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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 and I am so excited about today's guest.
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She is a wunderkind on almost every medium, I think Kyla.
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My guest Kyla Scanlon, who ...
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Literally, you're on TikTok, you're on YouTube.
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You have your own Substack.
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You do hysterical, and yet, deadly accurate, mostly TikToks about what's going on.
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And, I love your stuff first, but it seems that you really have your finger on the zeitgeist of the moment. So, welcome! Kyla Scanlon: Thank you.
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Yeah, thanks so much for having me. Very excited to be here.
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Jim O'Shaughnessy: It's my great pleasure.
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So, I'm sure that almost all of our listeners are going to know who you are and have probably enjoyed your TikToks and your Substack and everything else.
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But for those that don't, just give us a little backstory about how you got to here. Kyla Scanlon: Yeah. So, I'm from Kentucky.
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So I grew up in Kentucky, went to school in Kentucky.
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Graduated in 2019 and moved out to Los Angeles to work for Capital Group.
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Was in the top program there.
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So global rotational program.
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So sat on a high-yield credit desk.
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Supported an equity portfolio manager.
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Did a big ESG project, and then I left earlier this year to join On Deck, which is a tech startup, focused on education.
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And ended up leaving that role about two weeks ago to focus on the content and build a financial education startup. Yeah.
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Jim O'Shaughnessy: Interesting.
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So what was your degree in from college?
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Kyla Scanlon: So I majored in finance, economics and data analytics.
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So I was doing three majors, for fun. Jim O'Shaughnessy: Good. Yeah. A triple threat.
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Kyla Scanlon: Yeah, exactly. Yeah.
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Jim O'Shaughnessy: So, I'm intrigued.
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What gave you the idea to do, especially the TikTok ...
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And, by the way, people who know that I'm having you on, they're like, "You got to make her do at least five different voices."
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I- Kyla Scanlon: Oh, my God.
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Jim O'Shaughnessy: I'm not going to make you do them.
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But, you do them really well, which ... Kudos.
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But, what drew you to that niche, other than the obvious everyone's on TikTok.
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It, to me at least, but I'm an old, so ...
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It doesn't seem like a natural medium for ...
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Actually, when you watch your stuff ... I watched a lot of them.
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I think I've watched all of them.
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And, you are dropping some real, actual financial knowledge on people.
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Kyla Scanlon: It's the goal. Yeah. Jim O'Shaughnessy: Yeah. So, why TikTok?
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Kyla Scanlon: So I left Cap Group around January. Right?
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And that's when the whole GameStop saga was going down.
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And if you got on TikTok, there was so much misinformation, and a bunch of people being like, "Oh, my gosh!
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This is the end of all times."
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And I was like, "You know what TikTok probably needs right now is some rational thought."
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And so I was like, "Okay, I'll go on there and just start making videos about the markets and really just do daily market updates.
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Try to calm everybody down and just provide actual, hopefully, good information."
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And then I ended up making some skits, because there was so many meme-y things happening.
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Archegos was a big meme-y thing.
4:38
[inaudible], that was valued at $100 billion and had $20 in sales.
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And so, it was just like, "Okay, how can I draw attention to these events and get more people talking about them?"
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So that was the main goal.
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And TikTok was a good platform just in terms of distribution.
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Jim O'Shaughnessy: And, how quickly did your viewership soar?
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Kyla Scanlon: So I'm actually a relatively small TikTok account. I don't know.
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I've only been doing it since March and I have about 90,000 followers on there, So- Jim O'Shaughnessy: Wow! Kyla Scanlon: Yeah. It's been pretty good.
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It grew really quick around when everybody was trying into the markets.
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Growth has flattened out a little bit, just because TikTok is cracking down on financial TikTokers.
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But, yeah, it's been awesome I would say in terms of growth. It's been very quick. Overwhelmingly quick. Yeah.
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Jim O'Shaughnessy: That's very cool.
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And you are also like Exhibit B of my thesis, which I call "The Great Reshuffle."
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You are literally building your CV every day, online.
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And a lot of older people really don't understand that.
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I'm lucky in that I always try to stay current on what's going on. Right?
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So, what would your ideal job be if you had a job?
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Would you want your own company?
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Tell me what that looks like. Kyla Scanlon: Yeah.
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So I think like to the point of building the CV, and then I'll get to the job question.
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So, I went to a very non-target school, and the only way that I was going to get into the industry is if I was online.
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So I actually started writing about options trading when I was 18, because I was trading options in high school and that was my living portfolio.
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So, companies could be like, "Oh, this person is legit.
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It's okay that they don't necessarily have the perfect background, but we'll give them a shot, because obviously she's written so many articles about options trading.
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So she probably knows what she's talking about."
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So I think having that living portfolio online is so important.
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Kyla Scanlon: And then to the job question.
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So for me, it's just how can you get more people talking about stuff?
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So, the company that I'm wanting to build is in financial education.
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And it's like dual-lingo-Khan-Academy-investor- PDF-combo.
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So just, how do we get more people onboarded into the markets, because that's the missing piece.
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So you can download Robinhood and open up an account, but what do you do after that?
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And so I think there's this missing piece in financial education, where we have to get at more people past that initial step, into that onboarding phase.
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And so that's what I'm focused on for the next couple years, is the onboarding phase of financial education.
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Jim O'Shaughnessy: That's very cool.
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And so, I'm a huge believer and support a lot of different organizations for giving, because essentially, a lot of people are innumerate.
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And, I A) love the trend, especially of younger people investing.
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I am concerned about them maybe not understanding the deli that was worth 100 million bucks with 20 bucks of revenue.
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I do worry, because I've been around.
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This is not my first rodeo. Yeah.
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And, I do worry that come the inevitable downturn, that a lot of people are going to be badly burned.
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Kyla Scanlon: Mm-hmm (affirmative).
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Jim O'Shaughnessy: What do you think about that?
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Kyla Scanlon: I think it's a really good point, because ... So I just turned 24.
