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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 another episode of Infinite Loops.
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Today, I have a mystery guest.
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Well, he's not really a mystery.
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People on Twitter know him well as Liberty RFP.
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I'm going to ask you to explain both of those.
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I know the answer, but our listeners probably don't.
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What I'd like to start out, first off, welcome. Liberty: Thank you. Thanks for having me.
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Jim O'Shaughnessy: My pleasure.
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I love your newsletter, as you know.
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It's weird because I'm a quant, and you do kind of deep dives on companies, and obviously, that's meaningless to me.
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It's like you could have just numbers for my holdings in a portfolio and I'd be just as happy with it because it's the underlying factors, but I love your deep dives, and I love the fact that you're not just investing.
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You're science, and you're history, you're a bunch of interesting things, which I think is a really cool way to structure a newsletter, and so I've been very, very happy with it.
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Please, for our listeners, a little background on how you got that handle, Liberty RFP, and a little bit about your history. Liberty: Sure.
2:47
Well, first, thanks again for having me.
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I never know what we're going to talk about, but I always know it's going to be interesting, so that's a good combo for me signing up.
2:52
The short story is, I started out of university, I joined a little media startup, so I went in the media world and did the startup experience at the same time it was online.
3:01
That was quite fun, but while I was doing that, at the same time, I discovered a couple of books that changed the trajectory of my life.
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One of them was Your Money or Your Life by Vicki Robin.
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I don't really recommend the whole book but the central insight is that people work and they trade their time for money, but it works both way, so if you have enough money, you can buy back your own time.
3:23
The second book was Stumbling on Happiness by Dan Gilbert.
3:23
There, the central insight was that humans, in general, are very bad at predicting what's going to make them happy.
3:32
As you often talk about, we're super nomadic, so we just look around, look at what everybody else is doing and go, "Well, that must be the way," so we copy each other and we chase what everybody else is chasing.
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Most people, when they get what they're chasing, they're not so happy, but then they look around again and they say, "Oh, I must have done it wrong," so they chase something else that someone else is chasing, but few people take the time to figure out what really makes them happy.
3:50
I was lucky to do this pretty young and spend a bunch of time figuring out ...
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The book talks about how instead of looking at what people are chasing, look at what people who are happy, what have they got? How did they get there?
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That's a much better way, like kind of the base rate way to do it.
4:05
I figured out that for myself, this kind of autonomy, liberty, I didn't pick the name, Liberty, fully randomly.
4:09
This autonomy, independence, and control over my time was a big part of what made me happy, so I made this plan with these two books, together in my head, to figure out a way to become independent, to just be able to do my own thing, chase my curiosity.
4:23
While I was working for that media startup, I was setting aside maybe like 50 to 70% of my income every year.
4:30
That's how I built the capital to, I don't know, six, seven years ago, become a full-time investor.
4:33
Because in parallel to working, I was learning about investing.
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That seemed super interesting to me because it's kind of a lens through which you can explore, basically, everything else.
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Almost everything interesting in society is done by a group of people.
4:43
For groups of people to do interesting stuff, they mostly form as corporations so they can have a bunch of capital, and resources, and hire smart people and pay them.
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This system of looking at the world through investing is perfect for me because, one, it's practical because you make money at it to pay your bills, but through it, you can explore whatever is interesting to you, basically.
5:04
When my wife and I had kids, it wasn't really possible for me to keep the full-time job and then the 20 hours a week of investing on the side, so I dropped the full-time job and became a full-time investor.
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Then last year, at the beginning of the pandemic, which was a hard time for all of us, probably, but me too.
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I was looking for a new hobby and I saw a blog post by Balaji ...
5:21
Ah, I'm not going to even try to name.
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My apologies, my Indian friends.
5:26
The post was about how you should try to own your online identity because if you have a great Twitter account or whatever, you could build it up for years and years and then Twitter changes somehow, or you get banned, or the rules change, or the ecosystem changes in some way you don't like, and you don't own anything, basically, so that's when I started the Substack.
5:51
I was very afraid of creating a job for myself because I like this independence.
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I was afraid of making it like 100% financial, "I'm going to do analysis," and then you're on the treadmill so, "Next month, I got to find some new idea.
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I got to find some investible thing."
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That sounded not as fun to me, so from the start, that's why I did it as just my highlights.
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It's not like, I don't promise to make you a better investor, or healthier, or better looking.
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I don't promise anything.
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It's just stuff I find interesting.
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That's why it covers also like science, and technology, and the arts, and everything.
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I figure that in this world of abundance, years ago, finding the right information was super valuable.
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Like when Buffett or someone was looking at the microfiche, or when you wrote your first book, just getting access to the data was quite something.
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I feel like today, there's this huge deluge of information, and nobody has time to figure out what's interesting, what's good in the fire hose, and most people are specialists so they're only looking at their one field.
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I feel like, as a generalist, the best thing I can do is try to curate for everybody and just point out what I find interesting, so that's how I got here.
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Jim O'Shaughnessy: That's very interesting to me for a number of reasons.
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I think attention is the new gold or bitcoin, if you prefer, and that curation is going to be a very lucrative position to have if you're good at it. Because I try ...
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I'm very bullish on the future of Twitter, for example.
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I think they really have a shot to become the first continuously updated global brain, so to speak, but critical to that is how our relationship developed, is kind of perfect with the way I think you should use Twitter.
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I started following you because you had said something witty, or whatever, and so I followed you.
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Then I tried out your newsletter, which I really liked.
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Then I got it, then we talked, and I think that that progression, where you can have real world relationships with people, is kind of the perfect way to do it.
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In terms of your investment style, I know you're a generalist, but take me through how you decide to buy or sell a security.
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Then I'm going to ask you about alternate investments as well. Liberty: Right.
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That's something I've tried to think about for a long time because, here again, it's very easy to copy someone else's style.
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When I first started investing, I read about efficient markets and low-cost index funds, so I had this portfolio with a bunch of ETFs, but then I read the bio of Warren Buffett, and that was quite eyeopening.
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At the end of it, I was like, "Okay.
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Berkshire is basically an index, but only of good businesses and with no management fees, basically, so that's even better," so I started with Berkshire.
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Then when you learn about Berkshire for a while, you start looking for the next Berkshire.
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These all these mini-Berkshires, like Markel, and Fairfax, and Leucadia, at the time.
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I branched out this way, so I knew about insurance a bit.
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Then when I got into Fairfax, they have a more devalue side so I tried that for a while, but it just didn't work for my wiring.
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I'm not interested into really bad companies that are temporarily discounted and then, oh, they may re-rate a bit, but then you have to sell them and rinse and repeat, rinse and repeat, and all the time, and it's not a fun treadmill because I'm not that interested by the end business and I'm not that interested by the process of always finding new ones.
9:06
Over time, I think, I evolved into a, it's kind of a cliché, but a quality investor looking for these companies I can hold for the long-term.
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I tried to think of it as like, basically, owning the business.
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It takes years to get to that kind of level of knowledge about a company and confidence that you can really feel like you can understand it well enough that when times are bad, you really know what's going on and you won't panic at the wrong time.
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Because if compounding, the way it works is almost all of the returns are at the later part of the curve when it gets really steep.
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If you can't get to that part, you're not going to compound.
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Yeah, over time, I've evolved into that quality stuff.
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Only in recent years, I realized that unlike almost what everybody else is going to say, I'm not trying to optimize for the best returns.
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Everybody is trying to, "Ah, I got to figure out how to get the most alpha.
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I'm going to put my name at the top of the leaderboard."
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I am trying to optimize for happiness.
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Again, how fun my life is, and so If I figure that the best place to invest right now is mining companies and oil companies, but I'm not interested in thinking about those companies all day long and reading about them all day long.
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I'm not going to go invest there, even if it would look, on some metrics, like the best place.
