Prepare To Have Your Mind Blown - AMA With One of The Smartest Guys You'll Ever Know
Guest post from Justin who will setup the AMA with Dan:
Introducing Dan.
You guys have heard me talk about him a shitload. He is a well of knowledge about anything money, business, execution, follow through, career, etc.
His credentials include Stanford undergrad, and a Harvard MBA. He's disgustingly well read, wealthier than God, and an all-around life beast.
Dan was a fund manager (retired at 36) and now spends his time managing his monies, partying, and acting half-insane.
What were some things that Justin did early on when you first met that made you like him? What made you decide to mentor him? Could this be applied globally?
I didn't like Justin when I first met him. He was an overreaching, hyperbolic fuck and I didn't believe a word he said. He also introduced me early on to his gardener. Ask him about that one. The main things that attracted me early on to Justin were raw intelligence, confidence (his greatest asset and his greatest liability), and fun factor.
How would you grade Justin as your protege? How could he have implemented your teachings more efficiently and what were his biggest assets and leaks during the meat of your mentorship period?
LOL Justin is not my protege. I have higher standards. He was for a long time way too stubborn, unreliable, and unemployable to be a protege. Too much fucking work. His biggest leak is he did not believe Edison's "genius is 1% inspiration and 99% perspiration." He thought it was the other way around. He also had the poker player's disdain for making "small" amounts of money for doing things. Small, like $100 per hour. I am wealthy, but when Fidelity called me yesterday and asked if I would help them with some website feedback and they would give me $75 for half an hour, I really thought about it, LOL. And when I was worth $5mm, I would absolutely have done it.
That said, Justin is finally doing all the things I wanted him to do. But he had to learn the hard way. So his biggest leak was not listening to me from the beginning and mistaking his superior intelligence for thinking he DESERVED to be successful and taking any path that was labeled "least resistance."
No one deserves to be successful; some people deserve the OPPORTUNITY to be successful.
Given your high standards, what do you look for in a protege?
Who the fuck wants a protege? I never looked for one. But, the ones I was drawn to were:
Loyal
Eager
Bright
Willing to do anything
FUN TO BE AROUND
Able to teach ME something about some other area (not an exclusive tit for tat; it just makes a relationship feel more balanced)
For me personally, and I can't speak for others, it's about having enough of a personal connection that I actually care about you being successful. Half of life for me is just being a good sport, being able to laugh at yourself, being a person of integrity, coming prepared (in other words don't make me do all the work- do everything you can until you hit a wall, then let me break the logjam).
Where do you recommend hanging out to find good mentors?
Worst place to find good mentors: "hanging out." Make your potential and value apparent to someone who VALUES helping others for the sake of it. I worked with Justin because I liked him and I CARED about his success (there was no good reason for this. I am weird this way). Find people you want to emulate who are willing to take the time to TEACH. Many successful people are too self-centered, too unable, or unwilling to even describe the reasons for their own success, or too ego-driven to really care about what happens to you.
People like to help those they see as younger versions of themselves with untapped potential. Mentors are by definition giving. Avoid self-centered assholes. Find them in the places you WANT TO BE.
What methods and rules do you use for everyday decision making?
Number one rule for everyday decision making: behave with integrity. Integrity is doing the right thing when NO ONE IS LOOKING. For example, I never lie to women about my age, marital status, capabilities, or the diminutive size of my private parts. I don't believe in karma from a spiritual perspective, but I am a strong believer that she goes around, comes around. If you do the right things by everyone every day, and UNDER promise and OVER deliver you get very lucky. Luck is when preparedness meets opportunity. The harder I worked, the luckier I got.
Justin has talked a lot about your beastliness but I'm not sure exactly what you do. How did you go down this path?
One of the things I don't do is ask open-ended questions that would take hours to answer and have no focus, so they're unlikely to produce the answer I would find most helpful.
What one thing is the most important for your success?
I am more realistic about my strengths and weaknesses than most people in the world. I constantly reevaluate my "leaks" as we say in the poker world. I have always instinctively found what was valuable, interesting, and helpful from people I meet. I don't care who you are- you have something to teach me and I am going to figure out what that thing is.
