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Hi, I'm Jim O'Shaughnessy and welcome to Infinite Loops.
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Sometimes we get caught up in what feel like infinite loops when trying to figure things out.
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Markets go up and down, research is presented and then refuted, and we find ourselves right back where we started.
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The goal of this podcast is to learn how we can reset our thinking on issues that hopefully leaves us with a better understanding as to why we think the way we think and how we might be able to change that to avoid going in infinite loops of thought.
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We hope to offer our listeners a fresh perspective on a variety of issues and look at them through a multifaceted lens — including history, philosophy, art, science, linguistics, and yes, also through quantitative analysis.
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And through these discussions help you not only become a better investor, but also become a more nuanced thinker.
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With each episode we hope to bring you along with us as we learn together.
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Thanks for joining us, now please enjoy this episode of Infinite Loops.
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Disclaimer: Jim O'Shaughnessy is chairman and Co-Chief Investment Officer of O'Shaughnessy Asset Management, where Jamie Catherwood is an associate.
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All opinions expressed by Jim, Jamie and podcast guests are solely their own opinions and do not reflect the opinions of O'Shaughnessy Asset Management.
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This podcast is for informational purposes only, and should not be relied upon as a basis for investment decisions.
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Clients of O'Shaughnessy Asset Management may maintain positions in the securities discussed in this podcast.
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Jim O'Shaughnessy: Well, hello everyone.
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It's Jim O'Shaughnessy with yet another Infinite Loops today, I really, honestly guys do not know how this guy snuck on to the schedule.
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I log on, I have this vast staff of people who just put things in front of me right before we go on.
2:42
And I look and I go, "What?
2:42
Excuse me, Dan McMurtrie.
2:42
No, we're not having him on the show.
2:50
Wasn't he the guy who blew it when I was going to do a debut show with Ramp Capital and SuperMugatu, who doxed himself a week before we even did the recording."
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And yet they tell me here, all of the minions are standing here saying, "Oh, no. They're going like this.
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We'll take this part out, Jim, don't worry. Kidding.
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Dan is a very good friend who is the portfolio manager at Tyro Partners and the general partner at Anchorless Bangladesh disclosure.
3:22
We are investors in Anchorless Bangladesh. Dan, how it goes?
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Dan McMurtrie: It's good, man.
3:30
Thank you for having me back on, especially after, I think it's my third time on. If I remember correctly.
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I was on Juan's, an anonymous talking head.
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And then I think I came on during COVID.
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So thank you for having me back.
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And more importantly, thank you to your staff.
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I had to bribe liberally to get back on.
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Jim O'Shaughnessy: I should have known when I saw the one guy drive up the Lamborghini, that something was amiss.
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Dan McMurtrie: It's a lease, but it was still not cheap.
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Jim O'Shaughnessy: All right, man.
3:58
So you and I love to have conversations about, just what the fuck is going on.
4:06
And at times they're really interesting, because they're happening when people are paying millions and millions of dollars for an NFT.
4:15
And other people are taunting people who don't invest in what they like, with the phrase "Have fun staying poor."
4:23
Like is this the schadenfreude part of the market story? Or where are we?
4:32
Dan McMurtrie: I think there's that classic chart, that's kind of the emotions through a cycle.
4:41
And then there's kind of fear, panic, capitulation and then you get to like acceptance.
4:41
And I think we're in between kind of fear and panic right now where there's a lot of schadenfreude.
4:51
But depending on the estimates you're looking at retail investors seem to have given back the profits that they had during the last two years of what some people would call speculative excess.
5:02
But we're not yet seeing major capital impairment and unfortunately that seems to be almost a necessity for a cycle.
5:06
So I definitely think there's a lot of schadenfreude right now and there's just a lot of losses.
5:12
One of the things that we're discussing a lot internally is the difference between impairment and volatility.
5:17
I think that what happened in the last two, three years, is things got to prices where it was not that you couldn't make a bull case.
5:34
But one, the bull case required you to assume that a lot of these assets were extraordinary exceptions.
5:40
The top 1% of the top 1% of the top 1% of assets of all time.
5:40
And that you got a paradigm shift, et cetera.
5:46
And if it was anything other than that, if this was merely a 98 percentile asset or business.
5:53
Or what have you, you were going to look at a permanent capital impairment of 60, 70, 80, 90%.
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And so it'd been a very scary time, we spoke earlier this year and you were asking me about what I thought of fundamentals.
6:04
And I said, "I think fundamentals are mostly fine, but this attitude in the market and what people are describing to me as good ideas is really, really horrifying."
6:14
And I think that's, what's coming to pass.
6:18
And so, there's a lot of schadenfreude out there right now.
6:18
But one of the things we're seeing is, people had this framework that may or may not have made sense that has now kind of been shattered or is in the process of being broken.
6:27
And people are not jumping back to "Well, we should invest based on cash flow or valuation or some other framework."
6:37
They're going to, "Well, this framework didn't work.
6:37
How can we have faith in any framework?
6:44
Just our 30 times sales, 50 times sales, 80 times sales stocks, our NFTs, these are all down 80%.
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Why would we buy a packaging company at eight times free cash flow?" They're kind of gaping.
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And so they're going from kind of one very extreme on a metal framework to just a complete advocation of any intellectual ability to pursue markets.
7:03
Which is very interesting to see, it's something that's happened kind of every time there's a cycle.
7:08
But it still feels surprising even though you've read it a million times. Jim O'Shaughnessy: Yeah.
7:16
And because we're [inaudible], like I don't do schadenfreude, I don't do any of that stuff.
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Because as we were saying before, we started to record, like to me, stocks are just numbers and factors.
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And if they meet the underlying criteria and they get picked by the model and algorithm, we buy them, if they don't, we don't.
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So that tends to set in over time.
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And if you're me, you kind of Marvel at these people who are...
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You know that gift that I use sometimes you use sometimes, with the guy from it's always sunny explaining. Dan McMurtrie: Oh yeah. [inaudible].
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Jim O'Shaughnessy: Right.
7:59
So I just am kind of constantly in awe of watching people spin these incredible stories for why the patently absurdly expensive thing that they're buying, they're early really.
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And you have no idea where this is going to go.
8:28
But are we also just witnessing what we always, at least for me, I've studied markets for a long, long time.
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Fed price, money too low?
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When money is priced too low, people do insanely stupid things that seem insanely stupid, only when money is priced correctly.
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They're actually not insanely stupid if money's free.
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"Yeah, sure of course I'll buy that unicorn, I'll buy whatever."
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But isn't it also kind of, to pick up on your point.
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Their framework dissolved and now they really don't know what to do.
9:07
But at some point don't we get back to buying the paper company because it's got a free cash flow, you're paying four times for it.
9:12
Or do you think, "No, that doesn't come back?"
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Dan McMurtrie: I think it has to come back.
9:21
But I think the question is how much pain needs to happen in the middle?
9:25
I have a framework for, we do look at fundamentals, but I think that the majority of mispricings that exist in markets now are driven ultimately by agency costs.
9:32
So when we talk to allocators, other people like that about the stocks that we like.
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The joke we have is we go, "These stocks are mispriced and present an opportunity precisely, because you cannot raise money on these stories.
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These are not changing the world.
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These are not revolutionary.
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These are just businesses that make money that are mispriced, that will go up over time."
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And that's all there is to it, there's no greater pitch to it.
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And that's very hard as a pitch for people to go pitch to a committee because it just sounds so mundane. It doesn't stick out.
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And I think right now, and as people pitch certain types of style, there's a mimetic dynamic and certain types of styles start to work.
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And then pitching anything that's not that style just becomes very out of vogue and it becomes about the paint job, not the car.
10:29
And so you need that memetic process to, I think, slow down and reverse and then there's going to have to be something new.
10:36
So it's going to require something else to start working.
10:40
Because money gets allocated, I think primarily based on essentially a momentum effect, because of those agency costs.
10:45
And so until you see that start to happen, until you see a fairly lengthy record of value oriented strategies working, just no one's going to raise capital.
10:55
We were speaking with some of the prime brokers about which funds and which strategies are raising money.
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And throughout 2020-2021, there was one big name fund that raised over a hundred percent of the net inflows on a prime broker's platform.
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And you have to think about how insane that is.
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Meaning other than one fund, there was a net redemption of capital from funds over the last two years.
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That's why the underlying inefficiencies exist, because everybody else who is smart and does have insight and does have great resources, they have not controlled the game.
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They have not held the bat.
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And they've had the bat taken out of their hands.
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They don't have the ability to hold these positions.
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And so it creates an underlying market structure problem.
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And all of that's getting unwound right now.
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And it's very nasty, because even if you have a different approach, you are still facing a flows problem.
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That in the short term is going to be very hard to weather.
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So you could be long a bunch of casual flow yielding stuff.
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And depending on who else owns those securities, you may be down just as much as the tech guys.
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We know guys that run small and Mico-Cap strategies and they may be down 20, 30, 40% this year.
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Even though their underlying holdings trade it 2, 3, 4 times EBIDA, or free cashflow.
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In some cases, that's actually a real number.
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It's not an accounting misstatement on capital IQ or something.
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So it's just this period you have to get through.
12:27
The one thing that we really focus on is, it's natural to have some schadenfreude and I think the schadenfreude, if you really boil it down is it's jealously on a lag.
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Nobody has schadenfreude for somebody that never raised any money.
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But if somebody else raised all this money and made all this money and has this house in Aspen and Miami and whatnot.
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And you can't afford any of those things, then it's very easy, especially if you're on Twitter to want to dunk on some people.
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And as a younger man, I certainly participated in all of that, but I think I've really stopped doing that.
13:01
And part of it is, I was at an event last week and there's this guy named Dr.