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I'm trying to use investment as a kind of lifestyle design where I'm like, "Okay.
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I want to make good returns.
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I want to make this practical."
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I spend enough time on it that I want to beat the market, but I also want to spend my days thinking and reading about stuff that's interesting to me.
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I was very lucky that the kind of stuff that interests me happens to be very good businesses like software, and infrastructure for digital stuff, and payments, and aerospace.
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All these kinds of businesses are interesting to me, and they also happen to be very good businesses. That's a good match.
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If I had been like a geologist at heart, like super interested in mining, that may have been harder to align these things, but right now, that's how I'm thinking about it. Jim O'Shaughnessy: Yeah.
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When I was younger, I was a real proselytizer, and like, "Factor investing is the future.
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This is the only way that you should make your investments."
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I could be excused by youthful ignorance.
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What I learned, as I went forward in my career, is there literally is no one-size-fits-all in terms of if you're going to be a differentiated investor.
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If you want to buy a global ETF and just keep putting your 401{k) money or RSP money into that, fine.
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That type of person, in fact, I always recommend it to the majority of people who ask me, "What should I invest in?"
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I ask them, like, "Well, so are you really interested in the market? What are your hobbies? What do you like to do?" et cetera.
11:36
Most of the people have this kind of pre-programmed thing that they should beat the market, and even if these are people who've never read a book about the stock market.
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Now, I'm not going to bang on people for that because most of the greatest insights I've gotten into the market has been reading outside finance.
11:54
I alighted on doing, understanding human operating system as best as I could.
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I was doing deep dives on evolutionary psychology, biology, genetic behaviorism.
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There's a lot you can learn, and that allows you to take a much broader look at the market, but as you said earlier, the world. Liberty: Right.
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Jim O'Shaughnessy: People will say to me, like, "Why Wall Street?
12:28
Why were you interested?"
12:28
I said, "Because it's the Olympics of business."
12:30
Literally what you get to do is you don't have to know everything about lumber.
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You don't have to know everything about mining.
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You get to experience this pageantry of both human brilliance and human stupidity, which are ... Liberty: Yeah.
12:48
Sometimes, it's hard to know which one is winning.
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Jim O'Shaughnessy: Exactly, exactly. Do you have a ...
12:51
Now, so quality yeah, I understand that.
12:51
How many stocks in your portfolio at any given time?
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Liberty: There's the correct answer and then there's the answer behind the answer.
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The correct answer, literally, I have maybe 18 positions right now, but my top three or four is maybe 50%.
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Jim O'Shaughnessy: Right.
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Liberty: I like very much, now there are some investment guys, the NDS guys.
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They have this approach about how you have kind a barbell portfolio.
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One side, you have things that you're very confident in that are very, like the future is fairly certain for these things, and on the other side, you plant these seeds of optionality, and when they work out, they may graduate to the other side.
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There is some of that going on.
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My biggest positions got big because they worked out over the years.
13:30
I don't tend to trim or have artificial ceilings for position-sizing.
13:35
On the other side, I've been planting these things, and some have grown bigger.
13:39
Also, I like to do what Buffett has talked about, look through earnings.
13:39
I like to look through diversification.
13:42
Some companies have like one product in one geography.
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They're very non-diversified, internally, as a business, and so I will have trouble making that a huge position for me.
13:52
While some other businesses, like Berkshire or Constellation Software, it's like hundreds and hundreds of businesses around the world, diversified by geography, by industry, by end market, by all kinds of stuff.
14:01
I have an easier time making that a big position because I feel like, even though I have like 18 stocks, how many businesses do I have in my portfolio?
14:12
If I was looking at my portfolio as a conglomerate and I'm the CEO, I have, I don't know, a thousand businesses, so how do you think about it?
14:17
Some businesses are also more anti-fragile than others.
14:21
If there's a big, I don't know, a big recession, a big market correction, something, a company like Constellation is going to be able to buy assets cheaper and produce good value during that time, even if the stock price is depressed, but since I understand the businesses, I won't be tempted to sell, even if the stock is low, while some other businesses can only do well in good times, so they're harder to have as huge positions.
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Jim O'Shaughnessy: Do you face any problems with getting emotional about your portfolio or your holdings? Liberty: I'm sure. I'm sure I do.
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If I said no, I would be lying.
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The question always is, is it emotions that you can manage and that you can channel in constructive ways?
14:56
I would rather be emotional in the way that I like a business too much and I hold it for too long, than emotional in the direction where I sell too quickly and too easily as soon as there's some volatility.
15:11
I will try to over-correct in the direction of, some businesses I just like them a lot.
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I feel like an owner of them.
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Some people would say that that's automatically bad.
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It's, "You shouldn't get attached to anything.
15:19
Everything is for sale every day.
15:19
It's just a bunch of numbers on the computer, and if it doesn't meet your prospective IRR, sell it."
15:28
Maybe some people can operate like that, but I tend to do better when I identify stuff I really like, and holding things for a long time.
15:32
Most of the time, when I sold something because of the numbers, it was a mistake.
15:36
Like I owned Atlassian at like 25 bucks, and now it's like hundreds of dollars, but I sold it because it looked over-valued on some heuristic, on some metric, but was it really?
15:45
It's a different tangent, but I have this theory right now that ...
15:49
I wrote something about this for the newsletter. Base rates are amazing.
15:52
Base rates are one of the best tools that we have to think more clearly, make fewer mistakes.
15:56
To have a base rate for something, you need data, you need good data about it.
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If you have a business and you don't know what it does, just a generic business, you use the generic base rates, and it's going to tell you more than you can just by looking at anecdotes or whatever.
16:07
Then if you have a specific business like, I don't know, a mining business, you can look at the base rate for a mining business and that tells you something, and so on.
16:16
I feel like over the past 10 years, there's a new crop of businesses that have basically no historical analogs that are much better than a lot of what we've seen.
16:20
I know that sounds like this time maybe it's different, but sometimes it kind of is.
16:26
We have these businesses growing super fast, organically.
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I'm talking about the software, SaaS business that, in a couple years, they have global reach, overnight.
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They have no capital requirements.
16:41
They can click a few things in their AWS dashboard, and suddenly, they have more servers.
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They have expensive stock so they can hire all the best engineers.
16:46
They can hire them around the world because now everything is remote so you have access to the talent pool of the whole planet.
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Most of them are founder-led, and they have negative working capital.
16:53
They have 80, 90% growth margins.
16:58
That gives you a lot of leeway to reinvest and do R&D.
16:58
We have all these businesses, and if you look back, farther back than 20 years, 30 years, there was basically none of them.
17:07
There was great tech businesses like Microsoft or whatever, but there's not 50 Microsofts, and even Microsoft was shipping boxes of shrink wrap software, and they had to have deals with retailers.
17:15
Even then, and back then, how many PCs were around the world?
17:20
Mobile wasn't even a thing yet, and the internet was like a hundred million people? I don't know.
17:25
Everything has changed so much that I feel like, what are the base rates to understand these businesses?
17:27
I feel like people are using these heuristics from the past that may not apply.
17:31
I don't know what the right answer is.
17:31
I'm not less wrong than people.
17:31
I just feel like my uncertainty bracket is probably wider than most people in these businesses.
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Jim O'Shaughnessy: Yeah, so I was with Michael Mauboussin, over when we went to Capital Camp, which is Patrick and Brent [Shore's] wine and food festival, masquerading as an investment conference.
17:50
We had a great discussion about base rates.
17:50
Obviously, it is my favorite metric because, literally, the amount of information that you can infer from the base rate for a company or a group of companies, I don't know another single metric that works as well.
18:08
Liberty: That's what great companies do.
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When times are tough, they take market share, they prepare themselves for when things pick up again.
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That's a perfect example.
18:16
Jim O'Shaughnessy: One of the things that I would ask you is, as you research stocks, as you look at your interpretation of how this great reshuffle is unfolding, what are you doing or preparing to do, going forward, that you simply couldn't do or didn't even think to do previously?
