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Invest Like the Best

Exploring the ideas, methods, and stories of people that will help you better invest your time and money. Learn more and stay-up-to-date at InvestorFieldGuide.com
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Nov 13, 2018

My guest this week is Cliff Asness, the managing and founding principal at AQR Capital Management. 20 years after its founding in 1998, AQR manages $226 Billion dollars across a number of quantitatively based investing strategies.

Cliff was an original quant researcher and he has long been one of the financial writers and thinkers that I look to for education and for inspiration.

I distinctly remember reading one paper in particular—value and momentum everywhere—somewhat early in my career and thinking: this is the kind of research I want to do forever.

You can always tell when talking to Cliff or hearing him speak that he just loves researching markets. There is a deep intellectual honesty in his work, and a respect for thinkers at different ends of the market spectrum, from Gene Fama and Ken French, to Jack Bogle, to Dick Thaler and Robert Shiller.

Our conversation is about all things quant—past, present, and future. Cliff touches on many of the big issues facing quant investing and tells some great strong along the way. I hope you enjoy our discussion. Let’s dive in.

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.

Follow Patrick on Twitter at @patrick_oshag

 

Show Notes

1:47 - (First Question) – Favorite superhero

2:43 – Why ‘Ka nama kaa lajerama’ is part of his twitter profile.

3:38 – How portfolios have shifted the way they use factors in a portfolio

10:15 – What are good questions clients are asking right now

            13:24 – Contrarian Factor Timing Is Deceptively Difficult

15:40 – Does technology impact investing strategy

22:14 – When to share information vs keep it proprietary for clients sake

26:40 – How their research process is governed

31:14 – How they will incorporate machine learning into their process

34:21 – What they will do when red flags show up

37:01 – Wackiest question from a client

41:47 – The Three Sharpe Ratio Strategy

            41:53 – Liquid Alt Ragnarök

48:10 – Does his thinking change when it comes to asset allocation vs portfolio building

            50:17 – Parallels Between the Cross-Sectional Predictability of Stock and Country Returns

            53:01 – Sin a Little

57:14 – Trends in fees and pricing

1:02:43 – Thoughts on private equity markets

1:11:03 – Common attributes of really good researchers

1:13:21 – What is he most curious about right now

1:15:43 – What excites him outside of finance

1:17:00 – How much he discusses his work with his kids

            1:18:35 – The Devil in HML’s details

1:19:36 – Kindest thing anyone has done for him

 

Learn More

For more episodes go to InvestorFieldGuide.com/podcast

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub

Follow Patrick on twitter at @patrick_oshag

Nov 6, 2018

[REPLAY]

My guest this week is Peter Attia, M.D., whose mission is to understand and improve human lifespan and healthspan (or quality of life).  Reading Peter’s research, you find that there are many similarities between health and investing—ideas like compounding—which we explore in detail.

We spend a lot of time on mind, body, spirit and performance as it relates to living a better life. Of particular interest is the strategic problem that we face when studying longevity. As Peter puts it in our conversation: we are the species of interest, but we can’t conduct the kinds of experiments on humans—randomized trials, with control groups—that we apply to solve other big problems. So we have to back our way into a better understanding of longevity and quality of life.

To that end, we discuss what we can learn from studying centenarians, the problem of progress in science, a drug called Rapamycin (which Peter believes could be revolutionary), eating, the importance of muscle mass, and the idea of distressed tolerance.  We emerge with a framework for thinking about health and well-being which can hopefully help us all live longer, better lives. Please enjoy!

For comprehensive show notes on this episode go to http://investorfieldguide.com/attia

For more episodes go to InvestorFieldGuide.com/podcast

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub

Follow Patrick on twitter at @patrick_oshag

Posts From Peter Attia That You Should Read

Do Calories Matter

How You Move Defines How You Live

2016 Update

Long List of Questions Answered: Part 1 and Part 2

Links Referenced

The Scientific Method-Richard Feynman

Knowing Versus Understanding-Feynman again

Books Referenced

Barbarians at the Gate: The Fall of RJR Nabisco

Diffusion of Innovations

Good Calories, Bad Calories

Show Notes

2:31  – (first question) – Getting Peter to define the concept of wealth and how it might have changed in his life

5:01 – How do you increase the number of really good people in your life.

6:50 – Looking at the relationship between healthspan and lifespan and a chart that Peter created on this specific topic.

11:11 – Drilling down into the different dimensions and aspects of this chart that could be most important for people, especially how compounding plays into our health.

16:57 – The difference between strategies and tactics that will help you extend lifespan

17:54 – The Scientific Method-Richard Feynman

21:41 – Different types of intermittent fasting

28:59 – What role does repair play in health

34:17 – Barbarians at the Gate: The Fall of RJR Nabisco

36:01 – Looking back, what health trends today will look absurd

36:19 – Diffusion of Innovations

39:24 – What are the primary benefits of weight lifting

40:21 – The importance of glucose disposal

45:07 – Good Calories, Bad Calories

46:31 – What is the state of progress in the scientific community

52:14 – Peter is asked about how he guards against getting too attached to old beliefs

1:01:51 – A look at how performance relates to healthspan

1:03:34 –Peter’s first great auto-racing experience

1:09:17 – Looking into Peter’s medical practice and understanding his thinking that goes into helping people

1:18:11 – The most memorable day in Peter’s career

1:22:31 – The kindest thing anyone has done for Peter

Learn More

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub

Follow Patrick on twitter at @patrick_oshag

 

Oct 30, 2018

My guest this week is Ryan Caldbeck, a private equity investor who wants to bring quantitative rigor to the private markets. Ryan is the CEO of Circle Up, which uses a system it calls Helio to identify attractive investments in early stage consumer brands. 

While I am of course a fan of quantitative investing, I also know from experience how much harder private markets are than public markets when it comes to the transactions themselves. We discuss this and many other potential roadblocks to bringing models to private markets.

Using many individual companies as examples, Ryan explains some of the major predictive factors they’ve uncovered in their research. We also discuss which parts of the private markets might be infiltrated by quant processes first, and which may never be. 

I expect many more to go on a journey similar to Ryan’s in the years to come. They serve as an interesting example for ambitious investors out there.

Please enjoy our conversation.

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.

Follow Patrick on Twitter at @patrick_oshag

 

Show Notes

1:39 - (First Question) – Formation of Helio

6:57 – How they handle the relationship building needed to make investments in private markets

10:26 – Why consumer and retail are interesting spaces to apply their quantitative approach in private markets

12:54 – Searching for new relevant data

16:14 – How do they stay ahead of the commoditization of uniqueness

            16:21 – Pattern Recognition and Machine Learning

            17:24 – Sam Hinkie Podcast Episode

18:00 – Dominant predictive factors in this world

21:05 – Which is more important, relative value or rate of change

21:48 – What does the data say about online sales vs offline (being in a store)

23:30 – Variable that consumer investors think matters but it doesn’t

24:53 – Valuing companies and accounting for mispricing’s

            25:36 – Michael Recce Podcast Episode

26:41 – Goes through the process using Liquid Ivy as an example

28:46 – Most interesting sub-categories

29:33 – Future for this model

            32:10 – Albert Wenger Podcast Episode

35:19 – Other categories outside consumer and retail interest Ryan

36:28 – Biggest challenges for CircleUp as a business

38:46 – Handicapping their earnings expectations

41:36 – Take on the VC/PE landscape

43:03 – The types of models that are most interesting to the team

45:05 – Quantitative elements of brand that are most interesting

47:30 – Most unique brand and distribution strategy he’s come across

53:27 – Who has influenced Ryan the most

54:37 – His personal values

55:51 – More people who had an influence on Ryan

            56:05 – The Innovator's Dilemma: The Revolutionary Book That Will Change the Way You Do Business

57:07 – Thoughts on goal setting at the company

59:29 – Unchangeable factors that shape their long-term vision

1:02:01 – Most interesting individual conversation as part of this journey

1:04:02 – If he could only keep one dataset, what would he keep

1:05:09 – kindest thing anyone has done for Ryan

 

Learn More

For more episodes go to InvestorFieldGuide.com/podcast

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub

Follow Patrick on twitter at @patrick_oshag

Oct 23, 2018

My guest this week aspires to be the Larry David of investing, and we discuss why. Howard Lindzon is hard to categorize. He’s primarily an early stage investor right now, but he’s participated in all types of investing. He describes himself as a trend follower and always has a unique take on popular topics. 