I am also neurotically fearful of failing and would do anything to avoid that outcome and to be seen as "less than" (most importantly in MY eyes than the eyes of others). I also got lucky and I think more logically than almost anyone I ever worked with. I am a keen student of cognitive biases. Everyone on here should Wikipedia "cognitive bias," learn all of them, then be honest with yourself about how they affect you and your decision making.
This is called metacognition: thinking about thinking. Very, very few people do this and understand the fallacies of their decision making processes. If I had to pick a few things that led to my success as an investor, the first is pattern recognition. When a set of initial circumstances and facts are made clear I am good at figuring out where that cookie will crumble.
The second thing is that I don't care who you are or what you do; I don't care if you are my boss; if you say something wrong, stupid or questionable I am never, never going to let it go by. The third thing is that I strip important decisions and situations to their essence. I am a strong believer in analogical thinking and find that it is the best way to explain situations to others when they are not thinking clearly. I strive to find an analogy that is familiar to the person I am talking to by using my knowledge of THEIR field of expertise to make it click for them.
Have you always been driven to work hard or did you develop habits and protocols to accomplish this? If so, what do you attribute your work ethic to and what are those protocols?
I was born this way. I do not come from a family that has my habits and drive. When you were nine years old and people asked what you wanted to be older what did you say? I said one thing: rich. I also have always had the ability to delay gratification and understood RO and return on effort. I understood that the decisions I was making in middle school would lead to where I am today. I have countless people come to me and ask how they can get where I am. They can't. They closed out their options a long time ago by making decisions that narrowed their potential paths. I was the guy who looked at you when the bear showed up in the woods and started lacing up my sneakers- you looked at me and said "Dude, you can't outrun a bear." And I looked at you and said "I don't have to outrun the bear. I just have to outrun you." And I did, every time.
Do you think your approach can also work in different industries, or was it specific to the hedge fund world?
The part that was optimal for hedge funds was pattern recognition, but it's not specific to hedge funds. I said the same thing in every interview I ever had, and got almost all of those jobs. They ask what is special about you and I said "I will walk through walls for you." The difference between me and others is I meant it and I walked the walk. One difference in hedge funds and large organizations, perhaps (I never worked in one) is that there were different and probably less politics. Hedge funds are like sports. If you are scoring 30 points per game, it doesn't matter whether people like you. You are still getting the ball. When you are reliant on "promotions" this is a grayer area. But there is a lesson in itself there. I did not end up in hedge funds by accident. I ended up there because it was optimized for both my skills and getting me to my goals.
Where or what should I start with when wanting to learn about stocks and investing? What books can you recommend?
It depends on your goals. Do you want to know about the stock market? Do you want to impress people? Do you want to get in the business? Do you want an efficient portfolio that takes little of your time? If your goal is a long-term efficient portfolio, understand that you have almost no chance of getting good at picking securities. You have a chance to be smarter than most and REALIZE you have no chance.
The only place I would recommend you pick individual securities is in an area of significant insight and expertise. Even then, it is dangerous because it's not enough to know what is "in" or successful. You also have to know what OTHER people already think. Warren Buffet (who I hate to quote) compared investing to a beauty contest: it's not about figuring out who the prettiest girl is; it's about figuring out who other people think the prettiest girl is. I addend that it's really about figuring out what other people think about who other people will think the prettiest girl is.
Your time is not well spent in investing. Index and move on. Only when asset classes are in significant, obvious distress from sellers who have no choice (think real estate in 2008) would I recommend you really try to be an investor. Most people are just hopeless at it and those that are successful don't even know WHY they were successful. It's usually luck and leverage.
There is an old saying that few understand: "don't confuse brains for a bull market. "If you can only read one book (well, two), read Classics, an Investor's Anthology, Volumes I and II by Charlie Ellis.
What would you say is the most crucial personality trait to get ahead in business?
Willingness to fail. To be clear, I HATE HATE HATE to fail. But in the end I will just put myself in a position and do EVERYTHING in my power to avoid that outcome.
