Pods & Recs: No. 122

Today we have episodes on the influence of passive investing on the market, Kyle Bass with a global macro outlook, a fascinating episode on economic espionage between China and the U.S., and a phenomenal leadership episode with the COO of Focus Brands.

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Market Commentary

***Must Listen*** The Grant Williams Podcast: The End Game Ep. 3 — Mike Green. This is a mind turning episode with a brilliant guy on the impact of passive investing on the market. Green is the Chief Strategist of Logica Advisors and has done a lot of research into how passive investing has such a huge influence on the market in so many ways. He says in 2014/2015 he felt like the market stopped making sense and took a step back to dig into research, talked with his former boss Peter Thiel, and realized passive flows were having a massive impact on the market. He explains why this is so concerning, why it may be too late to do anything since the markets may be too big to fail, and that the Fed and government may become the dominant feature instead of the capital markets. The last 25 minutes are fantastic and incredibly intellectual, discussing the idea that we have created so much certainty and stability within the systems that run our lives that it is breeding its own fragility and contributing to inequality. [July 6, 2020–1 hour, 43 minutes] iTunes Podcast | Spotify | Overcast | Google | Breaker | Website Link

I don’t think there’s a way out of this at this stage, I think we’re too far in. Prices are too far elevated related to the underlying fundamentals. The cost to society from the lost of purchasing power from prices moving to their natural level is probably too chaotic and too catastrophic.

*** Must Listen*** Real Vision: Finance, Business & The Global Economy: The Interview w/ Kyle Bass & Raoul Pal — The State of Global Marco through Coronavirus Chaos. Bass is the founder and CIO of Hayman Capital, was featured in The Big Short and has been widely outspoken on China over the past few years. He covers all aspects of the global macro outlook — including the unintended consequences of the CARES Act and upcoming inflection point when PPP and increased unemployment benefits stop at the end of July, why issues in both Asia and Europe make him think money has to continue to flow into the U.S., and specifically why the level of leverage in the Chinese economy is setting it up for failure. He also talks about the social unrest in Hong Kong and thinks that is going to be a major issue and China tries to stop Hong Kong’s independence before the 2047 deadline. After briefly touching on the November election, where he thinks President Trump is a ~55% favorite as of now, he explains that his thinking the COVID vaccine comes sooner than people expect leads him to think some of the hotels, theme parks (long Six Flags), and infrastructure plays are all great bets as long as they have liquidity to get them through the next couple of years. He finishes saying the single best currency opportunity in the world today is Hong Kong and his position is as big as it has ever been. [July 4, 2020–1 hour, 12 minutes] iTunes Podcast | Spotify | Overcast | Google | Breaker | Website Link

We kind of opened our doors and hoped everything would go fine, and now we’ve realized we’ve let the “CCP Virus” into many supranational institutions…. they do it through the back channels, through bribery, through every way that they operate. We now see this and we’re going to start pushing back. I just can’t believe it took this long.

Bogleheads On Investing: Episode 023: Dr. Burton Malkiel. Malkiel is the CIO for Wealthfront, a professor of economics at Princeton University, and most well known for his book A Random Walk Down Wall Street. After discussing his background for the first 9:20, they dive into a lot of topics he covered when the book was released in 1973, including his suggestion to create the first index fund. He explained how that led to a long relationship with the legendary Vanguard founder, Jack Bogle, the initial difficulties Vanguard faced when launching their firm and the first index fund, and why he and Bogle disagreed on the use of ETF’s. He also talks about why although he is a major proponent of the efficient-market hypothesis, he does understand the use of a multi-factor approach when implementing a long-term strategy, with the caveat that it must be low-cost. He touches on a variety of other topics, including retirees need for income in a world of 0% bond yields, why he isn’t bullish on ESG, the impact of involvement of the retail market, and the state of the Chinese economy. [July 3, 2020–58 minutes] iTunes Podcast | Spotify | Overcast | Google | Breaker | Website Link

Quantitative Investing

The Meb Faber Show: #234 — Harindra de Silva, Analytic Investors of Wells Fargo Asset Management, “Just Because A Factor Hasn’t Been Working For 3 Years…Don’t Ignore It…Continue To Evaluate It.” This is a must listen for those interested in factors and long/short investing with Harindra de Silva, president and portfolio manager for the Wells Fargo Asset Management Analytic Investors team. He begins with an overview of some of the more well-known factors and then discusses applying multiple factors to the portfolio construction process. He also covers why factors change over time, the numerous reasons shorting is so difficult (which leads him to believe it should only be done so in small increments), and how institutions are thinking about factor investing right now. [July 6, 2020–50 minutes] iTunes Podcast | Spotify | Overcast | Google | Breaker | Website Link

Flirting with Models: Dr. Benn Eifert — Bad Ideas. Eifert is the founder and CIO of QVR Advisors and joins this podcast for the second time. This is a really deep conversation on options, with Hoffstein questioning Eifert on a lot of different option trade ideas. They touch on the risk/reward of most options, specifically on covered calls and VIX ETP’s, and handling tail risk strategies (21:40). With 10:40 left in the episode, they finish with the impact of structured products on the market and whether what happened in March of this year will have a long-term impact on the volatility market. [July 6, 2020–54 minutes] iTunes Podcast | Spotify | Overcast | Google | Breaker | Website Link

