foreign banker and everyone's going to say Jamie Diamond but the richest Banker is a guy I had never heard of before I read your piece named Andrew Beale we should all set up our own banks no that's not possible because you can't really invest in whatever you want to invest in and so it's too restrictive and at some point I
thought well it didn't didn't feel kind of do something like that and he buys billions and billions of distressed assets while everybody else is um you know orchestrating this fire sale whenever you find yourself on the side of the majority it's time to pause and reflect don't style drift like stick to
what you know but the reality is like the world always changes and you have to adapt and evolve with that and have the mental agilities I think it's easy to find someone who's really good for a cycle and it's very hard to find someone who's good for several Cycles if the pigeon was pure wedding in a particular
way in the food it comes the pigeon spends the rest of this time you're a wedding people are very good at that game they're almost to me a little bit like Alchemist right I think it's taleb who says that if there's two people you're trying to pick between and they have equal credentials pick the guy who doesn't look the part foreign
with yet another in Trump too infinite loops with my good friend Frederick geishen and we're just talking about his incredible blog that I have been a subscriber to for a long time and he's thinking of maybe changing the name so let him hear on Twitter any other social media or sub stack or anywhere you could find Frederick which one you
like better I'm gonna I'm gonna give away the two that he's considering it might not be either but it could be both it could be a subheading it could be the title could be the Alchemy of money which I like very very much as I joked to Frederick before we started recording I've been calling myself a symbol of
manipulator since uh way back in the way way back machine but then the other one's very intriguing the maze and what's in the news a lot now are all the funny memes being made about a certain someone saying that he was in the arena and when when Frederick told me the maze I thought I immediately thought you know that's a better
description to my way of thinking of what the arena really is right so the Reno of course the famous quote from Teddy Roosevelt you know don't why cheer from the sidelines when you can play in the game is the way I look at it I prefer to play in the game Frederick for first play in the game but the game
maybe is not just the arena where everything's known and set up right Frederick sometimes when we enter what we think is the arena we're actually going into a labyrinth or a maze or something like that and we're going to talk to about that too but I wanna go ahead you don't want to jump right into that now that you've set it all off
I'm like oh yeah you're doing such a good way of uh such a good job of pitching that and and the arena one I'm so surprised this was the kind of a Cambrian explosion of of memes this was a very few good few days on on Twitter it was fabulous and of course everyone who's talking about the arena themselves is just
sitting at the desk and the arena is our you know spreadsheets and Bloomberg and Twitter so it's all it's already hilarious I thought Boats were the funniest of the memes right and what were the guys or women who came up with the meme they showed the Gladiator with the guy you know with some shopping
somebody's head off that's the real Arena and then what they call the arena it's like some word cell or think boy behind a laptop it's your podcasting setup it's quite the arena um well to me the maze I mean I I like the arena is it's interesting as kind of a framework for you know your outer like you're taking risks you're going out
there um but for me the inner journey I was thinking of of the labyrinth and sort of you go into your own underworld and there's things that you're avoiding right there's a there's a monster there's a Minotaur and that's standing in the way of you and the center whatever it is whether you're looking
for Treasure whether you're looking to to change as a person whatever is it is there are things that you're afraid of and that are keeping you from basically growing and and going through that transformation and then coming out on the other end and as I explored that metaphor I mean the the Greek myth is I was like
oh this is all fully formed but life is not quite like that right because in a labyrinth you have one path to the center and all you have to do is keep going you kind of know you'll get there right it's it's the spiral type setup and all you have to do is be courageous enough and go through the um through the darkness
and and maybe fight a monster or two and you'll you know you'll get there but life is a little bit more like a maze I feel like there's there's multiple points of exit you can get lost there's all these dead ends and you see that all around you like people make bad choices and ultimately you can arrive at pretty
bad outcomes right you can lose all the things you hold here in life right your health your loved ones your money your freedom there's there's a lot of um outcomes that feel a lot more like okay I gotta make sure I get this right and I need um I need certain things I need to prepare myself when I do that like one of the
ideas in the in the Labyrinth myth is that you need a thread connecting you to the outside world to find your way back and I thought that was really interesting as a metaphor of its own you're going on in on this journey by yourself kind of in your own uh maze but you have a thread connecting you to people you can trust
and you know you know there's there's this Bond and there's people who make sure that threat doesn't get untied from the from the beginning um so even though it's your own Journey ultimately you want to make sure you're not totally alone right you have you have a bond to a community who understands what's what you're going
through and so to me there's all of these different layers to this um to this uh metaphor and I'm thinking it's it's I use it all the time now for anything else relates to an inner Journey where someone who's like I want this thing I want to change in this way and they're not completely looking at
what is keeping me from that and and what is this you know it's like the hero's journey but it feels a lot more um real to me because you kind of have to pick up a sword and go down there and and you don't really know in the beginning where you have to go it's a maze right and you can you have to I don't know it's like it it that to me
it feels feels exciting and a little bit scary and I think that's what a lot of life is the um the you have to face the fear to get to the part that really excites you yeah they uh I mean like uh Robert Anton Wilson calls it Chapel perilous and uh there's all sorts of and of course Campbell bureau's Journey he he
one of his better known quotes is the treasure you seek is in the cave you fear to enter and like all of these metaphors right they all if you like really unravel them they they all come back to some sort of fear-based thing that's blocking you yeah and uh I find that like fascinating and I remember I can't remember whose
quote it was but it was uh about all of like the the uh esopt uh fairy tales right these These Old stories right that survived they just survived over thousands of years and that that makes them very interesting right from a anti-fragile point of view yes that they that they just keep surviving and the
other thing that happens is they get compressed compressed compressed compressed and and so that you're getting like almost it for the good ones you're getting pure information right yeah and and I think the quote was something along the lines of E you know it is so much um that uh these fables teach us that
there are dragons that we should fear rather these fables teach us that we can conquer and beat those dragons that's worth doing so yeah yeah exactly I always thought that that was a great twist yeah I actually I mean I don't know that this is new but it was new to me right so this idea of of the Lindy wisdom and
like mythologies and obvious one but there's others where maybe there's something for you know infinite uh the infinite umbrella but really going back and figuring out figuring out what has survived and endured across cultures right and like Miss is one but there's other like you know certain types of music or move more like there's there's
components of culture that seem to be pretty uniform and that survive and maybe some of that we've discarded over the last 100 plus years and you kind of lost some of that wisdom and it's and it's worth discovering and figuring rediscovering that and figuring out what um why did that survive for thousands of
years like I read the um I finally read James nestor's breath which I initially rejected because I was like this book is hyped and I'm a contrarian and so I don't need it you know I come complete ridiculous um reaction to it but I've done a lot of breath work this year and and some of it was was very very potent
um and so I finally read the book I was like oh much of this has been around for thousands of years and um kind of signs is rediscovering it and stripping it from the spiritual serving it off the spiritual component but it's it's techniques that um you know kind of are as as ancient as as many of our cultures or so
I don't know I feel like we're quick to dismiss some of that and maybe it's a little bit out there maybe it's a little bit when people like okay I don't really you know the people who do it wear funny clothing like wait because we still we should investigate right and figure out is this possibly be good and and come at
it with you know that kind of beginner's mind I love it um and uh yeah we are we are simpatico in our thinking because uh you know things like um uh Noah's Ark right uh very simple uh and yet uh as you know I love Ai and and you can use it uh to investigate all sorts of things and so one of the things
