1 00:00:10,480 --> 00:00:14,400 Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast. 2 00:00:14,480 --> 00:00:19,560 Speaker 1: I'm Chill and I'm Tracy Alloway. Tracy, we talk a lot. 3 00:00:19,800 --> 00:00:21,360 Speaker 1: I don't know, I guess if we talk a lot 4 00:00:21,400 --> 00:00:24,960 Speaker 1: on this particular podcast, But I would say findite financial 5 00:00:25,000 --> 00:00:31,800 Speaker 1: media is very into great investments and legendary investors and 6 00:00:32,040 --> 00:00:36,800 Speaker 1: how they got there and how basically a whole industry 7 00:00:36,840 --> 00:00:39,800 Speaker 1: devoted to, you know, how people became rich and successful. 8 00:00:39,840 --> 00:00:42,559 Speaker 1: Wouldn't you say that? Yeah, well, you have to have 9 00:00:42,720 --> 00:00:46,159 Speaker 1: role models if you're trying to do something right. And uh, definitely, 10 00:00:46,640 --> 00:00:50,600 Speaker 1: investors tend to lionize certain people. I mean Warren Buffett 11 00:00:50,680 --> 00:00:53,800 Speaker 1: is probably the most famous investor that springs to mind. 12 00:00:53,840 --> 00:00:56,960 Speaker 1: And every year you get people who go down to 13 00:00:56,960 --> 00:01:00,080 Speaker 1: Omaha and it turns into sort of a war and 14 00:01:00,200 --> 00:01:03,440 Speaker 1: Buffett fest I would say, right, And then not only 15 00:01:03,480 --> 00:01:07,800 Speaker 1: do we sort of lionize these people, but also throughout 16 00:01:07,840 --> 00:01:10,480 Speaker 1: the year, at any given time, if they make a call, 17 00:01:10,680 --> 00:01:12,839 Speaker 1: you have people who want to jump on that call. 18 00:01:12,959 --> 00:01:16,880 Speaker 1: Like if Warren Buffett adds a new position to his portfolio, 19 00:01:17,520 --> 00:01:20,160 Speaker 1: then of course you'll get a Typically you see buying 20 00:01:20,640 --> 00:01:23,560 Speaker 1: of that stock the next day because people think, well, 21 00:01:24,040 --> 00:01:26,600 Speaker 1: Warren Buffett is invested in it, or any one of 22 00:01:26,640 --> 00:01:29,200 Speaker 1: these other gurus so to speak, is invested in it. 23 00:01:29,480 --> 00:01:31,880 Speaker 1: Then you get people trying to follow on and think 24 00:01:31,920 --> 00:01:37,080 Speaker 1: that they their richest and genius will spread to them. Yeah, 25 00:01:37,280 --> 00:01:39,800 Speaker 1: lots of followers, for sure. You even have some people 26 00:01:39,840 --> 00:01:42,959 Speaker 1: now who have basically made a business out of following 27 00:01:43,080 --> 00:01:46,320 Speaker 1: financial gurus, and it's called copy trading. So you have 28 00:01:46,680 --> 00:01:50,400 Speaker 1: followers of followers. It's followers all the way down. But 29 00:01:50,520 --> 00:01:53,600 Speaker 1: the one thing we don't talk about as much is 30 00:01:53,640 --> 00:01:56,520 Speaker 1: the fact that all these people are human, and in fact, 31 00:01:56,600 --> 00:01:58,680 Speaker 1: a lot of them have made some pretty huge mistakes 32 00:01:58,680 --> 00:02:02,120 Speaker 1: in their career. Warren buff It's made mistakes. No, I 33 00:02:02,160 --> 00:02:04,480 Speaker 1: don't know if Warren Buffett has actually ever made a mistake. 34 00:02:04,520 --> 00:02:07,480 Speaker 1: It's possible that he is bad at a thousand. But 35 00:02:07,680 --> 00:02:11,080 Speaker 1: most investors, even the really great ones I believe, have 36 00:02:11,240 --> 00:02:13,840 Speaker 1: made a couple of mistakes here and there, right, And 37 00:02:14,040 --> 00:02:17,160 Speaker 1: you're absolutely correct that we don't hear that much about 38 00:02:17,200 --> 00:02:21,399 Speaker 1: those mistakes. Maybe for obvious reasons, but I'm guessing there 39 00:02:21,400 --> 00:02:23,840 Speaker 1: are probably a lot of lessons you could learn about 40 00:02:23,840 --> 00:02:27,680 Speaker 1: investing from actually talking about what went wrong. There are 41 00:02:27,800 --> 00:02:30,600 Speaker 1: definitely lessons you could learn and we're gonna talk. We're 42 00:02:30,600 --> 00:02:33,880 Speaker 1: gonna learn some of those lessons today. And I think, 43 00:02:33,960 --> 00:02:36,079 Speaker 1: just for your and ice sake, I think we should 44 00:02:36,120 --> 00:02:38,920 Speaker 1: redouble our effort to point out mistakes because you and 45 00:02:38,960 --> 00:02:41,080 Speaker 1: I are in the position to always be reporting on 46 00:02:41,440 --> 00:02:44,920 Speaker 1: people's calls and people's position changes and their forecasts and 47 00:02:44,919 --> 00:02:47,120 Speaker 1: stuff like that, and we should just you know, it's 48 00:02:47,160 --> 00:02:49,680 Speaker 1: like a sort of note to each other, remind each 49 00:02:49,680 --> 00:02:51,680 Speaker 1: other to go back and look and see who got 50 00:02:51,680 --> 00:02:54,480 Speaker 1: it wrong the year before, just to keep everyone more honest. No, 51 00:02:54,600 --> 00:02:57,680 Speaker 1: you're absolutely right, Um, especially on the cell side, we 52 00:02:57,800 --> 00:03:00,600 Speaker 1: have a whole industry of people who are supposed to 53 00:03:00,600 --> 00:03:03,320 Speaker 1: be making calls and a lot of those are incorrect. 54 00:03:03,440 --> 00:03:05,640 Speaker 1: And you're absolutely right that we don't do enough to 55 00:03:05,639 --> 00:03:07,680 Speaker 1: point those out. I got it, Mit, scho. I have 56 00:03:07,720 --> 00:03:11,600 Speaker 1: a few investing mistakes of my own that I'm pretty embarrassed. 57 00:03:11,639 --> 00:03:15,840 Speaker 1: But maybe we'll talk about them during this episode. Maybe 58 00:03:16,000 --> 00:03:19,040 Speaker 1: I'm really curious about them now. No, they're so embarrassing, 59 00:03:19,639 --> 00:03:21,760 Speaker 1: we definitely have to bring them up. All right, Well, 60 00:03:21,760 --> 00:03:24,880 Speaker 1: maybe we can avoid our mistakes, or maybe maybe you cannot. 61 00:03:25,040 --> 00:03:28,000 Speaker 1: We can avoid making investing mistakes if we learned about 62 00:03:28,160 --> 00:03:31,720 Speaker 1: the big mistakes that famous investors have made. And to 63 00:03:31,760 --> 00:03:35,080 Speaker 1: this end, our guest today is Michael bat Nick. He 64 00:03:35,160 --> 00:03:38,200 Speaker 1: is the director of research at rid Holts Wealth Management 65 00:03:38,680 --> 00:03:40,240 Speaker 1: and he has a new book out that came out 66 00:03:40,280 --> 00:03:44,440 Speaker 1: this year entitled Big Mistakes the Best Investors in Their 67 00:03:44,480 --> 00:03:47,720 Speaker 1: Worst Investments. So they should be really fun because we're 68 00:03:47,720 --> 00:04:01,320 Speaker 1: going to talk about great investors and their colossal errors. Michael, 69 00:04:01,360 --> 00:04:03,680 Speaker 1: thank you very much for joining us, Thanks for having 70 00:04:04,280 --> 00:04:09,119 Speaker 1: Why did you write this book about famous investors growing up? Well, 71 00:04:09,560 --> 00:04:11,680 Speaker 1: the best advice I got on writing a book was 72 00:04:11,720 --> 00:04:13,760 Speaker 1: write something that you would want to read, and this 73 