Interview with David Dredge

Featuring David Dredge

David Dredge, CIO of Convex Strategies at City Financial believes that the people who are going to be successful in the long run are those who understand the convexity in their portfolios and have the liquidity to take advantage of opportunities when they are presented. Get a head start with his interview on Real Vision.

Published on
29 August, 2016
Topic
Risk Management, Volatility, Monetary policy
Duration
64 minutes
Asset class
Bonds/Rates/Credit, Equities, Currencies
Rating
14

Comments

  • TK

    Thomas K.

    11 1 2018 07:06

    0       0

    This is, verily, a classic. I'm still (this is probably my third or fourth viewing) blown away by Dave's intuitive understanding of complex systems. His forest fire analogy always reminds me of a concept from complex adaptive systems theory called "self organizing criticality", which describes systems that naturally organize into configurations just short of catastrophic thresholds (e.g., piles of sand). I've long believed the economy to be such a non-equilibrium dissipative system; Dave's analogy provides viewers with an intuitive grasp of an incredibly deep subject.

    Bring Dave back on one of these days!

  • JF

    John F.

    29 10 2016 23:20

    0       0

    Set aside Macro Economic Optimization Theory. And ask the question: “Looking at everything the Fed has done to date, what pattern has emerged that tells you what the Fed is trying to accomplish. And, what target, over these years, are they reaching for; and, how much longer do you think that will take? Perhaps the intent of the Fed is 1.) To drive commodity prices (especially copper) back to levels that can allow a controlled rising inflation for the 20 years at the forward end of the 32-year commodity cycle. 2.) To keep corporations and capital markets liquid; and, if they crash, call it ‘investors exuberance’ (Laissez Faire). 3.) Laissez-Faire-Fortunes are made from the swing of boom and bust, this is why the American approach appears less regulated toward dampen swings in Assets compared to more conservative European countries (ex: Germany). 4.) Currency devaluations restore values back to ‘GO on the Monopoly Board’ in preparation for the appreciate they will take on when the importing nations activate expansion after the reduced commodity price target is reached. 5.) Debt-to-GDP will be reduced in the expansion as interest rates slowly rise. 6.) Each step along this process will have some dis-optimization, but is required to get to the final goal.

  • CR

    Chris R.

    12 9 2016 15:47

    1       0

    Brilliant observations of the world as it is. Is there any way to read Dredge's newsletters?

  • AV

    Alvern V.

    5 9 2016 21:13

    0       0

    Your Yellowstone fire suppression analogy is spot on, but when Central Planners are in charge they create unintended consequences, just like the US Forest service policy of promoting Smokey the Bear.

  • AE

    Alex E.

    5 9 2016 09:48

    0       0

    Grant B., inflation is in the higher cost of your food at the supermarket, higher cost of clothing, Insurance, phone bill, electricity, health care, meds, electronics, car prices (although car prices may have peaked and are heading down due to lack of demand...) and education. Compare today's prices with prices three, four and five years ago and you'll understand what I mean...

  • NA

    Nickle A.

    2 9 2016 04:18

    2       0

    Brilliant. Worth re-watching

  • RP

    Ron P.

    31 8 2016 22:02

    1       0

    The gentlemans use of seasonal metaphors are fantastic.
    Wish he would of gotten more specific on the best use of money to hedge interest rate and inflation risk from his point of view

  • AC

    Andy C.

    31 8 2016 21:03

    1       0

    We need him in US government. lol

  • JH

    Jamie H.

    31 8 2016 16:56

    2       0

    Good to hear a no nonsense straight up discussion of current perception and level of risk. Nice!

  • GB

    Grant B.

    31 8 2016 13:16

    2       1

    Grant, where are obvious signs that the US is "already" in a recession please? I don' see those. Tx. Good interview with great insights and things to take away.

  • VP

    Vincent P.

    30 8 2016 16:10

    2       0

    I think he's on to something......

  • LA

    Linda A.

    30 8 2016 14:51

    2       0

    Brilliant analysis DD! Many investors don't understand this "fire risk" = interest rates. Instead Feds are fine with people piling on more risk & leverage. I don't see any way around a currency devaluation or write off of bad loans in order to move this economy forward. I agree with DD on Japan - serious trouble brewing no matter what action Kuroda takes. I think helicopter money leads to hyperinflation which will cause total devastation of the Japanese economy. I hope Kuroda does not take this path. The rise in interest rates will not just cause a collapse of the bond mkt but the financial system. Pare your risks people!

  • DP

    David P.

    30 8 2016 14:09

    1       0

    Many thanks for the insights in this interview.

  • DS

    Dan S.

    30 8 2016 08:52

    0       1

    Sell your 1 bedroom Beijing apartment and buy a 6 bedroom house in Australia! F%$k me! When put like this the capital flight into real estate markets like Australia, Canada and Auckland due to a rampant inflation gift to Chinese citizens makes all the sense in the world. I hope this trend is doomed sooner rather than later as it produces gross economic distortions that lead to real world dislocations.

  • AA

    Ali A.

    30 8 2016 07:44

    1       2

    Good content as usual. Just a point, not sure why the cameraman/woman has the urge to keep to fiddling with the frame

  • RT

    Ryan T.

    30 8 2016 05:24

    1       0

    I wish he would have touched on what could be the catalyst for rising interest rates. If there is one thing that could bring asset prices crashing down, that is certainly it, and NO ONE is looking at it.

  • DS

    David S.

    30 8 2016 04:14

    2       0

    I believe either presidential candidate will try helicopter money. DLS

  • cb

    carter b.

    29 8 2016 22:43

    6       0

    Yes what is the best strategy for an individual? Hold cash ? Buy bond puts? Buy gold calls? Buy volatility calls? All of the above?

  • CC

    Christopher C.

    29 8 2016 22:15

    3       0

    Why do folks think keep thinking standard deviations are in play or valid as constraints when we are running global experimental monetary policy?

  • de

    dale e.

    29 8 2016 22:11

    1       1

    As usual amazing. I just keep learning. Wish Grant would have him about Gold being that it was about risk.

  • JS

    John S.

    29 8 2016 22:07

    8       0

    Excellent - I've been hoping for the return of Dredge and he totally met my expectations. I strongly recommend his earlier interview too.

  • fc

    frank c.

    29 8 2016 20:51

    0       0

    well that made me buy some more TBT calls (furthers out)

  • rm

    russell m.

    29 8 2016 20:47

    5       0

    Excellent. Should be required viewing for tv doofuses that use terms risk and volatility synonomously.

  • BL

    Bruce L.

    29 8 2016 20:23

    6       0

    Great just like the first time. He makes things sound simple and clear, like Chauncy Gardner in Being There except he knows what he is talking about and he is right.

  • TH

    Timothy H.

    29 8 2016 19:21

    19       0

    @Bruno. Isn't D's point that the great risk right now is that the prices of stocks and bonds go down at the same time and that your insurance, on the other hand, would be to keep a larger than usual allocation of cash in order to purchase cheap stocks and bonds when the traditional portfolio is ravaged?

  • FV

    Fredrik V.

    29 8 2016 19:19

    0       0

    We are looking of a couple of bear traps still before we are out of the woods... Stamina (bear certificates gold) and liquidity will pay off... Accumulate during winter, and you have won!

  • BG

    Bruno G.

    29 8 2016 12:47

    43       0

    I have been a member of real vision for a year. Best interview that I have watched in my opinion. I was hoping Grant would have asked David what insurance policy is/are the best for the risk that he sees at this time for the individual investors watching. Again, thanks for such a great window into the minds of the best people out there.