that I was investigating uh was like the commonality of myths and I didn't know uh that the myth of a great flood is pretty much Universal and and it's in every culture um in some form or another and I was very interested about that right like if you grow up in a certain set of circumstances you know it's like
what did mcluhan say about first you create your tools then they create you and and and so you know first you create your myths and then they create you and you kind of think your myth is the right myth right because you haven't thought about it too much and then you realize wait a minute all these cultures that
like I know nothing about her I've never even heard of some of the cultures where I was learning about the fact that the the universality of the myth of a great day uh and then it gets interesting because then maybe you're maybe maybe you're looking at something that is an archetype that is a universal archetype
not just specific to like weird cultures using the book title as the definition of Western Rich you know countries yes yes yeah interesting I think yeah go I thought you were going to sell me portfolio insurance with the under the The Arc metaphor I was like wait what is coming is this a pitch to survive the next bubble you
know what's wonderful and as you know uh like as we were saying before we started recording I am in the I am incredibly grateful and lucky to be in the place where basically on my pitching days are over like you know you can either listen to me you can tell me I'm [ __ ] insane I don't really care and so the degrees of freedom that that
allows is really nice and what what I'm trying to do is I said to you and why I'm talking to you right now my friend is that I want win-win uh uh adventures with people that I like and and so when you use that as you're sorting mechanism it makes life a lot more fun at least yes yeah I mean always reminds me of
Buffett said this thing of you can do a good deal with a bad person and then he also selects for obviously people he likes and this is just a mentally filed away draft but I think the one time he definitely skirted that rule is when he got involved with Solomon and of course the whole thing not just blew up but I
think good find like there's there's this moment when as it was blowing up they were hiding things from him then they were setting him up to like you have to fix this uh and I think the guy wanted a golden parachute and there was this dinner and Monger was blowing up over the dinner because it was like this
thing is a huge mess and you're here trying to you know um extract the last you know a golden Parachute from from the burning ship where it was just to me that was like one of those obvious moments where you have a you have a good rule but then you in your own career you progress and you acquire this gravitas and you acquire
you know a different set of social circumstances and maybe come close to you know it's easy to have a rule and then also get tempted to maybe in this little instance because I want to put some money to work or maybe this person you yeah I I think it's a really good Rule and I think especially in Wall Street
but also generally in life you'll always get tempted to make an exception and uh yeah it's good to always remind yourself of of those kinds of first principles only and what a great way to lead into what I want to talk to you about today because this really is an impromptu I texted you just what an hour and a half
ago yes yeah and and I was prompted to text you because I read your excellent article that that's what I want to talk about today and and you have the a great line in there so I chose it to introduce the comic and and your great line is who is America's Best Known banker and everyone's going to say Jamie Diamond at
least everyone I know is going to say maybe they might name someone in the bed but we're talking about commercial Banks yeah and and then you say but the richest Banker is a guy I had never heard of before I read your piece named Andrew Beale America's richest banker and as I read your piece I just saw it like this is
almost a Master Class about like if you're trying to maximize your objective function for making money this guy has a pretty good formula so I thought I thought it would be great if you could just kind of set the story up for us um and and then we'll we'll have a conversation around like how he did this
what what's really smart about what he did maybe what we could suggest as an improvement I just thought that we should we should all set up our own Banks and yeah you just texted me was just enough time to put about a shirt and instead of the camera you should already sure you want to do this right now
um so I'd first heard about Bill there's a book called The Professor um the bank of the professor and the suicide King which is about a poker game so be all the self-made Banker shows up in in Vegas and challenges all of the America's top poker players and I'd read that and that was kind of interesting and then there was no biography on him
and you kind of went away again um and then I did a piece on a couple of pieces on Buffett thinking about the alternate history of what if at Key junctures Buffett had made a different decision or something had turned out differently how could his life have played out and one of them was well he went big in Insurance
um uh what if he had become a banker instead right he owned a little bank at one of his first Acquisitions was one he had to divest it like could he have you know made a fortune in banking which is another kind of average industry but every once in a while somebody figures out a way to still make a fortune there
and my first I was like no that's not possible because you can't really invest in whatever you want to invest in and so it's too restrictive and at some point I thought well it didn't didn't deal kind of do something like that and so I started digging into him and it's pretty fascinating because his story his story does not at all
start out like somebody who would make uh 10 billion later like he grew up in Michigan he had a bunch of these odd jobs started putting that money into a Fix and Flip real estate deals and um then in the 70s and 80s he has a few things in real estate that started to pay off like he buys these distressed
properties from the government um and just has a few home run and Investments where he basically fixes up the property sells it to someone at a at a cap rate and then in the 80s right there's a savings and loan crisis and he ended up in Texas because of one of the properties that that he bought Texas was going through a
real estate and energy downturn and so he's like oh all the banks around me are failing and I have this windfall from one of the deals that I did what am I going to do I'm going to start a bank right I'm going to take advantage of all of this and he was already he was you know a scrappy guy or like he was running all these
small businesses focused on real estate and always looking at at kind of how can I buy something of value and turn it around and he started just apply that same thing in real estate I'm sorry in banking except with access to a leverage right so similar to to Buffett and so you could see the first few years
in the Savings and Loan crisis he just bought all of these things from the government at deep discounts the government is like okay I just want this stuff off my hands he buys it and when the opportunity set dries up he's like okay there's nothing to do I guess I'm not going to do anything so he waits you know 2 000 runs
around comes around there's a recession there's 911 so he buys the aircraft bonds and he just always finds a way to keep this thing going and look for the next opportunity in something where there's a distressed seller or somebody just you know scared of the sector and the big turn I think comes in the
mid 2000s right when the housing boom is underway and all the bankers are out there just just getting rich and playing while the music is going and um you know what does he do he goes to Vegas to play poker he really shows up at the office his um his bank he's trying to rent out space in his office because he's let out I think a few
hundred people he's let go of because the the bank is basically shrinking right and he's like I've got nothing to do all the loans are crazy and there's a great quote from the person who did loan Acquisitions for him and they even refused to buy regular Home Loans you know backed by Fannie and Freddie and the guys like everybody's
laughing at me because we're not doing these deals and they're like this is guaranteed by the government and Beale is like look these guarantees are worthless like he saw what was coming um the only thing that he didn't realize was it was going to take you know four years to play out so he's sitting there
and sitting there and waiting and um you know lo and behold the financial crisis comes around and he buys billions and billions of distressed assets while everybody else is um you know orchestrating this this fire sale because they're there's because they're failing um and then the same thing repeats you
know over the past 10 years because you know uh markets recover uh interest rates go down and there's again nothing nothing to do so to me it was kind of this original value investor formula of look for downside protection look for a really cheap asset um try to do it with you know leverage or other people's
money do it smartly you know whether that's Insurance float or in a fund structure or in his case he does um he does use deposits but he only uses them basically when he sees a fat pitch right and and so do it smartly don't don't blow yourself up with leverage you use it only when uh when there's a really asymmetric opportunity available
and so you can see um and somebody on on Twitter Iceman thank you so much for that helped me pull all the FDIC data and you can kind of see in the assets for his he has now several Banks um it's kind of like this this wave that goes up and down as uh as there is a boom and a bust and he scales it up and
