Victor Haghani - LTCM to Elm Partners

In today's video Patrick Boyle interviews Victor Haghani, former Long Term Capital Management Partner about investing, arbitrage trades and how he built his career on Wall Street.
After more than 40 years in finance, from the London School of Economics to Salomon Brothers to LTCM, and now Elm Patrners - Victor Haghani has worked out the best way to invest his family’s savings. We talk about Indexing, value investing, momentum risk management and international diversification.
Subscribe to Victors mailing list: elmfunds.com/blog/
Victor's Ted Talk: • Where are all the Bill...
Books Mentioned in the video:
Liar's Poker by Michael Lewis: amzn.to/3asrt7N
When Genius Failed by Roger Lowenstein: amzn.to/3pKOrxj
Inside The Yield Curve by Martin Leibowitz :amzn.to/2NVkaxH
Triumph of The Optimists by Elroy Dimson: amzn.to/2LcixL5
Patrick's Books:
Statistics For The Trading Floor: amzn.to/3eerLA0
Derivatives For The Trading Floor: amzn.to/3cjsyPF
Corporate Finance: amzn.to/3fn3rvC
Patreon Page: / patrickboyleonfinance
Visit our website: www.onfinance.org
Follow Patrick on Twitter Here: / patrickeboyle

[@PBoyle]

Thanks to our growing list of Patreon Sponsors and Channel Members for supporting the channel. www.patreon.com/PatrickBoyleOnFinance Marc De Mesel, Annie Chen, Nate Stapleton,Timothy Baird,Cab1260, WIlam, Robertas, Hernan Merino, Random Encounter, Nieuwsbrief Ikwil, Bee Positive Consulting, hyunjung Kim, John Cadena, Ian Tracey, A Smith, Callum McLean, Oscar, Simon Pena, Alexander E F, Cyrus Yari, Ed, Pavle Obradovic, Erik Van Ekelenburg, David O'Connor, Zak Patterson, Ki Ryu Chan, Pjotr Bekkering, Drew, Ivaylo Kunev, Alex, Robert W Proudfoot, EatEmAll, Michael Boensel, pooh shmoo, Robert Muller, Andre Michel, Ivan Iliev, Gopaljee Atulya, Milan Tomic, Mark Hooker, Artem Vasenin, P H, Mathews Sebonego, Sebastian, Michal Lacko, Yann M, VicMR, Peter Bočan, Michael Pierce, V Jordan, Steve Kinnear, Gil, HalfwitHam, Mark Brophy, Patrick T, David Urdenata, Juan Valdez, Bruce Roberts, Chad Norman, Bruce Roberts, Shamikh Rana, Friday Guy, Marc De Mesel, Augusto Ramos, Soy Boomer Doomer, Bob Slartabartfast, Robert Feiler, Camil Dbouk, Erik Montesinos, Matthew Loos, Az Indragiri, Aman Bali, Lautaro Parada, Pratap, Deborah Joseph, Robin Sung, Kurt Johnston, Dominik Auerbach, gurmeet Kaushal, John Hall, Dara Mo, Josef Goergen, Wilbert Cheng, Daniel Talero, Cogitecture, Jaroslav Tupý, Trevor Lucey JB Weld, Alex, Sunny, Carlos Figuera, Peter Pomelov, Mitchell Rowton, Pedro Texeira, EV Bike Dude, Luis Quintino, Null065, Rick Thor, MeBerzerk, Henry Nguyen, Sola F, The Collier, Carlos Mejia, J Wadia and Bitcoin OG

[@reggie3819]

Patrick I am getting addicted to your channel

[@schuylerhansard1486]

Scammers at it again in the comments I reported the comments but just be watching man. They had your name and pic but no content when you go to profile!! I got screen captures if you need them man. Anyway thanks for the information content!!

[@khuo0219]

Can you please insert bookmarks for key points? It is useful to come back to this interview for educational purposes.

[@tinolino58]

@@schuylerhansard1486 it happened to me. But I was warned!