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I've never really seen a down market.
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I was really young and obviously felt the impact of the great financial crisis through my parents and what they went through.
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But I've never seen a bear market.
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And so I think that there's just not that preparation.
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There's not that framework for what it looks like when things don't go well.
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And I think you're seeing a premise of this in supply chains, with the idea of, "Oh, we're not getting exactly what we want when we want it."
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I think that could easily apply to the financial markets for this younger generation.
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It's like, "But I thought stocks always went up! What's going on here?"
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And so, I think it's just going to be a flipping of what we originally thought, and what was baked into our heads, into a very harsh reality.
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I think you're 100% correct, yeah. Jim O'Shaughnessy: Yeah.
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So, I think that, for what it's worth, somebody who's creative like you, and could do fun and yet truly instructive videos ...
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Because, by the way, this has happened time and time again, just to different people.
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Walter Winchell said same thing happens today to people as it did yesterday, just different people.
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And I always think that it's a part of our human operating system that we just never learn. Right?
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And, so I could see you coming out with some incredibly funny and yet poignant examples.
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Like, you could do a thing about Jesse Livermore, the famous stock speculator from the '20s, who made and lost three or four fortunes.
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Ended up killing himself in the Sherry-Netherland men's room.
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Go all the way up to the Wicked Bear of the '70s, and then [inaudible] the mother of them all, the dot. com.
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Which is probably closest to what we're seeing now, because it is based on, in my opinion, an actually true premise, which is, this stuff is new.
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It is going to change everything, the economy, how people interact, et cetera.
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But what happens is that people just get so excited and they're willing to pay the moon.
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And people don't understand that that happened to their great-grandfather or grandmother when Warner Brothers announced that they were going to have talking-motion pictures. Right?
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Jim O'Shaughnessy: When radio came out, again, it was like our version of the internet.
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And they priced RCA to a point where it never recovered to its high.
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So, I think those would be really compelling and really cool.
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Would you see this as you white labeling the service to asset managers or brokers?
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Or, are you just going to do this independently?
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Kyla Scanlon: Yeah, it's a good question.
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I'm not sure, because one thing that I'm not great at is monetizing.
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And so, obviously, with the company, you have to monetize it.
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And so I don't [inaudible] anybody to have to pay for financial education.
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I think that's something that just should be free.
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So, I would have to figure out a way to build in some financial aspect to it.
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So, I'm not quite sure exactly what that would look like yet.
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Kyla Scanlon: There's different ways.
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Like, I think product placement is interesting.
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So, that's primarily what I'm meant to do with the media arm of my company and me as a person.
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Everybody's like, "Oh, you're on TikTok.
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Can you advertise our company?"
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And so, ideally, I could funnel those companies to this platform and be like, "Okay, so you're a real-estate investing company.
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How about you explain that to all these people that want to learn it?
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And you can pay for placement."
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So that would be the ideal model, but I don't know exactly how that'll shape out yet. Yeah.
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Jim O'Shaughnessy: Right. Yeah.
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Because I was in a very nice way asking you about your business model. Kyla Scanlon: Yeah.
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So answer is, I don't know.
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Jim O'Shaughnessy: You know what?
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That is a correct and great answer. Kyla Scanlon: Yeah.
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Jim O'Shaughnessy: Because- Kyla Scanlon: It's too honest. Jim O'Shaughnessy: No! Not too honest.
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Listen, the more honest you are, the more transparent you are, the further you will go, because the one thing that I now have under my belt and you are just growing into, is your reputation.
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It's really your only true asset, honestly.
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And so, I love that answer.
11:34
I think it's a great answer.
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I want to talk a little bit about some of the stuff that you've been looking at.
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And so, I'm a huge fan of Laozi and the Dao De Jing.
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And, and I want to talk about DAOs, D-A-O, which by the way, is also the way a lot of Europeans and Brits talk about the Tao, T-A-O. Right?
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So at first I'm like, "Well, this is actually perfect," because they are Decentralized Autonomous Organizations.
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I can't think of anything that Laozi himself would be happier to endorse.
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Kyla Scanlon: Yeah, absolutely.
12:13
Jim O'Shaughnessy: You've written about them.
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You've done TikToks and YouTubes about them. What's your take? Kyla Scanlon: Yeah.
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So I think they're like the Web 3 answer to "What is a corporation?"
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And so, instead of having a bunch of five guys in suits up in a boardroom making all the decisions, it would be a bunch of token holders that are making all the decisions through different smart contracts.
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So you would have a community that primarily exists within Discord right now, voting on these different governance proposals that people sent through.
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So if you're like, "Oh, we want to pay like the CEO of this DAO a certain amount of money."
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Everybody would vote on that. It would go through.
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So it's just a more decentralized way of running a company, versus having these decision makers.
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It's more of these voters that are moving the organization forward.
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Jim O'Shaughnessy: So, do you think that they ultimately have a chance to displace the more traditional, limited liability company [inaudible] for example, OSAM is a limited liability company.
13:03
Or, do you think that it's going to be more for a specific type, like tech? Or that? What do you think?
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Kyla Scanlon: Yeah, I think it's going to have to be very specific at first until it gets calibrated.
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Because, right now there's just a lot of kinks in the system that have to worked out, how DAOs are structured and how they move forward.
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I think that there's a lot of successful examples that just run funds that have DAOs, different collector DAOs.
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So, they'll collect NFTs, they'll collect different artworks, they'll purchase things together.
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But I think if you were trying to run a government through a DAO, that probably wouldn't be the best model.
13:33
I think that there could be different applications beyond that.
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But, right now, I think that some of the use cases are relatively limited. Yeah. Jim O'Shaughnessy: Yeah.
13:44
And they're based on permission-less authentication, if my understanding is correct?
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Kyla Scanlon: Mm-hmm (affirmative). Yeah.
13:50
Jim O'Shaughnessy: On that, let's switch a bit to Bitcoin.