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Kevin Elco, he's a sports psychologist for Alabama.
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And as a Notre Dame alumni I feel not great about citing him on anything.
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But the point he kind of made was he said, "Your success in 2022 is going to be defined by what you choose to ignore."
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And I really think that's kind of the most concise way to think about things that we think right now.
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I think that if you are a serious investor or really you're serious about whatever you're doing, it's incredibly unproductive to have a lot of your head space taken up with schadenfreude.
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Because there's not a whole lot you can do that's productive out of that.
13:40
And I think part of the problem is, people look at these funds that invested at things at very high valuations.
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And they go, "Well, this framework was ridiculous."
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But then they'll spend weeks basically just trash talking those funds instead of implementing their own plan.
13:55
And we're really trying to...
13:55
Everybody wants to make a joke at the bar, that's fine, but it needs to stay there.
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And when people come into the office, I think it's really important that people focus on what is their plan.
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How are they going to implement that? What is important now? What can they do now?
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That actually is going to be productive.
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And so if you think it's a packaging company at eight times three cash flow, I want to see people focusing on that.
14:20
Not focusing on some private that needs to get marked down this quarter.
14:25
But it's really hard, especially in the social media era.
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Because there's all these stories, all these stimulants, that are just looking to get your attention in every way they can.
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And you can make a mistake by noticing that you didn't make a mistake, which is kind of bizarre.
14:45
Because a great way to get clicks is to make people feel good about themselves for mocking somebody else's failure.
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And then just sitting there and spending your time mocking somebody else's failure, you make almost an equivalently stupid mistake.
14:53
Because now you finally have a market that's down where there are real opportunities for the vaunted value investing deep fundamental.
15:03
Unless you're actually focusing on finding the value, then you've just missed out on a lot of gains over many years and now you're going to mock your way through not making any games now.
15:13
And you're seeing it kind of all over the place.
15:13
So we're really trying to kind of understand that, maybe other people were the butt of last year's joke now, but we don't want to the butt of this year's joke.
15:23
And that's a very hard psychological process to get yourself to go through. Jim O'Shaughnessy: Yeah.
15:30
I completely agree with you on the agency and the mimesis of dealing with those people over a 30 plus year career, different people, same attitude.
15:40
In fact, we got very far down the line back in the early 2000's with a big in institutional investor in the UK.
15:48
And we had kind of the final conference call with them and I was telling them about the particular strategy that they were interested in.
16:05
And then one guy on their committee basically said first to the group, but then asked me to address the question.
16:12
And it was like, this is just too simple.
16:19
And I'm like, "Okay, do you want to elaborate on that?"
16:19
And it really underlined for me, somebody who did not spend a lot of time following the narrative, because I always have believed price leads narrative, not the other way around.
16:37
And that when you get caught up in these narratives and forget price, weird shit happens all the time.
16:42
I loved your idea about the, now that they have gone through this particular downdraft after putting their money with the one who was buying everything at price to magic ratios.
16:59
Do you think that there's a solution to these agency problems?
17:09
Dan McMurtrie: I haven't come up with one yet.
17:13
I think there is a solution.
17:13
I think the problem is, so there are a handful of very sophisticated family offices.
17:20
And if you look at some of them are deliberately doing this and some of them do this just out of instincts, but what they do is they form a very effective network and ecosystem of people where everyone is very smart at what they do.
17:37
And they kind of have their own lanes and there's some collaboration sharing of information, but they have a really good ability to basically deploy to a certain from a certain perspective factor exposure.
17:47
So they've got a really good real estate guy in each region.
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They've got a really good tech guy.
17:50
They've got a really good long, short guy, whatever it is they want.
17:55
And they build this kind of community and that works pretty well when you're talking about hundreds of millions or single digit billions of dollars and needing to really manage 10, or 15 relationships.
18:08
It's much harder when you're talking about 10, or 20, or 30 billion plus these endowment or sovereign size monies.
18:13
And you have a lot of different stakeholders that are very inconsistent.
18:19
Their feedback that, you won't hear any from anything from the stakeholders for five or 10 years and then every one of them will want to be involved one random year.
18:27
And there isn't a consistent evaluation framework.
18:34
I think the biggest hindrance the endowments have is that the endowment staffs in general turn over every five years, which is less than the average length of one cycle.
18:40
And so there's really limits their ability to actually implement a plan on a multi cycle basis.
18:47
I mean, it's incredible, it's probably not surprising to you.
18:54
But if you go back to let's say 1970 and you implement almost any investing approach uniformly, trend following, systematic value, what have you?
19:00
You've had pretty good results.
19:08
Generally speaking, if you just stuck to...
19:08
I know some guys that have been doing the Richard Dennis turtle trading type momentum, basically just using moving averages and stops.
19:21
And they're volatile, but over the last 40 years they have absolutely crushed it.
19:21
Same thing with equity, same thing are these.
19:27
But the unifying thing I see across the money managers that I know who have 20 plus year records that are good, is they are never sexy at any moment in time.
19:35
A guy I used to intern with forever is kind of my Yoda this guy, Mike O.
19:42
Keith at 12th street, asset management.
19:42
Mike will almost try to convince you not to give him money.
19:47
If you try to go talk to him about his fun, he'll be like, "Oh yeah, AutoZone's a really good company and they just buy back a lot of stock and we really like them.
19:57
I don't know much about it."
19:57
And then if you actually pride to him, he will give you multiple PhD dissertations.
20:01
"Well, yeah, I remember like 1997, I was talking to the guy who would later be CEO and we were really close and I invest in this deal."
20:12
And it turns out he knows everything about the company, but he has such a low level of ego and has seen so much crazy stuff over such a long period of time, that he almost has a functional inability to hype himself.
20:22
Just because of the wealth of experience he has.
20:30
An allocator asked me, "Hey, if I wanted a long only value guy, who would I recommend?" And I said, "This guy."
20:34
And he goes, "Oh yeah, but I've been on his distribution list for a long time."
20:40
"What does that have to do with anything?"
20:40
So there's not a shiny object factor, but I am amazed at how many people don't.
20:44
There doesn't seem to be enough respect given to investment managers who actually have these very long term track records.
20:49
Because obviously historical performance isn't predictive of future returns, but anybody who survives 2, 3, 4 cycles there's a conversation worth having at least I would say.
21:04
But I think it's very hard.
21:04
I mean, the way these institutions are structured, very few institutions are actually structured to optimize for returns alone.
21:13
I think everybody likes to believe they are, but I think maybe 5% of investment firms have ever seen are actually just engineered optimized for returns.
21:18
There's always a million other things, people say, "Well, we're all about returns, but also ESG, but also this, but also this."
21:30
And there's nothing wrong with having those other constraints in there.
21:30
But people don't really loop that thinking enough times to understand what's actually in their hit box.
21:39
And so in the last few years it has appeared that just taking highly concentrated beta risk was the best approach.
21:46
And so you had a lot of people, we had people come to us and say, "Shut your funds down and just start a new fund and just own four stocks.
21:54
And just never sell them for 10 years and we'll all make a ton of money."
21:54
And I go, "Do you want to fund that?"
21:58
And they go, "No, you just go do it and then come back to us."
22:02
And you you don't need to be a math genius around a simulation to figure out the survival likelihood of that strategy.
22:08
I think you and I both know people who are absolute brilliant.
22:12
You talk to them and you go, this person's brilliant.
22:12
And they're down 70% this year.
22:16
And they're people who are intellectual powerhouses who are very unlikely to survive as an ongoing concern as a business this year.
22:23
It really isn't that simple. And so it's very tough.
22:28
I think that anybody who has clarity about what they're actually trying to accomplish and how they're actually doing it has a massive advantage, because I think most people are structurally unable to have clarity.
22:39
And that's really the main problem.
22:44
There's not clarity about what the goals are.
22:44
And the other thing is that the communication between money managers, investors, et cetera, there's so much theater in that.
22:49
There are so few honest conversations about what people actually want, what their actual decision making framework is.
23:03
And there's so much opportunity for the more thoughtful GPs and LPs who can do something that actually aligns interest that may be more or less risky.
23:08
But if everybody had an ability to have more honest conversations, you could solve some of the problems.
23:14
But I do think that this momentum effect on agency is really hard to overcome because how do you go in every quarter semi-annual, annual.
23:27
And have one group in the IC, just crush everybody else and not allocate them more capital.
23:34
And how do you keep them, if you don't allocate more capital?
23:38
It's a problem from every angle.
23:38
And then you have people coming out saying, "Well, the endowment should have beaten the S&P 500."
23:42
Even though the endowment should not be a hundred percent equity risk, but are you going to explain that to a mob of 25,000 angry alumni, it's going to be tough.
23:54
So I don't really know how these large stakeholder count in institutions can handle this.
23:54
I think some of them have done a good job, but it just is a very hard problem.
24:03
I empathize a lot with that side of the table, but I think some of them were private, relatively smaller, pseudo institutional family offices and things like.
24:12
That have also done a great job by just picking extremely high quality partners and actually writing things up for a very long period of time.
24:22
And they tend to have a preference for what we call when risk, rather than if risk.
24:22
So they'll do a lot of things where they go, "Look, maybe we get paid back four years, six years, nine years, 12 years from now, but we're probably going to get paid back versus other people want if risk, where if this works, we're going to get paid way more.
24:36
” There are times where those bets can be interchangeable based on the risk return.
24:41
But as we talked about end of last year, early this year, I thought that if risk was priced to the level, that just didn't make a whole lot of sense, because you had this idea of a venture portfolio being a series of call options or lottery tickets, but then the price of the lottery ticket had been priced up based...
24:58
If you were using the sample set data, you were buying lottery tickets for 1/50 the value you were at the end of last year.
