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MiB: Soraya Darabi, TMV

     This week, we speak with Soraya Darabi, who is co-founder and general partner at TMV, an early-stage venture firm that has funded a broad range of startups. Darabi is also the founder of Transact Global and host of the podcast “Business Schooled.” She previously served as manager of digital partnerships and social… Read More The post MiB: Soraya Darabi, TMV appeared first on The Big Picture.      This week, we speak with Soraya Darabi, who is co-founder and general partner at TMV, an early-stage venture firm that has funded a broad range of startups. Darabi is also the founder of Transact Global and host of the podcast “Business Schooled.” She previously served as manager of digital partnerships and social media at The New York Times. She discusses how the firm invests in “Non-Obvious” founders. There are market inefficiencies in this overlooked segment of entrepreneurs, while in Silicon Valley, there is both efficiency and similarity that lowers the probability of successful innovation. She also explains some of the advantages that being a successful entrepreneur lends to her as a venture capitalist. Investing in seed rounds in places from Baltimore to Austin, being persistent in areas overlooked by others gives her access to deals in start-ups that are both cheaper and at lower capital requirements than perhaps places like SIlicon Valley or NY require. A list of her favorite books is here; A transcript of our conversation is available here Monday. You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Google, Bloomberg, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here. Be sure to check out our Masters in Business next week with Sukhinder Singh Cassidy author of “Choose Possibility” hailed as one of the Top 100 People in the Valley by Business Insider and a Power Woman by Elle. She has 25 years of experience founding, scaling, and advising companies like StubHub! Google, Amazon, and Yodlee. Thoughts?     Soraya Darabi Favorite Books   The post MiB: Soraya Darabi, TMV appeared first on The Big Picture......»»

Category: blogSource: THEBIGPICTURE14 hr. 1 min. ago Related News

Advantages Fade

New Platforms Gaining Demand Share at Expense of Netflix Source: Media Play News     Earlier this month, I discussed how money compounds slowly, how the world often changes at a geologic pace. This is not always the case: Sometimes, the world can be upended relatively quickly. Case in point: Netflix. They began life doing… Read More The post Advantages Fade appeared first on The Big Picture. New Platforms Gaining Demand Share at Expense of Netflix Source: Media Play News     Earlier this month, I discussed how money compounds slowly, how the world often changes at a geologic pace. This is not always the case: Sometimes, the world can be upended relatively quickly. Case in point: Netflix. They began life doing DVD rentals through (!) snail mail. The website allowed you to create an ordered queue of what you wanted to see; each time you mail back a DVD the next item on your list is mailed to you. This fixed the “Why do we want to drive to the store (!) when we won’t know what to rent and besides they are out of it” problem, to say nothing of late fees. In the early days of broadband, Netflix rolled out an ambitious program to stream content over the internet. It was clunky and imperfect but gradually improved. In 2010, they offered a streaming-only plan (no more DVDs by mail). Netflix is still the dominant video streamer, with more subscribers than Amazon Prime, Hulu, Disney+, HBO Max, Apple+, Paramount+ et al. combined. But a > 50% market share is down from domination when they invented the sector 12 years ago. Does anyone imagine that Netflix will be dominant in 50 years? What about 20 years? 5? I don’t know, but if history is any guide, at a certain point, that first-mover advantage will in large part erode away. This is not about which company is the biggest or hottest at the moment — tastes change, sectors rotate in and out of favor. Strategic advantage in one era becomes an anchor tying you to the past in the next. A pivot — like DVD by Mail to Streaming is less common than you imagine. To get a sense of how the world changes, consider the top 10 S&P Companies from 1980–2020 (via John VanGavree). Over that 40 year period, priorities change, economics shift, even investor taste changes. In the 1980s and ’90s, AT&T and IBM were the big guys in technology; today, 6 of the top 10 are technology. Will Exxon or any other Oil company ever grace the top 10? GM, GE are yesteryear stories.   The list of innovative and groundbreaking companies that changed the world only to fade into relative obscurity is endless: Blockbuster, obviously, but also RCA, Lucent, Woolworth, Citi, Sears, US Steel, Eastman Kodak, Circuit City, etc. Successful companies come and go; terrific success is difficult, delicate flower to keep alive. Long-lasting is incredibly rare indeed. The world changes. The most important companies in the world wake up one day to discover their products are no longer desired and their services are no longer needed. Best of luck in your future endeavors, thank you for your years of service. Capitalism is cruel but fair.       Previously: Gradually, Then Suddenly (October 1, 2021)   The post Advantages Fade appeared first on The Big Picture......»»

Category: blogSource: THEBIGPICTUREOct 15th, 2021Related News

Think of Bitcoin Like a Company

Barry Ritholtz, a Bloomberg Opinion columnist, talks Bitcoin and Banks with Bloomberg’s Tom Keene and Lisa Abramowicz on “Bloomberg Surveillance.” Ritholtz’s opinions are his own.   Ritholtz Says to Think of Bitcoin as a Specific Company Source: Bloomberg   The post Think of Bitcoin Like a Company appeared first on The Big Picture. Barry Ritholtz, a Bloomberg Opinion columnist, talks Bitcoin and Banks with Bloomberg’s Tom Keene and Lisa Abramowicz on “Bloomberg Surveillance.” Ritholtz’s opinions are his own.   Ritholtz Says to Think of Bitcoin as a Specific Company Source: Bloomberg   The post Think of Bitcoin Like a Company appeared first on The Big Picture......»»

Category: blogSource: THEBIGPICTUREOct 15th, 2021Related News

1954 Mercedes-Benz 300 SL Gullwing

The first time I saw a Mercedes-Benz 300 SL Gullwing in person was in the late 1990s at a winery on the North Fork of Long Island. It was parked among a long run of classic cars, next to a 70s-era Porsche 911. The SL was striking — a gorgeous, innovative design that remains compelling… Read More The post 1954 Mercedes-Benz 300 SL Gullwing appeared first on The Big Picture. The first time I saw a Mercedes-Benz 300 SL Gullwing in person was in the late 1990s at a winery on the North Fork of Long Island. It was parked among a long run of classic cars, next to a 70s-era Porsche 911. The SL was striking — a gorgeous, innovative design that remains compelling a half-century later; the Porsche, none of the above. Ever since that experience, Porsche’s flagship sports car has been a functional piece of engineering, but lacking in that grace and elegance. The SL ruined the 911 for me. Another observation: Prior to the lift in prices of the past few decades, owners of classics actually drove them. This was some sports car club outing, we spoke with the members, and learned they regularly drove and raced these cars. Since then, many of these cars have become so valuable that each drive becomes an exercise in expensive depreciation. Collectors have ruined driving the cars they love. And that’s a shame. I find the wing door coupe (W 198 I) to be the most iconic Mercedes of all time. Produced from 1954–1957, MB made 1,400 of the Coupes, (plus 1,858 Roadsters). Direct fuel-injection 3-liter overhead camshaft straight-6 engine made 175 horsepower. SL stands for “Super Light,” combined with the very aerodynamic design, it had a top speed of 163 mph, which was astounding in the 1950s. It was the fastest production car of the time. The car below was the one owned by Paul Newman, who not only appreciated fine automobiles but raced them as well. Of all the myriad cars one could ever imagine owning, driving, and enjoying, this is the one I most would like to have in my garage.     Source: Classic Sport Leicht The post 1954 Mercedes-Benz 300 SL Gullwing appeared first on The Big Picture......»»

Category: blogSource: THEBIGPICTUREOct 15th, 2021Related News

Finding Value via Writing

7   Over the years, I have discussed my publishing about investing and related topics. (See this, this, this, or this). Many of us began doing this before monetizing content was a thing. Spend time reading any of the RWM Mafia and you a pattern as to why we put words to page emerges. We… Read More The post Finding Value via Writing appeared first on The Big Picture. 7   Over the years, I have discussed my publishing about investing and related topics. (See this, this, this, or this). Many of us began doing this before monetizing content was a thing. Spend time reading any of the RWM Mafia and you a pattern as to why we put words to page emerges. We write to: Figure out what we think Explore a topic or idea Memorialize an investment position (or potential trade) Share expertise Educate readers Publicize a concept Express outrage Signal interest in a topic Influence decision-makers Debate / argue around an issue Defend an idea or position Educate ourselves about a thing Resolve a noisy internal dialogue I am going to share a few examples, and I want you to look for the consistent thread that runs through all of them: They each add value, search for truth, expound on deeply held beliefs, are sincere, and reflect curiosity about the world. If only everything we read had those 5 attributes. Michael Batnick is Head of Research at RWM, a founding principal, and a crucial component of our investment committee (he does the heavy-lifting, I get all of the credit). This post is a perfect example of teaching readers even as he admits what he doesn’t understand: I Don’t F*ckn Get It All of this stuff is incredibly confounding. On the one hand, you have normal people speculating on Doge, which is cute and mostly harmless. I mean, it says right there on the website that “Dogecoin is an open-source peer-to-peer digital currency, favored by Shiba Inus worldwide” Silly, sure, but hard to get too worked up over this. And then on the other side are wealthy people who buy pet rocks as status symbols. I understand this drawing your ire, but I hope now, or at least after reading Packy’s piece, that you understand people’s motivations. And then, in the middle, you have brilliant investors like Chris Dixon who swear that this is web 3.0. Blair duQuesnay is a triple threat: She is a CFA who sits on our investment committee, advisor/CFP, and also manages RWM’s UHNW practice. A recent discussion reveals her curiosity and insight: Pluto is a Planet I find myself rebelling against this change like a cranky old man. Back in my day, Pluto was a planet! I refuse to call it a silly dwarf planet. Bah humbug! I’ll probably get angry again when my kids start learning the solar system in school. I notice this tendency among professional investors. The sands of time shift the way the world of money works, if only ever so slightly. What worked in investing 40 years ago, may not work today. We cling to the groundbreaking academic papers of yonder days – mean-variance optimization, the small-cap premium, the value premium, and book value. We read the masters – Ben Graham, Modigliani, Miller, Fama, French, and Merton – and we deem their work Gospel. Has anyone pursued the financial well-being of teachers more than Tony Isola? That is what he and Dina Isola do for RWM. This is first-rate: How To Escape Your Financial Cocoon Self-deception is a raging epidemic. A myriad of factors influences our point of view. Genes, family life, friends, experiences, and other items determine perceptions. Why do we believe our experiences are reality? James Low reinforces this concept. These stories have a tilt or bias. This generates a selectivity in our attention which blocks many of the other possibilities we might entertain. Delusion becomes fact. The worst part- We aren’t aware. Neither is anyone else. Nobody wants to rock the U.S.S. Delusion. Everyone’s wearing tinted sunglasses. Viewing reality in different shades turns fantasies into reality. Nick Maggiulli is our resident quant/data wonk/COO. This post is classic “Nickie Numbers” – take generally accepted wisdom, crunch the numbers, prove it is bullshit: Why Buying the Dip is a Terrible Investment Strategy But today, I’m going to change all that. Because today I’m going to give Buy the Dip the proper burial that it deserves and demonstrate without a reasonable doubt why it is a terrible investment strategy. Ben Carlson may be the best financial writer today who regularly uses data to demonstrate points on investing strategies. He works with our institutional clients. I could show you countless examples but let me simply go his most recent: The Worst Stock and Bond Returns Ever The U.S. stock market is up 13.5% per year since 2009. Valuations have been well above historical averages this entire time and moving ever higher. Interest rates are about as low as they’ve ever been. Add all this up and it’s hard to argue with the idea that investors should lower their return expectations going forward. The problem with this equation is you could have said this very same thing in 2012, 2013, 2014, 2015 and so on yet it hasn’t happened. The low return environment that seemed like a sure thing has been nothing but high returns. There are few people in the world who can identify connections between disparate ideas like my partner and co-founder Josh Brown does. His ability to see what everyone else misses is unprecedented. And his writing is so sincerely beautiful. Like this piece: I Collect Cashflows I collect shares of businesses. Been doing it since my late teens. Not always successfully. I use a certain type of non fungible token called a stock certificate for this. I never lay hands on the certificate, it’s in digital form, living somewhere in the multiverse. A company called DTC makes sure the shares I’ve bought are the shares I get. And then I hold them. Sometimes I will trade them for digital dollars that I also don’t ever see or touch, but then soon after I am trading those dollars for another pile of virtual stock certificates. People will say “You’re crazy, why would you want to buy a fraction of a company you will never touch and hold in your hands?” And I’m like “You just don’t understand.” When ideas come together in a way that is informative, entertaining, and educational it is a thing of joy. Beautiful.   The post Finding Value via Writing appeared first on The Big Picture......»»

