Hedge Fund Manager Alix Pasquet: Why Smart People Lose Money

When smart people lose money, it's not, you know, they lose 10% it's always a catastrophe. Like draw down, bro. Draw down. Do you think there will be a lot more BS retail ideas? There's a group of stocks out there in the stock market that retail keeps buying. If they had a knowledge of history, they know how that story is going to end. Younger generations that don't have analog training that haven't read the book that just look at snippets and snack on information, they're gonna lose a lot of money. We're already seeing happen. Don't do violence to yourself in the morning. These guys that are plunging into ice cold bass when they first wake up, that's stupid. Hey, thank you so much for listening to odds on open. This week we're going to be doing something slightly different. One of my mentors, a hedge fund manager by the name of Alex Pasquette, is going to be giving a talk on why smart people lose money. I hope you guys enjoy. He said, "Really, thank you for having me." To be asked to speak publicly about any topic is a great honor and I try to add a lot of value. Part of our content strategy is to add value. Having a content strategy is very important for us. It helps us make money. But it also helps us generate insights and to get feedback on our ideas. If our ideas are wrong, believe me, the crowd will quickly tell us that it is. But often the crowd also adds value to you when you share your content. It's actually a mistake smart people make, which is not to share their thinking, especially publicly. But anyways, so my background is that I am probably not genetically designed or culturally designed to make money. I come from the Caribbean, not a place known for their capital allocators. I studied games for growing up. I was obsessed with games. I went to business school to Bapson. But really, all I did during college was play poker and back amin. And even played poker and back amin' my teachers. Sometimes we'll let them win to get better grades. But my background, I wasn't designed to be an analyst. I never learned accounting. I mean, I took a counting class. What I never really sat there and learned accounting, modeling, or any of these things. But after college, I gambled for a living. I spent three years doing that, playing back amin' in poker, and I'll get to that. And then one of the guys I used to gamble with was a very wealthy businessman. He offered me a job to come run his personal money. And because I didn't know what the hell I was doing, that business and an interesting model, he would take young guys that he liked. And he thought we're usually more street smart than smart. Put a lot of pressure on them. And basically throw them in the deep end of the pool and say, "Can you swim?" And if you knew how to swim, he would put more and more responsibilities on you. And I loved him, dearly, both him and his son. And I still can't believe they gave me the responsibilities that they gave me at the time because I seriously did not know my ass for my elbow. But I started out allocating money to money managers. And that's where I really learned investing by literally taking meetings with other money managers and just asking them questions. And whoever I thought we were smart, we would get them money. And it was one of the best schools for investing that you could have. And I'll get to that. All right. So the topic is, why do smart people lose money? I'm fascinated by this for a lot of reasons. One of them is I'm forcing our business to compete against people that are much, much smarter than I am. And how do you do that? How do you compete against smart people that are better resource than you, have more experience than you, and also have teams that are bigger than yours and smarter than yours? I mean, it's uncanny how much money people are spending on resources now in the investment business. So how can we, as a firm, prime macaia, compete against these really, really smart guys that are out there? But also, how do you mitigate the catastrophic mistakes smart people can make? You know, it's a, I find that to be a fascinating topic. And I'll walk you guys through how I came to some of those insights. Okay. All right. First, a couple of quotes, one by Phil Bernbaum, you gain more by not being stupid than you do by being smart. Smart gets neutralized by other smart people. Stupid does not. By Tom Sol, there is usually only a limited amount of damage that can be done by dullest stupid people for creating a truly monumental disaster. You need people to tie IQs. One of my favorite quotes from the big guy, that's what I call Warren Buffett, by the way. He said, over time, markets will do extraordinary, even bizarre things. A single big mistake could wipe out a long stream of successes. We therefore need someone genetically programmed to recognize and avoid serious risks, including those never before encountered. Certain parallels that lurk in investment strategies cannot be spotted by use of the models commonly employed today by financial institutions. Temperament is also important. And dependent thinking, emotional stability, and a keen understanding of both human and institutional behavior is vital to long-term investment success. I've seen a lot of very smart people who have lacked these virtues. This was written before the age of the AI. It's one of my beliefs that AI is going to make the things that Warren talked about worse. At least for the first growing pains that we're going to go through as we use these AI tools. I'll get through that. All right, so what you're looking at here is a theme. So we're big into themes in our business. We're always looking for tailwinds that are pushing our businesses forward if we're long or headwinds that are pushing our businesses back if we're short. And we like to find tailwinds that other people are not thinking about. And one of them is what we call the generational battle. So the first baby boomer is turning 80 next year. The first baby boomer was born in 1946. And in terms of wealth, that generation has 76 trillion dollars in the United States. Gen X, which is my generation, by the way, I call Gen X Neo Boomers because we were raised by boomers and we have boomer sensibilities. But we were the first to really use the internet. So we're both analog and digital. I'm a Gen X, by the way, and our generation has 37 trillion. The silent generation. So this would be your grandparents, your great-grandparents, my grandparents. They have 19 trillion. And then the millennials have 13 trillion. And we don't know how much the zoomers have. But you guys are popping up. So basically what's happening is the first baby boomer reaching 80 next year. And as he's passing, that wealth is trickling down to the generations. It's going to Gen X, then millennial, and the baby zoomers. Right? And that wealth is causing a generational battle. Why? Because millennials and the zoomers are taking this money and actually putting into the stock market. Right? That's actually one of the explanations for the persistent retail bid that we are seeing. Because people are like, where is this retail get this cash from? Why do retail keep buying these stocks and coins? Well, well, the reasons is they're inheriting money. Right? Reason why I put that in there is you guys have a problem. The zoomers. It's a generation that no longer reads. All the information is in digital media and short content. The problem is to really develop judgment as a smart person. You have to read. You have to do what's called analog training. I mean, I don't know if I say that's called that. Sorry, it's what we call it. And analog training is disconnected mental training that older generations had to do more of because we didn't have the digital tools and we believe that the future of investment performance is guys that have both analog weapons and digital weapons. Okay? By the way, value investors specifically, smart value investors have to pay attention to this stuff because the mistakes that they're making right now are borderline catastrophic and we try explaining that to some of our value investor friends, but one of the problems