Were you always good at taking risks? I find it hard to take risks and naturally seek out all the information before making a move, so I miss opportunities. Is there a mindset that allows you to stomach potential loss?
I am Jewish. I hate losing money. It made my job miserable and kept me up and night...but it made me better. There is an old saying: "You can eat well, or you can sleep well." I feel, ironically, that I hate risk. Justin will tell you that I am the smallest stakes wealthy poker player he's ever seen. Interestingly, I was WAY more bothered losing $1,000 in a pot than $100,000 in the market. I think this is because I took risks professionally in stocked, I believed they would even out over time, and in the end I wanted to eat well more than I wanted to sleep well.
If I could give you advice, and it is a bit trite, it would be to start small. If you are that scared, I challenge you to flip a coin 50 times with Justin for $100 a pop. See how it feels. Some people's lives are just better for not taking risks. It's ok, but you will need a lot more luck to get wealthy that way. It's a personal choice. The only thing I will chide you for is this: if I offer to flip coins but pay you out 60/40 and you say no (and I have seen this with my own eyes) then you are just a mouse and you should be eating Top Ramen and dating someone for whom you are their only option.
I also heard a psychologist talk one time about the "snowball" and it's an interesting technique for people who get anxious or scared. You just keep going down each bad branch of the outcome/decision tree, and ask "what's the worst that could happen?" Keep going until the end and see if you can handle that outcome. Most of the time, it's nowhere near as bad as you think. In addition, OWN YOUR FAILURES.
You've had a successful career path. Have you ever had to deal with significant failure along the way, or has it been mostly smooth sailing? (ex. going broke, unexpected job loss, unsuccessful on major initiatives, etc.) If so, give us some insight on how you dug yourself out of the hole and kept perspective. If you haven't one through anything like that, what's your opinion on why it's been smooth sailing for you?
I took the wrong job (in some ways) out of business school. I thought it was the best possible job I could have gotten but realized soon after I got to this very recently hedge fund that there was no "there there." I networked like hell and treated every job interview like it was the most important final of my life. The reason I got the job that made my career was because someone who interviewed me at Harvard Business School that I declined to continue with was so impressed that he gave my name to my ultimate employer and said you should call this guy; we are sorry we lost him. That's the "karma" I was talking about. I was also VERY CLASSY about how I let them go. If I had just not returned phone calls or been a dick since I no longer had use for them, he would have thought I was a prick and never passed my name along.
That was a very stressful time realizing I had taken the wrong job. BUT I had excelled so much at everything I did that I knew even if the startup hedge fund, my second job after graduating, failed, I would find something else. People like to say I got lucky. Bullshit. If this one hadn't worked, the next one or the next after that would have. I REFUSE TO FAIL. Too many people (and I have interviewed a thousand of them) like to come in and tell me why this job would be great for them. Idiots. I would go in and tell them why I WOULD BE INDISPENSABLE. They would fire their wives before they would fire me. Selfishly. Most people don't want to help you. They want to help themselves.
How do you apply probability theory in your life outside of investing?
I play poker for fun so that's a big application, but I doubt you care about that. In a formal way, I doubt people really use "probability theory" in a robust manner in their lives. What I DO think is very important is people's total misunderstanding of TAILS. I have a couple good friends who used to always say "100%". Wrong. Then I finally got them down to like 95%. Wrong. The human brain does a TERRIBLE job understanding the difference between 90%, 95%, 98%, 99%, and 100%. And it can matter a LOT when taking risks that have very bad outcomes. Any of you betting men? You really think you do a good job knowing the difference between needing 10 to 1 and 25 to 1 and 50 to 1 odds? You don't.
I have seen this lead to overconfidence and very bad decision making. One thing I believe Justin has mentioned is the importance of black swans. It's all related. For those of you geeks here, read up on fractal distribution versus normal distribution, specifically Mandelbrot's "The Misbehavior of Markets."
