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Risk and Return with Jeff Tsai and Vinny Yu

George Grombacher March 6, 2022

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Risk and Return with Jeff Tsai and Vinny Yu

LifeBlood: We talked about understanding risk and return, the challenges facing investors, how to start understanding your risk tolerance, and how to sift through massive amounts of information in a way that make makes sense, with Jeff Tsai and Vinny Yu, CoFounders of of Javlin Invest.  

Listen to learn about how to immediately increase your level of investment knowledge!

You can learn more about Jeff and Vinny at JavlinInvest.com, Facebook, Twitter and LinkedIn.

Thanks, as always for listening!  If you got some value and enjoyed the show, please leave us a review wherever you listen and subscribe as well. 

You can learn more about us at LifeBlood.Live, Twitter, LinkedIn, Instagram, YouTube and Facebook or you’d like to be a guest on the show, contact us at contact@LifeBlood.Live.

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Our Guests

Jeff Tsai

Vinny Yu

Vinny Yu

Jeff Tsai

Episode Transcript

Come on

warm lead. This is George G and the time is right welcome today’s guest strong and powerful. Jeff side, Vinny, you Jeff and Vinny. Are you ready to do this? Let’s do it. Let’s do it. Let’s go. Jeff and Vinnie are the co founders of Javelin invest. It’s an app that gives long term investors better access to data and the tools necessary to take their finances into their own hands. Excited to have both of you on, tell us a little bit about your personal life smartbots your work and why you’re doing what you’re doing.

Jeff Tsai 0:42
Alright, George, thanks for having us. Excited to be here. Um, I guess I’ll get started. Yeah, absolutely. Alright. So my name is Vinny, co founder of javelin and best. Professionally, my background is in finance. I was in trading portfolio management and m&a in total for about 15 years.

I’ve been happily married for almost three years now, which two were spent during the pandemic, you know, still going strong, so.

Okay, on that front, Jeff? Yeah. And so following Vinny, I am actually completely different than Vinnie to certain degree I’m more credentialed actuary follow the Society of Actuaries. Previously, to co founding this, I was sort of running the and overseeing all the corporate actual functions within a small to medium sized Mutual Life Insurance company focused on retirement products. And I oversaw like asset liability modeling, cash flow testing, product innovation, enterprise risk management, and all those functions. And sort of passion project that I’ve been working on and sort of how we got into the app making businesses. As I was leaving, actually, a passion project of mine is making hoop hero, which is an eight bit basketball game for iOS. So that’s sort of a fun thing that we’re doing, we’re thinking of trying to expand that into an empty space somehow.

george grombacher 2:19
I love it. So you both have well, is their passion for the markets passion for investing. And you recognize that a lot of folks who are out there that are hopping on apps like Robin Hood, or XYZ app or just trading their fidelity account, whatever. They’re a bit, they’re sort of trading with their hands tied behind their backs.

Jeff Tsai 2:44
Yeah, absolutely. And that’s kind of why we made this app, right. We wanted to help the everyday investor get a better understanding of their stock portfolio, and also to provide tools and resources so that they can make better investment decisions. Our our main focus is around risk and reward, which we think is something that isn’t really focused on enough. And we provide risk metrics that aren’t typically found in other investment software, such as conditional value of risk, volatility, and Sharpe ratios. can also help you easily optimize and backtest your portfolio against the s&p 500. So these tools were traditionally used by professional money managers. But now we kind of want to make it available to everyone, you know. Yeah. You know, and, George, I think it’s great that you brought up passions, because actually, I joke with Vinnie all the time, that our passions, this app is sort of the intersection or the baby or the marriage, the happy marriage of both of our passions. Vinny, obviously, with his portfolio management, and his m&a and his finance background, very strong, and a great portfolio manager trading background, you know, he’s focused on the returns. And obviously, because he has that investment experience, he also has, that the idea of optimization and back testing and understanding what people are doing, as they’re trading as a building the portfolios, then my passion and my experience has been risk. And so I’m sort of the, the, the eyes to the fire, you know, and helping to really bring the idea of like, hey, our passion is really to drive. Helping retail investors understand the risks in their portfolio that they’re actually holding. And so Javelin is actually customized to you know, you come in and you put in your portfolio or your linker portfolio and so that’s, it’s great that you brought up passions, because this is really our passion.

george grombacher 4:56
Yeah. I appreciate that. So

Risk and reward, let’s just talk, I think that certainly, it’s easy for me to get my brain around reward. If I throw money at AMC, or Dogecoin, or whatever, and it goes up 10,000% That’s awesome. harder for me to as an investor, or maybe I don’t even realize, like, how is risk relating or transferring to my behavior and my bottom line?