down like a like a hedge fund portfolio basically where you go up and down in in exposure uh to the market so yeah yeah so so the thing that really made me fascinated was first off uh very unusual uh uh background for a banker right um and I think it's taleb who says that if there's two people you're trying to
pick between uh and they have equal credentials pick the guy who doesn't look at the part to last yeah yeah yeah because because he probably had to work quite as hard to get there um and but you also tell kind of the back story about he had an uncle who fixed TV sets uh that they would buy broken TVs for like a buck to two bucks
and then they would resell them after his uncle fixed him for between 30 and 40. I mean talk about uh those are Venture Capital returns that's true that's true a lot of his early businesses were kind of um finding something fixing it finding something off value but underpriced fixing it reselling it and then using
um basically compounding the earnings by putting the money back into something that's cash flowing like a a you know house like a rental um and so kind of already yeah I guess it was the same same idea the same seat and ultimately same mindset that just transcended from from that into yeah and and and the other I was out with my
friend Michael mobison last night for dinner and I've been kind of fascinated by the you know can can we use the big five uh personality profile to make assumptions and or predictions about what type of investor somebody's going to be whether they're going to be a good investor not Michael agrees that he
thinks there's something there and so we're actually gonna maybe work on something together uh that that would uh that would test that out we probably could be wrong probably are wrong uh but the one I'm thinking about is um uh with with Beale in particular it seems to me that one of the characteristics that you have to have
and the reason I'm bringing up the the big five is this agreeableness uh Factor so on the big five I score very low on agreeableness and yet I find myself to be a very agreeable person that that that isn't what they mean by that though yeah what they mean by it is people who uh score very low on agreeableness and my guess
is that Andrew would score near the bottom decile uh is is that if if they think something looks obvious and that things are stupid they not only do they not do that thing they they go out of their way to say that's [ __ ] dumb and and why are you doing that and and the thought like as you were giving the
background on on how he got into becoming a banker is like you know you had a quote in the article that made me think of the big short and and what he was saying is and you brought it up in in your uh introductory remarks like all everybody knew that Fannie and Freddie that was just like treasury [ __ ] no it wasn't and and so I love the fact
that he's like yeah no that's [ __ ] dumb and uh go ahead keep buying them keep dancing uh music music's gonna stop here and and then there's the the quote uh that they attribute to Queen Twain probably isn't his but along the lines of whenever you find yourself on the side of the majority it's time to pause
and reflect right yeah and and so let's let's let's segue a little bit into like this guy is really an interesting character I mean he he blew 200 million on an aerospace thing uh because he just loved the idea um I love and then he's got a math problem that he actually calls the Beale conjecture that he offers a hundred
thousand dollar prize on I really like this guy I think I maybe want to meet this guy or have him on the podcast well what do you think yeah I think if you could get him on the podcast that that would be interesting to me um there's all these others to me this comes back to right okay agreeableness
definitely an independent thinker right I think in investing you have to be a little bit careful with the just being a pure contrarian because most of the time the market goes up you know the long term and so you don't want to be on the short end of something absolutely true just because you you don't like the the
herd so but at these key junctures you have to really think for yourself and I think that's not just that's not just what he did but also there's all this evidence of him just following his curiosity right he reads an article about how expensive I think the first article he read was about satellites and
that was interesting but then it was too expensive to shoot them up into space and then you know his mind starts going like okay what if there was a cheaper way to get them into space now turns out he's not Elon Musk right it might take someone with a lot of engineering pedigree um to to pull that off and so for Bill
like he tried it and I think he lost or the Venture ultimately cost 200 million and he had this quote where he said you know people thought I was crazy it was like this midlife crisis and he's like well it was just a calculated risk right is something he really wanted to try and then he ring fenced how much money he
could afford to to invest in it and when it didn't work then it didn't work and um so to me this was all indicative it might actually be useful right to me it's indicative of this somebody who's like using a really interesting problem and I want to try to fix it it's not always going to work right I have to be willing
to place bets that have some chance of working out but I can't just go for the sure thing um but I'm also really willing to to do the work and go wherever in my own instincts lead me and I was thinking why was he able to not play when everybody else was playing right and I think there's a
degree that there's character but there's also the conditions that we create for ourselves right and if you run a fund or if you run a publicly traded bank and you're a CEO you can't maybe you can but most of them you can't really shrink the bank for four years and do nothing and fire all kinds of people right your board's gonna fire you
your shareholder is going to hit like it's not it doesn't work and so it struck me because it was a moment where one of his board members was like are we a dinosaur like we're shrinking we're not doing anything you know The Regulators are kind of asking us why why are we raising money because that's
another thing he did he sold preferred stock she didn't give up Broner [ __ ] but he was like the risk of my own bank is underpriced I'm going to raise money even though I don't need it before I actually do need it right and so he created all of these conditions including things for himself to do right
that he had these other interests that kept him busy I mean I'm convinced that you know any any smart investor entrepreneur the mind is always going right there's always an itch to do something to find something that's interesting to to solve some challenge some puzzle so if you're sitting in the office all day
you know on the market you don't really get it you don't there's nothing really to do it's very hard I think to to resist the urge to play unless you're like okay I'm gonna do these other things right now solve some math problem play golf go learn something new right and and make sure that Temptation uh doesn't take
over so he did that and he also created the conditions that allowed him to be patient like he controlled his own destiny by owning all of the bank um he had enough Capital he had things to do and he cut staff right like he he kept the cost basis low and that obviously that's tough right I think employees it's obvious that that was to
his benefit and other people were worse off for that um but I think you could make the case that someone like him running a public bank or running maybe a hedge fund to write like a credit hedge fund or something like that and being under the gun for performance every quarter every year um would have eventually made different
decision I think it's really easy to imagine ourselves like oh I could have seen that I could have figured that out and then I would have done that well would I is every month every year people are prodding me like why aren't you doing this you're like you're an idiot for not picking up that Nickel in
front of the steamroller right it's really hard to um actually pull this off and for years um you know just just sit and and watch and have the confidence that you're ultimately going to be proven right that's the other thing right he said like he thought this was going to be over six months you know from from when
he started to think he was crazy and then it took four years or something from 2004 to 2008. [Music] um that's a long time yeah like I'm on Twitter like a week Fields a long time there's a new meme cycle coming uh four years is a long time to not um make money when when that's really what you're focused on yeah and the
insights that you drew there I think are are worst like really pounding on because first off the agent principle problem right so if if you for example I I'm lucky enough to on our Venture side we don't have LPS so if we get conviction and even if other people think it's crazy we'll do it and that frees you in
a way where if I'm being honest if I was running a publicly owned vehicle or if I had LPS I wouldn't make decisions the same way I've actually felt that so you know for me I I can I can totally get that but the other thing that I think about when I was reading your piece was a throwback to the way investment banks used to be
organized investment Banks not only did they have the names of the partners as the name of the institution right JP Morgan was Mr JP Morgan right and they were Partnerships why was that important because they had their skin in the game there was no like grifting yeah sure well grift if it's not our money but if
it's actually our name and our money on the line that leads you to very different thought processes very different times where you're willing to pull the trigger very different times when like if you are really that much I have another friend who calls it soul in the game if your name is on the door and it's all your money