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I'm not smart enough to have a good thesis on Bitcoin.
13:54
I experimented with it, just because I think you need to have skin in the game if you really want to try to understand something.
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But my son Patrick, who runs "Invest Like The Best" and all the other things over there, did it.
14:04
Honestly, I think it was one of the things that really put him on the map and he did it, I think in 2017, called Hash Power, which was all about Bitcoin.
14:14
And so I asked him when we were together traveling, if he could describe it to me in half an hour. He did.
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He did a pretty good job, but then I recently had a guy on my podcast named Zach Resnick.
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Are you familiar with him? With Zach?
14:31
Kyla Scanlon: I don't think so. I might be.
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Probably I'd recognize him. Yeah.
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Jim O'Shaughnessy: Okay, so he's really interesting from one specific point of view, and that is that he...
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There is a version of Bitcoin called Bitcoin SV, and he believes that the potential, all of the growth that people are hoping for with the various Ethereum-type networks, etc. , actually can't happen. And he says can't.
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Can't happen with the current, most popular BTC, because they limit the size of the transaction to, I think...
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I can't remember what exactly, but Bitcoin SV does not.
15:11
I find that really intriguing, because I do think the...
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Listen, the use case for Ethereum, the use case for those kinds of autonomous, permissionless and yet proof of work, there's a lot...
15:23
They make a lot of sense.
15:29
I don't know that they make a lot of sense as currencies, because normally, a currency should be a store of value, and Bitcoin doesn't appear to be that.
15:34
It appears to be a wonderful trading- Kyla Scanlon: [crosstalk].
15:42
Jim O'Shaughnessy: Yeah, a very volatile asset. What are your thoughts?
15:42
You've done a bunch on Bitcoin. Tell me what you think.
15:46
Kyla Scanlon: Yeah, so I think Bitcoin is really interesting because you have a couple different camps in the crypto space, and you have the Bitcoin Maxis and then you almost have like everybody else.
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And the Bitcoin maxis are very attached to the idea of Bitcoin being this pure cryptocurrency.
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It's like the only thing that...
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Other things can exist, but Bitcoin is the be-all end-all.
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And I think Bitcoin is really interesting from an economic perspective, because it's essentially leading indicator for the whole market, so Bitcoin goes down, the rest of the market is probably going to suffer.
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Kyla Scanlon: And so I think that's...
16:15
The idea that the market could exist without Bitcoin or that crypto isn't Bitcoin, I think is...
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That hasn't quite happened yet.
16:19
Bitcoin hasn't separated itself from the rest of the crypto ecosystem, and same with vice versa.
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And it was Paul Tudor Jones, I think, that was talking about Bitcoin as a hedge against the real world economy.
16:29
And the thing that he was saying is that Bitcoin is bullish humanity, and I think that oftentimes, Bitcoin and the whole crypto space is very pro-tech, like very pro-innovation.
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Kyla Scanlon: And because of that, it's an interesting investment vehicle because you're almost betting on this big future.
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And so I think for that reason, Bitcoin and the rest of the crypto space is super interesting, because it's not even just an investment, but it's like trying to build out this whole entire financial universe.
16:59
And so I don't know from a hash perspective.
17:04
This is more like big brain qualitative analysis, but I think it's just interesting from that perspective, is it's trying to change how things are done, to a certain extent.
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Jim O'Shaughnessy: What I find interesting about it...
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I think you're right, what you just said.
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And so I find it interesting, because it sounds to me like a real sovereign individual, almost libertarian [inaudible].
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Kyla Scanlon: [crosstalk], yeah.
17:28
Jim O'Shaughnessy: Yeah, so how does that square, especially with younger people being more in favor of more government, not less? Kyla Scanlon: Yeah.
17:38
I mean, the libertarian ideology leaves a lot of people behind, and I think it especially leaves the younger generation behind, because you're like, "Oh, we don't need government."
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And then it's like, "Oh, but we do."
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Even though the government can be very inefficient and very bad, like they can't even figure out the debt ceiling situation, we still need them, to a certain extent.
17:55
You still need these centralized decision makers, and so I think what crypto...
17:55
And I struggle a lot with this with crypto.
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Kyla Scanlon: It's like they're trying to revolutionize the financial system, but we have all these different crises happening, like we have the supply chain crises, we have the energy crises, we have the climate change crises.
18:10
And it's like, " Well, how does crypto square all that happening?"
18:10
And sure, you could have...
18:14
Climate Coin is meant to solve climate change and put monetary incentives towards that, but at the end of the day, boots on the ground, crypto isn't fixing that.
18:19
And so I think that's the hardest thing to square in why the libertarian ideology and anti-government rhetoric is painful.
18:31
Rhetoric is painful, it's because...
18:31
Or not painful, but could be not great, is because you still need it to a certain extent. Yeah.
18:37
So long [crosstalk] than probably warranted, but... Jim O'Shaughnessy: Yeah. Yeah. No, no, no.
18:41
I find it fascinating because the challenge for me is that it seems to me that people who literally have zero understanding of not only Bitcoin, but everything that is going on, especially with web 3.
18:58
0 and a lot of those things.
18:58
And I honestly do worry, because I...
18:58
Listen, I'm a freedom maximalist, the only thing that basically defines me is I'm fiercely anti-authoritarian of either wing, so I'm unpopular with all the politicos, it seems.
19:10
But the notion that we don't need government, I think is foolish.
19:17
We do, but my worry is how do we upgrade government to a level where someone like you could do a piece on, you know what? They actually get it.
19:32
And look at what they're doing, because I'm blown away.
19:32
I can't believe they're doing this.
19:36
Do you think that it's just like one of those...
19:36
I mean, what's the average age in the House and Senate? It's like, I don't know. 80?
19:39
Kyla Scanlon: Yeah, it's bad.
19:42
Jim O'Shaughnessy: It's really bad.
19:43
Kyla Scanlon: Yeah, [crosstalk].