Category: blogSource: THEBIGPICTUREOct 13th, 2021Related News

Finding Value in Writing

7   Over the years, I have discussed my publishing about investing and related topics. (See this, this, this, or this). Many of us began doing this before monetizing content was a thing. Spend time reading any of the RWM Mafia and you a pattern as to why we put words to page emerges. We… Read More The post Finding Value in Writing appeared first on The Big Picture. 7   Over the years, I have discussed my publishing about investing and related topics. (See this, this, this, or this). Many of us began doing this before monetizing content was a thing. Spend time reading any of the RWM Mafia and you a pattern as to why we put words to page emerges. We write to: Figure out what we think Explore a topic or idea Memorialize an investment position (or potential trade) Share expertise Educate readers Publicize a concept Express outrage Signal interest in a topic Influence decision-makers Debate / argue around an issue Defend an idea or position Educate ourselves about a thing Resolve a noisy internal dialogue I am going to share a few examples, and I want you to look for the consistent thread that runs through all of them: They each add value, search for truth, expound on deeply held beliefs, are sincere, and reflect curiosity about the world. If only everything we read had those 5 attributes. Michael Batnick is Head of Research at RWM, a founding principal, and a crucial component of our investment committee (he does the heavy-lifting, I get all of the credit). This post is a perfect example of teaching readers even as he admits what he doesn’t understand: I Don’t F*ckn Get It All of this stuff is incredibly confounding. On the one hand, you have normal people speculating on Doge, which is cute and mostly harmless. I mean, it says right there on the website that “Dogecoin is an open-source peer-to-peer digital currency, favored by Shiba Inus worldwide” Silly, sure, but hard to get too worked up over this. And then on the other side are wealthy people who buy pet rocks as status symbols. I understand this drawing your ire, but I hope now, or at least after reading Packy’s piece, that you understand people’s motivations. And then, in the middle, you have brilliant investors like Chris Dixon who swear that this is web 3.0. Blair duQuesnay is a triple threat: She is a CFA who sits on our investment committee, advisor/CFP, and also manages RWM’s UHNW practice. A recent discussion reveals her curiosity and insight: Pluto is a Planet I find myself rebelling against this change like a cranky old man. Back in my day, Pluto was a planet! I refuse to call it a silly dwarf planet. Bah humbug! I’ll probably get angry again when my kids start learning the solar system in school. I notice this tendency among professional investors. The sands of time shift the way the world of money works, if only ever so slightly. What worked in investing 40 years ago, may not work today. We cling to the groundbreaking academic papers of yonder days – mean-variance optimization, the small-cap premium, the value premium, and book value. We read the masters – Ben Graham, Modigliani, Miller, Fama, French, and Merton – and we deem their work Gospel. Has anyone pursued the financial well-being of teachers more than Tony Isola? That is what he and Dina Isola do for RWM. This is first-rate: How To Escape Your Financial Cocoon Self-deception is a raging epidemic. A myriad of factors influences our point of view. Genes, family life, friends, experiences, and other items determine perceptions. Why do we believe our experiences are reality? James Low reinforces this concept. These stories have a tilt or bias. This generates a selectivity in our attention which blocks many of the other possibilities we might entertain. Delusion becomes fact. The worst part- We aren’t aware. Neither is anyone else. Nobody wants to rock the U.S.S. Delusion. Everyone’s wearing tinted sunglasses. Viewing reality in different shades turns fantasies into reality. Nick Maggiulli is our resident quant/data wonk/COO. This post is classic “Nickie Numbers” – take generally accepted wisdom, crunch the numbers, prove it is bullshit: Why Buying the Dip is a Terrible Investment Strategy But today, I’m going to change all that. Because today I’m going to give Buy the Dip the proper burial that it deserves and demonstrate without a reasonable doubt why it is a terrible investment strategy. Ben Carlson may be the best financial writer today who regularly uses data to demonstrate points on investing strategies. He works with our institutional clients. I could show you countless examples but let me simply go his most recent: The Worst Stock and Bond Returns Ever The U.S. stock market is up 13.5% per year since 2009. Valuations have been well above historical averages this entire time and moving ever higher. Interest rates are about as low as they’ve ever been. Add all this up and it’s hard to argue with the idea that investors should lower their return expectations going forward. The problem with this equation is you could have said this very same thing in 2012, 2013, 2014, 2015 and so on yet it hasn’t happened. The low return environment that seemed like a sure thing has been nothing but high returns. There are few people in the world who can identify connections between disparate ideas like my partner and co-founder Josh Brown does. His ability to see what everyone else misses is unprecedented. And his writing is so sincerely beautiful. Like this piece: I Collect Cashflows I collect shares of businesses. Been doing it since my late teens. Not always successfully. I use a certain type of non fungible token called a stock certificate for this. I never lay hands on the certificate, it’s in digital form, living somewhere in the multiverse. A company called DTC makes sure the shares I’ve bought are the shares I get. And then I hold them. Sometimes I will trade them for digital dollars that I also don’t ever see or touch, but then soon after I am trading those dollars for another pile of virtual stock certificates. People will say “You’re crazy, why would you want to buy a fraction of a company you will never touch and hold in your hands?” And I’m like “You just don’t understand.” When ideas come together in a way that is informative, entertaining, and educational it is a thing of joy. Beautiful.   The post Finding Value in Writing appeared first on The Big Picture......»»

Category: blogSource: THEBIGPICTUREOct 13th, 2021Related News

Writing to Pursue Value

7   Over the years, I have discussed my publishing about investing and related topics. (See this, this, this, or this). Many of us began doing this before monetizing content was a thing. Spend time reading any of the RWM Mafia and you a pattern as to why we put words to page emerges. We… Read More The post Writing to Pursue Value appeared first on The Big Picture. 7   Over the years, I have discussed my publishing about investing and related topics. (See this, this, this, or this). Many of us began doing this before monetizing content was a thing. Spend time reading any of the RWM Mafia and you a pattern as to why we put words to page emerges. We write to: Figure out what we think Explore a topic or idea Memorialize an investment position (or potential trade) Share expertise Educate readers Publicize a concept Express outrage Signal interest in a topic Influence decision-makers Debate / argue around an issue Defend an idea or position Educate ourselves about a thing Resolve a noisy internal dialogue I am going to share a few examples, and I want you to look for the consistent thread that runs through all of them: They each add value, search for truth, expound on deeply held beliefs, are sincere, and reflect curiosity about the world. If only everything we read had those 5 attributes. Michael Batnick is Head of Research at RWM, a founding principal, and a crucial component of our investment committee (he does the heavy-lifting, I get all of the credit). This post is a perfect example of teaching readers even as he admits what he doesn’t understand: I Don’t F*ckn Get It All of this stuff is incredibly confounding. On the one hand, you have normal people speculating on Doge, which is cute and mostly harmless. I mean, it says right there on the website that “Dogecoin is an open-source peer-to-peer digital currency, favored by Shiba Inus worldwide” Silly, sure, but hard to get too worked up over this. And then on the other side are wealthy people who buy pet rocks as status symbols. I understand this drawing your ire, but I hope now, or at least after reading Packy’s piece, that you understand people’s motivations. And then, in the middle, you have brilliant investors like Chris Dixon who swear that this is web 3.0. Blair duQuesnay is a triple threat: She is a CFA who sits on our investment committee, advisor/CFP, and also manages RWM’s UHNW practice. A recent discussion reveals her curiosity and insight: Pluto is a Planet I find myself rebelling against this change like a cranky old man. Back in my day, Pluto was a planet! I refuse to call it a silly dwarf planet. Bah humbug! I’ll probably get angry again when my kids start learning the solar system in school. I notice this tendency among professional investors. The sands of time shift the way the world of money works, if only ever so slightly. What worked in investing 40 years ago, may not work today. We cling to the groundbreaking academic papers of yonder days – mean-variance optimization, the small-cap premium, the value premium, and book value. We read the masters – Ben Graham, Modigliani, Miller, Fama, French, and Merton – and we deem their work Gospel. Has anyone pursued the financial well-being of teachers more than Tony Isola? That is what he and Dina Isola do for RWM. This is first-rate: How To Escape Your Financial Cocoon Self-deception is a raging epidemic. A myriad of factors influences our point of view. Genes, family life, friends, experiences, and other items determine perceptions. Why do we believe our experiences are reality? James Low reinforces this concept. These stories have a tilt or bias. This generates a selectivity in our attention which blocks many of the other possibilities we might entertain. Delusion becomes fact. The worst part- We aren’t aware. Neither is anyone else. Nobody wants to rock the U.S.S. Delusion. Everyone’s wearing tinted sunglasses. Viewing reality in different shades turns fantasies into reality. Nick Maggiulli is our resident quant/data wonk/COO. This post is classic “Nickie Numbers” – take generally accepted wisdom, crunch the numbers, prove it is bullshit: Why Buying the Dip is a Terrible Investment Strategy But today, I’m going to change all that. Because today I’m going to give Buy the Dip the proper burial that it deserves and demonstrate without a reasonable doubt why it is a terrible investment strategy. Ben Carlson may be the best financial writer today who regularly uses data to demonstrate points on investing strategies. He works with our institutional clients. I could show you countless examples but let me simply go his most recent: The Worst Stock and Bond Returns Ever The U.S. stock market is up 13.5% per year since 2009. Valuations have been well above historical averages this entire time and moving ever higher. Interest rates are about as low as they’ve ever been. Add all this up and it’s hard to argue with the idea that investors should lower their return expectations going forward. The problem with this equation is you could have said this very same thing in 2012, 2013, 2014, 2015 and so on yet it hasn’t happened. The low return environment that seemed like a sure thing has been nothing but high returns. There are few people in the world who can identify connections between disparate ideas like my partner and co-founder Josh Brown does. His ability to see what everyone else misses is unprecedented. And his writing is so sincerely beautiful. Like this piece: I Collect Cashflows I collect shares of businesses. Been doing it since my late teens. Not always successfully. I use a certain type of non fungible token called a stock certificate for this. I never lay hands on the certificate, it’s in digital form, living somewhere in the multiverse. A company called DTC makes sure the shares I’ve bought are the shares I get. And then I hold them. Sometimes I will trade them for digital dollars that I also don’t ever see or touch, but then soon after I am trading those dollars for another pile of virtual stock certificates. People will say “You’re crazy, why would you want to buy a fraction of a company you will never touch and hold in your hands?” And I’m like “You just don’t understand.” When ideas come together in a way that is informative, entertaining, and educational it is a thing of joy. Beautiful.   The post Writing to Pursue Value appeared first on The Big Picture......»»

