My guest this week is Chris Cole, founder and managing partner at Artemis Capital Management. Chris’s specialty is in long volatility strategies, setting up portfolios that will benefit from significant change and volatility in markets.  We discuss how a series of small bets can lead to disproportionally large nonlinear payoffs, in both life and markets.  We also discuss the kind of watch Chris wears, Dennis Rodman, and movies, all as metaphors for his life philosophy.

Chris Cole Artemis Capital Management

Chris Cole

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Books Mentioned

Antifragile: Things That Gain from Disorder

Command and Control: Nuclear Weapons, the Damascus Accident, and the Illusion of Safety

Devil Take the Hindmost: a History of Financial Speculation

Lords of Finance: The Bankers Who Broke the World

The Genius of Birds

Creativity, Inc.: Overcoming the Unseen Forces That Stand in the Way of True Inspiration

Impro: Improvisation and the Theatre

Links Referenced

Volatility and the Allegory of the Prisoner’s Dilemma

Dennis Rodman and the Art of Portfolio Optimization

Show Notes

2:07 – (First Question) – Chris is asked about the somewhat morbid and interesting concept of a “ticker”

3:17 – A look at volatility and convexity as Chris sees it, and what we do in our everyday lives that exposes us to these concepts.

8:03 – How does the same idea get used in investing and a portfolio

10:02 – If convexity is the non-linear payoffs to change, why is value investing a short convexity strategy?

11:20 – Antifragile: Things That Gain from Disorder

14:09 – Are there such things as positive Black Swans?

15:51 – How does Chris see the world and markets looking through his lens of convexity

18:10 – Command and Control: Nuclear Weapons, the Damascus Accident, and the Illusion of Safety

20:39 – Why democracy may not survive the strategies in place to protect us

20:54 – Devil Take the Hindmost: a History of Financial Speculation

23:05 – Lords of Finance: The Bankers Who Broke the World

23:20 – Why World War II helped the US economy get out of the depression

24:24 – Have we pulled too much future returns into our current numbers and are our expectations for market productivity too high?

26:11 – Some of the strategy thinking that Artemis uses to build portfolios in this current market atmosphere

30:40 – How does an average person access these strategies or do you have to be an institution to execute macro strategies like Artemis

33:58 – What would it take convince Chris that he is wrong and the world financial markets are in better shape than perceived

36:48 – Are we seeing above average fear in the market or are we setting up for a more horror-filled scenario where the workforce potential is decimated by technology

42:53 – How do clients of Artemis perceive their negative outlook on the economy and society

44:10 – Dennis Rodman and portfolio optimization

44:16 – The unexpected lesson investors can learn from NBA great Dennis Rodman

49:39 – Artwork seems to be a major part of Chris’s work, so Patrick questions how that developed

51:36 – What movie best exemplifies the long volatility strategy

55:14 – Chris’s most memorable day in investing

57:04 – The kindest thing that anyone has done for Chris

57:52 – Chris’s important daily habits; exercise, meditation, and reading; and he goes about them.

59:38 – The Genius of Birds

1:00:39 – Creativity, Inc.: Overcoming the Unseen Forces That Stand in the Way of True Inspiration

1:01:05 – Impro: Improvisation and the Theatre

Learn More

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Article by The Investor’s Field Guide