think the FED and other central banks are going to do about digital currency. Well, first of all,

did you like when I think of digital currencies? I wrote an article about it is actually a free years a goal when I called in quest of digital gold. I don't know if I was the first one to use the term digital goal, but I used it fairly earlier. I used it a few years ago. And what I pointed out that digital currencies have different users, and Bitcoin tries to be digital goals, like a digital consistent store of value. Why is it? Uh, it doesn't have to

have ease of transactions. That doesn't have to be it should not actually be easy to move it around. That's actually the fact that bitcoin is a clunky to transact as a feature, not a bug, because if you want to have store of value, you don't want it to be easily stolen. So uh, bitcoin is a heavy, ponderous store of value like gold. And then there are other currencies which could have various industrial uses like I think

I call the theium digital copper. I honestly not don't really know enough to understand what all of those cryptic currencies doing, what could be the use cases? I cannot give any opinion. What I think is that bitcoin has been working really hard to accumulate the street cred as a store of value because it had multiple cv corrections, but it never really collapsed, which is not how we

think and bubble trades. Many people say that bitcoin is a bubble, for example, and it trades anything, uh it tastes like anything but a bubble, because bubbles do not do this eighty percent correction then rebound eighty percent per correction rebound. You know what does that type of trading precious metals and that's exactly how cryptocurrency is trading. That trading is precious metals and alternative core uh coins trading as base metals. And that is a pattern that I

recognize best based in two thousand fifteen. So for traders who want to trade cryptocurrencies, and my recommendation is look at precious metals patterns and try to understand how those develop. There are all sorts of pros and cons that could be talked about whether bitcoin will survive as a store of value, what will be the adoption levels. I don't think that government digital currencies, which a subject the jure, have threat to Bitcoin, no more than fiat currencies that

currently exists are a threat to bolth. I think if every country will have its own digital currency U something that it could be like not affected by central banks, like bitcoin will actually have a use interesting how far it can go thor whether what's the fair value for it? I'm really not qualified to say really really interesting. So let's talk about your old boss when when you were

a JP Morgan, Jamie Diamond was running the shop. You've been pretty uh, You've offered a lot of praise to Diamond over over the time he was there, but you also criticized his thoughts on bitcoin back in Obviously lots changed since then. Tell us a little bit about your thoughts of money center banks like JP Morgan Chase being active participants in cryptocurrencies. Well, one thing about Jamie what

I know, like call how much I know him? And I'm kind of feeling awkward to stop tweeting somebody essentially by talking about somebody on podcast. But I know that he can like say things and then take them back and recognize his mistake without too much stress over that. So he's like, nobody should be trading bitcoin, And my joke was basically, what do you know about trading bitcoin? And I'm sure he could have changed his mind several

times and loved at all. Right, So that's what actually makes a good manager, right, he's encouraging to people, he knows how to write, run a good bank or business success of JP more of all banks under his leaderships are so tremendous and so divergent from performance of any other banks. Like I don't think there was ever a bad illustration a better case study of how much is he all can make a difference than Jamie Diamond. I mean that is completely outlined in terms of in terms

of how much different he made. If you track same bags, how they were performing, stockless, performing relatively the appears under his rule, under his leadership and without his leadership, and the divergence is just insane, really really more than one case, it's it's the case with City Bank Bank one JP Morgan. Every single time, the divergence is just out of the galaxy. How much better everything performs than to his leadership. But I also was just laughing about the fact, what do

you know about bitcoin? Why do you think that bitcoin should be cheaper or more expensive or whatever? And I sometimes make laugh fun of myself that way as well. I think banks will have to uh take this into account because it's a store of value and banks are supposed to store value. I think banks have no choice to get into the business of digital volts and volts

and institutional custody for cryptocurrency. Huh really really interesting. So when you look at cryptocurrencies, are they a macro factor that you have to think about? Cryptocurrencies are becoming a micro factor? I think up a certain point, it was a very esoteric trade and just this one specific asset and the only SR strategy, and you about this assets too, how to buy and hold them? And when my investors were asking about this, my answer as well, you can

buy and hold them yourselves. Why should I be doing this for you and charge your money to do that? Um and let of institutional custody was part of the issue for me, But also I felt like I cannot really add value. I'm a trader. My job is to buy low and so high. Even if I have long term time horizons, I'm still quintessentially a trader. So why would I be trading if I don't. If I cannot trade cryptocurrency, why I would be holding it for for clients?