19:44
Jim O'Shaughnessy: And it was like, I worry that private enterprise is so many cycles ahead of government, that I just...
19:51
Unless government finally says, "You know what?
19:51
We want to learn, come teach us." Right? I don't know.
19:55
And I think that that is going to be something that your generation is going to have to try to figure out, because I agree with you.
20:00
Listen, you got to have government.
20:05
Kyla Scanlon: Yeah, you do.
20:07
Jim O'Shaughnessy: Yeah, totally you have to.
20:08
And yet you don't want a government that is bought and paid for by lobbyists, right?
20:13
Grifter capitalism, so to speak.
20:13
My friend Rory Sutherland has a great idea, and he's in the UK, and so he is like, "Why don't we try electing parliament by lottery?"
20:27
Whereas basically, you just get picked because that way, people would...
20:27
They would not have all those vested interests hanging over them.
20:32
Do you think that, especially like here in the United States, that it's something that we can solve?
20:38
Kyla Scanlon: Mm-hmm (affirmative).
20:42
I mean, incentives are so misaligned right now. The amount of...
20:45
[inaudible] that came out today that he traded one to five million right before big announcement and the market tanked.
20:49
And it was like a bad trade ultimately, but still.
20:53
And it wasn't like any ethical red flags.
20:53
It was probably standard, but you see it with Nancy Pelosi, you see it with the other fed chairs that were potentially trading on insider information.
21:04
And I think Congress and the Senate have traded about 300 billion in total this year.
21:04
And it's like, "Okay, what? Should that be a thing?"
21:10
Because then their incentives are skewed towards the stock market, and you see this with companies, too.
21:16
They're trying to do more for the shareholder.
21:20
They're going to buy back their shares.
21:20
They're going to issue dividends rather than investing in R&D.
21:24
Kyla Scanlon: And so I think that's the issue with the government, is it's not investing in R&D, it's investing in dividends and share buybacks, which are great to a certain extent.
21:29
But when you need R&D, which I think arguably the US government needs innovation, because we can't keep on going at this rate.
21:38
We're going to be either surpassed or taken over, probably, because we can't get simple things like a debt ceiling figured out.
21:43
There's going to have to be a fundamental change, and I think that there probably needs to be an age limit, because Mitch McConnell, who is from my state, has been in office longer than I've been alive and has done nothing for Kentucky.
21:52
And you can see it in Kentucky's economic structure, and so I think that there just needs to be these like fundamental changes with regards to incentives, and also the frameworks around policy and who can set policy.
22:08
Kyla Scanlon: And I also think lifelong politicians should not be a thing.
22:09
You should not want to be a politician.
22:13
It should be more like a civic duty, and then you should leave after two years and go back to being a doctor and engineer.
22:19
I think the whole structure just needs to be reconsidered, which is such a big ask, but I think top down, it's going to have to change. Yeah. Bottoms up, too. Jim O'Shaughnessy: Yeah.
22:29
So my other friend, Tim Urban, who does Wait But Why- Kyla Scanlon: Oh. [crosstalk], yeah.
22:33
Jim O'Shaughnessy: Yeah, so he's got this wonderful chart that goes, "Who you're mad at."
22:34
And it shows the rich people up here, and then he has another chart over here and it goes all the length of the graph, and it's grifters, right?
22:45
Kyla Scanlon: [crosstalk].
22:46
Jim O'Shaughnessy: And he goes, "These are the people you should be mad at." Kyla Scanlon: Yeah.
22:49
Jim O'Shaughnessy: And so I think that...
22:49
Well, it's going to be a challenge, because everything you said, I pretty much agree with.
22:53
I think that term limits have been something that people have been talking about since I was...
22:57
Well, since I was your age.
22:57
And they just never seem to happen, so I guess that's going to be one of those things that we just have to watch as it unfolds. Let's shift gears.
23:07
You wrote something really interesting about the Amazon model being fragile. Kyla Scanlon: Yeah.
23:13
Jim O'Shaughnessy: Tell me why you think that. Kyla Scanlon: Yes.
23:15
I mean, there's like a couple points to it, so it's just...
23:16
I've been labeling my theories lately, which is so presumptuous of me, but the idea is Amazonian expectations.
23:21
So Amazon has really instilled in us this instant gratification culture, this consumerism culture that we have, and Amazon's model hinges on this idea of just-in-time inventory.
23:34
So everything is going to be just-in-time, as you need it, whenever you want.
23:38
And now, we kind of have this supply chain crisis, which will, I think eventually be solved, but the Amazon model hinges on everything being perfect.
23:43
Like all the dominoes have to fall at the same time.
23:49
Kyla Scanlon: And so if one of those dominoes doesn't fall the right way, like a boat gets stuck in a port, or a factory catches on fire and it's not producing, or we have a global pandemic, Amazon's whole model kind of gets at risk.
24:02
And so that's the idea with Amazonian expectations, is they've instilled into the consumer this idea of, you can have whatever you want, when you want it.
24:07
Two day shipping, it'll be there in a cardboard box. No worries.
24:12
But when you have a supply chain crisis, that whole model gets a little bit more fragile.
24:17
Jim O'Shaughnessy: Do you think that unless the supply chain problem gets rectified quickly, do you think that this could be a materially negative thing for Amazon, and for example, their stock price? Kyla Scanlon: No.
24:32
I mean, Amazon's AWS, I think at the end of the day.
24:34
They have so many different arms that they work in, so I think people would be like, "Oh, Amazon should deliver it sooner."
24:39
But the consumer is pretty forgiving.
24:39
I think if it was four day shipping for a bit, nobody's going to be like, "Oh, we hate Amazon."
24:45
But I just think the whole supply chain crisis just really calls into light this instant gratification culture that we have, and how we expect things to be at our doorstep in two minutes, or two days.
24:55
So yeah, I think that [crosstalk] Jim O'Shaughnessy: Well, in New York it is kind of two minutes, so.