00:04:13,960 --> 00:04:17,720 Speaker 1: definitely fit that bill. So there are a bazillion how 74 00:04:17,760 --> 00:04:20,760 Speaker 1: two books, so I wanted to take the opposite side. 75 00:04:20,800 --> 00:04:22,600 Speaker 1: And maybe that's the wrong way of putting it, because 76 00:04:22,600 --> 00:04:24,440 Speaker 1: this is not a how not to book, This is 77 00:04:24,480 --> 00:04:27,120 Speaker 1: just a book. On to your point, we do lionize 78 00:04:27,160 --> 00:04:30,320 Speaker 1: these best investors, but they are human too, and investing 79 00:04:30,400 --> 00:04:33,360 Speaker 1: is really hard and I don't care what style you're doing, 80 00:04:33,440 --> 00:04:36,040 Speaker 1: how big a dollar pull you're managing, it is really 81 00:04:36,080 --> 00:04:38,840 Speaker 1: hard and it's not about avoiding mistakes. I mean, there 82 00:04:38,839 --> 00:04:41,279 Speaker 1: are certain mistakes that are easily avoidable. For instance, do 83 00:04:41,360 --> 00:04:44,120 Speaker 1: not buy and hold a triple levered. You know et F. 84 00:04:44,200 --> 00:04:46,920 Speaker 1: Don't do that that we can avoid. But Jesse Livermore 85 00:04:46,920 --> 00:04:48,760 Speaker 1: said something along the lines of the mistake family is 86 00:04:48,800 --> 00:04:51,200 Speaker 1: so large that you think you've made it all, then 87 00:04:51,560 --> 00:04:54,240 Speaker 1: you know one is right around the corner. So you're 88 00:04:54,240 --> 00:04:57,040 Speaker 1: going to make mistakes whatever you're doing, if you're buying 89 00:04:57,040 --> 00:04:58,920 Speaker 1: and holding, I mean, whatever you are doing, you're going 90 00:04:58,920 --> 00:05:00,760 Speaker 1: to make mistakes. So the point of this book was 91 00:05:00,800 --> 00:05:03,240 Speaker 1: that maybe after reading this you will have a little 92 00:05:03,279 --> 00:05:05,360 Speaker 1: bit of empathy for your future self when you do 93 00:05:05,440 --> 00:05:08,320 Speaker 1: make a mistake. Don't go off the reservation, don't beat 94 00:05:08,320 --> 00:05:11,480 Speaker 1: yourself up, Just taken and try to move along. So, Michael, 95 00:05:11,480 --> 00:05:15,160 Speaker 1: I'm really curious how you actually went about researching this book, because, 96 00:05:15,160 --> 00:05:17,040 Speaker 1: as Joe and I were discussing, you know, these are 97 00:05:17,160 --> 00:05:22,040 Speaker 1: things mistakes, errors, that people generally don't like to talk about, 98 00:05:22,120 --> 00:05:27,000 Speaker 1: and that certainly aren't as well publicized as their successes. Yeah, 99 00:05:27,040 --> 00:05:29,400 Speaker 1: so a lot of this stuff is public. I didn't 100 00:05:29,400 --> 00:05:32,000 Speaker 1: speak to any of the individual investors because it was 101 00:05:32,080 --> 00:05:34,600 Speaker 1: all out there. A lot of it people have written about, 102 00:05:34,600 --> 00:05:37,400 Speaker 1: people have spoken about, of course, like John Paulson's recent 103 00:05:37,640 --> 00:05:41,279 Speaker 1: struggles are very public. Iron Horn's recent struggles, actments, recent struggles, 104 00:05:41,560 --> 00:05:42,919 Speaker 1: so I think we have a lot more access to 105 00:05:42,920 --> 00:05:45,280 Speaker 1: information than we would have in the past. We were 106 00:05:45,360 --> 00:05:48,360 Speaker 1: joking earlier that maybe Warren Buffett had never made a mistake, 107 00:05:48,360 --> 00:05:49,960 Speaker 1: but of course he has made a mistakes. And you 108 00:05:50,000 --> 00:05:52,880 Speaker 1: wrote about Warren Buffett in your book. So what was 109 00:05:52,920 --> 00:05:56,240 Speaker 1: Warren Buffett's biggest mistake? Not only did Warren Buffett make mistakes, 110 00:05:56,240 --> 00:05:57,960 Speaker 1: but there was plenty to choose from. It wasn't like 111 00:05:57,960 --> 00:06:00,480 Speaker 1: I had to search very difficult, very hard for this one. 112 00:06:00,960 --> 00:06:03,520 Speaker 1: So the biggest mistake that that he would say is 113 00:06:03,560 --> 00:06:06,840 Speaker 1: that he bought a shoe company called Dexter Shoe. I 114 00:06:06,880 --> 00:06:09,800 Speaker 1: think it's a small company in Maine that got destroyed 115 00:06:09,800 --> 00:06:13,400 Speaker 1: by overseas competition. But the mistake was not that he 116 00:06:13,400 --> 00:06:15,760 Speaker 1: bought this this company. The steak was that he bought 117 00:06:15,800 --> 00:06:18,640 Speaker 1: it with stock and he paid something like three d 118 00:06:18,760 --> 00:06:20,560 Speaker 1: fifty or four ure million or something like that, and 119 00:06:20,600 --> 00:06:24,360 Speaker 1: that is now worth seven billion dollars. There's a bowling company. 120 00:06:24,440 --> 00:06:25,919 Speaker 1: I used to own a pair of deck I just 121 00:06:25,920 --> 00:06:27,520 Speaker 1: want to get this in there. I used to own 122 00:06:27,560 --> 00:06:30,080 Speaker 1: a pair of Dexter shoes. By the way, I don't 123 00:06:30,080 --> 00:06:32,920 Speaker 1: know what happened to them all right, keep going well, 124 00:06:33,080 --> 00:06:35,760 Speaker 1: so yeah, so so in that particular mistake, that is 125 00:06:35,800 --> 00:06:37,760 Speaker 1: not something that any of us are not going to replicate, 126 00:06:37,800 --> 00:06:39,680 Speaker 1: because none of us are going to have the opportunity 127 00:06:39,680 --> 00:06:41,600 Speaker 1: to buy a ship company with with chairs in our 128 00:06:41,640 --> 00:06:44,960 Speaker 1: own company. The point is, if Warren Buffett makes mistakes, 129 00:06:44,960 --> 00:06:47,200 Speaker 1: and he's made plenty of them, be very careful about 130 00:06:47,240 --> 00:06:50,840 Speaker 1: being overconfident in your own abilities, Michael, as you point out, 131 00:06:50,920 --> 00:06:54,159 Speaker 1: like none of us own a Berkshire Hathaway, that we 132 00:06:54,200 --> 00:06:58,120 Speaker 1: could even buy a company within our own stock like 133 00:06:58,160 --> 00:07:00,320 Speaker 1: that is not something that we're going to replicate. But 134 00:07:00,640 --> 00:07:03,640 Speaker 1: is there a generalizable error from there? Is there a 135 00:07:03,720 --> 00:07:09,240 Speaker 1: lesson from that Buffet mistake that the average investor could apply? Oh? Certainly. 