Invest Like the Best with Patrick O'Shaughnessy

Latest Episodes:

Joe McLean – How to be a Pro’s Pro - [Invest Like the Best, EP.143] Aug 20, 2019

Show notes

My guest this week is Joe McLean, the founder of Intersect Capital, which provides financial advisory services to a variety of clients, including a number of NBA players and other professional athletes.

What I loved about this conversation was the weaving of sport, coaching, and finance into a cohesive whole. There’s so much to take from this discussion—from the importance of service and low self-orientation to the impact of strict standards for who you work with, to common mistakes we all tend to make with money.

Please enjoy my conversation with Joe McLean.

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.

Follow Patrick on Twitter at @patrick_oshag

Show Notes

1:18 - (First Question) – His backstory and the combination of athleticism and finance

2:43 – His time in Ireland

3:29 – Moving away from basketball and into finance

6:08 – What the Intersect business is today and his early lessons

7:55 – Most important coach/mentor

8:59 – Where the name Intersect came from

10:22 – Setting high standards early on

12:35 – Biggest mistakes he saw in his early clients

14:04 – Developing his value proposition to clients

14:24 – Michael Kitces Podcast Episode

16:57 – Process when he’s working with a client signing a new athletic contract

19:53 – The concept of a Pro’s Pro and Top 50 Reasons Professional Athletes Remain Wealthy

22:40 – Managing clients’ interest in creating businesses off their brand

24:20 – The role media plays in athletes’ long-term strategies

25:40 – Getting early clients into compliance with his strategy

28:24 – Daily maintenance role he plays with clients

32:24 – What has impressed him most from his young clients

33:36 – What makes for a great coach

34:50 – The meaning of “all in” to Joe

35:54 – His assessment of the financial services industry today

37:32 – Where his value in service came from

39:05 – Longer term vision for his business

40:33 – Unique ways he finds himself helping his clients

43:49 – Watching his client’s mentor the next generation

45:10 – Historical players and teams he personally admires

46:22 – Athletes and venture capital investing

47:38 – Who makes up his trust network

49:09 – What he’s most excited about for the future of the business

49:46 – Kindest thing anyone has done for Joe

50:24 – Biggest impact a coach had on his life

Learn More

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub

Follow Patrick on twitter at @patrick_oshag

Zack Kanter – All Things Business - [Invest Like the Best, EP.142] Aug 13, 2019

Show notes

This week’s guest is, Zack Kanter, the founder and CEO of the Stedi. Zack and I decided not to talk much about his business on this podcast and opted instead to explore more generally, so a bit of an introduction to what they do may be helpful here for some extra context. Stedi is a platform for exchanging and automating 300+ types of business-to-business transactions - transactions like purchase orders, invoices, etc. It’s a modern take on an archaic protocol called EDI - electronic data interchange, something I’d never even heard of until several months ago. Learning about EDI is a bit like finding out about the Matrix - every physical object you come across, from the food you ate for breakfast to the clothes you’re wearing and consumer electronics you use - anything with a barcode on it - was likely touched by EDI, often dozens of times before making it into your hands. Stedi is the first update to this messaging later in decades.

Our conversation in this podcast is about business in general, starting with Zack’s fascination with Walmart and Amazon. I should also not that my family is a recent investor in Stedi, and I’m thankful to have learned a great deal from him over the past few months. Please enjoy our conversation.

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.

Follow Patrick on Twitter at @patrick_oshag

Show Notes

1:52 - (First Question) – Interest in Walmart and Amazon

4:02 – Sam Walton: Made In America

4:49 – What from their success can be applied elsewhere

11:07– The idea of tempo with a business

17:17 – Ability for a business to expand laterally

24:33 - Magic of Amazon as a constitution

26:24 – The concept of the OODA loop

26:40 – Boyd: The Fighter Pilot Who Changed the Art of War

31:51 – Orientation within software businesses

32:24 – The Systems Bible: The Beginner's Guide to Systems Large and Small

38:03 – Lessons in building software

38:37– Certain to Win: The Strategy of John Boyd, Applied to Business

41:51 – Setting a common vision for a company

44:14 – Changing the dynamic of teams and how different size teams can accomplish different things

48:00 – How leaders should think about build vs buy

51:07 – The different types of value propositions

53:07 – Utility for companies

57:31 – Concept of network health and the best question from VCs

1:04:04 – Massive projects are less frequent in a world where we can do a lot quickly

1:04:08 – Wait but Why

1:09:37 – Just in time vs just in case learning framework

1:11:55 – His favorite question

1:13:39 – Why is most commonly heard advice wrong

1:18:06 – Kindest thing anyone has done for Zack

Learn More

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub

Follow Patrick on twitter at @patrick_oshag

Chris Bloomstran – What Makes a Quality Company - [Invest Like the Best, EP.141] Aug 06, 2019

Show notes

My guest this week is Chris Bloomstran, the president and chief investment officer of Semper Augustus Investments Group. He became famous in investing circles a few years back for his incredibly detailed investigations of Berkshire Hathaway. While we do cover Berkshire towards the end of the conversation, we spend most of our time talking about what makes for a quality business. I loved some of his angles on the current landscape, including our discussion of companies like Richemont and Disney which are actively taking distribution back in house. Please enjoy our conversation.