Jeff Tsai 5:33
so, a lot of people don’t realize how risky say something like a Dogecoin actually is, right? And it’s really hard to quantify without, you know, the data and the analytics. So one example that we actually like to use to help, you know, people illustrate,

you know, what we mean by risk to reward and what we’re trying to kind of accomplish here with the app is we like to compare, you know, something similar, right? Gamestop to like a Tesla, right, both super popular stocks for the past couple of years. And if you look at their risk to return profiles, you notice that their returns are actually pretty similar, right? However, their risk differs drastically. So in our risk reward chart, you can easily see that, you know, to get that type of return of like a Gamestop, Uber Tesla, you don’t necessarily have to take on as much risk as a Gamestop. And that’s the kind of mindset that we want our users to have, right? We want to mitigate any type of unnecessary risk, so to speak, and sort of build upon and even just clarify what we mean by risk risk, we, you know, we, we call quality quantify risk as volatility, and that’s typically how it’s quantified in the investment world. And volatility is just how much your equity holding or your cryptocurrency is moving, daily, monthly, quarterly, yearly, depending on how you want to measure by the timeframe. And just just so we have an understanding of what that is.

george grombacher 7:16
Yeah, I think that these are such foundational terms, concepts, parts of investing, that that the average investor, probably even higher levels of investors just it’s not, it’s not like we can understand it. It’s just that we don’t necessarily know that it’s such a key thing that it’s so trackable, and that you’re missing out on something which is very accessible.

Jeff Tsai 7:44
Right? Absolutely.

george grombacher 7:47
So, how, how are you able to do this? How are you able to, to to create these charts? And why don’t you just sort of take us through how you develop the app? And what, what, what the experience kind of is?

Jeff Tsai 8:02
Sure. And so why don’t I take this lead for the moment Vinnie, and then you can come in and fill in any holes that I left out, I think, for Vinny and I, the genesis of the app, like we mentioned, you know, you know, we met playing basketball on the court. And we became friends that way. And, you know, one day we just randomly met up, and we just found that we were both trying to do something in entrepreneurship. And as we started chatting more and working together more through some other projects. One day, I sat down with Vinnie, and say, Hey, what’s really your passion, what’s your dream is like, I want to help people be the best investors they can be. And for me, mine was I wanted, I was like, Oh, that’s amazing. Like, I want to help people understand risks, and mitigate the risks, you know, as an actuary. And so our process really coming around through this was, you know, we’ve actually sat down and coded every algorithm that’s being used. Some of that is proprietary. And some of it is stuff that we’ve leveraged, especially data, we’ve spent a lot of time trying to find data that we think is useful for people and that we can take advantage of, and help people calculate all these metrics, calculate all these analytics. And no, we’re not app developers by by training in vibe and by profession. But it was sort of like a learning process. I did have a little bit of app development through making hoop hero. But aside from that, it’s really been a little bit trial by fire, but you know, we’ve surrounded ourselves with some great help. We’ve been very fortunate very blessed with the people that have stepped up to help us and so you know, the what you see is a culmination of all that.

george grombacher 9:52
Nice. Alright, so with all available information, so when we’re talking about individual securities like you mention and Tesla, you have the ability just to go into different previous reports, and like, how are you getting the information at that thing? That that’s probably very obvious to you guys, but not necessarily obvious to other people?

