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We live in the golden age of content. There are so many high-quality investor interviews these days. To be sure, technological advancements facilitated this growth. However, none would be possible without people’s generosity. Interviewees graciously share their time and hard-earned insights. Their stories and lessons have been invaluable for my investment framework development. After all, investing is an intellectual process—the “act of selection”—which I’m constantly honing and refining. I welcome the help.
I’ve listened to hundreds of conversations over the years. Fortunately, I also interviewed some fascinating investors on my YouTube show. Each one approaches investing differently. Yet, they share many similarities. Their intersections reveal the most interesting and valuable insights. I share my biggest interview takeaways below.
When Politicians Panicked with John Tamny
John Tamny was my first interview guest (interview link). John is a prolific columnist, editor, adviser, and serial author. While not a professional investor, John employs a refreshingly honest framework in analyzing economics. It’s as unique as it is powerful.
Our discussion centered around John’s new book, When Politicians Panicked: The New Coronavirus, Expert Opinion, and a Tragic Lapse of Reason. John argued that freedom would stem the Coronavirus (COVID) crisis more effectively than lockdowns. To be sure, John’s message was mostly political.
Yet, I found lots of investing parallels. Above all, was John’s recognition that information creates better action. Data best equips us to manage crises, like COVID, and investment portfolios alike. John noted how free people most produce information. The collective wisdom of markets dwarfs that of any single expert. We diversify investment portfolios across strategies for this very reason—to learn which ones will be most effective. The same should be done with policy. Cut your losers and let your winners run, in all aspects of life.
A Discussion with Tony Greer
My next interview was with Tony Greer, founder of TG Macro (interview link). Tony shared his investment process and journey of founding his firm.
Tony sees markets as integrated wholes. They are connected. Movements in one asset class likely relate to those in others. He developed subconscious relationships among the four main ones (stocks, bonds, commodities, and foreign exchange) while working on various trading desks over his 30-year career. These connections guide his trading.
Tony searches for market trends using various indicators. He specifically likes commodities where signals are most pure and not impacted by extraneous items like CEO decisions and other company actions. Tony integrates these relationships into investment theses. Then, he deliberately structures trades in order to maximize the exposures he wants.
Tony’s approach resonated with me. It’s similar to my collateral, leverage and volatility framework whereby thesis generation is just the first stage of an investment. The trade construction is an additional and artful step that can be the most important return determinant.
A Discussion with Hugh Hendry
My show with Hugh Hendry was an absolute blast (interview link). Hugh is the founder of Eclectica Macro Hedge Fund, a St. Barts luxury real estate investor, and an adviser. He’s as deep a thinker as he is charismatic.
Hugh sees the future as unknowable (and I agree) which makes investing difficult. While this may (understandably) scare some off, Hugh embraces it. He developed various methods for coping with unavoidable mistakes. Our interview illuminated three features.
I was first struck by how Hugh practices “playfulness.” Far from whimsical child’s play, this approach promotes creativity. Hugh can safely evaluate potential trades that only become profitable as the future unfolds, regardless of how absurd they may seem today. The guise of playfulness shields his ideas from premature judgments and allows him to consider a wider range of possibilities.
My second takeaway was Hugh’s approach towards trade construction. He treats his portfolio like a centipede, expressing the same investment theme in multiple ways. Thus, Hugh can quickly cut loose his unprofitable positions without abandoning his overarching trade; much like a centipede, which can lose a few legs and still march on. For example, he might express the same bullish gold trade with 30, 40, or 50 positions across a variety of commodities, equities, and derivatives. It’s a fascinating way to incorporate diversification benefits into a concentrated strategy.
Hugh observes that “successful investors dig shallow graves.” This unpins all his investing. We cannot avoid losses as investors; that is out of our control. We can, however, direct how much we lose. Many have recovered from small losses. Large ones, though, are catastrophic. They must be avoided at all costs. “I’ve seen people rise from shallow graves. I haven’t seen the inverse”, Hugh asserts.
A Discussion with Daniel Want
My interview with Daniel Want went deep into how his world view frames his investment approach (interview link). Daniel is the Chief Investment Officer and co-founder of Prerequisite Capital Management. He approaches investing from a first principles perspective that helps process modern world complexities into investment themes and ideas.
