Navigating Market Chaos
Freddie: The market is in turmoil with tariffs, trade wars, and unrest around the world. Join us for a special episode with one of our favorite guests, Ian Naismith. He is from Algo IQ. He runs a hedge fund of accredited investors that has actually managed to not only sidestep the volatility but also has turned a small profit.
Hello again and welcome to Leibel on Fire. I'm Freddie Bell with Amazon's bestselling author of Authenticity. It's Mr. Leibel Sternbach? Hello Leibel. How are you?
Leibel: Good. How are you?
Freddie: Unbelievable. How are you dealing with all this market volatility?
Leibel: Oh, well, it feels like a rollercoaster.
Freddie: It is a rollercoaster.
We have our special guest, and you know what, I'm going to turn the mic over to you to introduce, reintroduce Ian Naismith from Algo IQ. Can you do the honors?
Leibel: Ian is a money manager that I've known for quite a while now. He runs a hedge fund for accredited investors, and he is one of those, soothsayers of the market. He has a provincial crystal ball that allows him to kind of gain insights into the behaviors of the market. And last time we had the him on the show, he had some prophetic advice and insights into what was happening. And Ian I'm glad to have you back during this time of volatility and looking forward to hearing
kind of what your take is on what is happening in the markets.
Ian: Thanks Leibel. Pretty wild. It's reminding me of several times in my life where we've had things that were very unpredictable. That gave the market a lot of uncertainty. I can go back to long-term capital. I could go to the Asian contagion.
We had the dot com bubble busting in April of 2000. We had the terrible July of 2002. We had the weird part of the 2008 flash crash and finally the pandemic. So there's been several different times where we were lucky with the exception of 911 that we had quite a bit of volatility building up in the marketplace prior to
these larger events. So a lot of times the way I detect when things are getting a little bit frothy is when I'm seeing positive huge returns and negative huge returns building from what we would consider a baseline average of what we would expect on a daily basis from a return standpoint. So a lot of times that will unleash itself prior to the major changes we start seeing in the marketplace.
And that's what happened this time. We were on the podcast back in mid-December, and that's the last one I did with you. And at that point in time, I was saying that it was way too frothy to expect something like a 1999, and here we are. And the thing is, you don't know what's going to cause it, but when you see it in the numbers prior to the events it's kind of interesting that happens over and over again.
Freddie: What are the key things that you're seeing in the market right now that gives you a reason to pause.
Ian: Well, volatility is usually my canary in the coal mine. But the problem is that we have things that we haven't experienced in a while at a great level. And that would be the tariffs of course.
I'm really keeping my eye out on Canada. And keeping an eye out on China. And here's the reason. Canada has an election that's happening on the 28th, I believe of this month. They're one of our largest trade partners, I think behind Mexico. I think China's number three, if I remember correctly. We don't have near the imbalance that we do with China.
That's the reason why the tariffs are much more strict with China than they are with Canada. But right now Canada's not in a position with their current leader to make a clear cut decision on how they're going to negotiate with the United States. I think once they have that election, then we finally are freed up to get a full blown decision.
I think that will ease some of the pain that we're having. At least with Canada. China's more challenging. I don't pretend to be an economist at all. I just look at numbers and letters, but I think that one's gonna be more challenging. And until we can remove that variable or at least come with an answer, I think the market's gonna be volatile for some quite some time.
Freddie: Interesting. We're talking with Ian Naismith from Algo IQ, and I'll go to you right now leibel.
Leibel: Yeah, panic is what's happening as we talk about often on the show, right? It's uncertainty, right? When nobody knows what's gonna happen. That's when things get chaotic, right?
And people are. People are reaching to extremes, right? They're reaching to extremes of what is the worst-case scenario. And then they're projecting that. And it's important to remember, right? What Warren Buffet says is that it's only when the tide goes out that we see who's swimming, without protection, who's swimming naked.
And that's what we're seeing today, right? And we're seeing people who don't have protection, who are panicking. They either selling really aggressively or they're buying to do the support, or they're moving money from equities into bonds. And Ian, I would really love to hear your insight as a money manager who's navigating this, both on the fixed income side where you've got your fixed income models, and then you've got your equity, kind of, I wouldn't even call it equity, right?
It's an all asset hedge fund.
Ian: Right.
Leibel: What is it that you're seeing, and how is it that you're navigating your investors who are, you're managing to sidestep a lot of that volatility, you're managing to profit on it, right? What is it that you're seeing that you know the market isn't seeing or that the market's reacting to, that you've already reacted to ahead of time that has positioned you correctly?
Ian: Well, year to date since our last podcast commodities were behaving pretty well. Frankly, I was using VXX. Wish I was using it this last week, but I wasn't. That's actually way chaotic. But since volatility was picking up on the equity side, I had a 5% position in VXX, which really hedged out a lot of, some of the downside that started in March.
That helped a lot. The problem is if you hold something, it's like holding on to dynamite. You don't want to have too much of it. And you have to respect it for its own volatility also. So, when we found that it had protected us from the downside of certain asset classes on the equity side, or sectors that is, then we started seeing the rollover happening in commodities as well.