I think now with institutional custody developing now, with the futures market, various et fs and various options, there are some opportunities opening up for arbitrash for various investments and various more structured investments. And also cryptocurrency is becoming to be incorporated in the global marcro pictures. So definitely we're becoming more and more open to going in the direction

really interesting. Before I get to my favorite questions that we ask all of our guests, UH, let me throw a couple of curveballs at you one from the book I'd rather manage money than people explain that. Well. So my background, I'm a mathematician. I'm essentially I like playing games. I like sitting in front of screens and thinking about numbers. I like walking around and thinking about charts and relationship

with in assets. I'm not the kind of person who wants to be hiring, firing, doing interviews, having a lot of chatswood employees. They're just not my strong point. When I started a fund, my important condition has to have a team. Uh, and I have a business partner who can hand who really can spearhead that side of the business, like money raising and just building the team. It's I

think I do. I did always okay with my employees and relationship with my employees, and PEP seem to have worked with me, seemed to have wanted to work with me again. In fact, um one of my team members might chief risk corfus. She's started working with me to get two thousands back at a chase when she came to be my assist, like my kind of second and comment on my market making desk. And she's still with me. I mean, she hasn't been working with me all this time,

but she's on the team now. So clearly I can have good relationships with people, but managing people are just not my passion. I never thought I want to hire ten thousand people and build a business of the scope of other big hedge funds. I am interested in running a strategy. Interesting and the other curveball you've talked about. You'd like to play chess, you like to play poker, but you've also described them as tools that help you with your trading skills. Tell us a little bit about

the parallels. How can one transfer skills from those games into trading and investing. One thing that I like to talk at about, and this has a lot of with a mathematical background, that there is two components that go into trading, analysis and strategy. And you know when you

are mus have a PhD in mathematics. People usually don't have any doubt that you're good at analysis and analysis, whether it's economic analysis of plate analysis, about plending a solution, about thinking what is the central scenario, what is likely to happen. Strategy is a very different way of thinking. You it's when you don't know what's gonna happen, what

is your system of responses? How there You're gonna respond to various scenarios, and you could be one good at one thing and not necessarily good at the others, though they are somewhat connected. I think I was lucky in my preparation to Wall Street that I was really involved in a lot of strategic activities. To I, I did a lot of academic competitions which involves strategy. And I started to play chess very young, and then I switched to Go, which became more more my passion kind of

throughout college and high school. So high school, college and even and I SAI. Now I still play Go, and then I've learned later many other strategy games, including poker, and that really taught me about this system of responses. You cannot just say decide what's going to happen, and that's what's gonna happen. You might must be prepared to

react to things which you didn't anticipate. And I think poker specifically, but all competitive activities, but poker specifically is very good at building psychological fortitude, the ability to take a loss and move on, ability to gauge whether I'm in a good set of mind to even continue playing right now. It's never perfect. I made a lot of those mistakes both and poker and trading when I probably did not gauge my state of mind correctly. However, it's

a good start. It's a good background. And I did use a lot of poker analogies in my book The Trade of March twenty twenty, which in some sense looks to an earlier men About interview when we're talking about positioning uh into March two thousand twenty one of very strong poker anology I talk I thought a lot about this over my poker days. How much better you're likely to perform if you start the night well, if you have a lot of chips in front of you on

the table, you're so much likely to play better. So if you're moving into the crisis with your portfolio in a good shape, You're so much more likely to make good decisions then when you are moving into crisis, when you're Part four is under pressure. Part of it is just your risk management obviously, like if you're losing money, you're not going to be able to have space to

take new positions. But part of the pure psychology, you're gonna be a little paralyzed when you're losing money, while if you're doing well, you can be very open minded and think like, Okay, I can take profits on this, I'll take off this position, I'll put this position all,