[@jeebus6263]

If your videos had more occasional memes they would be easier to watch for the 💎🤟🚀 crowd

[@felixtaila7671]

Patrick, I can’t even describe how valuable and even by now underrated your channel is. Getting one of the LTCM Executives to do an interview which appears almost randomly on your channel is just incredible. Reading when genius failed upon your recommendation atm Thank you

[@deansundquist9601]

I’ve read 3 of the 10 books and been happy with them all. If COVID continues to keep me at home, and it certainly may, I just might make all 10.

[@standalby6949]

Patrick is so underrated on yt it should be a crime

[@arga400]

Patrick does have the advantage that all he has to do is call his friends for an interview to get high profile interviews :P

[@jamieandrei]

100% Patty's the internet hero world needs!

[@lukasceplicky9200]

Patrick, it's simply amazing that your content is actually free. Thank you for the amazing interview and in depth commentary!

[@alexfv5791]

Such a privilege to live in an age and time where accessing this kind of content is near free! Thank you Patrick and Victor, you're truly adding much value to the global investment community!

[@jeremyroastscoffee2495]

respect. your videos have been invaluable to me over the course of 2020 up to present. hope to see this level of conversation replace the MSNBC-level clown show that's going on out there right now

[@RicSenato]

Strategic like + comment.... even before finishings the video ( pushing the KZbin algo) Bravo Patrick !

[@rubyflex9429]

PB needs to start spamming the 2 option KZbin polls. PBoF 🚀🚀🚀

[@TomNashTV]

Hey Patrick great video!!

[@matchalatte5415]

Nice to see you here

[@V.gara_]

Really awesome learning from your videos! Thank you for all you do. Keep it coming!

[@rageoid]

Who the fook is this guy !!

[@kylejf9059]

Lol Tom Nash was telling people to buy GME at $400. Just kidding Tom, keep your hair on and see your dentist.

[@vojvoda-draza]

@@rageoid hardest hitting 55er right here

[@marxenbrothers]

Victor Haghani himself?! Wow, Patrick, this is absolutely fascinating!

[@marxenbrothers]

@@mauro-caimitradingon4679 my dear comment bot! It is an honor to get in touch with touch here. However, I prefer to just listen to the real Patrick Boyle on this very channel!

[@josuemiamire]

Wow amazing interview. This guy from LTCM ain’t no joke guys. This isn’t your usual KZbin stocks guru.

[@Football__Junkie]

All those LTC guys were sharp. That’s how they put the team together. Just tried to find the smartest guys they could.

[@taketheknight]

How long did they last?

[@sueton1797]

@@taketheknight read the book by lowenstein. ALL trades were profitable at the end. Sometimes you don't have enough time.

[@zatarawood3588]

Yeh but he didnt say anything about best stock to buy and hold TSLA 🚀

[@TsunamicBlaze]

It would be great if you gave us timestamps for the questions you ask, or at least a sequential list in the description. Great video nonetheless

[@jessewren1]

Amazing guest! Thank you for sharing this discussion. Wonderful insights

[@CR-qw6ff]

An absolutely amazing interview. A very timely interview from someone who experienced first hand being on the wrong side of a trade. It appears the critical components of investment are far deeper than value vs growth. An investor’s understanding of leverage, liquidity, diversification, allocation and rebalancing have been strongly promoted. This video was an excellent introduction to sizing and how it greatly differs from allocation and diversification. Thank you and your guest.

[@maestrovso]

So rarely that we get to listen to honest sharing of experiences of industry veterans. Thank you Patrick.

[@ChrisNTampa]

Man, Jason Statham does it all. Love your video.

[@ManPursueExcellence]

Hehehehe 😆

[@cscarlton24]

God, used to ride the L into The Loop in Chicago listening to When Genius Fails thinking I was the shit! Thank you for bringing back the good memories

[@laowai2000]

Patrick thank you so much for your channel. Absolutely fantastic content. Gamestop may not be heading to the moon but your channel certainly is! So grateful to have found your channel.

[@fluffle209]

Hey Patrick, can you do a video on what we should look out for when doing fundamental due diligence on stocks? I think it'll be very helpful for beginners to see what goes on behind the thought process of picking stocks

[@Twenti2]

I second this! Lol

[@jeffery9781]

Hi Patrick. Thanks for sharing valuable content always. As a courtesy & some value for your time, I played over 10 advertisements ( Different tabs ) while I was watching your videos. Including 1 hour long. I am watching from Malaysia.