Here's how Justin has developed an intuitive theory of risk: he made bad decisions for years and got to witness the outcomes. You have a chance to stand on the shoulders of people who have already made the mistakes you are planning on making. Take their advice. Justin's thoughts on "EV" are very general and not what I would call theory, but that doesn't mean they aren't valuable. They are common sense. When he says dress well no matter where you go because you might get lucky it's not probability; it's common sense. Think more in terms of upside and downside and cost and benefit, instead of probability theory, which has the risk of getting academic (the opposite of what you want).
Looking back, is there anything about your business life that you would have changed?
Believe it or not, no. I quit when I was making a fortune because I was sick of it and my daughter got ill. I passed on a fabulously profitable (really, scary good) opportunity when I quit my first job that was a job that I had coveted my entire life. But I had the honesty, flexibility, and perspective to say "enough is enough; this is not the key to happiness; I don't have to prove anything to anyone, and I don't have to be the richest guy in my class." I explored some avenues of curiosity that I always would have regretted not doing. I finally found a new passion in some creative stuff I am doing. I have made mistakes...but not in my career.
I guess the key here is that I don't play the "what if" game. I know what I did and why I did it. The rule I use is this...if I would have made the same decision with the same information at a prior time looking back, I am satisfied. Only if I think that with the information available AT THE TIME it was dumb do I second guess myself.
What are your favorite or most influential books? DO you have any particular published thought leaders you follow?
I assume you have read Freakonomics. The authors are among the best thinkers and think about the world the way I do (or more accurately, the other way around). They don't have bias. They take in the data in a disciplined way and just find the TRUTH without having a preconceived notion of what it is. They also provide lots of random knowledge about random topics that will make you an interesting conversationalist. You can read the blog as well; it's mostly good.
What role did mentors play in your life? In 8 years I've never heard you mention one, ever. I've always surrounded myself with people who are better than me at whatever I want to improve at.
This may sound strange, but I can't think of people I would consider mentors. I can think of people I admire and people I want to emulate, but not mentors. And perhaps this was my great strength. I took in all the info I could find and in the end chose what I thought was right. I never accepted "received wisdom" and you guys shouldn't either. If something I say feels like BS, ignore it or at least poke at it. I was too busy making fun of my superiors for them to mentor me.
There are often suggestions that you have to be ruthless to get ahead in business. To what extent do you agree with this?
This is bullshit. Don't be ruthless. Be aggressive and be good.
How do we go about building our networks and "flirting" with guys? Some general things we learned are add value, bring girls, and be fun. Any golden nuggets or specific tips you'd add?
You forgot to mention that number one is called "flying the flag." Some of this might be a direct answer to your question and some might be random musing:
In life and in business, don't be afraid to highlight your WEAKNESSES and MISTAKES. Only people who are good and have confidence lead with their shortcomings. I tell a girl early on "don't be disappointed with downstairs; you won't be impressed."
I never used girls in business. I was too busy learning my craft, reading everything I could get my hands on, and working. I sacrificed that part of my life. I also met my ex-wife when I was 19, so I was not on the market like that.
I think adding value is about being INTERESTING and knowing at least a little bit about a lot. Not for show; for real. I had the benefit of being a generalist for most of my life and for having great pattern recognition so I could relate my experience in one area to another. I am almost always able to find common ground and say something to someone I meet that says I know at least a little about what they do. This builds a connection.
See prior response about using (not in a bad way, in a good way) your connections with people every day to LEARN. I was always the kid the coaches and teachers got annoyed at for asking too many questions. But as a result, I know a lot about a lot.
Don't feel the need to one-up people. It's the worst. And ALWAYS ask questions. If you just talk about yourself, people will hate you.
Justin mentioned that you spent a lot more time cultivating wealth than cultivating vagina in your earlier years. What were the impacts of this decision and what would you recommend for someone who is 18, 21, 26 and 35?
This one may be controversial. I think things that bring a lot of immediate gratification (early spending, "vagina" as you artfully put it, partying) are in direct opposition to ultimate success. But you have to have comfort with your decisions and tradeoffs. I could have had more fun in a different way when I was younger. I didn't. I am comfortable with those tradeoffs and I don't regret them. But I am not confused that they are tradeoffs. My observation is that people who took the early gratification route spend a LOT of time complaining about where they end up.
