Parasite: Amazing and Deeply Disturbing

Bong Joon-ho’s Parasite is an amazing movie and a deeply disturbing reflection of modern society. It is like a magic mirror that shows the ugliness and the rot throughout all layers of society, hidden underneath the decorum of social norms.

Expressing One’s Soul in Art

Artistic creation is a process of expressing one’s soul. Creating artists expose their souls, performing artists mold their souls to express the souls of others… Performing your own art live is the apex of both, aptly expressed by Laura Marling: “When I play, I am very much in the space where I was when I wrote the music. You could slay me quite easily, I’m at my most vulnerable. (…) why is it that I get up on stage every night and open myself in front of strangers?”

Laura Marling performing “What He Wrote” in October 2012

Laura Marling performing “What He Wrote” in June 2020


Persona: Ingmar Bergman and Andrei Tarkovsky

Bergman’s Persona is undeniably an outstanding work of art: this movie makes you feel, think, and contemplate. After watching it, I found myself contemplating for a long time… about how we relate to others and the world, about the true nature of yourself and the plasticity of your persona… or maybe it is your true self that is flexible?…

Before too long, I found myself recalling the line from Tarkovsky’s Stalker: “Hardness and strength are death’s companions. Flexibility and softness are the embodiment of life. That which has become hard will not triumph.” Professor Borg’s personal journey in Bergman’s Wild Strawberries also came to mind.

What is strength, and what is weakness?… Do we get harder or softer as we move through life?…

To me, both Bergman and Tarkovsky evoke similar feelings, but, quoting Bergman himself: “My discovery of Tarkovsky’s first film was like a miracle. Suddenly, I found myself standing at the door of a room the keys of which had, until then, never been given to me. It was a room I had always wanted to enter and where he was moving freely and fully at ease. I felt encouraged and stimulated: someone was expressing what I had always wanted to say without knowing how. Tarkovsky is for me the greatest, the one who invented a new language, true to the nature of film, as it captures life as a reflection, life as a dream.” I agree, Bergman’s Persona feels somewhat crude compared to Tarkovsky’s later works, but it was created before Mirror, Solaris, Stalker, Nostalgia, and The Sacrifice, and Tarkovsky admired it. In the end, Persona is an impressive artistic achievement with an epic impact on many, including Tarkovsky.

The image is from the YouTube channel by Gabriel Gomez.

Days of Heaven

I had wanted to watch Days of Heaven for a very long time… I finally watched it in October 2022, and it did not disappoint!

It is one of those rare movies where the visuals and the atmosphere are more important than the outward narrative of the story. It captures that unique and fleeting feeling of “days of heaven” when you feel truly and utterly happy, disconnected from the whole world in your own happiness. It also conveys the intangible feeling of the flow of fate and how little power we sometimes have over it. It deeply resonated with me on so many levels, consciously and subconsciously. There are no other movies like it, a true masterpiece!

Unorthodox: Escaping your own eruv of personal preconceptions

I watched Unorthodox as soon as it was released on Netflix three months ago, but I could not immediately put my finger on what exactly resonated so deeply with me… Given, the lead actress, Shira Haas, was astonishingly good, but the “escape a cult” storyline was hardly unique, and it did not seem that special on the surface…

It took me some time and self-reflection to realize that we all live in our own eruvs of imaginary rules, dogmas, preconceptions, and general ways of thinking about the world. We don’t even notice being enclosed by these personal eruvs as long as the reality fits the confines of our own eruvs. We mistakenly think that the world operates according to the rules of our eruvs, refusing to take an open-minded view of the world. Unorthodox is not about escaping a cult but about escaping your own eruv of preconceptions about the world… And the more rigid your own imaginary rules and preconceptions are, the harder and the more painful it would be to escape that eruv… In the end, Unorthodox is about personal transformation and how painful it can be…

I conclude with the quote from Unorthodox:

“The rules are imaginary. The eruv wires around the neighborhood aren’t electric, there’s no moat (…) filled with crocodiles. Their power is just in your head.”
… followed by the response from Esty:
“The Talmud says… If not me, then who? If not now, then when?”