Jeff Tsai 10:17
Yes. All right. So we partner with vendors, and or we subscribe to basically information data providers. And through that, we off, you know, we, you know, pull in the data, and we analyze them and use them in whichever way we need to, so that we can get these, we don’t necessarily show that data directly to the user. But what we try to show them are the metrics and the algorithmic outputs, I guess, for the user. Right. So so we would pull in a lot of historical price data, right? So that’s, that’s how we can determine, you know, the price changes and the fluctuations, and, you know, the volatility and all that. And also, you know, it’s the foundation of how we, you know, run our analytics, it’s off historical data.

george grombacher 11:13
Got it? Yeah. And, you know, the last thing that I want, if I’m just trying to become a better investor, is to comb through and sift through a massive amount of data, right? I want, I don’t want just information, I want knowledge, and I really want them to be able to pull wisdom from that to make me a better investor. Right. Right. So So I open up the app, and I, I, I say what I’m interested in growth investing, how does it actually how is it how is it actually working?

Jeff Tsai 11:49
So you open up the app, and you can input, you know, tickers that you want, right? Or you can link your brokerage account, if, if you’re comfortable with that, right, it’s it’s much smoother and easier process. But you know, we understand that some people don’t like to link their financials to, you know, apps. So we created a manual input for people as well. So once you have your tickers inputted, we have a home screen where it has all these different metrics for you like the mentions, like the metrics that I mentioned before, see var conditional value at risk, which essentially tells you how much you’re at risk on any given day, right? So so to so for instance, maybe like a Gamestop, any given day, you could be at risk for losing 30% of your portfolio, right. And if you’re okay with that, you know, you know, there’s also probably much higher upside as well. But for something like an apple, which maybe have, you know, like a 3%, down day would be like a bad day for them. You know, but it’s upside is, you know, much higher, they’ll have a much higher risk to reward ratio, much lower volatility, and then we also benchmark it to the s&p 500. So you can see how your portfolio compares to the s&p 500. And then what we try to do is we, we try not what we tried to do we actually do it for you is we optimize those tickers for you as well. So you can see what the actual optimal allocations are for that particular portfolio. Right. So sometimes, you know, the question is, Oh, should I just, you know, how much of Tesla should I buy? How much of Gamestop should I buy, we actually calculate it and give you, you know, according to historical the Sharpe ratios, the historical risk to reward will calculate the actual optimal allocations for you. So that I think that’s something that’s really cool. Typically, this is something that takes a long time to do if you do if you’re doing it on your own takes a lot of spreadsheets, you have to know how to code you know, you know, you have to know where to pull the data. So we can easily do it all for you. But we have to, you know, we have to say that this is all based on historical data. So, you know, and and this should not be counted as investment advice, right? It’s just, we’re just providing data.

george grombacher 14:24
At this point in time, the app is not a functioning crystal ball that will look into the future, although it sounds amazing. It’s not quite there yet. Exactly,

Jeff Tsai 14:33
exactly. And it’s funny that you mentioned a feature because we also do it attempts to project your portfolio to the feature. And so that’s another function that we’ve worked on, is that it’s completely proprietary to us and very unique to us. There’s no one else out there that does what we do, is we’ll take your portfolio and we’ll tie it to macro economic factors. and we’ll run, you know, right now all we have in there is is, you know, 1000 different interest rates scenarios. And so, you know, if you’re worried about a rising interest rate environment, you could potentially see how that may impact you in the near term. Your portfolio how impact your portfolio and you’ll see a, oh, maybe I need to make some adjustments, or maybe this is really not a risk that I need to be really fearful or careful of. But sort of just like Vinnie mentioned before, it’s a model, it’s an algorithm. You know, it’s not a crystal ball, it’s not an Oracle, that’s not going to tell you exactly what’s gonna happen in a year or two.

george grombacher 15:45
Right. Now, what, what is it? Is it individual stocks? What is projecting,

Jeff Tsai 15:56
so protects your whole portfolio. So it takes her whole portfolio because, you know, some stocks, you know, there’s they have negative correlations to one another, so they move in opposite directions, so they may balance themselves out. So we, you know, we do look at the whole portfolio is a machine learning algorithm that ties your portfolio to the historical price movements of what’s happening in your portfolio to the actual historical interest rate environment that’s happened in the past as well. And then using some insurance, economics to generate sorry to be so technical, we, we model 1000 different economic scenarios, in this case, specifically interest, we model 1000 interest rate environments.

