The Ledger
Every statement that passed quotation and attribution checks. Mix any filter with any other: certainty 1/5, debate potential 5/5, or both at once.
why aren't all 15 resolved? a statement only gets an assessment when the public record can support or contradict it. opinions and what-ifs never can, and 0 checkable ones are still open, waiting for their date. predictions held up or didn't; assertions are supported or contradicted. on every card: ▮▮▮▮▮ certainty · ▮▮▮▮▮ debate potential. speakers are clickable
Williams: Asset classes correlate during a crisis, while risk factors do not
“If you shifted from an asset allocation approach to a factor approach, And you really wanted to get very clear on what the unique risks are, that if you ended up in a crisis, would tend to not be correlated. Asset classes are. Factors by construction are not.”
Karyn Williams: Smaller banks drive FX price discovery, not large banks
“The analysis that I ran suggested that the prices were being updated by the smaller players, not the larger players. And that made sense to me because if you're going to put information in the market, move that market, you had a trade to make and somebody on t…”
Williams: Mean-variance optimization is a conceptual framework, not a direct tool
“Really surprised that the mean variance optimization framework was applied directly and simply. Like, even from early days, it didn't make sense to me that these concepts, really, the point was to say something about how risk should be perceived, that it's sys…”
Williams: Standard deviation rarely reflects the actual risks institutional investors face
“So the expected return being a point estimate May connect well into, I want to cover expenses, and I want to grow, and I want to pay fees, but the risk, meaning of variance and their standard deviation, only by some strange coincidence would be connected to th…”
Williams: Granular trading risk models are a bad fit for institutional allocators
“Well, that's helpful to someone who's trading A portfolio, say, of a number of stocks and bonds, multi-asset class, we brought those models to institutional investors, but that's not at all the right way to approach the problem. They have different purposes. S…”
Williams: Capturing VC Power-Law Home Runs Reliably Requires Roughly 500 Holdings
“You really have to hold an index, something like 500 securities in order to know that you're going to actually hit one of those .5 home runs.”
Williams: Mean-variance optimization ignores fat-tail market drops and sequence risk
“For most mean variance optimization problems, you're throwing away the most important information. So think about making a decision about a loss limit over an investment horizon, and you have a real balance sheet to protect, but you're not actually taking into…”
Williams: Institutions unable to measure risk default to taking less risk
“So, so if you can't really measure where you are in terms of risk, And that means you can't really manage it. What you would tend to do, and a lot of organizations tend to do, is err on the side of less risk.”
Williams: Equity growth risk permeates high yield, real estate, and private equity
“The major driver of portfolio risk is growth and equity growth. But that exists in equities, and that exists in high yield, potentially, real estate, certainly private equity, and maybe even other investments. And so having a very clear picture of where that e…”
Williams: Institutional asset allocation is shifting toward factor-based risk models
“And I think that's largely where we're headed in, in the market for allocation and thinking about how the world of investment management evolves with technology and better information. That's one of the things that I would see coming is a refinement of the pro…”
Williams: Uncontrolled Macro Factors Frequently Swamp Active Managers' Bottom-Up Stock Selection
“And what we found generally was that a lot of times the factors would swamp the good work that they were doing on the individual positions in the portfolio. So all this great analysis and research Being put into individual decisions, but macroeconomic effects …”
Williams: Investment committees waste time scrutinizing minor, backward-looking line items
“It really bothers me when the conversation veers toward the small and insignificant and backward looking. So think, Wow, this portfolio has, you know, these 15 different investments. Like, you delegated that decision, and that decision's been made.”
Williams: A single asset manager held 80% of Farmers Insurance's assets
“When I arrived and the team was much smaller than nine people managing the process and this manager Had 80% of the assets.”