Episode 33: Corey Hoffstein [Newfound Research]

Corey Hoffstein

In this episode, I talk with Corey Hoffstein, co-founder of and Chief Investment Officer at Newfound Research.

Newfound Research LLC is a quantitative investment and research firm dedicated to helping investors pro-actively navigate the risks of investing through thought leadership and investment acumen.

At Newfound, Corey is responsible for portfolio management, investment research, strategy development, and communication of the firm’s views to clients.

Corey holds a Master of Science in Computational Finance from Carnegie Mellon University and a Bachelor of Science in Computer Science, cum laude, from Cornell University.

I hope you enjoy this conversation with Corey as much as I did…

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Have comments about the show, or ideas for things you’d like Taylor and Jason to discuss in future episodes? We’d love to hear from you at info@mutinyfund.com.

Transcript for Episode 33:

Taylor Pearson:

Hello and welcome. This is the Mutiny Investing Podcast. This podcast features long form conversations on topics, relating to investing, markets, risk, volatility, and complex systems.

Disclaimer:

This podcast is provided for informational purposes only, and should not be relied upon as legal, business, investment or tax advice. All opinions expressed by podcast participants or solely their own opinions, and do not necessarily reflect the opinions of Mutiny Fund, their affiliates or companies featured. Due to industry regulations, participants on this podcast, or instructed to not make specific trade recommendations, nor reference best or potential profits. Listeners are reminded that managed features, commodity trading forex trading and other alternative investments are complex and carry a risk of substantial losses. As such, they’re not suitable for all investors, and you should not rely on any of the information as a substitute for the exercise of your own skill and judgment in making a decision on the appropriateness of such investments. Visit mutinyfund.com/disclaimer for more information.

Jason Buck:

My special guest, I always say that for my guest, but this time is actually is a special guest. It’s my favorite VO guest. But I say that for all my guests. Is my partner in crime on Pirates of Finance. It’s Corey Hoffstein.

Corey Hoffstein:

You just couldn’t get enough of me.

Jason Buck:

Exactly. Yeah. But I think this won’t be a little different as we move towards this more combo style on the Mutiny Podcast, I just flew up to Chicago, shout out to Jeff Malec for this beautiful setup. I’m using all his equipment. So I appreciate it.

Corey Hoffstein:

So I’m sitting here going, I know that looks very familiar to me and I know it’s not where you live.

Jason Buck:

Yeah.

Corey Hoffstein:

All right, Jeff. All right. So it’s the RCM Podcast background.

Jason Buck:

Exactly. It’s the derivative podcast background, shout out and go check out The Derivative Podcast. Corey, you and I do tons of podcasts and tons of shows and I was just lamenting to Jeff. I don’t know how he does it every week too. And like booking guests, it’s quite relentless.

Corey Hoffstein:

I can’t do it. I don’t know how people do it. I am seasonal. I’ve always been seasonal. I’m in the middle of recording my fifth season. And every time I’m recording a season, I go, “I’m never doing this again. I’m never doing it again.” And then somehow six months later I go, “It wasn’t that bad. Was it?” It’s like, you forget. You forget the pain. And then I start doing it again. I’m like, “Why am I doing this?”

Jason Buck:

Just [inaudible 00:02:34] for punishment. I end up bulking like you, I do like three episodes in three days and I’m like, “Never again.” And then three weeks later, the deadlines coming and I got to do it again. And like, you think I’ve learned my lesson at this point, but I’m not. So I was on my flight here, on the plane I was watching the new series called The Offer on Amazon Prime and it’s about the making of The Godfather. So it was really interesting in the sense that like it’s from the producer’s perspective and all of the behind the scenes that went to making of The Godfather, it’s a really good series. Actually. It’s got Miles Teller, Matthew Goode. A lot of great actors, a lot of great writing, but what was fascinating to me is just, I think producers of movies and directors are very similar to entrepreneurs in that it’s what I’ve always said for like entrepreneurship is like, it’s like running the hurdles and every day they throw a new hurdle at you and you’re going to have to figure out how to overcome that hurdle. And the hurdles never stop.

Jason Buck:

Everybody’s like, “I just want to reach a plateau and kind of coast a little bit.” And I’m like, “Well, that’s not entrepreneurship. That’s business ownership.” And that’s probably going to be like a plateau. And then just a decline to zero. I can’t even speak now. Obviously, I’ve been on planes. But that’s what I was just thinking on the way here was like, that’s what we should talk about is a little bit of like entrepreneurship and that just resiliency of like, you and I have a lot of private chats about… Texts about just getting through the day, you know? What do you-

Corey Hoffstein:

I thought that might have been what spurred this conversation.

Jason Buck:

Yeah. Exactly. It’s like just getting through the day and I always think about it as like, if you can just move one inch down the field or as my partner Taylor Pearson always talks about just getting 1% better every week is like the Japanese kaizen kind of thing. What gets you going, like when you’re feeling down, how do you push through? Like, what do you do to like pick yourself back up?

Corey Hoffstein:

Well, I think first and foremost, when you told me you wanted to talk about this as a topic, I sort of thought it was funny because you know my answer, which is, I don’t even consider myself an entrepreneur.

Jason Buck:

Really?

Corey Hoffstein:

We’ve had this conversation.

Jason Buck:

Oh no.

Corey Hoffstein:

We’ve had this conversation. How well is my wife’s alarm going? Is that coming through clear?

Jason Buck:

Loud and clear.

Corey Hoffstein:

What, loud and clear? Great. Good podcast right there.

Jason Buck:

Yeah.

Corey Hoffstein:

All right. Back to the topic at hand. Yeah, we’ve had this conversation. I told you, “I don’t really consider myself an entrepreneur.” I’m a business owner, and I think some of the struggles are the same of just trying to get through the day. I very much ascribe to that mentality of just do one good thing a day. I’ve been at this now for 14 years in the same business with really high highs and really low lows and I think the only thing that’s consistent is that time moves forward and time moves a lot faster than you think it will. And I have found that the days in which I just do one good thing to make progress in my business, they add up a lot.

Corey Hoffstein:

It accumulates a lot over time and it’s actually sort of helped me find balance in my life in the sense that if I do that one good thing, if I know what that one thing is that I need to get done, then it gives me some freedom later in the day to say, “I’ve done the one thing I need to do. The most important thing of the day.” Like I don’t need to slam my head against the wall anymore today. I can go outside for a walk. And I think that sort of helped me find balance, but I certainly didn’t have it in the first five years of my career.

Jason Buck:

So is that like the founder of Keller Williams, he has the the one thing, I’m trying to remember his name, but that was the idea. You figure out what the one thing is to get done that day, or I think even Tim Ferris talked about is like, do you do like note cards of like things you need to get done that day. But number one is like, if you can get that, that’s like 80% of what you need to get done today. And then when you wake up, that’s what you hammer on. And then like you said, if you can check that box, it doesn’t really matter if you just walk on the beach for the rest of the day. How did you come about what that one thing is? How do you think about the one thing? Or did you steal that from somebody else?

Corey Hoffstein:

Yeah, I wish I was more organized than the one thing candidly, like I know there are some people who every Sunday night they set out their schedule for the week or they have their one thing. Typically, my calendar just sort of falls as it does. Right. I’m scheduling two weeks out for the most part. And it’s sort of obvious what the one most important thing is every day. And for me like there’s pillars of running a business, there’s the people that you employ, making sure that they’re on track, so sort of the relationships and personnel, the business. There’s the business development side of it. There’s the actual products and widgets you create that you need to focus on. And I find that my job as an owner of a small business is often rotating between those, and my focus on any given day may be something very different.

Corey Hoffstein:

So for example, as much as I was lamenting running a podcast earlier, the podcast is a large marketing vehicle for my firm. And so getting these podcasts done and I consider them an incredibly draining effort, is often one of the most important parts of my day. Because that season lives on and episodes get tens of thousands of downloads and that just adds up in value and accumulates in value over time. So if I can spend an hour and a half, two hours getting a podcast done for my own season, that has incredible value. And then it sort of takes pressure off the rest of the day. Doesn’t mean I’m slacking off the rest of the day, but I’ve sort of gone, “Okay, that one key item is done. I can turn my attention elsewhere and sort of like cruise through the rest of the day, hopefully.”

Jason Buck:

And just for the audience’s sake, I’ve never seen you slack off. We were able to just finally spend some time together and came and I can very clearly tell the audience. You definitely do not slack off. Like you get up very early in the morning, start your workout and just plow through the day. By the nighttime, you’re exhausted. So it’s a little hard to pick your brain at like seven o’clock at night, which I’m trying to do now, which is always a great idea. I can’t remember if I ever told you, when I was at IMG academy, because the tennis academy there had all these sports psychologists and they would work with the soccer players too. And we would have these binders where in the week ahead, we had to have 15 minute increments. We had to write down our entire week ahead in 15 minute increments.

Jason Buck:

And then after that I got really into like seven habits of highly effective people, like all that stuff. And this is like back in like the late nineties. And over time, I felt like by the time I was like 30, I was almost like burnt out from doing all that stuff and now I find, I think you nailed it too, the interesting thing is like, I used to take notes of the night before, or like you’re saying on Sunday night or usually the night before, like write down what I needed to do the next day. But now it’s just obvious what that one thing is every day. Do you think that we built that through habit or you just think like, “Yeah, I don’t know, a form of maturity, it’s just oh so clear in our businesses.” What is the thing that can really move the needle in the business?

Corey Hoffstein:

I think partially it’s probably through habit when you do it long enough. But I think for me, I did try that. I remember early in my career, I did try to sort of take on those practices. And I also tried to do a lot of the quarterly meetings with my business partners and talk about goals that we were trying to hit and things we wanted to do. And I’m sort of the belief now, particularly for the type of business we run, which is asset management, there’s a huge amount of it that’s just out of your control, right?