25:09
Then you're also putting much, much larger amounts of money in.
25:15
All of the portfolio mathematics that made venture really interesting just seemed to vanish in the last two years.
25:19
Yet that was exactly when all the money wanted to go in.
25:19
On the other hand, if there's a washout, there's going to be a lot of stuff to do in venture type stuff.
25:25
But I think if you're looking to have really strong returns over a multi decade period, I mean, people's return expectations were crazy last year that prices are high and they were expecting 30, 40, 50%.
25:41
But if you do 15% annualized for a very long period of time, the numbers get really goofy big, really, really fast, but it's very hard for humans to think that way.
25:47
Humans also, I don't think we do a good job...
25:53
My friend likes to say, "We're all just monkeys playing with numbers."
25:59
Which is a line I love, but I don't think we do a good job of thinking about the behavioral path risk of what we're doing.
26:03
When you have a framework or something you're doing really fail, especially in a public way, especially in a way you have to justify the stakeholders, it's psychologically crippling.
26:12
You are going to be basically licking your wounds during that drawdown, where you should be investing, you should be sticking to your program.
26:25
It's very, very hard when you start to think about the behavioral risk.
26:31
You're probably as a human going to take your risk up when the market's up.
26:31
You're probably going to take your risk down when the market's down, that's just what everybody does.
26:35
Or, you're going to be unable to raise capital when the market goes down, when the opportunities are there.
26:38
Another friend of mine likes to say, he said, "Look, the key to money management is raising money in bull markets."
26:46
I was like, "What does that mean?"
26:46
He goes, "Because there's no other time you can raise money."
26:50
He said in his view, "The whole key to being in equity funded money markets is trying to figure out how to take secret beta in bull markets and not blow up in bear markets."
27:01
Which is a very cynical oversimplification, but it's not entirely wrong from a business perspective.
27:05
Jim O'Shaughnessy: Lots there that could go into the formulation of a process that was considerably less loosey goosey and far more consistent over long periods of time.
27:23
I remember when I first started researching what would become my first book, Invest Like the Best back in the, literally in the eighties, I found a report that AT&T, I think, had done on the managers of their pension fund, which by the way, at that time was quite unusual.
27:49
Essentially people would...
27:49
The entire report of whatever manager was managing your pension money would be a statement of assets owned. That was it.
27:58
There was no, did you or did you not beat a benchmark or a relevant benchmark?
28:07
AT&T should be lauded for doing this type of analysis, but one of the things that they found when they did a multi-year analysis of their managers was that they differed greatly by style, by size of the company that they invested in, but they had two things very much in common.
28:31
All of the managers who had done consistently first or second quartile performance, over a variety of market cycles, which was number one, they had a highly articulated investment process.
28:44
That number two, they slavishly stuck to.
28:56
It ultimately became my style.
28:56
A highly articulated process that we slavishly stuck to.
29:06
The only thing I might say as far as the you're never sexy, true.
29:06
However, in years when...
29:16
We have momentum stuff, for example.
29:16
And 1999 was a vintage year for that sort of stuff. People...
29:23
We were still taking investors' money, high net worth directly back in those days.
29:30
Literally, I did what your friend did.
29:30
They'd come in and I'd say, "What strategy do you want?"
29:30
They would always pick the momentum strategy that was up a hundred percent for 1999.
29:42
I would literally say to them, "I am moving my own money out of that fund because it's really, really vulnerable.
29:49
You really want to look."
29:49
Then I would show them...
29:49
I always love the people who say, "You never see a negative back test."
29:55
Come talk to us, we got lots of negative back tests.
30:03
We would show them the draw down on that particular strategy, which of course it achieved in the next couple of years.
30:07
That was an odd period for me though, because I think you're right.
30:16
We were never getting that rush from connecting on a great story that we would've told.
30:30
I served briefly on our family foundation.
30:30
The family I grew up in as a foundation because my grandfather had been very successful and gave away most of his money during his own lifetime.
30:39
But what was left over, went into this foundation.
30:44
After like a few years, I just had to resign because these are my cousins for the most part.
30:51
I'm just going, "Guys, you're not doing this right." Then people would...
31:01
The whole idea of attaching your personality and/or your sense of self-worth to an investment thesis or outcome was really foreign to me.
31:08
I realize that I'm odd, but when you see it in people that you know and love, I can't even imagine trying to do it in a less, or in a more formal environment where you don't even know the people that you're talking to. I always thought that...
31:32
Dan McMurtrie: The one thing I'd say on that is, I was a very early Twitter user and I've gotten to meet so many emerging managers, both oddballs who started with very little capital and super institutionalized people and spin outs and all of that.
31:57
The one thing that I've seen that is just not...
31:57
I've talked about it before publicly is for every one guy you see who has that religious fever for a thesis, and it works out, there are 20 guys who are dead, who you never hear about.
32:10
That is a far more accurate statement than the you never hear negative back test statement.
32:15
Most of the clients I know, will go, "Here's the 500 negative back tests we did.
32:22
We found two that work and one was nonsense." Whatever.
32:26
Jim O'Shaughnessy: That's a problem, too.
32:30
Dan McMurtrie: That's a different problem, but it is astonishing to see how many people go down on their own sword.
32:35
I really have a belief that over a long period of time, people always talk about the markets being competitive or the markets being efficient.
32:46
I don't really buy into that as a thesis at all.
32:46
I think that you beat you 99 plus percent of the time.
32:52
We try to keep very detailed notes.
32:52
If we're being really blunt with ourselves, almost every time we've gotten hit pretty hard.
32:59
We knew what the cards were and we made a behavioral mistake.
33:07
We were being very, very honest with ourselves.
33:07
Sometimes it's, there's a little bit of over fitting in that to be sure, but I don't think anybody wants to admit that.
33:17
Because I think it's very, very harsh internally and it's very bad for sales, but I think everybody, most people fail in this business due to their own hand.
33:24
I think this is really a game that is you versus you.
33:29
We like to say that we don't like hills or dying.
33:37
We just avoid all of those things.
33:37
And I'm a big, what is it?
33:37
Strong opinions, weakly held type of guy where I...
33:44
One of the reasons aside from compliance, it's one of the reasons I don't tweet about stocks.
33:49
It's because I could love a stock today.
33:49
I could think it's the best thing since sliced bread and I could be out of it pre-market tomorrow.
33:54
Then you'd ask me, "Hey, what about this stock?"
34:00
I'll be like, "I've never heard of that stock."
34:00
I'll be like, "Jim, I don't know what you're talking about."
34:04
I never pitched that stock on anybody.
34:08
Jim O'Shaughnessy: Are you kidding me?
34:11
Dan McMurtrie: Nine hundred bases point position to my fund.
34:13
I don't know what you're talking about.
34:13
I've gotten very good at using that.
34:13
It's very valuable to have a little bit of delusion in how you do that.
34:20
But I've seen so many people the last two years who've gone on and they've become the guy that represents the [inaudible] thesis on Twitter or to allocators or other things like that.
34:31
Then the world's changed and they're unable to adapt to the new data because it feels like if they adapt to the new data, that their thesis was wrong and it makes the decision making very complicated, because you're not thinking about the investment.
34:49
You're not really thinking about the poor returns.
34:49
You're thinking about how it's going to look and what other people are going to think of it.
34:54
You really not even think about...
34:54
They're not going to do thoughtful analysis.
34:58
You're trying to handicap other people's knee jerk reactions.
35:03
You're doing this knee jerk reaction squared or cubed thing to make investment decisions.
35:09
This happens to very, very large institutions as well as hedge funds, as well as average people.
35:15
I mean, I know people who in their local town, they have happy hours.
35:15
People who like talk about stocks and they hold stocks to zero because they don't want to be the guy that fits that mining stock and then bailed out because they're going to look bad to all these people they sucked into the stock.
35:29
Similarly, I also don't talk about stocks because I know exactly what my hit rate is to two decimal points and I know what everybody else is, too.
35:37
I don't want to have some...
35:37
I don't want to have somebody else make an irresponsible decision because they respect me for some reason then blow their account up, because I might say, "Hey, I like this stock."
35:51
It might be a five or a 6% position of my fund.
35:54
There's going to be somebody, especially the hundred thousand people who read the tweet.
35:58
There's going to be 1, 2, 5, 25, I don't know how many people that are going to put half their life savings in that stock.
36:01
I think, Peter Lynch, I think has the best story on this.
36:05
At least my opinion, where he said, "Look, when an American family buys a dishwasher, a car, any of those things, they will go the ends of the earth, the diligence, they'll go to four different stores.
36:18
They'll talk to all their friends, they'll come over and watch it run.
36:22
They'll check about the warranty things, talk to manufacturers.
36:27
They will really know their stuff when they buy these appliances and things like that.
36:27
Then they hear about a stock on the train.
36:32
They put half their life savings into it."
36:32
There's something about stocks that just short circuit this person's mental processes.
36:36
If stocks were physically tangible, people would be much better investors.
36:44
Jim O'Shaughnessy: I think that leads me to another thing that you and I have talked about with increased frequency over the last several years, which is we continue to make exactly the same error time and time and time again.
37:04
On the one hand, I love the idea of democratizing, investing in terms of getting more people to actually be honest to goodness long term investors, et cetera, for their future.
37:26
But that is extraordinarily complicated because of all of these behavioral biases and ticks that we're talking about.
37:42
It's just like, I was talking to my wife the other night and it was about one of the more popular alternate asset groups shitting the bed.
37:46
She's like, "Why don't you do a podcast? Why didn't you do...
37:57
You've been saying for a long time, 'Oh my God, when this happens, a lot of people are going to do very, very poorly.'"
38:04
The majority of those people are going to be new investors.