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.

Follow Patrick on Twitter at @patrick_oshag

Show Notes

1:18 - (First Question) – Largest investing error

4:52 – Defining quality investor and their investment strategy

11:48 – Incremental return on capital and other themes that they focus on with investments

15:33 – Importance of unique business models

22:58 – Ownership of the customer relationship

28:06 – Bringing distribution back in house

29:55 – Doing something unique with owned distribution

32:40 – His thoughts on growth and value

32:42 – Chuck Akre podcast episode

37:12 – History of his interest in Berkshire Hathaway and he characterizes the business

53:29 – How is Berkshire protected into the future

59:17 – Most important trends in adjustments

1:08:00 – Which sectors or industries would he focus on

1:10:02 – Most intriguing business he’s unlikely to own

1:11:44 – Kindest thing anyone has done for him

Learn More

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub

Follow Patrick on twitter at @patrick_oshag

Brian Christian – How to Live with Computers - [Invest Like the Best, EP.140] Jul 30, 2019

Show notes

My guest this week is Brian Christian, the author of two of my favorite recent books: Algorithms to Live By and The Most Human Human. Our conversation covers the present and future of how humans interact with and use computers. Brian’s thoughts on the nature of intelligence and what it means to be human continue to make me think about what works, and life, will be like in the future. I hope you enjoy our conversation.

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.

Follow Patrick on Twitter at @patrick_oshag

Show Notes

1:11 - (First Question) – Summarizing his collection of interests that led to his three books

2:59 – Biggest questions in AI

3:43 – Defining AGI (Artificial General Intelligence) and its history

5:18 – Computing Machinery and Intelligence

7:54 – The idea of the most human human

9:59 – Tactics that have changed the most in learning to be the most human human

16:10 –Tests for measuring AGI and updates made to them

20:12 – Concerns for once we have AGI

26:06 – Self-awareness as a threshold for AGI

31:58 – Skeptics’ take on AGI

37:14 – Advice for people building careers and how AGI will impact work

38:16 – Explore/Exploit trade-off

44:57 – How to explore/exploit applies to business concepts

49:16 – Impacts of AGI on the economy

52:40 – Highlights from his second book

57:39 – Kindest thing anyone has done for Brian

Learn More

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub

Follow Patrick on twitter at @patrick_oshag

Eric Sorensen - How Quant Evolves - [Invest Like the Best, EP.139] Jul 23, 2019

Show notes

My guest this week is Eric Sorensen, the CEO of Panagora asset management, which manages more than $46B for clients across a variety of strategies.

Eric began his career serving in the Air Force as both a pilot and instructor in high-performance jet aircraft. He then accumulated 40 years of quantitative research and investment experience, with a Ph.D. along the way.

Please enjoy our conversation on the changing landscape of quantitative investment strategies.

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.

Follow Patrick on Twitter at @patrick_oshag

Show Notes

1:15 - (First Question) – His background in the Air Force

1:23 – Boyd: The Fighter Pilot Who Changed the Art of War

3:18 – Training people on high-performance machines

4:47 – Traits that made for better pilots

5:51 – The evolution of quantitative equity research and its stages

7:56 – How his research led to becoming a practitioner

9:10 - The early feature sets in his research

10:44 – Tradeoffs in the spectrum of interpretability

12:08 – Early days of his practitioner career

13:24 – Risk Premia and the 5 C’s

14:28 – Quantitative Equity Portfolio Management: Modern Techniques and Applications

17:13 – Applying the 5 C’s to value investing

18:38 – Knowing when a strategy/signal is broken

21:24 – What does this strategy plan mean for his firm today

24:56 – Mixing expert systems and portfolio construction

30:07 – Natural language processing

32:00 – The cultivating the power and creativity to ask good questions

35:13 – The concept of a research graveyard

37:45 – State of risk premia today

40:04 – Active equity process

46:37 – Frontiers of research that he’s excited about

48:53 – Safe havens for non-quantitative investors

52:16– Advice for young quants

54:36 – Quants on the buy-side that he admires

55:41 – Kindest thing anyone has done for him

Learn More

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub

Follow Patrick on Twitter at @patrick_oshag

Jane McGonigal – How Games Make Life Better - [Invest Like the Best, EP.138] Jul 16, 2019

Show notes

Jane McGonigal, PhD is a world-renowned designer of alternate reality games — or, games that are designed to improve real lives and solve real problems.