Corey Hoffstein:

So the two major things in asset management are often running money. Well, that’s just a constant, right? You might have research projects that you’re focused on, that you can sort of work through that backlog, but you never know what’s going to hit and what’s not in terms of being value add. So that’s just sort of a constant in your business. The second is raising money, and the truth of the matter is raising money is very dependent upon your performance and the market. What you find is that when the market goes down, people are just reluctant to make changes to their portfolio. So I can have a goal to raise a certain amount of assets in a year. Doesn’t mean I have any hope of raising that amount of assets, just because I want to, like you can put the effort in, but the market might not cooperate or your investment style might go out of favor, ask any value investor for the last five years, how raising money has gone for them.

Jason Buck:

That’s my least favorite question. Yeah, my least favorite question. I have people ask me all the time from outside the industry is like, “What’s your goal for AUM for this year or whatever, like growth rate.” And I’m just like, everything is so outside of your own hands, like you’re saying, all you can do is move the ball one inch down the field. And so you can put in podcasts, you can be doing sales calls, but like the sales cycle could be one month or it can be two years it’s based on performance. There’s so many factors.

Corey Hoffstein:

I have done this for so long now. There are years where I’ve overshot my target by 700%.

Jason Buck:

Yeah.

Corey Hoffstein:

There was one year that I picked up a 700 million mandate. I’m done for the year after that. And I know, because there’s going to be the next two years where I can barely raise a penny. You don’t know when it’s going to be there. So to me it’s like those quarterly goals are really hard. Even launching product can be hard. You can have a goal to get product out the door. I want to launch a new ETF, a new fund. You can sort of hit that pipeline, but you’ve done it, you know, it sort of always takes twice as long as you think it’s going to. There’s always [inaudible 00:12:08] and the more complex you want it to be, the more difficult it is to get out the door and then, great. It’s out the door. Now you need to get it on platforms.

Corey Hoffstein:

Well, it’s totally out of your hands as to when LPL decides they’re going to open up the platform again for you and they have their written rules, but that’s sort of the minimum threshold. And then after that, it’s sort of like… It’s relationships and do they feel like letting you in the door? And so some of this stuff is so out of your control compared to other businesses that I’ve largely given up on goals like that and have much more of a focus of just doing the things that I think get me towards those goals over time, without having those like very specific, I want to be on a certain platform by a certain date because I just feel like it’s so out of our control.

Jason Buck:

We have no leverage with the platforms. I mean, the analogy for us would be the regulators, right? We put our PPM together. Then we go out to the NFA and you just have zero clue how long it’s going to take. It could take a month and a half. It could take 10 months.

Corey Hoffstein:

Right.

Jason Buck:

You have no control over it. And that’s always hard as an entrepreneur, I think like just having that no leverage scenario and then yeah, raising AUM. I mean, who knows what’s going to work? What’s not going to work, when it’s going to come in. You have no idea. I want to go back though, you said you feel like you’re a small business owner and not an entrepreneur. What do you feel? What’s the difference for you?

Corey Hoffstein:

Yeah. And I know this isn’t the strict definition of an entrepreneur, but an entrepreneur to me is someone who focuses on starting businesses and starts multiple businesses over their lifetime. My father was an entrepreneur, right. He had a passion for starting businesses. When he was in college, he started a company selling calculators. He ran four or five different companies from the day I was born. And the last one, he took public in the .com era. Like to me, entrepreneurship is your passion is starting businesses. My wife is an entrepreneur, right? To me, it’s a different mindset. My passion is not starting businesses necessarily. I have a passion for finance and I happen to run my own business. And I think of myself as an operator of an asset management firm, as well as an investment manager. But I don’t consider myself an entrepreneur.

Jason Buck:

Is that because you-

Corey Hoffstein:

You are an entrepreneur. You’ve started medical businesses. I would consider you an entrepreneur because you approach these things from the mindset of a business owner. I’m sort of a business owner almost by force just because I ended up running my own investment management business.

Jason Buck:

No, but like an entrepreneur, you started Newfound Research and then I would argue even when you’re launching new products or pivoting, that’s a form of launching a new business wouldn’t you say? I mean it’s a new business line.

Corey Hoffstein:

Yeah.

Jason Buck:

I’m splitting hairs. It was just curious, when you said you don’t feel like you’re an entrepreneur, I just didn’t know what that meant. To me, like the entrepreneur and the business owner, I think about a lot of times people, like I was saying is they start off as an entrepreneur and then they get a small business or medium or big or large business and then they just want to hold on in cash checks.

Jason Buck:

And then that’s what I’m saying. You’re in a slow, steady decline. Whereas I guess if you’re, to me, then this is not standard definition either is you’re in entrepreneur mode. You’re just constantly pushing. And basically it’s Red Queen Principle, you’re running faster and faster to stay in the same place. Like you can never get stagnant. You can never really, hire enough people to really run the business without you really behind the driving force I don’t know. I mean, that’s a good question.

Corey Hoffstein:

I don’t have a good answer for it. I actually looked it up while we were talking in the intro and the definition of entrepreneur doesn’t help me at all in terms of these semantics.

Jason Buck:

I’m sure.

Corey Hoffstein:

But no, I don’t know. I don’t really think of myself that way and perhaps that’ll change over time, but because I’ve been running the same business for 14 years, I don’t really think of myself as someone who starts businesses and that’s sort of the way I think about an entrepreneur.

Jason Buck:

Yeah. I always think about when I was younger, like in the nineties, entrepreneur is a bad word. I mean, and men unemployed. And then now it’s like, everybody-

Corey Hoffstein:

It’s like, sexy.

Jason Buck:

Yeah. Now it’s in their Instagram profile, just, entrepreneur or whatever. And I’m just like, now it’s almost meaningless. Right. I remember Taylor was like, “We shouldn’t call ourselves serial entrepreneurs even though they are,” Because he feels like that’s a pejorative now for millennials.

Corey Hoffstein:

Yeah.

Jason Buck:

So that’s why I was wondering if you were just trying to stay away from the word.

Corey Hoffstein:

No, no, no. I mean, look again, I think of my father as being an entrepreneur and that was back in the days where it was hard to be an entrepreneur and it was hard to raise money and you were really an outcast as an entrepreneur versus the early 2010-a where startups became very sexy. Right. Everyone wanted to do a startup, but everyone in many ways still does. So yeah, it’s not me trying to avoid the phrase. It’s just me sort of not thinking of myself that way.

Corey Hoffstein:

Again, running an asset management firm, I think it’s very different because I wear both the hat of an operator running an asset management firm as well as the hat of being the CIO. So I spend a lot of time thinking about the investment side and candidly the business I would run and operate if I didn’t care about the investment side, if I was just trying to run an asset manager on easy mode would be very different than the business I run today. If I just had no… Didn’t care about investments at all and was just trying to raise money in product, it would be a totally different business.

Jason Buck:

Yeah. Remember I remember when I was a… Maybe before we started business right at the beginning, I remember having long talks with Mike Green about there’s two very different things between running a portfolio and running an asset management business. And every trader investor thinks it can run a portfolio, but the actual management of the business side is actually almost harder than running the portfolio. Especially the portfolios kind of like we build are broadly diversified, not necessarily set it and forget it. But that’s the general concept as far as like the asset buckets. They’re going to be changing around the margins, but every day there’s a new fire to put out it seems like when you’re running the asset management side of the business.

Corey Hoffstein:

Yeah. You hear enough stories about people who spin out and they love the investments and they don’t realize that the investment part is just one small pillar of what it takes to run an asset management firm, right? It’s the operations, it’s the compliance, it’s the administration. And then it’s the sales. This is not a, we build it and perform and people will come. No, you perform, that’s the minimum threshold. And then you go knocking door to door at the consultants and try to get rated. No, by the way, you’re competing with everyone else who’s doing that. So now it’s a relationship game and you’re trying to get platform access. So you need people in key accounts, if you’ve got 40 act product, like a mutual funder, an ETF, you’re going to knock on the door of advisors and trying to sell to them. And oh, by the way, so is BlackRock and Vanguard and Investor and everyone else offering dozens of free services just to get their attention, right. Table stakes became in the mid 2010s that you now had to do portfolio consulting for free for financial advisors just to get in the door, to talk to them about your product. Right? This game is getting more and more competitive. All of which has nothing to do with actually running money. That’s just table stakes.

Jason Buck:

Well, and that’s what I’m saying you have this huge [inaudible 00:19:30] especially in your space incumbents whether it’s in mutual funds or ETFs is like, everybody loves the low fee mantra but like if you’re Vanguard running trillions of dollars, you don’t have to charge that many fees to pay all those thousands of employees. But like you’re saying, you’re a small business owner and out the gates, all of the costs we’re talking quarter million dollar minimums just to run like an ETF, let alone mutual funds, building out sales team, everything. And it’s just like, you have to be able to charge money to be able to run a sustainable business. And you’re competing against these incumbents that obviously can just crush you basically. I mean, I’m just thinking in my head of like, you’re putting it together and looking at the competition or with the total addressable market, you’re like, “I’m going to get dominated.” It’d be like going out and like trying to compete with Amazon.

Corey Hoffstein:

Yeah. That’s another massive trend in the industry, towards low fee product. And I do find that if you run high octane enough product with enough active share, you can sort of carve out to that 80 basis point level whereas otherwise you might have to be in the 10, 15, 20 basis point level. But yeah, there’s certain people who will say 80 basis points. We’re not going near you. That’s 60 basis points more than we’re willing to pay. And there’s nothing you can do about it. That’s just where the trend is going. Ultimately, fee is something that advisors and investors can control. Doesn’t mean everything. If you can overcome that fee hurdle with whatever excess return you can generate, great, but all else equal, you obviously want a lower fee and it’s hard as a boutique to compete in that environment.

Corey Hoffstein:

I’ve always said everyone thinks like passive beats active at the end of the day because active managers aren’t that great. I always thought Vanguard’s knife in the back of the industry was the mutual fee structure that they set up. That by definition, the more assets they gathered, the lower their fees went. And what you saw was active management fees flat lined while passive management fees continued to go down, which means the relative fee hurdle that active managers had to overcome to justify their fees, got fatter and fatter.