25:00
Kyla Scanlon: With all the instant grocery services that keep on popping up.
25:01
Yeah, that's a whole different thing, too.
25:06
Jim O'Shaughnessy: It's amazing, and another friend, Alex Danco, who is a big wig at... Kyla Scanlon: Oh.
25:11
Jim O'Shaughnessy: You know Alex?
25:11
Kyla Scanlon: Oh, my gosh.
25:11
Yeah, his world building papers are some of my favorite papers. Yeah. Jim O'Shaughnessy: Yeah.
25:15
Okay, so he's my only recurring guest on Infinite Loops, because we love to just chat with each other.
25:22
He has an idea that you should build a little viscosity into shopping. And what do you think?
25:30
Do you think that's a good idea? Kyla Scanlon: Yeah.
25:32
I mean, I think there's like...
25:32
You always need a little bit of room to have [inaudible] flexibility, so I think it's important.
25:35
Jim O'Shaughnessy: And so to shift gears, but same question, so I support a young artist who is in Manhattan, and I think he's your age, actually.
25:46
I think he's 24 and he has a myth that's — his idea is diametrically opposed to the idea of instant.
25:51
And I said, "So Dan, explain. Explain it to me."
25:51
And he's like, "We don't have an Instagram account. We..." They're artists.
25:56
"We don't have a Twitter account.
26:03
We don't have a Facebook account.
26:03
We don't have social media."
26:03
And I'm like, "Okay, that's interesting."
26:10
And he goes, "Jim, people my age are so used to getting everything instantaneously."
26:20
That they crave a scene where it isn't on social media.
26:20
You've actually got to go to their gallery, which is on 20th Street, Manhattan.
26:30
And he told me about one of their first showings.
26:36
He has other artists there as well, and 200 people showed up and they were all either your age or they were all basically with maybe a couple of exceptions of eccentrics who were 55 or 60.
26:50
Jim O'Shaughnessy: They were all in their 20s.
26:50
And he said it was off the hook.
26:54
We just did not expect it.
26:54
It was all word of mouth.
26:54
And so Alex and I often talk about how to create a scene.
27:00
And what I thought was really interesting was he was talking to people during it and everyone was gushing.
27:06
I'm the only one who gets to experience this. That is so cool.
27:13
And I'm going to tell all my friends, because they're just going to die when they hear that this went on and I was there.
27:16
Do you see that as a growing trend or is that just specialized to art?
27:22
Kyla Scanlon: Yeah, I mean, I kind of wrote about it in my most recent piece.
27:23
So the desire for analog I think is really coming up.
27:23
So similar to what Alex I think or the artist is discussing is we really crave these offline experiences, which I think is going to be an interesting development with aggressive crypto too and sort of thesis there.
27:37
But for my generation, it's like, okay, we've existed on social media our whole life, so we've been told to spend money and then show other people how we spend money.
27:47
Kyla Scanlon: And I think a lot of people are getting sick of that because it's like, wow, at the end of the day, I feel empty and I feel sad and I feel alone.
27:51
And I think that having these IRL experiences where you're able to tangibly have an experience that exists in this offline space is going to be increasingly important.
28:02
And I think that we're going to revert more sorts like analog versus digital moving forward in terms of how we consume some of our content.
28:07
So I totally agree with that. Yeah. Jim O'Shaughnessy: Yeah.
28:12
I find that really funny.
28:14
I'm a very, very early tech adopter.
28:14
So I had the first VHS machine.
28:14
Well, I bought it for my parents. I was still 16 or under.
28:21
I had the first computer.
28:21
The minute CDs came out, even though I had a massive vinyl collection, I got that.
28:27
And so it is interesting to see it go the other way, but I also understand it, right?
28:34
It's like in real life experiences, you can't be duplicated, and they are unique and unique is cool.
28:39
And I want to look at a note that I took on because I read another thing you wrote and it was a little formula, economic growth equals... What am I doing? Oh, flexation. I love that word.
28:50
Plus FOMO, plus instantaneous, plus community. Okay.
28:57
Tell me how you derived that equation. Kyla Scanlon: Yeah.
29:01
So I mean, so [inaudible] another hill that I have is this idea of consumer spending being the economic engine of the United States.
29:05
I think right now the United States probably doesn't need to be growing, GDP growth should not be the main metric that we are always focused on, because we have demographics that we have to worry about.
29:15
We have waste that we have to worry about.
29:19
We have climate change that we have to worry about.
29:19
And so my thing there was in how do we think about economic growth?
29:25
Kyla Scanlon: And it was still in the context of consumer spending, but this idea of flexation is the inflation of flexing.
29:31
And so I think with social media and the rise of social media, you have everybody flexing, but it's getting more and more expensive to flex, right?
29:35
So you have to flex bigger and harder each and every time.
29:39
And that's why different NFT projects end up mooning because it's like, oh, I'm going to use this as a flex good, and I'm going to show everybody else.
29:48
It's my digital Rolex, it's my digital Lambo, and that's why you have the... You have your Rolex on?
29:55
Jim O'Shaughnessy: No, no, it's not a Rolex. Kyla Scanlon: Okay. Jim O'Shaughnessy: Yeah. Just we old...
29:58
Rolexes stopped being cool 20 years.
29:59
Kyla Scanlon: Oh, oh really? Okay. Jim O'Shaughnessy: Yeah.
30:02
But I do wear an actual watch, I don't wear an Apple watch.
30:06
Kyla Scanlon: Yo, I have an Apple watch, so I...
30:07
Yeah [inaudible]- Jim O'Shaughnessy: My son thinks I'm eccentric for wearing a regular watch.
30:12
Kyla Scanlon: It's all you need, but it's a function of the flexation.
30:14
So the inflation of flex culture and then FOMO.
30:14
So I think a lot of what happens in society is driven by FOMO.
30:20
So people are going to want to be a part of different trends.
