Chris Cole and Jason Buck – The Dragon Unleashed

Published on
July 31st, 2020
Duration
70 minutes

Chris Cole and Jason Buck – The Dragon Unleashed

The Big Picture ·
Featuring Christopher Cole and Jason Buck

Published on: July 31st, 2020 • Duration: 70 minutes

In the grand finale to “The Big Picture,” Jason Buck speaks to Chris Cole, founder and CIO of Artemis Capital. Chris is one of the sharpest players in the volatility space and has made his name by playing risks and opportunities that others can’t see. An outspoken critic of the 60/40 equity/bond split, Chris is an advocate of what he calls “the dragon portfolio,” which consists of gold, long volatility, and commodity trend-following in addition to stocks and bonds. Chris gave a glimpse of the dragon portfolio when he spoke with Danielle DiMartino Booth on Real Vision in February 2020. Since then, volatility has exploded, both during the massive sell-off in March as well as in the shocking market melt-up since then. Simply put, the dragon has been unleashed. The twin risks of the left tail (deflationary deleveraging) and right tail (inflationary deleveraging) loom large. As Chris wrote in his 2020 report, "to thrive, we must embody the cosmic duality between the hawk and the serpent." Filmed on July 27, 2020. For access to Chris’ 2020 report, “The Allegory of the Hawk and the Serpent: How to Grow and Preserve Wealth for 100 Years,” click here: https://docsend.com/view/taygkbn