you are gonna make very very different decisions than if you have to be a pub like you say if you're a public institution or if you're running a credit card and you're like yeah we're not going to do anything for four years you're gonna be out of business because all of your LPS are gonna fire you where
your board's gonna fire you and and it to me it's it's such a great Learning lesson that that like we have optimized for exactly the wrong things and and and it does it why does it surprise us that you and I think had a conversation about like one of the things that bothered me most about the great financial crisis was nobody went to jail
right and dirt you during when he made his first Fortune during the SNL crisis lots of people went to jail yeah so so even it might it might not have been their money it might not have been their skin or name on the door but there were consequences right and like you [ __ ] up guess what you're gonna go to jail
for 10 years and then we had the great financial crisis we socialized all the losses and we'd let the private people retain the gains well if that if that is what you're going to be optimizing a system for guess what you're going to get a lot more of you're going to get a ton more grifters and and those types of people
it's called being in the arena gym listen this is this is I mean I I hear you that's that definitely seems to have changed and yeah you get what you incentivize for right it's you really do you really do and so like maybe one of the lessons that you enumerate in your wonderful piece is like one of the things he he
sets up is we're not Bankers we're think about this like we're running an hedge fund yeah uh talk about that because I think that's a really brilliant way to reframe yeah so I came about this in one article where he had a he set up a vehicle which was basically a firm originating loans but he called it it
had hedge fund in the title and it seems like he played with the idea of running a hedge fund um and then he tells his his people like okay think as if you were working at a hedge fund like think like investors basically don't think like bankers and like just you know originate loans and put them on the balance sheet and we're
going to get paid like a spread no think like an investor think like a risk taker um and then in the next step he decided against starting a hedge fund he's like wait a sec you know I could do that but first of all I'd have to deal with investors and I I'm already dealing with Regulators like that's not pleasant but
investors no no way and then I have to split the profits you know and I was like this this is how you know you have a really good business on your hand if 2 and 20 if a 220 fee structure is not enough to entice you to take outside money right and you never had to raise outside Capital either which is kind of
incredible right like in in that way it's also similar to to Berkshire right I guess just this compounding machine and every time you found attractive opportunities sometimes you'd taken a partner but by and large he managed to do it all without giving up ownership or or control and the other interesting
thing that he did with his employees right on the one hand he told them to think like investors but then he took something from his poker um time into into his own investment process so in in Vegas he showed up and he was really concerned that he was giving away information like tells to all these Pros um and so he'd buy different kinds of
sunglasses he put up um earphones and listen to music and he put I mean this is crazy but he put a little motor or something into his sock that would tip him every few seconds and then before making a decision he would always wait until the next time he you know that he get that impulse so to kind of randomize
um the time that he took him to to uh to make a decision or not that it took him to make a decision but to make uh to act on it um and when he made investment decisions basically he had this um has this conference room and he was like okay he has a staff come in and he's like pitch me on this um on this portfolio tell me
you know give me the report tell me what's going on here in the ask some questions and then he comes up with what he wants to pay for it and while he does that he's shielding basically himself right like he's shielding his his work his monitor and he's like I don't want to give away to my own employees
indications of you know that would um show them what I what it is that I want to hear I want them to almost in isolation and it's kind of a weird process right but he's like I want to keep this process pure I want to get the information from them and I want to make my own decision and I don't want to get into this
Dynamic where uh you know the the analysts or the the original is kind of trying to gain the system because they're like I know what the boss wants to hear you know like there's all of these um ways that as you get to know a person you kind of know their their buttons and and you know their preferences and uh so I thought it was
really interesting that I was trying to keep this the Purity and keep keep the bias out of the process even if it made him look you know a little bit a little bit strange right like I I just uh I got a poker table instead of socializing he's he's putting up everything to to isolate himself and in your own company
rather than having this cordial meeting like okay let's all dissect this thing and have fun he kept it pretty rigid and and so I respect that I'm not sure I'd enjoy it you know in a working environment it felt a little bit like um intense but I do thought it did think it was really interesting because he was like
my Edge is that I can make a really rational decision about this particular asset right I understand the valuation I want to understand what I want to pay for it and um as soon as I get influenced by by other people um that's gonna go away I and I I love that section uh for a couple of reasons first off
um it if you do things in the same way always the same kind of thought process the same kind of unfolding of the value would uh process people know right and and so what I liked about that process even though yeah very odd uh but it he he understood that by doing it that way he was not conditioning his employees to pitch just one way and and
and so like you know habits make make our neural Nets deeper right we have deeper groots in our neural networks if it's a habit and they're really hard to break out of right and so when you do it the way when I was reading that part of it I'm like you know what's brilliant about this is it doesn't allow the
people who work for him to habituate a [ __ ] right and because because they don't even know and then the thing that that underlines that that's why I thought the piece was so well done is this idea of the random um uh General uh buds generator and his sock even if he's even if he's made the decision he won't announce it until that
random Buzz goes off so so people we are so conditioned to linear thought cause effect cause effect linear this is what happened here I'm going to project that into the future in a linear fashion that didn't worry the world works and if you can condition yourself to be a non-linear uh uh thinker and a non-linear decision
maker that's going to be really valuable and what he was taking advantage of I think with the with his random Buzz generator is the fact that most of the people he was betting I guess that most of the people around the table he was playing Booker against were on a linear and they were looking for that pattern
right and and so whatever he you know does this he's bluffing and I'm making it I'm touching my face here for people who are just listening to us um but when when you when you can't when there is no discernible pattern that's very upsetting to the average most people the average mine and I and I
recall as I was reading your piece uh this thing where uh they did it with pigeons and they randomly released booned right so there was no rhyme no reason to what the pigeon was doing when the food was released but the pigeon inferred a reason so yeah if if the pigeon was pure wedding in a particular way and the food comes
the pigeon spends the rest of his time if you're a wedding in that fashion even though no food right and so I thought that that was also kind of a brilliant way that he arranged this but he also another thing that he was really big on was go all it when when the conditions are are like what you perceive as perfect and he would he would I think
I'd probably wrong but he would probably put that in terms of hey if the odds are incredibly in your favor right as you're calculating them there's always you could be wrong but if if your base rate for calculating odds is pretty good right if the movie not the snapshot right like if I if I'd made a decision
one decision today and then decided every decision I'm making in the future was because I made that one right I'm an idiot because who knows why that worked right yes that's why you don't want to snapshot of a decision you want a movie which is a base rate and that's why page rates are so valuable but then also kind of this
ability to have the guts to go all that talk talk a bit a little bit about that yeah I mean I I could tell you were out with uh with Michael last night with the base rates are coming up hey read the first edition my friend of what works on Wall Street and I was all about Facebook I think I think you're completely uh on
point though um because this whole thing does not work right if all of this waiting all of this does not pay off if when the opportunity comes around you're not swinging for the fences and and I think even with him it was tricky because yes you did that and and if from what I understand in the
90s he put as much money as he had to work and then you know um in the financial crisis though he uh he bought billions and of dollars of assets but he also um from what I understand he expected it to be worse right it's it's almost like if you're anticipating a bad event for a while and you're waiting well you don't