[@JoseTorres-ry9qe]

"It's a big club, and you ain't in it" -George Carlin

[@deansundquist9601]

Just good interviewing, based on education and experience instead of hype. Refreshing considering the rest of the internet in this space right now.

[@WorldsHypocrisy]

Great interview and stimulating discussion. Thanks Patrick- your channel keeps getting richer and better day by day!

[@tubesourav]

Hi Patrick, I have been following your videos in the last few weeks (not because of GME). The quality and content is incredibly good. And, I've also bought all your books. :-) Great going.

[@DeLanoLLoya]

Awesome interview I heard about LTCM from the book More Money Than God by Sebastian Mallaby. It is a great read. It detailed the history of hedge funds. Alfred Winslow Jones... man what a life changing book.

[@Jonathan-fc6wk]

Would love to see an interview with Victor Niederhoffer.

[@jamieandrei]

When Genious Failed is a must read.. great book.. think interview is going to be 🔥🔥🔥

[@juwright1949]

What a great interview! It is PACKED with so much information. Lots of WORK ahead for me. Thank you so very much. Well done. 👍🏻

[@Repoboba]

That is a great quality content! Really enjoyed the guest and an interview format.

[@adriansaw8329]

Serious request: can you tell us about working for Victor Niederhoffer (re daily routine and anecdotal stories) to give us a rough idea of what it was like to work under him? How it felt for you to be working as his understudy at the time, etc. Thanks.

[@PBoyle]

I might try to get him on the channel at some point. I am hoping to do a live interview, as that is often so much better than zoom meetings. I'll have to wait until travel becomes a bit easier.

[@adriansaw8329]

@@PBoyle Thanks Patrick- your take on the relationship and the experience is also welcomed (Insights gained by you etc, from the perspective of a young up-and-coming understudy).

[@cole6167]

WOW! Was that interesting! No surprise on this channel. Thanks for sharing such an interesting conversation!

[@ME-nm1go]

Why does this man have only 83K subscribers???

[@hilbertshotel]

The problem with LTCM was that the partners' risk models said the probability of losing everything in a single year was 10^(-24). Four years later, they were done.

[@teamspeak9374]

this could be a good start to a podcast with people from the financing world, kinda like lex fridman tries to get top guys from various science fields

[@Ali_zee_x]

Patrick thank you for the video. I just noticed you have 10 different watches =))) Nice watches tho X

[@Whereisshellymiscavige]

Patrick's voice is too relaxing.

[@michielvandenberg7438]

I really like this type of content. Long in depth interviews. Also please continue with uploading on Spotify where I can listen your content as a podcast. Perhaps improving the sound quality would be a nice bonus. Huge fan!

[@michielvandenberg7438]

@@prosperproject6993 I will, fake-robot-Patrick

[@TheMightyWej]

Love these long form interviews, is that a new microphone on the intro as well? Sounds like a lot more bass than usual. Thanks for the great content! :)

[@gasmice]

On the reading list (in the notes on Patrick Boyle's video 'Applied Portfolio Management - Class 1 - Risk and Return', some story threads intertwine. You see three views of Salomon Brothers in 'Liar's Poker', 'When Genius Failed' and 'Buffett: The Making of an American Capitalist.'

[@kylejf9059]

Went well with some tea. A change ball from the coffee. Thoroughly enjoyed 👍🏼

[@frankman6041]

hey patrick, love your content, plz do a video about how people with learning deficiencies like dislexia can understand better the stock market, are there any books or seminars ???

[@schuylerhansard1486]

Super insightful!!! Thank you!!

[@1pwNz0mb13Z]

Loved this! I just subscribed to the Elm Partners news letter uwu

[@joelstu2128]

Great video! Now I want to learn more about sizing investments

[@zo9fg]

nice, does anyone have a timestamp of topics discussed? it's such a long interview

[@michaelbartlett4961]

Great Video. Really l am finding your content really makes me think. Random l found your videos because of GME.

