Explain, you’re not trying to speculate, you’re just trying to give Americans access to the cheapest and best performing mutual funds on the planet.” And they did this and the SEC looked at it and blessed it with what’s called a no action letter. What you were actually capturing was exactly this phenomenon. So, want to warn you, there were a few small technical difficulties, which I think people have come to expect, given that everyone’s working from home and there are a lot more variables to control for. If you look at… And this is also just the autopilot idea.
And somewhere around 85% of every incremental dollar, that’s now going into retirement accounts in the United States is going in, in the form of a target date fund.I think that the tail hedge discussion will emerge from some questions I wanted to get to later on anyway, which is about how your… Because in a lot of the articles you’ve written, a lot of the interviews you’ve given, you’ve referred to the fact that you’ve positioned clients to participate asymmetrically to one of a finite number of potential outcomes, and so I think we can probably drill into some of the optionality and how you structure that optionality as we discuss that. We’ve got 1% of the market. So you didn’t have an ETF focused on the idea of insight or ownership at that point. If I take it to 20%, it’s even lower.
Now it’s an assumption that the next transaction is close to that transaction. And so it meant that literally no trades were happening. Today, Mike is Chief Strategist for Logica Capital Advisers and, as usual, he has a lot on his mind. And so we use this paradoxical phrase, we talk about markets becoming more efficient. It just takes me back to my value roots, and I approach the macro space from the same standpoint. Humans are storytellers. We’ve been fortunate so far that it largely has delivered under exactly what we look like. This is true for Vanguard products. The market is becoming increasingly distorted.This is what this actually looks like. But after that experience, I went to work for Peter Thiel managing some of his personal capital.The problem with those assumptions is that it relies on a couple of different features. Your propensity to sell rises as valuation rises, your propensity to buy falls as valuations fall. Michael shared his background and the thesis he’s developed on how regulatory changes over the past couple of decades have led to a deluge of passive flows in markets that have disrupted the past equilibrium that was enforced by a balance between largely momentum and value traders, and shifted several expected levels for markets in terms of valuations, expected returns, etcetera, in ways that I think very few investors have intuited or are positioned for.Hopefully it will come through here.
So he had recognized that he could model the specialist order book, and he used an atomic decay pattern effectively to build this order book simulation.