38:10
People who haven't done their homework on investing, but it becomes virtually impossible to get them to understand and/or not want to kill you if you say, "Hey, you shouldn't do that." They do it anyway.
38:28
Then the inevitable happens. Is there a way...
38:28
Is there a reasonable, credible way to...
38:41
This is a tough question...
38:41
To get people to both understand and respect this.
38:41
The Lynch thing, about buy what you know.
38:52
I don't know whether I agree so much with that. It's a good story.
38:58
You're absolutely right about Americans investing huge amounts of time.
38:58
If they're going to buy a house or a refrigerator or whatever.
39:03
I like your idea of it's a tangible thing that they would spend more time with it, but is there some way that we could teach these things or are they just unteachable in your mind?
39:21
Dan McMurtrie: I think they are teachable, but I think that...
39:29
I was a wrestler growing up and I think wrestling is probably one of the best...
39:37
Wrestling and potentially poker, but especially wrestling is a great example where I think in order for you to learn it, you have to be willing to tolerate a lot of pain to get there.
39:45
There's a lot of path dependency to that.
39:45
A lot of the people I know who seem to have a natural talent for investing, particularly when they were younger, they seemed wiser when they were very young, they had really, really messed up childhoods and they saw horrific decision making around them.
40:01
That taught them a lot of what not to do. I do think there's a...
40:01
I don't know if it's mean, but I do think a lot of investing is about understanding other people's mistakes.
40:14
It's about understanding why the market is making a mistake.
40:14
It's not about determining how good something is.
40:18
There's an advanced move in fundamental investing where you say, "Everybody thinks this is good, but it's actually great."
40:24
But that's an exceptional scenario.
40:24
That's not your meat and potatoes approach.
40:30
I think there's a lot of people who came up through rough childhoods or saw a lot of bad business decisions who seem to have some talent, but I actually think it's taught.
40:41
I certainly think there are probably certain genetic and other indicators that make somebody's mental makeup a little bit more attuned to what you need to be a good investor.
40:55
But I think that there has to be a lot of self-knowledge in order for you to be able to learn.
40:59
That's really the main thing.
40:59
If you're not self-aware, you're not going to be able to realize what you're good at or not good at.
41:05
I think what most people don't understand is if you are not good at any part of investing, there are great solutions.
41:11
If you just want to put your hands up, you're going to get a pretty good result relative to most people, you're probably going to be sixties or 70th percentile.
41:21
If you just say, I'm going to advocate any effort in here, because I'm good at painting, I'm not good at this.
41:26
I'm good at whatever it is. I'm a doctor.
41:33
If you're only good at one particular type of thing, and you decide to abdicate the rest of your portfolio again.
41:36
Most people who want to pick stocks, I'm telling them like, "Sure, pick stocks, but only do it with 10% of your money.
41:44
Put everything else in something else.
41:44
Because if you want to start picking stocks, it's going to take you a long time to really figure out what's going on.
41:48
And it might actually be worse if you do really well at the beginning, because you're going to be tempted to put a lot more risk on." That stuff's tough.
41:58
I do think there needs to be more education around base rates.
41:58
I think that there's one thing that I would want to talk to people about, it's about, if we watch a thousand companies come and go, what does that actually look like?
42:11
I think that would've prevented a lot of the carnage the last couple years for some people, but it's a very, very tricky thing.
42:22
I think that one of the difficulties here is similar to scratch off lottery tickets or slot machines or something.
42:29
Anybody can sign up and play the stock market game.
42:29
It makes them think it's a game, but it's not.
42:34
It's a very, very serious thing.
42:34
I think you and I both have a style that's somewhat silly.
42:39
Interpersonally, we like to make light of things because it's not very productive to be stressed out, but it's still a very, very serious thing.
42:51
I think it is at a high level taught, but there's a bunch...
42:51
It's just such a complicated equation and it is a magnifying glass for every type of human folly that can exist.
42:57
I mean, it's one of the reasons why I love markets and can't imagine doing anything else is the market is a factory that just mass produces Greek tragedies. Jim O'Shaughnessy: Yes.
43:14
Dan McMurtrie: That's really what it is.
43:14
Every year, there's a new Greek tragedy and it's always the same. It's never new.
43:17
Our approach is, there's a study that I think Seth Klarman referenced it.
43:25
They were talking about mutual funds and they were talking about how, if you looked at 20 plus year records and I might misstate the numbers, but it's basically, if you look at the 20 plus year records, everybody who was in the top decile on a 20 year basis was not ever in the top decile during any individual year.
43:46
A lot of people were top decile one year, were bottom decile the next year.
43:46
You see that, there's that I think it's HSBC puts out a top 20 hedge funds, biggest gainers for losers every month or something and people tweet it.
43:57
It's the same funds swapping back and forth every year which again comes back to the concept of base rates and things like that.
44:04
Our approach is always trying to...
44:10
I think it comes back to understanding compounding mathematics of just saying if you hit singles and doubled and you can do that for a long period of time, then you end up with an exceptional result.
44:19
Recently I've really disagreed with a view that you should invest with the goal of hitting home runs.
44:25
I think the track record of that approach over the history of markets is probably the worst single investment strategy that exists is attempting to hit home runs exclusively, which isn't to say, occasionally, you don't swing hard, but going in with man with hammering into that situation causes a lot of bad decision making.
44:51
I mean, I do think some of the things that I think are interesting is, I do think, like with Twitter in particular, the rise of groups of people collaborating on their investments, some of it's leading to the worst decision making you've ever seen, but there are some that are actually pretty positive.
45:05
I do know that it is having a positive outcome for some.
45:10
I struggle with the ethics of it.
45:10
I haven't wanted to really talk about stocks because I don't want to pie pipe or anybody into one of my mistakes.
45:14
That could be either I pitch a bad stock or it could be, I pitch a good stock and then I pitch a second stock that's bad.
45:21
Because the first stock worked, then they go crazy on the second stock.
45:25
It's a complicated thing, but at the same time, people are going to make mistakes. It's what people do.
45:32
It's the history of markets.
45:37
I do think that if you...
45:37
The question is how many mistakes are being induced versus how many genuine learning processes are happening?
45:45
I think that's the equation you'd want to run and I don't have good answers on how that's working, but I do think, and I do see, I think we both see, some young people really learning a lot.
45:58
The other thing is when you're young, it's a lot better to make horrific investment mistakes when you're 22 with a thousand dollars than it is to make them when you're 45 or 55 with half of your retirement. I do...
46:17
I like seeing some of the younger people trying to figure it out and try to work through it.
46:17
Some of them say, "You know what?
46:22
Indexing is the right approach for me, or whatever's the right approach for me."
46:25
I think that's really cool to see, but it still also scares me just because I always see the other side of it.
46:32
I can see, especially with what's going on in Crypto right now with these stablecoins and things like that.
46:37
I'm seeing the other side of it where one thing can go wrong and all of a sudden, a hundred thousand people can have their accounts zeroed or more. That's just not...
46:50
It's not good societally.
46:50
It's not good for markets.
46:50
It's not good for individuals.
46:50
I think it's a massive regulatory failure that this stuff was allowed to get to the size that it did.
47:02
It's going to stop a lot of people from investing in real things for a very long period of time.
47:08
There's going to be a lot of people...
47:08
I mean, we go back to the GameStop and AMC saga, and the popular narrative essentially was the stock market is a scam, but now we can scam the stock market, because we're beating these hedge funds. This was the narrative.
47:19
Now these losses, they're going to...
47:24
A lot of people are going to go back to the view that the stock market's a scam.
47:29
Again, it's that when you lose your framing, you don't jump into a correct framing.
47:29
You go from bad framing to no framing.
47:36
Then you get very, very upset and angry.
47:36
That's what happens with a lot of people and it results in horrible outcomes.
47:42
A lot of people are risking money that they couldn't afford to risk.
47:47
People's children's college accounts and retirement and things like that.
47:54
Again, it comes back to this being very serious.
47:54
That's a really complicated topic of whether it's teachable or not.
48:00
Jim O'Shaughnessy: I mean, there is a study that I have up, I think it's by pin tweet when I did the talk to Google, that was part of the deck that I used.
48:14
It was done by a couple of academics, looking at Swedish, identical twins.
48:21
It was pretty well design study.
48:21
The so what of it was essentially that up to 40% of our investment failings, if you will, is genetic and cannot be educated against.
48:43
For me, it's just such a challenge because I end up not saying anything on a lot of things where, I probably should have said something.
48:51
But it's like, if you premeditate, what happens if you say like, "That's a scam," or, "That looks an awful lot like what Ponzi did with postage stamps." You're going to lose. Almost 9. 9 times out of 10. I don't care.
49:18
It's fine if I lose, but by lose, I also mean you are going to get people even more hostile to that idea that, "You're so old.
49:25
You have no idea what you're talking about."
49:33
When I wrote the Internet Contrarian, I was 39 years old.
49:33
I had the amount of hate mail, email was relatively new.
49:40
The amount of hate email that I got was stunned me.
49:40
Yet, that I went on and started an internet company. I'm not innocent here.
49:49
I fell prey to the same cascading, information cascade as everyone else. But I just wonder...
50:00
I was looking at Tim Urban on Twitter, did a thing.
50:09
Actually, I think you retweeted.
50:09
I think that's how I saw it.
50:09
About the orange minds and everybody all of a sudden thinks that this is the way it is.
50:16
What you need is someone saying the emperor is naked.
50:21
The challenge with that and this whole...
50:21
As you know, I've been fascinated by [inaudible] theory, more from what it can tell you about art markets, stock markets, et cetera, than for any of his end of the world, apocalyptic nonsense.
50:34
And that's one of the reasons why we as a species are now the apex predator.