In this conversation, we cover his investing history and his take on the fintech investing landscape. What I’ll remember most is the idea that we should focus on what is happening versus what we think will happen or might happen. There is a Peter Lynch like quality to some of Howard’s thinking, and a willingness to embrace the weird that I find very appealing. The few times I’ve met Howard, I’ve smiled or laughed most of the time, which is about as nice a thing as I could say about someone.

He’s a good example of why I like this podcast format. His investing style bears literally no resemblance to my own, but it got me thinking about a lot of new things. I hope you enjoy our chat.

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.

Follow Patrick on Twitter at @patrick_oshag

 

Show Notes

1:42 - (First Question) – Why he wants to be the Larry David of investing

2:00 – Why his investing style is best described as trend following

4:05 – The biggest inspirations/influencers on Howard’s investing

6:39 – What made his second mentor, Fred Wilson such a great investor

9:52 – Formation of Wall Strip

12:33 – Why weird is so important in his investment philosophy

14:56 – Understanding his investment philosophy through his investment in Rally Road.

21:02 – His assessment of the fintech space

28:54 – Why fintech pushes away from human nature

30:50 – Major trends in fintech that have his attention

35:02 – What stands out about the teams at these companies he invests in

36:37 – Thoughts on fractionalization plays

            36:44 – Capital Allocators podcast episode

            36:54 – Venture Stories Podcast

40:03 – Any major trends that are changing and worth attention

            42:06 – The Tipping Point: How Little Things Can Make a Big Difference

43:26 – His take on the media landscape

45:10 – Kindest thing anyone has done for him

 

Learn More

For more episodes go to InvestorFieldGuide.com/podcast

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub

Follow Patrick on twitter at @patrick_oshag

Oct 16, 2018

My guests this week are Ali Hamed, Brian Harwitt and Marc Porzecanski who work together at CoVenture Credit. When I first had Ali on as a podcast guest, we discussed the many aspects of what his firm does, ranging from venture, to crypto, to credit. We glossed over the lending side of the business, but having since learned a lot from them on the topic, I was excited to get the chance to talk with members of their credit team for today’s longer exploration of esoteric high yield lending.

I am always proselytizing the value of investor education, s this week we have a podcast first. The CoVenture team has prepared a long series of posts that correspond to our conversation and go even deeper into the topic of credit investing. You can find them in the shownotes at investorfieldguide.com/credit

This is entirely differently from any conversation I’ve shared before, so I hope you learn as much as I did. Please enjoy my discussion with team CoVenture Credit.

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.

Follow Patrick on Twitter at @patrick_oshag

Show Notes

1:42 - (First Question) – The formation of their unique credit business

7:09 – Their advantage in seeing both the equity and credit side of their investments

10:23 – Looking at the Returnly deal as an example

14:07 – How they view these deals and are able to sustain them as long-term investments

18:09 – Their interest in payroll deduction lending

20:08 – Finding unique types of default risk

21:31 – What stands out in a platform that makes CoVenture want to take a deeper look

26:43 – Most interesting types of problem they have come across that they have yet to do a deal in

31:35 – What is going to change to make for more thoughtful underwriting of subprime lending

35:51 – Major structures of asset backed lending

39:49 – Whether the home serves as an interesting playground for credit opportunities and whether people will own anything again

42:44 – Mark’s experience working at a huge firm vs his experience at CoVenture

44:31 – How does the current credit cycle impact their view

47:04 – Lending against bitcoin

50:06 – Who is interested in these loans against bitcoin

50:57 – How to set interest rates against a weird asset like this

53:00 – What are the key determents of success in this business

1:02:27 – Kindest thing anyone has team for the team

1:03:52 – How to treat people that you pass on

 

Learn More

For more episodes go to InvestorFieldGuide.com/podcast

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub

Follow Patrick on twitter at @patrick_oshag

Oct 9, 2018

My guest this week is Saifedean Ammous, author of the book the Bitcoin Standard. This was one of the more interesting conversations I’ve had in the world of cryptocurrency, primarily because we don’t talk about Bitcoin or Crypto until 25 minutes into the talk. Instead, we focus on history, economics, sound money, low time preference, and gold—all interesting topics.

Saif’s thinking on cryptocurrencies other than bitcoin—which is that they are worthless—is unique and thought provoking. His reasoning around why gold shouldn’t be compared to the returns generated by assets like equities was also compelling. If you’ve followed my Hash Power episodes, this is a new a differentiated interpretation of Bitcoin as a technology for the store of value use case. Please enjoy our conversation.

Hash Power is presented by Fidelity Investments

 

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.

Follow Patrick on Twitter at @patrick_oshag

 

Show Notes

2:10 - (First Question) – Explain Sound Money

4:25 – Examples of hard vs easy money

7:36 – the even money trap

9:36 – The benefits of hard money vs today’s standards

14:05 – Why this interests him

            14:16 – Gold Wars: The Battle Against Sound Money As Seen From A Swiss Perspective

            14:56 – Democracy – The God That Failed: The Economics and Politics of Monarchy, Democracy and Natural Order

16:17 – Correlation between time preference and people’s ability to succeed in life

19:59 – How money markets worked in the late 18th century vs today

27:57 – How he came across Bitcoin and how he thinks of it as a digital gold

35:42 – How will the world transition to a sound money standard

42:15 – The impacts of hyperinflation on crypto currencies

45:04 – The idea of a orderly upgrade of the world currency

48:20 – His thinking on alternative coins

54:05 – What it takes to compete with bitcoin

1:01:43 – How he diversifies

1:04:35 – Stalling bitcoins demand

1:06:11 – Does he apply his thinking of lower time preference elsewhere in his life

1:07:09 – Kindest thing anyone has done for him

 

Learn More

For more episodes go to InvestorFieldGuide.com/podcast

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub

Follow Patrick on twitter at @patrick_oshag

Sep 28, 2018

“This is an unusual early episode release thanks to the timing of the recent news on Tesla. In this short episode, Danny and I discuss cannabis stocks, Tesla, and his “wild bill” story about quant investing.”

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.

Follow Patrick on Twitter at @patrick_oshag

Sep 25, 2018

My guest this week is one of my best and oldest friends, Jeremiah Lowin. Jeremiah has had a fascinating career, starting with advanced work in statistics before moving into the risk management field in the hedge fund world. Through his career he has studied data, risk, statistics, and machine learning—the last of which is the topic of our conversation today. 

He has now left the world of finance to found a company called Prefect, which is a framework for building data infrastructure. Prefect was inspired by observing frictions between data scientists and data engineers, and solves these problems with a functional API for defining and executing data workflows. These problems, while wonky, are ones I can relate to working in quantitative investing—and others that suffer from them out there will be nodding their heads. In full and fair disclosure, both me and my family are investors in Jeremiah’s business.

You won’t have to worry about that potential conflict of interest in today’s conversation, though, because our focus is on the deployment of machine learning technologies in the realm of investing. What I love about talking to Jeremiah is that he is an optimist and a skeptic. He loves working with new statistical learning technologies, but often thinks they are overhyped or entirely unsuited to the tasks they are being used for. We get into some deep detail on how tests are set up, the importance of data, and how the minimization of error is a guiding light in machine learning and perhaps all of human learning, too. Let’s dive in.