know where the bottom is it's really hard to to go all in at that moment because there could always be another dip and you know you you just don't know and you're kind of conditioned yourself to be cautious and skeptical now and especially since this last time right government intervention has become a lot more important
um now if you if you politically don't like that you might already be conditioned to you know kind of throw your hand up at the world like this is not how it's supposed to work I'm supposed to get more Bargains and uh so even he later commented and you know he did well in the financial crisis but he wished he'd
you know done twice as much um and understandably though in that moment he didn't know where the bottom was he but he did have the courage to um to bet on his conviction and I think that's it's tough because conviction is such a tricky thing right especially um if you haven't like at that point he'd been investing for decades so I
think he'd have a good grasp on what kind of collateral he'd underwrite and you know these different markets like he'd really understand you know this is I think something people misunderstand with Buffett um who's kind of an unhealthy Obsession of of mine because I think he's so interesting yet perpetually
misunderstood and like reduced to these sound bites and there's this thing where he can make a decision very quickly right there's a famous um I did a thing on on Schrader's license um the author of the snowball and she gave a few interviews and talked about what she learned from him and there's this
um thing that he can make a decision in five minutes or or less on the phone and that's because he has well-developed filters but it's also because a lot of things he's been tracking for decades and he understands certain industries really well and so you can have that same conviction or come you know go through that same uh process if you
don't have that same knowledge base or if you don't understand the base rate so I do think um you know one has to keep in mind like he went all in during the financial crisis after running this bank for you know two decades and having been a real estate investor for another almost basically two decades before that
right like he started early in his teenage years to buy his first houses so he really understands uh certain real estate and certain markets I think probably just very very very well and so um yeah it's there's always it's always tricky with these stories you know what lessons can you really take from them
because to me these people you included but people were very good at that game they're almost to me a little bit like Alchemists right like there's there's the signs there's the analysis and there's the behavioral aspect and then there's a little bit of a mysterious element to me that's always like you know this person there's there's
something different and the way they perceive the world and the way they understand themselves in relationship to the market and the opportunity said there's there's something going on that's um I can try to understand this that does not mean I could just as easily or somebody else could just as easily do it
like there's a quality to it that's a little bit um you know don't try this at home necessarily without having the same knowledge you know it's it's it's not it's not trivial it's easy to reduce this to a headline I was like oh he went all in um and it's easy to just misapply that all over the place to situations that
are nothing like what do you face because again he waited years and years for the perfect opportunity um in an asset class he understood very well and he prepared himself for it um so and again that to me was like the parallel with with Buffett in a lot of ways and and Buffett I guess shows that
it's not trivial even if you've done it well throughout your career you might not always go all in when it's appropriate right there's um it's that one is like I can I can respect it or admire it without at all pretending like I could just copy that yeah I think that I mean you know how I feel about uh the people you know the
the morning routine click thing and all that [ __ ] like here are the five things all millionaires do in the morning no I'm sorry that's wrong and and who gives a [ __ ] as to whether you know they start with a cold plunge and then meditate or bang their gong and do all of that that it it's we are
completely missing the point they put in five pieces of clothing that's what they did so what what fascinates though and why I love your work is as you as you continue to find people like this or insights on Buffett or insights on on uh other you know great investors great Alchemists because I totally agree with you I joked
before we started recording that hey man I've been calling myself a simple manipulator for a long time and and that's kind of like what really Alchemy yeah is right and like Newton that eats bet what if you looked at hours spent during Newton's life like maybe an hour of his 24-hour clock of life was spent
on physics at 23 was spent on Alchemy yeah and then speculating in the South sibo a little bit like that's where like mutant is actually it all kind of came together I'm like yeah this person you can be a serious scientist can also really be interested in you know converting lead to gold or whatever finding some other
um really interesting but you know out there um idea I'm trying to to figure that out which to me is like the people who go into the market like you have to have a little bit of that arrogance so like here's nature here's the market used this complex system and I'm the one who's gonna I'm gonna figure out this
way to to get out of it what I want right uh so that's yeah Newton is a great example and and I may you know I I whenever uh rap Capital would put up the picture of the very attractive girl and and then the the line on the meme is something along the line so tell me something I don't know or whatever and
and the why is always tease ramp with words the stock market is a complex adaptive system that is uh that it is works and the market clears because it is driven by heterogeneous opinions right so I'm selling Apple you're buying Apple both of us are right we have different reasons I'm selling it for a different reason than you're buying it
and that's why Market's clear that's why markets are often efficient because we have a heterogeneity of opinions driving the clearing price but when when markets move Trend into either bubble or crash territory opinions moved into homogeneity everyone's thinking the same thing at the same time which causes what I call
information Cascade and these information Cascades reinforce the homogeneity of the opinions where you get things people saying well everyone knows right everyone knows that a b and then C always follows right and the information Cascade basically breaks all but the sturdiest thinker right because and I it happened
to me right like I I wrote a piece called the internet contrary in in April of 1999 in which I said 85 of these companies are going to be carried out of the market feet first it's the biggest uh bubble we've ever seen in our lives but the information Cascades around the internet were so profound so pervasive
that what is this idiot do in September he founds an internet-based investment advice sir of course it's the future have you not urged it I love that but but see that's the thing we all we we always tend to overrate our own smarts our own ability to withstand the storm and you know the people I really admire are like this guy
um in terms of business right I don't know what he's like I'll have to read that book in which you found I have it somewhere uh but anyway you might not agree with his politics but uh oh wow yeah but but I think we have to you know be able to see people for what they are which is multiple aspects
and you don't have to agree with all of them exactly and and I've never used the litmus test style of thinking right like I can get a great idea from somebody who's politics I think are idiotic or ridiculous right and and vice versa so but I I like that you know the the idea that oh you put it well the headline right so so the
headline on Buffett is not Buffett at all right in fact you and I at one of our where we were having a chat uh when we were together for lunch and I said something along the lines of hey I admire Buffett but for completely different reasons than the people who go to the Woodstock for capitalism every year Omaha I and I admire him because
he's an Ice Cold Stone Gangster killer and like people it's like me if this were a religious thing fate Warren me saying this I'd be burned the stake as a parent what it is a religious thing right I mean that's it it not with the steak burning but it's definitely I mean Schroeder commented on this where she said she was
trying to I think she was digging into is like you know his Buffett ruthless and like what does he do and and she basically said like people were going out of their way to be like no he's he's very honest he's like above board and everything like they were just emphasizing the point to such an extent
and she was like well you must have done something to and and not that he was totally unethical but some of his early deals right like in order to buy something that's undervalued do you have to get it from somebody who who will sell it to you right and like if that person doesn't know what this asset is worth and it's illiquid and you might
have to drive through town and like knock on their door and convince them to sell it to you right like there's there's things you might have to do to get rich that will leave someone else obviously worse off in the in the market it's more Anonymous right and you can kind of gloss over that
um yeah with him it's interesting because he's such a strong Cult of Personality that he's also cultivated right and and um and I understand why you know I think it's still Val like I came around full circle as like a big Buffett fan early on and then at some point you know I went to the meeting in Oneida like this is
