How Quants Became Cool | ETF Trends

When algorithms power the market and quantitative trading is a given, it’s easy to forget that once upon a time it wasn’t all that cool to be a quant. When Corey Hoffstein co-founded Newfound Research in 2008, quants were still the nerdy secret weapons of Wall Street. There hadn’t been a Flash Crash to draw public attention to algorithmic trading. Michael Lewis hadn’t gotten in on the conversation. 

Fast forward a decade or so, and quants are now the cool kids in finance. Analysts and asset managers like Hoffstein have tens of thousands of Twitter followers and loyal audiences across platforms. Hoffstein’s podcast, where he dives into topics like liquidity cascades, commodity volatility, and directional versus volatility-driven options strategies, has a five-star rating on iTunes.

The Quantitative Shift 

“I think the appetite for learning about quantitative investing has certainly accelerated over the last decade,” Hoffstein says. It’s hard to say whether that’s because the market itself has moved in that direction, dragging financial professionals and lay investors along with it, or because people like Hoffstein made an active effort to expand the conversation.

Take a minute to consider some of the other quantitative experts on #FinTwit. Benn Eifert, founder of a quantitative hedge fund specializing in options and volatility, has some 58,000 followers. Lily Francus gained 50,000 followers in just over a year thanks to NOPE (net options pricing effect), a model she developed as a student. More than 42,000 people follow Wes Gray for his quant-driven posts on ETFs and portfolio construction. There is clearly an appetite for these conversations, and there’s a new school of experts willing to teach, share, and discuss.

“It’s probably never going to hit the mainstream, but when you look at the number of investors who have adopted systematic strategies, the number of new CFAs that are minted every single year, I think there’s just a growing audience for really learning about this style of investing,” Hoffstein adds.

Learning Curve

The biggest takeaway from the growing interest in quantitative strategies may be the growing number of people actively looking to learn. The conversations in these communities are driven heavily by research. Expect charts, questions, friendly disagreements, and a level of jargon-y inside jokes that won’t make sense to your friends outside of finance.

But that doesn’t mean that the community expects you to be an expert. Rather, it tends to be more collaborative, where experts in one area of finance can question experts with totally different expertise. And what’s more, those questions can range from basic to complex and cross from equities into pop culture. (Case in point, Hoffstein recently joked with AQR founder Cliff Asness about the concept of “portable beta” while comparing himself to the writers of South Park.)

Leaning into this desire for learning, and teaching, is part of what led Hoffstein to launch his podcast, “Flirting with Models.” “I had a few close friends in the industry who suggested that… people learn different ways, and they encouraged me to explore podcasting as another way to connect with an audience that wanted to learn about quantitative investing,” he explains. 

Learning to Flirt With Models

Hoffstein approaches each episode with great care. To start, he embraces the learning mindset and picks guests who are experts in topics he may not know well. Then, he goes head-down into research. 

“One thing people underestimate is the amount of work that goes into it ahead of time,” he explains. That means at least an hour on a pre-call, requesting a reading list, and building an arch of questions that allow for a meaningful conversation.

 “A listener can start at the beginning with basic knowledge and accumulate what they need throughout the podcast. And it really does take … a tremendous amount of work.”

You’ll be able to see some of the care that goes into his five-star podcast in action at Exchange: An ETF Experience this April. Hoffstein is taping an episode of “Flirting with Models” live on stage. Attendees can watch Hoffstein interview Michael Green, a diehard proponent of active investing, about his move into ETFs. Expect them to get into how flows affect passive investments, why the structure of funds matters, convexity, and more.

Plus, you’ll get to see a little bit of how the sausage gets made. “I’ve never interviewed in front of a live audience before; I think it will bring a totally new dynamic to the conversation,” Hoffstein says. “[The audience will] see that there’s parts of conversations that get entirely cut out when the podcast goes live. We might stop and start and repeat.”

If you won’t see “Flirting with Models” tape live at Exchange, you’ll still be able to catch the episode when it airs.

Don’t Forget Twitter

You can always find Hoffstein on Twitter in the meantime. It’s another platform he uses to engage and educate, which landed him on our #ETFintwit #Top50 list in 2021.

While Hoffstein uses Twitter as a platform to share his research with investors (he does run a business, after all), he points out the more valuable part of the social network is often to get out of your comfort zone and into conversations with people who have a different perspective on investing.

“If you were actively taking part in those conversations,” he says, “You got to see all these different views from what, perhaps, you were seeing.” If you’re more an observer, you can follow the back and forth between the experts as they discover those conflicting point of views in a public space.

For more information, follow the people in this article on #ETFintwit: Corey Hoffstein @choffstein, Benn Eifert @bennpeifert, Lily Francus @nope_its_lily, Wes Gray @alphaarchitect, and Cliff Asness @cliffordasness.

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