Pods & Recs No. 90

Today we have great episodes on fundamental, quantitative, and macro investing, Simon Sinek explaining the importance of having a “why,” and Ray Dalio on embracing radical transparency within your organization.

If you missed the last few editions of Pods & Recs, feel free to view them here: 89, 88, and 87.

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Business

• Capital Allocators: Drew Dickson — Blending Behavior and Fundamentals at Albert Bridge Capital. This is as good of an episode as you can hear on fundamental investing and avoiding behavioral biases. Dickson is the founder of Albert Bridge Capital and CIO of the Alpha Europe funds, where he manages $350 million in European equities. He stresses the importance of creating a culture that allows for failure and ensures the risk of a decision is analyzed beforehand (which is why a short thesis is created for every stock they buy). He also emphasizes why you can’t let your ego get intertwined with your decisions, and why you must think probabilistically and fight your biases when making decisions. They finish the episode with why he started a blog and mentions a touching post I recommend everyone read. [November 25, 2019–53 minutes] iTunes Podcast | Spotify | Overcast | Breaker | Website Link
• Invest Like The Best: Gavin Baker — Tech and Consumer Growth Investing. Baker is the founder and manager of Atreides Management and is a growth investor focused on the intersection of the consumer and technology. He believes our society may be entering peak disruption and tries to capitalize on this by forecasting 5–7 years out while looking for companies with both high ROIC and a good management team. He explains what he saw in Apple and Facebook years ago that made him invest, what has made him miss out on the run of Netflix, and different trends effecting technology (VR, gaming, alternative data and regulatory capture). [November 26, 2019–1 hour, 4 minutes] iTunes Podcast | Spotify | Overcast | Breaker | Website Link
• What Works on Wall Street: The Factor Archives: A History of Factor Investing. This episode is with both Jim O’Shaughnessy and Jamie Catherwood, both of O’Shaughnessy Asset Management (OSAM). The episode covers the start of a series of articles OSAM is compiling on the history of factor investing (Part I and Part II). It may be surprising but their research shows factors have been around for centuries and provides stories of how people judged the depth of cargo ships to trade commodities years ago, and how investors in Asia had runners to relay the price of rice. Their two biggest takeaways: 1) systems perform better than humans not because they make better decisions, but rather because they aren’t biased to the same extent humans are and 2) a model is only as good as its underlying data. [November 20, 2019–23 minutes] iTunes Podcast | Overcast | Breaker | Website Link
• The Tim Ferriss Show: #397: Two Questions Every Entrepreneur Should Answer. This is the first episode of a new podcast series with Mike Maples called Starting Greatness. This specific episode is with Andy Rachleff, who is the co-founder of Wealthfront and Benchmark Capital, and is a must-listen for any entrepreneur. Rachleff states the two most important questions for any entrepreneur are how do you reach “product-market fit” and how do they know when you’ve achieved it? He then applies these ideas to his early days at Wealthfront and where he did and did not make the right decisions while they iterated the product. [November 25, 2019–56 minutes] iTunes Podcast | Spotify | Overcast | Breaker | Website Link
• Alpha Exchange: Alberto Gallo, Partner and Portfolio Manager, Algebris Investments. The episode is a great listen on all things macro: interest rates, inflation, volatility, central bank policy, how they are all intertwined and what the guest expects going forward. Gallo is a partner at Algebris Investments where he leads the firm’s Macro Strategy effort and runs a credit-oriented portfolio. He believes that Central Banks have muted volatility for investors since 2009 as a result of more and more forward guidance, which has also caused a polarization of volatility — more days of calm in the markets, and fewer days of much higher spikes of volatility (like in 2018). [November 27, 2019–42 minutes] iTunes Podcast | Spotify | Overcast | Breaker | Website Link

The Rest

• TRAINED: Simon Sinek | Finding Your “Why.” This is a great episode for anyone to listen to. Sinek is the best-selling author and organization consultant who is also known for his Ted Talk with over 11 million views. He talks about the importance of having a “why” behind what you do and not having what you do define who you are. The why gives you a purpose and helps you weather the difficult times that occur along the way. He finishes the episode with an overview of his most recent book, The Infinite Game, which can be described as something that doesn’t have a finish line (life). The idea is that in order to thrive in an infinite game, you have to have an infinite mindset, which means living in the moment, embracing the process and handling any surprise with a positive attitude. [November 22, 2019–28 minutes] iTunes Podcast | Spotify | Overcast | Breaker | Website Link
• Masters of Scale: Ray Dalio — How to embrace conflict. Dalio is the famous founder of Bridgewater Associates, arguably the most successful hedge fund to date. He is well known for his principles (book here), and the episode is about his most well known — his dedication to radical transparency. He stresses the importance of a leader to proactively invite criticism and create a culture where they can be challenged. His goal is to create an idea meritocracy where the best ideas win out regardless of where they come from. They wrap up the episode with ways to ensure people are able to handle the inevitable conflict that arises when people communicate what they truly think. [November 25, 2019–49 minutes] iTunes Podcast | Spotify | Overcast | Breaker | Website Link
• Planet Money: #951: Snakebite. Fun episode on how one man’s relentlessness helped develop a new treatment for snake bites, the first in over 100 years. Over 100,000 people die from snake bites every year, mostly in rural locations where it’s hard to transport the anti-venom in a timely manner before the victim dies. He was so dedicated to testing his antidote that he paralyzed himself while awake to test the solution for the first time. [November 13, 2019–24 minutes] iTunes Podcast | Spotify | Overcast | Breaker | Website Link

RECOMMENDATIONS

Books

Simon Sinek (Author, Motivational Speaker and Organizational Consultant):

1. Finite and Infinite Games by James Carse

Andy Rachleff (Chairman, Wealthfront):

1. Crossing the Chasm: Marketing and Selling High-Tech Products to Mainstream Customers by Geoffrey Moore — Great book for entrepreneurs.
2. The Four Steps to the Epiphany by Steve Blank

Ilana Weinstein (CEO, IWD Group):

1. I Am Charlotte Simmons: A Novel by Tom Wolfe — About a young woman’s experience during undergrad in college.
2. Hacking Darwin: Genetic Engineering and the Future of Humanity by Jamie Metzl — The premise is we can hack the genetic code the way we can hack a computer. It also addresses the ethical and socioeconomic challenges of that.

Marcelo Lima (Managing Member, The Heller House):

1. The Innovator’s Dilemma: The Revolutionary Book That Will Change the Way You Do Business by Clayton M. Christensen— Jeff Bezos makes all of his leaders read this book.

Blogs

Drew Dickson (founder of Albert Bridge Capital, CIO of the Alpha Europe funds):

• Morgan Housel’s blog
• Abnormal Returns — Best website for daily curated reads.