Comments

Transcript

  • NE
    Neha E.
    15 August 2020 @ 21:47
    Absolutely brilliant exchange! Chris Cole has a very effective communication style. Thanks for the whole volatility and Ahead of the Curve series.
  • IW
    Ian W.
    15 August 2020 @ 08:57
    Fantastic. Thanks guys for this whole series. I just upgraded to RV plus just to watch the full versions after seeing the supercut. Dang... Keep these technical deep dives into options coming. I feel like my IQ goes up 10 points after each one ;)
  • SW
    Scott W.
    11 August 2020 @ 13:18
    @Chris @Jason @RV Are there any books or training materials you can recommend on modeling correlation and scenarios "for dummies" - say entry level in excel, in the vein of crawl/walk/run?
  • FC
    Felipe C.
    2 August 2020 @ 06:47
    I saw those videos on how to implement the long vol share of the portfolio. The trade ideias shared by Patrick are great and useful. But one thing that it’s not clear is how to size it. As an example, allocate roughly 20% to stocks, bonds, gold or even commodities trend following is simppe. You just buy x shares of SPY, TLT, GLD and do an active managment of an commoditiy Etf. But how do i size 20% into a call/puts backspreads portfolio?
    • DH
      Dominick H.
      2 August 2020 @ 21:39
      I'd appreciate if you can share the videos on how to implement the long vol for a retail investor? Most of the VIX ETFs are poorly designed for short term trade, not for long term portfolio allocation as discussed in this interview. Your question about the size is right on. Thanks!
    • FC
      Felipe C.
      10 August 2020 @ 19:02
      https://youtu.be/pvX5_rkm5x0
  • wj
    wiktor j.
    6 August 2020 @ 20:06
    Brillant
  • DM
    David M.
    31 July 2020 @ 17:06
    An awesome interview, great to hear Chris's point on view and what's on his radar. Not sure if Chris is here or if he's gonna check out the comments, but if so I'm curious to hear some of his thoughts on safe ways to possibly make long vol a positive carry trade in an overall portfolio structure (of course not to give away too many secrets from Artemis!), especially when the CB's objective to a certain extent has been to directly halt vol in the various markets and push vol back down. Thanks for coming on Chris and Jason!
    • JB
      Jason B. | Contributor
      31 July 2020 @ 18:12
      David, those type of positive accruing options structures can sometimes be found in the options on futures markets, we talk about this in my interview with Jerry Haworth from Wednesday
    • sw
      shaun w.
      6 August 2020 @ 12:08
      Yes I am also curious how the long vol funds out there actually net make money. Since options markets is technically a zero sum game there must be some active manager edge there.
  • ES
    Edward S.
    5 August 2020 @ 20:44
    Fantastic interview. Wish it had continued for another hour.
  • MD
    Mike D.
    5 August 2020 @ 05:23
    5 months left in 2020. Who’s gonna come up with a better metaphor than long vol = the worm? (goat = chris)
  • CZ
    Cyprian Z.
    4 August 2020 @ 23:05
    Would be interesting to see sensitivity of the dragon portfolio to different vol assumptions. How does it perform at 10-12% vol? Excellent interview. Chapeau bas, Chris!
  • AR
    Anthony R.
    1 August 2020 @ 19:12
    Not sure what happened with the 'submit' button here. Apologies. Oh - and the hell with the 'retirees'.
    • CS
      C S.
      4 August 2020 @ 07:01
      No worries, Anthony. I think you're lament in the second half of your comment was well worth repeating.
  • PC
    Peter C.
    4 August 2020 @ 04:15
    Best big picture long vol interview I have ever listen to. I will have to read the transcript and keep studying this area to really understand these concepts that are soaked into Chris. Thank you Chris, Jason & RV TV!
  • IO
    Ikechukwu O.
    31 July 2020 @ 19:02
    Great interview! I can always find a nugget of valuable information when Chris speaks. Great questions by Jason as well. Another manager that is just as sharp and we haven't heard from in a while is Nancy Davis. Would love to hear her thoughts on the markets especially following the events in March. Real Vision, please get her back on soon.
    • JB
      Jason B. | Contributor
      31 July 2020 @ 19:24
      I agree, I for one would love to talk to/see Nancy on RV
    • TM
      The-First-James M.
      31 July 2020 @ 20:21
      I wish Nancy's IVOL ETF was available to those of us in the UK. Darned MIFID2 and the Brussels bureaucrats who forced it onto us...
    • AM
      Andrew M.
      31 July 2020 @ 20:31
      Just buy TIPS and Linkers? pretty sure IVOL is mostly TIPs anyway
    • MT
      Mike T.
      3 August 2020 @ 14:16
      @ The-First-James M. For those domiciled in Europe and not having access to US ETF's a very simple work around is to become an **International** Client of a US located Broker e.g. https://tastyworks.com/ With the exception of Canada they are licenced to operate in pretty much every country in the World. Personally I don't like IVOL as the underlying itself doesn't trade much - very wide spreads - and there's only neglible interest in the Options = extremely wide spreads and many strikes have zero bid. The idea behing IVOL is interesting BUT the poor liquidity makes it a very bad instrument to trade with. While I'm at it LIQUIDITY should be the first, second and third criteria one looks at before considering any new position.
  • DH
    Dominick H.
    2 August 2020 @ 21:44
    Fantastic! Very timely insight for one's portfolio reconstruction especially in the phase shifting time I think we are in now and next 12 months. Highly recommend to bring Chris back next several months for an update.
  • VG
    Viktor G.
    2 August 2020 @ 18:45
    So good!
  • MJ
    Marius J.
    2 August 2020 @ 14:38
    Fantastic !!!
  • DS
    David S.
    1 August 2020 @ 20:36
    Brilliant discussion. It takes a thousand metaphors to help me better understand volatility. Keep up the good work. DLS
  • DS
    David S.
    1 August 2020 @ 20:35
    Japan is an exceptional case. I believe it was Mr. Koo that mentioned that Japan corporation had 10 years to pay off debts while the rest of the world was functioning normally. In addition, the Japanese citizen was and is not in debt like many citizens in the US and EU. The Japanese Government debt is offset by corporate and private savings in Japan, not in the West. The Japanese financial experience cannot be used as a template for the US and EU policies or investment – a different world economy and different balance sheets. DLS
  • AR
    Anthony R.
    1 August 2020 @ 16:39
    Great Discussion. I love the line: 'this is not an opinion' and then he goes on to discuss the math in his research. Like a lot of successful folks interviewed on RV - there's not a hint of triumphalism or arrogance. They understand that they're just doing what the math says to do! Very grounded approach. Too bad large swaths of our US culture are now harping that 'math is racist'. This means they'll never pursue that discipline and its sisters, logic and reason..... and will forever be mired in their current condition - with economic consequences for everyone....