I'll do this, I'll do that. Really really interesting. I know only have you for a couple more minutes, So let me jump to my favorite questions that I ask all of our guests, starting with you know, I was gonna One of the things I noticed in the book is there are long periods of time when you're working literally twenty four hours a day. There there are slack messages back and forth at one in the morning, at three in the morning, at two at five in the morning,

West Coast time. UM. There were days in March of uh where the whole team was working twenty four hours a day. Days on a time, So it kind of makes my next question almost uh irrelevant, But I have to ask, you know, during the pandemic, did you have time to watch TV? Were you streaming any shows or listening to anything online? Or were you just you know,

pretty much seven at the trading desk. I think the first few weeks were really funk here, the first few weeks of March, and that's what I'm writing the book of. There was not a lot of time to do many other things except dealing with like kids being suddenly remote in remote education, and dealing with markets. I generally do do a lot of things to onn wine, which includes watching TV. Uh. In the first amounts of Pandemic, yes, I started to watch TV. I was writing fiction, I

was going for a lot of hikes. I would do a lot of my work, including writing this book, The Trades of march Um. Much of it was written with a laptop sitting by the ocean both and here in California and Hawaii. I did. I did a lot of those things, and I did a lot of things that many people do not think of doing. It undwinding at night. One of the things I did in Pandemic I watched the series of footy six YouTube videos which were really

math videos, just discussing constructions, really really large numbers. What's the name of that YouTube channel that you were watching is. I think it's called Ridiculously a Huge Numbers And there's like fourty six video videos. And so I would be at eleven in the evening watching a video about transfine conduction and felt growing erarchies. I have my own weird ways, but I do watch quite a bit of TV. I do like I I really like good TV. I think

that I don't go to movies anymore very much. I think the movies are no longer any good, but the TV shows are amazing. So give us a few TV shows you like, and uh, tell us, tell us what entertain you over the past couple of years. Well, I obviously love Billions, especially because I know in person many people it's based on. I love Game of Thrones because it's a fantasy show and I know the author and I read all these books obviously long before they came out,

and it's really well done. There's been a lot of great shows over the years. Uh. Some of them were a kind of surprise shows that we're not e one made as a first uh R shows originally, like I'm a huge fan, for example, of the nineties show Puppet the Vampire Slayer. I I'm a fan of the recent show with Magicians. Oh, I love that show. Yeah, I think that was a really huge upside surprise for me. How the show were tremendous. Yeah, that's funny. It's it's funny,

it's creative. It's just keeps taking into places you don't expect to be it. I was delighted show. And then there are always classic shows which are just really good, like Wire Breaking, Bad, Original Sopranos, Homeland does those kind of classic goods. True Blood and I like thru Blood as well. I'm surprised, given your proclivity for black hole metaphors, I'm not hearing any science fiction in that list other than Magicians. Is more fantasy than sci fi, you know.

I love battles. I love New Battlestar Galactica. Really yes, the New Battlestar Galactica is one of my favorites. So so there are two shows I have to ask you about, um, the Expanse, which I'm up to the finale. I've watched everything except the last one has been tremendous. I don't know, if you're a fan of that sort of sci fi, you know what. I was going to be killed for my ants on this. I haven't yet gone through Expensive

and I wished a few episodes. I have a particular thing, and that's probably why my I don't watch a lot of science fiction shows is I'm tend to be claustrophobic, and I'm really bothered by shows which set up all on a closed space station. Somehow Battlestar Galactica managed to circumvent it and I was able to watch it, But a space station shows that usually kind of a tough watch for me. And then there's another sci fi I'm going to recommend. There's only two seasons of it. Altered