Are there any methods you'd use in a marketing environment to get people to warm to you?
I don't know that this works universally or even whether it was the best call for me, but I tend to use humor, create a connection and sense of familiarity as soon as possible, and show people that I am different and memorable. These occur more instinctively than as a tactic. This can be pretty specific to who the other person is, the environment, etc. For my world, I met a lot of people who did the same thing every day: either a management team who was making the same presentation all day or a due diligence guy who was asking the same boring questions all day.
For the first time, I would never use the presentation and make it clear early on I had PREPARED because I cared enough about the meeting to do the work, say things that demonstrated I understood something important and subtle, and often explicitly debunk some other common BS I thought they would have heard, or make fun of whatever I assumed they last guy they had met said to them (again, creates a bond). For the marketers I would do things like when they would say "what is special about your process"- I know the standard line here. I would say "nothing, really." BUT then I would demonstrate from everything else I said that this was in fact untrue.
It seems like you really enjoy having fun with life (making fun of superiors, wrestling people at a wedding, etc.) and yet you had to be extremely focused to perform well at your job. Do you have trouble transitioning between the two? Do you do anything to separate work and play? Is there anything you do to help with stressful situations?
For the most successful people, work is play. I loved games. I loved debate. I loved learning. I loved being right. That made my job play. I also was never stuffy and I promise you this: no one ever had a meeting with me they don't remember. Frequently people will say to me "remember when we met 10 years ago and you told me x?" The answer is no, I don't fucking remember. But ask yourself why they did.
This is very specific to me personally. You can't be someone you aren't, and shouldn't try to be. I was a performer when I was younger and treated most meetings as just that: a performance. There were brokers who said they would buy tickets to me talking to a management team. It was always, always interesting, if nothing else.I am just a believer in calling people on their bullshit in the most humorous way possible. One of my favorites, not for business meetings, is "You are either lying or stupid. Neither one is great, but at least I am going to let you choose. The greatest thing ever said to me in a meeting was my first boss in a board meeting as I was rocking my dad's hand-me-down suit, pink, somehow inlaid with diamonds dress shirt:
"Hey Dan, did you get that off a dead Puerto Rican?”
The number three guy at my company had just made his first half million dollar bonus and showed up proudly in a brand new accord. He said "What do you think? Isn't it awesome?" I said "Yes. For an assistant manager at Sears. Grab me a coffee maker next time you are at work."
Do you feel you can get away with what you're saying because you're the man, or are you the man because you get away with the things you say?
I can tell you this: everyone who meets me at our poker table absolutely refuses to believe the number of times I have been hit in my life. I have something I call a "face wink." It's my way of saying "I know I just said the most demeaning, witty, belittling thing to you since you got beat up in third grade, but c'mon...you don't really think I meant anything by it, do you?"
That's more for social situations. In business, I just crushed people's souls. They instinctively know when they are beat (although that doesn't mean some of them won't hate you for it). Actually, you know what? It's a lot like picking up women: be interesting and unpredictable. Cocky, interestED(!), and have an ARC. What a prick...who does he think he is? Wait, what is he going to say next? Hold on, he just did something that says he gives a shit...I was wrong about him after all. Rinse and repeat.
Note from Justin: How he gets away with it: for starters, he is the single biggest shit talker you will ever meet. He says UNREAL things to complete strangers, shit that even I wouldn't say.
Step 1: he makes friends with people like me who will punch someone in the face if they get serious/frisky with him.
Step 2: He has a tone in his voice that implies he is fucking around.
Step 3: He walks the line like a tightrope walker, always 1mm away from going too far, but never actually crossing it.