  • AR
    Anthony R.
    1 August 2020 @ 16:39
    Great Discussion. I love the line: 'this is not an opinion' and then he goes on to discuss the math in his research. Like a lot of successful folks interviewed on RV - there's not a hint of triumphalism or arrogance. They understand that they're just doing what the math says to do! Very grounded approach. Too bad large swaths of our US culture are now harping that 'math is racist'. This means they'll never pursue that discipline and its sisters, logic and reason..... and will forever be mired in their current condition - with economic consequences for everyone....
  • AR
    Anthony R.
    1 August 2020 @ 16:39
    Great Discussion. I love the line: 'this is not an opinion' and then he goes on to discuss the math in his research. Like a lot of successful folks interviewed on RV - there's not a hint of triumphalism or arrogance. They understand that they're just doing what the math says to do! Very grounded approach. Too bad large swaths of our US culture are now harping that 'math is racist'. This means they'll never pursue that discipline and its sisters, logic and reason..... and will forever be mired in their current condition - with economic consequences for everyone....
  • AR
    Anthony R.
    1 August 2020 @ 16:39
    Great Discussion. I love the line: 'this is not an opinion' and then he goes on to discuss the math in his research. Like a lot of successful folks interviewed on RV - there's not a hint of triumphalism or arrogance. They understand that they're just doing what the math says to do! Very grounded approach. Too bad large swaths of our US culture are now harping that 'math is racist'. This means they'll never pursue that discipline and its sisters, logic and reason..... and will forever be mired in their current condition - with economic consequences for everyone....
  • AR
    Anthony R.
    1 August 2020 @ 16:39
    Great Discussion. I love the line: 'this is not an opinion' and then he goes on to discuss the math in his research. Like a lot of successful folks interviewed on RV - there's not a hint of triumphalism or arrogance. They understand that they're just doing what the math says to do! Very grounded approach. Too bad large swaths of our US culture are now harping that 'math is racist'. This means they'll never pursue that discipline and its sisters, logic and reason..... and will forever be mired in their current condition - with economic consequences for everyone....
  • CJ
    Christopher J.
    1 August 2020 @ 13:54
    Should listen to the 2017 chris cole interview with grant williams too. Interesting hearing them talk about crazy valuations debt etc then. They talk about possible black swan events - Covid springs to mind of course but a pandemic at some time was of course inevitable.
  • MF
    Michael F.
    1 August 2020 @ 13:33
    Get Chris back in November. Let's see what tail we are headed down.
  • JS
    John S.
    1 August 2020 @ 11:56
    Excellent
  • GM
    Gary M.
    1 August 2020 @ 11:35
    First time listening to Chris Cole. Superb 👏👏
  • EB
    Evan B.
    1 August 2020 @ 02:35
    What a great conversation that even a modestly knowledgeable retail investor can understand due to the clarity. What a great duo-- great interviewer and of course it is wonderful to hear from Chris Cole again! Thank you!
  • NJ
    Nesko J.
    31 July 2020 @ 14:13
    Chris Cole is intense looking dude. Love the analogies Rodman like long vol.
    • EO
      Elena O.
      31 July 2020 @ 14:25
      volatility in the markets is not less intense when you have portfolios to manage
    • JA
      John A.
      1 August 2020 @ 00:00
      Yea, he should consider dressing as Chancellor Gawron from Star Trek for Halloween. The eyes man lol.
  • NG
    Neil G.
    31 July 2020 @ 21:22
    This vol series is amazing. Fascinating.
    • NG
      Neil G.
      31 July 2020 @ 21:23
      Also saved my tail (pun intended) thanks to studying up on Chris's papers.
    • JB
      Jason B. | Contributor
      31 July 2020 @ 21:34
      Thanks Neil, glad you enjoyed it!
  • JH
    Joel H.
    31 July 2020 @ 19:27
    excellent. Thank you!
  • sg
    scott g.
    31 July 2020 @ 17:28
    fantastic interview, a lot to digest.....transcript would help
    • sg
      scott g.
      31 July 2020 @ 17:58
      sorry. i see it now. ty
  • EO
    Elena O.
    31 July 2020 @ 14:36
    i think we will soon see an extreme case of right tail in both NDX and SPX taking out ATHs...
  • OS
    Oliver S.
    31 July 2020 @ 11:39
    'Hawk & Serpent' is a great read. Chris is an exceptionally switched on chap. Thanks RV.
    • JR
      Jaymes R.
      31 July 2020 @ 11:49
      If you want to learn more about how retail investors can actually implement a dragon portfolio there are plenty of YouTube videos on it that show how you can implement it on your own!
    • EO
      Elena O.
      31 July 2020 @ 14:28
      any videos you can share for self-implementation?
  • RM
    Ron M.
    31 July 2020 @ 13:45
    Love Chris' work - the guy is the Dennis Rodman of vol! IMHO, I just don't know if I buy a 100 year portfolio allocation. In the last hundred years we benefitted from a gift of almost free commodities, overpopulating the planet by 8x (now hitting/hit peak resources perhaps?). Technology and biotechnology are going to be growth sectors like we've never seen before with automation (robotics, AI/ML), real-time, personalized medicine, etc. In the last century we saw mostly declining interest rates. The dragon might have worked well on an analysis of the last century, but perhaps this century might play out differently. Doesn't detract at all from Chris' points... great interview.
  • RC
    Ralph C.
    31 July 2020 @ 09:02
    Good interview but not sure how useful this is for retail investors
    • JB
      Jason B. | Contributor
      31 July 2020 @ 11:22
      Thanks Ralph, I’m curious how you think it’s not useful to retail? Most people do not understand that their “diversified” portfolio is really ALL implicitly short vol
    • OS
      Oliver S.
      31 July 2020 @ 11:40
      If you read the original paper, it discusses how each of the classes can be accessed by a retail investor.
    • ND
      Nitul D.
      31 July 2020 @ 12:55
      Some ways a 'retail' can implement long vol in their portfolio 1. Gold allocation 2. Commodity allocation (via long futures, etf, commodity equities etc.) during trending inflation regimes. Depends on sophistication one can go into explicit vol products, equity/index options etc
    • MH
      Madhushanka H.
      31 July 2020 @ 13:41
      I came across this strategy in youtube- https://www.youtube.com/watch?v=pvX5_rkm5x0&t=2274s. Basically, it explains how to use call backspread/put back spread to go long vol. But, one needs to roll the contract prior expiry (ex- for 1 year contract, roll it at the 6months mark) in order to have low or zero carry cost.