Steve Markovitz – Performance Chasing & Bad Timing: When Investors FailVW Staff
Founded in 2007, Lake Geneva Investment Partners (LGIP) is a FINMA registered asset manager in Geneva, managing $650m with a systematic investment approach. With 12 investment professionals, the company manages two funds (a fixed income absolute return UCITS and a multi-strategy trading/arbitrage hedge fund), and also offers tailor made solutions for larger accounts.
Co-Founder Steve Markovitz has 26 years of experience in software engineering, analysis and trading. He spent most of his career in New York, working with companies such as Bankers Trust, Deutsche Bank and Millennium Partners where he managed in excess of $1bn in several arbitrage strategies.
In this Opalesque.TV BACKSTAGE video, Steve explains how performance chasing leads to “crowding” and eventually to “explosive unwinding”. He also mentions a case study that demonstrated how most investors fail to make money because of bad timing. The average investor “decides to buy with his intellect, but sells with his gut” when volatility gets too high. The result of those two factors is that many investors aren't making any money, even if they invest with the best managers.
The Answer: Target volatility
LGIP's funds offer an interesting proposition as they are managed with a strict target volatility approach. Both funds have outperformed their respective benchmarks by significant margins. The flagship hedge fund has a track record since 2008 and a correlation to MSCI World of only 0.2 or lower. LGIP's investment strategy returns have no dependence on overall market direction and are characterized as quantitatively driven “but not systematic”.
Steve Markovitz – Performance Chasing & Bad Timing: When Investors Fail
Hear Steve also talk about:
- How experience at Millennium Partners shaped his investment approach
- Why trades are initiated only when there is a measurable statistical advantage
- The Power of Multi-Strategy
- “Proud moments” of LGIP: Positive returns in 2008 (6%) and August 2015
- Outlook: Confident about future returns as markets revert to normality from suppressed volatility levels
LGIP only trades liquid markets and instruments and provides full transparency, daily reporting, and no gates or lock-ups. Steve also points out that the gains LGIP reports are not mark-to-market profits but almost exclusively realized actual gains. Negative surprises can result when portfolio valuation depends on the subjective pricing & modeling of illiquid or OTC securities.
Steven Markovitz has 26 years of experience in software engineering, analysis and trading. He spent most of his career in New York, working with companies such as Knight Ridder, Bankers Trust, Deutsche Bank and Millennium Partners. At Millennium, a New York based hedge fund, he managed in excess of $1bn in several arbitrage strategies. Steve is head of research for Lake Geneva Investment Partners SA. and holds a B.A. in chemistry and an MBA from Columbia University.