50:43
We're very good at copying and learning from things quickly, but the challenge becomes the people who know better don't...
51:02
If they're doing it at the height of the insanity, they're really not going to be believed.
51:02
And then on top of it all, they themselves might fall prey.
51:12
I just think it's a fascinating societal question because you mentioned regulatory failure. Absolutely.
51:19
I have seen asset managers saying things that, when I was younger, when I was your age, definitely would've sent them to jail.
51:37
Puffery is what they SEC used to call it.
51:37
Do you see, specifically, this country coming to an end of that cycle and a more firm, if you will, regulatory framework or no?
51:47
And by the way, I'm not a huge fan of the government.
51:54
I think that everyone who couldn't make it in management goes over there, but what do you think?
52:02
Dan McMurtrie: That's the existential bear case right now.
52:06
And I'm not a macro guy, but I am a fundamental guy.
52:16
Gammara DD at New River likes to call his form of macro, I believe, aggregated micro, which I really like, which is, instead of trying to look at FX pairs, he's going to count up all of the IRS wage data to try to look at what the actual wage versus price impact is.
52:34
That makes a lot more sense to me.
52:34
That is how I would model a company.
52:38
The problem is the macro data is just a lot less wieldy and has a lot more noise and other things like that, but I do do a good amount of that.
52:42
My concern right now is, a few years ago, we read a letter and we were talking about, if you looked at the evening news on cable, the headlines, they were 80% whatever was trending on Twitter that day.
52:57
And then if you went to the following day's White House briefing, it was 90% Twitter plus cable news.
53:14
I'm worried that our system has gotten to this point where, as you increase the amount of information flying around, you increase the amount of noise and at a certain level of absolute information exchange, certain people are able to derive more signal, but I am worried that we've hit some threshold where there is so much noise that our system, as a democracy, and actually, President Xi and China said this very directly to Biden.
53:42
He told Biden to his face, he said, "Your system will fail because you cannot respond to what's going on fast enough because of the checks and balances, because of the amount of people who think they deserve voices on problems that they're not educated on."
53:58
And basically told Biden America's doomed in his perspective because of our structure.
54:05
I don't know if I'd go as far as he did, but there's definitely an issue there and I do think there's an existential question about the compatibility of social media and representative democracy.
54:15
I think it's a very, very scary thing because if enough people support anything, how can anybody enforce regulations if they know that if they do that, they will be removed from office in a very short clip.
54:27
And we have two year election cycles plus state specific stuff and we have immense amounts of money moving into government hands and there's a lot of talk about the amount of people on Twitter supporting unregulated crypto stuff, but not enough of a discussion about the immense amount of lobbying dollars that went in there, and we're talking pretty unprecedented numbers.
54:52
I mean, hundreds of millions, billion dollar donations.
54:56
When I think an individual is restricted to 5,000 in a direct donation? Jim O'Shaughnessy: Yeah. Yep.
55:04
Dan McMurtrie: These are major exploits in our system that were not contemplated by the founders and were not contemplated by people even 10 years ago.
55:11
were not contemplated by people even 10 years ago. And they're being actively exploited, not to mention, this isn't limited to crypto, I don't mean to just harp on crypto, but what is coming out with what happened with Bill Hwang and that whole situation is having
55:28
coordinated traders offshore beyond the reach, the SCC trade, derivatives and underlying and swap and all this on US exchanges at a size that was just never contemplated before, where they're controlling over 100% of the flow of securities. And I note, this is completely precedent. This
55:40
And I note, this is completely precedent.
55:40
This all happened in the 1800s and early 1900s.
55:44
There were all sorts of games, pre SCC Act.
55:44
Management teams trading their entire companies, outstanding shares and things like that, but we are at a point where there are, what Microsoft would call, a critical vulnerability to our operating system and we are fighting about just completely irrelevant issues and populating.
56:05
So that's the most scary thing to me right now in the United States, is the inability of our governmental function to focus and to execute on things that actually matter and externality is starting to be very real.
56:29
And it's the biggest concern I have for this country, is, when I see we have a structural...
56:34
David Ironhorn has given several speeches in the last year about this view of a structural underinvestment in things like copper, in things like zinc, paper, oil and gas, diesel infrastructure, et cetera, stuff that is very foundational to functioning society, but has become unattractive for ESG reasons or what have you, but we still need it.
56:52
There's no path off of it for 10 or 20 or 30 years.
56:58
And we just stopped investing.
56:58
And part of it really was because the returns were terrible and there was too much capital.
57:06
It's not really just ESG that gets a little bit of a red herring, but it gives us cover, but the point he made that's very scary is he said, "Look, if you wanted to start today and you said, 'We're going to take unlimited money.
57:14
We're going to fix these supply issues', it's going to take you five to seven years to get that capacity online in a meaningful way."
57:24
These are really, really large projects.
57:24
And instead of immediately beginning those projects, we are talking about Canada's going to phase out single use plastic and we're talking about windfall taxes for oil and gas producers who are already saying they want to invest, we're talking about new environmental regulations and it's not that any of those things shouldn't happen.
57:46
It's just that it's very tone deaf and not understanding what's happening or giving out gas tax waivers or stimulus checks when we have a supply demand and balance for gasoline.
57:56
That's before you get into something like diesel or we've had very specific regulations come in where we're going to probably have a very serious crisis with diesel and there's just no replacing that in the intermediate term due to the energy density there.
58:05
And so this is really where the rubber meets the road on these things, where all of a sudden this is all abstract, it's all price levels until we're literally out of something.
58:15
And keep in mind, right now in oil, for example, we are unloading our national defense surplus of oil while China is essentially offline and we're still under supply and come about October, we're going to be out of excess slack of oil supply, and China will probably be functioning again, so that's not a great situation.
58:37
And so this is happening and we're not seeing a very serious coordinated approach.
58:45
We look at 2020, we had a somewhat unknown problem in this virus and I think we all would have notes on how it was handled, but everyone got in line really fast and we pumped unlimited money at the problem.
58:59
This time, there's absolutely no coordination going on.
59:05
There's weird political bickering happening.
59:11
I think that my lens on US politics is there's a fundamental difference in the left and the right, which is the right has this ability to unify behind an arbitrary.
59:17
You can put a literal straw man up and the right will unify and say if you don't love straw man, you hate America.
59:26
They're really good at forming a V and going right.
59:26
And the left is a bunch of different sex that have completely differing ideologies and really, they basically win or lose based on tweet engagement.
59:43
And so I'm very worried that this administration is not capable of prioritizing and not capable of attacking issues and that's much bigger than just regulations.
59:59
As I look at it right now, we had excess demand as a result of all these things that have happened and that seems to be coming off very quickly of a lot of capital being destroyed, but beyond that, we have an existential supply issue and so I don't really understand what the treasury and fed are doing right now, because you're about to get mortgage rates at 6%,
1:00:23
home price is about to go negative year over year, everything is rolling very, very quickly, and it would appear that we're just going to exacerbate the supply issue, where even if inflation comes
1:00:36
down, this policy response could put us in a situation where inflation does come down, but the instant we stop hiking, it just picks right back up because we've taken more supply offline. It's almost like the government, instead of directly address the issue, is trying to
1:00:52
It's almost like the government, instead of directly address the issue, is trying to appeal to some arbitrary rule set on the wall, be like, "We went by the pamphlet guidelines to deal with this so we can't be faulted."
1:01:06
I'm seeing a lot of that sort of thinking where, when I look at what's actually going on or my perception of what's actually going, I don't understand what's currently happening and how it relates to what actually is happening in the world but I do understand how it relates to what people were talking about six months ago or 12 months ago.
1:01:24
And so again, it's these agency frictions where you have to ask yourself are decisions being made because they actually are rational and make sense in terms of what's going on, or are decisions being made to appeal to anchoring bias to whatever the committee said, whatever the standards were last time for fear of having a very specific outcome.
1:01:50
Are you trying to win an election in six months and are you trying to kick the can?
1:01:55
There's a lot of other conflicts of interest and also, can you overcome the narrative?
1:02:02
Can the Biden administration become pro-oil and gas and pro-mining after basically declaring war on them? It's very, very hard.
1:02:09
And that's the danger of these memes, is they become so big and so tribal that if facts change and if you need to change the faith of the catechism, it can be hard, especially if you've run on the basis of [inaudible].
1:02:25
So it's a very scary time, hey.
1:02:35
I think that is the number one existential risk for this country right now, is that if our system just cannot handle...
1:02:40
I almost think about a call center.
1:02:40
A call center might be able to handle 50 calls an hour, 100 calls an hour, 200 calls an hour, but can a call center handle 200,000 calls an hour?
1:02:50
If you have a flight that gets canceled on Delta on a random Tuesday, they can probably work it out.
1:02:57
You're not going to love it, but they can work it out.
1:03:00
But if you have a flight that gets canceled on Christmas Eve, it's a very different problem and we might be entering a regime of human society where we're in constant Christmas Eve.
1:03:07
There's just infinite noise, infinite crises.
1:03:15
Every day, there's a new existential crisis.
1:03:15
There's a shooting, there's a shortage, there's some politician saying something ungodly terrible one side of the other, there's a threat to our rights, the Supreme Court.
1:03:26
And I'm not saying that any of these things are not serious problems.
1:03:30
It's that no single human is meant to be aware of all of the sins and faults of the world, but it's even worse when you put them on a committee, because then, is the committee really going to address what is important that we need to address and over what timeframe?
1:03:47
I do think a huge issue right now is the timeframe asymmetries of different stakeholders, because in order for somebody to stay in office and maintain their ability to make the correct long-term decision, they may have to make a short term dumb decision, which then creates these weird non-linearities and path risk.