Corey Hoffstein:

Again, that sort of happened until smart beta came around and you start to see active fees have come down more in line with passive, at least from like a directional perspective. But there was a time period there sort of in pre 2010 that the gap got pretty wide between active and passive. And at that point it’s almost impossible from an active perspective, particularly when you’re talking large cap equity to run any sort of 253 hundred stock portfolio and generate enough alpha, you need to be super concentrated in what you’re running.

Jason Buck:

Is it Bechuanas or Wiggles worth or both that just wrote about Bogle and have you read it any of those book? Like I think it-

Corey Hoffstein:

Was both, right? So, Bechuanas wrote… Wow, this is really embarrassing that I can’t remember the name. Wow. This is really embarrassing.

Jason Buck:

We’ll put it in the show notes. I’ll give you a second to look it up, but what he also-

Corey Hoffstein:

He wrote The Bogle Effect, didn’t he? He just wrote The Bogle Effect.

Jason Buck:

Yeah.

Corey Hoffstein:

And didn’t Robin Wiggles worth, didn’t he write Trillions?

Jason Buck:

Trillions. Yep. I can remember Trillions because I think that’s what we’re both chasing. Right? Trillions.

Corey Hoffstein:

Yeah. I think I’m like literally Googling this as we do this. Yeah. I think it was Trillions. Yeah.I think Trillions is more about passive specifically just how like passive changed the world. But I haven’t read either, not for lack of wanting, but as you know, living in Cayman right now, getting those books is actually pretty difficult. I’m back in the states in two weeks and hopefully picking up lots of good summer reading.

Jason Buck:

Yeah. You don’t have that Amazon effect nor did I see any great bookstores when I was walking around Cayman.

Corey Hoffstein:

There’s one bookstore that I know of and you’re lucky if you find any investment books.

Jason Buck:

What it does remind me of in a way though, like every business is hard and starting up any business is hard. And so I always think about, because a long time ago I was in restaurant business and everybody is a decent home cook or can throw a good house party. Everybody goes, “You should start a restaurant.” And then they go and do and nine out of 10 fail in the first year. And it’s because of lack of like professionalism or forethought, really more than anything. And typically almost any business that fails in the first year is usually under capitalized due to like hopium, right? Hopes and dreams. Every business is hard. We were having a conversation at lunch the other day with some other business owners. And it was like, what always fascinates me too is it’s all the same shit. Right? It’s like revenues, minus expenses, equals profit. But every industry has-

Jason Buck:

Revenues minus expenses equals profit. But every industry has this moat around it, where they have specific nomenclature that tries to keep everybody out. In commercial real estate, we talk about cap rates. In other businesses, it’s IRR versus ROI, or whatever. Every one has different things, but at the end of the day, business is hard, it’s a struggle, and everybody’s doing the same thing. There’s not too many terribly moving parts to the overall, like I said, revenues minus expenses equals profits. That’s just one way of looking at it, and then you looked up which ones you were looking for.

Jason Buck:

The other thing I thought would be interesting to talk to you about while I was sitting on the plane, in my head, I was thinking, “What would people want to hear from Corey?”. Before I get to that though, as I lead the witness here, is when we started Pirates of Finance show, do you feel like that’s starting an entrepreneur business? Or, do you think that’s a media arm of what you’re already doing at Newfound Research?

Corey Hoffstein:

You know those people that call everything a call option, and you hate them?

Jason Buck:

You know I hate when everybody uses options to describe everything in life.

Corey Hoffstein:

“Pirates of Finance was a call option.” I looked at it more as continuing to extend an experiment in media. You and I have had a lot of discussions. I think we’re in an era where personal brand is incredibly valuable, and I think personal brand is incredibly valuable within asset management. Even though I have a really strong emphasis on systematic and quantitative approaches, when you look at major systematic firms, there’s typically a figurehead. It’s because people like people. For me, it’s important that Newfound has a figurehead. For many years, I was reluctant to play that role. I eventually decided to step into it. You and I, I think, both agreed that there was a large lack of sophisticated, I’m going to use sophisticated in quotes here, for anyone who’s just listening. I don’t know if I’d call what we do sophisticated. But, especially coming out of 2020, there was a huge amount of content going on YouTube that, I think you and I both watched and said, “This is really doing a disservice to people. It’s not thoughtful. It is encouraging potentially very bad behavior.”

Corey Hoffstein:

We thought there was an opportunity to do something, particularly on YouTube, and maybe experiment with other things, like Instagram and TikTok eventually, to put some more thoughtful media out there, from the finance space. We’ll see if it resonates.

Corey Hoffstein:

We made a big pivot. We did the original Pirates of Finance show for, I think, 22 episodes, where we had to come up with a topic every week, and we did more of a deep dive, and it was heavily edited. I will say, I don’t think we got the traction we were hoping for. It was an experiment that, for lots of reasons, maybe it didn’t work. You and I didn’t do a ton to promote it. We did a lot of work on it, and this has, I think, probably been the big failure of my entire career. I do a lot of work on something, and I get it out the door, and I just forget about it, versus, we should have maybe spent more time promoting it, or hired someone to promote it. We’ll see if this new format works. I think there’s a core audience that seems to enjoy what we do, but I don’t know if it’s necessarily YouTube as a whole.

Jason Buck:

Yeah, well I think, you and I talked about it too, we probably needed to put two to three years into just consistently putting out episodes. But, that was such a heavy lift, especially on your side, as far as doing the more content-centric show like that. By the way, have you, it just popped into my head, have you used any of those skills you learned in editing for that show? You taught yourself editing, and you edited all those shows. Since we stopped doing that, have you used it for anything since then?

Corey Hoffstein:

Not a thing. This is how it goes with me, though.

Jason Buck:

Yeah.

Corey Hoffstein:

I think you know, I’m a bit of a control freak.

Jason Buck:

You think?

Corey Hoffstein:

My first season of the podcast that I did five years ago or whatever, I sort of did the first round of editing, and then I ended up hiring a fantastic editor. Shout out to Matthew Passy, who is an unbelievable editor, who now edits everything for me. I need to go through that process of learning it myself, and this is probably a big flaw of mine. I need to learn something myself to understand how difficult it is, to then really value someone else doing it. And go, I know I should pay you, and I know what good quality looks like because I’ve tried this and I know how hard it is.

Corey Hoffstein:

Now of course, everything’s hard when you first start. But after 22 episodes, I knew how long it would take for me to edit something, so I knew if we were going to hire someone to do that type of editing, the type of knowledge they’d need, both from a finance perspective as well as an editing perspective.

Jason Buck:

We talked about that a bunch of times. I don’t think it’s anytime wasted when you’re teaching yourself that because then you have a context, or framework, for hiring people and like you said, to know who you want to pay for that. More importantly, a lot of times you’ll fire a lot of people trying to find that good one, so you’re wasting time and money if you don’t know exactly what you’re looking for and you knew exactly what you were looking for. For those that don’t know, that’s a hidden gem there, Matthew Passy, is probably the editor of any finance podcast you love.

Corey Hoffstein:

Every finance podcast out there. I think he does Patrick’s, mine, yours, Brewster’s.

Jason Buck:

He doesn’t do ours.

Corey Hoffstein:

He doesn’t do yours?

Jason Buck:

He does Brewster’s, Yinh Hinh’s. Who else?

Corey Hoffstein:

He does Michael Batnick’s.

Jason Buck:

Yeah.

Corey Hoffstein:

He is the man pulling the strings behind the entire finance podcast scene.

Jason Buck:

That’s amazing. The other thing I thought that would be fun to talk about, because what I think happens a lot is, you and I are just jumping into conversation. I think when you have your own podcast, but we rarely hear about Corey. If we do, it’s usually about a paper you’ve written, whether it’s return stacking, or rebalancing timing lock, but we don’t hear too much about your bio.

Corey Hoffstein:

That’s on purpose.

Jason Buck:

I know it’s on purpose, so I’ll make you uncomfortable. As you’ve learned, I’m actually a fairly private person. I’m going to turn the tables on you a little bit. When you originally went to school you went to Rochester Institute of Technology, correct?

Corey Hoffstein:

Yeah, I went there my freshman year.

Jason Buck:

When you went there, all bright-eyed and bushy-tailed, was it 18 year old, or 17 year old, or 16? Did you skip grades?

Corey Hoffstein:

No, I showed up at 18.

Jason Buck:

What did you think you were going to study? What was your grand plans in life at 18?

Corey Hoffstein:

I had taught myself to program when I was 12, I think, because I wanted to make video games. In high school, I actually on the weekend, I went to a private high school in New England but I wasn’t a boarding student, I was a day student, and I lived 45 minutes from school and my friends were all over Massachusetts. Actually when I was too young to have a car, I couldn’t go see them on the weekends, so I would spend Friday nights, basically coding and on AOL Instant Messenger. I taught myself how to program video games. I programed video games for the Game Boy Advance and actually had like these cartridges that I would flash ROMs onto that I built, and I would play them on my Game Boy. By my senior year wrote my own scripting language and 3D game engine as a senior project. Yeah, I really thought I was going to go on and make games for a living.

Corey Hoffstein:

Then I got to college, and did my first sort of official computer science classes and realized I didn’t particularly like my classmates, nor did I particularly care all that much about the classwork. It became very apparent to me that this was not something I wanted to spend the rest of my life doing.

Jason Buck:

Well one, I don’t think I ever told you when I was in middle school in Michigan, my best friend left and went to Deerfield Academy, in central or western Massachusetts near Amherst I think, if I remember correctly. I wanted to go so badly, I was begging my parents to go there and everything and never ended up going. Of course, I ended up at like the IMG Academy at a Sports Academy for my senior year, but that’s nowhere near the Deerfield Academy.

Jason Buck:

I wonder, when you said you started to teach yourself at 12, you were playing games on your Game Boy, I think about when I first went to university, I studied international business. Just being an entrepreneur since I was a little kid and being around both my parents are fairly entrepreneurial as well, just like your dad is. The international business classes were super easy for me, so I was bored there. Then my other passion is comparative religions and world religions and mysticism. But like you said, I was almost bored as well, so I just started at the 400 level classes in my freshman and sophomore year. And they’re like, “You need to go back and take the electives” and I was like, I already knew more than my teachers on the basics of Buddhism because my dad was a Buddhist his whole life, and I was bored to tears out of my mind. So, you’re bored that freshman year, was it because you felt all that self-taught nature, were you just ahead of everybody else?