Category: blogSource: THEBIGPICTUREOct 13th, 2021Related News

Protected: Writing to Pursue Value

There is no excerpt because this is a protected post. The post Protected: Writing to Pursue Value appeared first on The Big Picture. This content is password protected. To view it please enter your password below: Password: The post Protected: Writing to Pursue Value appeared first on The Big Picture......»»

Category: blogSource: THEBIGPICTUREOct 13th, 2021Related News

Transcript: Chamath Palihapitiya

     The transcript from this week’s, MiB: Chamath Palihapitiya on Venture Investing, is below. You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Google, Bloomberg, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here. ~~~ RITHOLTZ: This week on the… Read More The post Transcript: Chamath Palihapitiya appeared first on The Big Picture.      The transcript from this week’s, MiB: Chamath Palihapitiya on Venture Investing, is below. You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Google, Bloomberg, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here. ~~~ RITHOLTZ: This week on the podcast, man, strap yourself in. This is really one of the old-time greats. Chamath Palihapitiya, Founder of Social Capital, very successful venture capitalist, part-owner of the Golden State Warriors, and all-around insightful investor social critic, and tech wonk. If you’re interested in anything from technology to social media, to venture investing, startups, entrepreneurship, I don’t know what else to say other than strap yourself in. This is a great one. With no further ado, my conversation with Chamath Palihapitiya. VOICE-OVER: This is Masters in Business with Barry Ritholtz on Bloomberg Radio. RITHOLTZ: I’m Barry Ritholtz. You’re listening to Masters in Business on Bloomberg Radio. My extra special guest this week is Chamath Palihapitiya. He is the Founder of Social Capital, one of the more interesting and successful venture capitalist out in Palo Alto. He is also an Engineer and Team Leader working at places like AOL, Facebook, and Slack. He has been known as the SPAC King for his numerous successful deals in that space. And he is also a 10 percent owner of the Golden State Warriors. Chamath Palihapitiya, welcome to Bloomberg. PALIHAPITIYA: Barry, thanks. RITHOLTZ: I’ve been looking forward to having this conversation for a while. Let’s — normally, I start with people’s backgrounds and we go chronologically, but you have some quotes that I love, and I want to ask you about them and let you run wild with them, “Starting with venture capital properly deployed can solve the biggest problems filling the void left by the shrinking scientific ambitions of governments, foundations, and international organizations. Explain. PALIHAPITIYA: Well, if you look at what’s happening in California or what’s happening at the federal level of the United States currently, there’s a really interesting thing that’s happened, which is we have effectively single-party rule. You have a, you know, elected leader that’s of one party. You have a Senate that’s of that same party, a House and then, you know, in the case of California, mayors as well, all democratic in this case. And what’s interesting is it also happens to be a moment in time where the societal problems that we’ve been facing are the worst they’ve ever been. Climate change is worse than it’s ever been. We have a water crisis. We have an impending food crisis, homelessness, crime. And you have to ask yourself, well, if a single party like — you know, when you have a typical normal, you know, political set-up, you have these two opposing forces and you have to find common ground. And each party says the exact thing, which is, well, if we had complete control, this would all be fixed. And it turns out that two examples where you have complete control, in fact, nothing gets fixed, even less gets fixed than what got fixed before. So why is that? It’s that the toolkit of policy and the toolkit of societies has changed. It’s no longer as much about laws necessarily, but it’s about technology. It’s about code. It’s about very specific inventions of science. And the problem with that then, well, then you would say, “Well, great. Well, that’s the solution to all of our problems. If we go in and figure out how to actually, you know, just have more of all of that stuff, everything will be solved.” OK, well, then — then you go in and you decompose that problem to first principles. And what you find is, for example, in places like core scientific research, people care more about citations, and papers, and research, and it’s also highly politicized and infested with all kinds of infighting. And so, foundations can’t fund the work that they used to. Universities aren’t nearly as good and actually promoting massive breakthroughs. So more and more of this responsibility gets put on for-profit enterprises, but to be very specific, they have to be for profit and they have to be technical. And when you see it that way, the venture capitalist all of a sudden has this critical role in society that they didn’t have before because they are a translator. They are, you know, in a technical meeting the smartest business person, but in a business meeting the smartest technical person. And they’re able to put these things together to solve problems. And so, that’s what I was trying to get across, which is we need more people building for-profit technical businesses, organizing resources against problems. RITHOLTZ: So — so let’s stay with the concept of — of venture capital being organized to solve problem and talk a little bit about Social Capital. Tell us about your first couple of venture investments and who were your first limited partners. PALIHAPITIYA: So, I was a Facebook at the time, and I had been doing a bunch of angel investing. And this is maybe 2008 or ’09, but I was the first solo G.P., I think, in many ways. I was putting some money to work of my own money, small checks, Barry, $10,000, $15,000. RITHOLTZ: Early seed round, right? PALIHAPITIYA: Early seed rounds in, you know, 2007 and ’08, basically all the money that I had. And I had to win. I met a guy named Rick Thompson, an amazing entrepreneur, who started a gaming company. And I jumped in with two feet. I invested my money. I spent a little bit of time there helping him, you know, sort of — I mean, as a — as a part-timer, obviously, because I was working at Facebook at the time. And the company gets bought by Disney for like 750 million bucks and I made a few million bucks. And I thought, “This is it.” I have my — I have my escape velocity. And at the time at Facebook, they were all these people that were trying to invest in the company. And Zuck basically said to me, “Hey, can you help sort out whose money we should take?” I mean, I was running Facebook platform, I was building Facebook Mobile, I was doing all of these products so — but I was like, “Yeah, sure, I guess.” And I met the guys at Tiger Global, Chase Coleman specifically, and we built a relationship and then, you know, Tiger ended up investing in the business. And along the way, you know, I said, “Hey, I’m thinking of, you know, investing a little bit of capital on the side.” And he goes, “Well, if you organize a little LLC, you know, I’m happy to kick in a, you know, a few shovels.” And so, all of a sudden, I had this little group of me and my friends, and I just organized about 11 million bucks, you know, and I was like three or four of it and like, you know, other couple of folks jumped in for 50K there, 500K there, a million there, whatever. And so, while I was a full-time employee at Facebook, I was a part-time investor. And that’s how I started and so those are my first LPs, wonderful guys, Reid Hoffman, you know, a whole list of kind of like … RITHOLTZ: Who — who’s the rest of that list because already I am loving this group? PALIHAPITIYA: The list was pretty impressive. I want to say it was like Peter Thiel, Reid Hoffman, Chase Coleman. I’d have to look at the slides, I can’t … RITHOLTZ: But it’s a murderous row pretty much. PALIHAPITIYA: Yeah, Dave Goldberg, you know, Zander Lurie who is the CEO of Momentum A.I., so a bunch of really great entrepreneurs, and CEOs, and investors. Anyways, I put the money to work and, you know, it was non-obvious that that fund was good. I was learning. And most of the investments I made were way too ambitious, and I was deeply undercapitalized, right? So, you — in 2008 and ’09, in hindsight, it was really dumb to make a bunch of deep tech investments. Now, some of them have come home to roost, and that fund has now (inaudible), but we got very lucky and it did very well, but it took an enormously long period of time. So, I put the money to work and I learned. I learned, hey, portfolio construction is important. I didn’t get that right. I was way undercapitalized, like, hey, wait a minute, like I needed way more reserves to defend these companies. And I had to think about duration, meaning I can’t solve 20 of your problems in a 10-year fund. I need to solve five of your problems in a 10-year fund if I want to be in the fund business. And, you know, that obviously changed in 2016 and ’17 when I just basically consolidated with my own money. But so – then I left Facebook in 2011 and I went back to these same folks. And I said, “Guys, let’s go much bigger. I think I know what I’m doing.” And we created — my first fund was 250 or 60 million bucks. I put up 60, and then it was really like, you know, John Doerr, Peter Thiel, Reid Hoffman, Li Ka-shing, you know, just — I ran the table of Jorge Paulo Lemann like incredible people. And a handful of really great institutions, Mayo Clinic, you know, folks that I was really proud to make money for. And I said, “This is like a great intersection of entrepreneurs and, you know, investors, and philanthropists, and foundations.” And, you know, I’m going to go and try to find great businesses, and that’s how it started. RITHOLTZ: So, from there, what was the subsequent funds that came out of that because that, you know, funds that run a seven or a 10-year lifespan. And some companies, some VCs will just do Fund 2, Fund 3, Fund 4, you didn’t exactly go in that direction. PALIHAPITIYA: You know, I can tell you — so like the returns as of this last quarter because I just — I had a — I had a little advisory board meeting, you know, I put about a billion one in the ground. That is worth today just a little under $5 billion. RITHOLTZ: And this was the 2016? PALIHAPITIYA: No. So, yeah, this was … RITHOLTZ: Or 2011? PALIHAPITIYA: I — I raised about $1 billion over four funds — over five funds, sorry, in the first five years basically, so a $260 million fund, another $260 million, a $500 million, and then I had a small $100 million fund and then a $30 million opportunities fund kind of — so about $1.1 billion. And, you know, so far, we’ve returned a little — almost a little under 2X of capital, so cash-on-cash, we’ve returned about two some odd billion. The curing value is a little under $5 billion. And I think that, you know, when I look in the next — in the next few years that will turn one more time. So basically, you know, one billion will turn into $10 billion and the returns are, you know, probably — well, right now they’re in the high 20’s nets. RITHOLTZ: That’s great. PALIHAPITIYA: And it’ll be in the — probably the low 30’s. That’s when it’s all … RITHOLTZ: So, as all that comes up, are you just going to roll that over into another fund or … PALIHAPITIYA: So … RITHOLTZ: … are you looking to spread this into different spaces because I am aware you are a man of many interests. You’re not just — I — I find the world … PALIHAPITIYA: Right. RITHOLTZ: … really fascinating and curious. And — and looking at what you invest in, I can tell you approach the universe the same way. PALIHAPITIYA: Right. So, along the way, I think in 2016 what I realized was running funds doesn’t accomplish my goal. And it took me some number of years to figure that out. I loved working inside of these companies. I loved trying to make some of these businesses work. I loved taking really big moon shots on technical problems that I wanted to solve. I didn’t like the constraints of a fund. I didn’t like managing L.P. relations because by that point, you know, as you know, Barry, when you’re in the fund to business, then it’s all about quantity of LPs. And so, the LPs had grown beyond my cohort of people, right, because it’s not as if their money is infinite either. RITHOLTZ: Right. PALIHAPITIYA: Right? And so, then we have fund of funds and other organizations who are in the business of, you know, being investors in these organizations. And it became very administrative. And a lot of my time was spent fundraising and managing those relationships as opposed to investing or starting companies. And so, that was one big error of judgment that I felt I needed to fix. The other one was I was looking at myself thinking like, well, am I going to be able to defend the ownership of these best companies? And think about what happens in a fund. If you make an investment and it’s working, you have all this pressure to double down. But when there’s something smaller and more technical where there’s way more asymmetric risk, it’s much harder to convince others that you should continue to invest in that as well. RITHOLTZ: So, let’s stay with that a second because that’s — there’s some really interesting things. When I hear someone like you say double down, what I’m usually thinking of is, hey, we made a small investment in the seed round and now it’s the A or the B round, and we’re going to have to step-up. And $500,000 is now a $50 million or $2 million becomes $100 million. Is that what you mean by double down versus … PALIHAPITIYA: No, I mean, the following decision, which is very hard. So, let’s just say — and — and we use explicit examples because it’s easier. So, let’s just say we invested in the crypto business and the software-as-a-service start up on the same day. $10 million in each. The SaaS business has a much higher probability of short-term progress. I sold, you know, X amount of software, here’s my bookings, here’s my revenue. RITHOLTZ: High probability of modest success. PALIHAPITIYA: High probability of modest success. Most people are, you know, enraptured with that. RITHOLTZ: That’s what — well, that’s what the S&P 500 is for. If you want a high probability amount of success, go by the spiders. But I … PALIHAPITIYA: Sure. RITHOLTZ: … imagine people come to venture because — hey, I have all my … PALIHAPITIYA: No. RITHOLTZ: … conservative stuffs. PALIHAPITIYA: No, not true. RITHOLTZ: I’m looking for you to … PALIHAPITIYA: Not true. RITHOLTZ: … hit me the 100X. PALIHAPITIYA: It’s not true. It … RITHOLTZ: Really? PALIHAPITIYA: … it may be — listen. So there — there are two conundrums here. The conundrum number one is if you’re a limited partner. If you’re a limited partner right now sitting inside of a foundation or a pension fund and you have to return capital, and you have to get over your hurdle, you need an allocation into venture, but those allocations are minuscule. Nobody is getting, you know, huge allocations into Sequoia, right? RITHOLTZ: Because the capacity is that’s limited as it is. PALIHAPITIYA: Nobody — nobody is getting huge allocations in the benchmark. You know, these are $500 million funds, you know. And I — you know, in my example, I was 30 percent of all the capital, so there’s just not a lot of room for other. RITHOLTZ: Right. PALIHAPITIYA: Number one. And then the more insidious problem is actually the human capital inside the funds themselves. And what I mean by that is not that they’re bad people, they are wonderful people, but they are products of a very specific and very rigid hierarchy. You know, they typically went to a handful of schools. RITHOLTZ: Right. PALIHAPITIYA: They typically are educated in exactly the same way. They typically, you know, have the exact same kind of risk tolerance as a result of all those things. And so, when the rubber meets the road, this Harvard MBA or the Stanford MBA, they want to treat the venture capital organization as their version of the S&P 500. Very predictable, Steady Eddie. Let me make, you know, a good salary. Don’t rock the boat. So, what happens? Crypto stuff gets underfunded until it’s obvious. You know, hard tech and — and, you know, life sciences get underfunded until it’s obvious. SaaS gets overfunded until it’s obvious. And that’s the whipsaw that you face now. Now, there are a handful of organizations that have fought against that and have done it brilliantly. So, when you look, for example, like Founders Fund, I’ll pick an example. Incredible set of investors who are iconoclasts to the one. Atypical in every dimension. There’s not a single drop of real pedigree amongst them, except they are all incredible entrepreneurs. If you look at Coastal Ventures, same situation. Incredibly atypical in their intellectual makeup, and the way they think, and what they value. And to a one, they’re generally great entrepreneurs, so you see this recurring theme. So, you know, for me, what I’ve tried to do is recalibrate my time around that realization. I have a fixed amount of capital. If I surround myself with these good — they’re good people, it will lead me astray because I will get risk off. And the whole goal of this business, as you exactly well put it, is to be 100 percent massively risk on. And so, that’s how I live my life. I have a small allocation of capital in case all of this goes to zero, but otherwise 99 percent of my net worth and wealth is massive risk on. RITHOLTZ: That’s quite, quite fascinating. I — I keep wanting to go to some of my questions, but you keep saying things that make me have to respond. I’m still kind of struck by your LPs, meaning management. And what I mean by that is someone runs a successful fund. There’s a very limited amount of slots for money to come in. I just imagine it’s like here’s the deal. I have a slot for 100 for you. I’ll send you the annual updates, we’ll have an annual meeting, and I don’t want to hear from you the rest of the year. PALIHAPITIYA: You can’t take — it’s not … RITHOLTZ: It’s the approach. It doesn’t work that way? PALIHAPITIYA: … it’s not that — well, it’s not that easy even for the best organizations. You know, when you’re dealing with these large pools of capital, they are large bureaucracies. And in fairness to these bureaucracies, there’s — there’s really important guardrails of risk management, right, and legal and operational due diligence that they have to do because again, it’s the fireman’s pension, it’s the teachers’ pension, it’s the … RITHOLTZ: Right. PALIHAPITIYA: … you know, it’s the foundation. It’s the — they’re all doing good work, right? So, it’s not like, you know, they have a right to be cavalier, but it creates an infrastructure of folks that approach their job in a very specific way that, for me, didn’t make sense. For others, I think it does make a ton of sense because, you know, they — look, there’s a tradeoff. Today, that tradeoff, by the way, has rewarded them more than me. And what is the tradeoff? When you’re a successful investor, you’ll get to a fork in the road at a certain level of assets where you have to go on the path well-traveled or the path less traveled. The path less traveled is what I’ve taken. You’re alone … RITHOLTZ: Meaning …by yourself, more risk … PALIHAPITIYA:  you’re by yourself … all your own money, all risk gone. The path well-traveled says syndicate the risk, let the — let the returns decay, build an AUM machine, monetize the fee income, sell a percentage to dial or to whomever, and then eventually sell the G.P. to somebody and you’re done. And, you know, if you have enough capital at some point, you’re like, well, what do I need any more money? This is a safer route to take. RITHOLTZ: Right. PALIHAPITIYA: I am of this different view, which is I want very specific kinds of progress that will not happen unless I am a tip of the spear on a bunch of things that I want to change. And I’m using my money as a mechanism of showing the change that I want to see in the world with the idea that if free markets are ultimately efficient, other money will follow. And it will unlock and create change. SPACs are a perfect example. RITHOLTZ: We’re going to talk about SPACs in a little bit. I’m fascinated by the path less traveled. And I — I’m kind of reminded of an old joke a friend used to say, what’s the difference between having $1 billion or having $2 billion? And the answer is really nothing. PALIHAPITIYA: Nothing. RITHOLTZ: Right, there’s not — what is the difference? PALIHAPITIYA: Nothing. RITHOLTZ: So — so once you wrap your head around that, why build an AUM machine? Why take a G.P. and do all the things you don’t want to do just so you can sell it in the road? PALIHAPITIYA: Well, look, I mean — I think there’s something very valiant in building a company of any kind. I don’t care what it is because you end up hiring people, you end up creating your own little economy. You know, by hiring good people and paying them, you’re giving them a path. You’re giving them, you know, some amount of purpose in their lives. So, you know, any form of company building, I think, is heroic, the person that uses to build a company. I don’t care what it is. It could be a garbage business, an AUM business. You know, they’re all to me where I look at the founders of those things like you, and you’re in a class of hero for me. Everybody may not be with the same, you know, sometimes now founders, unfortunately, sometimes can get vilified for being an entrepreneur. But in general, I think they’re heroic. But again, that’s not what I was trying to do. My returns in society, I wanted to be expressed by a different kind of change and a different kind of purpose, which was a practical problem solved. You know, I want reforestation to be, you know, done differently. I want a gene editing solution to be so cheap and so fast the available we can eradicate, you know, the 32,000 inherited Mendelian diseases. You know, I want to figure out how to get, you know, sub $100 solar on everybody’s roof and to build a massive distributed energy utility in America. It turns out I’m doing all those things. Now, I can do that with my capital and that’s really great. That capital may go to zero … RITHOLTZ: But you’re saying … PALIHAPITIYA: … but it may not … RITHOLTZ: … you couldn’t do that if you had these institutional endowments and other … PALIHAPITIYA: Maybe not. RITHOLTZ: … large more conservative investors who are more concerned about IRR than moving the needle. PALIHAPITIYA: Short-term IRR because, you know, again they have a job to do. They have pension obligations to make. They have, you know, other things that they’re funding. They have the lifestyle they want to pay for. They have their own annual reviews and bonuses and things. So, you know, it’s not to debate the validity of it, it just exists, and I’m not willing to sign up for that because duration. And, by the way, you can see that certain funds have realized that that durational limitation doesn’t work in tech anymore, right, so now you’re seeing these 15-year funds, right? Some of these climate funds are really long-dated so that they can take huge long risk with very sticky money. I think that’s moving.....»»