of value investing is that almost all the reference material that they've learned is pre-2008 reference materials. Since 2008, things have changed. The market structure has changed. There's new investment players, businesses, especially internet-enabled businesses have changed and so have business tactics and a lot of things that drove cheap valuations almost no longer exist. It's totally different things that drive cheap valuation. The availability of information that couldn't make something cheap pre-2008 doesn't exist today. Usually when something is cheap today, it has a problem, right? All right. Don't be the e-trade baby. A lot of people like isn't it difficult to invest in the markets and I'm like not if you're using e-trade making a big investment is as easy as a single click. Boom. I just bought some stocks. See? It was totally easy. Check this out. Boom. More stocks. Boom. asset-backed securities. Boom. Credit default swaps. Boom. Boom. Boom. Hell, I don't even know what app this stuff means but thanks to e-trade I can wait. Why is this lying going down? Oh God. Just drop 400 points. This is not happening. Dear Lord, I've made a horrible, horrible mistake. It's dropping more. I want to take it back. It's all gone. I've just lost my entire life savings. Oh God. Step for saving for meantible. I think it would be sick. I'm gonna jump out the way to an out. e-trade. Sorry. You can't take it that. You know, in 25 years of doing this, I got to sound like a fucking boomer. In 25 years of doing this, I've seen a lot of smart people go through every emotion that the e-trade baby has gone through. I've seen grown men cry when they lose money. I've seen people having to move their families to cheaper neighborhoods and cheaper schools because they lost everything. Okay. And really high IQ people at that. I've seen guys that I would consider average become billionaires. Okay. So the when you study the dynamic range between an average investor and a great investor, one of the things that you see is that IQ and intelligence is actually a small percentage of what drives or success. Okay. The first place that I saw this was games and playing games for a living. So my story with with back M and when I was 18, I saw my uncles play the game. And I remember we were by at the beach and they were playing. And I had noticed them playing before, but that moment I started paying attention. And I noticed that there was probability and I was obsessed with probability at the time. And I learned the rules. I played with them. And they got very cocky with me as they were beating me because of that. No. How to play. So I got pissed. I went back home and I bought all the books on back errand that I could find. Right. There was actually a gambling store and friends and they had all these back errand books. I bought them all. I read them. God better came back a couple months later and trounced my uncles. Okay. Graduated high school went to college. There was a back M and club in Boston. I think it was called a Cavendish. I went to play there and a sweat which is back M and more than than two people and they killed me. Lost a bunch of money. I was too cocky. I got pissed. I found out that the best player in the world lived in Boston. I hired him to give me lessons. Came back six months later and I killed all these guys at that club. And then I was introduced to the back M and neural nets. So a lot of people don't know this but the first neural nets were developed to play a back M. Well, to be fair, the first neural nets were developed by intelligent services. Mostly IRPAD, DARPA, the CIA, Mossad and the others. And then as these people left to go to academia, they started introducing these neural nets and one of them was developed to play back M and a guy called Gerard Tisoro at IBM in the 80s. He built a program called TD Dammit. This is actually really useful by the way because the to understand AI because the the stakes that people made using AI and back M and they're also making them in the investment world. Same mistakes. It's also the same mistakes as being dealt with AI and chess. Same mistakes that are being dealt with AI and go and so on. But basically my process for getting better at the game was getting playing against smart players for not a lot of money and and also hiring coaches. And imagine my surprise when you could use that same process to improve at an investing. But the first place that I started seeing smart people make mistakes is that in back M and you have all these great players and the problem is sometimes to make money they like to compete against each other. And I noticed that if you wanted to make a lot of money gambling you shouldn't do that. And it wasn't about ego about being the best player is to really make a lot of money. You had to find rich back M and players that had big egos. That did not know how to play as well as you did. And if you did that you could consistently make money. Same thing in poker, same thing in gin and basically any game of strategy and chance mixed together. Okay. But there were also other lessons. If you study poker for example very quickly it lends you to study the meta game. Ranges. All of these are very powerful lessons for that you can apply to investing. But the first big mistake that smart people make is wanting to compete against other smart people. No. When you're fiduciary when you're fiduciarily responsible for other people's capital it's your duty to compete against morons. Okay you cannot risk capital. Competing in smart people is a very very stupid thing to do. Okay. So one of the guys I should gamble with a very smart businessman gave me a job and I ran money for him. And I applied that same lesson from poker and back M and to investing. And basically go with smart people read all the books and investing. I still can't believe by the way that people who write books spent two years writing books that they've done for $15 and you can get all those lessons and less than a day sometimes. But it was very powerful when I got into investing to apply the same process. Find smart people read books, ask for advice. But one of the beauties of investing is if you're playing poker in the middle of the hand you cannot call a smart guy and say hey what do you think I should do whereas investing you actually can. Right. And that's actually a lesson that I still do today. If I don't know what to do about something I literally will call smart person about my idea and just say hey what do you think about this? But we'll get to that. But then in 2006 my mentor became president of a very large well-known quant fund. And so did his stepson who was a very close friend of mine. And we never invested in quant funds because I never really understood what they did and mentor said hey we have a problem. The family office community knows that you and I are close and they keep asking has elites invested has elites invested and we need to be able to solve for that. Right. So can you come and do some work on this? I'm like well you guys are known for being secretive. You know I can't I need to be able to understand what you guys do because if there's a period of under performance I have to know whether to cut the position or to actually add because it's a lot of work. commentary, laps and performance. You guys look, there's a lot we can't share with you, but come in, we'll give you access and you'll learn from the team. And for a period of a few months, I had access to some of the smartest quant investors in the world. And it was incredible. And one of the things that they taught me was that every quant fund has to solve for about six problems. The first is having access to data. It's actually really, really hard and expensive to have access to all of the data sources that you need to run a quant strategy well. Right? It's not as easy as you think. And the barrier to entry, it's really expensive. Not only that, you need decades of that data. The second problem quant funds have to solve for scrubbing the data. Sometimes when you run a quant model that's supposed to find investment anomalies or training anomalies in it, it finds a piece that it takes on anomaly. And