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.

Follow Patrick on Twitter at @patrick_oshag

Show Notes

2:06 - (First Question) – What do people need to think about when considering using machine learning tools

3:19 – Types of problems that AI is perfect for

6:09 – Walking through an actual test and understanding the terminology

11:52 – Data in training: training set, test set, validation set

13:55 – The difference between machine learning and classical academic finance modelling

16:09 – What will the future of investing look like using these technologies

19:53 – The concept of stationarity

21:31 – Why you shouldn’t take for granted label formation in tests

24:12 – Ability for a model to shrug

26:13 – Hyper parameter tuning

28:16 – Categories of types of models

30:49 – Idea of a nearest neighbor or K-Means Algorithm

34:48 – Trees as the ultimate utility player in this landscape

38:00 – Features and data sets as the driver of edge in Machine Learning

40:12 – Key considerations when working through time series

42:05 – Pitfalls he has seen when folks try to build predictive market investing models

44:36 – Getting started

46:29 – Looking back at his career, what are some of the frontier vs settled applications of machine learning he has implemented

49:49 – Does intereptability matter in all of this

52:31 – How gradient decent fits into this whole picture  

 

Learn More

For more episodes go to InvestorFieldGuide.com/podcast

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub

Follow Patrick on twitter at @patrick_oshag

Sep 18, 2018

(0:49) This week, to mark the two-year anniversary of the podcast, I offer a quick summary looking back and forward.

(0:55) Yesterday I heard about an Appalachian Trail thru hiker named Croatoan, or Crow for short. Crow was his trail name, which all A.T. thru hikers carry. Importantly, you can’t give yourself a trail name. Someone else has to name you along the way. Crow’s girlfriend was named Porridge. Another hiker he encountered along the way was named Bear Wrestler…more on him in a few minutes.

Crow was a Sobo, a south bound hiker heading from Maine to Georgia. This is a far more unique route, as most thru hikers are Nobos, hiking north. These hikers maintain a rich culture. Each wears their own trail flare, and has their own trail style. They are obsessed with their gear and food. They develop their own improved walking method to cover ground efficiently. Hikers typically won’t veer far off course, no more than a tenth of a mile, for almost any reason. Crow once left a meaningful gift he had received by a river bed, realized it two tenths of a mile later, and just kept moving. Two exception to this rule are to visit a brewery or find some homemade ice cream.

(1:50) There are different types of thru hikers. White blazers are hikers who follow the main trail, lit by the famous white blazes marking the way. Blue blazers often go a step further, exploring side trails in addition to the main trail. Green blazers smoke weed the whole time. There are other colorful ones I’ll stay away from here as they aren’t safe for work.

Apparently you can spot an imposter in a number of ways. My favorite was that anyone wearing big, sturdy hiking books should be questioned, because most thru hikers realize quickly that they are way too heavy and opt instead for lightweight shoes. Crow had a nice pair of Altras.

(2:22) This brings us back to Bear Wrestler. Around a campfire, Bear Wrestler was telling Crow and his girlfriend all about his long trail adventures and feats, but Crow noticed that Bear Wrestler was still chubby, carrying 40 pounds of fat. This is a second way to spot a potential imposter. When hiking intensely for months on end, it is impossible to keep any weight on, so Bear Wrestler was clearly a yellow blazer, a type of hiker who drives between trail heads instead of hiking the entire way like the purists.

As I heard about Crow and his adventure, I was thinking about what to say in this short episode about what I’ve learned across two years running this podcast. What I quickly realized is how many yellow blazers there are in the world, and that at many times in my life, I too have been a yellow blazer—opting for easier but less authentic, and less interesting, routes. The podcast is part of a portfolio of things that I’ve put in place in my life to try to avoid being a yellow blazer. To instead push myself to be more like a blue blazer, exploring anywhere I can.

(3:16) Looking back on the incredible guests I’ve had, I realize now the common mindset that unites them, and I’d like to highlight that mindset here. Even though my guests have come from just about every conceivable background, investing and otherwise, they are all in persistent and consistent pursuit of original experience. Now, that might sound obvious, but its rare to meet people whose default is to chase original experience. These people stand out quickly now to me, because I can recognize freshness in them, patterns I haven’t already seen 10 other times elsewhere. I now think often: am I doing this because its conventional, and/or because I’m watching what other people do? I think if you do the same exercise, you’ll be alarmed by how often the answer is “yes.”

Diving a bit deeper into these people and what unites so many of my past guests, there are four elements that I see over and over again.

(4:01) The first is common trait is deep curiosity. My take on curiosity after meeting all these people is that it works best in two ways: through building units of exploration, and through embracing strange intersections.

When people ask me what I do, I’ll sometimes just list the actual things I do, instead of a job title. So I say, I read books, papers, and articles. I run tests on data, using many of the same scripts and tools. I have tons of individual conversations with people in nooks and crannies of the investing world. I talk to clients and prospects. I write letters and white papers. These are my units of exploration, and I expect that I’ll keep repeating each of them forever. I have no clue where that might lead, but I’m confident that through curiosity fueled repetition, I’ll find good things. My close friend and most frequent podcast guest Brent Beshore has looked through 12,000 business deals. Talk about repetitions. I think curiosity, and the interesting investing opportunities it creates, is just a set of habits. Finding the right habits, the right units, is a great start.

I also often see what I call strange intersections. Picture a Venn diagram with tiny, but interesting, overlap. Some of the most intriguing things I’ve learned about live in these strange intersections. Ali Hamed and Savneet Singh, who are partners at a firm called CoVenture, have found interesting overlap between the worlds of lending, technology, and old world business. Whether it be shoe returns online or watermelons, they’ve found unique ways to lend at high rates on unique platforms enabled by technology. I often see people using seemingly unrelated interested, ideas, or strategies together to produce something different. I encourage everyone to think about strange ways of combining their areas of expertise and interest.

(5:40) The second common trait is persistence through randomness. Sometimes when I talk with people about the importance of curiosity, they say it sounds too easy and fun. The good news for the skeptics is that more often than not, its not fun, it is a total slog. When I looked back recently, I found that I only finish about 1 in 7 books that I start. Even most that I finish aren’t great. Put differently, I read an incredible amount of mediocre books to find just one book that makes a difference. This happens everywhere. The vast majority of data and ideas that we investigate at O’Shaughnessy Asset Management go nowhere at all.

I think most people will agree that the journey of discovery is often tedious, filled with dead ends, and above all random. My favorite example of this persistence through randomness was my conversation with Josh Wolfe, which I recommend in its entirety.

One of my favorite phrases picked up in the past two years is the Shangaan phrase Hi Ta Xi Uma, which I learned from Reinius Mflongo, one of the top trackers in Africa. It means “we will find it,” and Reinius will keep muttering it when he loses a track and struggles to find the next one. Everything is hard, and usually much harder than we can fathom. All the best people I’ve met through the podcast just don’t let that stop them. They also seem to develop an awareness of this constant difficulty and just become used to it.

(6:55) This second trait, persistence through randomness, is perhaps my favorite way to test for yellow blazers. There are many people in the world of business and investing who can talk extremely well. But if you keep peeling back the onion, asking more and more specific questions of a yellow blazer, you’ll find nothing original. But when you do hit on something, several layers down, that you’ve never heard before, that to me is a mark of persistent inquiry. That’s the kind of people I’m after.

(7:21) The third common trait is risk management. It is tempting to view uncertainty as a sort of risk, but I think that is a large mistake. All the good stuff is found in places that haven’t been mapped already. In fact, to take the idea of original experience a step further, what is common across the best people I’ve met is not just having the experiences, but then bringing some sort of order to the chaos they found in uncertainty. This isn’t risk, in my opinion. If anything, not seeking out chaos is what’s risky.

