Welcome to Patrick O’Shaughnessy's podcast series, Invest Like the Best.
This week’s guest is Chris Cole, founder and managing partner at Artemis Capital Management. Chris’s specialty is in long volatility strategies, setting up portfolios that will benefit from significant change and volatility in markets. Chris Cole and Patrick O’Shaughnessy discuss how a series of small bets can lead to disproportionally large nonlinear payoffs, in both life and markets. They also discuss the kind of watch Chris wears, Dennis Rodman, and movies, all as metaphors for his life philosophy.
Antifragile: Things That Gain from Disorder
Command and Control: Nuclear Weapons, the Damascus Accident, and the Illusion of Safety
Devil Take the Hindmost: a History of Financial Speculation
Lords of Finance: The Bankers Who Broke the World
The Genius of Birds
Creativity, Inc.: Overcoming the Unseen Forces That Stand in the Way of True Inspiration
Impro: Improvisation and the Theatre
Volatility and the Allegory of the Prisoner’s Dilemma
Dennis Rodman and the Art of Portfolio Optimization
2:07 – (First Question) – Chris is asked about the somewhat morbid and interesting concept of a “ticker”
3:17 – A look at volatility and convexity as Chris sees it, and what we do in our everyday lives that exposes us to these concepts.
8:03 – How does the same idea get used in investing and a portfolio
10:02 – If convexity is the non-linear payoffs to change, why is value investing a short convexity strategy?
11:20 – Antifragile: Things That Gain from Disorder
14:09 – Are there such things as positive Black Swans?
15:51 – How does Chris see the world and markets looking through his lens of convexity
18:10 – Command and Control: Nuclear Weapons, the Damascus Accident, and the Illusion of Safety
20:39 – Why democracy may not survive the strategies in place to protect us
20:54 – Devil Take the Hindmost: a History of Financial Speculation
23:05 – Lords of Finance: The Bankers Who Broke the World
23:20 – Why World War II helped the US economy get out of the depression
24:24 – Have we pulled too much future returns into our current numbers and are our expectations for market productivity too high?
26:11 – Some of the strategy thinking that Artemis uses to build portfolios in this current market atmosphere
30:40 – How does an average person access these strategies or do you have to be an institution to execute macro strategies like Artemis
33:58 – What would it take convince Chris that he is wrong and the world financial markets are in better shape than perceived
36:48 – Are we seeing above average fear in the market or are we setting up for a more horror-filled scenario where the workforce potential is decimated by technology
42:53 – How do clients of Artemis perceive their negative outlook on the economy and society
44:10 – Dennis Rodman and portfolio optimization
44:16 – The unexpected lesson investors can learn from NBA great Dennis Rodman
49:39 – Artwork seems to be a major part of Chris’s work, so Patrick questions how that developed
51:36 – What movie best exemplifies the long volatility strategy
55:14 – Chris’s most memorable day in investing
57:04 – The kindest thing that anyone has done for Chris
57:52 – Chris’s important daily habits; exercise, meditation, and reading; and he goes about them.
59:38 – The Genius of Birds
1:00:39 – Creativity, Inc.: Overcoming the Unseen Forces That Stand in the Way of True Inspiration
1:01:05 – Impro: Improvisation and the Theatre
For more episodes go to InvestorFieldGuide.com/podcast.
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