Invest Like the Best with Patrick O'Shaughnessy - Josh Brown – The Reformation - [Invest Like the Best, EP.14]

Episode Date: December 6, 2016

My guest this week is one of the reasons that this podcast exists.  Josh Brown is a financial advisor and the CEO of Ritholtz Wealth Management. He is also the creator of TheReformedBroker.com, a blog about markets, politics, economics, media, culture, and finance that has become one of the most widely-read sites on the financial web.  He is the author of Backstage Wall Street and Clash of the Financial Pundits. Josh was instrumental in finding me an audience years ago when he shared one of my research pieces with his rapid base of fans.  This conversation includes a look at his journey, what he’s learned along the way, and most importantly, his top five, dead or alive.   Please enjoy!   For comprehensive show notes on this episode go to investorfieldguide.com/brown/ 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

This podcast is sponsored by CFA Institute, the Global Association of Investment Professionals, whose mission is to lead the investment profession by promoting the highest standards of ethics, education, and professional excellence for the ultimate benefit of society. CFA Institute serves a global community of investment professionals, working to build an investment industry where investors' interests come first, financial markets function at their best, and economies grow. The chartered financial analyst credential is the most respected and recognized investment management designation in the world.

The views expressed in this podcast do not necessarily represent the views of CFA Institute. Hello and welcome, everyone. I'm Patrick O'Shaughnessy and this is Invest Like the Best. This show is an open-ended exploration of markets, ideas, methods, stories, and of strategies that will help you better invest both your time and your money. You can learn more and stay up to date at investorfield guide.com. Patrick O'Shaunisee is a principal and portfolio manager at O'Shaunisee Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of Oshamacy Asset Management.

This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of O'Shaunossey Asset Management may maintain positions in the securities discussed in this podcast. My guest this week is one of the reasons this podcast exists because he helped me find an audience several years ago. I sent him a research piece which he kindly shared with his rapidly growing follower base. Today, he is the avatar for the next generation of investors. His story reads like a myth, trials and tribulations, reformation, transformation, and a commitment to share what he has learned. Josh Brown and I discuss his journey and have a lot of good laughs along the way.

You can find show notes for this episode at investorfieldguide.com forward slash brown. And in this episode, I ask the most important question first. So please enjoy. All right, Josh, thank you so much for doing this with me. by far the most common question people wanted to know is in the world of hip hop rap, top five dead or alive? This is where we're starting?

Yes. All right. Dead or alive? Yeah, of course. I mean, it makes it easy. Everyone's one and two has to be either big and Pock. But who's one? Well, I'm from the East Coast, so it's big. I respect the Pock arguments. They're wrong, but I respect.

I think you have to round out the top five with East Coast, though. I think you have to keep it real. It's where it started. KRS and Rakam are easy. The fifth slot's a little bit tougher. I typically default to Jay-Z. Yeah. Early Jay-Z.

It's a crowd-pleaser to end with him. But I will say, like, 6 through 10 is harder than 1-2-5. How about right now? Maybe top two. You know, like who I'm listening to a lot. You know, I'm not that far afield, I guess, from the mainstream. I'm listening to Kendrick and Kanye a lot. Yeah.

But some of the newer guys are really in. interesting to me. I think maybe the most fun rap record to have come out this year is by Dram. A lot of people know the track he did with Yadi called Broccoli, but the full record, that's a fun record. We don't really make hip-hop records anymore. They're fun. You know, the top-selling rap record this year is Drake, which is the most depressing thing. And I don't hate it, but it's, it's mopey as hell. And, you know, so this is like the polar opposite. It's live instrumentation, it doesn't make you want to kill yourself. So there's a lot of new stuff coming out. I think the hurdle is higher for any of the new guys to ever break in. When you ask somebody,

top five live or dead, I don't see how somebody that comes out now ever ends up in that list. Well, it's kind of like classic rock, right? Like the origin. It's the same paradigm. People that were the trailblazers, it's just going to be hard to beat that paradigm. Yeah, like you could say Pearl Jam's awesome. I love Pearl Jam, but like you're not going to kick the who out of the top five. You know what I mean? Right. I mean, you can, I guess, but you're going to get side-long glances. So I think it's an interesting question because it's the kind of question that gives people an opportunity to give an answer that says something about themselves versus what the actual truth is.

So, you know, some of those you listed, I love. And, you know, but that's an interesting point. If you ask the question differently, who are your five favorites? So when someone says top five, like Chris Rock movie, top five. Yeah. When someone said, like, are you asking? me who are my five favorites because that's a different list. Like I have I have tried in my in my top five like if we're going to do it that way. But if you say like definitively who are the best like unobjectively

that's a matter of preference right. But it can't but it can't be we have to be objective. I don't know. Jay-Z is not my favorite rapper but I think he has to be in the top five. So so quickly five favorites. I mean this is going to sound crazy but it's it's DMX. It's Eminem. Um, you know, Lutang Clan, I could pick four or five of them. It's, so it's, oh, Big Daddy Kane, who would not be in anyone's, you know, list of top 10 MCs. But for me, he's a top five. So it's harder. I went through my Spotify list, just figuring to answer it that way to keep, to make it objective for myself.

Not who I think and I want to say, but like who actually has the most on my big rap list. And it was, Nause was number one, Eminem was two, Tupac was three, Outcast was four, and the roots were five. Oh, man. Which is a very different list. Outcast. Yeah, this gets really hard. You're going to get dragged for this because this is the whitest discussion of top five MCs. Maybe that's ever taken place. Hey, at least for doing it. I'm from, Long Island. You're from Connecticut. Minnesota originally, even whiter. Even worse. This is going to be, this is going to be tough.

