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Home > Hidden Forces > Financial Volatility at the Edge of Crisis | A Conversation with Christopher Cole
Podcast: Hidden Forces
Episode:

Financial Volatility at the Edge of Crisis | A Conversation with Christopher Cole
Category: Business
Duration: 01:32:17
Publish Date: 2017-03-27 02:00:00
Description:

In Episode 5 of Hidden Forces, Demetri Kofinas speaks with Christopher Cole. Chris is the founder of Artemis Capital and the portfolio manager of the Artemis Vega Fund, which seeks to profit from periods of financial volatility, dislocation, and systemic crisis in financial markets. His core focus is systematic, quantitative, and behavioral based trading of financial volatility derivatives.

In this episode, Demetri and Chris explore political and financial volatility. They discuss the unprecedented level of mean reversion of volatility in financial markets. They look at financial volatility persistence. They compare spot or historic volatility to implied or forward volatility. They look at volatility-of-volatility (vol of vol). Christopher Cole presents his opinion that modern portfolio and system rebalancing strategies actually dampen financial volatility. Demetri Kofinas see's these strategies as increasing volatility in the long-term, which Chris Cole agrees with. Christopher also makes the further point that stocks are overvalued when looked at from enterprise value to EBITDA, Case Schiller PE, Price to Book, Price to Sales, etc. He also believes that financial volatility could come from either the left or right tail of the distribution. We could have inflation or deflation, according to Christopher. His objective is to profit regardless of whether we get a move upwards or downwards in prices. The key for Cole is always in finding cheap ways to go long uncertainty and to carry volatility.

These concepts can seem complicated. They are, however, what one needs to remember is that volatility is change. Volatility is uncertainty, and we live in uncertain times. This episode of Hidden Forces is about learning how to embrace that uncertainty. It is about learning how to embrace change. It is an episode about learning how to profit from risk and how to capitalize on what cannot be known. It is about learning how to price that risk through a deeper understanding of volatility in financial markets.

Producer & Host: Demetri Kofinas

Editor: Connor Lynch

Engineer: Stylianos Nicolaou

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