Corey Hoffstein:

I don’t know if that was necessarily it. I was put into some of the advanced courses because I also took the AP credits. So it wasn’t necessarily that I was more advanced because I was self taught. When you’re self taught, you don’t get all the formal side of things. I think there’s also this big difference between programming, software engineering, and computer science. And the thing I would stress for people who don’t know the difference, is that computer science as a degree can be done without ever programming. Computer science is a very theoretical concept and more or less is about algorithms and can be done with pen and paper.

Corey Hoffstein:

Software engineering is about the practice of being an engineer and how to develop software, which is a skill set. Managing tens to hundreds of thousands of lines of code is nontrivial. Developing these projects is nontrivial. The same way you might have a physicist versus an engineer, you can have sort of a computer scientist, who’s going to think about algorithms and run times and computer structure, and then you can have a software engineer, who’s going to take many of those ideas and actually build the building. And then programming is the skillset by which that building gets built, but it’s just a skillset.

Corey Hoffstein:

So me learning programming was not really computer science. I wouldn’t say I was ahead, a lot of the things I had self taught and learned. Yes, I had learned some of the algorithms that we were eventually taught in computer science, but not formally. I don’t know if I was necessarily ahead. This is sort of arrogant to say, I did not find Rochester challenging as a school. I did end up transferring out and went to Cornell. I knew within about a month that I needed to leave Rochester, it wasn’t the school for me. I think ultimately what it was is I went through the computer science degree and said, “This just isn’t what I’m particularly interested in spending the rest of my life on”.

Jason Buck:

So, what appealed to you about Cornell?

Corey Hoffstein:

Well, that’s a good question because I actually went to visit it prior to going Rochester and I hated it. My mom always thought I would go to Cornell and I went there and I was like, “This is not the school for me”.

Jason Buck:

For our international listeners it’s about the coldest place and I grew up in frigid Michigan and the upstate New York, the wind just whips through there. It’s like negative 20 degree wind chill in the wintertime.

Corey Hoffstein:

I think Rochester was worse though. Going from Rochester to Cornell, wasn’t that bad from a weather perspective. I originally wanted to go to Brown, actually. I think the only two places I applied were Brown and Cornell. I had a bunch of friends at Brown. I was going to stay in computer science, even though I knew I didn’t want to spend my life making video games, I still liked programming and some of the aspects of computer science. So I knew I was going to stay in computer science. Cornell has a fantastic computer science program. Brown, I thought had some really interesting electives, ability to design your own degree that I really liked.

Jason Buck:

Did I tell you my sister did her undergrad at Brown? The other thing Brown known for is you can, speaking of electives, you can elect to not get grades at Brown.

Corey Hoffstein:

Yeah.

Jason Buck:

That doesn’t seem like you’re MO though.

Corey Hoffstein:

No, but I had a bunch of friends there who really liked it. I was just looking for somewhere to go and ended up getting wait listed at Brown and accepted at Cornell. That was sort of that.

Jason Buck:

But you said you continued along in computer science, even though that wasn’t what you necessarily like. So, you get your degree and then did you go out and work before you went to postgraduate?

Corey Hoffstein:

No. So I graduated in 2009, spring 2009. For those listening, I’m sure will remember that was not a great time period for jobs. I remember sitting in our graduation and whoever was doing the whole speech was saying how great it was that, something like a quarter of the class had jobs coming out of graduation and how proud they were. Cornell’s a pretty good school. You would expect more than 25% of the students to have jobs, but it was just a horrible, horrible economy.

Corey Hoffstein:

During Cornell, I really found a passion in finance, particularly quantitative finance. I loved this sort of application of the things I was learning in computer science to the field of finance and found all these financial engineering degrees. Said it was sort of for me. Carnegie Mellon at the time was the top program, their computational finance program. I applied and ended up getting in. I went right out of undergrad, right into grad school to Carnegie Mellon. I knew myself, that if I didn’t stay in school, I was never going back.

Jason Buck:

Oh, that’s a good point. Yeah. It’s tough. It’s tough to go back. But also, I took time off and went back as well, but it was great to have some life experience go back in adult because I took it much more seriously. I knew why I was there instead of just going to check boxes, but I was just thinking, you just touched on all the beautiful places in America from Rochester, to Ithaca, to Pittsburgh. But I’m curious, what kind of student were at, even at Cornell? Were you just extremely studious, and then just go balls to the wall on the weekends? I’m just curious what, what young Corey Hoffstein was like.

Corey Hoffstein:

No Corey Hoffstein was studious, but not to the point of, I never needed to get all A’s. I was sort of someone who wanted to learn for myself and if I didn’t care about a topic, it was really hard for me to put the time and effort in. I never got bad grades, but if I didn’t care about something, I was a B, B+ student. And if I cared about something, I was an A, A- student. I was never going all the way to A+, but that’s sort of where I lived.

Jason Buck:

At your prep school, you played lacrosse. Did you try to ever think about walking on Cornell’s team or anything and doing any of that or playing club?

Corey Hoffstein:

No. I thought about walking on at Rochester. Ultimately ended up playing club and then I got to Cornell and was like, “These kids are really damn good”. At that time, Cornell had probably one of the best teams in the country. I don’t know if that’s true anymore, but they had a really phenomenal team and they were just at another level. Even though I went to a prep school in new England playing lacrosse, the division we were in was not a sports division. I played varsity my freshman year in high school, which never would’ve happened at a real New England sports prep school. I was not the best lacrosse player, despite the fact that I was captain on my team. So going to college and going to Cornell, I was like, this isn’t going to happen. I actually ended up playing rugby for a bit, which was pretty fun.

Jason Buck:

Wow. So when you think about all those memes about like Chad lax bros from New England, do you take offense to any of that? Because you’re almost like the opposite of that mentally, but then obviously physically you did that as well.

Corey Hoffstein:

No, that was 100% me. In high school I had double popped collars, I had a lanyard, we hung out on the quad and threw lacrosse balls around. I had a hat and like the curliest hair sticking out of my hat. It was just like, lax bro lettuce everywhere. I don’t take offense, that was a 100% who I was. My entire identity.

Jason Buck:

Then coming out of Carnegie Mellon then, why didn’t you end up on Wall Street because that would’ve been like the pure path for you, right? You were checking all of those boxes.

Corey Hoffstein:

So it turns out Wall Street wasn’t really hiring at that time.

Jason Buck:

Cornell graduated in 2009. When did you graduate from Carney Mellon?

Corey Hoffstein:

December, 2010. So it’s not true. They were hiring, I’m sort of making a joke there. But a lot of those derivatives desks were dismantled. A lot of my friends who did go work at Wall Street, ended up finding themselves out of jobs within two or three years because internal hedge fund desks were getting spun out and couldn’t necessarily take them with them. So a lot of the jobs that my degree had prepared us for, which were sales and trading jobs specifically related to complex derivative structuring, just sort of disappeared from the banks. And if you actually look at these programs now, they’re much more buy-side focused. There’s a lot more machine learning and portfolio construction and factor analysis. I think a lot more people would end up working at something like an AQR than they would a JP Morgan or Deutsche Bank.

Jason Buck:

Well isn’t that Dodd-Frank or the Volcker Rule where basically they’d get rid of all their projects.

Corey Hoffstein:

Exactly. That was happening while I was in grad school. Doesn’t mean the banks weren’t hiring because they still need quants in a lot of roles. It was just the demand had gone down and the roles got a lot less interesting. But the real reason that I didn’t end up going to work on Wall Street was because when I was undergrad, that’s when I actually started Newfound. Newfound Research was named Newfound Research because I had built some quantitative models that I got introduced to a local asset manager in Boston through one of my internships. He liked the models that I was running. I ended up licensing him signals from the quantitative models. I named Newfound Research after a lake in New Hampshire that my family used to have a cabin on, and I called it Research because we were providing research and honestly I thought maybe I’d get beer money.

Corey Hoffstein:

The guy basically wasn’t running any assets on it and said if I raise any money, I’ll pay in these things called basis points. I had no idea what a basis point was, but by the time I got out of grad school, he had raised over a billion dollars using the research. So I had a company that all of a sudden had a bunch of free cash flow. And I said well, this is as good as time as any to try an entrepreneurial venture because it’s already bootstrapped and worst case scenario, I can always fall back and work on Wall Street.

Jason Buck:

What do you think now? The name Newfound Research.

Corey Hoffstein:

Everyone thinks we do research, which we did. So it’s not wrong, but I was at a conference once and someone said, “Well, if your name’s Newfound Research, why are you an asset manager?” I said, “Have you ever heard of research affiliates? Have you ever heard of applied quantitative research, AQR?” Like what do you mean I can’t have the name Research. But yeah, I probably should change the name.

Jason Buck:

Or even call it like Research Lab or Newfound Labs or something.

Corey Hoffstein:

Or Newfound Management, I don’t know.

Jason Buck:

I can’t imagine what I would name something as an undergrad and then having to stick with it all these years later, I would be like…

Corey Hoffstein:

Yeah, people ask me where did Newfound come from? I’m like, it came from the fact that I thought I’d be out of business in three months and I just named after a lake. There was no thought, I was 18. Or I guess at that point I was 20. You never know how these things are going to stick with you.

Jason Buck:

So it’s interesting to talk about licensing now because you and I have been talking about licensing stuff again recently. For anybody that maybe is thinking about licensing, what lessons have you learned or what would you do differently with doing any sort of licensing deal in the future?

Corey Hoffstein:

Well, I should be really clear, the licensing deal I did was not a full strategy. I think research affiliates really helped pioneer the model of you build investment strategies and then license the index of that strategy out and you sort of serve as an index provider or sub-adviser.