I might have to, I might have to call some backup and get some help defending this. So like I said, it's one of those questions you can, you can lie about to make yourself sound better, and that certainly doesn't seem like your personality. I would love to hear. because I've actually never heard it from you in person, kind of the story of your reformation, so to speak. So maybe the threshold crossing moment when you went from, let's say, a world where there were a lot of what you feel now and probably felt then were bad practices in the advisory space and the investing space to really being fed up and totally changing course. Yeah. So to the extent that I'm able to talk about myself without hating it, I can definitely

tell stories about the way I used to do things which was all wrong. I mean, my book was about here's every mistake I've made and why I didn't realize until later that they were mistakes. So not to kind of like self-aggrandized. It took me, let's say, 10 years to realize that I was doing this business the wrong way. And I feel like it would have taken a smarter person, three years, one year. So I'm not thrilled with myself that it took so long to say, all right, this is counterproductive. It's not great for the client. It's terrible for my own psyche. It's not helping anyone. It's, it makes no sense. It took me a really long time. But I hope that I've made up for that because once I realized, I didn't keep it to myself. I came out pretty publicly. Guns blazing.

Yeah. Listen, I said, I said the truth. And by the way, it's not that I was so courageous. I really didn't have anything to lose. It was late 2008. Actually, my eighth blog anniversary is this week. So, but I was in a place where my career was basically over, not over because I was like, had a problem business-wise. I just didn't want to do it, like what I was doing. So I was kind of in this really, really negative place. The world was coming to an end anyway in financial markets. So there probably weren't huge consequences for me to tell the truth. And in hindsight, obviously, it saved my life and it gave me a career. So, you know, I don't look back and say, oh, I wish I would have come to my census sooner. It is what it is. The silver lining is that I had a front row seat

for everything you're not supposed to do in investing. Like I literally watched retail brokers, who I would say are the worst investors for the most part, not every retail, but the ones that I watched. These are guys at regional firms or third-tier broker dealers doing a lot of investment banking business. The clients were even worse in most case. The clients were like, you know, really into gambling and short-term speculation. And just that toxic combination of clients who have the wrong idea about what to do with their own money, brokers who have a conflict embedded in how they get paid and also have their own gambling issues. And just watching that over the course of a few years pre-crisis and then during the crisis, the silver lining,

is I'm going to make other mistakes. I'm not going to make those. And they're classic, you know, the kinds of things that really destroy people's net worth, some of the stuff that I saw people do. I'm curious how you could kind of tell this story via the composition of your portfolio. So what did your portfolio look like in 2005, six? And what does it look like today? And was that like a 180 transition or was it gradual? And does it still gradual? It's, yeah. So it's not, It's more than a 180. It's a different sport. So when you're a retail broker and you're primarily working with clients who are high

net worth and high risk tolerance and what they've really hired you for is to help them beat the market, to help them generate massive above average gains, the problem with that is that they expect that it's something that could be done consistently. And when you're trained by people who train you to believe that that's possible, it takes a while to realize, oh, I see what's going on. This is a loser's game. This is work with a client. Try to give them what they're asking you for. It's not a possible thing. It doesn't work out. Work with the next client. Work with the next client. So a bull market, so let's say from 2002, the low to 2007, you could do it. It could work. You could buy what you thought were good

stocks. Try to buy them with catalysts coming up. Try to own a few of them. And by few, like seven or eight per account. And you'll always have one doing really badly or two or three. And then you'll always have one or two or three doing really well. And you'll take profits where possible. You'll average down into the losers. You'll have a really big winner and the client will send you the rest of their money from the other five brokers who had blown up.

But until you get into like 07, early 08, when real, real things start to blow up outside of your portfolio, things like Bear Stearns going away. And then all of a sudden you realize, oh, okay, so I made this client money for four or five years. I lost it all in two months, everything that I made for them. And they want to still play this game, but I can recognize this game is not working. And it has nothing to do with me, my skill, my intelligence. No one can actually do this.

And at that point, I stopped listening to the analysts. So we would have like a meeting. we had guys covering stocks, gals, guys, whatever, come out and say, all right, here's the deal. These are the stocks that are going to get killed less. So we're going to recommend these this month. Literally, that was a – but that's what forced me to look outside for information, information that I never had. Like, I don't have an MBA.

So that's when I started reading blogs. So I started reading Barry Riddholtz. And Barry's take on the financial situation, the housing market, all of that was diametrically opposed to what Wall Street was saying and to what the analysts in my firm were saying. So that was a really big turning point. And my portfolio now is night and day from the way we were managing accounts back then. So are you, are you, I know you are all proponents of low cost, probably is the common denominator. But personally, are you almost all indexed?

Are you, do you still pick stocks? Yeah. So my retirement portfolio, my 401K is the same models that our clients have. And, you know, we think that that alignment is really important. But then for fun, I have like, you know, an IRA, a SEP IRA. And I buy blue chip stocks and I try not to trade. And, you know, the general idea with that portfolio is, and this is how I learned about the markets begin with, the general idea is that through owning individual stocks in different sectors and following what's

on with them. It gives you a better feel for what's going on in the broader markets, the economy, but the real money that I will make and, you know, the, hopefully, you know, the real money that I'll pass on to Mike will be in the same portfolios that we recommend to people because it's what we believe. It's our investment philosophy. Seems very prudent, but sometimes the individual stock side can be a little more interesting and fun, a great way to stay kind of abreast of what's going on. My kids are, yeah, my kids are learning the market through, individual stocks. So one of them owns, I bought Disney for, and then the other one I bought Under Armour for. It's his favorite brand. And it's not about whether they go up or down. I think that that's