the problem is that's actually a data entry mistake. And do you know as a team of engineers how to scrub that data? It's a very complicated processing. You have to know the third is lowering your market impact when you trade. So you find a signal and you fix an anomaly. Can you put a trade in that actually doesn't create market movement and the anomaly so that it's almost like the Heisenberg principle that observing something can actually affect that thing where trading something can actually impact. So how to lower your market impact? The next is how do you lower your transaction costs? It's actually not easy and requires scale and the right relationships with the brokers. And then next is access to leverage. Often the anomalies that these quant funds find is so small that you need leverage to be able to amplify that. How do you manage that in those trading systems? And then last is how do you find really, really smart people, manage them, incentivize them, and that's not easy. And the founder of that quant fund, one of his genius other than intellectual heft, was also he was a really good businessman and very street smart, which is very usually unusual that your street smart and book smart at the same time. But anyways, it was amazing because I actually saw how smart people had thought about all the problems of not only dealing of making money, but managing other smart people. And one interesting thing is when I asked them, hey, you guys can't tell us any signals today, but are there any older signals that you guys have found that you guys have used in the past that are no longer viable? And the-- yeah, it's easy. One of our first signals is NE8. We noticed that market specialists did not like to go home with positions on. So around 355, a lot of positions they had in inventory, they would actually sell those off. And the stocks would go down and presently. And they realized that they could build a quant signal that could pick up on which are these stocks and actually short them around 350 and cover them right before the closed and make a small amount of money that with leverage could actually become a decent amount of performance. And when he said that, the insight we had is that unlike the other quant funds that use, let's say, statistical arbitrage, these guys actually exploit human behavior. And that's actually was very valuable in terms of us understanding what they actually did, right? But even that wasn't enough for us to really understand what they did. And one of the things that I-- because they were very secretive, I noticed that the majority of them had gone to one school, right? So I literally took a trip to that school, had meetings with all the teachers and said, hey, what do you teach? And this was where my development as a fundamental investor picked up because I started understanding the philosophies that this firm was using to actually make money, including chaos theory, complexity, systems thinking, and others, right? And that was actually very, very useful. And again, that was another lesson. If you're very, very smart, you have to study systems thinking, complexity, cybernetics, network theory, and others, because a lot of the mistakes of judgment smart people make, you saw for that by studying those things. But anyways, that also led me to understand August of 2007, when the quant funds were blowing up, what actually was happening. And that saved our fund, actually, because I ran my first hedge fund I started in 2006. And we were up 35% in 2007. But August alone, we dropped 10% because when quant funds were deleverging, a lot of our longs went down, and our shorts went up. We made most of that back in the end of Q3 and Q4, but still understanding how the quants were blowing up because I had studied them before was actually very helpful. So the-- Sorry, I lost my trim thought. But anyways, it's very powerful. There are books on the quant funds that you can read, by the way. And I would definitely ask Ethan for advice on that. OK, so one of the things about the younger generations right now is hyper simulation. And one of the things we noticed is young guys don't handle market swings up and down as well as the older ones. And that's actually something that didn't used to happen. There's a problem right now in the investment business called the junior senior problem. And a lot of PMs are noticing that they don't want to hire juniors anymore. They don't want to hire junior guys, right? That's a problem. And they say, look, they know how to model. They learn the pod talk early in college, adios, and factors, and such. But if you ask them, hey, what do you think the CEO is thinking? They don't have the strategic reference points to be able to put themselves in the shoes of the CEO and saying, look, this is what he said. But here's what he actually is thinking of doing, or see the competitive reaction. And the other part of the junior senior problem is the junior guys, dark handle pressure, as much as the senior guys. And I think one of the reasons is the over-the-use of hyper stimulants. By the way, I have a similar problem. I had to quit caffeine. I started drinking caffeine, a coffee late and 2016. And I was noticing that, wow, the stock was going against me. And usually I'm able to emotionally regulate. I wasn't able to. And it's when I quit caffeine that a lot of that came back. And caffeine is hyper-similant, as much as I love me, a great cup of espresso. I have to quit. And maybe I have it once or twice a year now, sadly. But caffeine just makes my highs higher, my lows lower. And the ability to self-regulate is something that sometimes very smart people don't have. And I really do believe that hyper stimulants cause that. Alcohol, nicotine, social media, caffeine, or recreational drugs, porn. And by the way, sometimes we have a theme called the modern addict. You see somebody drinking a cup of coffee, vaping, while he's on Instagram at the same time. That has an impact on your thinking. And by the way, we're all guilty of it. You have to figure out a way to minimize it or better yet, for example, manage it. So if you hyper-simulate, you need to do things like massage, sauna, a cardio, and working out, because it helps clear these from your system. OK. So what are the mistakes a smart people make? One of the first ones, one need to compete against other smart people. Don't do it. One of my favorite analysts and the beginning of his career, Ethan, there you go. And he gives career. He uses-- to love to compete against Viking, Loan Pine, a bluish even. He's like, "Here's what these guys are thinking, but here's why I'm like, uh, dude, no, no, no, no, no, no, no, no, no, no, no." That's not your job. Your job is not to compete against the smartest people you've ever seen. Okay, your job to compete against morons, okay? And if you don't think other great investors don't have that mentality, it's what we call the prime pattern. The prime pattern is when an institution and the visual is taking advantage of a competitively, competitively disadvantaged institution or individual. Look at what Charlie says. Competency is a relative thing. What I needed to get ahead was to compete against idiots. And luckily there's a large supply. And Warren Buffett, if you've been playing poker for half a minute, you still don't know who the Patsy is, you're the Patsy. By the way, the strategic implication of that is fine-gain, have a lot of Patsys. So this book by Willis Johnson, one of my favorites, is from junk to gold, a story of co-part. This guy would took junk yards, which is usually historically run by people that are not very educated, and he brought sophisticated business techniques to that space and eventually consolidated and became one of the best businesses out there. We love this business. We've held it at various moments throughout my career. One of my mentors used to be on the board of the company. And that's the kind of competing that you want to do. So one of my favorite stories on this is to protect the guilty, I won't name, but a very close friend of mine, his father, study, engineering, and MIT. And he moves back to his home country and people are like, what