18:38
Liberty: Oh, there are so many directions this could go. That's my curse.
18:39
I always want to say five things at the same time.
18:45
Jim O'Shaughnessy: Well, go right ahead.
18:48
Liberty: One of them, personally, from purely an information ingestion system point of view, is I find that Twitter, which is kind of like the main way that the interest graph is manifesting, so there's all the social networks everybody's talking about, everybody's on them, and they're trying to recreate social ties that people have naturally.
19:05
With these kind of ties, when people meet up or connect, they're doing small talk, and exchanging some jokes, and they're having a good time, and that's all great.
19:16
I find that with the interest graph, which is what Twitter is, where people connect based on their interests, who they never have met, every week, I think about this.
19:28
There's no natural path for me have met most of the people I spend my days talking to.
19:32
I'm some guy in Canada in pajamas, I've never studied finance, I've never studied tech, and I'm talking to you right now.
19:37
I'm DM'ing with a bunch of ... There's no natural path.
19:39
This is a new thing that has been created where people can connect, and when people connect based on the interest graph, it's very different from the social graph.
19:44
When they connect this way, they learn a lot.
19:48
They, "Hey, read this book. Check out this blog.
19:53
Let's discuss this thing that just happened, this tech news."
19:53
They learn a lot and they create a lot.
19:58
I feel like, for humanity, this kind of new engine of learning and creation is bound to, it's going to compound over time. It's not going to stop.
20:03
It's going to just get bigger, so that's cool on the finance side.
20:06
For me, so that's one way I'm doing things different.
20:10
Like 10 years ago, whatever, I would go on some forums, but I would be more on my own, trying to do everything on my own.
20:13
Now I feel like I'm part of this huge network, and I've got to know some people, over time.
20:19
Yeah, I feel like this is a huge difference from how I would have done things before.
20:23
Now, so much of my ideas, my discussions, my ideas come from this kind of thing.
20:23
Even if I'm reading an article somewhere, on some newsletter or something, a lot of the time, I know the person who wrote the newsletter.
20:32
That would never have happened before.
20:32
There's no way I could have connected with these people, so this is great on the finance and investment side, but even more looking forward to all these scientists that are connecting on Twitter and such, all the artists, the engineers.
20:43
All these people, where having the right idea can change the world.
20:49
It's like what they say with coders at Google, there's a 10x coder, the 100x, someone who's going to create something that has so much leverage through technology, that it literally changes the world.
20:57
Well these people, now they're all talking to each other in ways that they wouldn't have been like 20 years ago, so that's super exciting to me.
21:00
I also feel like, as I said, my investing is kind of lifestyle designed, The way I end up picking companies I invest in, I use this idea of the great reshuffle.
21:09
To me, that's also in my head.
21:14
It may not be exactly the same mental model that you have, but to me, that's also something that's happening where change is ever-faster.
21:17
It's harder to build these modes that are going to last for a generation the way Buffett was investing in a long time ago.
21:26
Now, I try to filter more for adaptability, and development velocity, and how these companies can leverage what they have to go to adjacent places, and change direction quickly.
21:33
All this kind of stuff, to me, feels more valuable in a fast-changing world than it did in a slower-changing world, so that's something else I look for.
21:45
Jim O'Shaughnessy: I think that what the great reshuffle really does is it collapses time, space, and geography.
21:52
Then, COVID came along and pushed that into the mainstream.
21:52
It might have taken 10 years, on its own, for geography to collapse.
21:58
It's gone, and quite literally, a billion new people came on the job market, and they're smart, and they know how to use these tools as leverage.
22:14
I think the inherent leverage, non-financial leverage obviously, but the leverage for an individual has never been greater and it's only going to increase, in my opinion. Liberty: Yeah.
22:28
Jim O'Shaughnessy: Now, there are downsides too.
22:29
Social media allows for in-group verse out-group.
22:29
It allows for people cocooning in their own little belief system.
22:34
You can literally curate your Twitter feed so that you never hear ...
22:41
If you're a Biden supporter, you never from a Republican.
22:47
If you're a Republican supporter, you never hear from a Democrat.
22:47
I think that's really dangerous because what happens is you sink into dogma, and I equate dogma with brain death.
22:59
Becoming prematurely certain or, "I have this correct answer machine in my head." All of that's got to go.
23:06
It's got to go because, now we're getting back to curation, right? Liberty: Yeah.
23:14
Jim O'Shaughnessy: The people who are the best curators, and I think you're one of them, really spend a lot of time looking at a variety of really interesting things.
23:18
I read a lot of people that I know I'm going to disagree with.
23:25
You're not one of them, but I'm talking about just broadly.
23:30
I do that because I'm probably wrong with a lot of my beliefs, and you've got to continually ...
23:37
I don't even call them beliefs anymore.
23:37
I call them hypotheses or a thesis because beliefs, generally, get held very closely when there's no empirical evidence on their behalf.
23:48
Whereas, a thesis or a hypothesis is designed to be challenged, right? Liberty: Yeah.
23:56
Jim O'Shaughnessy: I think that the age of the individual ...
23:57
There was that book written in the '90s, The Sovereign Individual. Have you read that? Liberty: No, I haven't.
24:06
Jim O'Shaughnessy: Yeah, okay.
24:07
I didn't read the whole thing.
24:07
I read big parts of it, and they got a lot of it right.
24:09
I think what they got wrong, and I want your opinion on this, is do you think investing could go the way of politics and other things, and create in-group, out-group, like, "We're value investors.
24:24
We never talk to growth investors"? You know what I mean? Or, "He's a quant. Burn him at the stake." Liberty: Whoa.
24:33
You better build a real moat. That's a good question.
24:33
I think there's some natural divisions between styles.
24:37
Like my own kind of bubble in FinTwit, I don't see much people drawing triangles, and day trading, and all that stuff, so I think people self-select into some communities, but inside of the community, I've been impressed, actually, at how good FinTwit is.
24:52
Somehow, it's got a pretty good balance, some pretty good antibodies for these kind of bullshit, basically.
24:59
I've spent a lot of my life on all kinds of discussion forums about musics, and games, and tech, and all that.
25:04
It's very hard to have a good community that survives.
25:04
You have to have the right pH, basically.
25:08
If it's a free-for-all, over time, the trolls take over and they drive away all of the pillars of the community, all of the best contributors, so you need- Jim O'Shaughnessy: [crosstalk]. Liberty: Yeah.
25:20
You need moderators that are just active enough to keep the trolls away so that the community can flourish.
25:22
On Twitter, it's self-organizing.
25:22
There's no mods, so it would seem harder, but somehow through, I guess, muting, and blocking, and not just responding to the trolls, we've got this pretty good balance, I feel like, or maybe it's just my follow list, but what I'm seeing is really, really impressive.
25:34
Yeah, so I don't know if it could, over time, degenerate into this kind of a culture war or tribalism, and all that stuff.
25:38
I feel like there's probably less of a chance of this than politics.
25:43
Because in politics, there's basically no feedback, so it's all about identity, and tribalism. It's like sports.
25:46
With investing, you make money or you don't make money.
25:54
There's something pushing you to be a bit more rational, and if your beliefs ...
25:54
If your map of the territory is very, very different from the actual ground troop, you're not going to do well.
26:01
You're going to self-select out of the group, so there's probably a selective pressure on the ecosystem that keeps it a bit more rational than it would be somewhere where it's more about pure abstractions, and nobody ever figure out if they're right or not, and the cycles are so long.
26:12
There's an election every many years, and all the complaining you did and Facebook comments, what did this really do in the meantime?
26:17
It's more about emotions and identity than doing something in the real world. Jim O'Shaughnessy: Yeah.
26:26
I think that, for a lot of people, one of the things about the great reshuffle that I think it is happening is people get frightened.
