Why Systematic Macro Outperforms Discretionary | Market Radar
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Before we get started with today's show, I just wanna take a couple minutes to talk about permission list for the next conference presented by BlockWorks. It's happening in June in Brooklyn, New York, and it's all for the developers and builders in crypto. So if you're interested in really understanding how the nuts and bolts of the crypto industry are being built and you wanna learn more, go ahead and get your ticket. I'm gonna be there as well as with Quinn and the rest of the Ford guidance gang. It's gonna be a ton of fun. So use the code f g 10 at tech checkout, and you'll get 10% off your
The core drivers of our macro models are gonna be growth and inflation. I'm pretty sure anyone listening to this has seen similar models like this. They're pretty much the bread and butter for most macro models out there. And the importance behind growth and inflation relies simply on the fact that, you know, you can have high growth, but if inflation is extremely high as well and unsustainable, what ends up happening is your real growth, right, growth adjusted for inflation can be low. So you can have this illusion where you have high growth and, it's offset by inflation and vice versa on the
Like, how do you take that into what you guys do at MarketRadar? Because I'm my understanding is you guys do a bunch of systematic macro in terms of, like, you have your own portfolio recommendations, etcetera, and a different and a system there. But, yeah, like, what is it all you guys do with this model that you create?
Basically, it's the the regimes, the four regimes that we have kinda give you the environment that you're in, and then we have the performers that perform poorly or the ones that perform well during the regime, and you're just kind of where we play the odds. So the the regime gives you the odds. We play with those odds. And, with those odds, we created these portfolios, which what we believe is the best way to play those odds and properly allocating to the proper assets that do the West the best during those regimes.
Got it. So why why is it important to pursue macro with that lens of of systemization of it? Because, you know, we often get so many discretionary macro people on the show. You know, I've had Prometheus macro on before who's also follows a similar sort of systematic macro approach. And I'm just curious, like, why why do you guys believe that's the best approach versus this, like, pure discretionary? That's
a bit of a a meaty question there. So let's take it, I guess, from the top of the, of the base that number one, if you're gonna make a bet in macro, right, let's just say it's a bet on a central bank. If you're betting on SOFR rates or whatever it is, you're you're gonna bet that the central bank's gonna make a move before the market obviously anticipates it. You have to lay your opinion on the line, and you have no systematic gauge of basically telling you that you are wrong. You have to the same the same way that bet was placed, it has to be taken off right or wrong. So, like, let's just say
It it also works both ways too. It works even for the upside. People always ask us, what is your price target? What's where where do you take your profits? And we don't have price targets. It's purely just based on the data outputs because if you have price targets, you might have a winning trade that you take off too early. And in the long run, your losses are gonna outweigh your gains because you keep cutting your winners off too early.
Okay. So maybe what we could do is just use this scenario of you know, my understanding is somewhere in
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