Corey Hoffstein:

I think it’s a brilliant business model if you can pull it off because it’s so asset light. It’s personnel heavy, but you’re not having to manage the compliance of funds. You’re not having to do all the regulator overhead. You don’t have to hire the sales teams, necessarily. You probably need product specialists that can go out. If all my product is being run by Invesco via ETFs and mutual funds, it’s their wholesalers that are out selling. I don’t need key accounts or any of that stuff. It’s really just at that point, a marketing game, which is, in this industry, focused very much on publishing thoughtful research, which is what they’re doing anyway. If you can pull off that business model, it’s brilliant. The problem is, people caught onto that business model and the fees you can charge now are very thin. I think research affiliates probably in some of the ETFs that they manage, are getting single digit basis points and are happy about it.

Jason Buck:

Or is part of the issue, like you talked about earlier, about trying to get on platforms and everything, let’s say you do get all that on, it’s almost like being on Amazon, you have no control over it. So you could just get kicked off the platform and lose all of your AUM and dips almost all the time.

Corey Hoffstein:

And you can get fired, right? You sort of asked the question, for example, like why does BlackRock continue to pay MSCI? Why don’t they launch their own indices and have their ETFs track their own indices? That’s sort of out of your control in many ways. And you can’t force the product advisor to lock in with your index for fiduciary reasons, so they always have the ability to fire you. They might have to change the name of the product, because they’re licensing some part of the product name from you, but that’s not really a big deal.

Corey Hoffstein:

The other side is that you lose control of the sales. I used to sub-advise for a fund company and when they’re not your sales people, you cannot force them to sell your product. My experience is most wholesalers in the asset management business, carry three products around at any time. It’s like a fixed income product, an equity product and maybe an alternatives product, and it’s whatever’s performing really well. So if you’re a sub-advisor at a fund company that’s got 40 funds, the only chance you really have at selling is if your brand is good enough to sell, or you have really hot performance. Other than that, the sales people are just going to ignore you and you are really prohibited from going out and selling that product on your own.

Jason Buck:

It jumped in my head too, he’s never going to watch this because he is living the dream, but Chris Abdo Macia also went to Cornell. Do you guys ever talk about Cornell stories, even though Chris is a little bit older than you are?

Corey Hoffstein:

Never. I try to avoid mentioning I ever went to Cornell because it’s like.

Corey Hoffstein:

Never. I try to avoid mentioning I ever went to Cornell because it’s like, who’s the guy in The Office that always talks about he went to Cornell?

Jason Buck:

I don’t know. But it’s like Harvard, right? You find out in the first five minutes if somebody went to Harvard because they’re always telling you, right? [inaudible 00:48:14].

Corey Hoffstein:

Cornell is just like, they had a great engineering program, but they’re like the runt of the Ivy Leagues. I don’t know. I’m not one of those people that takes like great pride in the schools I went to. I know people love their schools. I’m not a school pride person. It doesn’t define me and nor do I think you should be proud about something that you did, I don’t know, what’s that coming up on, 20 years ago in my life. Who cares anymore?

Jason Buck:

Right. I would think part of it is you either go to a state school that has amazing athletics and people get really into that. And that’s what they carry on for like the rest of their life is almost that passion for athletics. Or you go to an Ivy League school, like you did, and then people love telling people they went to an Ivy League school. But like you said, who cares? It was 20 years ago. Are you carrying around your CV?

Corey Hoffstein:

Yeah. Again, if I’m still talking about stuff I did 20 years ago it means I haven’t done anything interesting in the last 20 years. I don’t know. I would hope you’ve grown as a person and have accomplished more interesting things in your life that that’s not what you want to talk about anymore.

Jason Buck:

So before we move on from the initial licensing business and Newfound Research, what actually were the models you were developing as an undergrad? Why were they so interesting and why did other people find them interesting?

Corey Hoffstein:

Yeah. So at the time what I was working on, to make a very long story short, is I had developed some dynamic trend models that I was running on US sector ETFs. And the gentleman who saw what I was working on really keyed in on the idea that the portfolios I was trying to build had the ability to go to cash. So I was using these dynamic trend models on US sector ETFs to then build portfolios that could be up to a hundred percent cash. And this was during the 2007, 2008 period. So during 2008, for example, my models had said, hey, get entirely out of financials and all that sort of stuff. Stay long energy until about midsummer 2008. And then for all a Q4 2008, Q1 2009, all the signals were in cash. And that was a very unique proposition at that time, sort of an equity strategy that could go a hundred percent to cash.

Corey Hoffstein:

And again, it was just trend following. Sort of a dynamic approach and a unique approach to trend following, but it was more or less trend following. And it was very early on in the era of ETF strategists. So this is something that came out of the 2008 period. Technology platforms enabled unified managed accounts, UMAs. And so what this basically allowed is asset managers could put their portfolios up on technology platforms like Envestnet and advisors could subscribe clients to those portfolios as just a sleeve within a client account. And then it could be managed in that client account by the asset manager without the asset manager ever having to execute any trades because the trades were executed by Envestnet. And so you had this all of a sudden very scalable distribution system, massive adoption of ETFs. ETF strategists became huge post-2008 because a lot of the ETF strategists were tactical.

Corey Hoffstein:

And so just as a category this whole thing took off. Windward out of Boston got bought by Schwab, later became known as Windhaven. You had Good Harbor out of Chicago. You had Riverfront out of, I think they’re out of Virginia. You just had these firms raise tens of billions of dollars over this period because after 2008 everyone was looking for something that could protect their portfolio. Because I think we all look back now and say it was a 10 year bull market, but 2010 you had, was a Greek debt crisis, Euro. We were not out of the woods. Everyone was still very concerned about markets.

Jason Buck:

Yeah. Actually we were talking about this last week is that March 2020, it’s such a V-shaped recovery. Unless you were around for like 2008, 2009, unless you really felt that pain, it felt like the world was ending. Where we haven’t seen anything since then, and people that have come to market since then have no idea what real pain is like. And you’re like, is the market ever going to come back? Is this done forever? And especially that’s in our formative years, it’s just like, you said, and managed to go through a 10 year bull market after that. But there was no signs that was going to happen, right? Everybody was in just pure desperation mode.

Corey Hoffstein:

And I will also say, it can be very formative in your career, but you don’t relive the same experience. Going through that in 2008, I was in the industry and I had money invested. My parents always encouraged us to invest from a very young age, but how much money can you really save when you’re making $5 an hour sweeping floors in a grocery market? Yeah, I had money in the market and I lost a tremendous amount, but in the grand scheme of things it was less than one year’s salary that I would’ve made at a bank. So you don’t feel the same pain versus today, right? The market’s down 10, 15, 20%. And I go, wow, all of that accumulated money that I’ve saved and invested over the last 14 years, losing 20% of that, 15% of that is all of a sudden a much larger number. Not to mention the fact that I own 50% of my business, and an asset management business is basically levered equity exposure, right? And so it’s like, great. And on a private side, I’m also taking a big write down when the market goes down. You feel it a lot more and you can see why people get panicky when they get older because that dollar number gets a lot bigger.

Jason Buck:

But like year to date down 17%, like you said, that is still incredibly painful and that dollar amount’s a lot more. But do you feel this is anywhere near what 2008 was like?

Corey Hoffstein:

No. No.

Jason Buck:

That’s what I’m saying.

Corey Hoffstein:

No, no, no, not even close. 2008 was like the entire financial system is breaking. We’re going into the depression, right? And we have to remember that at the time you had central banks and governments writing a brand new playbook. What got unveiled in March 2020 in two or three weeks took governments two years to make in 2007 through 2009. The reason March 2020 was such a fast snap back was because the playbook was there. Imagine having March 2020 without 2008 and having to invent this stuff during the COVID crisis. I don’t think it would’ve gone nearly as well for financial markets.

Jason Buck:

Going back to you’re licensing these models and everything in 2010, and obviously you don’t have full control. When did you decide to go out on your own and what was your initial thoughts for taking back Newfound Research and making your own business out of it?

Corey Hoffstein:

Yeah, this is where the story gets a little weird and I don’t really talk about this very often.

Jason Buck:

I was trying to skip over it for you.

Corey Hoffstein:

No, you can’t really, you can’t skip over it unfortunately. So my first client, so for several years I did try to do a repeat of my first client with varied success. We tried to stay in the research side. I got more and more involved with the portfolio construction. I would work with large RIA groups or mutual fund companies that were trying to repurpose funds. And we would redesign tactical strategies. Ultimately, it was a horrible business model because even though I charged basis points, I would do all this upfront work in building the relationship, all this upfront work in designing portfolios. The portfolios would go live, and if there was even a single misstep everyone would just lose faith and the product would just sort of go nowhere. I never got the buy in. And it was just, from that perspective, it was a bad business model for me. I should have charged money up front to force them to really invest in making the products work.

Corey Hoffstein:

But what eventually happened was in, let’s say 2012, late 2012, early 2013, I guess August 2013, the SEC investigated my first client. Going in for a routine audit and then ultimately ended up investigating them because that client had started promoting having a live track record going back to the early 2000s based on the signals that I had given them, which clearly were not live because in the early 2000s I was 13. And so what ended up happening was a lengthy SEC investigation that I was heavily involved in. I ended up in, I think it was 2017, ended up being a witness for the SEC and having to take the stand against the CEO of the business. And this was a business that had gotten up in 2013 to about 10 billion dollars and then was so convincing at telling people that it wasn’t their fault, that my firm was the source of the fraud, that they ended up getting to about 25 billion before they admitted wrongdoing in late 2014, I guess, December 2014.

Corey Hoffstein:

So not a great period of my life, candidly. I had a lot of the industry turn against me. I got blackballed from events. We got thrown off platforms. I’m still not allowed on Ameriprise with any of my funds despite the fact that the SEC found no wrongdoing on my part. I have a lot of people that seem to assume I was the whistle blower in this. I will point out that if I was the whistle blower, I would’ve made so much money I would no longer be working. I was not the whistle blower. So the choice I had at that point was my reputation was getting dragged through the mud. I had this huge SEC situation going on. This firm was a hundred plus people. My firm was five people. My business partner and I discussed just shutting things down and moving on with our lives because it wasn’t worth the pain. And I said, no, the SEC will ultimately tell the real truth. I’m just going to plant my flag in the ground.