30:20
That's why Shein is so popular, and fast fashion is so popular, is because like, "Oh, I have to have exactly what other people are wearing all the time and I'm going to go and buy it and then throw it away, because I wore it once."
30:32
Kyla Scanlon: So I think FOMO is a really big function of how the economy grows and then instant feedback.
30:34
So I think like with Amazon and instantaneous gratification that I was talking about, that's a key way that the economy is growing too, is people want to know instantly and have stuff instantly.
30:48
So that instant gratification is a big function of economic growth and then also the desire for community.
30:53
So I think to the point that you were making about the art scene is I'm sure people went there because they were like, "I'm going to meet cool people."
31:00
Kyla Scanlon: And I think that's one thing that is a function of pandemic, and then also a function of us being online for so long, growing up in social media, is you do feel a little bit isolated.
31:09
You do feel a little bit like you're watching the world pass by through a window.
31:13
And so I think that we're going to see people seek out these communal structures more often and that will be like an economic growth engine as well. Yeah.
31:22
Jim O'Shaughnessy: That's very interesting because all of those things are as old as humanity, right?
31:25
Kyla Scanlon: Oh, [crosstalk].
31:27
Jim O'Shaughnessy: It's like the magazine Forbes that listed the 400 richest people in the country, I think it started in 1982 and they got that from Mrs.
31:34
Astor's ballroom in Manhattan, which could only hold 400 people and everyone would kill other people to get an invitation because [inaudible] you made it.
31:46
And so yeah, the whole idea of FOMO, I mean that is as old as the hills and it's baked into our human operating system.
31:50
And now, you have these weapons of mass destruction or distraction, right?
31:58
And so the one thing that I find very interesting though, because I hire a lot of younger people, especially for this podcast, because they're digital natives. Kyla Scanlon: Sure.
32:15
Jim O'Shaughnessy: And anyone who tries to claim that someone 61-years-old is going to be able to use all of those tools effortlessly as someone 24-years-old, they're in insane.
32:24
And you know what haptic memory is?
32:32
That's the touching of things, right? Kyla Scanlon: Yeah. Yeah.
32:34
Jim O'Shaughnessy: So, I have a friend who thinks that cash, actual cash, which I always joke is the original Bitcoin, right?
32:41
Because you can't trace it, right?
32:41
But so I'm 61, I'm used to paying with cash.
32:47
It gets less and less and less as you go down the age structure, right?
32:47
And so the haptic memory of what cash feels like is going to be lost, maybe not in your generation, but probably in the one that follows you, right?
32:59
I have a seven year old grandson and it wouldn't surprise me at all if he has no memory of it.
33:04
Jim O'Shaughnessy: So things could just change like that way as well.
33:07
But I think that digital natives have such an incredible advantage over others, like [inaudible], one of the guys I hired to work for me.
33:21
Its like he gets it done in no time at all and I'm marveling at it and he's just like, "No, this is easy."
33:28
So that kind of leads me back to your idea about your company.
33:28
Do you think you're going to have people who work for you or are you going to be able to do this whole thing yourself?
33:36
Kyla Scanlon: Oh my gosh. Yeah.
33:36
I mean, that's just like a internal conflict at all times for me. It's very much... I don't know why it is.
33:38
I don't know if it's like being from the south or however, but it's very much like, oh I have to forge things alone.
33:50
So I definitely need to hire people because I'm not technical.
33:50
So ideally, having somebody to help develop the website and the app would be awesome, rather than me learning how to code.
33:56
So ideally, yes, I'll hire people.
34:01
That would be the main goal.
34:01
But yeah, I think it's hard to ask for help sometimes with that stuff. Jim O'Shaughnessy: Yeah. Yeah.
34:07
I think that's smart, but of course, you can use contractors, right?
34:07
You can have a contractor build your website, you can have a contractor do all the other tech stuff.
34:11
And I'm fascinated by this idea that at some point in the next 50 years, there's going to be a trillion dollar company with one employee.
34:22
Because of the leverage of technology.
34:30
One of the things you also talk a lot about, which is something I actually believe in very deeply is the idea how collective beliefs form, and how powerful they are.
34:35
What led you down that road?
34:45
Bitcoin or something else?
34:45
Kyla Scanlon: Oh, I don't...
34:47
So I'm a big philosophy nerd.
34:47
So I think just by reading a lot of philosophy stuff like the collective nature of humans drives, well, most everything, right?
34:52
So collective belief driving the value of the asset, that's essentially the whole functionality behind Bitcoin is people believe in it, price go up.
35:01
You could argue the [inaudible] the stock market, to the extent that yes, [inaudible] needs to have earnings.
35:05
Kyla Scanlon: Also Tesla, collective belief is driving the value of the asset there.
35:07
So I think for me, it's just something that I noticed and read about.
35:13
I'm very much a student of the game.
35:13
Nowhere am I like a pontificator on all this stuff, still learning a lot. But yeah.
35:19
I mean, I think community and just how we think of communal structures.
35:23
That's ultimately probably the most important thing and the most human thing that we could do.
35:28
And I think people forget that we're animals at the end of the day, and so we're going to have this community desire and obviously, if you get a bunch of humans together, they're going to move places. Yeah. Jim O'Shaughnessy: Yeah.
35:41
You might be interested in mimetic theory, which is copying basically.
35:41
Luke Burgis, who I had on the podcast, wrote a very good introductory book called Wanting. You might enjoy that.
35:48
Because if you build these things together, it's really interesting the way you can see how it unfolds, but you also see how this has been human being behavior since the get go, right?
36:01
And we just have much more awesome tools to do that with.
36:09
And so I think that you, for example, could just have your own company and do very, very well with it.
36:18
I want to go back to something you just said and it was, you said being from the south. Okay? So... Kyla Scanlon: Oh, sure. Jim O'Shaughnessy: Yeah.
36:27
So, tell me a little bit about that.
36:27
Do you really think that there's still really strong differences between the parts of the country? Kyla Scanlon: Yeah. I don't know.