But then there are the conceivable risks: things that could go wrong that we can list ahead of time. On this front, guests were often very thoughtful: developing plans to be deployed when specific risk scenarios play out. I loved Mike Zapata’s story about the darkest night. He and his SEAL team would prepare and practice every tiny detail of a mission, creating plans for all risks, then wait to attack on the darkest night they could, because even though the conditions were hardest in the dark, their preparation and risk mitigation would shine in that difficult environment.

More specific to investing, many of my guests have a clear focus on downside risk protection. Several people have told me that there are common ways that things go wrong, but many more unknowable reasons things go right. So instead of trying to predict what will work, focus on avoiding the common pitfalls. My favorite example again came in Africa, being told 100 times to not run when lions charged us. It is a common and known risk factor (each of our guides had been charged more than 50 times), but one that was easily mitigated. If you don’t run, the lion will stop short and maul and eat you. You just have to have that lesson beat into your brain a hundred times ahead of time because the basic instinct, as is so often the case with investing, is to run.

(8:57) For the fourth common trait, we return to our thru hiker Crow one last time. I heard Crow’s story from my friend Bill, who picked up Crow hitchhiking to give him a quick ride into town. Bill offered to buy Crow dinner. He accepted with a huge smile, telling Bill “wow, that is some real trail magic right there.” Trail magic is my favorite piece of lingo in the thru hiking culture. Hikers tell endless stories about trail magic, which is what they call the acts of kindness and goodwill bestowed upon them by strangers along their journey. Food, shelter, a quick lift, a homemade cookie. Consider how incredibly positive sum trail magic is. The givers and the receivers of the magic both come out ahead. Despite all I’ve learned about business and investing over these two years, my favorite question to ask is still my final one in each episode, about acts of kindness. Getting to hear more than 100 stories of kindness from these people has been the highlight for me, and the best lesson.

(9:49) Summed up, what I’ve learned from these people is to follow your own way, always. Figure out the right units of exploration, embrace strange intersections, and carefully consider what could go wrong. Rest when you need it, be dogged and aggressive when the situation calls for it, but just keep going. Do it all with respect for others and as much trail magic as you can muster.

Thanks to all the great people I’ve had on the show, and thanks to you for listening for these two years, I promise to keep this discovery process going in some way, shape, or form forever.

Learn More

For more episodes go to InvestorFieldGuide.com/podcast

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub

Follow Patrick on twitter at @patrick_oshag

Sep 11, 2018

My guest this week is Kathryn Minshew, the co-founder and CEO of the Muse, and the co-author of The New Rules for Work: the Modern Playbook for Navigating Your Career. I’ve learned in business is that the quality of people and the culture they create dictate outcomes. Having made plenty of mistakes hiring, and having had many enormous successes, I am always interested in best practices for finding and successfully recruiting the right people.

Given that Kathryn runs a jobs marketplace and has written a book on the topic, she is the perfect person to explore some the core concepts around pairing people with the right positions. We discuss how companies should market to prospective employees, how employees should represent themselves to employers, and the most common mistakes she sees across the hiring landscape.

Please enjoy our conversation.

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.

Follow Patrick on Twitter at @patrick_oshag

 

Show Notes

1:31 - (First Question) Largest changes in the nature of work and how people approach finding the right job for them

3:27 – Can this work be jammed into a formula

5:18 – What strategies is she sharing with employers when it comes to hiring

8:31 – How long should the process take

9:33 – Biggest mistakes employers make in this process

10:39 – Besides the usual stuff, what can perspective employees do to bolster their chances

12:50 – How much more efficient will matching technology get in the years to come

16:00 – What will be the largest changes to work itself

19:09 – Will we move away from full time work into parsels of work units

20:50 – Most successful piece of content or content strategy the Muse has employed

22:34 – Advice for early stage entrepreneurs

26:24 – Kindest thing anyone has done for Kathryn

 

Learn More

For more episodes go to InvestorFieldGuide.com/podcast

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub

Follow Patrick on twitter at @patrick_oshag

Sep 4, 2018

I intentionally avoid the world of quantitative investing on this podcast. The whole point of this format is to learn about many different fields, and the vast majority of my time is already spent in quant world.

Occasionally I’ve broken this rule because of something unique, including this week’s conversation with Richard Craib, the founder and CEO of Numerai. If you listen to the podcast often you’ll have heard me reference Numerai, a hedge fund which blends quant investing, cryptocurrencies, crowdsourcing, and machine learning — talk about a PR company’s dream.

One important note: Numerai is both incredibly open and very secretive. You may sense a bit of frustration on my part, but that is only because, as a fellow quant who loves details about data and modeling, we couldn’t go deeper into the details on the record.

We discuss how Numerai has created an incentive structure to work with data scientists around the world in an attempt to build better investing models. The idea of having data scientists stake cryptocurrency in support of the quality of their models is fascinating. Like many hedge funds, Numerai doesn’t share its track record, so we don’t know if this works—but I hope you, like me, use this conversation as inspiration for how different technologies can intersect.

Hash Power is presented by Fidelity Investments

Please enjoy my conversation with Richard Craib.

 

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.

Follow Patrick on Twitter at @patrick_oshag

 

Show Notes

2:32 - (First Question) – How he came up with Numerai and how its related to his background

4:08 – How he works with and models the data for his system

5:24 – Describing machine learning as it relates to his work, and specifically linear regression

7:11 – The important stages in his sequence

8:46 – How the scale in the number of data scientists they use is different from other areas

11:30 – Which is the most important aspect of creating alpha; their data, algorithm work, proprietary ensembling of those algorithms.

14:30 – The idea of staking in blockchain

17:30 – Does the magnitude of the stake matter in blockchain

19:10 – Understanding the full incentive structure for both staked and unstaked work

21:07 – How is the prize pool determined

22:29 – Philosophy on how to source interesting data

26:11 – His thoughts on the crowd model and the wisdom of crowds

27:12 – The size of stakers for Numerai

27:51 – Interpreting the models and knowing when something is broken

30:03 – How they think about people not submitting their models

31:48 – Their model building

32:39 – Most interesting set of things they are working on to improve the overall process

            35:38 – The Market for "Lemons": Quality Uncertainty and the Market Mechanism

37:11 – How people can come along with their own data

39:00 – His thoughts on the quantitative investment community

40:44 – What else is interesting him in the hedge fund world

44:03 – Building a marketplace and staving off competition

46:16 – Kindest thing anyone has done for him

 

Learn More

For more episodes go to InvestorFieldGuide.com/podcast

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub

Follow Patrick on twitter at @patrick_oshag

Aug 28, 2018

My guest this week has a fascinating background. He has a PhD in biology but has split his time as both an investor and an operator. As an investor, he’s involved in companies like Airbnb, Coinbase, Instacart, Opendoor, Stripe, Square, and Pinterest—not too shabby. As an operator, he helped both Google and Twitter scale their businesses, in the case of Twitter from 100 employees to 1500 over two years. He’s just written a book about these experiences called the High Growth Handbook. 

Our talk centered on what makes for a good investment and more specifically how Elad identifies an interesting market. Operators and early stage investors will find lots of nuggets in this fun conversation. Please enjoy. 

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.