Carbon was spectacular. Yeah, it was good. I wished for season and I enjoyed it. The second season is that, you know the character human they wear people like skins so you can change bodies. They do that in the second season, and it was, you know, surprisingly good and it resolves a lot of open questions. If you like the first season, I'm going to recommend the second season. Might I might turn back to that and I probably

will watch Expense. I love one of the authors writing for expense his other books, and one of my favorite authors, Daniel Abraham. We're going to circle back to books in a moment um. Let me ask about mentors who who helped to shape your career. There is actually if you look at my book at the acknowledgement page, there is

a list of mentors there. They were mentors along my like they'll key people obviously along my entire life studying, from my like mask club mentors to high school teachers to UH graduate school professors to my serious advisor and

people like that when you think about Wolsted. Also, there were some it's really easy for me to remember certain key moments of mentorship, like, for example, my first boss at Bankers Rush, Jeff Basmon, and I noticed he would say some things which is really register for me forever. Like I remember one of my early days on Wall Street and he's talking to broker on the shout box and he's asking about the price on something and broker

is saying the prices. I think I calculated the price should be four at five, and he's like, I don't care about your calculation. I can do calculation myself. Where do you have forbid, do you have five offer? And that's kind of mentality which registered for me. It's not about what you think the market should be, it's about whether the market is there and going on forward. I had lots of those mentorship moments with my various bosses

at JP Morgan. That included Evan Burnson, David Puss, Mark Sarp, John Anderson, who was probably the person I worked really closely with during my years of proprietary trading, and JP Morgan and still remained the great friend and supporter. He's currently co head of fixed and Common Commodities and Millennium. People like that were super helpful to me. Each of them said at some point some things that really registered

with me. Those For example, one time, which was very criticalizing time in my career, when I came to my boss and I asked him, I told him this is the trade. I'm laying out this trade, this is my trade idea. And he said, well, if you do this what you're proposing to do, how much you're gonna make? I said, we're gonna make ten million dollars and then he said, okay, let's do twice that and make twenty million.

And that was kind of an important way for me to understand you should not set your side low in financial markets. How that trade end up working out, we made ten million probably so so let's not say that officially, but well made a good amount of money on the trade. So let's talk. You mentioned some of your favorite authors. What are some of your favorite books and what are you reading now? Are you mostly think about fiction I'll fix you nor non fiction either or what do you like? Well?

I mostly read fiction. I read some books I read you usually read some books related to finance with materials related to finance, or I read Oh, I read the fantasy and science fiction. Give it give us some names. So obviously my all time favorite is The Lord of the Rings. Yeah, Lord of the Rings, if you stay in fantasy. I love The Will of Time, which is recently made into a show. But by the way, I

loved on Amazon Prime the Will of Time. I love all works by possibly my favorite living author, Guy Gabriel ka Um. He writes a lot of historical fantasy. I like. Another current author I really like is Naomi novic Um. Give us a book title, but my favorite book of hers is Spinning Silver. But she is also very well known for her temporary series starts with the book Her Majesty Is His Majesty is Dragon for Guy Gabriel k K,

who I mentioned earlier. His earlier work is Fionova Tapestry Trilogy, but his his recent books, which are set up in any Sounds period children are The Sky and The Brightness Long Ago um I Viering. I mentioned Daniel Abraham. I really like his series The Dagger in the Coin. I already mentioned The Game of Thrones, both showing books. I probably could go on with a list of fantasy novels I love, just to switch to science fiction a bit.

I like Andres Game by Orson Scott Card some of the sequels, but not too farantsticals because they get worse. The first book is terrific. Yeah. I love Andrew's Game, and it's great for I think it's great for traders and anyone interested in strategy. I like Uh. I like a lot of Hyperion series by Dan Simmons. M. Do you do you go back historically in sci fi? Any of the classics are? Have you mostly been reading more

modern sci fi? Well? I read some of the classics by the necessity because I'm not a young Some of the stuff that I was reading in the teenager by now is a classic, even if it was relatively modern back then. But I did go a little back in

the history back then. Now I tend to read mostly more modern stuff, and it's a little it's a little difficult a days to read, especially science fiction which was written even say in the nineties, because projections of the near future just so off and it's very hard to kind of stay in there kind of suspended disbelief. But it all depends on the texture of the science fiction some of it, like for example of novels by Den Simmons, which are stand really well regardless of what, regardless of

the fact that they we're wating really long ago. Yeah, the more general they were about the day to day use of technology and the more math grow they were. I'm thinking of people like Asimov's Foundation or Larry Niven's Ring World. They didn't talk about cell phones and personal computers.