[@David.Marquez]

Thank you as always Patrick for such a quality interview and talking about things that really matter,

[@sov19871987]

@@prosperproject6993 this is not Patrick, this is fake account, REPORT

[@felipecancela9576]

Hi Patrick. Thanks for the videos and your channel. I did not really catch what you both were trying to say about "NYSE getting rid of the stop losses"...?

[@felipecancela9576]

@@mauro-caimitradingon4679 oh no ! Patrick got hacked jajajaj. For every one reading this, don't do this.

[@TO-st4jn]

Great interview thank you! Learned a lot.

[@christoffermogensen6018]

Patrick, I respect your knowledge.

[@Beartrap208]

Once again another great informative video! Please keep going with the channel Patrick, great content!

[@yonatanofek4424]

Insane what the hell is he doing here talking to us.

[@yonatanofek4424]

@@mauro-caimitradingon4679 bad scammer no no.

[@DarthJabba504]

Didn't know you worked for Victor Niederhoffer...you had some great experience.

[@Lawofimprobability]

Can you talk more on the effects of stock options and stock assets as a way that wealth inequality shows up in paper but doesn't resemble the expectations of brick-and-mortar assets?

[@user-ze4ih5ii3c]

hey Patrick are you going to make any videos where you livestream you classes?

[@trying3841]

Thank you so much for all your videos!

[@ryanwilkinson3916]

Patrick, would love to see a video about your take on equity crowdfunding!

[@cosmingalpoker4599]

MR Patrick what are you doing ?we need more videos bro , notification are on Let's go! PS nice content

[@lfc-europe]

Whilst this is a very interesting video, but does he know about rockets and moons. 🚀🚀🚀🌒🌒🚀🌒

[@aryanknowledgeseeker9945]

Whhahahhahahah

[@aryanknowledgeseeker9945]

Damn bro that made my day u spoke exactly what I thought

[@Ataraxia_Atom]

Read the book "when genius failed" this guy is an expert in rockets and explosions

[@jeebus6263]

See Moon 🌘🌒 Wife's boyfriend says hi bois 🚀

[@mohamadhariz9613]

🌙🌙🌙

[@ittybittytractorworks]

Great content as always!

[@ayseyilmaz3910]

Great value! Thank you.

[@ManPursueExcellence]

Is he saying that the long/short strategy is dangerous as a stand-alone for an individual trader/investor? It’s talked about around the 29 minute mark.

[@WhyGoThere]

46:55 what's the paper? Fessenbinder?

[@schrodingerscat3912]

nice! great interview and even better questions prepared

[@schrodingerscat3912]

@@mauro-caimitradingon4679 wow thanks fake Patrick! I can report your ass to KZbin now. how dumb do you think subscribers to this channel are? you're on the wrong side of the internet

[@catcar9157]

You look like my dad Patrick, maybe that’s why I love your show! No, not it, just good content...

[@PBoyle]

All bald people look the same. :)

[@Kondio317]

🙌🙌🙌🙌💎💎💎💎

[@TheDudeMaaaan]

IM NEVER SELLIN

[@TheDudeMaaaan]

guys this is just a topdown inverted vortex elevator pincer attack .DONT FALL FOR IT , easily defeated by not selling.

[@jbweld6193]

@@TheDudeMaaaan I sold. Thanks for cash bro.

[@TheDudeMaaaan]

@@jbweld6193 your welcome clearly you need it.

[@jbweld6193]

@@TheDudeMaaaanlol

[@jackdyer9562]

Way to go Patrick. A tier content

[@sov19871987]

Thanks, great interview

[@KAS-kl7dn]

Professor I have a question can I email or call you.

[@eimestein223]

hey Patrick thanks for the content, can't understand the name of the 2 book, can anyone tell me. Thanks

[@eimestein223]

@@prosperproject6993 Thanks Patrick

[@ChasingMidnight001]

When Genius Failed, and Liar's Poker

[@eimestein223]

@@ChasingMidnight001 Thank you

[@catcar9157]

Love your show, show your Grannie (or your mum)some love!

[@jenspinkernell]

Great content, thank you.

[@frankritheshpereira857]

Thanks for the interview Patrick, really appreciate it!

