In this edition of The Bull Run, Evai Editor in Chief Vernon Ward sits down with Professor Andros Gregoriou to discuss the development of the evai.io ratings platform, recent inflation announcements by the Fed and the upcoming AI-powered investment fund, EvaiActiveFund.
VW
Welcome to the first edition of a brand new podcast launching on the via YouTube channel and all the usual places where you download your podcasts. The first edition is an interview with our Chief Research Officer, Professor Andros Gregoriou, where we’ll be talking about the evolution of the Evai ratings platform, EvaiStableFund, the upcoming EvaiActiveFund, the AI fund dynamically rebalanced by AI and machine learning, and also the impact of the recent inflation announcement by the Fed.
Welcome . . . to The Bull Run.
VW
Okay, so welcome to the first edition of The Bull Run. We’re very, very pleased and honored to have as our first guest, our Chief Research Officer, Professor Andros Gregoriou, thank you so much for your time. It’s great to have you.
AG
Thank you. Pleasure. Absolutely.
VW
So let’s, let’s get straight into it.
You know that the community is growing hugely in such a short amount of time. People are very, very interested in the project and it’s great to have you come out front and answer some questions for the community and the wider audience. So I wanted to first of all, you could just give a bit of background, you know, your history in academia, and, and, you know, other positions that you’ve had.
AG
My name is Professor Andros Gregoriou and I’m a full Professor of Finance since 2008, so coming up to sort of 13 and a half years now. My history is for the last 20 years, I’ve been building models on asset pricing, so how to determine stock prices, stock returns, and input and also my own unique liquidity measures, which have been used in the Evai ratings platform. My history is that I’ve led research, and been a full professor, at the University of East Anglia, Bournemouth University, University of Hull and at the University of Brighton – and with UK universities, every seven years, they have a research-excellence framework, where they’re assessed on their research and they obtain government funding because of it over the the following seven years. And I have actually just led that for the University of Brighton. So I’m an established professor. My work, I have undertaken consultancy for central banks, advise the Bank of England and have also done a lot of work for hedge funds in the UK, in Cyprus and in the US, and Iran. I’m essentially a professor of asset pricing models and liquidity measures. So this is my background.
VW
That’s great. Evai is only, you know, not even a year old since the ratings platform launched, how much work went into the project before the MVP launch, which was in April last year?
AG
The ratings platform is a unique piece of research that is clearly groundbreaking. What we have done is we have taken two of my research papers, my 2011 Journal of Banking and Finance paper, my 2019 general business research paper, and we have used that technology, we’ve developed our own models for ratings and our own liquidity measures. And we have adapted that for the cryptocurrency space, the work is is absolutely huge because what we are doing is we’re combining two sets of philosophies that are very rarely used in industry and academia. On the one hand, we want a model that has fundamental components in it, built from Nobel Prize-winning research. So for example, the Nobel Prize-winning researcher Eugene Fama, known as the father of finance, and Kahneman on Prospect Theory, and the psychology of investors, also technical analysis tools. And we’re combining that with Artificial Intelligence and machine learning technology, and the idea is that we take these factors that are grounded in academic theory, and are rigorously tested through time. And then we actually use the AI and ML in a very clever way, so that we can obtain the best fit of the model. And that’s why we’re using an automated AI system as well as the optimum coefficients, so the other weighting of the factors.
So we’re using the AI to get the best model, the best fit and the best sort of weights of each factor for the model. And each model is unique and each each cryptocurrency is unique. And each cryptocurrency may change the model as we increase or decrease the data set. So we’re combining two different technologies and it’s really, really important. On the one hand, if we simply use the theory and what’s grounded, you won’t get the optimum fit, and it will also have the elements of human bias, which we really don’t want. The AI gives us an entirely data driven model that is free from human bias and gives us the optimum fits and the optimum weight. But AI on its own is a problem because it doesn’t have any grand theory, it’s not tested on academic rigor.
So we’re combining these two things. And what we have, what we have actually created is a piece of groundbreaking research. The work that has been undertaken has been absolutely enormous. And we wouldn’t have it any other way. We want a product that is, that is that is not only grounded, in theory, not only tested properly, but it’s tested rigorously on data sets all the time, through back-testing, and also predictions and forecasting. And it’s really, really important for us to have a unique product that is tested, and can stand the test of time because we want to be here for over a long period of time. And we believe we have something that is unique and groundbreaking. For our investors, the benefit, absolutely is is unique.
VW
There’ll be a lot of people watching this that will be new to the crypto space, that are just getting into it, and may or may not have heard about the volatility, and things like that. So I wondered if you could just touch those for new investors, the importance of unbiased crypto ratings?
AG
Well, I feel it’s vital. Actually, I feel it’s more vital than ever. Because fundamentally, if you look at traditional markets, and you look at ratings, things like financial, S&P or Moody’s, what traditionally has happened is people give their expert views on what ratings should be. And people who actually rate have vested interests. This is not what we want, will be right, we really don’t want this we really don’t want Professor Gregoriou, his opinion we don’t want that. We want everything to be driven by data. And we want everything to be unbiased or free from any human elements.