It was always massive macro engineering projects. Um like the Ring World as an example, that it gave it a timelessness that that I think the people who got too involved in the day to day you know, either they were right or wrong, and if they're wrong, it's hard to get immersed in that world. Yes, and there is certain idea that there is certain talent about being a good futurist, Like there are some good writers who are

just not good futurists. For example, Isaac Asimov, which is one of the most celebrated science fiction writers of all times, was an awful, horrible, atrocious futurist. I mean, he had made completely unforgivable mistakes, and his treatment of science was uh, outright fall and almost insulting, Like I felt like he was actually insulting science by the way he was treating it. And yet his novels were innovative, creative, and very readable and had a lot of great ideas, really really interesting.

Our last two questions, what sort of advice would you give to a recent college grad who was interested in the career of either investing or finance. The advice it is probably similar to what I would tell anyone going into any career. First of all, if you care about financial success, you want to find a confluence of three things. Thinks that uh, thinks that rewarding financially obviously, just as I mentioned, thinks that you are good at, and things

that you enjoy. So when you find the consers of those things that you can do, something that you enjoy doing it, you happen to be good at, and they're financial rewarding, then you'll have a rewarding career. And finance could very easily be that. And but even within air is so finance you need to find initia I think it is. Might be not easy, of course for a young person, but it's very important to assess, ah, well, what are you actually good at and be realistic about that,

be very honest with yourself. What it is that I do better than any other person in the world, and how they capitalize on those things that I do better than any other person in the world. And then uh, and part of the reason, like, for example, I write books like my book The Trade of mar and I'm sure that are equivalent, some equivalent books, maybe different fields and sub fields, is try to actually understand what it is that people do so you have a correct idea

whether you're going to enjoy this or not. Really really interesting and our final question, what do you know about the world of investing today that you wish you knew twenty five years or so ago when you were first getting started as a trader. I think The most important thing I would have liked to know back then that

I will still be here now. The importance of that is to understand that this is a long game, and very often it's very easy to get impatient and think somewhat uh, and think somewhat short term, like think like, oh, well, if when you're twenty five years old, events that will happen when you're forty five or fifty years old seems so remote you almost don't care about. But the actual

reality is that you do care about them. Huh. Reality is that you will when you're fifty years old, you still weren't gonna want to be healthy, you still aren't gonna want to have money, and you're still gonna have fun in the world, right and some of those seeds

will be planted at your earlier age. So understanding that this is a long game that you if I'm knowing back then, that I will still be in this game twenty five years later and I'll still enjoy it, would probably alleviate a lot of stress and pressure on me back then. Really really interesting, Alex, thank you for being so generous with your time. We have been speaking with Alex Guarevich. He's the founder and CEO of Hante Advisers and the author of the Trades of March, a Shield

against Uncertainty. If you enjoy this conversation, well be sure and check out any of the previous four hundred discussions we've had over the past eight or so years that we've been doing the show. You can find those at iTunes, Spotify, a cast, Bloomberg, wherever you get your favorite podcast from. We love your comments, feedback and suggestions right to us at m IB podcast at Bloomberg dot net. Sign up for my daily reads at Ridholts dot com. Follow me

on Twitter at rid Halts. I would be remiss if I did not thank the crack team that helps put these conversations together each week. Katherine Silva is my audio engineer. Attika val Brund is my project manager. Sean Russo is our head of research. Paris wall Old is my producer. I'm Barry Ritolts. You've been listening to Masters in Business on Bloomberg Radio.