[@sov19871987]

@@prosperproject6993 this is not Patrick, this is fake account, REPORT

[@frankritheshpereira857]

@@sov19871987 I know lol, same thing happened to coffeezilla

[@sov19871987]

@@frankritheshpereira857 if they doing this on youtube that means people fall victims to these fraudsters

[@ChasingMidnight001]

@@sov19871987 I'm getting these on multiple channels and reporting all I see. Now would be a good time for that YT censorship to kick in.

[@jinte1552]

Thank you for an other great video!

[@marinabaskakova2333]

Thanks yet again for the great content l!

[@CapitalWorksPro]

I found a like new copy of inside the yield book mentioned in the video for $6.51 incl. shipping. Apparently inflation hasn't gotten to the books lol

[@catcar9157]

Good on you Patrick!

[@marcosfan90]

Thank you Patrick

[@hgm8337]

The silver squeeze was always a joke...

[@peterbradshaw8018]

Hedge funds are old dude read Fashions in Forecasting by Alfred Winslow Jones in Fortune Magazine circa March 1949. Arguably Lord Keynes ran a hedged fund back in the day.

[@oscarsanz03]

English subtitles are not activated...

[@oscarsanz03]

Great video by the way, thank you as always! 👍👍

[@PBoyle]

They are generating right now, should be up soon.

[@winstonsmith77]

9:57 the word you were looking for is big brain

[@cippollino83]

Hi Can you post an educative video about selecting a company to investigate in. What to pay attention on and how to read financial results? Thank you

[@jonelectronics510]

That question will have a very involved answer. In terms of financials there are some very 'General' rules which are not always accurate depending on the sector a company works in: Assets should also be larger that liabilities. That way if a company suddenly faces difficulties, they could sell assets to cover liabilities. But this is not always accurate as companies normally account the price they paid first hand for an asset. For example, if a company buys a brand new machine for £100k......you are not going to get that selling it second hand, you may get £50k or less. So assets need to viewed carefully. Long term and short liabiites are not the same and should be treated differently. Short term liabilities such as loans and debts can be very useful for growth but will require paying back quickly (think buying a packaging machine to complete orders quicker and increase sales) Long term liabilities can be less attractive as these may become more suffocating to a company as time goes on, think of compounding interest on a loan, the longer it takes to pay off the more you pay. Generally property can cause big issues long term. You should always compare the same quarters through a companies history. Never compare a last quarter to a prevous quarter for example. You should compare this quarter this year to the same quarters last year. Consumer demand is different throughout the year but can be more consistent in same quarters previous years. Think of an icre cream company, they sell less ice cream during the winter but lots during the summer. So comparing winter to summer sales is not an accurate view on growth. Turnover should rise slowly and consistently. If this is choppy over many years this could signal an issue. Cost of sales should be controlled, this is the amount of money it takes to provide a sale. Never invest in a company that has really high cost of sales, long term unless they can lower this (it can be possible with large manufacturing the longer you do it the cheaper it gets as infrastructure increases (think Amazon)) this will kill a company. A drugs company is a key, the cost of research and testing is horrific which they hope to recover long term through drugs sales. Short term their cost of sale would be massive. Profit should be consistent. If you have a company that keeps flipping between massive profits and massive loses, that is not a sustainable company long term. There are many more ratios that people look for but first you need to start reading company accounts. Understand the different documents and then start looking more into why they list (or don't list in some).

[@ashishpatel350]

it's gamestonk we are the hedgefund now lol

[@jeebus6263]

Distributed Manual Stupidity Network (or AI Prime Net)

[@Gumardee_coins_and_banknotes]

You should get Walk The World on.

[@alibizzle2010]

I'd love to know what the $ value is of the difference between the 70% and 90% loss on LTCM he mentioned. bet he wished he had taken Buffets offer

[@piotrarturklos]

It's all inconsequential, it could all randomly go much worse too because of their mistakes. They made multiple mistakes at LTCM, the primary one being the excessive leverage on niche derivates. It's funny how people who make huge mistakes often fantasise about some small changes in the outcomes.

[@piotrarturklos]

And BTW, that $ value was a couple hundred million dollars.

