Professional Background:

After college, I went to work for a commodity trading adviser that was run by my brother, Victor. After five years there — where I was basically doing what I do now, developing strategies and trading them — I decided it was time for me to offer the ideas I had in an institutional framework, and I recognized that there was a niche for uncorrelated and negatively correlated systematic trading. So I left in 1992, and after about a year of programming and developing my operation, we began trading for clients in July 1993.

Day-to-Day Responsibilities:

I oversee the investment and research process. Perhaps the best way to describe it is that I play the role of a professor with a lot of really brilliant graduate students, where I can mentor them, I can give them advice, but they’re so much better at so many of the individual tasks than I am. In addition, they are meant to maintain their own research process — coming up with ideas and doing scientific analyses of these ideas. Overall, the goal is to create money-making improvements to what we already do.

Education:

I have a degree from Harvard in computational neuroscience, which is the study of how the human brain processes information.

Fun Fact

Something I’m fairly proud of is my musical ability. I’m a nice guy to have around if you have an open piano because I can play pretty much any song you can name, in any key, and can play different string instruments as well.

BIG PICTURE

Biggest trading opportunities for the firm?

The biggest opportunities occur all over the place, in sequence, and they tend to occur when there’s a lot of volatility. So I can’t say what the biggest opportunity for us will be because I don’t really know where the action is going to be. It’s much more questions like: How afraid are people? Are they complacent? Those represent opportunities to us in the sense that wherever there’s emotion in the market, wherever psychology is driving things, those tend to be places where our models work particularly well. Because levels of emotion, levels of fear, are highly correlated with realized volatility, from this we get our long volatility component. So where are the opportunities? For us, they’re where the volatility is. I wish I could predict that a year out, but that’s what we look for.

Difference between trading for an alternative investment firm vs. trading for a traditional asset manager?

I believe that an alternative investment firm should provide investment strategies that are truly diversifying and truly alternative. Unfortunately, the current state of the industry is such that there is a tremendous confusion of alpha and beta, and many styles of hedge fund management have high correlation to each other and also to stocks. This makes them more like traditional managers, despite the fact that they can go both long and short on stocks. At my firm, we are committed to providing not only attractive stand-alone returns, but also to serving as a true alternative investment by being unique, diversifying and protective.

What is the most challenging aspect of your job?

Staying ahead of the markets as they evolve. I think financial markets act, by their nature, to seek out the weakest participants and cause them the greatest possible losses. And while I don’t think there’s some nefarious force guiding them, I think that’s the natural course of a dynamic system. The fact that markets do have this quality means that they are constantly evolving new ways to take your money. And, in order to stay ahead, you have to continually invest in technology, you have to create new ideas, you have to look in places where no one else is looking, and you have to understand how the other competitors in your space are approaching the same problems and try to stay ahead of them, too. Staying ahead of the markets is the greatest challenge, and it gets harder and harder every year.

Major Industry Trend

You have to rotate your models more rapidly today than you used to. Models that used to work have stopped working with greater rapidity lately. I think that this probably represents the entrance of a large number of players into the hedge fund space in all sectors and all strategies. And for us, we know very quickly when one of our models has stopped working — one of the advantages of high-frequency trading is knowing when something isn’t working anymore very quickly. For longer-term strategies such as trend following, it’s more difficult to tell if the strategy is declining in effectiveness because big trends are very rare to begin with.