Follow Patrick on Twitter at @patrick_oshag

 

Show Notes

1:31 - (First Question) – Process for evaluating a young business

            2:43 – Andy Rachleff Podcast Episode

3:09 – Data factors for evaluating a business

5:08 – Reference checks

6:42 – Advice for companies that are reliant on product cyclicality

            7:01 – Where to Go After Product-Market Fit: An Interview with Marc Andreessen

7:31 – High Growth Handbook

9:30 -   Lessons learned from marketing and growing companies

12:09 – How do you hire the best people to improve your distribution

13:16 – How does he think about lifetime customer value vs customer acquisition cost

15:57 – Should companies just focus on the high margin power users

16:35 – Best ways to organize a company hierarchy

19:16 – His interest and background in the area of longevity research

21:52 – Changes he has made in his own life as a result of this longevity research

22:56 – Most effective use of a CEO’s time

24:58 – How he evaluates or identifies interesting markets for potential businesses

28:03 – Any markets that fit his criteria that are underappreciated by investors

30:02 – Worst practices for businesses

32:19 – Kindest thing anyone has done for him

33:20 – What would be the topic of his next book

34:40 – Biggest lessons he’s learned about markets

 

Learn More

For more episodes go to InvestorFieldGuide.com/podcast

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub

Follow Patrick on twitter at @patrick_oshag

Aug 21, 2018

For the 100th episode, I’ve brought back my good friend Brent Beshore. Brent was the 10th guest on the podcast, after we met because of a mutual interest in capital allocation. I quickly learned that Brent was one of the most unique and thoughtful investors around. He was an entrepreneur from the moment he left school, trying many different things before finding a fit buying smaller business with the intention of owning them forever.

What amazes me about Brent is his encyclopedic understanding of business and the nuances of different business models and deal structures. This comes from reps. He and his team have looked at about 12,000 deals over the years, at every kind of business that you could imagine. I’ve been with him when he goes through this process and it’s fun to hear what makes certain businesses stand out from others, which is largely the topic of this conversation.

You all know transparency is key for me, so it’s important to know that my family and I are investors in a fund called permanent equity, run by Brent and his firm Adventure.es.

To commemorate this milestone episode, I can think of no one better than Brent, because he exemplifies what has made this podcast so fun for me: learning from other people who are willing to share what they themselves have learned through fun, blood, sweat, and tears. Please enjoy our conversation, and thank you so much for coming along on this journey. I can’t tell you how much it means to me.

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.

Follow Patrick on Twitter at @patrick_oshag

 

Show Notes

2:02 - (First Question) – How does he think about optimizing risk in terms of the capital stack when looking at deals

5:27 – What conditions would they add debt down the road after investing in a company

6:52 – What business sectors are most intriguing for Morgan to invest in right now

            6:57 – Trent Griffin Podcast

9:34 – Why no HVAC businesses if it’s such an attractive sector

13:56 – thoughts on rolling up similar businesses and horizontal scale

16:04 – Another industry Brent would focus on

18:02 – Difference between property management in larger cities vs smaller metro areas

18:51 – What role does profit margin play when Brent is evaluating a business

22:46 – The appeal of a hyper cyclical business

            22:52 – Brent Beshore Podcast Episode

27:27 – Favorite counter cyclical business

28:14 – How they judge assets, tangible vs intangible assets

33:58 – How does he think about wage inflation when considering the cost of a business

37:21 – His fascination with pet crematoriums

38:57 – History of the permanent equity fund and the changes by having a larger pool of capital

43:48 – Pitching investors on a new structure for the business

46:14 – How will this business model scale

 

Learn More

For more episodes go to InvestorFieldGuide.com/podcast

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub

Follow Patrick on twitter at @patrick_oshag

Aug 15, 2018

Today’s conversation is a continuation of my discussion on applying the lessons of tracking animals in the wild to tracking in your own life. I encourage to listen to that episode first.

In this second part, Boyd’s sister Bronwyn joins and offers perspective on business and life. Given that Boyd and Bron grew up in this wild place, their perspective on the world is refreshing and very different. We discuss a wide range of things, But the section on restoration near the end is just phenomenal stuff.

Please enjoy part two of my conversation with the Varty family.

 

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.

Follow Patrick on Twitter at @patrick_oshag

 

Show Notes

1:21 - (First Question) – Concept of shame and the role it plays in the lives of the people that visit

3:11 – Bron’s take on shame and if this is uniquely male issue

5:15 – How the Varty’s think about the concept of presence, and time with Nelson Mandela

13:34 – Selfishness as an impediment to presence

20:26 – Tending the cup

20:37 – Life is not a zero-sum game

23:15 – How they run the reserve as a business

30:18 – Importance of motivation as a business

33:55 – Cultivating a culture that makes a business a family

40:15 – How they help other family businesses

45:29 – The idea of restoration as a business and legacy

51:23 -Restoration model in investment

53:49 – The age of restoration will be born on the age of information

54:48 – Places that have given Varty’s deep connections (other than Africa)

1:00:46 – Kindest thing anyone has done for Bron

 

Learn More

For more episodes go to InvestorFieldGuide.com/podcast

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub

Follow Patrick on twitter at @patrick_oshag

Aug 14, 2018

An interesting question that I think about a lot: how do you balance exploring the new with savoring what you already know and love? Most of the time I prefer to explore, but the best part of this podcast experience for me has been meeting people who become close friends. For episodes 99 and 100, I’m bringing back two of the most popular past guest who are both now dear friends. 

This week’s episode is split into two parts, today and tomorrow. Today’s episode is with Boyd Varty and tomorrow is with both Boyd and his sister Bronwyn. The incredible Varty family hosted me in South Africa, so you’ll hear birds and elephants in the background as we talk. 

This conversation with Boyd is about our shared experience called “track your life” which I couldn’t recommend more highly. We tracked animals on foot for five days, and learned a lot from the environment itself. While we discuss our time together, this is much more about how to live. My original conversation with Boyd had a huge impact on me, and this continues the exploration of Boyd’s idea that we should all be going our own way, in the right way, instead of simply following well trodden paths. 

I hope you enjoy this conversation with Boyd and check back tomorrow for another conversation with the Vartys. 

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.

Follow Patrick on Twitter at @patrick_oshag

 

Show Notes

1:55 - (First Question) – Encounter with five wild dogs

10:19 – The idea of a perfect day on the track

15:59 – The importance of silence

19:42 – Why we could all benefit from the power of silence

21:37 – Side effects of being on the track

23:49 – Following the smaller paths

25:20 – How culture can keep us from forging our own path  

29:34 – The stress he puts on the watch at night

33:34 – The power of going from alert to rest and back again

            35:11 – Why Zebras Don't Get Ulcers

38:25 – Disconnecting from the modern world and reconnecting with your life’s purpose

41:42 – How much does skill play into finding your life’s calling

43:23 – Common objections to what they do

49:58 – Importance of end of day on the track

52:33 – Silence and feeling of thousands of years of time passing through hallucinogenic

56:22 – His experience with bees

Learn More

For more episodes go to InvestorFieldGuide.com/podcast

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub

Follow Patrick on twitter at @patrick_oshag

Aug 7, 2018

Ryan Selkis - The Crypto Barbell and Token Curated Registries - [Invest Like the Best, EP.98]

This week’s conversation is for those interested in the nitty gritty of cryptocurrencies and for those who, like me, are fascinated by that world but more than a bit skeptical of the investing prospects for the many cryptocurrencies now in existence.

My guest is Ryan Selkis, who I met at an event hosted by Union Square Ventures and Blocktower Capital. At that event, in a crowd of many brilliant people, Ryan was consistently asking hard questions and raising counterpoints.

I love his perspective because he is both passionate, but realistic, excited about crypto, but worried about many aspects of the ecosystem.

We discuss many new topics like his barbell analogy for thinking about different kinds of coins, token curated registries, and the need to better transparency around decentralized projects.

Hash Power is presented by Fidelity Investments


Please enjoy our conversation.

 

March for the Fallen

Want to meet other curious investors, get in good shape, and support a fantastic cause? Consider joining a great group to hike 28 miles in honor of those who have fallen in defense of our nation. 

Learn more and sign up at alphaarchitect.com/mftf

 

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.