26:31
A lot of people get really frightened about lots of change. Liberty: Yeah.
26:41
Jim O'Shaughnessy: The world has sped up.
26:42
There's really no denying that.
26:42
The amount of the information tsunami is difficult for people to curate properly.
26:48
That's why I think synthesizers are going to be the new ...
26:55
I've thought that since I was a kid.
26:55
I was reading an old journal and it's like, "Conceptualize, synthesize, realize."
26:59
That's how you get to new and better ideas.
27:07
I think that was how you got to them in the past as well, but we didn't have this ... Back to Twitter.
27:12
It's like having the best seat at the Library of Alexandria, and you just push a button and everything you're interested in just shows up on your screen.
27:25
Then you need to be more careful, like nullius in verba, take no one's word for it.
27:25
You've got to have the scientific method at the back of your head.
27:34
I'm open to any kind of suggestion, because everything's going to have a positive and a negative.
27:41
My worry is, I know, especially in America, the gatekeepers are dying, and they're very angry about that.
27:49
Used to be there were three TV stations, there were two newspapers. That was it.
27:53
If you wanted to control the narrative in America, it was really easy to do.
27:58
You just got the guys from Hollywood in the room, and the guys from The Wall Street Journal, The New York Times, and CBS, Walter Cronkite, and you could make an American believe anything, and so that has been atomized.
28:12
One of the things that I actually love is the fact that I see ...
28:12
I'll use your newsletter as an example.
28:19
People like you can now make a pretty good living and buy your time, so to speak, by putting out a great newsletter.
28:27
There are other people that I've spoken with, who I haven't had on the podcast yet because they tend to be single stock mavens, but I did a call with one guy who's trying this methodology.
28:38
Some of the stuff that I've seen, these deep dives on companies, 10 times better than any sell-side research I ever saw. Liberty: Yeah.
28:52
Jim O'Shaughnessy: Now, people can do a Substack and make a living at it, and so the previous gatekeepers, like journalists have made a deal, The deal was, "We're not going to make a lot of money, but we're going to have great influence over the decision-makers."
29:02
That's gone, and so what do you think the next step is?
29:09
Are we going to see a bunch of people?
29:09
Because, quite frankly, I think you're very smart, but who wouldn't want to change and buy time with money?
29:15
You know what I'm saying?
29:21
It's like time is the most scarce resource, and you want to spend it wisely.
29:27
Liberty: Yeah, that's a good question.
29:28
Some of my friends, that's what they're doing.
29:28
They're doing a deep dive newsletter.
29:30
What I often tell people, some people DM me and are like, "I wish I could contribute, but I'm no expert at anything.
29:37
I don't have anything to say," and it's almost like, "Oh, there's all these big accounts that get all the attention, but there's no chance to come up in the ranks, to join the party."
29:45
chance to come up in the ranks, to join the party." What I'm saying, what works for Twitter, for a newsletter, for anything online, the general principle that I see is that there's only one of you, but there's, basically, unlimited of others, so as long as you provide a lot
30:00
of value into the system, and you do it for long enough, even if you're only getting back like 5% of the value that you're giving, over time, if you aggregate a large enough audience, 5% of like 1,000, of 10,000, that starts to be a lot more than what you're giving in. If you're giving 1x of value by sharing your research, and if you're learning in public,
30:16
If you're giving 1x of value by sharing your research, and if you're learning in public, because others are learning so they can learn along.
30:22
There's all kinds of way to be useful online.
30:25
You don't have to be an expert.
30:25
I'm just a guy in pajamas.
30:25
I've never studied any of this.
30:28
I learned it all in public over the past 20 years on forums, and on Twitter, and people have come along with this, and they got to know me over time, so I feel like if people just do this long enough ...
30:37
Most people give up before they get to that steeper part of the curve.
30:40
They try it and nobody replies, nobody follows them, and they're like, "Okay.
30:44
I'm shouting into the void, so it's pointless," but if you keep going for a while, the internet is very good at finding good content, eventually.
30:51
It doesn't happen overnight, but eventually, your newsletter is going to get found out, your Twitter account is going to get found out, and then this 5% that you're getting back from it is going to be from a big enough number that it's win-win, because everybody that's reading you feels like they're getting good value.
31:02
In return, it's incredible, at this point, how many ...
31:07
I'm in some DM groups with people who are considered my closest friends.
31:12
Twitter is now my office, my water cooler, and my community because in real life, around here, I don't know anyone else who's interested in investing in technology the way I am.
31:21
I was writing about this recently, about how I'm pseudonymous.
31:21
People don't know my real name, but I've been using the same online name for 10 or 11 years, so if you followed me over that time, the reputation has accrued to that name the same way it would to my real name, and so if you hate me, if you like me, it's still, you know it's me.
31:35
If you've been reading me for that long, you may know more about me than some of my friends, and my parents because they're not interested in tech or finance, and I spend my days thinking about this, so they don't know about a huge part of my life.
31:48
They may know that my name is X, but does that tell them about this other part?
31:48
I'd rather follow someone under a pseudonym, but feel like I'm along with the journey, I know them, that they're sharing a bunch of stuff, than following someone, was posting under their real name, but they're just doing retweets, and memes, and they don't share anything, and I have no idea what's going on in their heads.
32:05
The name is not the important part. Jim O'Shaughnessy: Yeah. Absolutely not. I agree.
32:10
You made a point that I want to talk about a little bit more, and that is this idea of people give up way too soon. Liberty: Yeah.
32:22
Jim O'Shaughnessy: One of the things that I absolutely love about my ability is to find people like Vatsal, who I hired on Infinite Loops.
32:28
Like Lily, Nope, it's Lily, who is this young woman who's now actually in the industry.
32:35
I would have never met you, for example.
32:35
I would have never met a lot of the people who I consider very good friends now.
32:41
I just think that that has not been fully explored at all.
32:52
Liberty: The value of that.
32:53
Earlier, I was talking about how I'm investing as a kind of lifestyle design.
32:57
I invest in the things I want to learn about.
32:57
To me, I get so much value from investing that's not monetary that I feel like even if I was underperforming the market, it may still be worth it for me.
33:07
Maybe the rational thing would be to put my money in OSAM and do something else, but through investing, I'm meeting great people, I'm having great conversations, I'm reading about great companies and technologies.
33:15
I'm learning every day, so that intangible stuff has so much value to me.
33:20
How many percentage points of returns is that worth?
33:25
If I could do 12% in an index, I'm doing 10%, but I'm having a great time, I'm meeting great people, to me, that's worth millions, right?
33:33
Jim O'Shaughnessy: Totally agree.
33:34
That's another way, intelligent way, I think, to look at it.
33:34
Because in the past, people were, unfortunately, wed to their jobs.
33:39
When I would think about your average person in a job, that would kind of suck.
33:46
You have to go the office.
33:46
You have to be there at 8:30 or 9:00.
33:51
You got to stay until 5:30 or 6:00.
33:51
You're doing repetitive things, and all of that is gone now.
33:58
It's like you don't have to do repetitive things anymore.
34:03
The machine will do that thing for you.
34:03
You don't have to go to the office anymore if you're in a knowledge industry like ours. Look, I understand.
34:11
In fact, I put at thing up on Twitter because I saw my own bubble.
34:18
Because it was an article in The Atlantic saying, "How many people do you think are working from home?" My guess was way off.
34:21
I guessed way too high, way too high.
34:21
I don't know of a previous era where anything like that was even possible. Liberty: Yeah.
34:34
I feel very lucky to have been able to do it.
34:34
There's still billions of people who are, basically, working to survive, or even in richer country, a lot of people have jobs that they, basically, it's like the office.
34:43
They hate them, but got to pay the bills, and you live for the weekend.
34:48
Jim O'Shaughnessy: Right.