Category: blogSource: THEBIGPICTUREOct 12th, 2021Related News

Chamath is “Massively Risk On”

Chamath is Massively Risk On The engineer turned VC wants more than IRR, he wants to dent the universe, and explain why life is like poke. TBP, October 14, 2021       There are lots of reasons why some investors become venture capitalists: Money, fame, the lure of technology’s magic. But very few are… Read More The post Chamath is “Massively Risk On” appeared first on The Big Picture. Chamath is Massively Risk On The engineer turned VC wants more than IRR, he wants to dent the universe, and explain why life is like poke. TBP, October 14, 2021       There are lots of reasons why some investors become venture capitalists: Money, fame, the lure of technology’s magic. But very few are unabashedly utopian about what venture investing could accomplish if it tried. Chamath Palihapitiya is. The engineer-turned start-up investor wants to do more than generate an IRR – he believes venture capital “when properly deployed, can solve the world’s biggest problems and fill up the void of what he believes are shrinking scientific ambitions worldwide.”1 He rattles off a long list of problems that need fixing: Climate change, water crisis, an impending food crisis, homelessness, crime. Governments, according to him, have shown they are no longer up to the task: “It’s no longer as much about laws necessarily, but it’s about technology, it’s about code, it’s about very specific inventions of science.” When it comes to the potential good this technology could accomplish for society, Chamath is all in. Other than a small pool of emergency capital, the technologist and social critic has put 99% of his wealth to work into various moonshots – investments of much higher risk and much longer duration than the typical venture fund tolerates. So much so that nearly all of Social+Capital is now his own cash. This was a conscious choice, to give him the freedom to focus on high-risk, long-duration investments of his own choosing. “When you’re a successful investor, you’ll get to a fork in the road at a certain level of assets where you have to go on the path, well-traveled or the path less traveled.” The well-traveled path was to become an “AUM Machine” – the fate of many successful venture funds: “Syndicate the risk, let returns decay, build an AUM machine, monetize the fee income, sell a percentage, and then eventually sell the GP to somebody and you’re done.” For many organizations, this conundrum is all but unavoidable. Limited Partners (LPs) that invest in venture firms are typically endowments, foundations or pension funds that are looking for something other than denting the universe – they want a return on capital. He criticizes the “insidious problem” of human capital inside alternative investing, where everyone comes out of the educational factory the exact same way. There is a “very specific and very rigid hierarchy” where everyone in a firm went to the same handful of schools and were educated in exactly the same way, leading to the exact same kind of risk tolerance: “The entire financial infrastructure of the world is in part merit and in part historical artifact and in part establishment and prestige: I go to a good school. I play lacrosse. I’m a three-letter athlete, I get into an Ivy, then I go work at a bulge bracket firm. Then maybe I get an MBA at one of these set Ivies. Then I go back to said, bulge bracket firm. Then I go to the buy-side. I work at a blue-chip hedge fund. Maybe I start my own.” The result, he says is a homogenous mindset and a lack of diversity. “I don’t mean diversity in like skin color and religion and sexual orientation. I mean, diversity in your mind.” The intellectual sameness leads to a very rote playbook and a “mono class” of investors. Many of Palihapitiya’s views are controversial making him a lightning rod for criticism (his take on stock buybacks is an example). His critique of the structure of investment funds is just another example. He doesn’t seem to mind, going out of his way to troll the haters on Twitter. “People just lose it. It’s so delicious.” His approach to venture investing helps to explain Palihapitiya’s love of Poker, which he sees as a metaphor for life: “You start poker with a stack of chips in life. You could be born to the richest man in the world. You could be born in poverty. Your stack is different, right? There’ll always be somebody at the table who can buy in for more than you in life. You then have to make bets. You have to take some shots. Who do I trust? Who do I fall in love with? Who do I work with? Who do I go to school with? Where do I go to school? What job do I take in poker? You make bets, which pot do I play? When do I raise? When do I call? How much do I risk in life? You sometimes make all the right decisions, horrible outcome, sometimes all the wrong decisions, great outcome. Poker is a chance for you to see that past. Take a step back and realize how much of is really in your control and how much of it is not.” Early in his career, Palihapitiya embraced risky bets – and they have paid off handsomely. At 45-years old, he could kick back and take it easy. That is decidedly not the path he has chosen. Whatever the next decade of start-up investing brings us, Chamath is all in.         Previously: MiB: Chamath Palihapitiya on Venture Investing (October 9, 2021) Transcript: Chamath Palihapitiya MIB: The Venture Capitalists (July 15, 2019)     _____________ 1. Page 126, “The Business of Venture Capital,” by Mahendra Ramsinghani, 2nd edition (2014)   The post Chamath is “Massively Risk On” appeared first on The Big Picture......»»