In other words, silver started waning. We had waning in agriculture. We had waning in base metals, and finally gold started giving in. Again, we're looking at volatility and also behavior to get us out. And we were lucky enough to have that protection with the VXX, which again, I'm not holding it at this point, so I think it's up like 17000% in the last few days.
I wish I had it, but I just, so you had to pick your battles with those types of things. And we already were anticipating this coming into the beginning of the year, so it's really been an easy year for us. Year to date our draw down for the year right now, as we said, we're at the lowest draw down for the year.
We're at around 3.5 draw down, and this is in a negative, almost 20% environment, I think for the S & P.
Leibel: Yeah. So, so I'm gonna ask a challenging question and I'm gonna half answer it for you, but I want you to expand it, expand on it and explain some more. So, we hear the rhetoric out there all the time that active management doesn't work.
It doesn't outperform the S & P 500, right? And that you're better holding the index for the long run. And the biggest person who keeps saying that all is Warren Buffet, right? He just keeps saying it over and over again. Yeah, Warren Buffet he sold a whole bunch of stocks and he's been holding cash for the last few months, almost like he was predicting that this was gonna happen.
And here we have you here who's saying the exact same thing that you were able to predict. You didn't know what was gonna set off the market, but you knew something was gonna set off the market. And then you kind of outlined this way of hedging your bets. Can you talk to me more about, or explain to us kind of, how is it that you're able to outperform when other people right, are underperforming or accelerating their losses in the market?
Ian: Well, the algorithm that I've been using for a long time, which incidentally the bond indexes are out the market and they have been, so my draw down on the high yield right now, I think I'm like 21%.
21 basis points. Right now my deepest draw down on that index. And we're talking about high yield bonds here. We're not talking about
Leibel: That's .21 on high yield bonds.
Ian: Yeah. That's our deepest draw down. Our all time deepest draw down is negative 1%. And so I average about 8% a year on that.
So that's very low drawdown for what you're getting on the money. But again Leibel, the thing is that with me the algorithms that we use look at high odds. Momentum type trades and high odds, contrarian type trades. Now, the algorithm what sets it apart, which you are familiar with, the algorithm does not care about time.
It's time agnostic, which means that I can set it for an end of month, end of quarter, end of week, end of day. I can do it intraday, so forth, and it gives me a high odds chance of closing out each trade. I don't pretend to be a buy and hold. I never will be and never was. And anyone that's ever argued about buy and hold, well, they need to go look at my indexes.
And it shows you how well active management works. It's been a blowout. So, know where your entry points are and know how to position size, and surely respect when the markets are not behaving. Accept it when you're not keeping up with them on the bounce. All right. That's very hard for people to do.
Really celebrate when you're not going on the downside and be prepared to, get your spanking when the thing's bouncing from the bottom and you're not participating. The idea is we want to remove those 10% timeframes that are panic and try to participate as much as we can in the 90% timeframes that are relatively smooth.
'Cause a lot of trillions of dollars get removed really quickly in these panic states. So, so am I
Freddie: correct in thinking this is what you're doing for your investors as well?
Ian: Oh, I'm sitting on my hands. I'm having fun time. This is not stressful for me at all. In fact I really like these periods because that's what really allows us to shine. If you can avoid 20% draw down or almost all of it, and it decides to bounce and you miss the first 5 to 10% off the bounce.
Well, if it reconciles itself and stays, true, and then it gets back to its high watermark, that's fun. It's easy to do over and over again.
Leibel: So if I hear you correctly, what you're saying is if we protect on the downside and we make sure that we don't participate in all the panic selling, then when we participate in the upside, we don't need all of it.
But even if we just get some of it, we're gonna make out better than the people who rode the entire rollercoaster.
Ian: My biggest problem today was to decide if I wanted a coffee roll or a Boston Cream donut. That was my biggest problem today so far. Well, and I'm not trying to be, I'm not trying to belittle this 'cause I know a lot of people go through the pain.
Yes. They don't have to. It's a choice.
Freddie: We're just about out of time. But I wanted to know if an investor or someone who's just casually in, or maybe someone is in retirement right now wants to learn more about you and what they should be doing at this point, where should they go?
Ian: Algo IQ capital dot com is where the hedge fund is showcased.
So accredited investors only. So it does have limitation on what I would consider not well, non-accredited investors can't participate. I'm always having people approach me to productize my stuff, and if we get to a point where we're having a ticker, like an ETF ticker or a mutual fund ticker, I would surely share that because that's the easiest, that's the easiest way the average of investor can get ahold of our expertise.
Leibel: Yeah. And on the fixed income side if people want to have access to your fixed income strategy, that is something that is available through Yields4U if they want to use that.
Ian: Yes. Leibel's a big fan of our work. Our work speaks for itself. And I give Leibel signals as to what to do and so you do have the ability to access the, it's smooth sailing as the business, but the idea is that you can access the performance.
Freddie: Well, great information from two great people today on our podcast, and that's all the time we have for today, unfortunately. But you heard it here first. If you'd like to learn more about Ian, visit as he said his website, or you can reach out to Yields4U.com the team there will be happy to help you to connect and help you to determine where Ian's strategy is best fit for you.
