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Want to Build a Computer That Makes Money? | Nigol Koulajian, Quest Partners | #21

“Volatility is the most important criteria behind our strategy.” – Nigol Koulajian (Tweet)

Want to build a computer that makes money?

Quest Partners LLC has a long, robust track record with their systematic trading approach.

They utilize a different strategies from many of their peers and have diversified their product range to include equity programs both hedge and long only.

At the core of it all is their philosophy on focusing on what investors need. They provide solutions for investors rather than a purist strategy.

Leading the way is our next guest on Top Traders Unplugged, Nigol Koulajian.

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In This Episode, You’ll Learn:

  • How growing up Armenian provides a filter for the way Nigol perceives the markets
  • His experience at Anderson Consulting and how he ended up working with Solomon Brothers by chance
  • Why Nigol spend time at Colombia Business School programming and building models

“Alpha does not equal skill, alpha measures… skill sometimes.” – Nigol Koulajian (Tweet)

  • What Nigol thinks of Value at Risk
  • How Nigol found himself as a risk arbitrage manager despite his passion for CTA strategies
  • How Nigol navigated beneficial detours before finally partnering to co-found Enterprise Asset Management in 1994

“CTAs are getting better at implementing these factors on a stand alone basis, but they are becoming worse and worse at hedging equity corrections.” – Nigol Koulajian (Tweet)

  • About the founding and growth of Quest Partners from inceptions in 2001 to +760$ million in 2014
  • The dangers of an increased correlation between alternative strategies designed to protect against trouble in traditional investment and the traditional asset classes themselves
  • Learn about self reinforcing feedback loop and how managers of growing AUM are forced to allocate to factors that are doing well (but perhaps doing well by chance)

“When volatility is expanding, CTAs are expected to generate high returns.” – Nigol Koulajian (Tweet)

  • About the tight, automated business infrastructure of Quest Financial Partners
  • About the shift in volatility expansion and how to measure it
  • Plus much, much more…

“Sometimes not getting what you want is the best thing you can get because long term there are things that are very useful that we don’t even realize we don’t know.” – Nigol Koulajian (Tweet)

Resources & Links Mentioned in this Episode:

Seven CTA Factors that are not Skill Based which Drift in Long-term Returns:

  1. Sector Allocation – CTAs have been allocating to fixed income because it performed well over the past few years
  2. Long vs. Short – 90% of CTA profits come from the long side of trades
  3. Time Frame – CTAs have increased model time frame
  4. Mean Reversion – Selling rallys and buying dips within the trend
  5. Fixed Long Equity Exposure
  6. Carry Models
  7. Credit Strategies

“The benefit of positively skewed sources of alpha is that they are more stable when the market regime changes.” – Nigol Koulajian (Tweet)

The Five Different Strategies of Quest Partners:

  • Benchmark CTA Strategy
  • QTI Replicator
  • Equity Hedge
  • Fixed Income Hedge
  • Equity Long

“Going from a Sharpe Ratio of .5 to .6 takes you from average to almost superstar. This is how dramatic these factors are.” – Nigol Koulajian (Tweet)

Sponsored by Swiss Financial Services and Saxo Bank:

Saxo Bank Sponsor of Top Traders Unplugged

Connect with Quest Partners:

Visit the Website: www.QuestPartnersLLC.com

Call Quest Partners LLC: +1 (212) 838-7222

E-Mail Quest Partners LLC: info@questpartnersllc.com

Follow Nigol Koulajian on Linkedin

“Once CTA strategies are programed, as long as they aren’t over optimized, you can give them life and then let them live.” – Nigol Koulajian (Tweet)

 

2 Comments

  1. Vikas Rao on 05/13/2015 at 8:40 AM

    This probably was one of the best interviews here! Thank you for doing this, Nigol is a very sharp individual. The 7 factors that he outlines and the models he talks about are very helpful.

    • Niels Kaastrup-Larsen on 05/14/2015 at 9:03 AM

      Yes Nigol is surely worth paying close attention to when he shares his insights.

      Thanks for the feedback Vikas
      Niels

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