And this is really important. And this is why we’re using AI and ML. What we’re doing is we’re using it in a very clever way, because we want it also grounded on academic theory and rigorously tested. So we’re combining sort of the academic literature and my work and our prize-winning research. But we’re using the good bits of the AI and ML, which is the unbiased, best fit of the model, essentially, in terms of weight that’s free from human bias and is entirely data driven, rather than my opinion – we want to avoid that. And to be honest, this is only the start. We could apply this model to all conventional assets, there’s nothing stopping us doing that. So in terms of your point about volatility, I think is really interesting, because one of the things that we’re doing is we’re continuously improving them.
This is research. This will carry on endlessly. And what we’re doing is we’re looking at new measures of volatility actually looking at new measures of liquidity. And we’re looking all the time at different estimators. And one thing to point out is every Friday, on our telegram community, I actually post the research paper that we are following with the ratings, or we intend to follow in the future. So by all means, that’s really interesting, because not only do I post the paper, I also comment on it. And by all means, I want people to read these papers. And if they have any technical questions, feel free to of course message me and I will explain further what we’re doing. We want it to be transparent, we want everybody to benefit from this and we feel in this market and in all markets actually to be honest, it is vital to have a rating system that’s unbiased, and as grounded theory and rigorously tested, it is vital.
VW
That’s very, very good advice. And also we will put the the telegram Group link down below. If you if you’re not already part of the community, please join. And you can see group Professor Gregoriou’s academic papers, they are published every Friday.
We launched, towards the end of last year, EvaiStableFund, which was a huge, huge success. And it’s given investors a chance to have exposure to the market without that risk of volatility. But I know we get we get a lot of messages about the upcoming EvaiActiveFund, the dynamic fund which will be rebalanced permanently by AI and machine learning, based on the ratings. I wondered if you could give some insight into the into the development challenges and and when you when you think we will be ready for the release?
AG
First of all, I appreciate people’s concerns about that. From our point of view, what is important is that we get a really strong product. And that’s really, really important. We feel that the fund is, is unique and is something that is quite revolutionary. Because essentially we are using the ratings and we’re using the AI and ML platform to essentially dynamically adjust the factors and dynamically adjust the model essentially, so that investors can get the ultimate benefit. In terms of when it will be available, we’re hoping for February. That should be the case and my personal opinion is that a fund like this is really, really important for investors. And really that’s for two reasons. I think, first of all, if we look at the inflationary pressures that are occurring at the moment, due to the Covid. And due to the climate change due to the century, the recession that is occurring, governments are printing money. And as a result of that, then obviously, in terms of fiat money, it’s decreasing in value. So having something that will give you a very high fixed return is invaluable for investors. Secondly, cryptocurrency is definitely where people should be invested, hence why we’ve created this in the first place. And the reason is they’ve got fixed supply.
So obviously, they do not suffer from inflationary pressures. So ultimately, in the long run, if you consider that governments are printing money at ease with any sort of crisis, then obviously, the value of fear is constantly going down. And your real worth is constantly going down if you invest in intervention of stocks or shares. cryptocurrencies do not suffer from this, so it is really important to do that. And obviously, the advantage of a stable fund is, is any kind of volatility in the market, you’re absorbing, because you’re earning a fixed rate. So it really is really important. The reason that things have been delayed is because we want to have a really, really strong product. And one that evolves with the development team, making sure that we get things right, everything that is done, we manually test just to make sure that it’s done properly. We also tested rigorously on past data on a forecast. And we have to make sure that it’s done properly before we release it, because we have our reputations on the line. And also we believe we have to give investors what they want, which is a great product. So we appreciate the concerns. Hopefully, we’ll be ready to launch in February.
VW
You touched upon a couple of points there that I wanted to pick up on just to get your views on with regards to recent news. Obviously, the Fed made the announcement about inflation which obviously had huge repercussions, both in both traditional and crypto market reaction to the news. In the immediate and I just wanted to get your thoughts on the sort of repercussions of it and how long you think the kind of repercussions will be felt going forward?
I feel obviously, when there’s inflation pressure, there’s always repercussions on all markets, I don’t think there’s any doubt. I feel that in the crypto market, it will be more short term than it will be in conventional markets, because cryptos themselves do not suffer from inflationary issues because of the fixed supply. I think obviously, in the short run that makes a difference. But I think in the long run, it will recover quicker. But I think even more reason for investors to want a fixed fund.