are you going to do? Are you going to start a thing tank? Are you going to join the government? He's like, no, I'm going to start a car repair shop. And he said, what? Why are you going to do that? And he's like, just, you know, I think it's a good business to go into and he became and he owns now one of the largest car repair shops. And it's also monopoly in that country. And the reason why when I ask him, why did you do that? And he said, did you see who I was competing with? You know, he was competing against car mechanics that were doing this as a almost like a lifestyle business. And he just trounced all these guys. That's the kind of thinking that you need to do. If you're going to mark, you need to stop competing against other smart people compete against idiots. Okay? Trust me on this. Now, smart people can make really dumb mistakes. Okay. And it's a lot of fun to be able to exploit that when it's happening. It's rare, but it's possible. Okay. Smart people do a lot of networking mistakes. They don't belong to multiple networks. Okay. So what I mean by that is is they tend to have one network and then belong to just that. Whereas you should join multiple networks. So for example, we've tried to build a network to be East Coast base, West Coast base. Um, travel network in Europe, travel network in Southeast Asia. And I want to belong to multiple networks. So there's my back M network, there's my poker network, there's my investing network, there's my all the geeky stuff that I study. Recently, we did a case study on the NFL. It's the uh, uh, case study that keeps on making us money. Uh, because a lot of the tactics, the new tactics that we've learned, we've learned from the NFL, we're applying it to investing. Like, for example, and the NFL, there's a concept called football intelligence. And we've realized that young investors that have great investing intelligence tend to be better analysts. Uh, uh, and we have ways of picking up an investment and we call investing intelligence now. Um, uh, uh, so, you know, how can you belong to multiple networks? You have to think about that. Uh, having an underutilized network, a lot of smart people tend to know a lot of people, but they don't keep in touch with the network or know how to utilize it for idea generation, idea confirmation. Now having a lot of triads in your networks. So I spoken about this another my talk. So triads is when you've introduced two people to each other. And Judy is in, uh, it's called a mitzvah to introduce a man and a, and a woman together. Uh, it's a blessing. Um, uh, I'm not Jewish by the way, but one of my mentors is, and he's been teaching me and I've applied that. How do you do business mitzvahs? So one of the things that I do, if I'm setting an idea is I always say, Hey, who are the two smartest people that I'm collaborating with this idea that don't know each other that I can introduce to? The more triads you have in your network, the more you perform, uh, or you're successful. The sociologist actually done a great work on that. Now refreshing your network, you know, the smart people tend to consolidate with a group that they have and they very rarely go and meet new people and then too many dormant ties, uh, which is people that you know that you haven't spoken with. You have to fix all of that. Smart people tend to love intricate complexities. It's kind of how they show their smart. Uh, the very close friend of mine runs a fun and he was invested in the name where literally to understand it and to make money in it, you have to understand California weather patterns. Okay. And the guy, the analyst I was covering that for him, uh, was intellectually arrogant and he loved this idea, but he also lost $400 million investing in it, right? It's not intricate complexities that matter. It's actually finding unrecognized simplicity that matter, right? And this quote, most geniuses, especially those who lead others, prosper not by deconstructing intricate complexities, but by exploiting unrecognized simplicity. It's something that is simple that no one is really looking at that really you're going to be making money on. Smart people love to be right. And again, as the words of Stan Druckemiller, it's not about being right or wrong. It's about how much money you make when you're right, minus how much you lose when you're wrong. I'm wrong all the time. And it's okay. But I like to be the first to recognize that I am wrong. And I have designed my friends to literally grab me by the shirt slap me or around me like, Hey, Jack asked you're about to make a mistake. And it's okay. And I'm okay with making mistakes. And then you realize that, you know, it's, you made a mistake. So what? Move on. Okay, learn from it, but move on. Try not to repeat it. And it's actually one of the qualities of great investors is they tend to not repeat that big mistake again. Okay. Uh, but it's very important to be able to let go of being right. One of the smartest macro thinkers I know is one of the worst money makers I've ever seen, mostly because he wants to be right. Not being emotionally developed. Okay. For smart person in the mid 20s, much more important to go develop your emotional emotional side and not the emotional and repressed, then it is to go and learn modeling skills, for example. Take a dance class, travel, preferably as a group activity, what's called a compound experience, learn new languages, try new foods, have novel experience, constantly new people, learn diverse skills, especially if you're shy, go learn comedy improv, public speaking, acting, even. There's a concept called dynamic evaluation. Uh, it's one of the new ones for us. And since we started doing that, our performance has improved, which is that if I'm studying an idea, instead of putting my strength and play, I put my weaknesses in play as well. So for example, uh, uh, if an analyst is shy, and he's reporting to me in an idea, I always be like, okay, I need you to call five people that you don't know and ask them these questions. So that sense is weakness is shyness, putting that weakness into motion actually helps you make money. Okay. We learned that concept from a psychologist called Phil Stutz, where I'm kind of obsessed with right now. If you haven't seen Stutz, the documentary on him, uh, by Jonah Hill on Netflix, it's a musk watch. It's one of these things where maybe I got exposed to it when I needed to, but I literally improved when I, when I, when I learned and studied, uh, uh, all his books, his interviews, I did a deep dive on him last year, fascinating, muscle learn, especially if you're a very smart person. Um, okay. So to lab wrote this amazing piece in a very telebian way. I usually filled with insults and very, very smart sarcasm. But I actually think this is a required reading for today. And he calls it the intellectual yet idiot. It's a chapter in one of his books called Skin in the Game. You can actually find it for free on medium. There's a lot of people and academia, leadership, governance, governments that are intellectual, but get more on. And you have to kind of know when you're dealing with Warren. By the way, a lot of these guys in the investment business as well. Okay, lack of self awareness, big mistakes, smart people make. You don't know your power zone. What are the ideas that are your power zone that if you invest in, you're going to make money. I find that you need outside people to tell you that because some of my friends, they actually don't know what their power zones are. Where if you're a great observer of your friends, you'll know what their power zones are. So for example, if one of my buddies calls me with a retail name, it's an automatic short because he's been trying to go along a retail for 22 years that I've known him and he's over oh, at every moment. And at one point, he was like, I'm going to quit investing in retail. I was like, no, he's like, why is like, why deprived of rest of us? You know, doing the opposite what you do in retail is as good as doing, you know, like, no, don't do keep doing that. You know that he like persists. He like his obsessed with retail and losing money at it. But yet