136 00:07:09,320 --> 00:07:12,520 Speaker 1: So this is the availability bias. He had purchased another 137 00:07:12,560 --> 00:07:15,880 Speaker 1: assume manufactured company that did extraordinarily well for him, and 138 00:07:15,920 --> 00:07:17,720 Speaker 1: he said, well, that one did well, this one will 139 00:07:17,760 --> 00:07:20,840 Speaker 1: do well. And people make these parallels all the time. 140 00:07:21,240 --> 00:07:23,560 Speaker 1: I mean this, obviously there was a logical step. This 141 00:07:23,640 --> 00:07:26,000 Speaker 1: is a shoe company. That's a shoe company. But people 142 00:07:26,000 --> 00:07:28,360 Speaker 1: make comparisons all the time, just something that pops easily 143 00:07:28,400 --> 00:07:31,360 Speaker 1: into their brain that has no business being compared with 144 00:07:31,360 --> 00:07:34,040 Speaker 1: with something else. But there are a lot of mistakes 145 00:07:34,200 --> 00:07:38,120 Speaker 1: are of easily avoidable, as for instance, what Bill Ackman 146 00:07:38,200 --> 00:07:42,160 Speaker 1: did is very easily avoidable. Do not talk to friends 147 00:07:42,160 --> 00:07:45,920 Speaker 1: and family about your newest stock pick. And if you 148 00:07:45,920 --> 00:07:47,800 Speaker 1: do talk to them, and if you do pound the table, 149 00:07:48,280 --> 00:07:50,840 Speaker 1: give yourself an out say hey, I really you know, 150 00:07:50,840 --> 00:07:52,440 Speaker 1: if somebody asked, I really like the stock x y 151 00:07:52,520 --> 00:07:54,440 Speaker 1: C at a hundred, which one are you referring to? 152 00:07:54,560 --> 00:07:58,120 Speaker 1: So Bill Akman the the mistake that I highlighted in 153 00:07:58,120 --> 00:08:00,000 Speaker 1: the book, of course, there was, you know, like every 154 00:08:00,000 --> 00:08:02,200 Speaker 1: body else, there was multiple mistakes to choose from. I 155 00:08:02,240 --> 00:08:05,720 Speaker 1: went with our life. How can anybody give a four 156 00:08:05,800 --> 00:08:08,640 Speaker 1: hour presentation on a stock and then say, hey, you 157 00:08:08,680 --> 00:08:10,840 Speaker 1: know what, I forget everything I said last week. I 158 00:08:10,920 --> 00:08:13,679 Speaker 1: changed my mind, right, So I think it's really easy 159 00:08:13,720 --> 00:08:15,920 Speaker 1: to just avoid that. Just don't talk about your positions 160 00:08:15,920 --> 00:08:18,120 Speaker 1: in public, especially not your friends and family, because we 161 00:08:18,160 --> 00:08:20,120 Speaker 1: are loath to change our mind. But like I said, 162 00:08:20,760 --> 00:08:22,520 Speaker 1: if you do talk about it, at least give yourself 163 00:08:22,520 --> 00:08:25,000 Speaker 1: a note. Don't get married to a position. Michael, I 164 00:08:25,080 --> 00:08:27,559 Speaker 1: kind of think when it comes to investing, there's there's 165 00:08:27,600 --> 00:08:32,320 Speaker 1: two very generalized broad bucket mistakes that you can think of, 166 00:08:32,360 --> 00:08:34,600 Speaker 1: and one has to be making a bad investment that 167 00:08:34,640 --> 00:08:36,760 Speaker 1: loses money, and the other one has to be missing 168 00:08:36,760 --> 00:08:39,880 Speaker 1: out on a good investment. Do you have any famous 169 00:08:39,920 --> 00:08:43,000 Speaker 1: examples of either of those and on the whole, which 170 00:08:43,040 --> 00:08:45,760 Speaker 1: one is more common for the people that you surveyed? 171 00:08:46,640 --> 00:08:48,480 Speaker 1: M hmm, this is a this is a good question. 172 00:08:48,520 --> 00:08:51,120 Speaker 1: So I think the unforced errors are probably more common. 173 00:08:51,320 --> 00:08:54,880 Speaker 1: But I have never had anybody say to me, Hey, Michael, 174 00:08:55,520 --> 00:08:58,360 Speaker 1: I got a stock tip. The thing quintupled? Now what 175 00:08:58,400 --> 00:09:01,240 Speaker 1: do I do right? Like, It's never that. It's always hey, 176 00:09:01,240 --> 00:09:03,200 Speaker 1: somebody gave me a stock tip. I've down, what do 177 00:09:03,240 --> 00:09:06,679 Speaker 1: I do now? So the unforced errors, in terms of 178 00:09:06,800 --> 00:09:10,320 Speaker 1: watching something go up without you, is really hard to 179 00:09:10,320 --> 00:09:12,280 Speaker 1: insulate ourselves from. I'm not really sure. I don't really 180 00:09:12,320 --> 00:09:15,400 Speaker 1: have a good suggestion of how to like protect yourself 181 00:09:15,400 --> 00:09:18,199 Speaker 1: from yourself. And as an example, Stanley Druckon Miller, who 182 00:09:18,240 --> 00:09:20,560 Speaker 1: literally has like a top three track record of all time, 183 00:09:21,080 --> 00:09:23,280 Speaker 1: I bought a stock I think it was called Veri 184 00:09:23,360 --> 00:09:27,120 Speaker 1: sign in late nineties. He had terrible fomo and it 185 00:09:27,160 --> 00:09:29,920 Speaker 1: showed him a profit, of course, and then he doubled 186 00:09:29,960 --> 00:09:32,920 Speaker 1: down and then it went like it the market top 187 00:09:32,960 --> 00:09:34,600 Speaker 1: the very next day, and I think he lost like 188 00:09:34,640 --> 00:09:37,320 Speaker 1: three billion dollars in six weeks. And it basically he 189 00:09:37,320 --> 00:09:40,040 Speaker 1: said no Moss, he set him out, so he got 190 00:09:40,040 --> 00:09:41,760 Speaker 1: swept away with the phone. With the late nineties, we 191 00:09:41,760 --> 00:09:44,520 Speaker 1: just saw the same thing with bitcoin recently. It is very, 192 00:09:44,640 --> 00:09:46,720 Speaker 1: very difficult to watch people make money when you're not. 193 00:09:47,480 --> 00:09:50,520 Speaker 1: Let's talk about some of these psychological errors. You mentioned 194 00:09:50,600 --> 00:09:54,640 Speaker 1: the famous trader Jesse Livermore earlier, and I read his 195 00:09:54,720 --> 00:09:57,640 Speaker 1: book a couple of years ago, and he, you know, 196 00:09:57,720 --> 00:10:00,720 Speaker 1: he sort of prized himself on his risk manager abilities, 197 00:10:01,000 --> 00:10:03,720 Speaker 1: but even he would then somehow getting these like horrible 198 00:10:03,800 --> 00:10:06,360 Speaker 1: ruts where he broke all of his own risk management 199 00:10:06,440 --> 00:10:09,400 Speaker 1: rules and he would double and triple down on losing investments, 200 00:10:09,679 --> 00:10:12,360 Speaker 1: even when he knew that that was the worst thing 201 00:10:12,440 --> 00:10:14,000 Speaker 1: you could possibly do. I think there was like some 202 00:10:14,040 --> 00:10:16,840 Speaker 1: cotton trade or something like that that totally destroyed him. 203 00:10:16,880 --> 00:10:22,120 Speaker 1: Are there examples in your book of investors who just 204 00:10:22,280 --> 00:10:25,960 Speaker 1: like they just blow through all of their own rules 205 00:10:26,000 --> 00:10:29,000 Speaker 1: and risk management approaches and destroy themselves. Well, he is 206 00:10:29,120 --> 00:10:32,600 Speaker 1: the prime example. He made several fortunes and lost them all. 207 00:10:32,640 --> 00:10:34,440 Speaker 1: And the one that really did him in was he 208 00:10:34,559 --> 00:10:37,280 Speaker 1: was short the market and the great depression, and I 209 00:10:37,280 --> 00:10:40,600 Speaker 1: think he made a hundred million dollars and a hundred 210 00:10:40,640 --> 00:10:41,839 Speaker 1: million dollars, I mean that's a lot of money in 211 00:10:41,880 --> 00:10:46,200 Speaker 1: at decent amount today. But he went so he flipped 212 00:10:46,200 --> 00:10:48,640 Speaker 1: and he went bullish a little bit too early or 213 00:10:48,679 --> 00:10:51,640 Speaker 1: something like that, and he got destroyed. And uh, every 214 00:10:51,640 --> 00:10:54,160 Speaker 1: time that he made and loss of fortune, he came 215 00:10:54,160 --> 00:10:57,760 Speaker 1: away with these like remarkably eloquent sayings about the market. 216 00:10:58,120 --> 00:11:01,760 Speaker 1: And he is probably the single most quote a trader today. 