1:04:02
You make a short term dumb decision to kick the can then in the midterm, you can't stay in power and then you're unable to address the long-term problems.
1:04:11
And so there's a lot of dynamics like that where this path risk and outcome risk become somewhat different.
1:04:17
And I don't know the answer to it, but it's very, very hard.
1:04:21
Jim O'Shaughnessy: Yeah, it is a fascinating time from both a very problematic, in terms of the things you've just outlined, at the same time that we're getting the early fruits of this variance amplifier, that is the internet and its ability to give leverage to just regular people, but again, unprecedented in human history.
1:04:52
So we are at a very interesting time, I think, but as you well point out as well, the chaotic periods are often in retrospect periods where things actually went very, very bad, all out roam, or went very, very good when some existential crisis and/or event forced rethinking, if you will, of the underlying basic premise of how you're approaching a problem. So I, too.
1:05:32
This is been one of my things that I've been thinking about.
1:05:32
We have all of this happening at once and human beings are not designed for this level of information intake.
1:05:47
One of my heroes, Claude Shannon, basically information theory, above a certain level, it just becomes damaging.
1:05:53
In fact, one of the more speculative theories in psychiatric circles is that things like schizophrenia are simply filter failure.
1:06:07
They are the brain not deleting out 95%+ of the stimuli that hit our perception filters.
1:06:07
And so I'm always trying to look for new ways to solve problems.
1:06:20
One idea a guest I had on suggest jury systems where you could actually take an Elon Musk or some other super rich guy, Warren Buffet.
1:06:40
And jury systems are really interesting in that when you put people from very different backgrounds together in a room and you give them the problem, they're unusually good at solving them in terms of, they don't have a script that they're reading from, they're not zealots in terms of their political doctrines or beliefs.
1:07:05
It's something I've said about your average American and for that matter, you could say pretty much your average person in the world is a fairly decent human being.
1:07:16
And yes, of course, there are extremes of this, but on average, I think most people are certainly not doctrinaire evil or saints so thus, the mixing and matching in the jury system, pretty interesting.
1:07:35
I, for one, am all in favor of trying everything that is at least sensible in terms of solving these problems, because I agree with you in terms of, we are facing a lot of problems that simply wouldn't exist without the current technology that we enjoy and doesn't make me throw up my hands.
1:08:02
I remain a rational optimist and think that we can solve these problems, but that doesn't mean that there aren't going to be huge problems, new problems and that the mantra of anyone who believes that we will continue to generate new knowledge, we will continue to generate innovation, but the innovation or knowledge itself could be problematic and...
1:08:31
Not could be, probably will be, and then we've got to solve those problems as well.
1:08:36
So we could do an entire course on this at Notre Dame or wherever.
1:08:43
Let's shift gears briefly.
1:08:43
Oh, do you have something else you wanted to add to that?
1:08:48
Dan McMurtrie: Yeah, I think the way we think about it, there's what we call first quartile outcomes, which are things like the dollar collapsing, end of society type things, and the reality is that as an investor, particularly in liquid assets, you have actually no ability to head those outcomes.
1:09:08
Your shorts will not be worth anything, your longs will not be worth anything, your dollars will not be worth anything.
1:09:13
If it's not a physical asset or offshore you're SOL.
1:09:18
And so you can handle that from an asset allocation and legal structuring perspective a little bit, but not entirely, and so I do think it's important for investors, we focus everybody, I say, to find the second quartile.
1:09:31
How bad can it get before it doesn't matter?
1:09:31
And in that case, the way I think about it is, a lot of people have a hard time focusing and the answer to that often is pain.
1:09:47
If these problems we're dealing with do not obey soon, they are going to get painful enough to where, all of a sudden, these mimetic dynamics will shift and the right answer will have to be taken.
1:10:02
What is the Churchill line?
1:10:02
Americans will always do the right thing after trying all [inaudible].
1:10:06
Jim O'Shaughnessy: Everything. Yeah, exactly. Dan McMurtrie: Right?
1:10:10
And I think that is the reality that I think we will solve all these problems, but there's a question of how much pain is necessary in the interim, which is a bit bit scary.
1:10:17
I would say, just is a note on the first couple topics we had.
1:10:25
I think there needs to be a difference in discussion in education about commerce versus gambling.
1:10:35
And I have a distinction here, which is, I don't necessarily think we need to teach people about how to build cross correlation matrices and things like that.
1:10:50
I don't think that's useful, but the amount of Americans who start a small business not understanding what an income statement is, what a cash flow statement is, understanding the basic building blocks of what a business is.
1:11:00
Bill Ackman actually did a great YouTube video a long time ago.
1:11:05
I think it's Big Think or something if I remember it.
1:11:05
And it's 20 minutes of him just explaining what a business is from the perspective of, I think, a lemonade stand and he just walks through the three financial statements, how they work together and how he thinks about just the very basic drivers.
1:11:19
And I think if that was taught better, that would probably have a bigger impact than stuff about investing in assets through a digital paper lens, because my belief is, regardless of what you or I or anyone else who would say, the brain interprets that as a gamble. It's too abstract.
1:11:37
That's my point about tangible.
1:11:42
So when somebody goes to a physical business every day, they start a dentist office, they start a restaurant, they start a car wash shop, it's very tangible, it's very real.
1:11:51
It's not easy for their brain to just abstract things away, and if they do, it'll be getting really real, really fast, but I think there needs to be some teaching about commerce.
1:11:58
And I think if you have the basic understanding of commerce, that is what can allow some of the Peter Lynch stuff to work.
1:12:04
And if you look at the immigrant communities in the United States who have been really successful in an outlier way, there's a big focus on stability of a family on financial literacy, on things like that and a lot of it's understanding basic commerce.
1:12:19
And so it's things like motels, the Patels, who came to America and motels.
1:12:25
There's great stories about that.
1:12:25
And there's similar things for other head in the groups.
1:12:29
Every Irish person knows how to run a bar.
1:12:29
I don't think we're that financially savvy about it.
1:12:34
We just have a natural inclination, but that commerce versus gambling education is different.
1:12:39
I think there should be more commerce education.
1:12:39
The second is, I think that what technology is broadly doing right now, we have these verticals we define where we cover stocks by.
1:12:54
And so some of them are things like trucking or manufactured housing or liver diseases or things like that, but one of them is we have dopamine manipulators, and that is everything from online gambling to video games, to social media and it doesn't matter which one of those they are.
1:13:10
Even e-commerce in a lot of cases.
1:13:14
These are all the same business model.
1:13:14
These are software platforms that are designed to manipulate really root level dopamine responses and they're designed to not only hook you with that, but they're designed to increase your dopamine sensitivity.
1:13:28
So if they can't get you by the direct dopamine hit of the content, they'll socialize it.
1:13:28
So all of your tribal instincts of other people being into this and you not knowing about it, you're at fear of you being castigated from the tribe.
1:13:38
They're trying to trigger that.
1:13:38
There's a lot of different sub regions of the brain they're going after, but essentially, it's all about dopamine sensitivity.
1:13:49
And I believe that as this is done to people at younger ages, it is increasing people's average dopamine sensitivity and I think that plus the volume of noise makes it very difficult for filters to function appropriately and I think that correlates very, very tightly with the mental health crisis we have in this country.
1:14:08
I think it is filter failure.
1:14:08
I think it's largely due to significantly elevated dopamine sensitivity in the average person now versus 20 years, 30 years ago. And it's amazing.
1:14:19
We work for a lot of performance coach people and things like that and we've done everything from Navy Seal people to Zen Buddhist people.
1:14:35
And when you boil it all down, it's really about reducing the amount of signals coming at you and then learning to be perceptive of yourself in terms of what signals are actually worth paying attention to.
1:14:48
And often, it really has to do with identifying which stimuli are causing the most anguish.
1:14:56
And it's that 80- 20 rule.
1:14:56
There's going to be something going to realize where this is a relatively small part of my life and it's contributing 80% of my stress. I should just cut it.
1:15:06
And so much of that is relevant to success in anything that you do, and it's like what I said earlier that Dr.
1:15:12
Kevin also said it, what's going to determine your success is what you choose to ignore.
1:15:17
And I really think that's everything now.
1:15:17
And that leads me to my last thing before I hand the mic back over, which is there is a difference between leadership and stakeholder management and leadership is when you run as a leader for office or you're elected a leader as a sports team or something like that, there's something about leadership, which implies that the group will not always like what you do.
1:15:40
You will do something as a leader and say, "This is what we're doing and you guys are going to bitch and moan, but I'm telling you, this is the right move for the tribe and we're all going to go with it."
1:15:50
And people grumble and then great leaders are the people or people go, "He was right. She was right.
1:15:57
We all thought it was dumb, but it was the right move, it was the wise move."
1:16:03
And if you go through any old holy text or any old book, every story of leadership involved some trial where the leader wants to do something where the rank and file person following that leader goes, "This is the dumbest thing ever."
1:16:14
And then they go, "Hey, storing all that grain was pretty smart."
1:16:22
Versus stakeholder management is being reactive and so there's a big difference between being responsive and being reactive.
1:16:28
Responsive, looking at the facts, figuring out what's going on, prioritizing the issue and then going after the issue, versus just knee-jerk reaction, I got to put that fire out, I got to put that fire out, I got to water the plants or whichever look bad that day.
1:16:44
And I think you do have a risk right now of everybody becoming stakeholder managers rather than leaders.
1:16:51
And you need both, but when you have no leadership, the system can just eat itself.
1:16:57
And so I think that's what's going to have to happen.
1:16:57
And generally, last year everybody's making a lot of money, everybody felt really good, everybody really felt that they had a voice about everything.
1:17:06
And burn the financial system down, we're going to do distributed finance and everybody's really cocky.