if he's doing industrials, he makes money. And for some reasons, industrials have saved them. And then and by the way, not just the last few years when industrials are literally like this, but throughout our careers together. Okay. Not taking care of your life force. So your life force is your relationship with your body, your relationship with your mind and your relationship with other people. Okay. Very smart people need to take care of their bodies. One of the reasons you see smart people lead the investment business is they lose the energy of dealing with markets. So working out, relaxing, massaging, doing things that force you to recover. And over a long periods of time is very important. Keeping up with emotional relationship with others. The study, this concept life force, very powerful. Never developing your own style. So when my first coach, investment coach, had me good at things that were more my style despite my insecurities about my style. My performance went up to this day. I'm still shot. And being okay with that. There's something about Mrs. Market when she feels your style, she wants to reward that. I know it sounds like Kuku nonsense, but I really do believe that that when your personality and your authenticity is imbued and you're investing, that's when you get rewarded. Not getting feedback on your ideas and science of processes. Not knowing your talents that you have ritualized and amplified to be a strength. So for example, if you're good at field research, and by the way, we are, we like to focus on consumer stocks because the field research is much more easier to be done. Right. So how do you amplify that? Followed 13 F's and hedge fund letters of great consumer investors, surround yourself with other people that are great consumer stocks and so on. Not knowing your weaknesses or negative patterns, which leads to lack of dynamic evaluation, which I was just talking about. All right. There's a great book. I think it's called No More Mr. Nice Guy, where he talks about the paradigm. And we've noticed this in multiple aspects that smart people often have the wrong paradigms. And what he says is that a paradigm is a roadmap. We used to navigate life's journey. It's everyone uses these road maps and everyone assumes the map they are using is up to date and accurate. Paradigms often operate on unconscious level, yet they determine to a large degree or attitudes on behavior. They serve as a filter through which we process life experiences. Data that does not fit our paradigm is screened out and reaches our conscious mind. One of the ways that we add value to analysts that come work for us is we find why or their paradigm is wrong about investing and we give them the concept, the tools and the processes to shift that paradigm. And it's it's one of the ways you should never hire somebody unless you know how to improve them without him being known that he's that that he's being improved. And one of the problems with hiring the kind of guys that we like to hire, it they tend to be intellectually set in their ways. So you you have to improve them in a way where you're not forcing yourself upon them and changing the paradigm is how you start doing that. And we have ways of doing that. By the way, the last part is cool. It's very important. Most paradigms are developed when we are young, naive and relatively powerless. They are often based on the inaccurate interpretations of childhood experiences. Since they are often unconscious, they are rarely evaluated or updated. Unfortunately, these paradigms are assumed as to be 100% accurate, even when they are not the wrong mindset. So think about paradigm as having influence on mindset. When you change somebody's paradigm, it can have an impact on mindset. But analytical mindset is a very powerful to actually be able to alter, especially in your own. If you if you see investors that have improved or long periods of time, they had a process for consciously changing their mindset over time to be able to adapt. You saw Warren do it. You saw Charlie do it. You saw a lot of Tiger Cubs do it, especially with the influence of Steve Mandel. You saw Julian do it. You saw a lot of the Tiger Grand Cubs do it, especially after the influence of two of the best investment teachers that the world has ever seen at Columbia University. And it's very powerful, but you got to be aware of it to be able to do it. And this quote by Richard Hoyer, so Richard Hoyer was inside the CIA. And he's the one that taught CIA analysts to the better analysts and literally put in a book called the psychology intelligence analysis. And his kid Dick Hoyer, Jr. wrote structured analytical techniques, which is a must read. Okay, as an analyst. And by the way, structured analytical techniques, I often thought it was wrongly name. It should actually be called structured networked analytical techniques because the networking advice it gives in those books are even more powerful. All right. We have, let's say 10 more minutes and then we'll get to questions. Ethan, okay. All right. So what are the biases? So you see, well, the problem is with smart people is that they're still prone to cognitive biases and blind spots. But because they're smart, the intelligence actually amplifies these things as opposed to minimizing it. Somebody that's not so smart. Doesn't have that. He doesn't know about these things. That's why he rushes in, right? The first time I noticed that was in high school. And my high school would always be funneled me that the smartest guys I know were very bad with girls, whereas all the morons were getting all the girls. I was like, how is that? I don't, how I understand how that works. And I think sometimes smart people are really good at coming up with negative visualization as to why what they're doing is not going to work. Right. She's not going to like me because of these really brilliant reasons. Right. We're as the other guys like, yeah, I'm nothing to lose. Let's go. Right. And to this day, I still can't believe I would look in the cows. I don't get it. Okay. So where are the biases and to let your arrogance lack of metarationality. So what metarationality is is having the humility and understanding. Right. That there's somebody smarter than you doing something and that you need to to to to to minimize your own intelligence. I want to do X and go do Y, which is what the smart guy is doing. It gets more effective. It's actually harder than you think. Okay. When I hear I've done six months of work on this and I think the idea is bad. If the guy is long, it's almost an automatic short. Okay. Why because you've probably done five months, three weeks, five days, too much work on this. Okay. Be very careful whenever you hear I've done six months of work on this, especially as a stock is going down value. I just only overly anchored to valuation your investment thesis. Why do you own it? It's cheap. So that's not it. That's not an investment thesis. Who cares? If it's cheap, there's 5,000 books on value investing in Amazon. Okay. Everybody's a value investor. It has an And you know, in the 70s when no one knew value investing, it was an advantage to be a value investor. Okay. Today, it's very, it's harder. It's way more competitive. I missed it by us. This is when you, you, you talk about an idea, the stock is up and you hear somebody say, I missed it or better yet, you think it. Time to do some work. You haven't missed anything. The best stocks are the ones that you buy at new highs. Emotional estimation, seeing only validation. You have an emotional reaction about something that is not based on thought and then you go and you only look for validation that you're right as opposed to disconfirm the evidence that you're wrong. Loss of version. So like I said, this causes very smart people to review risk averse and they make mistakes of omission, often not maximizes opportunities because they come up with extremely intelligent, negative visualizations about opportunities. Right. And big beauty aversion. You know, the one of my favorite strategic thinkers, he says, we are born into a probable reality with ambiguity aversions as humans. Okay, you have to