Show Us Your Portfolio | Cem Karsan | How an Options Expert Builds His Personal Portfolio

In this episode we speak with Cem Karsan, the most popular guest from our first 200 episodes. But this time we changed things up and asked him to talk about how he manages his personal portfolio.
Many investors are used to building their portfolios using long-term buy and hold allocations to stocks and bonds, but Cem turns that on its head and takes a very different approach. We talk about the principles that guide his investment strategy, how he thinks about portfolio construction, his views on inflation and a lot more. For followers of Cem, we also ask for some breadcrumbs on dealer positioning at the end too.
If you found this video valuable, you might also enjoy our other interview with Cem Karsan. In that interview, we take a deeper dive into his dealer positioning models and the basis for his macroeconomic framework. You can find that interview here.
• Cem Karsan | Option De...
#cemkarsan #vanna #charm #gamma #optionsinvesting
00:00 - Intro
02:59 - the guiding principles of Cem's personal portfolio
05:22 - will Cem ever retire?
07:24 - the importance of time
10:39 - how Cem balances time frames in his portfolio
13:09 - how selling his market making business changed Cem's approach
15:32 - the future of the 60-40 portfolio
23:06 - how 60-40 portfolio investors should think about the current environment
25:38 - the outlook for active management going forward
27:17 - how Cem thinks about bonds
30:08 - evaluating active managers
31:15 - equity investing in an inflationary world
35:58 - how Cem thinks about valuation
40:29 - Cem's thoughts on international exposure
43:10 - Looking at drawdowns
46:36 - does long equity exposure make sense in the current regime?
48:12 - inflation and Fed policy
51:56 - assets that perform well in an inflationary environment
57:30 - the importance of getting the secular trend right
01:01:11 - the role of venture capital, private equity and real estate in Cem's portfolio
01:04:08 - things Cem spends money on that are not financially motivated
01:05:59 - some breadcrumbs on current dealer positioning
01:14:15 - the one lesson Cem would teach the average investor
CEM'S PREVIOUS APPEARANCE ON THE PODCAST
• Cem Karsan | Option De...
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[@ExcessReturns]

Thank you for checking out Excess Returns. If you found this video valuable, you might also enjoy our other interview with Cem Karsan. In that interview, we take a deeper dive into his dealer positioning models and the basis for his macroeconomic framework. You can find that interview here. kzbin.info/www/bejne/rX66g4qkbbiBsMU

[@seunjoong]

Cem is such a genius in these markets. Seriously incredible perspective.

[@mikemarwan4716]

Cem is the most insightful voice in the investment world today.... Sitting shoulder to shoulder in the HALL OF FAME with the other greats like Mike Green, Felix Zulauf and Stanley Drukenmiller!!! (So sorry for his recent loss - wife passed away in Feb 2023)!

[@bradenfriedman1350]

Cem- micro and macro scholar. Grateful to have him in these times for sure.

[@nicolehustles]

He is amazing, yay go Cem!!!

[@tedcormier1736]

Thanks to all for an amazing interview. Cem has great ideas and elucidates them well with useful analogies….no use having insights if you cannot explain them to the average person.

[@syNTHETIC_C]

Best one to ever do it

[@popdop4498]

49:00 Two minutes of complete wisdom.

[@goals987]

Thank you. Especially appreciate the show bookmarks.

[@PsyonicReaver188]

Great episode

[@exrayZap-ry1gh]

sobering perspective Thanks for this

[@HectorYague]

Interesting points of view on how structural trends will change as we shift into a populist era in which Fiscal policies will trump Monetary policies. I appreciate the 30k feet view discussion.

[@ExcessReturns]

Thank you Hector!

[@b.sai44]

@@ExcessReturns Thanks for hosting Cem again. Much love ❤️

[@HepCatJack]

On yield stacking, where you put the value of the bond to borrow to purchase equity, what if you get a margin call ? Why borrow against an asset to purchase equity when so much equity is currently heavily discounted ?

