By Bilal Hafeez 13-10-2020

Ep. 32: Corey Hoffstein On How The Fed, Passive Investors And HFT Create Liquidity Cascades

(1 min read)
Resize text:


Corey recently wrote an excellent piece on market liquidity and I had to have him as a guest. For background, he is co-founder and Chief Investment Officer of Newfound Research, a quantitative tactical asset management firm. At Newfound, he is responsible for portfolio management, investment research, strategy development, and communication of the firm’s views to clients. He holds a Master of Science in Computational Finance from Carnegie Mellon University. In this podcast we discuss:

  1. How central banks have pushed investors up the risk curve
  2. How central banks have introduced moral hazard to investors
  3. The importance of passive investing as marginal flow into assets
  4. The impact of passive on how trades are executed
  5. The procyclicality of HFT liquidity provision
  6. How dealers hedging magnifies volatility shifts
  7. The prevalence of volatility contingent strategies in markets
  8. When do liquidity cascades end
  9. How to position for liquidity cascades
  10. Books that influenced Corey: Fooled by Randomness (Nassim Taleb) and Red-Blooded Risk (Aaron Brown)

Corey’s paper Liquidity Cascades and supplemental work can be found here. For his broader research, you can find it here. You can also follow Corey on Twitter

Make sure to subscribe to the show on AppleSpotify, YouTube, or wherever you go for your podcasts. You can follow us on Twitter and LinkedIn.



(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)



For access to our Slack Chat Room, where we discuss all things markets with our researchers and subscribers



Successful Start-Ups Build Strong Founding Teams (4 min read)

By Sam van de Schootbrugge | Feb 10, 2021
Start-up success hinges on many factors, but most would agree that the skills and experience of the founder and initial founding...

Where Will the Economy Find 10 million Lost Jobs? (3 min read)

By John Tierney | Feb 08, 2021
The headline January labour market report was another downer – private payrolls rose a scant 6,000 versus the consensus...

Where Can you Get Higher Bond Yields?

By Caroline Grady | Dec 04, 2020
US yields are rising. The combination of growing optimism over a global recovery given vaccine progress, and the possibility of a US...


The Fed is Failing (1 min read)

By Bilal Hafeez | Mar 01, 2021
The Fed’s failure is neither that rates…

Do ESG Ratings Affect IPO Valuations? (4 min read)

By Sam van de Schootbrugge | Mar 03, 2021
Summary A new Journal of Corporate Finance…

Want To Join Our Community Of Leading Investors And Researchers In Our Slack Chat Room?