217 00:11:01,840 --> 00:11:04,160 Speaker 1: And the irony is that he couldn't even follow his 218 00:11:04,200 --> 00:11:07,960 Speaker 1: own rules, not even close. Um, and he he got 219 00:11:07,960 --> 00:11:09,720 Speaker 1: blown up a brazilion times and at the end he 220 00:11:09,720 --> 00:11:12,360 Speaker 1: took his own life because there were structural changes in 221 00:11:12,400 --> 00:11:14,120 Speaker 1: the market with the SEC coming in, and he just 222 00:11:14,240 --> 00:11:16,440 Speaker 1: he just couldn't do what he used to do. And 223 00:11:16,559 --> 00:11:21,000 Speaker 1: uh and yeah, so Joe mentioned the human psychology, how 224 00:11:21,040 --> 00:11:25,080 Speaker 1: many of these big mistakes are are driven by human error. 225 00:11:25,200 --> 00:11:28,040 Speaker 1: And you know, if that's the case, then is the 226 00:11:28,160 --> 00:11:31,679 Speaker 1: major lesson just that we should write down some tried 227 00:11:31,720 --> 00:11:34,760 Speaker 1: and tested rules and you know, have them sort of 228 00:11:34,800 --> 00:11:37,439 Speaker 1: set in stone and never deviate from them. And maybe 229 00:11:37,440 --> 00:11:40,839 Speaker 1: we should have machines run our training portfolios or people 230 00:11:40,880 --> 00:11:45,640 Speaker 1: completely devoid of emotion. Is that the takeaway? Well, it's 231 00:11:45,679 --> 00:11:49,240 Speaker 1: hard to give such broad advice like that, but like 232 00:11:49,280 --> 00:11:51,880 Speaker 1: I said, insulinting yourself from the fear of missing out, 233 00:11:52,320 --> 00:11:54,360 Speaker 1: I just don't have a good answer. And another example 234 00:11:54,400 --> 00:11:57,200 Speaker 1: is Jack Bogel. He so he took over the Walenton 235 00:11:57,240 --> 00:11:59,280 Speaker 1: Fine which is one of the oldest mutual fund companies 236 00:11:59,280 --> 00:12:02,360 Speaker 1: in the country, and he basically ran into the ground 237 00:12:02,440 --> 00:12:04,920 Speaker 1: because in the late sixties, during the go go years, 238 00:12:05,360 --> 00:12:08,200 Speaker 1: the name of the game was high turnover, rapid trading, 239 00:12:08,679 --> 00:12:11,440 Speaker 1: and and the Wellington Fund, which prided himself in being 240 00:12:11,480 --> 00:12:15,320 Speaker 1: conservative and surviving the Great Depression and a balanced portfolio. 241 00:12:16,040 --> 00:12:19,640 Speaker 1: He hired some hotshots from Boston to keep up with 242 00:12:19,679 --> 00:12:22,440 Speaker 1: what everyone else was doing. He even had a mutual 243 00:12:22,440 --> 00:12:25,760 Speaker 1: fund that was based on technical analysis. So Jack so, 244 00:12:25,920 --> 00:12:28,920 Speaker 1: Jack Bogel was infected with a fear of missing out. 245 00:12:28,920 --> 00:12:31,880 Speaker 1: Stanley truck and Miller was, it's really difficult and these 246 00:12:31,880 --> 00:12:34,760 Speaker 1: psychological things. I mean, I don't know if machines aren't 247 00:12:34,760 --> 00:12:37,840 Speaker 1: necessarily the answer. I think that one thing that all 248 00:12:37,880 --> 00:12:40,800 Speaker 1: of us can do is write things down, like when 249 00:12:40,840 --> 00:12:43,200 Speaker 1: you go into a trade, write things down, and so 250 00:12:43,200 --> 00:12:46,320 Speaker 1: so I did this, and this is not intentional at 251 00:12:46,360 --> 00:12:48,679 Speaker 1: the time, but I kept a trading diary or a 252 00:12:48,760 --> 00:12:50,560 Speaker 1: journal of what I was doing, and I would go 253 00:12:50,640 --> 00:12:53,520 Speaker 1: back and look at it, and it sounded so ridiculous, 254 00:12:53,880 --> 00:12:56,040 Speaker 1: and but it was my words, Like I couldn't blame 255 00:12:56,080 --> 00:12:58,720 Speaker 1: anybody else. It was me. I was ridiculous, And so 256 00:12:58,760 --> 00:13:01,520 Speaker 1: that was a really good a to protect myself from 257 00:13:01,559 --> 00:13:04,840 Speaker 1: being sort of self delusional. If these are my thoughts yesterday, 258 00:13:04,880 --> 00:13:06,280 Speaker 1: what are my thoughts could be tomorrow? So it's a 259 00:13:06,280 --> 00:13:09,160 Speaker 1: game that I just I just stopped playing entirely. Michael, 260 00:13:09,240 --> 00:13:12,640 Speaker 1: you're on Twitter and you obviously have been involved with 261 00:13:12,920 --> 00:13:15,800 Speaker 1: finance Twitter and trading Twitter for a really long time. 262 00:13:16,360 --> 00:13:20,800 Speaker 1: Do you think that Twitter can exacerbate what you described 263 00:13:21,200 --> 00:13:24,000 Speaker 1: with like Bill Ackman, where someone comes up with a 264 00:13:24,000 --> 00:13:28,200 Speaker 1: public view or a public persona or a public stand 265 00:13:28,320 --> 00:13:31,720 Speaker 1: on a stock, and then that causes them to get 266 00:13:31,720 --> 00:13:35,000 Speaker 1: overly locked into a position. And I don't even necessarily 267 00:13:35,040 --> 00:13:36,920 Speaker 1: mean on a stock. Maybe someone has a reputation for 268 00:13:37,000 --> 00:13:40,400 Speaker 1: being bullish or bearish on some idea, and that Twitter 269 00:13:40,480 --> 00:13:43,280 Speaker 1: can have the effect of making it harder for people 270 00:13:43,280 --> 00:13:46,000 Speaker 1: to change their minds. Of course it does, because the 271 00:13:46,040 --> 00:13:49,559 Speaker 1: thought process and the way the sausages made when trades 272 00:13:49,600 --> 00:13:51,720 Speaker 1: are put on and taken off, it's not pretty. And 273 00:13:51,760 --> 00:13:54,880 Speaker 1: so when you allow people to see that, it looks ridiculous. 274 00:13:54,960 --> 00:13:57,040 Speaker 1: And now some people have made a career out of that, 275 00:13:57,200 --> 00:14:01,559 Speaker 1: like as if for instance, Paul Twutor Jones amously circulated 276 00:14:01,600 --> 00:14:09,160 Speaker 1: the analog chart and right, so we laugh at that 277 00:14:09,280 --> 00:14:11,680 Speaker 1: stuff now, but that but that was like his thesis 278 00:14:11,960 --> 00:14:14,360 Speaker 1: and he was using He's a very big proponent or 279 00:14:14,520 --> 00:14:17,160 Speaker 1: was of Elliott wave analysis, And if we saw somebody 280 00:14:17,200 --> 00:14:19,840 Speaker 1: doing that in public, we would sort of laugh at them, 281 00:14:19,960 --> 00:14:22,760 Speaker 1: or at least I would. So I think that putting 282 00:14:22,760 --> 00:14:25,800 Speaker 1: your views out into the public can be really really dangerous, 283 00:14:25,840 --> 00:14:27,720 Speaker 1: really dangerous. And I think that just Twitter in general, 284 00:14:27,760 --> 00:14:29,640 Speaker 1: it just gives a very warp sense of the world 285 00:14:29,680 --> 00:14:32,800 Speaker 1: because you could see all these bozos and you think, oh, 286 00:14:32,840 --> 00:14:35,080 Speaker 1: I'm treating against them, like, of course I have an 287 00:14:35,160 --> 00:14:39,040 Speaker 1: edge against these people. But Jim Simons is not on Twitter, right, 288 00:14:39,040 --> 00:14:41,280 Speaker 1: like Ken Griffin, he's not on Twitter. So these are 289 00:14:41,280 --> 00:14:43,640 Speaker 1: the people you're competing