the best way to learn investing. It's with individual stocks. And it gives us a reason every week. Okay, let's go check the news on Disney. Let's go check the latest price movement on Under Armour. And then through that prism, I could explain things about what's going on with the stocks. And I think they're learning the market that way. It's a more fun way to learn. I'm curious when you're when you're teaching them or talking about the stocks, do you get into the business model side of things? Like do you say, okay, here's how it? Totally. Totally. Because the goal of it is not, oh, my seven-year-old's, you know, shares of Under Armour are going to change our lives. Like, the goal is by the time he's 8, 9, 10, he can fluently speak the language of investing. I didn't

have that when I was 10 years. You know, I knew basically, baseball cards and I had a good idea of supply demand for like comic books, which was cool. So we're going to do it with stocks in our house. And it's kind of a cool experiment. We'll see what happens. I hope they don't both become hedge fund managers or anything as a result of it. We keep hearing the same thing over and over again, now that you've got a lot of experience on the advisory side, that the role of the advisor has been kind of squeezed out of investment management and into planning and say behavior relationship management. I don't know that that's true.

I know that the media sees that. I don't know if that's really true, though. Yeah, so this is kind of what I want to dig in on. What aspects of what you do with clients or just more generally speaking that financial advisors can do is future proof, meaning like right now financial planning, you know, a good financial planner is definitely worth their weight in gold. But certainly with technology 10 years, 20 years from now, a really good questionnaire is probably going to be able to get you a lot of what a financial planner could get you today.

So I'd be curious to the extent there are things that are future proof in the advisory space, what you and you think other advisors can do now that will still be very valid in 10 years. So I think it's important for us to say that financial advice is like one of the oldest industries on earth. I mean, you go back to Old Testament when the Pharaoh is having a dream and he needs it interpreted and it's about the economy. So I think I think anything that's that's, you know, that long-lived, people are always going to have money. New people that aren't used to having money are always going to get money. Those are the people that are going to need advice.

And advice is not, should I buy Coke or Pepsi into the earnings or is the small-cap 600 index better than the Russell 2000? That's not advice. That's tactics and it's interesting and yes, there will be differences between whether you recommend one or the other. There will be different investment outcomes, but that's not going to help anyone. I think what does help people is having an advisor they have a relationship with. I'm not sure how that's replicated by technology. It definitely can be helped by technology, which is one of the things that gets us very excited here. I look at us as very progressive about incorporating tools into the practice to help us be better advisors

or to enable us to scale. I mean, that's really what I see all of these tools. And the best way I've heard this described is TurboTax being a good metaphor. When TurboTax first came along, there was the same idea, up, that's it, no more accountants. There are more accountants than ever right now. And they're all using TurboTax or a competitor of it. So it enables them to do work quicker, more efficient. the way the custodians describe this concept to the advisors that work with them as they say,

and I think this is true, they say standardize the process but customize the advice. So by definition, you can't give advice to someone with software. It's a human component. However, if you can take a lot of the tasks that are time consuming and not fiduciary tasks, frankly, if you can remove them from the process by standardizing them and using technology, I think you can give better advice to more people and you can broaden the types of advice that you're giving out. What do you look for in people that might be working at Reholtz with you and in investor,

in potential clients? Are there things that you screen for or screen against me, like a negative screen? Yeah. And I had to learn this relatively recently in the last five years because as a broker, you're taught to just take money from anyone that'll give it to you. In other words, somebody calls and says, hey, I was reading Barron's and they really like health care for 2017. No problem.

I'll find you some health care stocks. Let me see what our analysts like. Let me see what the trader is abusing about. So this is the other way around. Rick Edelman likes to say, Rick Edelman founded one of the largest financial advisory firms in the country. He likes to say, no, this isn't Burger King. No, you cannot have it your way.

if someone comes to us and they've got a really specific sense of what they want their portfolio to be, it's really tough for us to turn that situation around and explain to them, no, no, no, we have to figure out what you're trying to accomplish with your money and what your risk tolerance is and what your priorities are, when you'll be using the money, what your tax rate is, inflation, all of these. We have to figure that out and then, and only then, frankly, are we equipped to have a conversation about your portfolio? Look, I'd rather talk about, you know, Invidia and Adobe and all these stocks. I'd rather do that too, but that's not really what we're trying to accomplish here. So we're looking for people that understand that from the get-go, and that's both advisors and clients. And the second thing is there are probably a lot of people that we're not a good fit for.

And that sounds anathema to my industry. Everyone's something to asset gathering. Like, that's the – we would never be able to grow at the rate that we're growing if we were just saying, yes to everyone because by taking on clients who have expectations that differ from what you can actually deliver, you actually impede your own growth. You impede your ability to service the good clients because you're trying to change the bad clients. And not bad in the judgmental sense, but bad because it's bad fit. So I think learning that lesson was a really big turning point for me professionally to just say like, all right, this is what we do. We're really good at it.

We only want to do it for people who, A, want it, B, understand the value of it. And that's not everyone. So somebody that comes along, hey, I have $5 million. I'll give you half a million of it. Let's see how you do against this other hedge fund I own and this other advisor. We have to say no, thank you. And every time we do it, there's a benefit in our favor. We have more time to do the work that we actually want to do.

Did you see that actually happen? Were you taking those in the early days? the advisor business? No, but we had some really close calls with people like that because when you're just getting started, you're kind of like, hey, man, I'm going to make money. You know, how are we going to get this practice off and running if we say no to everyone? Barry, actually my partner, Barry, we had a really, I think, this was like a formative moment where, you know, and Barry's not an advisor, Barry's the strategist, the firm.