34:50
Liberty: It's above my pay grade to know how to do it exactly, but if we go up one level, a fraction, I just hope that whatever system we try to come up with to keep the dignity of work, and the satisfaction that people can have, have a job, I hope we can design a system that experiments with that, either UBI or something else, but the system has to be flexible, and to iterate quickly.
35:09
It would be a mistake, in fast-changing world, to go, "Okay.
35:09
Now the system is X," and then this gets calcified into a bunch of laws that can't change for the next 20 years.
35:20
Then any good corporation, right now, that's doing innovative things is iterating quickly.
35:25
Like all these software companies are deploying code like a thousand times a week, they're doing these A/B tests, deploying to 1% of the users, and if it doesn't work, they pull it back.
35:34
This kind of flexibility and iteration is how you learn about what to do.
35:34
You won't put a bunch of people around a conference table and come up with a solution right from the start.
35:43
You have to have a system with a bunch of feedback mechanism.
35:43
I don't know how, but I hope we do it with this kind of system, because it's probably going to help people much better.
35:52
Because I don't believe that everybody's going to become like a recreational painter, or everybody's going to learn to code. Humanity is too varied.
35:56
All kinds of people want all kinds of things, have all kinds of skills.
36:01
We got to figure out a way that can work for everybody, but it's going to be hard.
36:05
At the same time, I don't think we can go back.
36:05
It's not like, "Oh, we've tried this.
36:09
We're going to go back to the perfect system of the past," because the past wasn't that great.
36:12
How long ago, women couldn't even vote and enter the workplace until there was a war that, basically, forced the issue?
36:16
There's a bunch of crappy stuff from the past that we should learn from, but I don't know.
36:20
Just figure out a way to avoid the biggest mistakes, basically, going forward.
36:26
Jim O'Shaughnessy: I agree.
36:27
That's one of the biggest challenges, from the way I look at it, is that our institutions are not designed for the world as it exists today, they're not.
36:32
I worry, especially about government.
36:39
I don't know how they're going to keep up with private enterprise.
36:39
Private enterprise is so many clicks ahead of government right now, at least in the United States, that it's like ...
36:50
We fundamentally have to rethink, literally, everything.
36:55
We have to rethink education.
36:55
The public education in the United States, and we spend gobs of money on it and we're, I don't know, 48th in math and all of these things.
37:00
Even that, in this new world, teaching children how to think rather than what to think is, I think, going to be required.
37:14
Because, you're a great example.
37:14
Some other people that I've gotten to know on Twitter are great examples.
37:18
You have this inherent skillset, which is varied.
37:25
You now have access to these really cool tools that before, even if you were one of the richest people in the world, you couldn't buy them.
37:33
Liberty: What if you and I had been born in the Middle Ages, right?
37:35
Jim O'Shaughnessy: Right, yeah.
37:37
Liberty: It's Buffett's thing about his skill at capital allocation would not be so useful in Afghanistan or something, so we are so lucky to be fitting this environment.
37:41
All these problems with politics and education, it's not money problems, it's incentive problems.
37:45
The way politics works is so distasteful to most smart and talented people that they won't go into politics, right?
37:56
Jim O'Shaughnessy: Exactly.
37:58
Liberty: Engineers, and doctors, and this and that. They write books.
37:59
They do something better with their time because if you go into politics, it looks like a terrible life, basically, so the only kind of people who end up being attracted to it are very power hungry, very narcissistic, or they've been part of the system for 60 years or something, so they basically are the system, so to them, it's like a fish in water.
38:14
Jim O'Shaughnessy: Right.
38:16
Liberty: If the incentives could change in a way that discourage these types of people from joining politics and encourage others to ... Even if it's temporary.
38:19
If you could be elected without being a career politician, like if some engineer could take five years and go do something for the state and then go back to ...
38:27
Like if there was this path to pull talent in and it doesn't get them stuck in there.
38:35
It's the same thing with schools.
38:35
It's like, you can have all the money in the world, but if you don't have the right system ...
38:39
As I'm sure you've read Richard Feynman's biographies. Jim O'Shaughnessy: Sure.
38:44
Liberty: He goes to Brazil, at one point, and everybody over there is learning everything by heart.
38:46
Then he asks them a simple question and they can't answer because it's not something that they learned word-for-word, basically.
38:52
Jim O'Shaughnessy: Right.
38:54
Liberty: Sometimes, this system in Brazil could have diamond-plated schools, but if the system is not right, it's not about the money, which brings me to, you mentioned at the beginning, but the RPF in my user name is because I couldn't get just Liberty.
39:01
It was already taken, and so one of my heroes is Richard P.
39:07
Feynman, so I took his initials there.
39:09
Jim O'Shaughnessy: And one of mine, as you well know, yeah, yeah.
39:11
Liberty: My oldest son's middle name is Feynman.
39:13
Jim O'Shaughnessy: Yeah, that's really cool.
39:14
He's one of my biggest heroes.
39:14
Not just because he was so gifted at a lot of things but because, talk about a guy who truly lived his life.
39:20
He was so filled with joie de vivre, and he was really honest with himself about his own limitations, at least I think.
39:36
I don't think that was an act.
39:36
One of his most famous quotes is, "The first rule is don't fool yourself, and you are the easiest person to fool."
39:41
I've taken so much, I've read every book either by him, except for the deep physics one, or about him.
39:51
Claude Shannon is another guy who I really ...
39:51
He's a hero of mine, and nobody knows who he is. It's just amazing to me. Liberty: Yeah.
40:00
He needed a better PR department or something, because Feynman was so colorful, and that came across.
40:04
Shannon was super colorful but somehow, he got lost in history, right? Jim O'Shaughnessy: Yeah.
40:10
Liberty: Maybe he should have had messy hair like Einstein or something, got some better, pictures taken.
40:13
He looked too serious on photos.
40:13
I don't know what it is, but- Jim O'Shaughnessy: Yeah, yeah. I agree. Liberty: ...
40:19
Shannon is one of the all-time greats.
40:20
Jim O'Shaughnessy: One of the things that I read about Einstein, since you bring him up, did you know that the news people there who were waiting at the boat weren't waiting for Einstein.
40:22
They were waiting for some Jewish scholar, who was going to give some kind of controversial remarks.
40:33
Then it just, they screwed up and they all focused on Einstein, and so he became- Liberty: Wow.
40:36
Jim O'Shaughnessy: He became, I can't remember where I read this, but I just read it like a couple of months ago.
40:38
I just laughed because they weren't there for Einstein.
40:38
It was a mistake that led them to focus on Einstein.
40:50
I mean, it's just like, it's so wonderful, and- Liberty: So many things in- Jim O'Shaughnessy: Well, yeah.
40:57
Liberty: So many things in history are accidents, right?
40:59
Jim O'Shaughnessy: Exactly.
41:00
Many of our greatest inventions, penicillin.
41:00
He forgot to tidy up, literally. 3M. Liberty: X-rays.
41:04
Jim O'Shaughnessy: Yeah, X-rays.
41:05
3M with the sticky notes.
41:05
They were trying to come up with a permanent glue that could never be broken, and they- Liberty: It's the opposite. Jim O'Shaughnessy: ...
41:15
came up with the opposite, but then some bright person there said, "Hey, I got an idea."
41:21
Liberty: That's the lesson there.
41:22
It's to be open to chance and grab the opportunities when they come by. Jim O'Shaughnessy: Yes.
41:28
Liberty: So many people, it's kind of a state of mind.
41:29
So many people would throw that in the garbage because it's not what they were expecting, instead of saying, "Huh, that's weird."
41:30
It's not quite the same thing, but my pin tweet on my bio on Twitter used to be something like, most people, if they are convinced that they are wrong about something, they'll consider that as a defeat. Right?
41:42
Jim O'Shaughnessy: Right.
41:44
Liberty: "Oh, my arguments were weaker. Oh, you win this one." Right?