george grombacher 16:44
Nice. So if I’ve got a handful of exchange traded funds, ETFs, I’ve got a handful of different stocks and things like that, and I’ll put everything in and it’ll say, okay, based on what it looks like you’re trying to accomplish, probably optimize that by reducing your holdings in XYZ stock and put it into XYZ ETF. And so that’ll really, it’ll tell me, here’s how much is at risk. Here’s how much if you optimize things, or how you might consider optimizing it.

Jeff Tsai 17:17
Exactly, yeah. Yeah. So we can handle ETFs we can handle mutual funds. We can’t handle crypto just yet. Just to be clear, and we are just focused on the US equity markets at the moment.

george grombacher 17:32
Nice. What his response been so far?

Jeff Tsai 17:37
It’s been okay, you know, it’s, I think this is something that is more immediate for people who are a little bit more sophisticated, and their investment approach, you know, so someone who is, you know, is just sort of a new investor, they haven’t gotten themselves to the point where they want to think like this and invest like this. If they are sort of a hands on retail investor, some retail investors are a little less hands on. And so they may just want to be in know, very typical prototypical robo advisor, and they’re happy with that. But we can help with that as well. Yeah.

george grombacher 18:19
Got it. Nice. Yeah, it strikes me that we’re, we’ve certainly been investing through brokerage accounts for a long time. But now there are so many more people that are coming into the world of trading. And I think, depending on what you look at 80 85% of those folks are currently losing money at it. And so it strikes me that if folks stay doing it, that they’re going to want to become more sophisticated, and that instead of having to become more sophisticated, all on my own, they can be more sophisticated, become more sophisticated by using an app like Javelin

Jeff Tsai 18:59
Correct. Absolutely. And that’s certainly our hope. You know, we want to partner with you and journey with you and trying to help you just get better risk to reward returns. Yeah.

george grombacher 19:11
Yeah, love it. Well, gentlemen, people are ready for your difference making tip, what do you have for them?

Jeff Tsai 19:18
Um, alright, for difference making tip. You know, like, like we mentioned before, you know, this app can really help you optimize your portfolio along with risk metrics and projections with a click of a button. Right? So you know, we do all the dirty work all the grunt work for you, you no longer have to work with complicated spreadsheets, pay for data or know how to code. We still think it’s, you know, really important to understand basic investment concepts. But, you know, we, we can do it all for you with a click of a button. This Javelin invest that

george grombacher 20:00
Okay, go ahead.

Jeff Tsai 20:01
Yeah, sorry. I didn’t mean to catch up George. For me I wanted to say in life, timing is everything. But with investing a simple sort of consistent approach, disciplined approach such as dollar cost averaging, really takes away and proves that statement wrong. You’ll do well if you do that.

george grombacher 20:23
I think that both of those are great stuff definitely gets Come on. Jeff, Vinnie, thank you so much for coming on. Where can people learn more about you and where can they find Javelin invest?

Jeff Tsai 20:36
You can reach us at i a javelin invest calm if you have any questions. If you want to learn more about Javelin best. You can also reach us at our website Javelin invest calm or download us in the App Store or the Google Play store. Or, you know, if you email us at Hi at javelin, MSN comm we’re pretty responsive most of the time. So we’ll get right back to you. We love chatting with our potential users or clients.

george grombacher 21:06
Love it. Well, if you enjoyed this as much as I did, so Jeff and Vinny your appreciation and share today’s show with a friend who also appreciates good ideas. Go to Javelin invest calm and download the app Javelin invest from the App Store. Wherever you download your apps should have an email Hi at Javelin invest calm. Thanks. Good Jeff and Vinny.

Jeff Tsai 21:29
Thank you are Thanks, George. And thanks for having us.

george grombacher 21:33
Yeah, for sure. And until next time, keep fighting the good fight. We’re all in this together.

Transcribed by https://otter.ai

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