Corey Hoffstein:

And that’s when we started writing the blog much more proactively. I just wanted to get our name out there and say like, hey, there’s intellectual horsepower here and this is where the research is coming from. And we ultimately knew that there would be a lot of money in motion. And so the opportunity for us was to launch funds and models that allowed us to capture that 25 billion dollars that was ultimately going to be looking for a new home. And since we were in many ways, the original research driving those investment strategies, I thought we would be a very appropriate home. We were for some of the money, but I think what I miscalculated was that an SEC investigation is going to drag out for years. And that there’s really no good reason for a platform, if it sort of were in a he said, she said situation, there’s no reason for any platforms to take risk on us, right?

Jason Buck:

Yeah. Once you have that taint, it’s like, why bother? There’s so many other places to go.

Corey Hoffstein:

There’s so many other options in the industry. We are, as asset managers, largely fungible. And so a lot of them said, look, we get that we can get it from you. We understand your side of the story, but we’re going to just wait for this to play out. And it took years to play out. And so in those years, I had to sort of sit there and try to explain my side of the story for what probably felt like two or three years of my life.

Jason Buck:

I can imagine the pain of all that. And it feels like the world’s ending. And you don’t have really much context to work through it. And it’s a lot easier to talk about now. But it’s like Adam Smith, the vivacity of impressions. It probably feels almost like you’re telling somebody else’s story. That you can’t necessarily put yourself there. In that sense where you can’t get back. But what I’ve also learned too is what might be more painful is when you learn who your friends are, right? It’s amazing, once you had the SEC, people didn’t even bother to check if you were involved, how you were involved. They were just like, like you’re saying, asset managers are fungible. I assume you had people that you thought were close friends that then were like not returning your calls.

Corey Hoffstein:

I had people who said they would stick up for me in certain situations that just completely abandoned me. Yeah, I have a little black book of people who just very candidly did not show up when I needed them to show up. And that’s not to say I’ll do anything about it. I just won’t forget, right? And again, in many ways I don’t blame people. If I was in the same situation, I don’t know whether I would stick my neck out for a risk that really doesn’t pay off, right? Why would you, again when we’re mostly fungible as asset managers, why would you stick your neck out for someone where the story hasn’t been told? The SEC hasn’t finished their investigation. I get it. Doesn’t make it any less frustrating from my perspective. And the other side of it, I will say, is we made a decision as a firm that we were not going to be very vocal and public during that period. There’s no one I’m really afraid of. I am afraid of regulators.

Jason Buck:

Right.

Corey Hoffstein:

If you are not afraid of regulators it’s because you haven’t dealt with regulators. They make the rules. They really do. And there’s no fighting regulators. If they want to find something wrong, they will find something wrong. So to me, to go out in the press and try to defend ourselves was only going to draw more ire from regulators. I just wanted to be as cooperative as I could reasonably be because again, we were not at fault and just let it play out. I never expected it would play out as long as it did. I will say then the final icing on the cake is this company eventually went bankrupt in 2015. And I think it was two years later, right as the statute of limitations was coming up, the bankrupt entity then sued me and my business partner.

Corey Hoffstein:

We had filed a very large claim because this firm, when they got investigated by the SEC, stopped paying us. And so we had accrued well over a year of payments. So when they went out of business, there was a chunk of money that was on the balance sheet that we put in probably the largest claim for of anyone who was a claimant. And then of course the job of going through bankruptcy is to try to knock the claimants out. And so they then sued us, which took two plus years to sort of deal with. And again, anyone who hasn’t been sued, I often hear, well, why don’t you just take it to court? Why would you settle? If you’ve never been sued, you don’t know the process. It is again, now I need to disclose on every due diligence questionnaire I have been sued personally, right? Or I’m in the middle of a lawsuit. Why would any platform let me on if I’m in the middle of a lawsuit, right?

Corey Hoffstein:

And then it drags out for years. Nobody wins in a lawsuit. Even when you win at the end of the day, you’ve lost because it takes years. I will point out that company went bankrupt in 2015. It is 2017, and the money from the bankruptcy has not been paid out to claimants yet. People who have not dealt with the court system do not understand how long it takes for these things to play out. And if you decide you’re going to defend yourself in the courts, you can side track your career for years with this stuff.

Jason Buck:

Yeah. Like you said, a lot of life is either leverage or recourse. And when you’re dealing with regulators or courts, you have none. And so it’s a terrible-

Corey Hoffstein:

Yeah.

Jason Buck:

I think about it too. I think it was the comedian Bret Kreischer. He was talking to his manager and was like, “Papa, do you want to be somebody that sues or do you want to be somebody that works in this business?” Because you can’t be both, right? Just caught up in courts for a long time.

Corey Hoffstein:

I remember my first experience with the SEC, I was 25. I got subpoenaed, right? Because that’s how they do this, they send you a subpoena and you have to show up at the regulators. And I went to downtown Boston and I’m sitting there with my lawyers. I had two lawyers with me and across were, I don’t know, I think it was like 11 to 13 agents from the SEC who spent the next pretty much all day just asking me questions that were going on a transcript. And again, I was 25. Trying to prepare for that stuff when you’re 25 is not easy. And it’s interesting because you learn all these things. You want to be cooperative, but you want to give the shortest answers possible, right?

Corey Hoffstein:

It’s tough. I took the stand when I was 30 and getting cross-examined in front of a jury is not something I ever thought I would do. And you see all these tricks, the lawyers try to play. At one point, the defendant’s lawyer who was cross examining me was just screaming at me. And I think what he was trying to do was get me emotional. And I was like, these are just crazy, ridiculous tricks. And it was a very, I don’t know, interesting experience for me as a person. A little bit out of body to be like, where am I? How did I get here in life? And all of this, by the way, is just a complete distraction from the asset management business I’m trying to run.

Jason Buck:

Yeah, can you even run one in that? It’s so distracting that you almost can’t. And then like you said, you have the taint against you. But then I would assume, I’m just guessing, your dad and your parents, both your mom and dad were just hopefully incredibly supportive throughout that. Your dad has a lot of experience. I don’t know if he had experience on that part of this business.

Corey Hoffstein:

Yeah, so as an entrepreneur, he had been sued. As supportive as you can imagine two parents would be that believed that their son had done nothing wrong, right? The part of the story I didn’t tell is that I met my wife, going back to school. I met my wife pretty much the first week of my freshman year at Rochester. And I think somewhat fortunately she was living in Los Angeles when I was going through this. I think I went to a pretty dark bad place that I’m glad she was not there to witness because it’s just sort of depressing when you’re waking up every day, wondering what’s going to come out in the news or what you’re going to hear from next, what rumors are going out, what the SEC wants from you.

Corey Hoffstein:

I remember they asked us to turn over all of our documents, that’s what the subpoena says. And our lawyers said for us to filter through all of these emails was going to cost well over a million dollars for them to fulfill what the SEC wanted. And so my business partner and I then had to spend like four hours a day for a month and a half going through emails and sorting them for the SEC, knowing by the way that if we miscategorized or missorted things the SEC was going to be very mad at us. So I have all this experience of this arguably traumatic event in my life, and I’ll say two things about it. One, I don’t know how any of this experience helps me going forward. This isn’t like, oh, you have some great experience than you’re better for it. I don’t know if I’m worse off for it, right?

Jason Buck:

But this goes full circle because you’re an entrepreneur, right? This is what I’m going to say is I think doesn’t Jeff Bezos own like Relentless.com and it goes back to Amazon because that’s what he originally wanted to call the company. I think even Rob Dyrdek has relentless tattooed on his arm. But another word for me is resiliency, right? Like relentless resiliency. And that resiliency is that you built up that armor for entrepreneurship. Granted each new thing that gets thrown at is almost dramatically different so it doesn’t help. But you know internally though the internal fortitude that you know you can make it through it.

Corey Hoffstein:

Yeah. I will definitely say you do earn that mindset. And maybe that’s where part of that mindset we talked about earlier comes from just doing one incremental thing a day of being like that was a huge portion of my life that got eaten up with that that I saw through to the other side. And I just learned the days go on, time marches forward. But the other part of it for me though, and this is going to sound really weird, is I’m somewhat grateful for the whole experience. It’s hard for me to not look back and say, okay, I started this thing in undergrad. I happened to meet this person who then took some stuff that I did. Ultimately sort of the business he built was built on a foundation of lies and fraud. And yet through that, it established cashflow to my company that I was able to build my firm and get introduced to an entire industry.

Corey Hoffstein:

And then through the lawsuits, everyone learned who I was and it gave me the catalyst to want to step forward and say, no, this is who I am and really build my own brand. Again, it’s hard in a weird way for me not to be grateful for that experience in hindsight. Certainly I wouldn’t have said that going through it, but I do think that in many ways it, obviously any traumatic experience you go through shapes who you become. I don’t know. The last point I will add is I think it gave me, as much as a dark place I went to, it gave me a lot of patience. There were a lot of people, hundreds of people worked at that firm, all of whom were told a lie and were spreading lies about me. And I came to fully embrace like the, what is it, Hanlon’s razor, don’t assume malice just assume incompetence. I don’t like the word incompetence, but at this point, I try not to assume the worst of people. I think there’s just a lot of mistakes that get made. And I think it gives me a lot of patience. People often say I’m really patient on Twitter. I think it probably comes from that.

Jason Buck:

Like you said, the subpoena alone and having to go through all those documents would give you immense amount of patience having to do that hour after hour, year after year, month after month. By the way, Hanlon’s razor, we maybe should just say shorten it up to like, don’t assume malice, right? Because it’s not incompetence, right? You don’t know what people’s incentives are. You don’t don’t know what their information is. Just don’t assume malice. You just don’t know what anybody else is thinking. We really don’t have that theory of mind. By the way, I did not think you were going to talk about this at all. So I appreciate. I was just going to avoid it for you, skip to the next part, what I was thinking about.

Corey Hoffstein:

I don’t know, listen, whoever tunes into this podcast is going to be like, oh, they’re going to talk about investments. No. You got something entirely different here.