41:46
Jim O'Shaughnessy: Right.
41:48
Liberty: I think, and I try very hard to do this.
41:49
It's hard because it's against human OS, as you would say, but I try very hard to see changing my mind about something as a victory.
41:53
Jim O'Shaughnessy: Oh, yeah.
41:55
Liberty: Because if the arguments are stronger, you should want to change your mind.
41:56
If you don't change your mind, that's the defeat.
41:57
I think too many people, if they have this mindset, first of all, their confirmation bias is going to take over.
42:01
It becomes a filter, and everything you see, you filter it through this, and you only try to reinforce your existing ideas and that's when you stop learning.
42:09
Part of what I love about being a generalist, and making a connection to what we were saying before, I feel like 100 years ago, if you were a scientist, you kind of were a generalist because it was still possible to know about a bunch of fields.
42:21
It wasn't as specialized as it is today.
42:21
A lot of great ideas come at the intersection of fields, and so- Jim O'Shaughnessy: Totally agree, totally agree.
42:31
Liberty: I feel like today, everything becomes so complex, and so difficult, and so you have to have giant labs just to make an advance on something.
42:35
You spend a billion dollar on a small molecule.
42:40
Today, people are so specialized that they see a lot less what's going on around them.
42:45
That's what I feel is my privilege is, as just a guy in pajamas sitting around, I don't have a real job.
42:49
I can spend all day reading about anything I find interesting, and with the 80-20 rule, I'll never be as good in any field as any specialist, but at the intersection of these fields, I feel like I have a shot there to find some stuff that they haven't found yet because they can't look.
43:03
They're too busy at their real day job.
43:07
I feel like scientists like Shannon and Feynman used to be a bit more like this because they could read more widely and have more friends outside their fields probably, and stuff like that.
43:14
I don't know if we've lost something there.
43:14
I hope maybe that the interest graph on Twitter is going to bring some of these people together back again.
43:18
I don't know if people are very cross-disciplinary on Twitter in science. I don't know. I hope so.
43:27
Jim O'Shaughnessy: Yeah, I try to be, but I plan it that way. You're right.
43:28
Reprogramming your human OS is fucking hard.
43:31
I've been trying and succeeding somewhat, but I've been doing it for 25 years.
43:39
It's just, so now I have, if you just, through repetition, you strengthen the neural net, right? Liberty: Yeah.
43:48
Jim O'Shaughnessy: You create a habit, and when you habituate something, if you've thought it out ...
43:49
Most people habituate things without any thought, right? Liberty: Exactly.
43:57
Jim O'Shaughnessy: The other thing that I had to really train myself on, it's like the Jed McKenna line that I love, which is, "The smartest thing I ever did was stop being smart."
44:01
I really worked at this one and it has paid such massive dividends, which is, "I don't know." Liberty: Yeah.
44:15
Jim O'Shaughnessy: Because when you admit, "Hey, I don't know," you, A, have an opportunity to learn.
44:16
You, B, increase your ability for error correction, because most of what most of us believe is wrong, and if you need proof of that, study history.
44:31
Liberty: Yeah, [inaudible].
44:33
Jim O'Shaughnessy: Exactly.
44:34
Look at the belief systems of our ancestors.
44:34
By the way, the idea of the feeling of privilege, I could not agree with you more.
44:39
I'm not a religious person, but every night before I go to bed, I say to myself, "I won the cosmic lottery.
44:45
Thank you, powers of the universe that be." Liberty: Yeah.
44:55
Jim O'Shaughnessy: Because you're absolutely right.
44:56
You or me, born in whatever, the rural South in the 1820s, we're not going to do so well.
45:04
Liberty: I think the most mind-blowing way that I think about this is, if you zoom out a lot, all of our ancestors, we tend to think, "Oh, my great-grandparents, my great..." No, no, no.
45:14
From the very first unicellular organism on Earth, which was probably like RNA-based and super bad at replicating that started this chain, there's an unbroken chain from this thing to you, and any of these ancestors, even as unicellular, like some cell that's eaten up by some other cell and you don't exist today.
45:27
This line, this chain of life has to be completely unbroken for billions of years for us to be here.
45:31
You start looking at anything else, your mother and your father watch another show on TV, and you're not conceived, right?
45:41
It's a different- Jim O'Shaughnessy: Yes.
45:44
Liberty: It's a different egg, it's a different sperm.
45:45
Anything could be different in the past.
45:45
I wrote something about time travel.
45:46
If time travel could be real, any tiny change would change all of millions of people's lives because everything is so based on perfect timing, so and the very fact that we exist- Jim O'Shaughnessy: Everything's interconnected, yeah. Liberty: Exactly.
46:00
The very fact of our existence means that we've already won.
46:00
Then if we're having fun, we've doubly won because people having fun, most days, unheard ...
46:02
For human history, if we made two piles of people that ever existed, those that had a lot of fun most of the time are not the biggest pile, I'm pretty sure.
46:13
Jim O'Shaughnessy: You would not be here if you were not the result of success, after success, after success, going back to that single cell. Liberty: Yeah.
46:23
Jim O'Shaughnessy: In a way, the odds against us being here, having this conversation are so astronomical that- Liberty: Yeah.
46:33
May as well enjoy it, right?
46:34
Jim O'Shaughnessy: Exactly, exactly.
46:36
Liberty: Don't take it too seriously.
46:38
Jim O'Shaughnessy: That's become my philosophy in life. Liberty: Become.
46:42
Jim O'Shaughnessy: It's been my philosophy, for a long time, as an adult.
46:43
It's like I can't believe that I'm this lucky and that I wasn't born like 100 years ago.
46:44
I was thinking about it, and I was talking about it with my wife.
46:48
These people have these romantic notions of what the world was like.
46:54
They don't know much about history, because if this was 150 years ago, all three of my sisters would have died in childbirth.
47:00
I wouldn't exist because my mom was too old.
47:04
She was 39 when she had me, and it was only modern medicine that allowed for her to have a successful pregnancy.
47:12
If, by some miracle, I was around 150 years ago, well, after losing all three of my sisters, I would have lost my daughter, who also had to have a caesarian.
47:19
I would have lost my daughter-in-law, who had to have a caesarian.
47:24
Now, you could make the argument that doctors are doing too many caesarians, et cetera, but the idea is, people don't stop to think at how fucking amazing everything we have is. Like this thing.
47:41
Liberty: Just imagine being born before antibiotics and anesthesia.
47:42
You get a cut somewhere, and you die from an infection. Jim O'Shaughnessy: Yeah.
47:50
Liberty: Simple things could be deadly, like you break your bone and you die from it- Jim O'Shaughnessy: Yeah, you're dead. Liberty: ...
47:56
from the infection, from sepsis.
47:56
There's all these way that our life ...
47:56
It's like Stumbling on Happiness.
47:57
One of the principles is, in the book, that it's a lot easier to remove things that make you unhappy than to add things that make you happy.
48:02
I feel like our society, for all its faults and its flaws, has been pretty good at removing a bunch of stuff that makes us suffer, basically, especially in richer countries, and we take it for granted.
48:17
I open up the tap and there's clean water that comes out.
48:17
How many pipes are underground in this city?
48:22
What an engineering marvel this is, right? Jim O'Shaughnessy: Yes.
48:27
Liberty: But we never think about of all this stuff around us.
48:28
All of the electrical line, all of the internet lines, all of that stuff is a massive, massive undertaking that would blow the mind of anybody from the past, but we adapt to it so quickly that it's like, "Okay. What's the next thing?
48:39
What have you done for me lately, society?" Right? Jim O'Shaughnessy: Yeah. There's a great Louis C. K.
48:42
, the comedian, line, where he's talking about his first experience of having WiFi on an airplane.
48:49
Liberty: That's a great one.
48:51
Jim O'Shaughnessy: He's tells it deadpan. He's really good at it.