When I tell you he says INSANE shit to people, it would require a 3 hour call to explain this. As I've told you guys, the first time I met him he spent 1.5 hours telling me how dumb I was, and it was the most informative 1.5 hours of my life. People ask me, how did you not hurt him? PFFT easy: his claims were valid, he backed them up, it resonated, and I realized, fuckballs, I suck. This guy can tell me exactly how and why. I need to ask a lot of questions.This was 8 years ago. I went through him telling me how useless, dumb, and irrelevant I am almost daily for 6 years. One time we had ice cream; he was nice that day. So, there is that.
Like you, I consider myself to be giving a "performance" in sales calls and meetings. Can you give me some specific examples of how you made meetings more memorable?
It's pissing me off because I'd hear stories for years about meetings I had and I am not doing a good job telling how it worked. One thing I would say is this: I constantly had people off balance. This is something honed over years and relates to Justin's point about going up to the line but not crossing it. You could just see people move forward in their seats, because they knew if they relaxed, they were fucked.
In a life of ferocious competition, highest personal standards, wealth, and "success", where have you found beauty, connection, and meaning?
My favorite question yet. I quit at the top of my career. I was burnt, my daughter was sick, and I couldn't make the sacrifices anymore. I went a long time enjoying myself but I would say with little sense of purpose other than making up for some lost social time. In the last couple years I finally found something I love...making music and music videos with my daughter. I am more proud of that than anything I did professionally.
How have you approached "giving back"? Has the desire to do so evolved over your career?
For me, "charity starts at home." I have been only a modest giver to traditional causes. That said, I have helped materially many family and friends around me. Both of my brothers would not have homes without my significant help. For others, it has taken the form of mentorship. For other, it has taken the form of opportunity. There are probably four friends in the world who have retired early and wealthy and would never have been there without my help. It's very, very satisfying.
What has been the highest cost of opportunity in sacrificing yourself during your 20s for the sake of pursuing opportunity? Would you do it again after what you know today? Would you balance it?
As I said above, I wouldn't change anything, but let's not kid ourselves...I made sacrifices. However, my view is I have had different phases of my life and they came when I was ready for them. It's dumb for me to mourn my sacrifices. They made me who I am today and I was never close to doing anything differently. I can't say I would have balanced it. I used to say, explicitly "I am going to do 30 years worth of work in 10 then I will make up for it later." And that is what I feel is happening.
Note: Dan met his wife at 19 and married at 24 so he had someone at home. This removes the need to go find vagina and he didn't have a sense of loneliness. Had he been single, his story might be different, or maybe he'd have some regret. I think working a shit ton with no one to come home to would be a tough life after a few years.
I agree about loneliness. I also had kids. I was too busy, too focused, and had too much responsibility to notice what I was missing. I would have been lonely for sure otherwise, although there was lots of camaraderie at work. That brings up a sideways point: don't believe most of your work "friends" are real friends. They are not.
What kind of career path would you recommend to be in high demand in the next 10 years?
Ummm...this is a two hour conference call worth of discussion. I will try to say a little. You are asking the right question about high demand. Wayne Gretzky, the best hockey player ever, used to say "don't skate to where the puck is; skate to where the puck will be." Careers are the same. I don't spend time worrying about where the puck is going anymore. I will say this: don't sell your time by the hour or work for a company that does. Take a job where your skills are crucial to the success of the business and GENERATE REVENUE. This is called being "line vs. staff."
Note from Robbie: This is crucial for the guys in this group. A lot of you are brilliant at what you do, but you're replaceable as staff. Find a way to make yourself irreplaceable and you'll gain control and options. This is the story I've jammed down your throats a million times about how I got a country club membership out of my boss while everyone else slaved away in the office.
In the end, do what you are passionate about and good at. I have friends who joined hedge funds when I did and went nowhere, because it just didn't fit their strengths. No square pegs in round holes. Be realistic about what you will excel at. It doesn't matter what you want and hope to excel at. It matters what you can really excel at. I have seen this mistake many times.
What is the best strategy to retain all material in my head and recall it on will to create free-flowing conversations?
I actually have a poor memory. BUT I don't seek to memorize things; I seek to UNDERSTAND them. In high school I wouldn't memorize geometry proofs and algebraic equations. I would understand where they came from so that, in a pinch, I could derive them instead of regurgitating them. I approach everything this way. No rote. CONCEPTS. Deep, accurate understanding.