Jason Buck:

Well, that’s the point of this podcast is I want to really talk to investors, traders, hedge fund managers about everything almost but trading because there’s a lot of interesting stories there that don’t get told because it seems like everybody’s …

Jason Buck:

Interesting stories there that don’t get told, because it seems like everybody’s talking about the same thing. When you put out return stacking, you’re just going to go on every podcast and talk about return stacking. You’re not going to necessarily talk about this in your past. Part of it is, I was also wondering. When you went to start your own firm, I was figuring out the timeline with your wife too, there was missing gaps and I think you’re starting to fill them in for me. Were you young, single Cory, before you started getting sued and dealing with all these SEC issues and living in Boston?

Corey Hoffstein:

No. My wife and I, she was living in LA. I was in Boston. We worked together at the time, trying to think through.

Jason Buck:

You guys met your freshman year, but then she didn’t go to Cornell or Carnegie Mellon with you?

Corey Hoffstein:

No. We were in a long distance relationship.

Jason Buck:

That whole time?

Corey Hoffstein:

We were long distance for a long time. We’re actually really good apart. We spent a lot of time apart. There was one point, I had just this unbelievable lawyer. She was unbelievably talented as a lawyer, so overqualified to be working with me. She was from Wilmer Hale out of Boston. I told her, she was asking me about my girlfriend at the time. I was saying, going through this experience, one of the things that I didn’t know. Was whether the SEC was ultimately going to look at the profits, that Newfound had earned from this as unjustly gotten. Was the profits we earned for our service, going to get clawed back? Which would’ve ultimately bankrupted me. My lawyer, Lori was asking whether I was going to propose to my girlfriend, because we had been together for a long time. I said to her, candidly, until I know this is all over.

Corey Hoffstein:

I’m not going to do anything. I can’t do that to her. There was after I don’t know the fourth or fifth time I was deposed by the SEC. We walk out of the room and she says, “Hold on a second.” She makes me wait outside. And I hear her back inside going, “You need to stop jerking him around, if you are not going to go after him, you need to let him know you’re ruining his life. He can’t get married to his girlfriend.” Long story short, I end up proposing. At that point it was very clear that the SEC was not going to pursue anything against us. They didn’t view our profit as unjustly earned. Because the reality was the research we had given to them, that was being used to run these portfolios. Ran the portfolios and no clients lost money in the portfolios. They did exactly what they said they were going to do.

Corey Hoffstein:

The SEC said, you got paid for the research you provided and you didn’t say it was a live track record. That’s something they fabricated. We were ultimately sort of fine from the view of the SEC. I proposed my girlfriend and it’s all good. Then the last like knife was, they end up scheduling the lawsuit against this ex-CEO. While the company admitted fault, he refused to admit fault. He ended up going to court with the SEC and it ended up getting scheduled for right before my wedding. It must have been a week before, two weeks before my wedding that it ended up getting scheduled. I was like, this would be how it goes and I have to go take the stand a week before my wedding.

Jason Buck:

I think about what I hate when you watch these fraud shows they have on CNBC or whatever. The first thing that happens when somebody’s on a Ponzi scheme, is like you said. They go and claw back those profits from St. Jude Children’s hospital. If Madoff donated $5 million to St. Jude, 15 years ago, the first thing the lawyers do is go and try to claw that back. I’m just like, “Oh my God, that’s horrific.” You’re such a unique scenario. The models are working, the profit’s fine, because the models are working. It’s just falsifying, a live track record? That’s really what it boils down to?

Corey Hoffstein:

What ended up happening in this particular situation was, it was taking a hypothetical backtest and claiming it was a live track record. By the way, that changed over time in the original marketing documents that I still had. It said, “This is backtested and hypothetical.” Then it sort of lost the word backtested over time and just became hypothetical. Then it was like hypothetical based on a live track. It evolved over time. A lot of the questions I got asked were, why didn’t you pick up on this? Well, because it wasn’t my product, my disclosures. I wasn’t going through combing through people’s disclosures. I didn’t even read them.

Jason Buck:

You weren’t even looking at it.

Corey Hoffstein:

This stuff sort of evolved over time and the story got out there that this was a live track recorder going back to 2001, I think. Then the real rub of this is, it was based on a bunch of data I had sent them. But they miscalculated it. They took these trend following models and applied them a week early. If you’ve got trend following signals that you apply a week early, and trend following is normally a lagging strategy. You could imagine the hypothetical back tested performance looks phenomenal.

Corey Hoffstein:

Now the rumor is if you were to do this, what would happen is in the first week it goes live. You would realize if you lined up the old data set in your new data set. That there’s a week gap there because you were looking at the data wrong. It’s if you’re applying everything early, then you have a gap at the very end. What ended up coming out in testimony is that the analyst, who put all this together, actually identified that. And told the CEO way back in 2008, that they had done something wrong. The CEO basically said, “Forget about it.”

Corey Hoffstein:

What I loved about this whole thing, there’s so many little things about this. It was so brazen. He tried to claim that there was a live track record and that somehow that was something that had been come from my firm saying that. Again, I was 13 in 2001. I had other things on my mind other than live track records. Claiming it came from my firm, while at the same time filing ADV’s that said that they had invented the strategy.

Corey Hoffstein:

Going back to the weird nuances of our industry. There’s all these regulatory documents. And if you want to acquire a track record, there’s books and records requirements to acquiring a track record. You can’t just buy someone’s track record. It doesn’t work like that. You have to have all the books and records supporting the track record. And you have to make sure that you acquire the things that will allow you to remain consistent, with that track record going forward. For you to claim that track record. None of which had been done. Again the whole thing was just very weird and brazen and again I suspect what really happened is it just got out of his control. You see the evolution over time. I think it just spiraled out of his control and it got to tens of billions of dollars as an asset management firm. Up to 25 billion. And at that point it was like, I’m just going to try to bully my way through this lie because otherwise it’s the end of my career.

Jason Buck:

That’s what people, I think miss a lot. I think you just nailed it. It’s they think it’s this nefarious mastermind and it’s all these little things that just get out of control. The next thing you know, they’re in too deep. You saw that with Madoff. There’s those shows I was talking about on CNBC. I can’t remember the name of those money shows. But one of them, my favorites was these two women in upstate, South Carolina. That were providing parts for the military and it was a separate invoice with the parts and then the shipping. One day they messed up the shipping invoice and they got paid a thousand dollars instead of a hundred. Then they put it back or whatever. Then one of the husbands had cancer and they’re like, “Oh, we’ll just borrow this, but we’ll pay it back.”

Jason Buck:

Then it always cascades and spirals out of there and it’s always those micro-decisions. Then the next thing they know, they look up and they’re in so deep. They don’t know what to do and that’s been always interesting watching those stories.

Jason Buck:

I think about not necessarily changing the subject, I didn’t realize your wife and you were doing long distance for that long. That’s blowing my mind right now. We’re talking about almost the resiliency and the issues going through the distraction and the SEC. What I’ve always wondered though, is people that get married really young to their high school sweetheart, or people that are devoutly religious. I always wonder if they’re more focused because you’re eliminating a lot of distractions. Do you think that’s fair? I don’t have that experience of dating the same woman since I was a freshman in college. Did you feel that eliminated a lot of distractions for you, so you could focus more?

Corey Hoffstein:

No. We were long distance. We didn’t get married till we were 30, and we were together, but in many ways it caused a lot of other issues. When you’re long distance and again, FaceTime wasn’t around. We’re three hour time difference when I’m in grad school, so I’m going to bed and she’s not, or it just wasn’t easy. Just very candidly, I think anyone who goes through long distance goes through the issue of, you don’t see the person for months on end. We were broke kids who couldn’t afford to fly across the country to see each other. You sort of start to question, what is the game plan to come together here? Particularly when she was going to stay in LA and I had this business that was in Boston. And there was no light at the end of that tunnel. You had to believe that you were going to make it work.

Corey Hoffstein:

I was very fortunate that the business started to be successful and that I could afford to fly and visit her. And she could afford to come visit me. So I don’t know. It’s not easy and I certainly don’t think it made my life easier by getting rid of distractions. Because it just was a whole different emotional thing. I will say, for me personally I do know I’m fairly emotionally muted, perhaps stunted. I don’t have big ebbs and flows. Maybe that just made it easier.

Jason Buck:

There’s one thing you said that always confuse me. You said, you can’t have somebody else’s track record. How does it work with, I’ve never noticed this buying, you can buy an ETF or mutual fund and you can change the strategy. But you still get the old track record. How does that work?

Corey Hoffstein:

You can, and you can’t. You can buy the asset. That is the fund. Then if you’re going to change the strategy materially, that has to get disclosed through the prospectus. And I believe, and I’m not a lawyer. I believe the board needs to approve it and it needs to go through a shareholder vote. If you’re getting rid of major PMs, turnover, all of that’s getting disclosed. If you’re buying an index, if you’re buying an ETF that tracks an index, well the investment methodology’s not changing. You never really get rid of that historical track record of the ETF. But what should be disclosed in any marketing materials and you’ll see it on Morningstar. When there’s a substantial strategy change. Or change in portfolio managers, or anything that investors should be aware of that may lead to meaningfully different performance in the future.

Jason Buck:

I wonder, is it really worth it? We’ve seen friends or colleagues that have bought a mutual fund, kind of dramatically change the strategy. And then you’re going to have attrition anyway. Because you changed the strategy. So is it better to just start from scratch and then to buy into that? Or is there cost savings?

Corey Hoffstein:

There can be cost savings for sure. The other thing to consider and I think this has changed is the platform access. Let’s say there’s a vehicle that’s got 20 million bucks in it, a mutual fund, or an ETF that someone just doesn’t want to run anymore because they can’t make ends meet. You say, “Okay, I get to avoid paying 250,000 dollar plus startup costs.” Maybe half the assets walk out. But the reality is there’s a lot of just lost money out there that sticks around in these things. So you might keep half the assets, that’s good seed money and it’s already on a bunch of platforms. I think things have tightened up to the point where if there’s a significant change of control of the investment vehicle, it probably goes under platform review again.