48:52
He's like, "So I'm sitting there, and I'm like, 'I cannot believe this.
48:55
I'm going 500 miles an hour at 30,000 feet in a tin can, and I can get into arguments with people on Twitter in real time.'"
49:03
Then he's like, "Then it's stops working, and you're immediately like, 'What the fuck?'"
49:15
Liberty: To me, you pointed out your smartphone before.
49:16
To me, that's the Star Trek stuff that we don't see anymore, but I have a super computer in my pocket, and the fact that it's called a phone, I think, throws a lot of people off because it's a computer.
49:24
This thing is like, it's a video camera that's better than any video camera my parents had, growing up.
49:28
It's a better photo camera.
49:32
It's like I have access to all of the world's information.
49:32
I can talk to all my friends, I can ...
49:35
Everybody knows, it's not going to make the list, but it replaces so many things, that's crazy.
49:41
Then people complain, like, "Oh, this model is $1,000, while this model is 800. This is so expensive."
49:46
It's like, you're getting tens and tens of thousands of dollars of value.
49:50
If you could take a time machine and bring an iPhone that somehow worked, like if it had connection and everything, back like 20, 30 years, how much would a rich person pay for an iPhone?
49:58
Like millions probably, right?
50:00
Jim O'Shaughnessy: Definitely.
50:02
Liberty: The value would justify it, but we're all complaining about 100 bucks, 100 ...
50:03
We're so spoiled by technology and how much deflation there is in the capacities of it.
50:05
I'm glad this is happening because it's a sign of success.
50:11
If everybody was complaining, it would be a sign of failure, but still, I think people should, once in a while, take a pause and appreciate it.
50:19
Jim O'Shaughnessy: Well, and I again totally agree.
50:20
That was something I trained myself to do, and it just makes your life so much better. Liberty: Yeah.
50:27
Jim O'Shaughnessy: Right.
50:28
My wife will, she'll do this thing, like when we're at dinner with other people, she'll ask me a question because she knows that I know about it.
50:30
Then she'll get mad at me for answering too long.
50:34
Like, "Well, really, the guy you really want to study is Talleyrand, because that guy, he negotiated and navigated his way through the French Revolution.
50:48
He was an aristocrat, didn't get guillotined.
50:48
Was one of Napoleon's most trusted advisors, but then when Napoleon lost, they sent Talleyrand to the Congress of Vienna to get the best deal that he could for France," and she's like, "I simply asked you about something that had nothing to do with Talleyrand."
51:09
Liberty: I had to build a rule for myself about this.
51:10
If someone asks me about something, I'll give a super short answer, just what they want to know, literally, and I wait.
51:15
If they ask again or they keep going, then I open up the floodgates, right?
51:22
Jim O'Shaughnessy: Yeah, right.
51:24
Liberty: I try never to go at first, because I've learned, over time, that most people are not freaks.
51:26
They- Jim O'Shaughnessy: Yeah. They give you the stare.
51:29
Liberty: It's like too much.
51:30
Like, "I only wanted the exact answer to the question and nothing else around it."
51:33
Jim O'Shaughnessy: "It's just too much. Just stop." Again, there is, we ...
51:34
Look, all of us, you, me, a lot of the people that I interact with the most on Twitter, we should be on the Island of Misfit Toys.
51:45
I'm very happy to say that, right? Liberty: Yeah.
51:50
Jim O'Shaughnessy: It's like, I am not a normal person in that regard.
51:51
I love, like you do, diving into these things and, learning all of this stuff, and trying to figure stuff out.
51:54
What's nice about it is, so the collapse of geographies, the one that I think is the biggest deal, because what happens if ...
52:06
I was born and raised in St. Paul, Minnesota?
52:06
I think you know that I have a relationship with the Royal Bank of Canada. Liberty: Yeah, yeah.
52:13
You've been to more Canadian provinces than I have.
52:15
Jim O'Shaughnessy: Yeah, yeah. I love Canada. I love Canadians.
52:16
Let's say I had stayed in St. Paul, Minnesota.
52:20
My Canadian friends say that Minnesota is a nice, Canadian province.
52:20
Anyway, I would have probably, even if I could find them, I would probably have a pretty limited opportunity to meet people like you and have great conversations with you.
52:33
Then you just go down the list, and so this ability is another thing that I get like a kid.
52:39
I get excited because when else in history could you meet a bunch of people who like exactly the same kind of conversations in terms of that?
52:54
You might disagree heavily with some of their opinions, but that's great because you got to test ...
53:01
Liberty: There's an optimal amount of exploration versus exploitation in life for all kinds of stuff.
53:06
Even with art, I know you love music too.
53:06
We've shared some pics there.
53:06
That's one of the reasons why I include it in my newsletter.
53:11
I feel like art is one of the things that make lives worth living, right?
53:17
Jim O'Shaughnessy: Totally.
53:19
Liberty: It gives meaning, it gives you so much.
53:20
Most people, they buy a bunch of albums in their teens and 20s, and then they kind of stop exploring.
53:25
They get stuck in the same place for so long, and they're missing out on so much great stuff.
53:29
Because what are the odds that all of your favorite albums all came out while you were in high school?
53:32
Albums as good as that keep coming out. You just have to ...
53:36
It takes a while to explore a new style, a new genre, but anyway, you got to inject some of that new stuff in your life once in a while.
53:45
Too many people don't have this place to inject it, so that's one of the things I try to do through the newsletter is inject some randomness, even if it doesn't click for most people.
53:53
Even if it clicks for 5% of the readers and they discover a new great thing that they love, like a new book, a new album, a new this or that.
53:57
To me, that feels as good as teaching them about some company, or this or that.
54:02
Just try to enrich their lives on all levels.
54:06
I feel, sometimes, people get to specialized, not only as a field of work, but they get too specialized in how they see their life.
54:11
"Oh, this is a waste of time. Oh, this ..." No.
54:15
If you are having the best time of your life playing a video game, by all means, rearrange your schedule, and bump out something that's less important and do some of that.
54:24
To me, watching a great TV show, I'm going to plug Deadwood here.
54:24
That gives me as much joy as almost anything in my life.
54:28
There's a tendency of people to look down as, "Oh, that's just entertainment. That's a waste of time.
54:33
You could be reading about machine learning or something." No, no, no.
54:36
That's the Stumbling on Happiness thing.
54:36
Figure out if it really makes you happy, if it really brings value to your life, and then don't deny yourself just because others would look down on the activity.
54:42
Think about it independently, from first principle.
54:47
Jim O'Shaughnessy: Yeah, totally agree.
54:49
Liberty: Well, it's kind of a different point, but that's the thing.
54:50
If you're generalist enough, it's so much fun to be able to have a conversation with almost anyone about almost anything, right?
54:59
Jim O'Shaughnessy: Right.
55:01
Liberty: I know someone who designs integrated circuits and I've never studied any of that, but I can have a chat with him about this.
55:03
I know someone who's a musician, and I can talk about music for a while.
55:06
I know, one of my friends writes novels, and we can talk about the craft of this.
55:10
That makes life so much fun.
55:10
As you were talking before about how knowing when you don't know something, I feel like if you imagine your knowledge as kind of a blob on a map, it's kind of a shape.
55:20
Then when you learn, the blob grows, and grows, and grows.
55:24
The more you know, the more the border around it, the longer it is.
55:24
That's the shoreline of ignorance.
55:29
The more you know, the more you don't know because you can touch more and more things.
55:33
Jim O'Shaughnessy: Exactly. Liberty: Right?
55:37
Jim O'Shaughnessy: Right.
55:39
Liberty: If you don't know anything, you look around and it's not very far in any direction.
55:40
You don't even know some fields exist, right?
55:42
Jim O'Shaughnessy: Right.
55:44
Liberty: If you're 12 or something, you may not know about some people spend their lives on genetics of fruit flies.