against, but you don't really see them. 290 00:14:43,760 --> 00:14:45,720 Speaker 1: You see the people that are on Twitter all day long. 291 00:14:47,040 --> 00:14:50,160 Speaker 1: So what's the motivation for going public with the trade 292 00:14:50,280 --> 00:14:53,760 Speaker 1: because if I was being very cynical, and remember Joe 293 00:14:53,880 --> 00:14:56,000 Speaker 1: urged me to be more cynical at the beginning of 294 00:14:56,040 --> 00:14:59,160 Speaker 1: this discussion. But I would say, these people want other 295 00:14:59,200 --> 00:15:02,240 Speaker 1: people to follow them into the trade to inflate whatever 296 00:15:02,520 --> 00:15:04,880 Speaker 1: stock or acid it is that they are buying and 297 00:15:05,200 --> 00:15:08,240 Speaker 1: or betting against. Well. The the funny thing is that 298 00:15:08,280 --> 00:15:09,720 Speaker 1: I have no way of proving this, But I just 299 00:15:09,760 --> 00:15:13,160 Speaker 1: suspect that a lot of the people that talk about 300 00:15:13,160 --> 00:15:15,840 Speaker 1: positions publicly don't even have them, like, don't even have 301 00:15:15,880 --> 00:15:17,200 Speaker 1: skin in the game. They're just talking about it. And 302 00:15:17,200 --> 00:15:20,120 Speaker 1: people would almost rather like, hey, good trade, man is 303 00:15:20,240 --> 00:15:21,960 Speaker 1: like almost better than making money, which is just I 304 00:15:21,960 --> 00:15:24,760 Speaker 1: think people are just in it for the ego. Um. 305 00:15:24,800 --> 00:15:28,280 Speaker 1: And uh So I think, what what is the um? 306 00:15:28,280 --> 00:15:30,880 Speaker 1: Why would somebody put themselves out there? Well, if you're wrong, 307 00:15:30,920 --> 00:15:33,360 Speaker 1: people forget, and if you're right, like it's it's an 308 00:15:33,400 --> 00:15:36,000 Speaker 1: asymmetric trade. If you're right on a really big oil 309 00:15:36,000 --> 00:15:38,280 Speaker 1: trade or whatever, that can make your career. Right, we 310 00:15:38,320 --> 00:15:41,320 Speaker 1: see people that are living off of one big trade. Um, 311 00:15:41,400 --> 00:15:43,840 Speaker 1: So why wouldn't you put it out there? Do you 312 00:15:44,000 --> 00:15:48,840 Speaker 1: think that the pressures and the types of errors people 313 00:15:49,000 --> 00:15:53,640 Speaker 1: make are different for individual investors versus say, someone who 314 00:15:53,680 --> 00:15:56,520 Speaker 1: manages money. And I'm thinking about the effect that if 315 00:15:56,560 --> 00:16:00,240 Speaker 1: you manage money, you might get a situation which your 316 00:16:00,280 --> 00:16:02,120 Speaker 1: clients are calling up. It's like, wait, why aren't you 317 00:16:02,120 --> 00:16:04,480 Speaker 1: in tech docts or why aren't you in bigcoin or whatever? 318 00:16:05,000 --> 00:16:07,480 Speaker 1: And if you're missing out for a few quarters, you 319 00:16:07,480 --> 00:16:10,920 Speaker 1: can suddenly see a U M start to flee, Whereas 320 00:16:10,920 --> 00:16:14,520 Speaker 1: if you're in an individual you know you might miss out, 321 00:16:14,600 --> 00:16:16,680 Speaker 1: but no one is breathing down your neck or threatening 322 00:16:16,680 --> 00:16:19,120 Speaker 1: to yank their money. Great point. I think that's one 323 00:16:19,120 --> 00:16:23,320 Speaker 1: of the individual investors biggest advantages. So when um, when 324 00:16:23,360 --> 00:16:26,080 Speaker 1: John Paulson put on this trade, he had investors like, 325 00:16:26,520 --> 00:16:28,320 Speaker 1: what what Paulson trade? Are we talking about? So when 326 00:16:28,320 --> 00:16:31,280 Speaker 1: he's short of the housing, his investors were like, are 327 00:16:31,320 --> 00:16:33,000 Speaker 1: you nuts? What do you what do you think? You 328 00:16:33,040 --> 00:16:35,760 Speaker 1: know that Morgan Stanley doesn't know, so I can only 329 00:16:35,760 --> 00:16:38,560 Speaker 1: imagine the pressures that he was facing. And Michael Barry 330 00:16:38,600 --> 00:16:40,120 Speaker 1: two in the movie The Big Short. In the book, 331 00:16:40,120 --> 00:16:42,840 Speaker 1: of course, I think Joel Greenblatt tried to like take 332 00:16:42,840 --> 00:16:44,640 Speaker 1: his money out and maybe even suit him if I'm 333 00:16:44,680 --> 00:16:48,560 Speaker 1: remembering the story correctly. So there are all sorts of 334 00:16:48,600 --> 00:16:50,720 Speaker 1: pressures when you're managing money. If you have a client 335 00:16:50,800 --> 00:16:53,440 Speaker 1: leave for a specific reason, and then you have a 336 00:16:53,480 --> 00:16:55,640 Speaker 1: second client leave for the same reason, how could you 337 00:16:55,800 --> 00:16:57,520 Speaker 1: not say, hey, wait a minute, maybe this is just 338 00:16:57,560 --> 00:16:59,720 Speaker 1: the tip of the iceberg. Maybe it was all my clients. 339 00:16:59,720 --> 00:17:01,880 Speaker 1: Maybe maybe I better unwind this trade. Even if it's 340 00:17:01,880 --> 00:17:03,680 Speaker 1: it's it's the right thing to have on So I 341 00:17:03,680 --> 00:17:06,200 Speaker 1: think that that adds a whole other layer of complexity, 342 00:17:06,240 --> 00:17:07,639 Speaker 1: Like look at the position that iron Horn is in 343 00:17:07,760 --> 00:17:11,160 Speaker 1: right now. How could he not be affected? How could 344 00:17:11,200 --> 00:17:13,520 Speaker 1: he continue to be objective when he's in the journal 345 00:17:13,560 --> 00:17:15,920 Speaker 1: and all these articles are being written about him. I 346 00:17:16,000 --> 00:17:19,520 Speaker 1: think that makes it enormously difficult. To this point, how 347 00:17:19,600 --> 00:17:22,879 Speaker 1: do you figure out if you make a mistake, you know, 348 00:17:22,920 --> 00:17:25,320 Speaker 1: one of your investments goes pear shaped, or you miss 349 00:17:25,359 --> 00:17:28,159 Speaker 1: out on something. How do you determine whether or not 350 00:17:28,640 --> 00:17:32,720 Speaker 1: it's the market that's right or whether you're right? Am 351 00:17:32,760 --> 00:17:38,320 Speaker 1: I explaining this? Well, I'm probably not. Um, So mistakes 352 00:17:38,359 --> 00:17:41,600 Speaker 1: me different things to different people, Like sitting through a 353 00:17:41,960 --> 00:17:46,720 Speaker 1: thirty decline in the spre could be disciplined to one person, um, 354 00:17:46,800 --> 00:17:49,000 Speaker 1: but that could be a mistake to somebody else where. 355 00:17:48,800 --> 00:17:50,440 Speaker 1: A selling could be a mistake to the person who 356 00:17:50,440 --> 00:17:53,080 Speaker 1: thought they were being disciplined. So the mistake family like, 357 00:17:53,080 --> 00:17:55,080 Speaker 1: like I said, like Jesse Livermore said, mistakes me different 358 00:17:55,080 --> 00:17:58,399 Speaker 1: things to different people. But uh wait, what was the question? 