Ben Gilbert: preference

Transcript context

…Such a good point. Many, if not most, of the other quant firms are not doing that. Some of them maybe, but I think most of them are the model is suggesting things, and there is a person or persons who are the master portfolio allocators that pull the trigger or don’t pull the trigger. To be super illustrative because I think your natural tendency is like, oh I can understand why these two things would be related, the relationship may not be what you figure. For example, there could be two things that always move together. Tesla stock and wheat futures. You might try to, because humans are storytellers, concoct some story in your head of why those move together, and if you believe it then you might decide there’s some date where they should stop moving together. Well it could very well be that some other big hedge fund just owns both of those things, and when they rebalance it causes those assets to move together. But you would never think of that. You would think these things have a direct relationship with each other, not just that there’s liquidity in the market from both of them at the same time because someone else owns both of them. I think what RenTech admitted is we have no idea why anything is actually connected, but it doesn’t matter. Totally. That was surprising for me in the research. I assumed that was the whole quant industry and it was very surprising to me to discover that I believe. No, it is pretty much only RenTech and maybe a couple of other people.…

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