Follow Patrick on Twitter at @patrick_oshag

 

Show Notes

2:55 - (First Question) – how he best explains blockchain technology

4:12 – How does he categorize each cryptocurrency

9:11 – How Numeraii is valued

10:04 – Explaining token curated registries (TCR)

12:58 – How Token Curated Registries are being applied

15:05 – Innovations that will protect against nefarious actors in the crypto space

16:37 – How do you convince investors to commit to TCR’s

18:40 – Biggest headwinds to this industry

22:12 – What are the quality filters to root out the bad actors

25:42 – Thoughts on the ICO market as an alternative to capital raising

29:23 – Litmus test for who should use an ICO to raise capital

34:28 – What is unique about creation of a token vs the normal exchange of cash to determine if a company needs a token

36:21 – How many ICO projects are really necessary

38:28 – How should people form an investment opinion about this space

41:35 – Core mission of his company

44:28 – What are some of the reasons his goals won’t happen

49:30 – Lessons learned while working at Coindesk

49:58 – What is he most excited about for the future of this space

52:56 – Kindest thing anyone has done for Ryan

 

Learn More

For more episodes go to InvestorFieldGuide.com/podcast

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub

Follow Patrick on twitter at @patrick_oshag

Jul 31, 2018

My guest this week is Cathie Wood, the founder of ARK invest. Cathie and her team believe that disruptive innovation is the key to long-term growth and, therefore, alpha in the public markets.

Because their style of investing is entirely contingent on what will happen and change in the future, it is about as different a style as exists from the quantitative approach to investing, which relies on what is currently knowable about stocks and businesses. 

The future is notoriously hard to predict, so I am always interested to hear about investing approaches which try to model or handicap the future and build portfolios against that work.

In this conversation, we explore all the most interesting and exciting technology trends at play in the world today—and how those trends may play out for investors. We discuss genome sequencing, blockchain, software 2.0, mobility as a service, automation, and more. 

We also discuss Cathie’s take on building a bridge between the worlds of finance and Silicon Valley, and why starting with a benchmark is anathema to their process.

It is hard to deny Cathie’s passion and enthusiasm, and I credit her for building a unique firm culture that emphasizes openness and collaboration. Please enjoy our conversation on investing in innovation. 

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.

Follow Patrick on Twitter at @patrick_oshag

 

Show Notes

2:30 - (First Question) – Cathie’s idea of bringing open source to Wall Street

4:47 – Deep dive into the platform

            6:09 – White Paper on Bitcoin – Could Bitoin serve as the role of money

7:43 – Why disruptive innovation is so inefficiently priced

10:04 – How well does the market discount cash flow of disruptive businesses

14:09 – A look at their investing strategies, starting with top-down. 

16:10 – How they picked their 5 categories of technological change, starting with foundational    

19:42 – Changes in energy

21:53 – Robotics

24:17 – Excitement over deep learning

28:03 – How they express their top-down ideas from the bottom up

36:06 – Mobility as a service as a key area of focus

45:25 – The power of public mistakes

46:39 – What she looks for when hiring

51:14 – her philosophy on building and maintain a portfolio

56:38 – Behind the growth of the company

1:04:01 – Most exciting area for her right now

1:07:52 – Kindest thing anyone has done for Cathie

 

Learn More

For more episodes go to InvestorFieldGuide.com/podcast

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub

Follow Patrick on twitter at @patrick_oshag

Jul 24, 2018

I’ve often heard that good investors are a bit like journalists: doggedly collecting evidence and building an understanding of how all the pieces of a company or investment fit together. My guest this week is one of my favorite writers and journalists, Bethany McLean. Across her career, Bethany has covered many of the most interesting stories in business and investing, including Enron (which became the famous book and documentary, the Smartest Guys in the Room), Valeant, Wells Fargo, SAC Capital, Fannie Mae and Freddie Mac, the great financial crisis, and most recently, fracking and the energy revolution.

Given how deeply she has investigated all of these topics-- and thought about the common threads across them all--this was an amazing conversation. When talking to her, you can feel how much she cares and how diligent and fair she is when analyzing a topic. In addition to all of the great stories already listed, we discuss the art of persistence and other lessons she has learned about businesses and people gone bad. I especially loved her evolving take on housing in America.

Please enjoy my conversation with Bethany McLean

 

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.

Follow Patrick on Twitter at @patrick_oshag

 

Links Referenced

Mindsets: Optimism vs. Complacency vs. Pessimism

Disgraced ex-BofA exec raises uncomfortable questions about #MeToo

The Hunt for Steve Cohen

 

Books Referenced

The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron

Free Radicals: The Secret Anarchy of Science

Shaky Ground: The Strange Saga of the U.S. Mortgage Giants

Saudi America: The Truth About Fracking and How It's Changing the World

Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy

All the Devils Are Here: The Hidden History of the Financial Crisis

 

Show Notes

2:22 - (First Question) – Differences and similarities between investors and journalists

3:19 – What has more of an impact on business practices, exposing negatives or reporting positive

4:57 – first story that got Bethany intrigued with finding bad behaviors

6:19 – The process of getting to know the people who know more than the market

            7:43 – Mindsets: Optimism vs. Complacency vs. Pessimism

8:18 – First short seller that garnered her interest

8:57 – The process that led to The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron

10:36 – How to ask questions

12:18 – Importance of preparation

12:49 – Commonalities among the motivations for people who do bad things

14:20 – Difference between a visionary and a fraud

            15:42 – Free Radicals: The Secret Anarchy of Science

16:23 – Any standout frauds that told a really compelling story

17:33 – Looking into Valient

19:32 –Writing about the #MeToo movement

            19:34 - Disgraced ex-BofA exec raises uncomfortable questions about #MeToo

21:49 – Thoughts on the spectrum of chasing this story

23:26 – Ways journalist can fairly impact this movement

24:14 – The romance of owning a home in America and what it has meant for the market

            24:34 – Shaky Ground: The Strange Saga of the U.S. Mortgage Giants

28:27 – What has changed on her thinking about housing

30:24 – What role does Fannie and Freddie have in the market today

31:13 – Her desire to look into energy

            32:26 – Saudi America: The Truth About Fracking and How It's Changing the World

35:05 – What have been the changes in energy market in the US

            34:40 – Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy

37:01 – Where are we in the life cycle of energy production

38:27 – The more boring things that are actually the drivers of our economy

            38:29 – Technologies that shaped industrial revolution in America

39:42 – Where can people learn more about how our energy independence will impact other markets

41:10 – Why is Peter Elkin the best investigative journalist

42:24 – Most relentless she has ever been

43:58 – Who is doing it right

            44:38 – All the Devils Are Here: The Hidden History of the Financial Crisis

45:36 – Her take on reporting the The Hunt for Steve Cohen story

49:01 – How her views have evolved over her career and lessons learned

50:40 – Are there ways to prevent success from leading people down a bad path

53:48 – The role of empathy in her career

55:13 – Kindest thing anyone has done for Bethany’s career

 

Learn More

For more episodes go to InvestorFieldGuide.com/podcast

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub

Follow Patrick on twitter at @patrick_oshag

Jul 17, 2018

A very short introduction today because my guest is anonymous. Suffice it to say he manages a large pool of private capital.

He goes by the pseudonym “modest proposal” and his twitter presence is one of the reasons I first got on and now stay on the platform.

He is level headed, smart, and skeptical by nature, all of which made for a great conversation. We discuss how difficult the market has become for active investors, thematic investment opportunities, and the potential sources of market mispricings.

Please enjoy our conversation, and let me know which other anonymous accounts you’d like to hear from.

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.