359 00:18:00,359 --> 00:18:03,560 Speaker 1: The question is if you're watching the market. Let's take 360 00:18:03,560 --> 00:18:06,480 Speaker 1: bitcoin as an example, right, and you see it go up, 361 00:18:06,520 --> 00:18:09,480 Speaker 1: you know, in the space of a few months or 362 00:18:09,480 --> 00:18:12,680 Speaker 1: a few years or whatever, but you are absolutely convinced 363 00:18:12,720 --> 00:18:15,479 Speaker 1: that bitcoin eventually is going to fall apart, but you 364 00:18:15,520 --> 00:18:18,439 Speaker 1: miss out on it in the interim and eventually, you know, 365 00:18:18,520 --> 00:18:20,960 Speaker 1: five years later, it does fall apart. Have you made 366 00:18:20,960 --> 00:18:23,439 Speaker 1: a mistake or where you vindicated? And how much of 367 00:18:23,480 --> 00:18:26,479 Speaker 1: these decisions are dependent on market timing? And how are 368 00:18:26,520 --> 00:18:30,000 Speaker 1: you assigning blame or credit either to the investor or 369 00:18:30,040 --> 00:18:33,400 Speaker 1: to the wider market. We're never wrong, just early. So 370 00:18:34,240 --> 00:18:37,840 Speaker 1: Adam Smith wrote about this, his name was George Goodman, 371 00:18:38,040 --> 00:18:39,920 Speaker 1: not really Adam Smith in The Money Game, which is 372 00:18:39,960 --> 00:18:42,320 Speaker 1: my favorite book ever written on investing, and he talks 373 00:18:42,320 --> 00:18:45,800 Speaker 1: about just the psychology of yourself versus the market. So 374 00:18:45,920 --> 00:18:47,720 Speaker 1: I don't know that I have a good answer to 375 00:18:47,760 --> 00:18:50,080 Speaker 1: how do you know if it's a mistake, Because, like 376 00:18:50,119 --> 00:18:52,320 Speaker 1: I said, a mistakes are different things to different people, 377 00:18:52,720 --> 00:18:55,920 Speaker 1: but the market will ultimately I mean, the market is 378 00:18:56,040 --> 00:18:58,760 Speaker 1: the ultimate decision maker. So it's different time frames at 379 00:18:58,760 --> 00:19:01,520 Speaker 1: different objectives and different things to different people. So I 380 00:19:01,560 --> 00:19:04,200 Speaker 1: don't know that there is a aha, now I'm wrong. 381 00:19:04,240 --> 00:19:06,480 Speaker 1: Now I made a mistake type of thing. Let's like 382 00:19:06,560 --> 00:19:10,120 Speaker 1: do a rapid fire discussion of some of the mistakes 383 00:19:10,119 --> 00:19:12,359 Speaker 1: in your book. So looking at the you have a 384 00:19:12,480 --> 00:19:15,560 Speaker 1: John Maynard Keynes who made everyone knows an economist. He 385 00:19:15,560 --> 00:19:19,600 Speaker 1: also traded what was his big mistake? So his mistake 386 00:19:19,680 --> 00:19:22,879 Speaker 1: turned out to be an amazing lesson. So the idea 387 00:19:22,960 --> 00:19:26,600 Speaker 1: there was that he basically wrote the modern monetary system 388 00:19:26,640 --> 00:19:29,439 Speaker 1: and was the father of macro economics investing, and he 389 00:19:29,480 --> 00:19:31,520 Speaker 1: tried to apply that sort of analysis, Hey, what do 390 00:19:31,640 --> 00:19:34,680 Speaker 1: interest rates in Great Britain due to the currency in Argentina? 391 00:19:34,720 --> 00:19:37,280 Speaker 1: And then what does that do to stocks in Bolivian whatever? 392 00:19:37,840 --> 00:19:39,800 Speaker 1: And so he tried to do that and he got 393 00:19:39,880 --> 00:19:43,320 Speaker 1: destroyed like everybody else did during the Great Depression, and 394 00:19:43,400 --> 00:19:46,399 Speaker 1: he totally did a one A D and became a 395 00:19:46,600 --> 00:19:50,320 Speaker 1: bottoms up value investor. So that was a really really 396 00:19:50,359 --> 00:19:53,360 Speaker 1: interesting chapter to to read about it to write, And 397 00:19:53,800 --> 00:19:57,520 Speaker 1: you start out with Benjamin Graham as well, the father 398 00:19:57,760 --> 00:20:00,920 Speaker 1: of value investing, What could he pass really have done wrong? 399 00:20:01,840 --> 00:20:04,680 Speaker 1: So he was very conservative going into the crash of 400 00:20:04,760 --> 00:20:07,159 Speaker 1: twenty nine. I think he had, like, you know, a 401 00:20:07,200 --> 00:20:10,520 Speaker 1: decent amount of cash and preferred stocks or whatever, um. 402 00:20:10,560 --> 00:20:13,200 Speaker 1: But he went into early he thought that stocks were 403 00:20:13,600 --> 00:20:17,600 Speaker 1: incredibly cheap, and they were, but they got incredibly cheaper. 404 00:20:18,160 --> 00:20:22,840 Speaker 1: And so the takeaway for the average reader, and we're 405 00:20:22,840 --> 00:20:24,600 Speaker 1: all average, so to take away for the reader is 406 00:20:24,640 --> 00:20:27,760 Speaker 1: that be very careful. There are limits to value investing. 407 00:20:27,840 --> 00:20:29,800 Speaker 1: Just because something is cheap does not mean that it's 408 00:20:29,800 --> 00:20:31,280 Speaker 1: not cheap for a good reason. Does that mean that 409 00:20:31,320 --> 00:20:33,320 Speaker 1: it's not going to you know, if some of these 410 00:20:33,359 --> 00:20:36,040 Speaker 1: training had a multiple of four times earnings, it's probably 411 00:20:36,080 --> 00:20:38,040 Speaker 1: good reason. It doesn't mean that can't contract even further. 412 00:20:38,320 --> 00:20:41,639 Speaker 1: So this actually sort of comes around to Tracy's earlier 413 00:20:41,720 --> 00:20:43,879 Speaker 1: question about how do you actually know when something is 414 00:20:43,880 --> 00:20:48,119 Speaker 1: a mistake? And I guess my question with Benjamin Graham 415 00:20:48,200 --> 00:20:52,120 Speaker 1: is did he make an analytical error? Because he's considered 416 00:20:52,119 --> 00:20:54,520 Speaker 1: to be a great investors because he's the father of 417 00:20:54,600 --> 00:20:57,880 Speaker 1: value investing, literally wrote the book on it. I think 418 00:20:57,880 --> 00:21:00,520 Speaker 1: he's a mentor to uh Or in buff It is 419 00:21:00,560 --> 00:21:04,000 Speaker 1: that right. He was his teacher, his teacher at Columbia. 420 00:21:04,320 --> 00:21:07,440 Speaker 1: Did he violate some rule of his own or anything, 421 00:21:07,520 --> 00:21:09,960 Speaker 1: or is it just bad timing? No, No, he didn't 422 00:21:09,960 --> 00:21:12,560 Speaker 1: make a mistake that. The point was out that there 423 00:21:12,600 --> 00:21:15,959 Speaker 1: are limits to value, right, like things that look extraordinarily 424 00:21:16,000 --> 00:21:19,200 Speaker 1: expensive can triple in price, and things that look extraorinarly 425 00:21:19,280 --> 00:21:21,200 Speaker 1: cheap can still get cut in half. And there was 426 00:21:21,240 --> 00:21:23,800 Speaker 1: another trapped in the book where a mistake wasn't necessarily made, 427 00:21:23,800 --> 00:21:25,600 Speaker 1: but there was just a takeaway for the reader. So 428 00:21:25,720 --> 00:21:29,000 Speaker 1: Charlie Munger got crushed. He had a really concentrated position 429 00:21:29,000 --> 00:21:31,560 Speaker 1: in this company called blue Chip Stamps. Now that wasn't 430 00:21:31,560 --> 00:21:34,360 Speaker 1: a mistake. It was seventy four bear market. Everybody got 431 00:21:34,359 --> 00:21:36,920 Speaker 1: cut in half. The point was of that was that 432 00:21:37,080 --> 00:21:41,080 Speaker 1: everybody gets crushed sometimes. So they're just market environments which 433 00:21:41,240 --> 00:21:43,439 Speaker 1: you will not win. Right. So it's not necessarily that 434 00:21:43,560 --> 00:21:45,600 Speaker 1: Monger made a mistake in that in that chapter, or 435 00:21:45,600 --> 00:21:48,920 Speaker 1: that Ben Graham made a mistake buying socks. It's that 436 00:21:49,920 --> 00:21:55,520 Speaker 1: stuff happens. So you mentioned Jesse Livermore, who obviously didn't 437 00:21:55,560 --> 00:21:59,119 Speaker 1: really recover from his mistakes, but the vast majority of 438 00:21:59,160 --> 00:22:01,520 Speaker 1: the investors that you're talking about in your book did 439 00:22:01,640 --> 00:22:05,320 Speaker 1: bounce back? How were they able to do that? How 440 00:22:05,359 --> 00:22:10,520 Speaker 1: did they overcome the reputational issues surrounding getting something really 441 00:22:10,520 --> 00:22:15,000 Speaker 1: really wrong, survivorship bias? And I say that only have joking, 442 00:22:15,040 --> 00:22:16,480 Speaker 1: but the truth is, like, I don't have a great 443 00:22:16,480 --> 00:22:19,080 Speaker 1: answer to why did these particular people bounce back, because 444 00:22:19,080 --> 00:22:21,760 Speaker 1: certainly a lot more investors did not bounce back after 445 00:22:21,840 --> 00:22:23,840 Speaker 1: they had difficult periods of time. So I would say 446 00:22:23,840 --> 00:22:26,680 Speaker 1: that there's a lot of combinations of of luck, of skill, 447 00:22:26,720 --> 00:22:29,360 Speaker 1: of perseverance, of metal fortitude, you know, all the sort 448 00:22:29,400 --> 00:22:32,960 Speaker 1: of cliches. Do you have any I mean, you see 449 00:22:33,040 --> 00:22:35,960 Speaker 1: clients at your firm who have probably come with busted 450 00:22:36,000 --> 00:22:39,720 Speaker 1: portfolios and stuff like that. Do you have any sort 451 00:22:39,760 --> 00:22:43,600 Speaker 1: of lessons that you've learned on sort of like how 452 00:22:43,640 --> 00:22:45,760 Speaker 1: to come back in general, how for the average reader 453 00:22:45,840 --> 00:22:49,080 Speaker 1: or the average listener of this podcast after taking a 454 00:22:49,160 --> 00:22:52,719 Speaker 1: huge blow, how to sort of regroup and reset. The 455 00:22:52,760 --> 00:22:55,160 Speaker 1: important thing is that you put yourself in a position 456 00:22:55,200 --> 00:22:57,840 Speaker 1: to not experience a huge blow, because I think coming 457 00:22:57,880 --> 00:23:02,439 Speaker 1: back from it is supremelygult. We blame the market, We say, oh, 458 00:23:02,480 --> 00:23:04,199 Speaker 1: just my luck that I'll do this, and then the 459 00:23:04,240 --> 00:23:07,320 Speaker 1: market will do that, so there's easy ways to avoid that. 460 00:23:07,359 --> 00:23:09,879 Speaker 1: I have no problem with with picking stocks and timing 461 00:23:09,920 --> 00:23:11,760 Speaker 1: the market as a hobby with a small portion of 462 00:23:11,760 --> 00:23:13,719 Speaker 1: your money, because it is a lot of fun. But 463 00:23:13,760 --> 00:23:15,800 Speaker 1: if you're going to do it, do it with you know, 464 00:23:15,840 --> 00:23:18,200 Speaker 1: five percent of your portfolio max or something like that. 465 00:23:18,760 --> 00:23:20,480 Speaker 1: Don't put yourself in a position to be a four 466 00:23:20,520 --> 00:23:23,879 Speaker 1: seller because if you take a six blow to your overall, 467 00:23:24,000 --> 00:23:26,000 Speaker 1: there is no coming back from that. You will have 468 00:23:26,040 --> 00:23:30,720 Speaker 1: developed such a mental scar tissue and animosity towards the 469 00:23:30,720 --> 00:23:33,520 Speaker 1: market that you will never be objective again. I feel 470 00:23:33,520 --> 00:23:36,840 Speaker 1: like if you take five percent of your money and 471 00:23:37,280 --> 00:23:40,320 Speaker 1: trade it or try to market time or pick individual stocks, 472 00:23:40,640 --> 00:23:42,320 Speaker 1: the worst thing that can probably happen is that you 473 00:23:42,320 --> 00:23:45,000 Speaker 1: do really well in that. Yeah, why five percent should 474 00:23:45,000 --> 00:23:48,040 Speaker 1: be Yeah better? I better up? Yeah. Well, the good 475 00:23:48,080 --> 00:23:50,399 Speaker 1: news is that's not likely for most people because and 476 00:23:50,440 --> 00:23:52,840 Speaker 1: I also think another reason why training is a good idea, 477 00:23:52,840 --> 00:23:55,959 Speaker 1: it's because it's a constant reminder of how difficult an 478 00:23:55,960 --> 00:23:57,760 Speaker 1: opponent the market is. And I think that's really the 479 00:23:57,760 --> 00:24:01,240 Speaker 1: main takeaway from this book is, for goodness sakes, how 480 00:24:01,280 --> 00:24:05,840 Speaker 1: can you invest, trade whatever you're doing and not be humbled, like, 481 00:24:05,880 --> 00:24:08,000 Speaker 1: how can you really think that you have an edge? Like, 482 00:24:08,160 --> 00:24:11,400 Speaker 1: come on, it is so difficult and there is constant 483 00:24:11,440 --> 00:24:16,040 Speaker 1: feedback um, and typically you're not winning. So to continue 484 00:24:16,400 --> 00:24:19,800 Speaker 1: to try and adapt or solve the puzzle, it is 485 00:24:19,840 --> 00:24:23,160 Speaker 1: not solvable. So I'm not saying don't trade and don't 486 00:24:23,160 --> 00:24:25,919 Speaker 1: have fun, but be responsible. Should we even try to 487 00:24:25,960 --> 00:24:28,880 Speaker 1: outperform the market in that case, I don't think it's 488 00:24:28,920 --> 00:24:31,480 Speaker 1: a terrible goal, considering the fact that you're probably not 489 00:24:31,560 --> 00:24:33,480 Speaker 1: going to and it's gonna be a nice reminder of 490 00:24:33,560 --> 00:24:36,600 Speaker 1: why you shouldn't try to outperform the market. One more, 491 00:24:36,640 --> 00:24:39,840 Speaker 1: I'm curious about Chris Saka you wrote about in your book, 492 00:24:39,920 --> 00:24:43,800 Speaker 1: and I think he's just a private company tech investor, right, Yeah, 493 00:24:43,960 --> 00:24:46,879 Speaker 1: So just one lesson Tracy, just in terms of outforming 494 00:24:46,880 --> 00:24:49,560 Speaker 1: the market is insanely difficult, but I think people underestimate 495 00:24:49,640 --> 00:24:51,960 Speaker 1: how hard it is to even keep up with the market. Now. 496 00:24:52,000 --> 00:24:54,359 Speaker 1: As far as as far as Kris Saka goes, yes, 497 00:24:54,480 --> 00:24:59,080 Speaker 1: he uh allegedly has the most successful venture capital fund 498 00:24:59,080 --> 00:25:01,919 Speaker 1: of all time. He was a huge investor in Twitter 499 00:25:02,240 --> 00:25:04,800 Speaker 1: and one of the earliest investors in Uber like all 500 00:25:04,920 --> 00:25:08,120 Speaker 1: the unicorns. Basically he was there now, there were things 501 00:25:08,119 --> 00:25:10,520 Speaker 1: that he passed on, and there was some really giant 502 00:25:11,040 --> 00:25:13,639 Speaker 1: missus that he that he passed on, and three of 503 00:25:13,680 --> 00:25:19,160 Speaker 1: those were Airbnb, Snapchat, and drop Bocks, three of the biggest. 