I'm the advisor at the time. And this is before we launched the firm. and we get a call from someone, nice guy, Barry, I've been reading your column, you know, for seven years, and I just inherited, I think the number was $5 million, I could be wrong. I just inherited $5 million. Here's what I want to do. I want to give you and four other advisors a million dollars each, and I want to judge you for a year to see how it goes, and then whoever does the best for me gets all of the $5 million. So I don't know if he meant just performance, like does the best, like maybe. the relationship is, but, you know, Barry kind of said, so Barry over here is me having this

conversation and he basically takes the phone and you know, if you know Barry, so you know I'm telling you, he basically pulls the phone out of my hand, he's standing over me, I'm literally facing his crotch because I'm sitting in the seat and he's just like right in front of me and he basically lays down the law with this guy. He says, first of all, if you're a fan of mine, I appreciate it, that's why I'm, you know, that's why I'm willing to even say this to you, I want you to know you are setting up the world's most fucking retarded incentive system, like, imaginable. Because think about it, you've got five guys, they know they have a year, they're all swinging for the fences. Because if they don't win, oh, well, it wasn't their money.

They had nothing to lose. If they swing for the fences and win, which is very probable, then they've got the whole five million. So just hearing him be that blunt and saying that to someone. And, you know, in my shoes at the time, I'm like, dude, that's a potentially, you know, that's a, that's a, what are they called, penta millionaire? There's a pentamillionaire you're talking to like that. If I'm not mistaken, the, the guy came back and said thank you at some point later, you know, we didn't take the. You learn the lesson somewhere else. Maybe.

I don't, I don't really remember how it ended. But it was just that point that you've got to say no. Because if you say yes and you try to be conservative with that client and do what you know is the right thing, you're wasting your time. because one of the other four, they're going to do some wacky thing. They're going to put like 25% on, you know, Amazon and it's going to hit. So you waste your time. If you do the wrong thing, well, you're just violating everything about yourself that, you know, you said were your principles. And that's obviously not an option with me.

And so I thought I learned a lot from just the bluntness of how that was explained. And I think that definitely, you know, was formative. What are some things, very specific things that don't feel like work to you, but that other people out from the outside looking in seem like hard work? Well, people say like, how do you guys have so much time to write? Or how do you guys have so much time to put up all this great content? And I think from the outside looking in, it seems like it's a lot of work to do it. And that's fine. But, you know, one of the things about me is that this is investing and becoming a better investor is definitely my passion.

So for me, like I don't do fantasy football. I don't do square dancing lesson. Like I don't, this is what I do. I wake up, I read about markets, I read about investing all day, go home, play with my kids, they go to sleep. Maybe the game is on, but I'm probably reading even more. So just, and all of this, by the way, is not in an effort to produce content. It's in an effort to get smarter and to learn more. And the fact that I can do that publicly and take people with me on that journey, I think has been behind the success of the blog.

blog. My blog is not, hey guys, I'm 39 years old. Here's how the world works. My blog is, I don't know a lot about this topic. The markets seem to be really focused on it. Here are some things I'm reading today. Maybe you'll find them interesting too. That's a very, very big difference between that and the newsletter guys who are like, here's what's going to happen. Here's the truth. Yeah. Or here's, right, here's what the world is keeping from you. I think that schick works to sell subscriptions. I don't think you could sell a subscription to what I do on the blog, but I think it's probably 10 times more valuable for the readers because A, I'm a little bit more open-minded, and B, from day one, I've said, this is all about me trying to get better at investing. That's it. It's not about me

telling other people what to do with themselves. If you had to characterize yourself as one company, what company would you characterize yourself as? Oh, my God. Wow. That's a really good question. Like, in terms of my personality or in terms of... Interpret it however you want. Well, what's your answer to that? I don't have one. I just thought of this question. Can I do you and then I'll do me? Sure.

You mean you're going to characterize me as a company? Yeah. Sure, go for it. I'm going to say you're like Google. I'll take Google. Well, do you want to know why? Of course. Or we're just going to have dead air.

No. Line me. Here's what I would say that. You have this book list and I think you're reading a book every three hours. Something like that. Okay. So I forget how many books. I read your spreadsheet.

I think you're up to like hundreds of books this year, though. Is that real? It's probably about a book. 100 a year. All right. So that's insane. So you're like indexing the world's information in your brain. All right.

So I think you're like Google. I don't know. I guess I'm Twitter. Isn't that the obvious? All right. That's too obvious. What's second place? I don't know.

Yum brands? You can often find pizza, fried chicken and tacos inside of me at the same time. You've been to one of those triple pizza. Okay. So I think maybe I'm Young Brands. Yeah. Maybe I mean, you're definitely Twitter, I guess. It's maybe an obvious answer I should have expected.

Talk a little bit about that. I mean, you've got, you're kind of the exemplar in our business for using it probably mostly for good and for spreading some of the things that you've learned. How, I mean, why this kind of nonlinear explosion of attention that you get? What do you think it is about what you do that has so many people interested? I'm going to keep it real with you, Patrick. I don't know. I really don't. I don't know.

Look, I've obviously found my voice on the platform, but I, obviously put a lot of time into it too. Yeah. You know, like, I don't think it's like, oh, I was born to tweet because I was born in 1977. So it would be a good 30 years before my platform of choice came along. I think there's a couple of things. There's an element of right time, right place.

I think I started on Twitter in 2009. And there were probably 20 people talking about investing there. So that helps, of course. Yeah, you're a founder. Because then, like, Twitter gets hot. And, you know, Barron's. and Wall Street Journal and Time Magazine have all named me one of the top

people to follow, which is great. I like to tell people that, but then, like, I was one of the only people to follow at that time also. But whatever, I'm still here, and I'm still making the lists. So that's good. I think, by the way, DJ Khalid on Snapchat, it's the same. Right. Let me play the right time.