1:17:11
And now, you're having a bit of a loss of faith cycle.
1:17:13
And this is also why you have shifts to the right and why you have fascism throughout cycles because there's a complete loss of faith and people want a strong man.
1:17:23
And there's going to have to be something like a strong man at this point in the cycle historically.
1:17:28
And hopefully, it's a Mitt Romney and not a Mussolini or something like that.
1:17:36
But I think we're at a point where we need a reassertion of leadership to some extent.
1:17:46
And hopefully, that can happen in a sane way and not a crazy way.
1:17:46
But that is a scary thing, is normally when you see this loss of confidence happen in the system, you end up swinging way the other end of the spectrum.
1:17:56
And that's really the kind of thing we're concerned about right now, is we see something really crazy happen. Jim O'Shaughnessy: Wow. Yeah.
1:18:03
I love the bit about the difference between a leader and a stakeholder manager, I think you are bang on.
1:18:10
And what we are bereft of right now is true leadership.
1:18:19
Because you're absolutely right, if you're going to be a leader it's also very different than being a manager if you're thinking just in terms of business.
1:18:26
You're going to make decisions that, to your team or your tribe, just sound really dumb, and or they will second guess, et cetera.
1:18:42
And the key thing that you're looking for there is, do they do it anyway? Do they follow you?
1:18:48
That's I think, what distinguishes a good, great leader from someone who probably shouldn't be in the position of leader in the first place.
1:18:54
I also completely agree with your assessment of when people lose faith.
1:19:01
I remember I was young at the tail end of the 70s, and we were in a position much like that we are now, then.
1:19:08
And essentially, it was these combinations of things and poor Jimmy Carter, he is a decent man.
1:19:17
If you look back at, he's our best ex-president, in my opinion, what he's done since being president.
1:19:25
But his fatal flaw was, he was a tongue clucker and he was a scold.
1:19:34
And I still remember, I don't know the specifics of it, but his fireside speech, which was a disaster, basically saying, "Yeah, you know what?
1:19:44
America probably is over."
1:19:50
And probably not what you want to hear from the President of the United States.
1:19:58
And so that gave us Ronald Reagan, it's warning in America.
1:19:58
But then it was just so much more less insane, I guess you would say.
1:20:10
And you didn't have this incredible difference between the two tribes.
1:20:17
And at some point, that will have to be addressed, and whether it's, as you pointed out, whether it's a...
1:20:30
My preference, of course, would definitely be for Mitt Romney instead of a Mussolini.
1:20:30
But that's how these things happen.
1:20:35
And if you understand history, you understand that.
1:20:35
Why did Woodrow Wilson want to see Germany just in abject poverty after World War I?
1:20:44
Because he was a moralist and he wanted to teach them a lesson. They had behaved badly.
1:20:51
And that just set up the entire slow fuse to give us Hitler.
1:21:00
When you humiliate a human being, unless you're going to kill them, you're in deep danger.
1:21:08
Because if you humiliate a single human being, it's going to be like a wounded animal and if you don't kill them, they'll come for you.
1:21:14
When you humiliate an entire nation, you'll get Hitler.
1:21:20
And that's baked into our human OS and it's just...
1:21:20
I don't know that that's negotiable.
1:21:28
Dan McMurtrie: I've always had this debate with people, where they try to argue that this cycle is not different than past cycles, and social media is the same as the radio, or the television, or what have you.
1:21:45
And the argument usually cruxes on, well, this distribution of opinions did exist in past cycles.
1:21:53
So for example, going back to Versailles, you had John Maynard Keynes there, and he wrote The Economic Consequences of the Peace.
1:21:59
And he just lays it out clear as day, we're fucked, here's why.
1:22:06
None of these people actually tried to create a enduring solution here.
1:22:06
Everybody was moralizing or playing towards their next election.
1:22:12
It's always missed how their elections immediately after that event was to conclude, and similar things in the 70s.
1:22:26
But the difference is not what's being said, the difference is the number of times it's being said and the spread of those messages.
1:22:30
It's one thing when there's a thousand opinions, it's another thing when there's a thousand opinions said a hundred million times a day, and that's all looping.
1:22:40
It's the looping and the infinite RPMs that we're getting to that is distinct now.
1:22:47
Jim O'Shaughnessy: You've uncovered why I called this show Infinite Loops.
1:22:52
Dan McMurtrie: There we go.
1:22:53
Jim O'Shaughnessy: No, go ahead. Dan McMurtrie: Yeah.
1:22:57
And that's I think, the difference this time around, is just the velocity, the infinite loops.
1:23:10
And that's what's very hard to handicap and understand.
1:23:10
It is causing weird emergent outcomes that we're not necessarily prepared for.
1:23:22
On the other hand, the irony is we also have more ability to address any of these problems than we've ever had before.
1:23:31
That's the weird thing is you have to hold in your head at the same time is, I'm very frustrated with the governmental response I'm seeing currently, but also, people are getting very bearish and I'm like, "Yeah, but here's the problem."
1:23:47
I've been traveling the last few weeks and I've probably spoken to 40 or 50 CEOs, or very rich people, whatever.
1:23:53
And they all have the exact same thing to say, and these guys are like, "Well, the government won't listen."
1:23:58
And I'm like, "How much money did you guys spend on lobbying last year?"
1:24:01
And they're like, "Well, $25 million, but what does that have to do with anything?"
1:24:04
And I'm like, "Okay, so what I'm hearing is, everybody is talking and..."
1:24:13
I used to live in China and one of the things that was helpful living in China was, you didn't have your myths about...
1:24:17
As Americans, we grow up with really cute fairy tales about how, I'm just a bill, that whole song thing. And then you grow up.
1:24:24
But in China you're like, "Okay, this is a different world. Anything can go."
1:24:32
And in China, it was very clear that anytime they were going to change a policy, first, they needed to create a media narrative.
1:24:39
So if you ever think China's going to change a policy, you first have to see it in the papers.
1:24:44
They do not just go bang, policy is changing, with some notable exceptions.
1:24:44
So normally, there will start to be opinion pieces that look like they're independent thought, somebody in the party council will be like, "Oh, I just had this idea that maybe we stop locking down cities over one COVID case."
1:25:00
And when you start to see that, that is the signal that things will change.
1:25:06
In this environment, America's having to become more Chinese in that way.
1:25:06
It's very hard to pivot overnight.
1:25:11
You need to reposition the base, you need to convince people that it's not a contradiction to change the position, that it's actually in line with their beliefs.
1:25:21
And so the question is really just, when does that happen?
1:25:28
What we're dealing with right now is so trivially easy compared to COVID, in my opinion, as to be a joke.
1:25:33
And it's the most American thing ever that we might have a worse economic outcome from a completely textbook economic setup.
1:25:39
Everything that's happening right now has happened every cycle since the beginning of time.
1:25:44
And people are way more scared now than they were during COVID.
1:25:50
And everybody forgets, if COVID was 1% more deadly, we're not on this Zoom right now, we're living in caves with sticks. It's crazy.
1:25:56
But people are more scared right now.
1:26:03
And I just think at some point, and it might take one month, six months, 18 months, I don't know, but at some point people are going to wake up and go, "Oh, we should just do the obvious things because every problem we have is hilariously trivial to solve."
1:26:20
There was a news story I read the other day that was really funny, where it was saying, it would take $5 billion to start up this refinery to produce a bunch of diesel.
1:26:23
And people are like, "5 billion?"
1:26:30
And I'm like, "Guys, I don't even remember the last time I heard a number that small with reference to government spending."
1:26:35
We've been doing trillion dollar things because it's Tuesday.
1:26:41
We spend a hundred times that on one boat that doesn't do anything now that we have hypersonic missiles.
1:26:46
This is just ridiculously trivial.
1:26:46
You'd be amazed how fast people work when you throw billions of dollars at them.
1:26:55
And I'm in the weird position where I think that the FED should at least stop.
1:27:02
And I think that you need to have fiscal responses here or you need significant tax incentives and you need to actually engage and figure out, "Okay, how do we actually encourage real investment here?"
1:27:12
And you have to overhaul immigration, everybody wants to talk about illegal immigration and we have a completely shattered legal immigration process that is a sick joke, where we have people who are getting PhDs from Stanford who are being kicked out of the country.
1:27:28
At the same time, we're spending $30 for somebody to work at McDonald's now.
1:27:35
And everybody's like, "Well, what can we do?"
1:27:35
I was like, "Well, there's the super obvious answer of all these hardworking people that want to come here, or we could do other dumb things.
1:27:42
But maybe this really smart, obvious answer, which is just reform the legal immigration system."
1:27:48
I think we both know people who've gone through that.
1:27:53
And as I talk to my friends who are going through that, it's like a Monty Python bit.
1:27:59
It's like, do you weigh the same as a duck?
1:28:07
That's the only way I can describe.
1:28:07
My friend is walking me through this, so I'm like, "Wait, you and your wife both have very serious, economically important jobs.
1:28:10
You've been here for 12 years and they might kick you out in six months?"
1:28:16
And he's like, "Yeah, it's like this lottery thing and it's kind of 50/50."
1:28:20
And I'm like, "Well, bro, you weigh less than a duck, that seems to be the only logical outcome here."
1:28:28
Jim O'Shaughnessy: It is absolutely absurd.
1:28:30
It's one of my soap boxes that I am continually on.
1:28:37
We somehow still have the majority of the smartest and most clever and diligent people on the planet want to live and work here, and we are absolutely, completely destroying our legal immigration system.
1:28:51
And I agree with you wholeheartedly at the obviousness of many of the solutions here.
1:29:00
And I do still believe that, as Churchill points out, we'll try everything else, but we'll eventually do the right thing.