The Future of the Global Economy: One Step (ahem, Year) Ahead

Who can tell the future? 

Most people are not that good at predicting the future of the economy and the stock market, but there are quite a few pretty talented people who are. Most importantly, they are willing to bet their money (and a whole lot of it) on their vision of the future, instead of just yapping about it on television with no real consequences to themselves (think Ben Stein or Jim Cramer). These people are hedge fund managers, especially those who follow directional global economy based strategies.

Hedge funds are run by smart guys. They strive to generate attractive risk-and-return patterns for their investors through a wide variety of investment strategies. Broadly speaking, these strategies could be classified as “search for alpha” (e.g. “equity market neutral”) and “bets on beta” (e.g. “global macro”). Alpha strategies aim at generating returns patterns that are not related to the market or any known economic risk factors. Beta active strategies, on the other hand, generate returns by taking positions driven by underlying economic factors. The best beta active hedge fund managers are pretty good as a group in anticipating which of the economic factors would deliver superior performance in the future. If we could only see these positions, we would’ve been able to peek into the future (as perceived by a group of really smart hedge fund managers)…

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Pyramid Leverage

It is commonly accepted that “true” economic growth is the growth driven by technological innovation, and it is roughly approximated by a country’s GDP per capita growth. However, as I argued in an earlier post, short-term economic growth numbers could be distorted by monetary and fiscal policy choices. For example, a government may boost short-term GDP numbers by borrowing money through the sale of its long-term debt (say, twenty year bonds). By doing so, it employs the fundamental “time machine” feature of finance, which allows for the exchange of an uncertain future payoff for a certain payoff today. Ultimately, the repayment of the long-term government debt would be driven by the overall economy twenty years from now, i.e. people working, producing, consuming, and paying taxes then. Some of these people may not even be born today – how can we know for sure the number of workers and how productive they will be twenty years from now?

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Competition in Asset Management: Good Ideas vs. Good Marketing

You need money to make money, right? The same 10% return looks and feels very different for a one million dollar investment vs. a one billion dollar investment. Not surprisingly, the competition in the asset management industry for investors’ assets is fierce – there is a lot at stake. How does one convince a potential client to invest in your investment vehicle? Keep in mind that the investment would be made on an implicit promise of future performance, which, by the way, will only materialize after the investment decision is made. Even then, it may require several years of data to truly assess its performance. How do you convince a wary client that the future is bright and that his/her money will be well taken care of? Are you truly sure that the performance of your strategy a few years down the road will meet the needs of the client? Most importantly, how do you differentiate your investment vehicle from others who could be making outlandish claims about their funds’ expected future performance?

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Smart Beta ETF Portfolios: Cloning Beta Active Hedge Funds

Cloning hedge fund returns is a tricky business. Some hedge fund strategies, like S.A.C. Capital Advisors’ trading in Elan and Wyeth shares off insider tips, cannot be replicated by any algorithmic cloning procedure. On the other hand, returns for many hedge funds appear to be driven by exposures to latent risk factors not readily discernible to average investors. As John H. Cochrane of the University of Chicago observes:

As I look across the hedge fund universe, 90% of what I see is not “picking assets to exploit information not reflected in prices,” it is “taking exposure to factors that managers understand and can trade better than clients.”

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The Battle for the Last Mile, or the Future of Retail Investing

Quite a few years ago, back in 2008, I had the following conversation with one of my MBA students, Billy Ruck:

Billy: Why aren’t ETFs more popular now? They are great…

Alexey: Yes, ETFs are great! It’s a conspiracy, man!

As outlandish as my response may have seemed, it was absolutely true. Since this interaction, it’s been fascinating to see how both parts, the ETFs and the conspiracy, have been playing out. But, before we break out the tin foil hats, let me expand a bit on my 2008 answer…

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