Venture Capital & Entrepreneurship

Origins: Josh Kopelman, First Round Capital. Kopelman is the co-founder of First Round Capital, which he started in 2004 to focus on seed stage investing. The episode covers his career path — taking a company Infonautics public in 1996 after he started it in college and then co-founding Half.com, a fixed price marketplace connecting buyers and sellers of used books, movies and music products, which he sold to eBay in 2000 (and helped eBay launch ‘Buy It Now’). Based on this experience and seeing that venture funds were moving to fund larger firms later on and ignoring seed stage funding, he wanted to launch First Round. He talks about the First Round’s move to encourage founders to help each other and create a community among them and the other ways they provide value. [July 7, 2020–40 minutes] iTunes Podcast | Spotify | Overcast | Google | Breaker

The Meb Faber Show: #235 — Ajay Prakash, Rinse — The Barriers To Entry Are Super Low…But The Barriers To Scale Are Incredibly High. Prakash is the founder and CEO of Rinse, a laundry and dry-cleaning startup trying to essentially provide pickup and delivery services for those products. He explains what led him to start the company, why he chose to start the company locally in one city, how he’s navigated handling the logistics of the business and working with local services, and what lessons he learned from competitors who went bust trying to do the same or similar businesses. He also covers how he has embraced technology not by making an app, but by using text communication for customers. He finishes by covering the company’s process of raising capital, what the future growth strategy is, and what other opportunities they could layer on the existing infrastructure of the business. [July 8, 2020–55 minutes] iTunes Podcast | Spotify | Overcast | Google | Breaker | Website Link

Village Global’s Venture Stories: Investing in B2B Marketplaces with Kent Bennett and Dhruv Jain. Great episode on B2B marketplaces with two employees from Bessemer Venture Partners. They explain why so many companies had issues when trying to create B2B marketplaces originally and why that may change now, why they look for unsexy industries where brokers have large margins as a place for opportunity, how shifts happening in industries where technology hasn’t been utilized are also offering an area of opportunity, what areas look interesting to them (trucking), and what key dimensions they are looking at when analyzing verticals. [July 5, 2020–50 minutes] iTunes Podcast | Spotify | Overcast | Google | Breaker | Website Link


What Got You There with Sean DeLaney: #198 Dr. Marcus Elliott — The Future of Athletes and Elite Performance. Dr. Marcus Elliott is a Harvard trained physician and founder of P3, which focuses on cutting edge science for optimal athletic achievement and trains some of the top athletes in the world. P3 has taken an approach to individually customize every athlete’s training regiment based on what the science and data shows is needed for his/her body. He emphasizes the importance of doing this especially while the athlete recovers from an injury to ensure they don’t overcompensate and injure another part of their body. He says to follow P3 on Instagram to get a feel of some of the stuff they are doing. [June 14, 2020–1 hour, 8 minutes] iTunes Podcast | Spotify | Overcast | Google | Breaker | Website Link

A lot of our relationships are built by us collecting data and seeing something in the data that’s really compelling, whether it’s a superpower or an injury risk, and then sharing that with the athlete, and the athlete saying “that makes sense because my left knee is hurting, or I always get beat when I go to my right, or my second jump is really bad.”

The Rest

***Must Listen*** The Pomp Podcast: 330: Kat Cole — The Best Business Leader in America? Cole explains how she went from growing up in a single-parent household and not finishing her Bachelor’s degree to now serving as the Chief Operating Officer of Focus Brands, which holds companies like Moe’s, McAlister’s Deli, Cinnabon, and Auntie Annie’s. She does a great job providing leadership lessons she learned at every stop in her career, including joining Hooters before the age of 18 and eventually leading their global buildout of stores during the company’s hyper-growth phase. After moving up the corporate ladder within Hooters she was hired to be the CEO of Cinnabon, and she explains what steps she took as she was hired to both ingrain herself in the company and learn how they can improve. Then she covers how she and Focus Brands have handled running the business in the middle of a global pandemic. This is a must listen for leaders! [July 8, 2020–1 hour, 44 minutes] iTunes Podcast | Spotify | Overcast | Google | Breaker | Website Link

I was confident, but confidence didn’t show up as ‘I know what I’m doing, always.’ It showed up as, ‘I know I can figure it out because I know I’m humble and curious enough to ask questions and to get people to help me.’

Planet Money: Seed Spy. This is a fascinating episode about economic espionage and an FBI investigation into China attempting to steal seeds from the U.S. An American gets caught up and helps the FBI try to bust the spies, but they get out of the country and still have warrants out for their arrest. The episode is based on part of the book, The Scientist and the Spy: A True Story of China, the FBI, and Industrial Espionage. [June 26, 2020–25 minutes] iTunes Podcast| Spotify| Overcast| Google| Breaker| Website Link



Kat Cole (COO, Focus Brands):

  1. Give and Take: A Revolutionary Approach to Success by Adam Grant

Ron Carson (Founder & CEO, Carson Group):

  1. The Tattooist of Auschwitz: A Novel by Heather Morris
  2. Essentialism: The Disciplined Pursuit of Less by Greg McKeown

Vikram Mansharamani (Author, Think For Yourself:Restoring Common Sense in an Age of Experts and Artificial Intelligence):

  1. Team of Rivals: The Political Genius of Abraham Lincoln by Doris Kearns Goodwin

Chris Cannon (Chief Investment Officer, FirsTrust):

  1. Latticework: The New Investing by Robert Hagstrom

Mike Green (Chief Strategist, Logica Capital Advisors):

  1. The Mind of Wall Street: A Legendary Financier on the Perils of Greed and the Mysteries of the Market by Eugene Linden and Leon Levy




Here to bring you podcast suggestions. Twitter → @colby__donovan

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Colby Donovan

Colby Donovan

Here to bring you podcast suggestions. Twitter → @colby__donovan

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