In this episode of The Derivative, Jeff Malec is joined by Patrick Kazley of OneRiver explore how long volatility, convexity, trend following, and systematic macro can be combined in a capital‑efficient way to improve equity compounding and protect portfolios from major drawdowns. They discuss crisis “shapes,” why time-based rebalancing often beats intuitive drawdown triggers, how changing volatility microstructure (zero‑DTE, single-name vol, dispersion) creates new opportunities, and why behavioral biases keep most investors under-allocated to positively skewed defensive strategies. Patrick ties it all together with vivid metaphors — from F1 cars and soup vs. salad to sumo wrestlers and the beer boot — and explains how One River’s acquisition of a European alternatives/QIS team fits into their total-portfolio approach..… SEND IT!

Chapters:

00:00-02:21 = Intro

02:22-12:33= From AQR to One River – Patrick’s Background and the Case for Systematic Risk Mitigation

12:34-28:07 = Engines and Brakes – Equity Beta, Skew, and the Power of Convexity

28:08-43:55= Crisis Types, Trend Following, and Building a Total Portfolio Defense

43:56-1:03:04= Visualizing Risk – Crisis Shapes, Rebalancing, and the Math of Convexity

1:03:05-1:16:36= Metaphors, Markets, and M&A – From F1 Cars to Das Boot and One River’s Next Phase
1:16:37-1:28:37= Soup vs. Salad – Total Portfolio Thinking and the Future of One RiverFrom the Episode:

Blog post: A Short History of Market-Moving Middle East Conflicts

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SuperCars, Salad, and Sumo Wrestlers: Inside OneRiver’s Systematic Risk Mitigation Playbook with Patrick Kazley