Follow Patrick on Twitter at @patrick_oshag

 

Links Referenced

Factors from Scratch: A look back, and forward, at how, when, and why factors work

Josh Wolf Podcast Episode

Mike Zapata Podcast Episode

Michael Mauboussin Podcast Episode

 

Show Notes

1:55 - (First Question) - How value investing has changed

5:45 – How does he apply the lens of market over-reaction to the current market today

            5:47 – Factors from Scratch: A look back, and forward, at how, when, and why factors work

            7:06 – Josh Wolf Podcast Episode

8:35 – Areas where he prepares most

            8:36 – Mike Zapata Podcast Episode

12:18 – Where markets may be over reacting in media

20:10 – How does he invest on this thinking

            20:44 – Michael Mauboussin Podcast Episode

22:35 – Other parts of media that he finds interesting

27:35 – Aggregation theory and how it plays into his investment philosophy

31:06 – Structuring a long-short portfolio in today’s media market

35:59 – Customer acquisition costs and how it’s impacting retailers

40:51 – The role of physical locations in a world that was upended by virtual retailers

49:41 – Consumer Internet Story thesis and what he’s seen during his career

58:11 – Why the FANG stocks can’t win in the niches

1:02:25 – The distrusted 50

1:05:00 – How he thinks about Capital Allocation and buybacks

1:11:08 – His view on international equity markets

1:13:58 – His take on the asset management business

1:19:38 – Allocation of a portfolio in between periods of conviction

1:21:08 – People that he has learned the most from

1:23:54 – How do you identify people who are capable of evolving after a rough spot

1:26:53 - How does he force himself to adapt to new conditions and evolve

1:30:31 - Thoughts in investing in cannabis industry

1:32:31 – Conditions where he would get interested in crypto currency

1:36:20 – Kindest thing anyone has done for him

 

Learn More

For more episodes go to InvestorFieldGuide.com/podcast

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub

Follow Patrick on twitter at @patrick_oshag

Jul 10, 2018

With Patrick out of the country this week, we thought we'd play an old favorite that many of you have not heard.

Please Enjoy!

 

 

This week we explore a rare and underappreciated skill through the lens of an incredible story. My guest is Eric Maddox, whose name you probably don’t know but won’t soon forget. Just trust me that you need to listen to this entire episode, and listen carefully—because that is what the episode is ultimately all about: how to listen to others, with care and empathy, in the age of distraction.

Sometimes it’s fun not to know what’s coming and be surprised, so I won’t say anymore. After the episode, you can learn more about Eric at Ericmaddox.com.

On his wall, Eric has a framed Cuban cigar, he starts his story by explaining the significance of that cigar. Enjoy this episode, and try Eric’s method. It has worked wonders for me.

Please enjoy!

 

For comprehensive show notes on this episode go to investorfieldguide.com/maddox/

For more episodes go to InvestorFieldGuide.com/podcast

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub

Follow Patrick on twitter at @patrick_oshag

 

Jul 3, 2018

This week’s episode covers a new set of topics. The conversation, with Niel Robertson, covers media, e-sports, content distribution, marketing, and a lot more. Niel started a software company out of his bedroom when he was 14, and sold his first company in 1999 for $280 million, when he was 24 years old. He has started and sold other companies to Twitter and Cisco. He started another large business that ultimately failed. He’s been an investor, venture partner, and serial entrepreneur. You can find more in the shownotes. 

As I often do, I cut the long background section from the interview so we can get right to the meat of things, but Niel concluded that section saying: “I think that could be all summed up by I just liked building things and I can't stop doing it.”

In addition to the overall media landscape, we discuss the role that the biggest media platforms will play, and where other opportunities may exist. We cover digital collectibles stored on blockchain, and what type of digital assets may be leased to others. We close with a discussion of leadership, company structure, content creation, and something you should do each year.

Please enjoy this unique conversation with Niel Robertson.

 

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.

Follow Patrick on Twitter at @patrick_oshag

 

Books Referenced

The Start-up of You: Adapt to the Future, Invest in Yourself, and Transform Your Career

 

Show Notes

2:30 - (First Question) – Overview of the media landscape as it relates to influencer marketing

6:42 – How does he think about this space as an investor

12:21 – What is the future of distribution of products

17:01 - An overview of the e-sports ecosystem

18:20 – The shift of people watching others play video games

20:06 – Will we see power shift from the platform to the influencer

27:03 – Why Amazon is the sleeper in this game

29:38 – Reviewing some of the other platforms, starting with Snapchat

30:54 – Twitter

32:06 – Other platforms that should be focused on…Pinterest

33:38 – His interest in blockchain and digital collectibles

36:34 – Who will be disrupted by digital collectibles

37:55 – Why does the decentralization of these assets matter

39:49 – The tokenization of assets

42:11 – What companies have the largest hurdles to innovate in these spaces

44:57 – His thoughts on leadership

            46:44 – The Start-up of You: Adapt to the Future, Invest in Yourself, and Transform Your Career

47:52 – Advice for content creators and content aggregators

50:10 – His thoughts on companies that aggregate top content creators

53:17 – His experience owning restaurants

55:46 – His experience in motocross

57:31 – Kindest thing anyone has done for Neil

 

Learn More

For more episodes go to InvestorFieldGuide.com/podcast

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub

Follow Patrick on twitter at @patrick_oshag

Jun 26, 2018

My guest this week is Eric Balchunas, the senior ETF analyst for Bloomberg and the author of the Institutional ETF toolbox. This episode is intended for those in the asset or wealth management industry who have considered using ETFs in their portfolios, or for the individual investor who likes to stay up to date on trends in the market for asset management products. We cover all aspects of ETFs in some detail, and luckily in ways that have little overlap with a few other recent ETF-centric episodes on two of my favorite podcasts: the Meb Faber Show and Capital Allocators with Ted Seides with Matt Hougan and Tom Lydon respectively.

We open with Eric’s favorite ETF tickers, discuss the pros and cons of ETFs versus other investment vehicles, and explore the largest areas of opportunities for new ETFs coming to market in the years to come. ETFs have become the vehicle of choice for many investors, so it was about time we covered them in depth in this forum. As you’ll hear, Eric is the right person to teach the world about ETFs, thanks to deep domain knowledge and unflagging enthusiasm. Please enjoy my conversation with Eric Balchunas on the past, present, and future of ETFs.

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.

Follow Patrick on Twitter at @patrick_oshag

Books Referenced

Quantitative Momentum: A Practitioner's Guide to Building a Momentum-Based Stock Selection System

Links Referenced

Chart – There Are Now More Indexes Than Stocks

Show Notes

2:32 - (First Question) – Eric’s favorite ETF tickers

4:07 – How Eric got started into his career and how it led him into the ETF world

8:04 – An overview of the ETF landscape

10:10 – Active managed ETFs

            12:17 – Chart – There Are Now More Indexes Than Stocks

13:32 – Key variables he thinks about when assessing a new ETF

15:18 – Evaluating shiny object ETFs

17:30 – The appeal of ETFs

20:18 – Future regulatory concern of the tax treatments of ETFs

22:10 – The liquidity advantage of ETFs and why that can actually be bad for investors

24:19 – What would Eric do to build the perfect ETF

26:03 – What are the future trends for new ETF’s launched

29:40 – Categories that work well in the ALT world of ETFs

31:32 – Most effective marketing strategy for ETFs

35:50 – Quantitative Momentum: A Practitioner's Guide to Building a Momentum-Based Stock Selection System

36:28 – How will the winning asset managers have done differently in this space

41:56 – How the next downturn could impact ETFs

46:17 – Do ETF’s create pricing distortions

50:33 – What trend is Eric most interested in right now

53:21 – Alpha through Beta

55:51 – Kindest thing anyone has done for Eric

Learn More

For more episodes go to InvestorFieldGuide.com/podcast

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub

Follow Patrick on twitter at @patrick_oshag

Jun 19, 2018

My guests this week are Kyle Samani and Tushar Jain, both managing partners at Multicoin Capital.

I’ve taken a bit of a break from crypto because I hadn’t sensed many new angles to explore in this forum, from an investor’s point of view. I felt that while things keep evolving, the major investment theses have been established and explored.

Kyle and Tushar are interesting because of their often divergent views. For example, Kyle has been an outspoken supporter of Ethereum relative to bitcoin.