Daniel takes ideas seriously. This core belief underpins his entire investing framework. Two applications, in particular, permeated our interview: 1) markets are complex adaptive systems best analyzed with a systems approach, and; 2) contradictions don’t exist.
Daniel sees markets as intricate and interconnected systems. Causes of observable effects are not always straightforward or even apparent. Thus, markets are best analyzed using a systems approach. Daniel favors the methods devised by Eliyahu Goldratt and expanded upon by William Dettmer. These greatly differ from common investment techniques.
Daniel also recognizes that contradictions don’t exist in reality. This profound statement is another departure from mainstream thought. We routinely accept contradictions without even realizing. However, contradictions and compromises illuminate flaws in our knowledge. Daniel sees them as red flags and, ultimately, keystones to creating breakthrough solutions and unlocking performance. We discussed how value investing, with its checkered performance, is one such example. Daniel’s studying of this technique’s failings was one step leading him to his current framework.
A Discussion with Dr. Wes Gray
Dr. Wes Gray’s episode was another unique one (interview Part 1 and Part 2). Wes is the CEO, Chief Investment Officer, and a co-founder of Alpha Architect, an asset management firm dedicated to empowering investors through education. We dug deep into the intellectual aspects of investing and Wes shared some interesting perspectives.
Wes built his investment process and business around the ideas of evidence and adaptability. He’s absolutely ruthless in these respects (in a good way). As a result, Wes dramatically evolved throughout his career. Wes began investing as a fundamental, deep value investor (“do the DCF”). However, he’s since systematized his investing process and became a “quant.” Wes also incorporated new signals into his process—momentum and trend—which are diametrically opposed to a deep value approach. You rarely find investors who mix all these techniques as they tend to be siloed. Yet, Wes utilizes all due to his own experience, observations, and mental flexibility.
This stems from Wes’s high mental awareness. He’s mindful to not get emotional about investing noting that “the market doesn’t care about your feelings.” This revelation led Wes to systematize his value-driven approach in order to neutralize his biases. Wes worked hard to improve his emotional intelligence which has yielded many life benefits.
A Discussion with Corey Hoffstein
I most recently interviewed Corey Hoffstein, the Chief Investment Officer and a co-founder of Newfound Research (interview Part 1 and Part 2). Newfound Research is a quantitative tactical asset management firm. Corey shared a different investment framework featuring risk management.
Corey is incredibly curious about markets and portfolio construction. A computer science major by training, he’s self-taught about investing. Corey’s programing backgrounded enabled him to build and test various trading strategies at an early age.
This approach leads him down overlooked paths. Corey hunts for hidden bets that investors might unintentionally be making. He seeks to avoid unknown risks that expose his portfolios to loss. Corey recent studied how the timing of rebalancing trades impacts returns (a.k.a. timing luck). His research shows that this seemingly innocuous feature can greatly impact returns.
Corey also mentioned his use of “play.” Like Hugh Hendry, it frees him to consider a greater range of possible outcomes. This has been particularly useful in his exploration of cryptocurrencies. Framed as play, Corey suspended his initial biases towards the nascent technology and casually trades them. As a result, he’s learned a lot.
A golden age of knowledge
While I spoke with a diverse set of investors, they nonetheless share common approaches towards investing. Above all, each is most interested in acting in accordance with the data. They display immense mental flexibility. Each evolves his thinking framework as warranted by the facts and actively tries to avoid acting on dogma or faith. This is far easier said than done.
Furthermore, I found each interviewee to be incredibly creative. They are willing to consider actions that would repulse others. John Tamny supports political freedom even in the midst of a crisis; Tony Greer eschews company actions; Hugh Hendry routinely “plays” with seemingly absurd investment scenarios; Daniel Want seeks out contradictions to improve; Wes Gray heretically incorporates opposing investment frameworks, and; Corey Hoffstein hunts for unintended portfolio bets.
Ultimately, each of my guests displays courage, intellectual integrity, and a fidelity to the truth.
Identifying similarities and difference are the keys to discovering knowledge. We can learn a lot by comparing and contrasting different perspectives. Today, many are available at the click of a button transforming this golden age of content into a golden age of knowledge.
Happy hunting. May you invest wisely.
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