Yo, shout to Khalid and no offense, but that's what, that content is garbage. Like, I like his music. His Snapchat is garbage. There's nothing going to say, yo, I'm getting a haircut. Haircuts are a major key. He's like, you know, I'm watering my plants.

We're the best. And I've watched enough of it to be able to realize, no, I'm not missing anything. He's just early. Like, there weren't a lot of rap guys. And it built a young audience. The young audience likes his music, like I like his music. So I think there was some element of that. I wasn't watering my plants on Twitter or whatever.

I was trying to have like substantive conversations. I'm sure my early tweets are embarrassing. I don't go back and read them. I mean, why would anyone? So I think there's some element of that. But then the other thing is I don't fight on Twitter. Like I made this decision five years ago maybe. Like I, because I would see people I respect.

Like Cliff Asness and like. Yeah, pick and like amazing, like, amazing, you know, Doug Cass who's always been total mensch to me, a really nice guy. He's in a Twitter fight every day. Now I know it's his fault. Like three years ago, I would have been like, hey, leave dog alone. He wants it.

He loves it, obviously. But I watch, like, these guys who I don't even understand why they would bother. And they get into these fights with egg avatars or, you know, there's like this whole layer of anonymous either traders or hedge fund analysts. They're, like, angry because they have to be anonymous or, you know, they're, I don't know what, I don't really get it. I'm friends with a lot of them on Twitter. I learn from them.

They share great stuff. And then every once in a while, they'll, like, say something mean about me or about someone else. I just totally stay out of it because I realized there were days where I was having a bad day in the markets or in business or personally. And you have this urge to just, like, lash out at someone. Spue, yeah. So I think there's a lot of that going on.

And so I think my decision to not do it, I think it helped. Look, I could get on there. I could tear someone's heart out. You know, like, I don't think it's that hard to do that to, you know, look at someone who's put their life on Twitter and just say, all right, I know exactly how to hurt this person. Like, anyone can do that. So I think staying out of those wars and just keeping it about having fun and learning and linking the great content and talking about markets and leaving all the other stuff out, maybe that's elevated my Twitter brand. I don't know. The more I think about it, the more I realize it's foolish to think about. Is there anything else out there right now where you guys are amazing in that you have,

you really keep up to speed on new technology in the financial space, new platforms for getting your message out? Is there anything else that feels kind of early days? Could be technology, could be social media, could be anything, where you are kind of juiced about it. So it's interesting. There have been a bunch of new financial, excuse me, a bunch of new social media platforms and and I always said to myself like, all right, I'll create a profile and I'll just see if there's anything to it. I'll experiment. And honestly, in the last couple of years, it seems they all fail. They don't fail. They fail to get traction for finance. So give you a bunch of examples, Mirkat and Periscope two years ago that looked like, oh my God. Can't miss. This is going to be

huge. And whoever figures out interesting things to do on Periscope or Mirkat to do live broadcasting is going to win. It's just going to win. And I'm friends with all the venture tech finance guys. Like I know, I know them all. And so we all were trying and experimenting. Then you realize, like, no one's that interesting that you want to watch them broadcast live every day from their phone, right? Like not talking to good guests or not having good scenery or not actually having a point, just rambling. Nobody wants to watch anyone do that. Except for DJ Collin.

Right. No, but I'm saying like for investing. Yeah, he has like, I'm talking shit about this guy. He has like 20 million, 30 million people watching him right now. And you know he's like eating cereal. So, all right. So that's like a good example of something that this seems so obvious. Everyone's going to want to do self-broadcasting.

But turns out, like people don't have that much to say. Or viewers aren't that interested. And then there's Peach and L.O. And there's no finance Instagram that I'm aware of. So certain platforms, oh, there's no finance Facebook PS. Certain platforms just don't lend themselves, I think, to conversations about the subject matter that we're having. Right. So I think LinkedIn and Twitter for finance are the big ones. And Google Hangouts didn't work.

And I can go down this huge list of things just in the last couple of years. So I'm a little bit surprised by that. So I don't spend a ton of time experimenting. I try to focus on what I know is kind of working. How do you feel about Slack so far? Slack is like life-changing. We've standardized all inter-office communication on Slack. We have the compliance firm archiving it, obviously.

So what we're not doing there is doing what we're doing with encrypted email. So with encrypted email, you know, if we need to share a like client, personal personal data, you can do that there. You can't do it on Slack. You can't encrypt it. But things like, hey, the meeting's in five minutes or did you see that email from, you know, Mr. Jones about opening his, you know, wife's IRA, stuff like that. That used to be back and forth emails with like eight people.

It's a nightmare. See it. It's a joke. It's a joke. I think I send less than 20 emails a day now. And I mean, I receive like 100. But I'm not sending emails anymore because. So many inter-office things can just be a chat function, archive for compliance, nothing in there that's personal data or sensitive, just regular. And now here's why that's critical. I have employees in Oregon, in Florida, out of Long Island, here in New York City, in Michigan. You know, we've got to have, we've got to have a give and take that's almost as gapless as a conversation like you and I are having now. So that's how we do it.

What I found amazing about Slack, there's those studies that show cities with greater pot. population density produce more innovation, just because ideas and people are just kind of bouncing off each other all the time. And Slack is the first thing that I've seen, and I use it all the time, and I've got like several different groups where like there's almost that virtually. And you can get to know people faster. It's like an amazing, if Twitter is like the top of the funnel for finding interesting stuff. You're in my secret slacker.

Yeah, we're in the secret slacker. One of my secret slackers. We shouldn't talk about that. First rule of secret Slack group, don't talk about it. The bottom of the funnel seems like Slack, that the people that have been most interesting I've found elsewhere, somehow I get them onto that platform. Right. And I would encourage everyone to do that.