36:36
I was really grasping for straws a little bit there, because I was just like, I don't like working with people and so I was trying to justify it. So I don't know.
36:40
I mean, I think that it's been interesting.
36:47
So when I first moved to LA, it was such a steep learning curve.
36:53
I'd never been in a big city.
36:53
I was still walking around like it was my small town that I went to college in, had a bunch of different run-ins because I just wasn't careful enough.
37:03
Kyla Scanlon: And so I don't think that you have...
37:03
When I said that I wasn't implying going from the south like, oh, so I think differently than the rest of the world.
37:08
But I do think there's different environments that you grow up in and that does shape, nature versus nurture, right?
37:14
That does shape a little bit of how you see the world and how you interact with it, because for the first 21 years of my life, I was in a pretty Southern environment, I guess.
37:25
And so that changes how you think about stuff versus being in a city. Jim O'Shaughnessy: Yeah. Yeah, sure. And you'd really...
37:29
LA was the first big city you'd ever been in?
37:31
Kyla Scanlon: So I'd been in a couple other cities.
37:33
I'd visited Chicago, I'd visited Las Vegas, but I'd never lived outside of Kentucky.
37:39
I grew up a little bit in Connecticut, but we only spent a couple years there.
37:44
So Kentucky was my only real experience and then moving to LA, which was one of the biggest cities in the country.
37:51
You just learn quickly what the world is like. Yeah. Jim O'Shaughnessy: Yeah.
37:56
Well, Kentucky is a beautiful state.
37:59
Kyla Scanlon: Oh, I love it there. Jim O'Shaughnessy: Yeah.
38:00
It's absolutely beautiful.
38:00
But now, we were chatting before we started recording the podcast.
38:02
You're splitting your time between LA and New York.
38:07
I mean, whoa, let's talk about two of...
38:07
I always joke that New York really isn't part of America, it's its own dutchy that just floats around over here.
38:11
What do you think of New York City?
38:17
Do you like it or loathe it?
38:17
Kyla Scanlon: My first time here was a month ago.
38:19
I'd never been to New York City until a month ago. Fish.
38:24
And so, I really like it.
38:24
I walk everywhere in LA, which you shouldn't do.
38:24
And so it's really nice to have a city that actually supports that.
38:30
I think the electricity of the city is really interesting.
38:36
How electric, it feels like there's a bunch moving.
38:36
It feels like there's a bunch of things happening all the time.
38:40
And so, I really like that.
38:40
I feel like it's just very energizing, versus LA.
38:44
LA's really great, but it's not for me.
38:44
It's a little too laid back. Jim O'Shaughnessy: Yeah.
38:52
I always say that you either feed on New York's energy or it feeds on you.
38:56
And so, if you can feed on its energy, I don't know.
39:02
I've traveled, I've been to most parts of the world and to most of the world's major cities.
39:07
And while I love other cities from London and on down, New York is a pretty interesting mix.
39:07
And definitely the thing about walking. Right.
39:16
Jim O'Shaughnessy: When I was still the principal salesperson for O'Shaughnessy Asset Management, I was in LA every month because we had a lot of clients out there.
39:22
And I just was so amused.
39:22
One of the advisors were like, "Okay, we're going to go see the end client now." And I'm like, "Cool.
39:32
And we'd go down to the garage.
39:32
Jim O'Shaughnessy: And I said, "Hey, wait a minute.
39:34
Aren't they two blocks down the road?"
39:34
And he was like, "Yeah, yeah."
39:40
And I went, "Come on, man. Alan, we're walking." And he freaked out.
39:48
Just like, "I don't want to do that."
39:48
The cultures are very different.
39:48
And my wife is a street photographer here in the city.
39:54
Kyla Scanlon: That's lovely. Jim O'Shaughnessy: Yeah.
39:57
I don't think we could go anywhere else. Okay.
39:57
One other thing I wanted to ask you about is, what kind of investment style do you do? Kyla Scanlon: Uh-oh.
40:05
Jim O'Shaughnessy: How do you invest?
40:05
Kyla Scanlon: That's such a good question.
40:06
It's like one that I used to...
40:06
I don't know what happened, but all my work, I used to do a lot of single stock analysis, was very into fundamental work and built my own models and stuff.
40:12
And then all of a sudden, my work started slipping into different frameworks and different ways to think about the world.
40:16
Kyla Scanlon: I still invest and I have a pretty big exposure to tech obviously, my portfolio.
40:19
I also have exposure to waste management companies and some of those more recessionary companies, have quite a bit of exposure to Ethereum.
40:30
Very bullish on that one.
40:30
Not investment advice, obviously. But yeah.
40:30
I mean, I think my portfolio is relatively boring.
40:35
I look at companies like Square and I'm like, "Okay, I think they'll do okay."
40:41
Kyla Scanlon: And I put money in them and then I have a couple different ETFs.
40:42
And then I have my waste management companies, which I'm very bullish on because I think that we waste so much. And so, it's like that.
40:50
This is probably not great to admit, but yeah, the theses are just more so like, do I think it'll do okay in the next five years?
40:53
I don't have a price target. Yeah.
40:58
Jim O'Shaughnessy: And no underlying process?
41:02
We're quants and if it doesn't meet the model.
41:02
I was thinking of all the hullabaloo on Fintwit about the guy who was on CNBC. Kyla Scanlon: Oh, shit.
41:11
Who didn't know what his stock did? Yeah.
41:14
Jim O'Shaughnessy: I don't watch TV anymore.
41:16
I only saw it on Twitter, actually. Kyla Scanlon: Oh, I see.
41:19
Jim O'Shaughnessy: I started laughing and because the only person who can get away with that is a quant. Right.
41:23
Because if they said, even though I always did know what companies did that I was going to be talking about, if I didn't, I'd just say, "Well, we don't really care.
41:28
It meets all of these factor characteristics." Right.
41:33
That brings me to another question which is, is there too much just promotional and grifter style stuff out there?