Category: blogSource: THEBIGPICTUREOct 12th, 2021Related News

MiB: Chamath Palihapitiya on Venture Investing

     This week, we speak with Chamath Palihapitiya, the founder and CEO of Social Capital LP, which backs breakthrough companies in areas such as health care, education, climate change, and space. Prior to founding Social Capital, Palihapitiya was a member of Facebook’s senior executive team and was a software engineer with AOL and… Read More The post MiB: Chamath Palihapitiya on Venture Investing appeared first on The Big Picture.      This week, we speak with Chamath Palihapitiya, the founder and CEO of Social Capital LP, which backs breakthrough companies in areas such as health care, education, climate change, and space. Prior to founding Social Capital, Palihapitiya was a member of Facebook’s senior executive team and was a software engineer with AOL and Slack. He is also part-owner of the NBA’s Golden State Warriors. He explains his issues with the institutionalization of the venture model. Instead of focusing on “moonshots,” the trajectory is towards safer, more obvious investments that have compromised the mission of venture investing. This leads to the Risk-Off approach that leads to safe returns, instead of what he describes as the true purpose of venture investing. Palihapitiya explains how he embraced the path less traveled than what has become to traditional venture route: Eschew limited partners, invest only his own money, use public mechanisms like SPACs to find new merger opportunities — and engage in a massively Risk-On strategy. A list of his favorite books is here; A transcript of our conversation is available here Monday. You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Google, Bloomberg, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here. Be sure to check out our Masters in Business next week with Soraya Darabi, co-founder and general partner of TMV. The firm has funded a broad cross-section of startups, 65% of which are led by women or people of color. Less than 5 years old, TMV has already had 10 exits.       Chamath Palihapitiya’s favorite books Narrative of The Life of Frederick Douglass: An American Slave by Frederick Douglass Americana: A 400-Year History of American Capitalism by Bhu Srinivasan Fermat’s Enigma: The Epic Quest to Solve the World’s Greatest Mathematical Problem by Simon Singh Liar’s Poker: Rising Through the Wreckage on Wall Street by Michael Lewis   The post MiB: Chamath Palihapitiya on Venture Investing appeared first on The Big Picture......»»

Category: blogSource: THEBIGPICTUREOct 11th, 2021Related News

Frances Haugen: The Facebook Whistleblower

    Now that’s a rock star. You remember rock stars, don’t you? Probably not if you’re a millennial or younger. Rock stars were musicians who channeled the truth, who stood up to corporations and bad behavior around the world. They were explicit, not complicit. And they and their messages were so powerful that money… Read More The post Frances Haugen: The Facebook Whistleblower appeared first on The Big Picture.     Now that’s a rock star. You remember rock stars, don’t you? Probably not if you’re a millennial or younger. Rock stars were musicians who channeled the truth, who stood up to corporations and bad behavior around the world. They were explicit, not complicit. And they and their messages were so powerful that money rained down upon them. But it hasn’t been that way for a very long time. First we had MTV. Which soon made looks more important than the music. Good luck getting signed if you weren’t beautiful. They had whole teams of people to help write your songs, to groom you, because there was big money at stake, and the executives wanted it. That big money was based on technology, i.e. the CD, which sold for two times viny and cassettes, yet to “help the format” artists halved their royalties, with promises they would be raised once the CD got traction, and this never happened. It was a game, the major labels, MTV, radio and print media were in cahoots. They built beautiful stars, who became more and more vapid. And then came the internet. The paradigm was blown apart. But within the last decade a new order has been established, akin to the old one, but this time on steroids. Now the major labels sign very few acts, and don’t release any music from said acts until they’re sure they’re going to be hits. Furthermore, they have untold power at the streaming services, because they provide the lion’s share of their product, not only new music, but catalog, which represents in excess of 50% of streaming by everybody’s calculation. So every major label priority gets priority at the streaming service. It’s put on banners, it’s put on playlists, it’s given a chance. Good luck with your indie record. And as was proven in the movie business over the last forty-odd years, if you don’t have a library/catalog you can’t pay the bills, you end up selling or going out of business, because it’s the already paid-for assets that generate reliable income at essentially no cost while you do your best to make new hits. And now it’s even easier, it used to be impossible to get all your catalog in the retail store, you’d be lucky to get a greatest hits package, but today every one of the label’s owned songs appears on streaming services, and a lot of the past is better than what we’ve got today, but no one on the inside will say so. And don’t expect a whistleblower in the music business, where loyalty is everything. So “The Wall Street Journal” did a series on Facebook based on documents received from a whistleblower. But not only were the lengthy, detailed articles behind a paywall, they were in print, and most people don’t read, at least not beyond the headlines and captions on news or social media sites. It was big news amongst the intelligentsia, but that leaves out most Americans. But today the whistleblower went on “60 Minutes”: Facebook Whistleblower Frances Haugen: The 60 Minutes Interview. It’s less than fifteen minutes, you can afford the time, and it’s fascinating. First and foremost Ms. Haugen. She’s a 37 year old woman. She’s the antithesis of Elizabeth Holmes. She’s the antithesis of today’s social media influencers, the Paris Hilton/Kim Kardashian paradigm, where it’s only the exterior that counts and money trumps everything. Haugen went to the not even 25 year old Olin College, an engineering specialty school, and ultimately got an MBA at Harvard. Should you listen to the uneducated nitwit in your neighborhood or Ms. Haugen? It’s no contest. “Ms. Haugen was initially asked to build tools to study the potentially malicious targeting of information at specific communities.” That’s from the one hour old “Wall Street Journal” article on Frances Haugen, now that she’s revealed herself, they’re detailing her history. You can read about it here: “The Facebook Whistleblower, Frances Haugen, Says She Wants to Fix the Company, Not Harm It – The former Facebook employee says her goal is to help prompt change at the social-media giant” But that’s behind a paywall. It took twenty five years, but that’s where the internet is going, I point you to this article centered around Patreon in “Bloomberg Businessweek”: “Patreon Battles for Creators by Investing in Original Content – Ahead of a potential IPO, the $4 billion startup is transforming itself as competition from tech giants intensifies” It used to just be Patreon. Then came Substack. Now all the usual suspect platforms want to be gateways for content provided by citizens that sits behind paywalls so the creators can get paid. So what we’ll end up with is a bunch of niche creative providers, forget whether they get paid or not, who will reach tiny slivers of the public as the big outlets get bigger, then again will the big outlets gain dominance? This is still up in the air. Sure, the “New York Times” has just under 10 million subscribers, but we live in a country of 330 million, and those subscribers aren’t all Americans. Ditto music, the big acts might be bigger than the indies, but in the aggregate, the indies are quite large. Never mind that there’s only so much money to go around. Everybody wants to get paid, they’re sick of giving it away for free, they’re going behind paywalls. And if you don’t pay, soon you’ll be in the dark. But not on Facebook or Instagram, because there you’re paying with your attention, the time you’re logged-on, during which they can serve you advertising. That’s right, Facebook changed the algorithm a couple of years back such that content that delivered a reaction was favored. Because you’d interact with said content and you’d stay on longer, it was a win for Facebook, but a loss for society. Haugen says that Facebook turned on safety systems before the 2020 election, but once the contest was over, they turned them off, end result being the 1/6 insurrection. That’s what everybody was saying on Workplace, the Facebook intranet where everything was available to everybody. So Haugen wanted to move to Puerto Rico. Facebook said she couldn’t work there. So Haugen decided to quit. But during the month she transferred her projects to new people, she downloaded as much information as she could from Workplace. She was stunned what she could see and she was stunned that no one saw her looking, especially in areas outside her purview. Bottom line, Facebook commissioned internal studies that detailed over and over again the negative effects of the service. Instagram’s negative influence on teenage girls. The trade of drugs and human beings in plain sight. How people who posted frequently or were famous were whitelisted and could say anything with impunity. And then she contacted the SEC and provided this information to “The Wall Street Journal.” Now what happens? Well, even Haugen says that breaking up Facebook wouldn’t work. She says there must be governmental regulations because the company prioritizes profits over safety. But it’s worse than that. Facebook is not a manufacturer of physical goods. Half of the world is on Facebook, and the bottom line is the service is now out of the control of the company. As bad as it is in America, it’s a free-for-all in most countries. And, once again, it’s Europe cracking down on the service, saying it’s interfering with government, not the U.S. “a betrayal of democracy.” That’s what Haugen says about Facebook turning off its restrictions after the election. And democracy does hang in the balance. It’s been three and a half years since the Cambridge Analytica story broke, but now the anti-Facebook movement is gaining momentum. But don’t expect Workplace to be available to all Facebook employees in the future, they’re gonna close that loophole posthaste, never mind already shutting down internal operations that deliver information the brass doesn’t want to hear. If you don’t hear it, it doesn’t exist, right? Wrong! But you knew that. But you also thought the power resided in the public. Like yesterday’s inane anti-abortion/women’s rights marches. I sympathize with the sentiment, but not the method. We marched all the way through Trump’s term, did it make a difference? Of course not. It’s the twenty first century, not the twentieth. Battles are fought online. That’s where you make your statements and organize, a person behind a computer is much more powerful than a person at an evanescent rally. But really, we need the big players, the government, the investors to get involved or no change happens. I wish it were otherwise, but it’s not. That’s what voting rights are all about. At least you get a say in theory, but if the rules make it too hard for many to vote, and a partisan legislature is in charge of the results, irrelevant of the public’s will, look out. This is what is happening right now. And what is everybody doing? Looking to make a buck for themselves. Everybody’s deep in their hole, trying to elbow out others to get ahead. They’ve got contempt for others, there is no common good. That’s what “Squid Game,” the most popular show in the world, is all about. It’s not a revelation, it’s reality. People will do anything to survive, to keep the world running how they want it to. Meanwhile, people are addicted to social media. At least there are alternatives to Amazon, but no boycott of the operation has ever worked. But California has instituted warehouse workplace rules targeting Amazon. Good luck working in another state. Where odds are you’re going to get hurt, with repetitive stress injuries if nothing else. Oh, Amazon provides aspirin and band-aids, but the truth is you’re just a cog in the system, disposable, while the company and Wall Street make ever more money. That’s another message of “Squid Game.” So one individual has already had a huge impact. What are the odds other major tech companies will be reaching out to hire her? NADA! She’s white hot, untouchable, let’s hope she gets a big whistleblower settlement, but even if she does, that takes years. Meanwhile, our nation, our world, is being run by a college dropout with tunnel vision. And his number two is leaning into him, not the public at large, screw the public, it’s all about money, isn’t that the essence of Elizabeth Holmes and Theranos? But there’s a lot more truth in “Squid Game” than any of today’s music. And the goal of “musicians” today is to sell out to the corporation, or become a corporation, to sell crap to brain dead listeners. That’s to be lauded? No, Frances Haugen is to be lauded. She will be remembered, the Spotify Top 50 will not. Because Haugen did something important, took a stand, risking her career, her future. Who else is doing this? And if this were the pre-internet era, this “60 Minutes” story would be known by essentially every citizen, if they didn’t see it, they’d hear about it, but “60 Minutes” no longer has that kind of reach, nothing on network TV does anymore. Then again, Facebook hate knows no political boundaries, it can appeal to both right and left. But not really. Did you see that YouTube shut out anti-vaxxers? Trump wants back on Twitter. Trump had more reach than anybody in the world, now it’s been scaled back, but he’s already convinced his troops that Democrats are socialists who will ruin society and they must fight to protect their way of life, however bogus it might be. That’s what 1/6 was about. And the word was spread on Facebook. And despite all the doublespeak of Nick Clegg and the rest of the Facebook press team, we know it’s true. In reality, Mark Zuckerberg needs to lose his job. He can keep his money, but he can’t have his hands on the steering wheel of Facebook anymore. But that would require the board to have balls, which it doesn’t possess. Unlike Uber, where Travis Kalanick was exiled for bad behavior, Facebook throws off a ton of money, and since profits are everything, there is no change unless the government insists. But you can’t get agreement on anything in D.C. And not only is there no longer any trust in Congress, there’s no trust in the Supreme Court. And Ted Cruz is single-handedly holding up the appointment of 59 ambassadors, how does that help us exactly? But welcome to the modern world. Where what happens online supersedes everything else. And it happens so fast that elected officials cannot keep up with it. And the internet itself is fluid, so you end up playing a game of Whac-A-Mole. Meanwhile, China is clamping down. But Evergrande has revealed the country’s economic underpinnings are shaky. But Xi is trying to minimize the bad influences of the internet, he’s trying to tamp down celebrity culture, he’s trying to return China to the past, and ultimately that will never work. What did the Rascals say? “People everywhere just want to be free”? But things have to get really bad before they react. They’re really bad at Facebook. This is the first shoe dropping. What’s next? ~~~ Visit the archive: — Listen to the podcast: — @Lefsetz — Subscribe to the LefsetzLetter The post Frances Haugen: The Facebook Whistleblower appeared first on The Big Picture......»»