She is the Author of Reality is Broken: Why Games Make Us Better and How They Can Change the World and is the inventor and co-founder of SuperBetter, a game that has helped nearly a million players tackle real-life health challenges such as depression, anxiety, chronic pain, and traumatic brain injury.

Our conversation is about how to design useful games, how games effect us and our kids, and what the future might hold. Please enjoy.

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.

Follow Patrick on Twitter at @patrick_oshag

Show Notes

1:22 - (First Question) – Her take on the history of gaming and studying the players themselves

3:44 – Where her passion for gaming really started

4:55 – Her take on flow states

7:47 – Kids and gaming

10:32 – Advice for parents when it comes to the role of games

11:06 – SuperBetter: A Revolutionary Approach to Getting Stronger, Happier, Braver and More Resilient--Powered by the Science of Games

13:53 – Types of games that develop the right skills for kids

16:20 – Four things all games share in common

16:23 – Reality Is Broken: Why Games Make Us Better and How They Can Change the World

20:50 – Her take on Carse’s theory about infinite gaming

21:04 – Finite and Infinite Games

26:28 – How to understand gaming culture if you’ve never played a game before

28:28 – Amazon and gaming

31:18 – How fun makes anything more enjoyable

34:55 – How game designers calibrate feedback loops

39:14 – The good and bad of gamifying life

45:01 – What is the superbetter app

52:43 - Why powerups and bad guys are so important in games

57:03 – Secret identity

59:04 – Playing with boundaries

1:00:36 – Most worried about in the gaming world, and most exited about

1:07:32 – Kindest thing anyone has done for Jane

Learn More

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub

Follow Patrick on twitter at @patrick_oshag

Bill Gurley – All Things Business and Investing - [Invest Like the Best, EP.137] Jul 02, 2019

Show notes

My guest this week is Bill Gurley, a general partner at Benchmark Capital and one my favorite investment thinkers. As you’ll hear, despite enormous success through his career, Bill is clearly still in love with business and investing. Where many might discuss past glories, I’ve been incredibly impressed with how both Bill and his partners emphasize the current portfolio and market landscape. I’m thankful to have had the chance to speak with him in this format. I hope you enjoy our conversation.

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.

Follow Patrick on Twitter at @patrick_oshag

Show Notes

1:13 - (First Question) – The idea of increasing returns

1:21 – Competiting Technologies, Increasing Returns, and Lock-in By Historical Events

2:07 – Complex Systems Theory – Santa Fe Institute

4:35 – Markers that could be a sign of network effect in a company

6:27 – The opportunities for companies to capture network effect

8:46 – Are there certain teams/leaders that are more conducive to leading a network effect company

11:55 – Liquidity quality

13:35 – How important is the revenue model at the beginning

15:59 – Fascination with Nextdoor

17:56 – Paradox of Choice

18:39 – Finding opportunities

20:17 – Potential marketplaces and assets that could be commoditized

20:20 – All Markets Are Not Created Equal: 10 Factors To Consider When Evaluating Digital Marketplaces

21:39 – Usage yield on the world’s assets

23:50 – Has technology changed the world of value investing

26:28 – Hyper niche marketplaces

27:52 – Challenges of labor marketplaces

30:12 – User generated content businesses

32:44 – People who are capable of building UGC businesses

33:16 – His interest in Discord

34:31 – Factors of a healthy marketplace

37:57 – Fools’ gold in marketplace businesses

39:04 – How influx of cash is impacting the marketplace business landscape

40:43 – All Revenue is Not Created Equal: The Keys to the 10X Revenue Club

43:20 – How does the influx of money into the space impact him

46:44 – Spending money to attack top brands

50:32 – Regulatory capture

53:36 – His thoughts on the IPO market

57:49 – How did he realize this was his passion

1:00:42 – Qualifying his passion

1:01:52 – Favorite thing about working with entrepreneurs

102:48 – Honing your craft

1:04:33 – Making yourself a good mentor

1:05:56 – Kindest thing anyone has done for him

Learn More

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub

Follow Patrick on twitter at @patrick_oshag

Jesse Livermore – The Search for the Truth with the Anonymous Master - [Invest Like the Best, EP.136] Jun 25, 2019

Show notes

This week I have a very special guest years in the making. Like another favorite episode, with anonymous guest Modest Proposal, this conversation is with one of the stars of the financial twitter universe who writes anonymously and goes by the pseudonym Jesse Livermore. I met Jesse 6 years ago after reading his unbelievably unique investing research, which tackled all the big and interesting issues in markets. He now also works with me as a research partner at OSAM, where’s he’s used our data to continue to his search for truth in markets. Despite being one of the brightest minds I’ve encountered he is also as humble and unassuming as they come. I’m at least a slightly better person because of trying to emulate how he conducts himself. I get to have many conversations with him that go from 0-100 fast, and I’m thrilled to be able to share one of those with you.