41:39
Or do you think it's more limited? Kyla Scanlon: Yeah.
41:48
I mean, you're asking a TikToker.
41:48
That's literally, probably 70% of financial TikTok is these people that are pumping coins, or pumping a stock.
41:57
And, "Oh, go invest in this," because they know that their banks will get filled.
42:02
And then I think it's honestly, the same with some of Fintwit.
42:02
It's like, "Okay, I'm going to express my position and you should also do this."
42:06
Kyla Scanlon: And I make it super clear to my audience.
42:09
I'm like, I'm never, ever going to tell you what to buy ever because that's not what I want to do. That's not why I'm here.
42:14
I'm going to help you learn about the fundamentals, but I'm not going to tell you what to buy.
42:18
Or else I would've stayed at Cap Group and tried to become an analyst.
42:22
Kyla Scanlon: I think, yes, there is a ton of grifter out there.
42:24
It's like, it's quite unfortunate.
42:28
And I think it's really interesting.
42:28
One of the theses that I'm working on right now is this idea of investing versus gambling.
42:32
And so, I think right now we have a bunch of people that are pumping a gamble.
42:37
They're like, "Okay, go throw your money into here with us.
42:37
And we'll do it together."
42:40
I think the stock market has become a little funny in that regard. Yeah.
42:40
It's like, get your bags filled. It's weird. Jim O'Shaughnessy: Yeah. Yeah.
42:46
It's called the greater fool theory. Kyla Scanlon: Yes. Yes.
42:48
Jim O'Shaughnessy: You have a very unique sense of humor.
42:50
How much time do you spend preparing each one of those TikToks? Kyla Scanlon: Yeah.
42:57
Oh, it's funny that you say that. The word unique is...
43:01
So somebody left a comment on one of my TikToks and they're like, "Are you making jokes? Because I can't tell."
43:05
And I was like, "Oh, it's dry humor."
43:05
And they were like, "Oh, I don't think it is."
43:11
Kyla Scanlon: And so I think for me, the humor that I have is pointing out the absurdity in finding truth in the absurdity.
43:16
How long do the TikToks take?
43:22
Right now, I've gotten it down to be pretty efficient economies of scale almost.
43:22
They probably take about maybe an hour to write and then probably two to four hours to cut and film.
43:35
It takes about that long.
43:35
But yeah, the market's made it pretty easy to develop jokes around it, but that's funny, the unique sense of humor.
43:39
Jim O'Shaughnessy: Well, and so I'm a huge believer though in that, if you're going to tell the truth, you better be funny.
43:47
Billy Wilder had a great quote, which is, "Yeah.
43:47
You can tell the truth, but you better be funny or they'll fucking kill you." Kyla Scanlon: Yeah. True.
43:56
Jim O'Shaughnessy: And so, humor is a great way and that was what first made me interested in you, honestly.
44:02
Because I was like, "Okay, I love seeing this.
44:02
I love seeing another young person, who's literally." And you are.
44:07
You're calling them out on all their bullshit.
44:12
Kyla Scanlon: [crosstalk].
44:13
Jim O'Shaughnessy: Yeah, well, but you're also doing it in a really funny way, which is when you can entertain and yet, also educate, that's a powerful combination, in my opinion.
44:22
Kudos from me for that, because I think you'll serve as an example to other young people who hopefully, have a sense of humor.
44:29
Because if they don't do it.
44:35
Because people will then hate you.
44:35
And with you, you're entertaining them at the same time.
44:41
Jim O'Shaughnessy: Thank you so much for coming on.
44:41
We have a final question on infinite loops that sometimes it's really funny.
44:44
I watch the people's faces when I ask them the question, because some people, you can tell that they're listeners because they anticipated it and thought about it a lot.
44:54
And other people, even if they've listened, they'd forgot about it.
44:58
Jim O'Shaughnessy: The question that I ask is, we're going to make you the Empress of the world for one day. You can't kill anybody.
45:08
You can't put anybody in a reeducation camp.
45:08
But have you seen the movie Inception? Kyla Scanlon: Yes. Yeah. Jim O'Shaughnessy: Okay.
45:15
You can incept every human on the globe.
45:15
They're going to wake up the next morning and they're going to have two thoughts that they're going to think were their thoughts. What do you got for me? Kyla Scanlon: Yeah.
45:29
I mean, I think the first thought would probably be something around collaboration and also, the polarization of the world.
45:32
I think everybody takes things a little bit personally right now.
45:38
The first one would be, "Hey, not everybody's trying to destroy you."
45:43
I think that is a very human nature response.
45:43
We've always been a us versus them model.
45:48
Kyla Scanlon: And so, I think it'd be really interesting to be like, "Okay, instead of attacking each other, what if you collaborated?
45:55
What if you moved together on different projects?"
45:55
I think that would be the first thing that I would do.
45:59
The world is not against you, kind of thing.
45:59
And I think that could probably help with mental health to an extent as well.
46:03
That would probably be the first one.
46:08
Kyla Scanlon: And then, I think the second one would be around nutrition.
46:10
How can you consume better for foods?
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How can we go and farm better foods?
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Create frameworks around literally consumption culture, that's a little bit more beneficial to us as people.
46:24
I think that's one thing that doesn't get quite enough attention is the processed foods that we consume. And I eat them too.
46:29
I think everybody does because you almost have to, just to a certain extent.
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Kyla Scanlon: That's going to be really detrimental to us.
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And I could easily see generations in the future, looking back and be like, "Oh my gosh, I can't believe that they ate that red chemical dye and survived."
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I think those would be the two things.
46:44
It's collaboration is the key.
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And then also, nutrition is very important.
46:50
[crosstalk] Jim O'Shaughnessy: Perfect. I love both of them. Thank you so much.
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This has been a lot of fun.
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[crosstalk] I think you are going to go on to do great things.
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And we will definitely keep an eye on you and watch your progress. Kyla Scanlon: Thank you.