And it's definitely the coolest piece of technology, even though it's super simple, right? It's aOL instant message, internal. Searchable. Right. I mean, it's, I think it's incredible. I can't believe, like, they're talking about, like, oh, Salesforce is going to buy Twitter. because there's so much data from marketers on there. Well, they can have that data anyway.

Number one, they need to buy Slack. They're crazy not to buy Slack. And Slack should get like a LinkedIn-esque multiple, whoever buys it. But, yeah, we've standardized all inter-office communications that are not encrypted email worthy. We're doing that on Slack. And I recommend it to companies in any vertical. It's been huge for us.

What's the most memorable individual day? of your career. Wow. Probably the day that I came to work with Barry because, I'll tell you why, because prior to that, I was a retail broker at a firm that had borrowed a bunch of money during the crisis and was failing. And I had only ever worked for idiots. I didn't know it at the time because I was in my 20s, right? And when you get your first job at a school and your, whatever, you know, my first job in the industry was an internship. I was not. 19 years old cold calling at Duke and Company, which was an offshoot of Stratt and Oakmont. But I was 19 and I was in school.

So it was like, what are you going to do this summer? I don't know. This guy has five Porsches in front of his house in my town. I'll go work for him. He must be doing something right. He was an idiot. He was a bouncer who got a series seven. Fine.

But so like I had only ever worked for idiots, but I didn't know it at the time. And maybe they were well-meaning. Maybe it's not nice to say that. I don't really care. But going to work for Barry. It was the first time where I said, I'm going to learn something from this person now that could actually be helpful to me for the rest of my career.

Like, I really felt like I was going to work for a mentor. And keep in mind, I started reading Barry like in 2001 or something. He was writing at the street.com. He was the guy that wasn't Kramer, basically. But so that was, I think for me, probably the most memorable day. You know, and I dropped my Series 7. and like I just, I'm not a broker anymore ever again.

I'll never sell another financial product to anyone as long as I live. Like, that was a really big moment for me. I write about it in my book. I almost felt like I was walking on air. I wish I could ever have that feeling again. But other than like getting married, the birth of my children, like that's a big one for me. So I'll never forget it.

There's a lot of mentorship kind of in that answer. Who are people right now that you're learning the most from? Well, so they're all like younger than me. And so maybe maybe, Maybe it's a little bit like, it's funny because they work for me or they're younger than me. But the two guys that do most of the research in my firm are Ben Carlson and Michael Batnik. In addition to being personal friends of mine, I probably learn more from them every week than I've learned from other people I've worked with ever, you know, put together. These are these are guys that just are relentless in their pursuit of like important investment truths, right?

These are guys that if they were in any industry, like if they were in medicine, they would be like doing the same thing, just relentlessly trying to figure out real, true, consistent things to be able to say and explain about medicine. I just think that they're incredible people to work with and really, really influential. So those two. And then just like in the broader investing realm, like people I've either met or I've been waiting for a long time, my list is like, Chanos, I would say Asnus, I would say Ram Barnat, I would say Muhammad Al-Aerian. So I've met a lot of these guys, but even before, I just read a lot about what they said and how they thought. And, you know, thank God for that because I was kind of in the dark ages with what I was doing professionally. So just knowing

there was a broader world out there, I never expected I'd meet any of these people, by the way. So just like, that's been a perk. But yeah, I probably have a list of 10 or 15 people. Nick Murray has been hugely influential. His book might have changed more about my investment philosophy than any other book. It's called Simple Wealth, Inevitable Wealth. It's a classic among a certain group of advisors. But I go back to it once every couple years.

I don't know. I'm sure if I could think more, I'd have a more in-depth list. It's a good list. What are some of the things that you enjoy most about the show on CNBC? and what are some of the things that you wish were different about it? Or let's say you were the producer, the executive of the show, you know, over the coming years, how will it evolve or morph? So I love the show because it keeps me really sharp about what's going on in the markets

and it forces me to be aware of the trends, the cross-current sentiment, the fundamentals, because every single day, that's what they're talking about. So if I'm on the show two or three days a week, I have to know what's going on. And I think there's a tendency for people that are managing long-term wealth to sometimes not understand what's going on. And, you know, there's an argument to be made, oh, it's better off if I don't, I don't really buy into that. I'm one of these people that, if I'm involved with something, I want to know everything about it. So I think it really, really helps me from that standpoint. I also really enjoy the camaraderie of the people on the show, and I love the guests.

so we could spend an hour with Mario Gabelli. We can have people on the show that are managing $10 billion, $20 billion, $50 billion. We've had Carl Icon. We've had all of the iconic living investors have done the show or do it regularly. Just listening to them and understanding how they look at markets and having that give and take, I couldn't get that anywhere else. Like, it's incredible. So I feel like I'm really, really lucky.

to be a part of it. I think we put out the best daily hour show about investing and trading that exists. I'm obviously biased, but I think that's what we're trying to do, and I think we accomplish it more often than not. That being said, there are always segments that I'm asked to be a part of that maybe I don't think are particularly important, but, you know, that's part of the deal. Like if you're someone who's a public commenter on politics, not every discussion maybe is that exciting to you or that momentous to you, but that's, that's like a very minor drawback for a very big benefit. Because I end up in a lot of meetings in my, in my, in my, in my firm, in my regular career,

that I say, oh, man, I don't want to sit through this meeting, you know. So I think everyone's got that. So, but look, that's a very minor thing. The big picture is, you know, we get to talk about my favorite thing, which is investing in stocks, and we get to do so with some really, really brilliant people. And I don't really know of any other way that this would be possible. So I appreciate every day that I'm able to do it. If you had to give all your money to one of the guests that you've had on the show, and I promised you that they're going to live for the next 20 years, so it could be an older

investor, just buy and hold that investor, who would it be? And why? Wow. That's a really, really good question. Is it cheating if I say it's one of the venture capitalists? No, you can say anyone you want. No, I don't know. It's maybe girly. So we've had a lot of people who, we've had a lot of people who manage huge money. I think the problem with that is it eventually gets in the way of performance. The bigger you are, the harder it is to keep that consistent. So that's what makes that question tough. If you tell me I could have their past track record, it's much, much easier to answer. All right, let's do it that way. So you get the skill of whoever it is. They're going to be around for 20 years. And I get to decide when I come out?

