Vineer Bhansali, Founder and CIO, LongTail Alpha

Vineer Bhansali was recently among a small group of athletes who achieved the unthinkable, a 135 mile run in scorching heat, wind gusts and rain, all while traversing both the lowest and highest elevation points in North America. The Badwater 135 is considered the most difficult Ultra Marathon, an undertaking in which a guiding philosophy is, simply, “don’t die”. As the CIO of LongTail Alpha, Vineer’s investment philosophy is also not to die – or, translated to markets – don’t get forced out at the wrong time. And in this context, he makes substantial use of derivatives, instruments that protect against the extreme events that markets all too often confront. Our conversation is a review of the August 5th risk event, exploring its causes and consequences. Unsurprisingly, Vineer sees the overconsumption of the Yen carry trade as a primary catalyst and he details the many ways in which printed, essentially free Yen made their way into risk assets of all shapes and sizes. He details how his firm navigated the flare-up, looking to trade VIX at incredibly elevated levels before the open. With a view that the market price of insurance has come back to Earth too fast and with concerns that the recent risk-off may just be an appetizer for a larger unwind to come, Vineer argues that embracing insurance strategies is an important part of a long-term strategic portfolio plan.  I hope you enjoy this episode of the Alpha Exchange, my conversation with Vineer Bhansali.

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.