[@FoxFlyFishing]

Brilliant! I wanted to ask the host what kind of boat he races. I bowman on a J111 racer in Milwaukee. Thanks for the excellent content!

[@jackforehand3936]

Thanks for watching. I race J109s out of Connecticut. The 111 is a great boat.

[@FoxFlyFishing]

@@jackforehand3936 It was my pleasure! Just listened to the excess returns pod cast with Brent from SpotGamma, that was a great conversation as well. Keep the great content coming!!! Never sailed a 109 but they look fun! Keep it up, mate!

[@simpleventures]

Active management often touted to outperform the index but rarely does. The major culprits? Fees and behavioral mistakes

[@patricks1251]

cheapest industrial commodities (PGMs) - SBSW and IMPUY

[@patricks1251]

government spending on future energy projects, (close to the money spigot) buy NLR - Van eck Nuclear etf

[@BlackBeltMonkeySong]

What does he mean about getting "bonds under the hood and get exposure"? At 30:00

[@HepCatJack]

Since some of the inflation is linked to fossil fuel price, perhaps a better too to use is to encourage work from home like during the pandemic to reduce demand for gasoline (which cratered two years ago). This should help keep shipping costs low and fuel costs low for people unable to work from home. The legislators who want to pass laws to force people back in the office seem to want fuel prices to go up so that they have something to complain about on an approaching election year to the detriment of the people they're supposed to be representing. I expect that the U.S oil reserve will be replenished this year, not next year which will be an election year and this seems to coincide with the planned production cuts announced by Saudi Arabia. Perhaps it would be good time to accelerate research into the new enzymes that can break down waste plastics back to oil in preparation for times that the big players manipulate inventories via production costs to manipulate the price. So that instead of paying a high price for oil during these cuts, oil could be obtained by converting plastic trash and/or tires back to oil. A work from home economy should be bullish for car insurance economy which would have to pay less for car accidents. It will cut down on cleaners costs of workers who will be able to wear their old clothes to work from home.

[@george6977]

😊

[@maand166]

Can BTC be considered a hedge against inflation?

[@ExcessReturns]

The hodlers would say it's the ultimate inflation hedge and the best way to protect purchasing power over time. From mid-2021 to mid-2023, you had rising inflation & expectations and bitcoin falling .... and now with inflation falling, bitcoin is rising. You also had a very low period of inflation from the 2008-GFC to 2020/2021. The data points to the opposite relationship with Bitcoin and inflation (low inflation / higher BTC vs. higher inflation / higher BTC) but it's important to realized BTC has only been around since 2009, so less than 15 years at this point and one shouldn't draw any long-term conclusions from these trends.

[@leoc9074]

🤟🔥💯

[@annekeller4124]

😊

[@Hoblin]

Explain like I'm 5... what should my long term portfolio look like?

[@marineye]

Buy companies who are rich is cash flow and with strong fundamentals. Mom and pops companies and meme stocks do not work in raising interest rate eras. Basically look for safe heaven stocks for the next 4-5 years till we have this sticky inflation thing

[@timothyha2854]

Natural gas, copper, oil, healthcare sector stocks

[@popdop4498]

Relative value.

[@WhyGoThere]

A whole interview about his pf and I still have no clue what's in. Long certain sectors, some real estate, long vol (why was that?). Where is he short to offset the beta?

[@patricks1251]

cheapest US natgas stocks with long life reserves SWN and RRC

[@pweb4941]

can the us afford to allow the market to fall to PE multiples of 4 like they did 68-82? No IMO . Nov 6 1978 401 ks were introduced . That is now peoples retirement. If peoples retirement goes down to 20% then this will induce the mother of all depressions, deflation, all those things that they try desperately to avoid

[@kane5445]

How do I get more crumbs

[@eurostockoption]

admit it, you come for the 🥐crumbs 1:05:46 :p