Scott Peng, PhD, Founder and CEO/CIO, Advocate Capital Management

Armed with a PhD in plasma physics, Scott Peng was doing next generation research on rockets for NASA before joining First Boston. He soon became engaged in the derivatives market, spending time as well at Lehman Brothers creating structured notes. We first consider some of the notable debacles in this product set, like Procter and Gamble and Orange county, outcomes that Scott sees as the result of shortfalls that end users had in understanding the risks they were ultimately taking on. Seeking to close this gap, Scott wrote “The Structured Note Market”, a deep dive into the financial engineering that underpinned the creation of these products.

Om Podcasten

The Alpha Exchange is a podcast series launched by Dean Curnutt to explore topics in financial markets, risk management and capital allocation in the alternatives industry. Our in depth discussions with highly established industry professionals seek to uncover the nuanced and complex interactions between economic, monetary, financial, regulatory and geopolitical sources of risk. We aim to learn from the perspective our guests can bring with respect to the history of financial and business cycles, promoting a better understanding among listeners as to how prior periods provide important context to present day dynamics. The “price of risk” is an important topic. Here we engage experts in their assessment of risk premium levels in the context of uncertainty. Is the level of compensation attractive? Because Central Banks have played so important a role in markets post crisis, our discussions sometimes aim to better understand the evolution of monetary policy and the degree to which the real and financial economy will be impacted. An especially important area of focus is on derivative products and how they interact with risk taking and carry dynamics. Our conversations seek to enlighten listeners, for example, as to the factors that promoted the February melt-down of the VIX complex. We do NOT ask our guests for their political opinions. We seek a better understanding of the market impact of regulatory change, election outcomes and events of geopolitical consequence. Our discussions cover markets from a macro perspective with an assessment of risk and opportunity across asset classes. Within equity markets, we may explore the relative attractiveness of sectors but will NOT discuss single stocks.