I don't have anything to do 40 000 contrarians yeah 40 000 contrarians and he was walking on water and uh and it just felt like I was too late to that particular party and there was nothing you know everything had already been said and then over the last couple years I've kind of come back around like
oh there's a reason why he's so popular and like there's actually it's it's kind of rare to find someone who does well in business and has legitimate wisdom to dispense I think most often we find that somebody gets rich and then they offer their opinion on other things was like well yeah maybe I don't know I don't
know about that um but then you know also you know once you're rich um people I think what happens is people will not tell you if you're off base on something I mean I've worked at Family offices and I think you know a legitimate bubble starts working when everybody around you kind of depends on you for their
well-being right they will absolutely yes man you to death because it's their job and so I think it actually gets really difficult to um learn and improve in that situation because you're getting you're in your own it's like the like a social media Echo bubble right you think you're right on everything because you know
there's no uh no incentive or no no ability for for people around you to to really say no so yeah sorry I'm I'm going off track but no no no actually that's quite that's quite a good track to to to think about because you're absolutely right you know the the higher you write is the hierarchy the less good the information
you get yeah and like McNamara during uh the Vietnam war is a classic example of that he he was a Quant um but a Quant is only good as good as the data and numbers they're getting and and so his underlings were feeding him bad data and they were feeding him bad data because they were terrified of losing their position
and and so we they again we're back to incentives right and if if your incentive and you work for some big shot and and your incentive is to keep that position and and your choice is be brutally honest and tell the secretary well actually secretary McNamara we're getting our asses kicked um and uh then him say no we're not in
your fire or you're disloyal to me to me so what happens it's like gresham's law right the banking law bad money drives out good bad people drive out good people because because if you're you like we're staying on that theme for a minute and and you got two analysts who are your deputies at the Department of
Defense and you're McNamara and and you don't have that Insight that whoa you know maybe maybe I should hire that guy who is irascible and you know tells the truth and everything and if your own behavior is the Spire of the guy who tells you the truth and promote and or retain the guy who's lying to you bad people drive out good
and that's but it's very hard though right uh I I thought about that I mean going back to Buffett again but I was like where did Buffett get his ideas from and turns out a lot of it came from the pritzkers like the Chicago base family that kind of Grew From Law Firm into buying basically building a mini Berkshire without the
insurance which was called a Mormon and they and they intersected with him with with Buffett in a deal and he started learning from them and and met Jay and figured out what they were doing and and similar to Bursar I like a big part of it was it was a conglomerate each business unit was um run by its own kind of almost like an
owner operator type person and just picking the right people or making sure they stay in place after you buy the business was almost a key part of the edge right and Buffett emphasizes this all the time right it's like if I if I buy the business then I have to put a professional manager in place because
the old guy is leaving like it changes the whole dynamic and I want people who run this as if it was their own business well tell me honestly what's going going on or not you know afraid I'm gonna just uh chop off their head immediately when something goes wrong and I think it's that to create that kind of culture and that
kind of structure and to sustain it that's uh that's tricky and I think the buff and Margaret joked about that that they'd rather err on um kicking out someone um later in and kind of letting letting a few things pass before they um before they act and that that was an inherent trade-off that they had to uh to make
I'm gonna have to dig up this trade and quote and share it on Twitter because it was it was somebody who was going senile and there and they basically waited too long to switch out the uh the CEO of the business unit and Munger was like well this is part of the cost of doing business for us because we have to
operate with a lot of trust after a try we can only attract good people in their businesses if we give them this trust and the trade-off is that every once in a while um you know we're getting hurt by it a little bit but it's very hard to to do that yeah I mean right there like you're you're so good at this like almost the
book you might want to write by the way we're going to have a publishing vertical so uh perfect yep yeah that's where the money is that's where the money is yeah if you if you go to a different publisher I will be personally upset you'll see I'll no no I won't sue you I I what what did uh Vanderbilt say when
they screwed him uh gentlemen uh you have undertaken to to ruin me I shall not sue you for the law is too slow I will ruin you yeah I will bury you I will mean you every single day exactly he went all Roman and Carthage on their ass no but like I think that might be a great book because it's not I think what is unfolding here is
there's all of these really interesting stories right especially like about this banker and then about about it and everything else and they're all different but they all teach something and like that'd be a great book not what to think or what to do but how to think about it how to operate and then like if
the example that you just gave which is a great one yeah you know what if if you if trust and good people are going to be what you're optimizing for of course there's going to be the time when somebody's senile and you missed it yeah and that that's kind of like the error factor and I always used to give that as
one of the Hallmark good parts of being a quan right like a traditional stockpicker a traditional fundamental stock picker every stock that they buy they have to out of necessity believe that it's going to go up if they're buying right and so so in their mind the way their mind is framing it is I have to be
100 right 100 of the time right whereas a Quant we have accepted error factors we know through doing the long-term back tests that this particular strategy at least historically directionally failed versus benchmark like 30 percent of all rolling five-year periods and so that that gets to a different type of thought
right so you're it's subtle and you're almost unaware of it but one leads to kind of a deterministic type thought yes or no the other is a probabilistic way of looking at the world and saying yeah 30 of the time I'm going to be raw yeah that's very true and it's interesting because there's a significant amount of overlap rate
between investors and people who play games of chance and for example Bill Miller prominently he used to study and you refer to this in his letters like he studied poker players and other gamblers and uh that mindset shift is not easy right it's not intuitive and I've often thought that the first thing that
Buffett was good at was basically underwriting odds versus at the racetrack and then later also in insurance and he'd always come in like we will will do any deal if the mathematical Edge is in our favor not if you know we don't have to be sure this deal is going to work out we just have to have an edge that
compensates us for the for the risk and so I think for him intuitively there is that like he can think of that you can think like that as an investor understanding that it's a probabilistic game um but I totally agree with you that for the average person or maybe for the average investor this is not intuitive at all because you're picking the stock
and also I think increasingly you're being taught um you know to run with concentration because otherwise you might just as well go into the index right and so you're getting and you're doing a lot of deep work because it's harder to stand out as a mess right the game is a lot more competitive than uh 10 20 30 40 50 years
ago right it's it's um people go to extreme lengths to to dig up data and all of that comes with with um with bias right now I know a lot more about this and and this better work out like it's harder to look at all the work that you invest and then think well it might be you know a 55 or 60 chance
what's the base rate and the base rate for great investors still is not like they're going to hit home runs all the time right it's uh that's that but that's something that's very hard to to accept exante because you're like I did all this work this thing better work out and and I've got to get rich with it and and um
and then it's hard to like go too right like once there's like sun cost and um there's just so many yeah there there's so many uh pitfalls and again just being aware of them puts you ahead of a lot of people right it's just like the one you just mentioned in terms of um the the idea of you've got to be
completely open to the idea that X percent of the time I'm just gonna be Raw and I do think though as I was also listening to your response is I've always been a strong advocate for finding the process or the methodology that's right for you right because like the way I'm built I I I'm always building algorithms in my
head and that's the way I was ever since I was a kid right like when I when I first when they I grew up in Minnesota and they uh finally uh allowed a horse track um called Canterbury Downs um and I didn't know anything about horse racing or anything but like I was like I was young I'm like oh let's go this is fun