be comfortable with that. You have to be comfortable with the military calls of vuka condition. So volatility, uncertainty, complexity and ambiguity. You know, we love vuka conditions and markets, for example, because that's where opportunities are actually created justice mechanism. So a lot of smart people have the justice mechanism where they want to see justice and you often see short sellers that have that when management teams are committing fraud. They're like, these guys are fraudsters and they want a short to stock not realizing that they don't set the price and they're shorting into massive retail buying that is not seeing the fraud. And they can lose a lot of money as a short seller. You have to be very, very careful about his cell sabotage the self destruct button. One thing I noticed very smart people, they get rich and there's a self destruct button that they keep pushing and they start losing money. It's one, it's we all have it in humans, by the way. I'm not saying, by the way, I'm prone to probably every bias in here, but we have. Systems and processes, usually my friends that think God love me dearly are like, Hey, Jack asked you're doing that again. Okay, and stump it right. Projecting too much of the past into the future. The game has changed the internet, social media narratives, new players, quant funds, ETF passive, have changed the game. You can't take a look at a past situation and projected into the future anymore. There's novelty now. It's very, very different. And then pro cyclical behavior, which usually you're making money. So you jack up risk, you jack up exposure and you come into a loss and you start losing the money that you put in. All right, here are the blind spots. High personal business overhead, a killer for smart people. Be very careful as you succeed that you jack up your personal overhead. It amplifies almost every bias you have and creates blind spots. While you're focusing on your overhead and the cost and how expensive it is, opportunities are going by threats are going by you're not seeing them. Goal and do's blindness for having the wrong goals. So for example, and our investing, one of our goals is mentoring, learning and teaching. It's actually even though it seems like a selfless act, it's actually something that helps us make money as well. The echo chamber problem where you have the same source of information, same people that you speak with, and you don't have diversity in them and it forces you to lose money. Still networks, same thing, having the wrong social influences causes massive blind spots, structural and conditional blindness. You know, we tend to walk around regulatory, physical structures, social structures and almost are blind to it. Right. We're blind to the economic regulatory forces that are having a massive impact on our lives or pushing us backwards. You have to wake up to these things, you know, the investment business, the there's a there's either micro guys or macro guys, but it's actually one level called the mess. So you have the micro the mess and the macro and the mess. So is one step above the mic. The micro you have to know the influences are having an impact on you, your businesses and it's only one step above. Don't go too far because I think really real macro investing is very difficult. We've studied it. Eventually we will evolve to that, but we don't have what it takes yet to get there. If you study the evolution of Stan Druckemiller and George Soros, they started out as equity guys first and then involved in macro. But start getting good at the mess. Right. And then the geography and culture of your thought, you know, and the West, we tend to see things very differently than in the East. There's a great book on this is called the geography of thought. A second great book on this and obsessed with the writer. If he's a French synologist called François Julia, he the book is called Triggies on efficacy, which is an analysis of Chinese strategic thought and Western strategic thought brilliant. And then being stunned in one part of your be marry as a last so body emotion, mind, environment, relationship ideas. If you're missing things in those areas, that can have a big impact and create a blind spot. Okay. Tools to mitigate your blind spots. I have to speed up because that five minutes price implied expectations. Very powerful to do. It's a lesson from Michael Mobuson, read his book, expectation investing tutorial eight for free on his website, teaches you how to do these things, do it. Okay. When I started out gambling, I loved it because a gambling position has embedded odds in it that you can figure out. And then you can actually estimate your probability of winning, losing and what your profit margin is going to be. When I got to investing, it was actually very difficult to understand what odds are priced into a stock. Well, guess what? Mobuson gives you that process, very powerful teaching and mentoring, even at your age today, start teaching and mentoring younger people. Very important. Look for mentors. You know, I have a saying it's from my grandfather actually, when you're younger, you need older mentors. But when you're older, you need younger mentors because they remind you how to be young. It's one of the reasons why I like to spend time with younger people, right? Value principles. Get to know them. Value investing isn't dead. Okay. It's just that there needs to be an adaptation of how you apply value principles. The pre-mortem and the pre-parade by Gary Klein and Danny Conneman. So pre-mortem is a process of saying, Hey, I'm about to make an investment or a decision. If five years from now, I ends up that decision was a catastrophe. Why did it go wrong? And take those reasons and solve for them. It's very powerful, but also do a pre-parade with something I learned from a venture capital where they say, Hey, the mistake is not losing a dollar. The mistake is when you've lost access to a thousand dollars from investing one is you say five years from now, this thing has been a multi-bagger. Why did it happen? Or why did we miss it? Five years from now, it's very powerful psychological to do it, especially as a team. ACH, an asset of competing hypothesis, very powerful process that you get from that book. The psychology of intelligence analysis. Okay. And then scenarios, time as an indicators, also that you get from that book, bobert debates, very powerful to, if you're long to find a short seller and debate him on the idea. If you're short, find a guy that's long debate him on the idea. There are services that you can pay on Wall Street to get that. One of our most used tools is the bobert debate. In fact, sometimes I don't know anything about an idea. I literally will study for 20 minutes and come up with a thesis and debate a short seller on it. Long or if you want me to debate a short side, I'll debate a short side. It's a very powerful way to learn. Here's some of the books I would recommend. The intelligence trap. Mistakes were made by NEP by me. One of my favorites on here is military misfortunes. How smart militaries make catastrophic mistakes. When she is failed, which is on long term capital management and how they failed. Why smart people make big money mistakes and how to correct them. And then one of the best ways to understand narrative investing today, which is the halo effect. You have to read Michael Moby's sense research. This one methods to improve decision making a very powerful. Elon has a process that I love. I just we just did a study on this actually and it improved our process is like. What are the requirements of our investment process? And how do we kind of make them less dumb? Like, for example, a lot of investment firms require meeting management to make investments. We don't. Why do you need to meet a CEO? Like, literally, you know, no father ever thinks his daughter is unattractive. No mother ever thinks her son is unattractive. Of course, the CEO is going to say good things. It's a waste of time. Sometimes. If you meet with CEO, talk to him about his competition. About his suppliers, what's going on the industry? Fine. You've talked to him about the