[@alibizzle2010]

@@piotrarturklos my point is that if you read Lowenstein's book (a book that Patrick has recommended many times now) Haghani was the last hold out and he comes across as the most deluded. In this interview Haghani says he ran a hedge fund "just like Buffet". This is so far from the truth to be laughable when you consider how many times buffet has mocked the whole LTCM project. Patrick just fan boyed out and failed to address the image of Haghani presented in a book that we all know he has read. Victor obviously still bears a grudge towards Buffet after all these years which is really sad

[@alibizzle2010]

@@piotrarturklos and Haghani and the rest of the partners got $0.00

[@alibizzle2010]

@@piotrarturklos there was nothing new about the leverage. What was distinctive was the slavish belief in their models. I was 14 in 1998 and even I could have told you betting on Russia not defaulting was a bad bet they lost $400M on that position alone!

[@samerm8657]

Blessed be thine channel by thy algorithm! 😇🙏🎂😊👍

[@victoryoneable]

Mr Boyle, are there reasons for shorting a stock other than expecting the price to fall or increased volatility that might cause the contract price to rise? I'm curious about this because I hold shares in a company which is in the process of merging with another, smaller one and there are huge synergies; both reported very high EBIDAs and profits for the past half-year and little reason to think this won't continue; the merger will send the company into a higher investment level (from ASX100 to ASX20); share price is well off its year highs (and lows); broker research is increasingly labelling it a 'buy'. Yet the stock is being heavily shorted compared to its peers. Could it be that the value of the contracts will rise because of the greater liquidity expected in the stock? Or might it be to do with index funds shuffling in and out of their positions to achieve market weight?

[@eeekkk34235]

Excellent!

[@MeGawOOt99]

But what if I am an investor that basically put in $100 bucks just to see Melvin Capital managers get real salty and not actually looking to profit?

[@vojvoda-draza]

Patrick please make a video about bitcoin and wether it's a bubble or not

[@thoyo]

55:42 - 56:05 Can someone please explain how you can lose 30% in an ETF that rises 200%? A bit difficult to grasp that concept.

[@PBoyle]

It is due to the way rebalancing occurs within the ETF. I made a video on the topic a few months ago. kzbin.info/www/bejne/rZi7mqOBZbqXhqc

[@thoyo]

@@PBoyle Thanks Patrick!

[@sebastiandonickler.6715]

Great video! Tks

[@alibizzle2010]

Where are the customers yachts Victor?

[@mousquetaire86]

Probably

[@wayneglensky9190]

I would like to hear Patrick's opinion on bitcoin, if he has one.

[@mobileandroid5299]

I'd like to hear Michael Jordan's opinion on water polo. You see how STUPID my comment was? Think this through

[@wayneglensky9190]

@@mobileandroid5299 clown

[@Witnessmoo]

I really enjoy your dry British humour

[@alibizzle2010]

I remember Max Kaiser trying to spur a silver squeeze back in 2011

[@Witnessmoo]

It’s just dawning on me the knowledge gap between those who seek out and find these types of videos and those who don’t is astronomical and growing... I find myself speaking to people who don’t know anything about investing and dabbling... and it’s shocking how out of their depth they are. It’s worrying. The wealth inequality issue will get worse as the knowledge gap widens.

[@rossjohnson9098]

Both caused by hoarding either commodity. Why not send them the videos?

[@ChasingMidnight001]

This was really informative, thanks

[@ChasingMidnight001]

Oh ffs, not the spammers again!

[@Ali_zee_x]

Patrick Boyle is the gateway to financial secretssss

[@Ali_zee_x]

@@prosperproject6993 YES SIR Patrick

[@Ali_zee_x]

@@prosperproject6993 Done. Thank you. (How did you know I trade crypto :O)

[@kvikende]

@@Ali_zee_x it is a spam bot and a scam don’t contact it. Notice there’s no blue check mark and name in bold.

[@Ali_zee_x]

@@kvikende I realized after contacing him. Told me to deposit all of my crypto to his account so h trade for me!!!

[@kvikende]

@@Ali_zee_x glad you noticed and didn't do it. They're sadly everywhere on anything related to finance on KZbin.

[@tylerhutson4687]

loved it

[@Lhosal]

Take my youtube algorithm 🚀