Category: blogSource: THEBIGPICTUREOct 11th, 2021Related News

1973 Ferrari Dino 246 GTS

Another lovely I have been fond of for so long: Understated and elegant, the Ferrari Dino was once considered a “lesser” Ferrari due to its mere 6 cylinder engine. The lovely shape and flowing lines of this beauty seem to get better with age. The Dino’s beautiful body was designed by Pininfarina and produced by… Read More The post 1973 Ferrari Dino 246 GTS appeared first on The Big Picture. Another lovely I have been fond of for so long: Understated and elegant, the Ferrari Dino was once considered a “lesser” Ferrari due to its mere 6 cylinder engine. The lovely shape and flowing lines of this beauty seem to get better with age. The Dino’s beautiful body was designed by Pininfarina and produced by Scaglietti. Designed as a competitor to the Porsche 911 during the early 1970s, the MSRP of the Dino was $14,500 — similar to the 911. The 2.4L V6 engine DOHC had 2 valves per cylinder, produced 192 bhp mated to a 5-speed manual transmission. The low center of gravity and a mere 2,426 pounds meant very good handling and a lot of fun to drive for anyone with a little talent behind the wheel, despite only having 192 HP. The Dino is one of those cars I would love to have in my garage but seems to always be just out of my price range. I recall these going for $50k in the 1990s, beyond my budget then. Ferrari built only 2,295 GTs and 1,274 GTS (Spyders); That makes them relatively rare, and increasingly valuable. This car, in Rosso Bordeaux, sold for $630,000.   Source: Bring A Trailer The post 1973 Ferrari Dino 246 GTS appeared first on The Big Picture......»»

Category: blogSource: THEBIGPICTUREOct 8th, 2021Related News

The Radically Changing Labor Market

The Radically Changing Labor Market.....»»

Category: blogSource: THEBIGPICTUREOct 8th, 2021Related News

Hated Brands by State

Source: Rave     I am somewhat perplexed by this list — I can understand why someone might hate Paypal, Dell or Uber. . . but who hates Lego, or Lancome? The post Hated Brands by State appeared first on The Big Picture. Source: Rave     I am somewhat perplexed by this list — I can understand why someone might hate Paypal, Dell or Uber. . . but who hates Lego, or Lancome? The post Hated Brands by State appeared first on The Big Picture......»»

Category: blogSource: THEBIGPICTUREOct 7th, 2021Related News

Raising the Debt Ceiling

Source: Politico     It is amazing how much of the daily “News” is useless noise. To wit, the coverage of brinksmanship on the debt ceiling. You might think this was an important issue ever given all of the Sturm und Drang surrounding the impending default of the US Government! Unless of course you look… Read More The post Raising the Debt Ceiling appeared first on The Big Picture. Source: Politico     It is amazing how much of the daily “News” is useless noise. To wit, the coverage of brinksmanship on the debt ceiling. You might think this was an important issue ever given all of the Sturm und Drang surrounding the impending default of the US Government! Unless of course you look at the history of the debt ceiling kabuki theater, and realize eventually, the adults take charge and prevent the nation from defaulting. But its not just events like this silly debt ceiling dance; Nearly all of the noise around markets and stocks and investing turns out to be nowhere nearly as important as it feels in the moment. I have written about this before, but it is worth mentioning again: Birinyi Associates puts out a wonderful collection of headlines and excerpts from the most important news stories each day. They assemble these quarterly and annually. The amazing thing about these collections of mainstream news articles — terrible headlines, all full of ominous warnings of awful things to come — is that when viewed with a bit of distance and context, look utterly absurd. Most of the time, most of the things we worry most about turn out to be mostly meaningless. They work themselves out without any help from us. Its an important lesson for investors.     Previously: Apprenticed Investor: Lose the News (June 16, 2005) Curse of the Macro Tourist (July 25, 2015)   The post Raising the Debt Ceiling appeared first on The Big Picture......»»

Category: blogSource: THEBIGPICTUREOct 6th, 2021Related News

Ratchet Down Market Expectations

I discuss Gradually, Then Suddenly with the Tom Keene and Lisa Abramowicz on “Bloomberg Surveillance.”   Ritholtz Says It’s Time to Ratchet Down Market Expectations Source: Bloomberg     The post Ratchet Down Market Expectations appeared first on The Big Picture. I discuss Gradually, Then Suddenly with the Tom Keene and Lisa Abramowicz on “Bloomberg Surveillance.”   Ritholtz Says It’s Time to Ratchet Down Market Expectations Source: Bloomberg     The post Ratchet Down Market Expectations appeared first on The Big Picture......»»

Category: blogSource: THEBIGPICTUREOct 5th, 2021Related News

Information Hygiene

Source: Our World In Data     Over the past few months, I have been occasionally posting on the threat Covid-19 has created to the economic recovery. In this format, I stick to my assessment of markets and the economy. Sure. partisan politics can impact sentiment, but I want to focus on the areas I… Read More The post Information Hygiene appeared first on The Big Picture. Source: Our World In Data     Over the past few months, I have been occasionally posting on the threat Covid-19 has created to the economic recovery. In this format, I stick to my assessment of markets and the economy. Sure. partisan politics can impact sentiment, but I want to focus on the areas I have some skill set and expertise.1 If you have to begin every post or appearance with the phrase “I am not an epidemiologist, but…” the odds are tilted against any insight following. Quite a few of you had some thoughts which you shared with me. For the most part, they were thoughtful and constructive. Readers know I am all too happy to debate those views with anyone who cares to. If you want to push back against what I write — namely, that you should get vaccinated, that the governments should mandate it, as should employers — I ask only that you engage in the most basic of information hygiene practices. What does this mean? What are good information practices? Its mostly common sense: Anecdotes are meaningless; forecasts + predictions prove nothing. Do not cite OpEds or opinion pieces as proof of anything other than THAT guy has THIS opinion. If you want to make a scientific claim, it should be real science (published, peer-reviewed, etc.). It is not real science just because you read it on Facebook. It’s not just vaccines, the entire concept of what is real and what is false is a key part of the work we do as investors. That is before we get to all of the behavioral and cognitive issues that lead us astray. There are not a lot of things I agree with Senator Lindsey Graham about — but listen to the crowd shout him down when he tells them to protect themselves and their families by getting vaccinated. Just imagine the sort of nonsense these people base their most important life decisions on — it is horrifying. That is what it looks like when you create a monster and you can no longer control it. Oh, and that chart up top? After leaping out to a fast start, the US is now at the bottom of the list for wealthy nations in terms of total vaccination percentages. We are blowing it. We are snatching defeat from the jaws of victory. Bad information is in large part why…         Previously: The Economic Risks from Anti-Vaxxers (July 15, 2021) DELTA is Coming For Your Economic Recovery (August 13, 2021) Missing: Corporate Leadership on Vaccines (August 12, 2021) Found: Corporate Leadership on Vaccines (August 26, 2021) How F*cked Is Business Travel? (August 11, 2021)       _________ 1. Occasionally, I will put a guest author in Thunk Tank, and clearly label the author’s name to make it clear. The post Information Hygiene appeared first on The Big Picture......»»