1:29:10
And mentioning COVID, talk about a failed PR campaign on the part of the government.
1:29:19
Everybody at the beginning of COVID was saying that if we move mountains, we could have a vaccine in 18 to 24 months.
1:29:34
How many months was it actually? What, 11?
1:29:34
I don't think even think it was a full year until they had a working RNA.
1:29:40
Dan McMurtrie: Well, I think we had a working one in six or seven.
1:29:43
And we said, "We have this."
1:29:43
And then we had to actually make it.
1:29:49
And there's that book that just came out, I haven't gotten to read yet, about...
1:29:55
There's two books, there's one about the financial intervention, there's another about the development of the vaccine.
1:29:59
And I've done a lot of biotech investing and I watched that happen and I was like, "There's no way."
1:30:06
This would be the base rate, the base rate's insane here.
1:30:14
This would be the top one percent.
1:30:14
This just has never happened before.
1:30:18
And it was crushing to my inner cynic, just absolutely crushing to my inner cynic just to watch ruthless execution at scale and a lot of tradeoffs for that, but still a massively positive bet here.
1:30:34
Part of what's happening in society right now is, you've built several businesses and you had family that built businesses.
1:30:42
And I think when you grow up inside a machine or you work there, it's not pretty inside, especially at the early stages.
1:30:56
We see these large corporations and it looks like this well-oiled machine, or the government.
1:31:01
But inside, it's duct tape and bubble gum.
1:31:01
And I do think part of the concern is that too much of the inner workings are being exposed, where it's very hard for people to function because they're used to receiving feedback on the finished product, they're not used to receiving universal feedback on how they looked that day.
1:31:25
Some athletes talked about how much they hate how much the cameras are on them around practice and stuff now, where they're like, "Look, I'm fine to give you the interview after the game, but I don't want to talk to you if I have diarrhea on Tuesday and I can't do kicking practice.
1:31:38
That's really not any of your business.
1:31:38
And it's not helping me be a better kicker."
1:31:44
There's a lot of that type of dynamic right now.
1:31:44
And I know people at the FDA and the CDC, it's been very hard there internally because those are not institutions that are designed to be politicized.
1:31:56
That's not exactly what they're selecting for.
1:32:07
Yeah, I think the core point is that I think everything we're dealing with right now is extremely solvable, is actually an easier...
1:32:13
I almost think the reason we haven't addressed many of the problems that we're dealing with right now, is because I think subconsciously, everybody knows we can solve them, so there isn't the urgency.
1:32:22
We were not certain we could solve the COVID problem and people did not fuck around with that at all.
1:32:32
But all of these issues, everybody at the end of the day knows that it's a dollar number.
1:32:32
And it's a dollar number that's well within the means of the government to solve with a single bill.
1:32:45
So it's causing a lot of weirdness.
1:32:45
Jim O'Shaughnessy: All right, my friend.
1:32:48
We didn't even get a chance to talk about what I'm very excited about, which is the opportunities in emerging countries with the anchor list, Bangladesh, DC fund that you and your partner run.
1:32:59
Dan McMurtrie: I still have time if you want to keep going.
1:33:01
Jim O'Shaughnessy: No one can outtalk you, Dan. Not even me.
1:33:11
You must be more Irish than I am. I don't know. I'm 80%, what are you?
1:33:15
Dan McMurtrie: I think I'm only 75 or 70.
1:33:20
I've got some German in there.
1:33:20
Jim O'Shaughnessy: Ah, so that's the discipline part. Dan McMurtrie: Yes.
1:33:25
Jim O'Shaughnessy: Well, this has been great.
1:33:27
You can come on again because I would like to do a whole show about the opportunities in emerging markets.
1:33:32
That's another thing that is real and tangible and I think, a huge opportunity for good things to happen.
1:33:40
And I don't think it's getting the attention that necessarily it should get because talk about places where the opportunities are just so incredible and numerous.
1:33:54
But we'll do that a second time.
1:33:54
I'm now going to wave my wand and make you emperor of the world.
1:34:02
And you can't put anyone in a reeducation camp and you can't kill anybody.
1:34:09
But give me the two things that you are going to incept by whispering into the magic microphone and people all around the world are going to wake up tomorrow morning and they're going to think, "I have this great idea."
1:34:21
And they're going to do it.
1:34:21
What two do you got for me, Dan?
1:34:26
Dan McMurtrie: Okay, I can just change any two things in the world?
1:34:32
Jim O'Shaughnessy: You can change the way the entire population of the world behaves.
1:34:35
You can put an ear worm in and they're going to wake up to- Dan McMurtrie: I should go do that. Jim O'Shaughnessy: Okay.
1:34:48
I should go do that, is that your first one?
1:34:48
Dan McMurtrie: The first one I'd be is, if I could incept everybody on the planet to go travel to a country or place that is the most dissimilar to where they're from and to spend time with normal people, not to just sit in a really nice hotel, but to go have dinner in people's homes, get to know people, play soccer, whatever it is, something locally.
1:35:17
Because I think right now, people do not understand how similar people are all around the world and the capacity for collaboration and friendship is so much greater than our differences.
1:35:29
And I just think right now, they live in a projection of the world in their own head that is so unlike what's actually happening and the things people actually care about and actually deal with day-to-day are astonishingly similar.
1:35:48
So that would be the first thing, is just wanting that.
1:35:48
And I'm a big believer that everybody should basically take, if they can, a year or two in between high school and college and try to just work a normal job, travel, do something, so they have a why for when they go to college.
1:35:57
Or do the military, or do the Peace Corps or something like that. That would be one.
1:36:04
And then the second one, I think that with everybody on social media, I think people are really, really quick to assume a lot about other people.
1:36:27
And it's kind of similar to the first one, but I would encourage people when they see something that they think they really disagree with, to actually reach out to the person and try to have a conversation and understand why are they saying that and all that.
1:36:44
Because I've started forcing this on myself whenever I see something on Twitter or somewhere else, somebody emails me something and I just violently disagree with it.
1:36:53
Particularly, when I have a physical reaction to it.
1:36:53
My rule is, I have to call them before I say anything.
1:37:00
Because almost always, I'll realize that, oh, this person just is existing in a reality tunnel, or however you want to say that, that is very different than my own.
1:37:06
And given that framing, what they're actually saying is just so different than how I interpreted it.
1:37:17
And that doesn't mean I'll then agree with it, but that willingness to assume malice on other people is very insidious.
1:37:25
And I'm more scared by, there are a group of people on the internet and elsewhere, that assume that because somebody, at the present moment, occupies a current framing, that they are beyond saving.
1:37:37
The other side, they're liberal, or they're conservative or something, or whatever it is and so there's no point in even engaging with them.
1:37:45
And that is, as our friend Tom Morgan calls it, the past of Moloch, I think is what he calls it.
1:37:56
Jim O'Shaughnessy: Yeah, he does.
1:37:57
Dan McMurtrie: That is the beginning of really, really terrible darkness.
1:37:59
And so I think that both of those are basically the same thing.
1:38:06
I think we're at this point where the opportunity of Twitter, of these other websites, of all these things, of podcasts is, you have an opportunity to have more friends and more interesting conversations and have a richer and fuller life than was possible in the past.
1:38:22
But the flip side is, you can also have more enemies and be more hateful and be more stressed than has ever been possible before.
1:38:26
And I really try to encourage people to try to put on blinders and force yourself into that first category, even if it means you don't...
1:38:42
It doesn't necessarily mean your perception's going to be the most accurate, but it is going to be the highest utility.
1:38:46
Jim O'Shaughnessy: I love both of those.
1:38:49
As you know from our many conversations, I'm a huge fan of travel and how it opens, not just your mind, but your attitude.
1:38:54
You see the similarities and it's just possibly the best advice you could give somebody who could have a gap year, is to go from Bhutan to Bangkok and back.
1:39:12
And you really do, you're absolutely right, you really do see that our similarities are far, far more unifying than our differences.
1:39:29
And then I love the second one too.
1:39:29
I write about reality tunnels or reality goggles all the time.
1:39:36
And when you understand, when you really emotionally understand that that person, for whatever reason, is occupying a very different reality tunnel, you become more forgiving because you're in one too, and you always have to remember that.
1:39:52
We're horrible at self-assessment, but we're not bad at assessing other people, thus Tony de Mello's idea, if you really want to know what annoying traits you have, look at what bothers you in other people because that will tell the tale.
1:40:14
Well, Dan, this has been great.
1:40:14
Thank you so much for coming on.
1:40:20
We will have you at a fourth appearance.
1:40:20
You're going to start rivaling Alex Danco, who has been hiding on me recently.
1:40:26
Dan McMurtrie: I would just note one last thing because I can't stop talking is, I'll send them to you, maybe you can put them in the show notes.
1:40:37
There are actually websites you can go to if you're one of these younger folks who might be listening.
1:40:41
And they will set you up with jobs to go teach for a year or to do some other job that can allow you to do these things if you don't have the money.
1:40:51
So there's one that a friend of mine does and they set him up with a job working at a hotel in Alaska, and he ended up being a hiking guide and these other things for, if you're down to do this, all over the place.
1:41:02
So there are really good opportunities and there are platforms now that can set you up with these opportunities, even if you don't have family money or anything like that to afford it.
1:41:10
There are really workable solutions for you to go do this, so I'll send, Jim, you a couple of those if you want to maybe put them in the show notes, maybe that'd be useful to people.
1:41:18
Jim O'Shaughnessy: Absolutely. I think that's great. I think that's awesome.
1:41:19
So yeah, we will put them in the show notes.
1:41:23
All right, my friend, thank you for coming on.
1:41:26
Dan McMurtrie: Thanks, Jim. Really appreciate it.