It's 20 years, let's say. Okay, it's icon, right? I feel like that's easy. But then when I come out is when he's on the cover of Time magazine. He's a contrary indicator. Like, that's it for me. You know, congratulations. You're the best investor alive.

And now everyone knows it, so I got to go. From an outsider's perspective that just has, you know, has CNBC on and pays attention every so often, it seems like him and temper are the most refreshingly just themselves and just completely honest. Is that, would you agree with that? Yeah, but they're also freaks. They're freaks. They're so good. And it's, if you say, like, what's your process?

Like, I think they could give you, like, half a sentence. And then they're just like, oh, I don't fucking know, man. I just, I show up. I do my thing. I'm really, they'll never say this about themselves. But, like, I'm thinking they're inner monologue. I'm really bright. I know the right people to ask questions of.

And I have great gut instincts. Now, you can't put that on a prospectus. Right. Like, you can't be like. And we live in the age of process now. Everyone's got to have their process. So that's my joke. That's my...

Everyone does have to have their process, except for a very small handful of select individuals who have this freakish quality that they're just... They're like Jedi's. I don't know how else to explain it. It seems like the people that have racked up the biggest games in the industry through history. Like the most outsized, enormous...

And sometimes it's a one-day home run. Or sometimes it's just like really, really quiet for five years and then all of a sudden they get a big macro shift really, really right. Like, those guys are not processed guys. Not that they're like winging it, but like they're not like systematized. They're basically really open-minded, really smart, and they have great instincts. And that's, I don't think you can teach that to someone else. So like if David Tepper sat down with a finance course, you know, at, I think Carnegie Mellon is like big for him.

He's in Pittsburgh. Like if he sat down with those kids every day for four years, I don't think you end up with 50 new David Teppers. I think he's really special. But that's, but by the way, that's why everyone else needs to have a process. Because if you don't and you go out chasing that dream, you're putting yourself at a lot of, like a lot of risk that you don't need to take. To that point, do you think that we're screwing people investors out there now by glorifying these people? because we hold, you know, TEPA, I can, et cetera, up on a pedal stole, typically later in their careers when they get more attention when scale has become a problem for them. Or they're just closed to new investors.

Let me correct you, though. Here's how smart, here's how smart David Tepper is. Scale has not become a problem because he gives the money back every year. The better he does, the more he gets back. Okay. Because he gets it. Sure. But he's closed, right?

He's not taking new money. So the people that are making new investments, it seems to me like the same. there's more of a kind of gross stock, lottery stock, lottery manager kind of chasing because of how much we glorify the history is really successful investors, when the reality is most, Clarmine's the same way, right? Carmen sends money back. Rent tech, you know, no one's been able to get in there for decades. It seems like all of these amazing, the best managers are impossible, I mean, shoot, the moon managers, are impossible to identify ahead of time. It's very easy and high sight. They're also impossible to hold through their drawdowns.

Very few people have been able to do it. It's like Amazon. They're like the Amazon stock as a manager. Yeah, how many times has Amazon been down 60% from its all-time high? Yeah, I mean, other than Bezos, who's made money on this, you know? So, but when you say we, like, we're glorifying this, you're saying like investors in general or the media or? I guess media most specifically. But, I mean, this is like something that goes back to the beginning.

I'm not saying it's going to change. Yeah, I mean, look, this is that, you can find old newspaper stories from like the early 1900s or the late 1800s even talking about swashbuckling, you know, investors as though they're Indiana Jones and marveling at their feats. I mean, Livermore was a celebrity in his day. You couldn't have lived with his portfolio. Fortunately, for other people, it wasn't their money. It was his. Nobody could live through that. But they did it with him and didn't end up well for him.

You know, but so I think that's like, I think, I think that's a bigger question of, um, hero worship. And so hero worship is also thousands of years old. I don't think the cave paintings, um, of, of a man hunting a herd of animal. I don't think that's an anonymous man. I think that's like somebody, like a dude. Celebrity of them. Yeah. Yeah. But that, you know, the first, the first celebrity who ever lived is, is Alexander the Great. and just because you were somebody chronicling, and I think only one person actually did, contemporaneously, or very shortly after, but just because you were writing about Alexander the Great, that shouldn't be taken by the people reading it as you're an exhortation to go out and try to conquer land for yourself. Like, at a certain point, this personal responsibility. Yeah. I mean, I'm like anyone else. I, you know, fortune or whoever it was writes a story on Cohen, I'm reading it, right? It's interesting stuff to hear about it. Another guy that can't be systemat, or replicated. He's just like you said, a Jedi trader of sorts.

I think there's some element of that. And, you know, so right, so what are we going to ignore them? They're incredible. Yeah, yeah, I mean, I don't think it'll ever go. We are going to talk about them. I don't think it'll ever go away. Well, now here's something. So I have a problem with this, actually.

If you're someone who's selling a fund or a product and you're giving the audience the idea that you're able to replicate that, like I have a problem with that. And there were guys out there that are like, yeah, I kind of knew I was friendly with such and such. And I used to have lunch with this guy. And I trained that famous manager. I taught him everything he knew. And now I've launched my fun.