Category: blogSource: THEBIGPICTUREOct 4th, 2021Related News

Transcript: Jack Schwager

     The transcript from this week’s, MiB: Jack Schwager on Trading Wizards, is below. You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Google, Bloomberg, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here. ~~~ RITHOLTZ: This week on the… Read More The post Transcript: Jack Schwager appeared first on The Big Picture.      The transcript from this week’s, MiB: Jack Schwager on Trading Wizards, is below. You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Google, Bloomberg, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here. ~~~ RITHOLTZ: This week on the podcast I get to welcome back the person who was really part of the inspiration for Masters in Business in the first place. Jack Schwager is the author of a new book, “Unknown Market Wizards: The best traders you’ve never heard of,” but this is the fifth or maybe — even if I include the little book — the sixth book of Market Wizards he’s put out. And when I was a — a young stud on a trading desk back in the 1890’s (sic), Schwager’s book, “Market Wizards,” was — was one of the first books I picked up to learn a little bit about the idea of — of markets. And I found the book to be tremendously formative to me not so much because it said, “buy this, sell that,” but it was very revealing about discipline, and risk management, and mental models, and containing your emotions. And that book really was one of the early books that sent me scampering off to learn more about behavioral economics and — and behavioral finance, not so much because he was channeling Tversky and — and Kahneman or Thaler or any of those folks, but it was pretty clear from the successful traders he was interviewing that consensus was problematic, that examining your motivations was really important, that being aware of — of not only your own emotions, but your own biases, and some of your own cognitive deficits in blind spots was really, really important to individual traders. And, you know, I wouldn’t call “Market Wizards” a behavioral finance book, but it certainly touches on so many of the same issues. I find these books to be absolutely fascinating as he’s put them out over the years. The — the first book really was just a pure interview book, and — and it’s evolved over all these decades. I think the first book was ’86 or ’89, and the most recent book was 2020. He not only gives you a summation at the end of each chapter, each trading wizard of — of their rules and — and what guidelines you can pick up from them, but at the end, he summarizes it with something like 46 trading rules that you can learn from these people. And really, he’s made it easier and easier to consume the information I know what he’s trying to do, he wants to educate people. For me, as a young guy on a trading desk, I found it really helpful to sort of — that journey of — of learning what I was doing wrong and why in order to get better was — was really helpful. But I don’t think people have the patience for that these days. I found the book to be really intriguing, and I think you will also. And if you haven’t read the first one or the second or third or fourth, but go back and read that first trading wizards book. It’s really quite astonishing and has held up over time. You could read it today and it looks like it came out last month. So, with no further ado, my conversation with Jack Schwager. VOICE-OVER: This is Masters in Business with Barry Ritholtz on Bloomberg Radio. RITHOLTZ: My special guest this week is Jack Schwager. He has written five books on Market Wizards. And, in fact, I found his first book — I think it was the 1989 “Market Wizards” book to be enormously useful in my first job as a trader on Wall Street. He is also the founder of FundSeeder, a platform designed to matched undiscovered trading talent with capital worldwide. His most recent book is “Unknown Market Wizards: The best traders you’ve never heard of.” Jack Schwager, welcome back to Bloomberg. SCHWAGER: Hey, good to speak with you again, Barry. RITHOLTZ: Same, same. It’s — it’s been too long. Let’s — let’s start out talking about your first “Market Wizards” book, which I’ve told you before not only was it enormously influential to me when I was a trader, but it was part of the motivation for this Masters in Business format of talking to people who achieved a level of accomplishment and excellence, which leads me just to my first question, what — what made you decide to write that first “Market Wizards” book? SCHWAGER: Yeah, so I had the idea actually for several years. At the time, I was a future — Director of Futures Research Department, which is kind of a full-time job on its own. To do a book, you really have to do like commit to nights, weekends. I had — I had done a — a book before the, you know, “A Complete Guide to the Futures Market,” which was like a 750-page tome. And I didn’t want to do that — anything that — like that again. But I want you to have this idea that, gee, wouldn’t it be fun to go — and I knew some great traders. I said, “Wouldn’t it be fun to just kind of do that as the theme of the book?” But it was just a matter of time, and then I got invited by a — to a lunch by some other publisher who had — who (inaudible) the — get that analytical book I wrote, “Hey, you want to do a bunch of analytical books?” And I said, “No, no interest.” But, you know, I’ve been thinking of this and I said, “OK, why don’t you that?” And so, that was the catalyst. And I — I guess I just need a little push to — to get going because I thought it was a good idea. RITHOLTZ: So — so this is now over three decades that you’ve been sitting down with traders, talking to them about their process, their methodology, and where they’ve gone wrong, and where they’ve achieved success. I can’t help, but notice that the world of the 2020’s, at least the trading world, is so very different than the trading world of the 1980’s. How does that impact the — the sort of conversations you have? And how does that affect the methodologies of these different types of traders? SCHWAGER: Yeah. So, you know, that’s a good point. You’re absolutely right. I mean, there’s been — yeah, enormous, you know, really enormous changes. As — as you well know, you’ve been in the business a while as well. But, you know, from the time I did the ritual “Market Wizards” book, which was the late 80’s and talking to people at that point about their careers really going back to late 60’s, 70’s and into the 80’s, but that — you know, their — you know, their — their trading history, you know, is pre –, you know, pre-PCs. You know, of course, we had the futures and we’re basically dealing with bits now, electronic trading. But the — the big changes is this computerization element. And we went from a world where there — where we didn’t have PCs to where not only everybody has a P.C., which is quite powerful and — and has tremendous amounts of data, but you’re also dealing now — well, actually for decades where you have firms, you have taken quantification to the extreme, might have 100 PhDs in math and physics and so forth, you know, trying to — to work in the markets, you know, from — from — from that angle. So — so the — that’s been, I think, the — the really big change plus the electronic trading — the switch from — from bits to electronic trading. So, you know, how does that change? You know, are they enough? For instance, I end up interviewing mostly discretionary traders. We could talk why that’s true. He has a separate engine if you want, but that tends to be the reality. I mean, they are sub-systematic, but they’re mostly discretionary. It turns out that, for the most part, a lot of the approaches really do fall into the — to the same categories, and there’s still a place for the individual discretionary trader. And I — I would say the biggest surprise I had to do this — this last book on “Market Wizards” was I didn’t expect to find people with track records who like those in the first book, somebody, you know, people like the Kovners and the Jones and so forth. And to my amazement, I — I found people — you know, because — and — and I say that because of this great quantification and all this competition, you know, that now exists. And to my surprise, I — I found people whose records were every bit as good, if not maybe as good as any other they found. So that was my surprise, and it basically speaks as evidence that somehow, despite these enormous changes, it’s still possible for the individual creator to — to — who has talent and has a specific methodology to do his works to do enormously well. RITHOLTZ: Yeah, we’re going to talk about some of the specific traders and some of the eye-popping track records that they’ve amassed later. But you — you mentioned Jones — Paul Tudor Jones. Of all the people I recall from the first book or — or one of the early books, he seems to be the lone standout who continues to be active, who continues to trade, and continues to make money. I mean, he was very early to bitcoin and — and I believe he’s still a holder, you know, 20,000 percent later. What makes Jones standout and be so different from his peers? He’s — he’s much more open-minded than — I don’t know, you — you can — you can compare him to Druckenmiller or Dalio or — he seems to be a 30-something, not a 60-something. SCHWAGER: Well, the thing that that struck me about Jones that was different, I guess, is, you know — and I want to say — yeah, I was about to say less cerebral, but that’s not really fair. I mean, I’m sure he’s quite (inaudible), but he is — he was much more sort of active and — yeah, somebody like a — like a Druckenmiller, I didn’t see him trade. I spent a day with him, but, you know, I kind of picture him, you know, more thoughtfully going through in designing and trades of what he traded. But — but, you know, Paul, I remember sitting in his office that he, you know, screamed, you know, while we’re doing the interview, he’s screaming orders left and right. This is a day where there were, you know, phones down for the bits and, you know, so he’s — he’s — he’s doing these orders. He’s going through the screens. He — he was just very — almost manic in the way he trades. So, I had that — that almost physical image of him, you know, trading more so than anybody I — I guess, that I ever interviewed. There’s one difference. And there are certain things I still remember at that interview. He’s — he’s kind of insistence that, you know, every day he’s — he — he stalks for blank slate. So just because he has the position doesn’t mean that that position is still something to be held. So, you know, he talked about wanting to evaluate every position while I have this. Would I — would I still want — do I still want it today? You know, that type of thing, so this — this — this constant renewing of his analysis and assessment of the market. And I think particularly very much attuned, I think, to — to market action — and I’ve been very aggressive all the way. So, I guess those are some of the ways I — at least from my memory of that interview that I — that he struck me as being a bit different. RITHOLTZ: So — so let’s stick with that first book. I mean, the — the list of people you got to sit down with you for a day is pretty impressive. You mentioned Bruce Kovner. We’re talking to Paul Tudor Jones, Richard Dennis, Ed Seykota, Marty Schwartz, Tom Baldwin, Michael Steinhardt, Druckenmiller, I mean, that’s some … SCHWAGER: Yeah. RITHOLTZ: … murderous row of — of fund managers and traders. SCHWAGER: Yeah, and I — it was. And I was lucky to — I guess I didn’t realize how lucky I was because just about everybody I asked agreed. Now, I had some edge there because I knew some traders personally like Michael — well, Michael Marcus who’s — who’s actually in Chapter 1 in that book is not somebody who would have been known weren’t not for the book, but he — he is one of the greats. And he — you know, so I know him personally. You know, we were friends. I actually took his — my first job on Wall Street was vacated by Michael. He was cleaning out his desk when I came in my first day. We talked a little bit. He was going, in quotes, “off to become a trader and, yeah, leaving his analyst job. And I took his analyst job, but he was in New York for two years before you went out to — to Malibu and, you know — and, you know, well, moved permanently there. But while he was in New York, we used to get together for (inaudible) just every couple of weeks, so we had a relationship. So, he — he agreed to do it. We have — not easily, he’s a shy guy, so it took a bit of convincing, and I had a mutual friend who kind of pushed a little bit. But, you know, then he felt satisfied with — with our interview after I spent a day or two there at this — that was the one — that I did actually while he’s out — out in California. And said, “You know, you should” then he — you know, he said, “You should interview Seykota, and I never heard Seykota, but (inaudible) Seykota was his mentor and somebody who he considered the best trader and he knew. And so, he set that up, and then I flew out to — to Seykota. Kovner I knew because Michael had hired Kovner and so I met him through Michael, and I had actually worked because of Michael. He hired me to be an analyst from — you know, remotely why (inaudible) or commodities are going making all that money. And — and so, you know, I — so there were these — I had a bit of a jump because I do some and trade some. And then some of them recommend other traders, yeah. RITHOLTZ: Interesting, really interesting. (COMMERCIAL BREAK) So — so last question — on — on the early book, some — some of these guys have been trading for decades, and the risks that you run into relates to what one of my colleagues described as the — the paradox of experts. People who are experts have their expertise in the way the world used to be in an earlier version of the world that doesn’t exist. When you look around at — at these traders who’ve been at it for a long time, do they have a difficulty in adapting to the new world? I noticed most of the guys you interviewed for the newest book are fairly young. SCHWAGER: Yeah. So — well, of course, you know, if you go back to the original book, you know, a lot — well, most of them, you know, one of these ones I know continued — continued on for — for decades, you know, like the Kovners and — and the Druckenmillers, and so forth, and did — you know, did quite well, and Joe (inaudible). In the case — you know, but I can’t think of an exception, somebody like — like Richard Dennis who was — who had won in the most incredible stories ever, you know, turning literally a sub $1,000 stake. When he was trading in the MidAm Exchange, he’s (inaudible) contract and, at some point, amassing a couple hundred million dollars that got to be one of the great multiplication pitch (ph) of all time. But — but in — subsequently, years after our interview, had — had — had some — some — had problems and — and never continue — besides not continuing, I think had — had losses probably. So not everybody — you know, not everybody necessarily continued forever, but — but I think the majority, you know, continued — continued to adapt the markets. And — and in Dennis’ case, I think it may be an issue of — of the markets, I think, did change. Trend following back, you know, in Dennis’ hay day, which I would say late 60’s through late 80’s, those were kind of glory days for — for trend following. You — you had — had a couple of things working together first because it was before technical analysis became so popular. RITHOLTZ: Right. SCHWAGER: It was before — most of that period was before a lot of the computerization. So, people who were early on — on trend following kind of didn’t have a lot of competition. And also, you have the inflationary 70’s, the U.S. on the giant trends and futures, currencies, and so forth. So, you know, times were very good. When the times became more difficult or — and many more people, yeah, it was just (inaudible) amount of — (inaudible) increase in the number of people using these — those type of approaches, the approach naturally degraded. So, I think it — that was the issue there and — and could explain why somebody like Dennis didn’t continue the way he did, while some of these more discretionary traders like Kovner and Jones did. RITHOLTZ: My big takeaway from the — the early Dennis chapter was all about training traders the way they raised turtles on farms in Singapore. That — that concept that, hey, you could teach anybody how to trade if they’re disciplined and we’ll follow these sets of rules. I was — I was really impressed with that, and that was — I don’t know 25 years ago. Do you think someone like a — a modern version of Richard Dennis could still train traders the way he did? SCHWAGER: I — I have some skepticism there, and — and that’s developed over the years. I kind of — trouble is you — you train somebody — the person you’re training has to be kind of adoptable and amenable, and be a good fit for whatever the methodology you’re training. And, well, my perspective is that to be successful, the method you use is not (inaudible) being trained by somebody, you have to — has to be a method that’s compatible with who you are and how you’re thinking, what’s comfortable? So, if you are — you know, you’re somebody who, let’s say, doesn’t feel comfortable delegating decisions to a systematic approach, somebody can teach you a system, but it’s going to be very difficult for you to follow because you’re always going to want to be second guessing it or — or jumping the gun or not taking signal. So, it has to be compatible with — with — with what’s — what works for you. And — and I think that’s the problem. I don’t think you necessarily can train everybody. Now, at that time that Dennis did it, you have trend following being a — a very effective methodology. So, if people follow the rules, they could be successful, but I think that’s more the exception than the rule. So, you can’t — you surely can learn from a mentor if the mentor is compatible with — with the methodology that fits who you are. RITHOLTZ: Makes a lot of sense. Jack, I was kind of struck by this book, and I’m curious how did you go about it. Was it — was it different versus your prior wizard books? Did — did your methodology change or did you interview process change? Or was it — you know, you have a — a process and you stuck to it? SCHWAGER: Yeah. No, I’ve had — I’ve had the same methodology from the — from the first “Market Wizards” books, so — and it works, so there’s no — if something works, you know, nobody is going to change it. So, my process — but first of all, the actual — as far as the actual, you know, interviews and — and turning into text, when I do the interview — and this is kind of important — is any — I’m sure you could relate to this very well, Barry. I — I try — I — I do what you do really, which I — which I sense you do is have a conversation. So, I don’t go in with a list of questions. And, you know, I’ve been interviewed by people, and that you can tell they have a list of questions. And no matter what you answer (inaudible), you know, there’s no follow-through and it goes … RITHOLTZ: Right. SCHWAGER: … to the next question, right? And it sells very stiff in board, and it is. So, what I try to do in these things is really just literally have a conversation. And there are times there have been interviews where I literally — it could be two hours before I get the first thing that’s of any value. You don’t have that luxury, but I do. There’s a book, not a live interview. RITHOLTZ: Right. SCHWAGER: But — but that’s — that’s — so that’s very important. And — and I — I do have like a list of questions that I know I want to make sure I hit those topics. And after I spend any number of hours, which could be — which could be as little as a few hours in — in a short interview to — to as much as a day or more, then I’ll just check the list and see if I missed anything. But — so that’s one important thing. And the other part of the process that doesn’t change is just the way the interviews are transformed into text. And there — you know, obviously, I’m doing so much so many hours. You know, you couldn’t — any — a lot of these interviews could be a book-long by themselves. But besides that, if I used everything, it would be deadly boring. So, you — you really — what I’m really trying to do is basically extract out everything that it has — is one of two things. One, as something meaningful to say about trading or two, it’s interesting. You know, so it’s one of those things. So — and that’s the material that — that forms the chapter. And then — and then you do a fixing up of, you know, people. The way people speak doesn’t translate well into … RITHOLTZ: Right. SCHWAGER: … into written text as you — as you well know, I’m sure. And you may talk about the same topic in eight different places, and that’s fine if you’re talking, but it’s not fine if you’re eating. RITHOLTZ: Right. SCHWAGER: So, you know, that’s — that’s the basic process. The difference in this book though was the focus. And in prior books, I guess, they’ve been more — more heavy in well-known professional traders, although not necessarily all the time. There’s always been individual traders as well. And the — the most recent wizard book before this one back in, I guess 2012 or so, was “Hedge Fund Market Wizards,” which you can tell by the name is, you know, obviously not individual traders, right? They’re — they’re traders and organizations. So, this — this one was the exact — was — tended to be the exact opposite. It was literally to try to find those people who are trading in a home office, doing extraordinarily well and nobody knows they exist, nobody knows who they are. And — and so that was a difference in this book. RITHOLTZ: So, one of the differences I suspected when I went into reading this book is all of the subjects of your prior books, all the various traders, you know, you could do a search on them. You could — you could read about them. There’s newspaper articles in the days before Google and certainly since search engine has been around, you can find a ton of stuff on each of the people that you interview. I got the sense from each of the chapters in this book that you had a bunch of — of arrows in your quiver, but you didn’t know, which ones you’re going to use because you’re kind of going in a little — a little in the dark. Is that a fair assessment or am I — am I projecting too much? SCHWAGER: You’re projecting too much because, especially since I was doing these individual traders and, you know, it sounds like there’s a public fund out there or something like that … RITHOLTZ: Right. SCHWAGER: … so I — I had to really, really be careful this time about, well, I (inaudible). But I — I had to get the track records. And — and so I knew — you know, I knew what their track records were before I went in. RITHOLTZ: Right. SCHWAGER: And, you know, I — like I’ll give you one example. One of these traders, I got an email. This is about a year before I did the book, you know, saying something like, you know, “Hey, I’m — you know, this is my name and so — you know, and I turned a few thousand dollars into $50 million, whatever,” you know. So yeah, your initial reaction would be, “Sure,” right? But I’m always — I — I think that — you know, people made claims, they now they even — even don’t have to prove it. So anyway, so look, I’m not planning another book at the time I wasn’t planning to do this book. And I said, “But your story sounds very interesting. And if you can confirm it, you know — you know, it would be sounds like it would be a really good fit. And if I do another book, I’ll get back in touch.” It turns out that nine months later, I do decide to do — to do another book and I get back to them. And — and so, you know, a guy, he started trading back, I think, around 2006 and literally got every monthly stakes (ph) improving 2006 forward. So — so I knew — while the story sounds unbelievable, I knew it was — and I — and I — actually, they were — in this particular case, there were — there are Ameritrade accounts, and I have an Ameritrade account. I — even though with the — with the account, you know, (inaudible) look like. So, there was no — there was no surprise there. I — I kind of knew what I — I knew what his track was. I didn’t know what it’d be like or what he’d have to say or anything like that. That’s always the case, but I knew the track record is real. RITHOLTZ: So — so let’s jump into some of the details of — of various traders starting with the first chapter and pretty much the only person you interviewed who has a — has been trading for — for decades, and that would be someone I follow on Twitter who I’ve always been intrigued by named Peter Brandt. What — what drew you to him as a trader? And what makes him so unique? SCHWAGER: Yeah. So, as you said, Peter has a long career. He actually has — his career is broken into two segments. He — and each one is — I — I forget the exact number is, but that’s … RITHOLTZ: Eleven years apart … SCHWAGER: … (inaudible). Yeah, 11 years apart, but each one — each of the segments is, let’s say, 16, 17 years. So, he’s got over 30 years of trading experience. He went co (ph). He stopped trading totally for 11 years in between because, at the end of the first period (inaudible) and gone out of it, and he just — he just decided didn’t want to do it anymore. And then out of the blue, 11 years later, he decided to do and had a — had a second phase rated very well. So — so again it’s over three decades of, you know, of experience and — and so forth. OK. That’s — that’s part, that’s — that’s beginning. The thing that Peter — and — and I should — I should — I should say that — that Peter actually is a friend. Well, I — I knew him personally. One thing that always struck me about Peter was he just had a lot of what I thought valuable things to say about the markets and trading. And I remember him being on — on a — on another podcast and listening to it. And the questions will be asked and I would mentally answer him, and it was striking how similar his answers were. But it’s not just bad, you know, it’s just — I just really relate it to the way he — he looked at — at markets and risk, and had so many — so much good advice and just — just wisdom that — that — that I felt I wanted to capture. Now, Peter is — you know, in his early 70’s. And I — I literally — and he was kind of a catalyst to do the book. At the time, he was in Colorado as I am, and I (inaudible) thought, well, I’ll say to myself, you know, I knew — I knew if I didn’t have a “Market Wizards” book, I wanted that Peter in it. So, he was going — he was going to be moving. I think, well, I might have say to myself (inaudible). I might as well do his chapter. Now, it turns out (inaudible) that around to — to doing it. He had moved and then I — so I end up flying out, you know, to Arizona anyway. But the — the thing about Peter just — just to capture, I wanted to capture his — his market wisdom, the posterity. It’s probably the most straightforward way I can put it. RITHOLTZ: And it’s notable that several other wizards in the new book reference Brandt’s approach to risk management. Forget stock selection, they are just completely impressed with how disciplined he is and how he manages risk, first and foremost. “The — the stocks — the trades that are working out, we’ll take care of themselves,” he says. It’s ones that don’t work out that — that require all your attention. Somebody else said something that really intrigued me. The — the chapter on Jason Shapiro, the contrarian, I love this quote. “There aren’t good traders you can make money on by doing what they’re doing, but there are terrible traders you can make money on by doing the exact opposite of what they do.” Tell us a little about Jason Shapiro. SCHWAGER: Yeah. So yeah, Jason is the — the contrarian in the book, and that’s his nature. I mean, he — if you beat him, he’s just — he has to be, I would say, he has to be argumentative, but he always has to be on the upside. And he admits freely like he — he goes to a party and — and it’s mostly liberal, so he’ll argue the conservative side. It was mostly conservatives, he’ll argue the liberal side. He’s fine doing that. And his — his premise is that because just no absolute black and white, there’s truth on — on some truth on both sides, and — and people who insist everything is, you know, one side of the other (inaudible) is arguing with. But that his nature is always to be arguing and to be counter, so it’d be natural that he evolves into trading methodology that — that — that’s contrarian. And that’s what .....»»