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.

Follow Patrick on Twitter at @patrick_oshag

Show Notes

1:33 - (First Question) – Jesse’s origin story for investing

4:37 – Exploring his ways of problem solving starting with intuitive

7:53 – David Epstein Podcast Episode

11:46 – Looking at the analytical way of problem solving

15:42 – Statistical inference

24:45 – Should we opt for simplicity in the investment process

25:26 – Does his own investing include all three, intuition, analysis, and statistics

26:09 – The evolution of his research, process, and thinking on various investment factors.

31:38 – Thoughts on inflation and its impact on market valuation

40:05 – The Earnings Mirage

46:25 – Free Cash flow and valuations

50:51 – What should investors take away from this research

53:01 – Thoughts on trend as an interesting market signal

59:00 – The problems with trend

1:00:34 – Post on “The Single Greatest Predictor of Future Stock Market Returns”

1:11:15 – His work into understanding factors

1:15:36 – Looking at momentum

1:18:16 – His curiosity into the current market cycle

1:20:04 – Lessons learned from his time in the military, an effective way to create an environment where people can safely disagree with their co-workers

1:30:10 – The concept of progress in meaningful work

1:33:08 – Kindest thing anyone has done for him

Learn More

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub

Follow Patrick on twitter at @patrick_oshag

Chuck Akre – The Three-Legged Stool - [Invest Like the Best, EP.135] Jun 18, 2019

Show notes

My guest today is Chuck Akre, a now widely famous investor who founded Akre Capital Management in 1989, which now manages approximately $10B dollars. We discuss his investing style and his “three-legged stool” for evaluating companies. Please enjoy this great conversation.

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.

Follow Patrick on Twitter at @patrick_oshag

Show Notes

1:06 - (First Question) – Advantage of being in Middleburg, Virginia

2:11 – What a day looks like for Chuck

3:06 – Why imagination is more important than knowledge

3:38 – Difference between curiosity and imagination

4:38 – The origins of the Nirvana Three-Legged Stool concept

10:14 – First leg of the stool, Extraordinary business and ROE’s with a focus on Bandag.

14:36 – How his evaluations of value has changed over the last 10-15 years

16:10 – A look at recent businesses that he’s bought and why they are interesting

19:56 – Why they keep things simple

21:35 – Second leg of the stool, the people involved and characteristics of managers he has invested in

23:20 – Role of capital allocation in the people he focuses on

28:03 – Favorite biographies

28:22 – 100 to 1 in the Stock Market: A Distinguished Security Analyst Tells How to Make More of Your Investment Opportunities

29:34 – Third leg of the stool, reinvestment

21:09 – How does he think about diversifying across an investment area

33:32 – Great businesses wrapped in a bad balance sheet

37:35 – What would cause him to sell

38:52 – What does he look for in people

43:27 – How curiosity has impacted his interest in land conservation

43:51 – Advice for investors, especially younger ones

46:14 – Kindest thing anyone has done for him

Learn More

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub

Follow Patrick on twitter at @patrick_oshag

Jerry Neumann – Why Venture is Hard - [Invest Like the Best, EP.134] Jun 11, 2019

Show notes

My guest this week is Jerry Neumann. Jerry is one of the most thoughtful early stage investors that I’ve encountered, and his writings at reactionwheel.net are my favorite on this topic. He applies an incredibly structured way of thinking to a notoriously mysterious investment category. This is our second conversation, in which we cover why investing with one’s gut is a bad idea and why some of the popular edges in startups, like network effects, may be picked over. Please enjoy our conversation.

For more episodes go to InvestorFieldGuide.com/podcast.

Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub.

Follow Patrick on Twitter at @patrick_oshag

Show Notes

1:17 - (First Question) – His take on the venture landscape and the type of investments new VC’s are making vs what they should be making

3:44 – Most important implications of excess VC firms

5:32 – Misalignment of incentives in the VC space

8:19 – What he does differently from angel investors or VC’s

10:11 – The notion of risk and the types of risk the people he invests in takes

14:33 – Protections that he thinks about when it comes to the ideas he invests in

19:37 – Is there an area of expertise that provides an edge for startups

20:11 – Network effects are picked over