This conversation, which is meant for those still curious about crypto, offers lots of new food for thought. We discuss smart contract platforms, network effects, the coming platform wars, and why blockchains may not matter in ten years. Please enjoy my conversation with the partners of Multicoin Capital.

Hash Power is presented by Fidelity Investments

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.

Follow Patrick on Twitter at @patrick_oshag

 

Links Referenced

Paths to Tens of Trillions

An (Institutional) Investor’s Take on Cryptoassets

On the Network Effects of Store Value

If SaaS Products Sell Themselves, Why Do We Need Sales?

Money, blockchains, and social scalability

Nakamoto Institute

Token Economy

Multicoin.capital

Crypto Cannon           

 

Show Notes

2:11 - (First Question) – What would get the entire cryptocurrencies ecosphere to 5-10 trillion dollars

            2:53 – Paths to Tens of Trillions

4:37 – What will be the effective uses for crypto currencies, store value vs utility value

            4:38 – An (Institutional) Investor’s Take on Cryptoassets

8:48 – Why they are negative on bitcoin and more positive on Ethereum

10:07 – Where will start to see widespread adaption of the utility value of cryptocurrencies

14:44 – What is the major breakthrough that cryptocurrencies create

21:21 – How do we gain confidence that a utility token will become a sound investment

25:16 – The different type of network effects

            25:47 – On the Network Effects of Store Value

31:18 – How do you convince institutional investors to consider the crypto space

34:21 – Factors that they care about when first evaluating a crypto currency

39:21 – How does technological development and marketing factor into their decision when picking a crypto currency

            40:31 – If SaaS Products Sell Themselves, Why Do We Need Sales?

41:42 – Where these two men disagree the most right now

44:07 – Why there’s a chance blockchain technology as we know it today could be irrelevant

            44:25 – Money, blockchains, and social scalability

47:56 – Most compelling trends in this world today

51:51 – A favorite resource or person people can look into if they want to learn more

            52:22 – Nakamoto Institute

            52:57 – Token Economy

            53:24 – Multicoin.capital

            53:30 – Crypto Cannon         

54:14 – Kindest thing anyone has done for them

 

Learn More

For more episodes go to InvestorFieldGuide.com/podcast

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub

Follow Patrick on twitter at @patrick_oshag

Jun 12, 2018

My guest this week is Michael Recce, the chief data scientist for Neuberger Berman. The topic of our conversation is the use of data in the investment process, to help cultivate what is commonly referred to as an information edge.

I call the episode “Tim Cook’s Dashboard” because of an interesting question that Michael poses: if you armed the best apple analyst in the world with Tim Cook’s private business dashboard, what might that be worth? Effectively Michael’s goal is to recreate the equivalent of a company dashboard for many businesses, helping analysts understand the fundamental health and direction of companies a bit better than the market does, and in so doing create an actionable edge.

This is a daunting task, and you will hear why. It requires both a fundamental understanding of business and of data, statistics, and methods like machine learning. In our own work, we’ve found machine learning to be useless for predicting future stock prices, but extremely useful for other things, like extracting and classifying data.

This conversation can get wonky at times, but as listeners know that is the best kind of conversation, even if it requires a second, slower listen. I hope you enjoy this talk with Michael Reece. Afterwards, I highly recommend you invest the time to read a series of posts called Machine Learning for Humans, which I will link to in the show notes. It helps demystify the buzz words and explain how these new technologies are being used.

 

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.

Follow Patrick on Twitter at @patrick_oshag

 

Books Referenced

Crossing the Chasm

One Two Three Infinity

 

Links Referenced

Sam Hinkie Podcast Episode

 

Show Notes

2:44 - (First Question) –  Changes in data science through the lens of Michael’s career

5:17 – The basic overview of using data and machine learning to create an edge

6:58 – How the state of business is more than just a single data point

7:53 – How you know when you’ve pulled a real signal from the noise of data

10:49 – The advantages that data provides

13:01 – Is there still an edge in decaying data

15:34 – Building data that would predict stock prices

19:43 – Prospectors vs miners in data mining

22:18 – Knowing when your prospectors are on to truth

27:09 – Understanding machine learning

30:10 – Defining partition

32:17 – Applying the parameters of selection process to stocks

36:05 – What’s the first step people could take to use data and machine learning to improve their investment process

38:54 – Building a sustainable advantage within data science

41:35 – Predicting the uncapped positive vs what’s seemingly easier, eliminating the negative

43:58 – How do we know to stop using a signal

46:22 – The importance of asking the right question

47:09 – Categories of objective functions that are interesting to measure data against

            47:42- Crossing the Chasm

48:37 – Most exciting things he’s found with data

51:17 – What investors, individual or firms, has impressed him most with their use of data

52:17 – Will everyone eventually shift to being data informed or data driven

55:33 – Wall Street’s use of data vs other industries

            55:36 – Sam Hinkie Podcast Episode

57:48 – Why everyone should know how to code

58:52 – Kindest thing anyone has done for Michael

            59:22 – One Two Three Infinity

 

Learn More

For more episodes go to InvestorFieldGuide.com/podcast

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub

Follow Patrick on twitter at @patrick_oshag

Jun 5, 2018

My guest this week is Ash Fontana, a managing partner at venture capital firm Zetta, who invests in companies which build software that uses artificial intelligence methods like machine learning to predict and prescribe outcomes. Ash’s combined experience as a founder, entrepreneur, and investor give him the perfect background to discuss with us one of the hottest topics in business and investing.

This conversation is useful for anyone trying to evolve their own way of dealing with data. Of particular interest are the ways that Ash and his team evaluate data sets and how they think about competitive advantage in this new world—where he advocates a new term to replace the concept of moat: loops. 

If we can use data to do things better than humans, or if we can supercharge our intuitions with predictive models, we can harness the power of this new technology. What Ash has taught me is that data itself is dumb. But great data sets can represent the fuel for incredible companies. Let’s dive into how that may be. Please enjoy this conversation on how AI is changing business, and how we might profit from that change.

 

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.

Follow Patrick on Twitter at @patrick_oshag

 

Books Referenced

The Most Important Thing: Uncommon Sense for The Thoughtful Investor

 

Links Referenced

Jerry Neumann Podcast Episode

Ali Hamed Podcast Episode

 

Show Notes

2:25 - (First Question) – A look at their very specific investment strategy

3:35 – Future of competitive advantage in the SaaS industry

6:45 – How startups and new companies can compete against software giants that are pretty well entrenched in the market

8:38 – How do copies with narrow focuses attract VC money which is looking for massive returns

12:28 – The stages in which AI will be enabled

15:55 – Framework of an AI company

18:49 – Importance of the feedback in the AI company framework

20:56 – Examples of AI companies

23:50 – Why companies that are AI from the start will have a significant advantage in the space

26:21 – How do companies change their thinking about compiling useful data

32:18 – Regulation of AI

35:03 – Preventing other companies from leap frogging you in the AI space

37:57 – Some of his favorite AI companies

40:43 – How much has he seen in the finance world

            41:07 – Jerry Neumann Podcast Episode

43:10 – Why the focus on B2B AI companies

45:34 – Major components of the enterprise stack that he focuses on for AI

49:30 – What impact will all of this AI have the daily lives of people

51:38 – Biggest problems that he is excited to see AI tacklet

53:04 – How do you value the intangible asset of an AI model

57:13 – How Ash thinks about getting other investors into firms they seeded

1::00:27 – Other investors that Ash really respects

            1:01:15 – The Most Important Thing: Uncommon Sense for The Thoughtful Investor

            1:03:29 – Ali Hamed Podcast Episode

1:04:04 – Where would Ash invest outside of AI

1:07:11 – More about his family nut business

1:11:18 – Favorite macadamia nut story

1:12:05 – Kindest thing anyone has done for Ash

 

Learn More

For more episodes go to InvestorFieldGuide.com/podcast

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub

Follow Patrick on twitter at @patrick_oshag

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