I mean, for obvious reasons. Inflation is occurring. It’s obviously bleeding the markets, so in a situation like that, what do you want to do with your money, you want to put it in a stable fund that gives you a stable return. So I actually think, obviously, Evai hasn’t accounted for this, but it’s the perfect time to launch (the fund), it really is. But inflation will always occur. And this is what I mean, even once it recovers, it will occur again because any kind of crisis that occurs, governments always react by spending, and they spend essentially by printing money. So inflationary and money supply issues will always be there. So in the long run, what you really want is a crypto investment, but you want it in a stable fund, because why should we invest ourselves when we’ve developed this brilliant technology that can do for you can you, to make sure that you make money. So I think everybody benefits from it. Because if we’ve developed something so good, we should be putting it to use to make our investors money. And this is exactly what the fund is doing. So it’s using this great technology to benefit everybody. And I think long run this is where people should be because inflation has always occurred. If we go back to the 90s, really, when the UK left the Exchange Rate Mechanism, it’s always been a way to get out of jail really, printing the money. So that’s not going to stop and even after Covid, it will be something else.
VW
I guess that it’s almost like a self fulfilling prophecy of the Fiat world that’s sort of driving everyone towards crypto anyway, by default, because where is there to go at the end of it? Fiat money is decreasing in value.
AG
That’s the the main issue. And it will always do that. And it has always done that throughout time. And if we go back to the 90s, really. That’s exactly what’s happened. I gave a seminar at University recently. That’s exactly what I mentioned. Fiat money is constantly decreasing and you’re constantly devaluing your wealth. So ultimately, cryptocurrencies are the key. And because we’ve developed this really great groundbreaking technology, why not use it and take out the uncertainty on what money you will make.
And we’re so confident in our technology because we know what we have is groundbreaking, and it will only get better. Just to let people know it will only get bette. Research is something that doesn’t stop. I work on it all the time, I’m in an office at the moment working on it. And it’s something that we are continuing to develop. And we’re continually looking at it, looking at the way we test, looking at how we estimate models, and we are constantly driving to improve this. And that will always be committed. Because I personally – and the whole research team actually – are committed in the long run, we want this to get better and better. And as more data comes in, the machine learning element of the model really kicks in. Because as the model learns, it gets better and better as the data sets get better. And the other thing we’re doing is we’re actually developing our own data sets, because we’ve actually found a lot of problems with the actual data. And what we’re doing with that is we’re using very clever simulation techniques like the Wild Bootstrap, which I developed in 2007, for financial markets, where we’re actually able to sort of deal with a data problem and still get a good model.
But we’re also developing our own unique data points for the market, because we actually thought the market needs that because there’s huge volatility in data. And to some extent, this has happened in conventional markets. We’re really the Bloomberg of the cryptocurrency space, which is what they’ve been doing for years with conventional financial markets. So we’re doing that for the cryptocurrency space. So it’s much more than just the model, it’s a whole community. And it’s it’s a whole future of investments, essentially, for people in cryptocurrencies. So it’s a long term project. It’s huge.
VW
Thank you so much for your time, I just have one last question. Just for anyone watching, that is just getting into it. And it will probably touch on some of the answers you’ve given before. But I just think it’s important to, to offer the advice to people coming into the space. There’s only 5% of the world’s population currently using crypto, there’s 95% left to find it and they’re coming in every day. So I just wanted to ask, you know, what advice have you got for people that are just coming into to the market?
AG
My advice for people coming into the market is to look at Evai actually. I really believe that because I think you should log on to our system and should register, and I think you should use the free service which will show you what we’re doing and explain the cryptocurrency space.
And then I think you can look at at the material on YouTube done by Matt Dixon, our CEO for example, myself and and the rest of the team. And I think you should get familiar with the cryptocurrency space, and I think you should get in touch with us. We will explain to you what it’s all about and what we’re doing. And I would, I would actually start with Evai, and this is not being biased.
This is exactly where I would start from an education point of view. And in fact, with our students at the University of Brighton, when I teach them, that’s exactly what I say to them. Log on to the site, register, and see what we’re doing, what this is about, how it works and what the model is. And that’s how I would start. That’s how I would educate myself really, with with the cryptocurrency space. And I will start with us because we have a model, we’re able to explain what factors are driving it, and then they’re able to see, for example, how these factors change. They can see how this space works. And I would invest in the fund, I really would if it was my own money.
VW
The whole reason that you went on this journey initially was to democratise the market and level the playing field for for all investors. The platform is free to use for everyone at any time and it’s a hugely valuable addition to the to the to the market.
AG
Yeah, it is. I mean, I personally think is essential to the market. I would go even a step further, really, because I mean, as you quite rightly said that there’s a very small percentage of people that that have adopted the cryptocurrency space. I believe it’s the future. And really the way to start is the reading because you’re able to register on the platform for free. And you’re able to see what’s going on. And I think the next step would be to contact us really. Me and Matt went on this journey, initially because I personally feel, and Matt does as well, I really feel that this is essential to the market. We really need people to to be educated in this field. It is the future and we need to take out the uncertainty of crypto and that’s exactly what we’re trying to do. I personally have only been in it for the last few years, and I really do believe it’s the future.
VW
There’s no doubt about thank you so much for your time. I know you’ve got a lot on with the development and the release of EvaiActiveFund, but thank you so much for your valuable time. Really appreciate it.
AG
Absolute pleasure. Glad to be of help and always, always free to discuss cryptocurrency with us, anybody who’s interested. Thank you. Thank you so much.