Corey Hoffstein:

That’s a gamble you can take versus you’re not going to be on the platform anyway. It’s like, I start my own vehicle and it’s pristine and clean. But I’ve got zero assets, I’ve got all the starting costs and I’m available nowhere. Versus I have a product that might be available in a bunch of places. Maybe my story is similar enough. I can try to retain some of those assets and it’s at least available. Maybe I get turned off a couple platforms, but it’s still on more platforms than I would’ve been.

Jason Buck:

I was thinking about, I’m once again surprised that you talked about this. And you and I even though we’re very… [inaudible 01:25:23]

Corey Hoffstein:

I haven’t agreed that you can publish this.

Jason Buck:

That’s true, too. That’s a good point. I told you we probably would never publish this. So that’s a really good point. But it reminds me too, you and I very different, but also similar in a lot of ways. When we found out how similar we are, almost as each week goes by. I was wondering part of that is even though we do these public venues, you and I are actually very private people. Then part of it too, what we also learned is you and I don’t like owing anybody, anything. I wonder how much comes out of that experience, what you just discussed or that’s just always kind of been that way?

Corey Hoffstein:

No, I think that’s always been that way. I think that one’s nature. I don’t think there’s nurture in that one. It’s not that I don’t like owing people things. As we talked about this week, owing people things is part of the social contract. It’s I don’t like when people give me things and I don’t know if I want to continue engaging with them. With me and you it’s, if I pick up coffee or you pick up coffee, who cares? That all comes out in the wash of the relationship. I’m not too concerned about that. I don’t like it when it becomes one sided.

Corey Hoffstein:

Our good friend, Mike Philbrick, has a boat here on Cayman. And he’s been incredibly generous and taking my wife and I out a huge number of times and gas cost is expensive. I keep trying to pay him for the gas and he won’t take the gas. So whenever I can, I try to get his drinks or whatever I can do to try to get him back. Because he’s super generous and he doesn’t really care about the money. On the other hand, I know it can get extremely lopsided and I just like it to come out in the wash. That’s all.

Jason Buck:

It’s like, anybody that owns a boat or a truck, they always get abused. The other one that we found out and I just realized, I owed you a text. I didn’t text you when I got in. From my flight from West Palm when we were flying out. There was these beautiful cumulous clouds that I was taking photos from the plane and like you and I…

Corey Hoffstein:

That’s a good story. Was it Amanda that I send it to?

Jason Buck:

Yeah. Right. When you picked it up, maybe you picked up my girlfriend from the airport. You were like, “Check out these clouds.” And she’s just like, “Oh my God, you two are just too much alike.”

Corey Hoffstein:

I had no idea you were into clouds. I’m not even that into clouds. I just think the clouds around here are beautiful, in a way that you don’t get it in New England.

Jason Buck:

You know what it is. I think there’s a form of where we’re slightly on the spectrum, in the sense that we kind of just don’t have the filter with stuff like that. It’s just like look how beautiful these clouds are. People are like, who’d say that? So hopefully you don’t get a depressed mood and give the go ahead to publish this podcast. But I could obviously keep talking to you for hours. And we probably actually probably will as soon as we hit end here. But I actually don’t want to talk after everything you said, I don’t want to ruin the amazing story that you just told.

Corey Hoffstein:

Yeah, we can leave it there. If I can put like a little bow on it, perhaps. It’s because it is… I don’t want the wrong impression to come across. And I did try to say, this is an experience for me and I don’t talk about it. I would presume 99.9% of people who listen to this podcast have never heard me talk about it. I don’t like talking about it because I don’t want to come across as like a “wow is me story.” In many ways I am incredibly grateful for the experience. Like anything in life. I would hope that you can look back on things that at the time were very bad and find some positive. Because I think otherwise you just sort of get sucked into negativity and there’s a lot of things I learned from it. If I never talk about it again in my life, that’s okay with me.

Jason Buck:

Maybe that’s why you should publish this podcast because then you won’t have to talk about it again, because it’ll be out there in the public domain. And maybe I just scared you by saying out there in the public domain. But this is what I’m saying though, these are the things that matter. You know us bullshitting about where bonds are going to go, or this draw down for bonds or talking about duration. And should you go shorter duration, longer duration? Who cares? These personal stories and the resiliency in the relentlessness that you showed. Like I said, what’s getting, you’re an entrepreneur. It’s like, these are the stories that matter to me.

Jason Buck:

And I’ve been thinking in my head so many times during this… Shout-out to our mutual friend, Darren Johnson. Darren’s going to love this podcast if it ever gets published because he loves these kinds of stories. And he really wished we talked about this stuff more. It’s like, if Darren’s our target avatar, I think this is like the perfect podcast because I think everybody out there that’s either a trader or investor, entrepreneur, intrapreneur. These are the struggles they go through.

Jason Buck:

And I always say, “I think that being entrepreneur is a very lonely process. It’s a very lonely existence.” And you said your wife, my girlfriend, they’re both entrepreneurs. And I think that really helps out. When you’re in that those dark moments to know somebody else that has gone through something similar, that’s going through the same struggles as you. It’s a very lonely existence. So even if it’s just on a podcast with people, you don’t know. I listen to Founders podcast all the time. It’s one of my favorites. And basically this guy just reads the books of great entrepreneurs throughout history. And for me to just at least hear that once a week to know like I’m not alone. That people have gone through the same struggles, like this too shall pass kind of thing. That to me is invaluable.

Corey Hoffstein:

The other big part of it for me that it gives me an appreciation for because I think about this a lot. As my number of Twitter followers grow. Which always feels very weird to me. Is there finding me at different points in my life?

Jason Buck:

Exactly. I think you tweeted about this today?

Corey Hoffstein:

I did sort of as a joke that I was like, some people know me as the guy who runs flirting with models podcasts. Some people know me from my research on rebalanced, timing, lock. Some people from liquidity cascades. Some people know me from the recent return stacking paper. Some people know me from crypto shenanigans. And those are all different stages of my life. Some people know me back from when I used to write a weekly research report at Newfound for four or five years. And they’ve been with me at different stages of my journey. But someone who hits follow today doesn’t have any of that historical context for the most part. And so I think about that a lot, when I meet someone new. That I’ve just entered into their journey at a very specific point in time with no context of their past.

Corey Hoffstein:

And I will say that it has helped me become far less judgemental of people. Because it makes me give them the time to sort of like, for me to figure out what their past is. And most of the time I’m pleasantly surprised with what I find if you give them the space. But I try not to judge where people are coming from because I don’t know their history. And I try to be very aware of that when I’m meeting someone for the first time or even interacting with them on online. You always hear those stories of you don’t know what someone’s going through in their life. I think for me that was a big part of my later twenties. I did not talk about what was happening in my life. And most people would never know if they engaged with me. But it was always in the back of my mind, sort of this dark storm cloud.

Jason Buck:

Well, part of it, like you were just referencing, I think one of Taylor Pearson’s favorite quotes. And I’m going to butcher it something like that. Like be kind to people because you never know what internal battle they’re fighting. And that’s part of what you’re basically saying. But what you just said, I wonder is part of it now? Like you are actually finally comfortable talking about it? Where for a long time, did you feel there was almost that taint once again, was almost like on you too. Even though you didn’t know, you didn’t do anything wrong or bad. You didn’t want to talk about it because that dark side, of what people would think about you. And now you know it really doesn’t matter. This is part of your story, part of your journey. And all the good as you flipped it on its head, all the good you’ve you’ve created on it.

Corey Hoffstein:

I mean, I don’t want it to define me. It defined who I was in my twenties. Both because I was going through it and because if I met anyone, that’s how they knew me. There was a huge point in time that the people would go, “Oh, you’re that guy.” I would meet them and, “Oh, you’re the kid.” Because it was written up that this kid had written this algorithm and “Oh, you’re the kid.” And sort of that was my identity. And talking about this stuff was not something I wanted to do. And in many ways it’s like, you don’t want to reopen old wounds. But hopefully you can come to terms with them and find something positive.

Corey Hoffstein:

So yeah, you don’t know what people are going through. And by the way, I will just point out that what I went through on the grand scheme of things, is not bad. People go through so much worse and I’m very aware of that. This is not like a “wow is me thing.” People have gone through infinitely worse than what I went through. And I try to be aware of that. But for me it was a not great experience in my life. And I just try to be aware other people can be going through that and worse.

Jason Buck:

Well said and I can’t thank you enough. Hopefully I’m going to twist your arm and get you to publish this. Because to me this is exactly the kind of conversations I want to publish. And this brings me so much joy in a perverse sense of, to have such an interesting conversation and have you open up with such vulnerability. And for then people to feel the pain you went through, but then also to see the growth from it and that hopefully they can apply to their own life. And more importantly, why I think both of us do this on a side note. Is to also if you can lighten anybody’s load or anybody’s burden. Through our own stories or hopefully whether it’s us entertaining or similar stories, that’s kind of the point of what we do too. It’s not just trying to bring people into our ecosystem. It’s also like to hopefully provide some entertainment levity to people’s lives in general.

Corey Hoffstein:

Yeah. I don’t know if this one brought levity, but hopefully people enjoyed it. That was an hour 30 of us just jabbering back and forth, but I enjoyed it. Thank you for the opportunity. I appreciated it.

Taylor Pearson:

Thanks for listening. If you enjoyed today’s show, we’d appreciate it if you would share this show with friends and leave us a review on iTunes. As it helps more listeners find the show and join our amazing community. To those of you who already shared or left a review, thank you very sincerely. It does mean a lot to us. If you’d like more information about Mutiny Funds, you can go to mutinyfund.com. For any thoughts on how we can improve this show or questions about anything we’ve talked about here on the podcast today. Drop us a message via email I’m taylor@mutinyfund.com and Jason is jason@mutinyfund.com. Or you can reach us on Twitter. I’m @TaylorPearsonMe. And Jason is at @JasonMutiny. To hear about new episodes or get our monthly newsletter with reading recommendations, sign up at mutinyfund.com/newsletter.

Episode 33: Corey Hoffstein [Newfound Research]

Corey Hoffstein

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