business. That's not a requirement for us. Delete the parts or process step. For example, on the short side, we've deleted a lot of process steps. Want the product to solve the problems of the short side. Optimize. You know, how do you make a step or process a part of the process better? Accelerate. How do you speed it up? How do you automate? You know, with the AI, there's certain things that we've automated. But today, people are automating things without doing the previous four. Very dangerous. Michael Mobiston wrote a memo called Alpha in the Paradox of Scale, which is a must-read of how to find weed games to compete against. All right. Final. Mentor and Teach. Use coaches. One of the latest things we've been teaching, and I'll stop with this, by the way, is as a younger person, start watching out for the decade of your 40s and your 50s. Both men and women. And for many people, this is a lost decade. And often because they don't understand what's happening. There are men go through a form of menopause, women go through a form of menopause, and it starts impacting your energy, how you think, your mood, and all of these things. And the midlife crisis dynamics are really real. Okay. You don't have to worry about that. You're probably saying, why is this boom we're talking about this shit? But trust me, it's coming. Okay. And the earlier you manage for it, the better. From many ways for me, my 40s was a lost decade. It really was. Because even though I was aware of it, there were certain things. It's like, it's, and I find almost everybody goes through it. Investment, there's a great data set that Michael Mogos and Showninwards about investment managers, how their performance drops and their 40s. Okay. Really interesting. Okay. Build leverage into your personal and business life. Not the ability to borrow money, but capital code content community, contractual structural and conditional leverage. Very powerful. Have a YouTube talk on this. Go do it. Have a spiritual practice. Very important for smart people to have a spiritual practice. Have thought partners and confidence. The power pair or the power of being unstoppable too. I'm very lucky to have confidence that if I have an idea, I can pitch it to them. And they're very gentle with my ego about getting me feedback on it. Okay. You need people like that. You want to meet people like that and know how to build a right ritual. So we have a ritual for example called a morning 90. Every day, even today, I wake up, I read three hedge fund letters, one investment memo, and I go through the 13th of one investment manager looking for ideas. Every day. And that process feeds my competitive advantage. I have four or five things. I'm world class at. I need to do something on a daily basis that feeds these things. Find what that is for you. AI is going to amplify smart people's mistakes. Okay. We're worse. A people are using these AI tools. And they're making really big mistakes using them. Okay. An analyst has five skills they need to hone and develop. Recall our past patterns, mental realization of a business within the feedback loops of its ecosystem. To read between the lines, to make leaps of judgment and to synthesize. AI tools inhibit or dull all these investment skills, especially in workies. Okay. So watch out for these tools. Learn analog training. Thanks so much, guys. By the way, you know, so you know, for listening, if you have any questions, you know, hit me up on LinkedIn afterwards. If there's any way I can be helpful. Now for sure. And thanks so much for your talk. There were a lot of interesting insights there. I think I definitely related to the over stimulation. And the reliance on Gen AI. Like I think. Because you have so much access to these tools, we have so much access to these tools. It's very easy to get intellectually lazy and just pull out my phone over here and just, you know, go straight to the chat GPT app and ask something and have a discussion because of the, you know, the speed of information is rapid. And I guess my first question is about that. It's about this intellectual laziness. And I guess I'm curious how you think that what are the specific impacts that you think will come from that within the markets? And because that's the one thing I can think of as a clear, you know, it amplifies a certain story. Let's say there's a certain AI narrative that a lot of news outlets are talking about. And obviously that text it gets fed into the models and we have this kind of recursive thing going on. And, you know, because that's one thing I can think of and I'm curious if someone identifies something like that. Is it exactly a short because these things can go much higher before they can go lower? I'd love to hear your thoughts. So, great question. The first is, should goes and fantasy stocks. Okay, so there's a group of stocks out there in a stock market that retail keeps buying. And if they had a knowledge of history, they kind of know how that story is going to end. You know, you have $20 billion market cap companies that are never going to earn the free cash flow that has to actually justify those valuations. Okay, so just imagine a $20 billion market cap company at a 5% discount rate has to generate 1 billion in free cash flow every year to justify the market cap at no growth. Assuming a 20% free cash flow margin, that $1 billion, you got to do $5 billion in sales. Okay, if you take their costs per widget that they're selling and you take that $5 billion divided by it, they have to do a number of units that they don't even know how to manufacture that. So, some of these businesses that have zero revenue that have large market caps will never make the free cash flow to justify the market caps. And the long term, and the short term, people are not doing deep work on them and they're bidding them up and buying them on narratives. Right? And narratives are amplified by AI tools. By the way, so one of the problems of these AI tools that it hasn't escaped the manipulators that people are using these tools. Already smart marketers are designing pieces of content that the LLMs pick up on and put as a link with their product and to the link if you click through it so that you go and pay the product. You know, the smarties out there that are way smarter than we will ever be. They're figuring, hey, how can we use this to grow the system? Okay? So, you're going to need to be careful. I think AI is going to amplify one of my favorite lines from one to I'm obsessed with Chris Nolan. Almost everybody, my personality. If you ask somebody, my personality type, what's your favorite movie? The Batman trilogy is always in there. And, you know, theatricality and deception are going to be amplified by AI. So you have to be very, very careful with that and the younger generations that don't have analog training that haven't read the book, the books that don't know the historical context that just look at snippets and snack on information as opposed to sitting with the book under constraints and really thinking about it. They're going to lose a lot of money or already seeing what happened. Another thing you talked about during your talk is this idea that you have multiple networks. So, I think you said Southeast Asia Europe. I think you did you grew up in Paris correct me if I'm wrong. Partly Haiti and France and Switzerland and E-96. Okay. Okay. I lived in Zilla one point. I lived in Jamaica one point and I've traveled. One of my goals is to go to every country in the world. I think I'm halfway there by now actually. The day I did I did cheat a little bit. I crossed from Sweden and to Norway and a bridge and came back. I'm like, "Check, I need to go back." Yeah, awesome, awesome. Hey, I just I just love to for you to expand on that. Are you talking about different geographies different industries? Or is it just everything in general just so that you can as diverse and booklets fought? Of course, so so for example In your network needs to be structured by age Geography Sectors and Then whatever passion projects you have You know, so for example a lot of people they have their their people they know and work and extending that work