Now that your hedge fund is career is behind you, what opportunities do you still want to do next? Are you just complacent with what you have now (doubtful)? Or is there some burning desire to reinvent yourself? You clearly don't need more money, so what do you want?
I am an extremely busy retired person. I have many pursuits, not just jobs. I have helped build a very successful real estate business in the last two years from scratch with no prior knowledge. The funny thing is how much better I think about the real estate business than longtime professionals. Real estate people are dumb. I also revisited work for a few years and built a half billion dollar bond portfolio...and I had never bought a single bond in my life personally or professionally.
I believe most people investors are like workmen with a hammer: "To a hammer, everything looks like a nail." I strive to develop a full toolbox. I am an unattractive, short, older Jewish guy. Overcoming that socially was fun and satisfying. To me, just learn, learn, learn, challenge, challenge, challenge, connect, connect, connect. Integrity. The rest takes care of itself.
How do you make asset allocation decisions given that you "have more money than God"? Is your economic goal only capital preservation, or do you still have a risk position, and if so, what are your objectives?
For starters, in the world I came from I don't have more money than God. Because there are some serious gods. I would have if I didn't quit so young, but I did, thankfully. Regarding risk, a mentor of mine (I just realized I kind of did have one at some point. I just didn't work with him of live within 3,000 miles of him) was fond of saying "you are not in the getting rich business; you are in the staying rich business."
That said, I love investing when opportunities are ripe. It's tedious when they are not. I have a balanced approach to risk. My number one goal was to never HAVE to work again. Working is fine. Having to work after the effort I put in was, in my mind, disastrous. I've been an active investor in many types of funds, equities at an earlier time before I got sick of it, and now being very active in real estate with a very small group of friends. My goal has always been to end every year with more than I started. I have failed at that once, in 2008.
What are the key financial/economic numbers that you would look at every day to form a global macro view? How did you organize information and stay on top of stuff?
I was a voracious reader of everything Wall Street for many years. What I discovered is this: reading so that you understand the real data of what has just happened can be necessary, but I NEVER made money listening to pundits and expert macro guys from places like Goldman Sachs. They sound wickedly smart and often make their cases convincingly. They have the small flaw of being right with about the same frequency of chimps. I think reading people's opinions of markets is more likely to lose you money than make you money.
It's easy to get distracted by the volume of data and I wouldn't read that shit unless you simply enjoy it or want to round out the building blocks of how things work (i.e. not for prediction but for mechanics, general knowledge, and intellectual curiosity). I still get a macro daily email from Morgan Stanley. I can't remember the last time I read it. I used to peruse five per day as well as literally hundreds of other commentaries. When you are in the markets daily the main importance of this for me was forming contrary opinions. When you are doing what I call "intermediate" equity trading for months (not days or years) you need to have a command of the "expectations" game. I am so over that shit. It never ends.
For you guys, I believe that real money is made through passive allocation: tax efficient, low fees, low transaction costs, and if you have the capital and access, making big calls when things get screwy. There have been three calls that really mattered to me in the past 15 years. It is only when this gets OBVIOUS that I get interested. They were ahead of the internet bubble (there was a 99 percent chance there was a bubble ahead of time, not in retrospect), the aftermath of the debt meltdown in 2008, and the historically wide spreads a few years ago between cap rates and mortgage rates in some kinds of real estate.
What are your thoughts on the MBA route?
I have a big bias around MBAs. If you can go top 5, go for sure, unless your current setup. A good MBA is the biggest door opener in the world and the best way, by far, to switch the role or industry you're in. If you want to make a total right degree turn, there is no better way to do it. I would generally NOT recommend anything outside the top 10. If you wanted to be in finance I don't even know if I would recommend outside the top 5. This is very specific to your talent, grades, connections, current opportunities, and the relative NEED for an MBA in the field you want to pursue. Adjust for these factors. I'm a massive academic snob, so you are getting a pretty biased view.