and and so I was sitting there and I was watching the the uh board where the odds change right and so I just sat and all I did for the first time I was there was watch that board and and make notes and one of the things that I noticed was that when the odds on a horse changed rather dramatically towards the end
right before they all all bets were closed you could do very well you could only hit like a single but if you simply put a bet down on the horse where the odds change most dramatically in that horse's favor in the last call it 15 minutes of the window and and you put and you and your bet was to win plays or show
you did the batting average on that bet was really really high interesting and what you were doing was you were pre-loading on the wisdom of the crowd right yeah because all these other people whose knowledge base is probably vastly more certainly was vastly more than mine right they're out there and they're looking at the horse they're
looking at the condition of the track all of this gets aggregated into those changing odds right and and you're kind of being a lazy freeloader which again in my case it's always lazy underlies it uh but the the example is one where that that process that kind of methodology fit me in the way I look at this world
and and then others are gonna have to do really deep work you know they're gonna do they're gonna know every widget that comes off that production line I'm not saying that that is a wrong way to do it I'm saying it might be right for that type of mind what do you think I first of all I agree and this is so
interesting that you mentioned the slight mispricing once the um once that the odds start changing in a dramatic way because I think the same thing happens sometimes with stocks like good news comes out and it might still not be fully reflected because then you're running up against the bias of of anchoring of this was just worth this
and now the Market's in like it's very hard to then rationally readjust to the new reality because you've been living in the old reality for a long time and and so I think there's um this time period of of adjustment where someone like you might be like well no I know you know the market tends to in this specific situation under
prices and jump in there um and I totally agree with you that sort of the first order of business is to know yourself and understand um your own inclinations all yours also your own emotional makeup and what it is that you know in terms of strategy that would work for you which is difficult because
you step out and like everybody tells you like this thing worked for me and this thing this is how you're going to get rich and this is what you should do and uh often most of them I think they're trying to either sell you something or feel good about their own process right and like kind of uh um It's Tricky it's also tricky because you
have to find that thing you have to test it um and then you have this like long feedback period right it's it's not always obvious like let's say you start your career and you started in fundamental analysis of equities and at some point like this is I I don't enjoy this you know I want to I want to trade
or I want to do a Quantum whatever but like you've already started this career track like the the cost goes up over time at least if you're oh this is actually I think something that that I mean I have all of these mental drafts yeah um but I think there's a huge difference between being an investor and being in the
business of investing right um like what we just talked about it's it's a big difference figuring this out for yourself versus figuring out in a professional seat uh and I think this kind of gets misunderstood and I'm probably part of of the of the problem of conflating this but the advice that's right for somebody
who is in the business of investing can be very different for somebody who's an investor and I think this has become a big issue maybe last 20 30 years as this you know the business has institutionalized a lot of people are in a seat where the job is to create a certain risk return profile
um for the buyer of a product right for some institution that um that wants a certain risk reward profile or access to a certain strategy access to a certain asset class um and it used to be different right and like you go back and the person who would run a portfolio is kind of is is truly and investors doing the work themselves
um and now it's it's sort of the the there's a lot more nuance and and I think that that gets lost and and it's the same um with this you know figuring out what's what works for you well now it's like okay what works for the client and where is the perfect the worsted career trade-off Better or Worse right where am
I less likely to get replaced by AI or an ETF so yeah I think this is why this is part of why I keep harping in my writing on the inner Journey um because I think all of the emphasis goes on the outer well quote-unquote Journey but you know how to find an attractive investment how to construct a portfolio how to
you know figure out the markets all of those things that are directed to the uh to the outside and figuring out the outside world and interpreting that data and then the reality is half of the game takes place on the inside right how do you react in a certain situation um not just as it relates to biases and
decision making but also I've written about this too you know very things that are not really talked about like burning out and just kind of either getting tired of the work or being in a situation where you know you're running up against a wall and a bubble or something for for years and and it's just grinding you out and the market is
constantly telling you that you're wrong and uh I was I was wondering like why you know the the question of like why are even great track records why is it so rare to find them past you know two plus decades there's a few obvious reasons you know people get started late or they'll retire they're just too rich to care
um then they blow up and then they're a thing I think there's a good chunk of people who just burn out of the game and uh who found even even if they found something that worked well for them they found themselves in a place where it was you know they had not developed um a process or conditions that allowed
them to sustain that stress and that pressure for a long period of time so I think it is totally about finding what works for you and then there's a second opponent which is figuring out how to play the long game and so we can we can you know make fun of the morning routines and I think there's all of that
sort of productivity porn and like that's neither here nor there I think there's sometimes gems in there but by and large it's just engagement bait um that's not to say that there aren't a lot of things that are important health-wise that are completely not talked about because they're kind of um like you wouldn't talk about this with
your investors because then they're like well this guy's too too weak you know quote unquote to to run a portfolio for me um but I think that are really important and you can see it and you know Soros had a time when he when he burned out and came back and like Peter Lynch retired early like there's there's all
of these instances where people were clearly just hitting their limit even with something that they were really good at and that worked for them and uh so yeah I it's not it's not easy to uh to figure out all these things but I'm that to me is fascinating like how do you really play for the longer long term and not burn
out like in the metaphor of the maze it's like how do you find your treasure without getting lost right like I feel like that's the the often the missing part even if you're if you're trying to get wealthy right like it's very easy to succeed at that and then completely fail at a lot of other things in life
so you want to be very careful with how you study people um who you study or who you emulate and and kind of trying to see them in their full picture because any bill is probably very good at some things but he might not be good at everything and so I have to be kind of conscious of that and and figure out what are the right lessons to learn
here and what are the right lessons for me and they might be different for the right lessons for for gem or for somebody else yeah I I agree 100 because uh everyone's unique and everyone's got to find that combination that unlocks their best so uh and and what they're hoping to achieve or what they want their life to
be like and that's why I think kind of the process that that you do and and other people I admire who just look at these people and find these really interesting stories and then write it like you wrote this in such a way that you know you get people like me want you know I want people to hear about this
because like it's really interesting and it's unusual and as you were saying about the investment uh whether you're running an investment firm or whether you're just an investor they are very different right I I I'm not as cynical as to say that people who start in asset management companies are in it just for
the money I think that for the most part most of them are in it because they are they're just so curious about why markets behave the way they behave but you're I think you're absolutely right one of the things that I really hated was Glenn every portfolio was called a product and like that really rubbed me the wrong
way because you know I I used to say like half of the new offerings and like ETFs or for before egfs and mutual funds were designed by marketers not by investors and man you could tell the difference the ones that are designed by marketers end up like for the most part not all of them but many of them end up just
crashing and burning because they they're appealing to very different instincts right they're they're appealing to the memetic part of a human and they're appealing to the you know the thing where the halo effect like oh he's Rich so he must be smart about this no not at all and and in fact sometimes you