55:46
The more you learn, the more you know you don't know, and the more you have mores stuff to learn, so it's kind of an infinite flywheel, infinite loop, you could even say.
55:52
[crosstalk] The most fun I have is a week when I find a few good rabbit holes, and I can get in a state of slow.
55:56
Cal Newport is a writer I quite like.
55:56
He talks about how the jobs that everybody want have certain shared characteristics, and so they're autonomy, creativity, and impact.
56:10
I feel like, even before I knew the words, I've been lucky to design my life where I feel like I have this autonomy.
56:15
I don't have a real job, basically. I do what I want.
56:15
Now I have more creativity since I started the newsletter, which it's filled a void I didn't know I had in my life.
56:23
A friend of mine who's the writer of novels, sometimes, was asking me, like, "Don't you miss writing and creating?"
56:27
"Well, oh, I write a ton.
56:27
I write 300,000 words a year in my note files," but it's all private. It's not the same thing.
56:35
When you put it out there, first of all, it forces you to think better because writing is thinking, but private writing, you can skip some steps, you can hand-wave some stuff.
56:44
Public writing is like, if there's something, you're going to hear from people, so [crosstalk] it forces you to be better about it.
56:48
It's also a lot more rewarding, because then I get feedback, and now half of the newsletter is basically follow-up.
56:52
It's like, oh, someone responded to the past issue with something new, and they pointed me in this great direction, this new rabbit hole.
57:00
They have this great book about it.
57:00
Now it's more a two-way street with the readership, and that's so great.
57:04
You can't have that when you're writing just your private notes somewhere in a file, right?
57:10
Jim O'Shaughnessy: Exactly.
57:12
Liberty: Yeah, it feels like this shoreline of ignorance keeps spreading, but it feels great, so I don't care about not knowing anything, at this point. Jim O'Shaughnessy: Yeah.
57:18
It's just like anything else.
57:18
If you can convince people to understand how joyful that could make their lives. Liberty: Yep.
57:28
Jim O'Shaughnessy: It's like I have friends who say to me, "Jim, why do you bother writing all these threads on Twitter? Why?"
57:31
I said, "Well, because I have a self-selected audience, and I deeply believe I can't change anyone else."
57:38
I can't change my son, I can't change my wife. I can help them.
57:44
I can serve as a sounding board, but listen, this idea that you're going to change someone else's behavior, it doesn't work and, "Convince a man against his will, he'll be of the same opinion still." Right? Liberty: Yeah.
58:00
Jim O'Shaughnessy: You can compel.
58:01
You can, if you're their boss, you can withhold money or fire them, but you can't change them.
58:07
That's a horrible way to be anyway. Liberty: Yeah.
58:11
As soon as they're not under your control, they're going bounce back probably harder in the other direction.
58:14
Jim O'Shaughnessy: Exactly.
58:16
Liberty: It's counterproductive in the long-term.
58:17
To me, when you talk about how people wonder, like, "Why are you doing this?"
58:18
To me, it's like zero-sum thinking.
58:21
Jim O'Shaughnessy: Totally.
58:23
Liberty: It's like, two of the biggest model that I know you love too is, find some infinite games to play that you love, and then non-zero-sum thinking.
58:27
I feel like when you share stuff, first of all, you do it for yourself because you enjoy it, because it feels good.
58:33
You don't have to expect something in return.
58:36
Then when everybody starts doing this, you create a culture of this.
58:40
Because Buffett could have kept all of his secret for himself, but then he decided to teach his principles.
58:45
I feel like this influenced investing as a whole.
58:50
There's probably more teachers and more open people.
58:50
There's more open-source, basically, than it would be in some alternative dimension, right?
58:55
Jim O'Shaughnessy: Right.
58:57
Liberty: If we can create the same kind of culture inside of, say, FinTwit, and people will share all kinds of stuff, it's basically like you're leveraging the wisdom of crowds, group intelligence.
59:06
I don't have time to read more than X per day, but if I'm friends with a bunch of other people who read as much as I do every day, and then they share their conclusions ... If you spend ...
59:14
David Kim of Scuttleblurb, one of my friends, wrote about this once.
59:17
He wrote a deep dive of ...
59:17
I don't know, it's like 20 pages, but he spent like 150 hours researching it.
59:22
He was saying like, "It seems unfair that I spent all this time and energy writing something that could be read in like an hour."
59:26
That's one way to look at it, but my way to look at it is, if I could do the research in one hour for something that you could read in one hour, I'd rather read the primary sources, but when I read what you wrote, I'm leveraging the 150 hours that you did, and so in 150 hours of reading, I can get the conclusions from thousands and thousands of hours of research from smart people.
59:52
It's the same principle as a book.
59:52
Some super smart person spends like 20 years becoming great at some field, and then spends like four years writing a book about it, and you ingest all of that in a few hours.
1:00:00
The book is such a magical technology.
1:00:00
Another one we take for granted is, basically, like telepathic.
1:00:05
Someone's words are in your brain, and this person may be smarter than you are, so you're thinking smarter thoughts than you would think on your own. That's crazy.
1:00:15
Jim O'Shaughnessy: It's amazing.
1:00:16
You and I are very simpatico on that outlook as well.
1:00:16
Well, I'm getting a text here from Jamie.
1:00:21
He must be timing me from afar.
1:00:21
He's my schoolmarm who says, "You're coming to the end of your podcast, James."
1:00:27
This has been absolutely great.
1:00:27
I think you know that we ask a question at the end of the podcast.
1:00:34
I'm going to ask you the question, which is we're going to wave a wand and we're going to make you the emperor of the world for a day. You can't kill anyone.
1:00:44
You can't put anyone in a re-education camp, but- Liberty: Do I at least get a cool crown or outfit?
1:00:52
Jim O'Shaughnessy: Of course, of course. Liberty: Okay. Oh, that's good then. Jim O'Shaughnessy: Yeah.
1:00:57
Whatever outfit you want is yours.
1:00:57
What you can get to do is you get to incept people.
1:01:02
You saw the movie, Inception, right? Liberty: Yeah. Jim O'Shaughnessy: Okay.
1:01:06
You get to incept people, worldwide.
1:01:06
They're going to wake up the next day thinking it was their thought, and they're going to change the way they behave or think.
1:01:09
What two things are you going to incept the world population with?
1:01:18
Liberty: Wow, so much power. Jim O'Shaughnessy: Yeah. Liberty: Okay.
1:01:23
The first one would be something we talked about.
1:01:23
I would incept everybody, pretty young, about the insights from the Stumbling on Happiness book.
1:01:26
Basically, younger people would spend a bunch of time learning about themselves, what makes them happy.
1:01:31
Learn from others, who actually are happy, how it works.
1:01:36
Learn what makes them unhappy, so they can avoid that.
1:01:39
It's like, no matter how fast you're going, if you're going in the wrong direction, you're not going to get there.
1:01:43
I feel like- Jim O'Shaughnessy: Perfect. Liberty: ...
1:01:48
a bunch of unhappy people, miserable people made some bad decisions when they were young, and nobody ever told them that kind of stuff.
1:01:50
I feel like if we could just try to reboot the system so people make better decisions about where they are going in life, and what they're doing, I feel like this would remove a lot of unnecessary suffering. Jim O'Shaughnessy: Yeah.
1:02:03
Liberty: The second one would be, it's kind of a cliché, but it's the most powerful rule.
1:02:04
The Golden Rule is at the basis of empathy.
1:02:07
I feel like we need a Golden Rule-plus.
1:02:07
My plus version of the Golden Rule would be, don't just treat others the way you want to be treated, but take the extra step and figure out how others want to be treated, and treat them like that.
1:02:22
Because we're more different than we may think sometimes. Jim O'Shaughnessy: Yeah.
1:02:27
Liberty: I feel like that would be a nice little .
1:02:28
1 upgrade on the Golden Rule.