Touching sand. Ex-PM for quant multi-manager fund @NickelDigital. Previously ran quant FoF @CambrialCapital. My views are my own.
Joined November 2009
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David Fauchier retweeted
People are going to realize it takes a frontier human to extract productivity out of a frontier model, and there is simply not enough frontier human to compensate for the capex relying on revenue from training frontier models (yes if you remove training compute demand the whole thing is unprofitable already, and that’s before token price depreciation). Put it simply, demand for intelligence isn’t infinite and is in the shape of a bell curve, and cheaper models are slowly eating their way into the bell curve, leaving frontier training cost rely on a smaller and smaller tail of intelligence demand. In the end you are left with a billion dollar training run which only use is to solve Navier Stokes, because all the other tasks that are useful for the current economy can be run on cheaper models
"Token demand growth will need to outpace declining token prices to support continued growth in investment spending. Frontier models are currently a key source of demand for hyperscaler compute. However, the rise of competitive open-source models has contributed to a decline in average token prices. Measures of frontier token demand slowed in July..." - Goldman
This is a guy you want to work for 👇
We're hiring.
3 years: $0 → $1bn+ AUM. 7 ETFs. A category we're taking mainstream.
Now we need someone to help scale the advisor relationships that got us here.
Associate, Advisor Solutions — internal sales, clear path to external. Remote.
If you've got distribution experience, know ETFs or alts, and want to sell something you actually have to understand — link below.
David Fauchier retweeted
On $ADBE
could be "different this time"...but someone shared this chart + note:
'since mid 2015 revenue has increased sequentially in 39 out of 40 quarters.
Since release of ChatGPT, Adobe has seen 0 pressure on margins + revenue continues to hit ATH each quarter'
Numeral is a fascinating experiment and this is the best write up on it I’ve seen 👌
“Numerai Signals, by contrast, pushes a large chunk of the operational and portfolio burden onto users, which makes it structurally hostile to hobbyists and part-timers and better suited to genuinely institutional-grade processes.”
Not untrue.
Numerai Signals is very hard. Because it is hard to contribute additive institutional-grade alpha above what Numerai already has. We are genuinely surprised there are any users who persist and succeed. And we don’t know how they do it.
David Fauchier retweeted
Recently, we’ve heard a lot about the USDT audit. I decided to check how liquidity has improved over the past year for USDC instruments compared to USDT instruments (on Binance, spot exchange). The procedure is as follows:
1. Calculate the roundtrip cost for a $100k trade — the cost of executing a buy and sell simultaneously for $100k.
2. Do this for both the USDT and USDC instruments for a given coin.
3. Randomly select N two-hour intervals for each coin — one from roughly a year ago and one from the current market.
4. Compute CostImbalance = (USDT_cost − USDC_cost) / (USDT_cost + USDC_cost) for the first interval (one year ago) and the second interval (now).
5. Compute the difference between the two CostImbalance values.
Positive values indicate an improvement in USDC liquidity. For example, if CostImbalance = −0.75 in the first interval (meaning much higher roundtrip cost for USDC) and CostImbalance = −0.5 in the second interval (still higher roundtrip cost for USDC, but less extreme), then the difference would be 0.25 — showing that USDC liquidity has improved relative to USDT.
I ran this for around 40 coins, using 6 different interval pairs per coin. You can clearly see that the liquidity gap for USDC is significantly smaller now than it was a year ago — not just nominally, but relative to USDT liquidity.
David Fauchier retweeted
If you own 50 tech growth stocks, you don't have 50 independent bets. You have 1 bet on the tech-growth factor, sliced 50 ways. When that factor crashes, all 50 move together.
Most of your returns come from systematic factor exposures, not stock picking. And systematic risk cannot be diversified away by adding more stocks with the same exposures.
Real diversification comes from one of two sources:
1) You have no view on idiosyncratic returns and have enough of them (30-50) that idiosyncratic returns of your portfolio is ~0, and then the returns of your portfolio is dominated by FACTOR exposures, not number of tickers.
2) You have a view on idiosyncratic returns and are taking exposures to non-zero forecasts of idiosyncratic returns. Then, if you do not factor neutralize, you will be left with idiosyncratic returns + factor returns.
Study your portfolio's factor loadings. You might be shocked to learn you're running a concentrated bet while thinking you're diversified.
David Fauchier retweeted
Interesting appointment for Diageo’s new CEO! The lack of CEO was a notable overhang at the recent quarterly update, this should be a welcome announcement.
diageo.com/en/news-and-media…
Chuck in ‘I am long beta’ and replace those irrelevant 50page DDQs managers get asked to fill out with this questionnaire 👌
I make money because:
[ ] I am harvesting risk premia
[✓ ] I have alpha from superior models
[✓ ] I have alpha from superior data/information
[ ] I have superior access to cost/rebates
[ ] I don't
I keep my money / sustain a moat because my strategy:
[ ] Has fat tails (kills people/people kill themselves)
[✓ ] Has an infrastructural barrier to entry (hard)
[✓ ] Has a knowledge barrier to entry (hard)
[ ] Has a psychological barrier to entry (nasty)
[ ] Is opportunistic / special situations (no fitting)
[ ] Has a structural barrier to entry (unfair access)
[ ] I don't
than the dollar-volume weighted participant.
Know thy strength!
Holy macaroni
We’re all trying to compare different days, but there’s no reason for it. Yesterday was by far the biggest shock in crypto history - at a time when we were talking about the maturity of the space, bridging the gap between TradFi and crypto, and had started getting lazy with leverage.
Tuesday 8pm UTC - flash crash breakdown. Stay tuned (and safe).
Why in the name of Mary would @binance launch a market index that's price rather than mkt cap or at least volume weighted?? In what way is that useful?
#ALLUSDT
CC @BinanceVIP - a marketcap weighted index would be *damn* useful to trade beta...
binance.com/en/support/faq/d…
David Fauchier retweeted
Final part of my global spirits series is live. Global Spirits Part IV: Last Call substack.com/@sectorstories/…
For anyone that missed Parts I-III: the global distilling companies have been in a slump.
I couldn’t say these kinds of thing when I was still employed, but Warren need to go f herself.
It absolutely beggars belief that someone this ignorant about finance was allowed onto the Senate Banking committee in the financial capital of the world.
David Fauchier retweeted
“America would be better off if more people worked in manufacturing.”
• 80% of Americans agree
• 20% disagree
“I would be better off if I worked in a factory.”
• 25% of Americans agree
• 73% disagree
• 2% currently work in a factory
👉🏻 cato.org/sites/cato.org/file…
David Fauchier retweeted
hi! interrupting your markets news to share that i'm joining @ARIA_research as a programme director to invest in high-risk high-reward r&d that can benefit all of humanity.