find exactly the opposite well I as you know can talk to you forever I know you have an engagement and I have another one coming up but I I do want to do the the book ad on Beale because it did this he did this great thing and or great in terms of financial return thing um and you took a lot of discipline and
it you had to be a really be willing to be a really odd person like firing staff like they're just assets as opposed to people I don't know that I could do that um and and and but then he didn't do anything for a long time but then what did he do in 2022 yeah and so I'm not this is coming at it with some distance where I like the book
is still being written so to speak but last year He piled into uh treasury I'm sorry into into tips or into inflation protected treasuries um and these it seems like he did that late in the year when yields were were going up and and the the real yield on those I think was getting close to two percent
um did it on short duration and did it with broker deposits and so like this is kind of the information I have from the outside and you can see that assets for the bank spiked as significantly um to me this was a little bit of you know was kind of out of the ordinary right it's not like he'd done like a large levered Bond trade before
um so it seems to me like okay maybe he got an intro maybe he got an attractive spread on those assets versus what at the time you had to pay on the uh the broker deposits he was protected against uh inflation getting worse um so it seemed it possibly just asymmetric and interesting but also maybe kind of a
bridge I mean I wouldn't be surprised if you know a year or two from now if there's with higher rates and kind of a social economy there's a lot more distress and real estate and corporate bonds I mean I worked in uh evaluating leverage credit for a while and I was like that there was a big boom in in all of that
um and it's it wasn't designed to operate at rates that were five percent higher so it wouldn't surprise me if that was um kind of an asymmetric trade that he took for a couple of years before you know pivoting into the next big um distressed investment um but it's also possible that he was just like you know he'd been sitting on
his hands for a while and he was an attractive way to uh to pick up spread with with basically no no downside if I understand it right um and that was just you know I don't know this this is the it gets a little bit into speculation and it would be great to talk to him about it and figure out exactly what he's thinking
and why he's doing that trade but he was kind of unusual it got some headlines at the time because the banks have to file their ass reports with the FDIC so you can kind of see something's going on I'm like he's doing nothing for a long time did a little bit in the oil patch and did some I think some distressed power plant so
he did a few things but there wasn't really much for him to do for for a while um and then he made this big big bet on on tips and basically would mine tens of billions of uh of them yeah I again I don't want to go out too far in the lane because I don't really you know I haven't I wasn't in the
conference room when he was you know shielding his decision making process um but it did it was interesting to see that um he found you know something to swing at and for me I don't know for me the most interesting question was like oh what is he going to do next right like is this you know what does he think about the next couple of
years and because I'm I think much like Buffett and also much like you know a large alternative asset managers like they get a lot of information from like directly from their portfolio company so they kind of I think can see a little bit around the corner not that they always get it right but I think that's
to me is like that's an interesting spot to figure out okay where's the next opportunity set gonna pop up and if it's in if it's in a credit cycle I'm sure he's gonna he's gonna be very focused on that one and and hit it again yeah very interesting one of the things that I try to do is like model things
and then see like what are the commonalities what what how do they differ uh so kind of create a benchmark and what I've been looking at a lot right now is like why why are various people successful in a variety of endeavor Endeavor it doesn't have to be just business and or investing and and one thing I just keep coming back to is I
study all the various interesting people and what they've done is one thing they all seem to really have in common is agility they are they they are agile thinkers and doers and and so they they are almost the opposite of Steady Eddy predictable that there are certain aspects of their character that are steady and eat
predictable I used to joke that I had a very low standard deviation uh but but the the more I study people from especially as I open my aperture and study people like really successful in the Arts and really successful in politics really successful in military strategy et cetera and one of the things
that I keep seeing just time and again is agility the ability to to like notice oh that's different yeah I'd better not do it the old way like and again like it seems to have intuitively understood that one of the ways he could throw off to those other poker players was to use a randomized buzz uh before he announces
what he's doing what do you think because you I I would defer to you you're better at studying the stuff that I am I mean I think you're absolutely right um strictly because the market or if you're in the business of investing right people will tell you like oh don't um don't style drift like stick to what
you know but the reality is like the world always changes the market changes and you have to um adapt and evolve with that and have the mental agilities like okay this is actually like this is where reasoning by analogy can really get you into trouble because you're like oh I've seen a banking crisis so this next one is going
to look like that one and nope uh financial crisis look nothing like the 90s you know the Savings and Loan crisis so if you went by that Playbook you could really get yourself into hot water and some some very uh good investors did um so yeah I think it's It's tricky because it's only obvious in retrospect whether it was you know
agility or whether you know they just um went off the reservation but I do agree with you that it's that it's important and that it's rare it's I think it's fairly easy to find someone who's really good for a cycle and it's very hard to find someone who's good for several Cycles because then things do change the
Playbook changes and you have to adapt and the people who sustain performance through decades I think that's just exceptionally rare because that agility also it's it's hard right like at some point you know technology moves on and like we're used to certain things which is why it's so unusual for someone like you to run a
podcast and a venture firm and like be interested in all of that stuff I think it's a lot more common for people to fall into these grooves and be like no this is what I like and this is how I think the world operates and now we're going to stick with that and everything else is going to be cognitive dissonance
and I don't want to have anything to do with that um so the learning is rare right because it takes effort it's uncomfortable it's like I thought this worked this way and now it no longer does and this made me money all the time like value investors are great examples for that because they figured out these you
know spin-offs so they were all of these special situations where like this situation happens this is going to make me money and then other people discover it the system gets gained the opportunity goes away and you can keep chasing that thing and it's not going to work anymore and it's a lot harder to figure out the
next one right so um yeah agility is important and and difficult right it's it's hard to to let go of the old ideas it's hard for me to let go of drafts that don't work in writing like and the investment is a lot lower right I'm like maybe this can be salvaged and you know a lot of times it's uh
we get so invested in in our ideas and our values and because it happened to us like you know it it takes on um more more meaning or importance than maybe it should yeah that's a great Point uh I I I've always uh one of the things that always worked for me that I always tried to do at usually not terribly successfully but
if if I was like facing a certain conundrum or a problem or whatever I would play a game where I would create uh a character that was my best friend and um I would give that person advice I would that that would allow me some distance on the fact that it this was really me the classic asking for a friend it's really huge yeah
[Laughter] she lost you wow well but that that's not so easy either right like stepping outside of yourself because again with the maze but like I think we're often aware of the things that are bugging we just don't want to look there like I might be there might be things like I know I could do this better it's
just for whatever reason I'm in this Loop of this habit and keep repeating this thing I was like people around me can see it I can see it but it's another part of me and the part that's like operating day to day is like I don't want to look at it because it has all of these other things connected to it right
it's it's uh there's layers to that so I think that's a that's a really interesting exercise I just worry that a lot of people it takes some courage to do it honestly right because it's yeah there's a reason why um yeah well that's the take it takes courage I gotta do this exercise yeah yeah it takes courage to put yourself out there
in anything right it does yeah and and and that leaves us where we started in the arena in the arena or or maybe in the maze in the Maze yes it was just Arena deep inside the maze but this was a lot of fun thanks Jim I I really enjoyed it I love your piece thank you for coming on at the last minute