And it's like, dude, if you respect Soros and Buffett and all these people that you're name dropping, don't, don't act like, oh, yeah. And I'm going to give you what they do. It's insane. So I do have a problem with that. I don't think that's the media. I think that's like certain people in the industry that are kind of playing this affinity game like, oh, I know these people and I've studied them and I can bring their success to you. I think that's a really, really big problem. What's the kindest thing that anyone's ever done for you?

Honestly, I think a lot, a lot of people have done me a kindness in accepting me when I, first started writing when I first started because the stuff I was writing was terrible because I really didn't know that much. Like I knew a couple of things really, really well viscerally from my experience in the business. A lot of what I was talking about in the early days was brokerage stuff. And I knew I knew it better than almost anyone because I had been a reluctant student of what was going on there. But then I started to branch out a little bit and talk a lot more about markets and investing and I had experience there. I was trading professionally for accounts and investing for myself, but there's no way I was even close to as knowledgeable as I am now. I mean, none of us are

from eight years to now. So I think people were really forgiving of whatever I didn't seem to know and they were willing to stick with me as I got better or got better as a writer and got smarter as an investor. I think that that's been a really important kindness that I guess the public paid to me because it would have been easier to just say, this kid's an idiot. And maybe a lot of people did, and I didn't hear about it. But just I think people that have been reading me consistently, and I hear from them all the time, and they'll say, listen, you got a little bit shaky for a while in 2011. Some of the things you were talking about, the European macro situation, I was a little worried about you, Josh, but you pulled through. Like, I think there are people that knew that they knew

more than me, but they appreciated the writing, and they just gave me time to get better. and smarter and to build my career. Frankly, I wasn't managing much money then. I wasn't really going anywhere career-wise. And people were just like, I don't care. I want to hear what this guy has to say. So now obviously things have gotten better for me, professionally, personally, and those people are still around.

And they paid me that kindness. They gave me a chance. And I hope that I'm playing that role with other people who are now in the shoes that I was in. Try to link to a lot of the new up-and-coming financial bloggers, analysts, researchers, guys send me stuff all the time. I try to read it. It's not easy. I have two kids. I have a full-time job. But I think I'm trying to encourage people that are trying to figure out investing for themselves. I hope I'm helping. I'm like I'm not linking the

garbage just because let me do this guy a favor. If somebody does something really smart and I can give you a few examples of new up-and-coming blogs, I'll link to it. Like I'll send a few thousand people to that site. And if they keep going, they'll build their own audience. They don't need any help from me. And I think there have been a lot of guys like that that I've helped and other people have helped. And, you know, I try to repay it. Last question. I'm obsessed with people's like daily kind of habits, meditations, whatever they do. I think the worst habits in the world. So even if they're bad, what are, what are things that kind of like define your days? Like, what, what are the things that happen every day for you? All right. So my sick, my signature sex move

is I fall asleep at like 8.30. And then I like to wake up around 2 a.m. for no reason. I'll lay in bed and scroll through my iPad and read British Twitter, which is horrendously stupid of me to be doing. Then I'll take like a melatonin. I'm up to like three and I'll go to the bathroom and then I'll get back in bed. My bladder is like the size of a walnut at this point. And then I'll like, the alarm will go off at 545 and,

I'll say to myself, all right, you don't really have time to work out today. So I'll do that five days a week. No, sometimes I will go to the gym, actually. But, all right, so that's kind of my routine. But probably from 6 a.m. on, I'm working. I don't know if that's so good. But in the morning, there's so much that's already happened, right? The thing with this business, that's why I was out in California two weeks ago,

talking of financial advisors and traders. I'm like, how do you guys do this? because you got to start at four in the morning or three in the morning. So fine, but there's so much already that's going on at 6, 7 a.m. So I'm like knee-deep in it. I'm reading everything,

and I'm putting together my list of things that I want to read later that morning, which I publish. And then I'm on the train, and I work on the train. And I think it's interesting because I think there's a generational divide. It almost feels like people over 45 on the train

are talking with their friends or reading the New York Post. or sleeping. And then everyone under 45, first of all, has headphones on. Second of all, has a laptop or a phone, and they are furiously clicking away. Like, they could be reading TMZ. I don't know. But it just seems like everyone my age and younger is working.

So I'm working. And I get good use out of that time. Because by the time I'm in the office, I'm basically done with any of that kind of reading and writing. Because that's when it's like, all right, meetings, what's going on in the firm? what's the latest thing that we're trying to get across the clients? What do we have coming up in terms of our quarterly letters? We do conference call. We do so much.

Then I'm doing the show. Then I'm in meetings or I'm recording podcasts with Patrick O'Shaughnessy. So like my day doesn't really allow for a lot of time reflecting. And so the early morning is key for me. What are my other bad habits? Like happy hour once a week. Huge mistake. I'm like a waste the next day, but I still power through.

And then at night, my kids are in sports. courts. So I'm assistant coaching softball, assistant coaching soccer this season, basketball starting this week. That's really important for me because the only time I'm not thinking about, you know, whatever I read or wrote that day or whatever conversation. So that's actually the calming part of the routine is helping out. And then I go home and try to like, you know, salvage whatever's left in my relationship for my wife. And, and I eat a lot of carbs and I get back in bed, fall asleep too early, and I'm back up at 2 in the morning. So I want to write a book about that.

And I hope you buy it for someone you love this Christmas. Well, this has been awesome. I'd ask where people can find you, but the answer is everywhere. Oh, stop. Thanks for doing this. Patrick, thank you. Awesome. Do we shake hands now?

Let's do it. Okay. Wow, that was super weird. Hey, everyone. Patrick here again. To find more episodes of Invest like the Best, go to investorfieldguide.com forward slash podcast. If you're a book lover, you can also sign up for my book club

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