504 00:25:19,520 --> 00:25:22,879 Speaker 1: I think they're all still private companies. So the point 505 00:25:22,880 --> 00:25:26,240 Speaker 1: with that is like even the most successful private investor 506 00:25:26,280 --> 00:25:29,600 Speaker 1: of all time said no to these three companies. He 507 00:25:29,600 --> 00:25:31,680 Speaker 1: had an opportunity and these at thanks, but no, thanks. 508 00:25:31,720 --> 00:25:34,000 Speaker 1: So you're not going to invest in everything that's going off, 509 00:25:34,040 --> 00:25:36,359 Speaker 1: I mean, stating the obvious. There will always be something. 510 00:25:36,400 --> 00:25:38,320 Speaker 1: There will always be a distraction out there, whether it's 511 00:25:38,359 --> 00:25:42,119 Speaker 1: bitcoin or the bowl of stocks or whatever. It is, like, 512 00:25:42,160 --> 00:25:44,800 Speaker 1: there will always be something that is going that is 513 00:25:44,800 --> 00:25:48,320 Speaker 1: going parabolic that you're just not investing in. And deal 514 00:25:48,359 --> 00:25:51,120 Speaker 1: with it. Well. On that note, Michael, I think deal 515 00:25:51,160 --> 00:25:54,080 Speaker 1: with it is the perfect way to end our conversation. 516 00:25:54,480 --> 00:25:56,240 Speaker 1: Thank you very much for joining me. Yeah, thanks for 517 00:25:56,240 --> 00:26:09,919 Speaker 1: having me. Thanks Tracy, Thanks Michael. That was great. So, Tracy, 518 00:26:10,080 --> 00:26:13,040 Speaker 1: are you going to tell us what your big disastrous 519 00:26:13,080 --> 00:26:18,360 Speaker 1: investment was. No, I'm going to deflect to another aspect 520 00:26:18,359 --> 00:26:20,480 Speaker 1: of my personal life and just tell you something that's 521 00:26:20,480 --> 00:26:24,680 Speaker 1: tangentially related to Michael's last point, and we were talking 522 00:26:24,680 --> 00:26:26,960 Speaker 1: about whether or not the market is wrong versus the 523 00:26:26,960 --> 00:26:31,000 Speaker 1: actual investor. So many many years ago, my uncle, who 524 00:26:31,040 --> 00:26:35,120 Speaker 1: lives in Austria and has a retail business, got offered 525 00:26:35,359 --> 00:26:39,439 Speaker 1: the sale rights for Crocs in Europe. Do you remember 526 00:26:39,480 --> 00:26:43,359 Speaker 1: Crocs the shoes, Yeah, of course, yeah, they still exist, Yeah, 527 00:26:43,560 --> 00:26:45,640 Speaker 1: but I remember when they were a huge craze. They 528 00:26:45,640 --> 00:26:48,400 Speaker 1: were a massive craze. But anyway, this was before then. 529 00:26:48,720 --> 00:26:52,399 Speaker 1: He turned them down, specifically on the basis that he 530 00:26:52,440 --> 00:26:55,879 Speaker 1: thought the shoes were ugly, so he missed out on millions. 531 00:26:55,960 --> 00:26:58,800 Speaker 1: Joe um and clearly, you know, was he wrong about 532 00:26:58,880 --> 00:27:03,480 Speaker 1: Crocs being ugly? I would say, no, yeah, he wasn't wrong, 533 00:27:03,520 --> 00:27:07,680 Speaker 1: he was just early. Yeah, to use a trader cliche, 534 00:27:08,080 --> 00:27:12,919 Speaker 1: I really liked that conversation, particularly that point about just 535 00:27:13,000 --> 00:27:15,919 Speaker 1: how hard it is to beat the market. So obviously, 536 00:27:16,480 --> 00:27:20,919 Speaker 1: famous investors make mistakes, and they're probably some generalizable lessons 537 00:27:21,520 --> 00:27:25,399 Speaker 1: about the psychology of mistakes and violating your own rules 538 00:27:25,480 --> 00:27:28,080 Speaker 1: and all kinds of stuff like that, but just at 539 00:27:28,080 --> 00:27:31,440 Speaker 1: that point that you're gonna lose if you try to win, 540 00:27:31,520 --> 00:27:35,040 Speaker 1: you're almost certainly going to lose. Everybody loses at times, 541 00:27:35,520 --> 00:27:39,080 Speaker 1: and the idea of beating the market for almost everyone 542 00:27:39,240 --> 00:27:42,480 Speaker 1: is a massive fool's Errand yeah, well not just that, 543 00:27:42,520 --> 00:27:45,119 Speaker 1: but Michael made the point that it's difficult even to 544 00:27:45,280 --> 00:27:48,399 Speaker 1: keep up with the market um, and that is something 545 00:27:48,400 --> 00:27:51,080 Speaker 1: that I think a lot of people underappreciate. And actually, 546 00:27:51,400 --> 00:27:53,600 Speaker 1: on that note, I do have an anecdote from my 547 00:27:53,720 --> 00:27:57,280 Speaker 1: personal investing history, which by the way, is not extensive 548 00:27:57,359 --> 00:28:00,679 Speaker 1: at all and took place before I joined bloomer Um, 549 00:28:00,800 --> 00:28:02,919 Speaker 1: but many many years ago, you know, I invested in 550 00:28:02,920 --> 00:28:06,040 Speaker 1: a dividend fund, thinking this was a short bet at 551 00:28:06,080 --> 00:28:09,800 Speaker 1: the time, and dividend equities are safe, it should be 552 00:28:09,920 --> 00:28:12,840 Speaker 1: fairly straightforward, and a couple of months into it, the 553 00:28:12,920 --> 00:28:15,520 Speaker 1: guy that had been running the fund for decades and 554 00:28:15,560 --> 00:28:17,720 Speaker 1: making a good success of it stepped down and the 555 00:28:17,760 --> 00:28:21,640 Speaker 1: stock immediately plunged about ten or twenty percent something outrageous 556 00:28:21,640 --> 00:28:23,879 Speaker 1: like that. So that gives you an you had the 557 00:28:23,960 --> 00:28:27,120 Speaker 1: right idea. You had the right idea. Dividends if you, 558 00:28:27,119 --> 00:28:30,119 Speaker 1: you know, is a good thesis. And so the fact 559 00:28:30,160 --> 00:28:33,080 Speaker 1: that you you you avoided this key man risk in 560 00:28:33,119 --> 00:28:37,760 Speaker 1: the fund though down. Yeah, it's tough. It's tough anyway. 561 00:28:37,960 --> 00:28:40,600 Speaker 1: I have many, many more examples of things that went 562 00:28:40,600 --> 00:28:44,040 Speaker 1: wrong in my personal portfolio. All right, well, that's actually 563 00:28:44,080 --> 00:28:46,040 Speaker 1: a good excuse to wrap things up here so that 564 00:28:46,080 --> 00:28:48,800 Speaker 1: we can get to me and you chatting off the 565 00:28:48,840 --> 00:28:51,480 Speaker 1: recording and you can tell me more of your stories. Yeah, 566 00:28:51,520 --> 00:28:54,240 Speaker 1: you're right, Joe. Okay, let's leave it there. Let's continue 567 00:28:54,280 --> 00:28:58,000 Speaker 1: this conversation offline. Uh. This has been another episode of 568 00:28:58,040 --> 00:29:00,400 Speaker 1: the All Thoughts podcast. I'm Tracy allow It. You can 569 00:29:00,440 --> 00:29:04,120 Speaker 1: follow me on Twitter at Tracy Alloway and I'm Joe Wisenthal. 570 00:29:04,240 --> 00:29:07,320 Speaker 1: You can follow me on Twitter at the Stalwart, and 571 00:29:07,440 --> 00:29:10,280 Speaker 1: you should follow our guest Michael Batnick, the author of 572 00:29:10,360 --> 00:29:14,400 Speaker 1: the Best Investors in Their Worst Investments, on Twitter at 573 00:29:14,480 --> 00:29:18,560 Speaker 1: Michael Batnick, and follow our producer to for Foreheads at 574 00:29:18,640 --> 00:29:21,800 Speaker 1: Foreheads t, as well as the Bloomberg head of podcast, 575 00:29:21,880 --> 00:29:25,960 Speaker 1: Francesco Levie at Francesca Today. Thanks for listening.