Category: blogSource: THEBIGPICTUREOct 4th, 2021Related News

MiB: Jack Schwager on Trading Wizards

    This week, we speak with Jack Schwager, author of various Market Wizard books. He is also the founder of Fund Seeder, a platform designed to match undiscovered trading talent with capital worldwide. His latest book is “Unknown Market Wizards: The best traders you’ve never heard of.” He explains his process of interviewing traders: He… Read More The post MiB: Jack Schwager on Trading Wizards appeared first on The Big Picture.     This week, we speak with Jack Schwager, author of various Market Wizard books. He is also the founder of Fund Seeder, a platform designed to match undiscovered trading talent with capital worldwide. His latest book is “Unknown Market Wizards: The best traders you’ve never heard of.” He explains his process of interviewing traders: He spends a full day or two with them, tape recorder running, having a conversation, and firing questions at the traders, He has convinced reluctant traders to speak with him by giving them final edit on their chapter to correct or counter anything. Other than minor factual corrections (dates, locations, names) no one has objected to his analysis of their trading methodologies or track record. The traders Schwager speaks with all have put up eye-popping performance numbers using very different approaches.  Markets may have changed, but they are a puzzle to be deciphered. Those who figure out the key find great riches await them. But before you give up your day job, understand how daunting the odds are: the vast majority of speculative traders go bust. A list of his favorite books is here; A transcript of our conversation is available here Monday. You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Google, Bloomberg, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here. Be sure to check out our Masters in Business next week with Chamath Palihapitiya, founder of Social Capital. After a career as an engineer and team leader at AOL, Facebook, and Slack, he became one of the more successful VCs. He earned the nickname “SPAC King” for numerous successful deals he has done, and today is a part-owner of the Golden State Warriors.     Jack Schwager Authored Books Market Wizards: Interviews with Top Traders by Jack Schwager The New Market Wizards: Conversations with America’s Top Traders by Jack Schwager Hedge Fund Market Wizards: How Winning Traders Win by Jack Schwager Unknown Market Wizards: The best traders you’ve never heard of by Jack Schwager   Jack Schwager Fave Books Influence, New and Expanded: The Psychology of Persuasion by Robert Cialdini In the Kingdom of Ice: The Grand and Terrible Polar Voyage of the USS Jeannette by Hampton Sides The River of Doubt: Theodore Roosevelt’s Darkest Journey by Candice Millard Endurance: Shackleton’s Incredible Voyage by Alfred Lansing     The post MiB: Jack Schwager on Trading Wizards appeared first on The Big Picture......»»

Category: blogSource: THEBIGPICTUREOct 3rd, 2021Related News