people They know in their country club and that's all A lot of political problems are United States today for example is guys that don't know what it's like an a steel mill mill town and Ohio That that steel mill is no longer there You know that you don't have that perspective So for example if I'm learning so my passion project right now is is learning Producing and movie directing Okay, and I've been expanding my network of producers and I've met a couple directors unbelievable where we're learning there Okay, and we've been literally stealing stuff from there. How can we apply that to investing? Right so so you want to develop that network and then what you see is that when you're asking for advice you can ask Different people in different networks and there's two processes that come from that One of them is wisdom is multiple perspectives When you get multiple perspectives on something you tend to be wiser on it and the second is leading versus lagging indicator analysis So if for example on a stock you talk to a day trip on it Then you talk to an option market maker on it then you talked a long-only guy on it then you talked a short seller on it You talked a macro guy on it at the end you will notice who is a leading indicator on the idea who is a lagging indicator on the idea It's a very powerful thing to do so so for example One of the things I always advise young people whenever they join a city is join at least two or three different clubs Try to join the brook try to join the Racket Club in New York City try to join the University Club and those networks are very powerful leverage the alumni network of your school You belong to that Okay, so you you literally want to classify by network You know the I'm probably going to do a piece on networking. I think I may have actually on that because it people don't know how to network Any investment is what's funny is that I'm known as a good networker. I'm actually not is that the techniques I use are really good Right so and one of them is you have to belong to multiple network one of the latest ones For me a lot of my friends are either on the board or involved with a Santa Fe Institute Which is a complexity in network theory thick tank very important to study what these guys are up to So the the earliest VCs that were able to value of social media had read a book Called complexity by Mitch Waldrop that came from the Santa Fe Institute and still an edge today by the way to read that stuff And going back to the self-regulation for a young person Sometimes I feel I don't know if it's this morning. I'll pull up my phone and I'll just check messages immediately to Instagram And just get you know hammer with all the simulation imaginable and I'm just curious what does your typical morning routine look like and I say that question knowing that what Your routine should look like should be very different to ours because we're students and and but you are trying to make the best investment decisions possible Yeah, what does it look like I'm curious Okay, so It sounds weird and And It's not as if I don't have an addiction to this thing either, okay? I'm a junkie and not only that we own meta So I have to be constantly on Instagram. I'm addicted to Instagram Okay, and Instagram knows me very well. It's really interesting what Instagram wants to show me sometimes Especially if you go to your search page sometimes I really don't like who Instagram thinks I am but fine The mornings to emotionally self-regulate Are very important because the initial conditions that you said in the morning can drive Your entire day, right? So What I do on a daily basis and also by the way, I'm a bit reluctant Always of talking about this stuff because people think you do this you're gonna be successful No, that has nothing to do with success Because I know very successful people that literally wake up with a cigarette in a cup of coffee Okay, like literally a zaster way to nicotine and caffeinate early in the morning. Don't do that, okay? like the the the but what a morning routine is gonna do is protect your resilience longevity and self-regulation so me I wake up and I go I get a Theragon or Rumble roller and I literally give myself a massage and The reason for that is when you're responsible for capital as you're sleeping You tense up because of all the risk you're taking and Your body when you wake up is especially I'm 51 now your You feel more tense So you got a trigger your life force by working in your body first and the way that you do that is actually not working out It's actually something that relaxes you So a hot shower and I'm in a Theragon or rumble roller massage you guys know what a rumble roller is It's a roller with nubs on it. It's looked like looks like a torture act and then you you rumble your body on it and detenses you After that I drink a liter of water You need look when you get older you dehydrate faster. It's actually one of the things that also makes you look older Is you it's not that you you have to hydrate more younger you need to hydrate less you still need to hydrate But as you get older you have to hydrate a lot more and water when it goes through your system actually wakes every system up and your body and And then the third thing I do is I exercise So that's my morning routine And then I have usually a breakfast which is usually very heavy on fats It's a one of the greatest harms nutrition has ever done The nutritional industry is tell you that fats are bad for you You actually need healthy fats for thinking especially for the brain And then after that I do my morning 90 Which is three hedge fund letters one investment memo one thirteen F That's my morning routine, you know at there are days when I meditate Especially if I'm having a problem coming up with insights One of the things that we use to meditate by the way is I wear ear plugs when I meditate Okay, it's very or when I work this is actually one of the best things that you can do because I'm very distraction from You know the I've ever seen up, you know squirrel, you know, I'm dug the dog You know the so so I have to put Your plugs on when I work shut down my phone and just like like focus on stuff That's what my morning routine looks like Don't do violence to yourself in the morning these guys that are plunging into ice cold bass when they first wake up No, no, no, no, no, no, that's stupid. You're you're literally jacking up You're adrenaline Jacking up all sorts of negative hormones. No, don't do that in the morning wake up gently, you know, don't do yourself violence and And you know, it's the end of with four minutes left, but a lot of the people here can go longer if you want No, yeah, okay, no worries, but A lot of people here are very smart very driven people. I've met them spoken to them good friends with a lot of them and If there's one lesson that you think a young intelligent driven person should take from this talk like one thing. Oh, would it be? Triads so What you did with me Were you cold-called me? I happen to be receptive to cold calls because I myself cold-called a lot Right and we actually design our content strategy So that's smart people find us right But this thing of cold reaching out to somebody that you don't know and Then building a relationship with them adding value to them never lose that ever One of the best ways to add value is You meet with somebody and you ask them whether young or old what are your fears and frustrations? What are your wants and aspirations across categories and then you go back and if You study a way of adding value to them Call them back and said hey, you know that problem you're dealing with that fear enough frustration Have you considered this to solve for it? One of the best ways to solve other people's problems is to introduce them to somebody that can help them solve that problem. It's how you create triads, which is a group of three people on your network. That's the biggest leverage that you can take as a smart person because it's gonna take you out of your echo chamber. It's how you create emergence, how you create luck, it's how you create business opportunities, it's how you create. By the way, don't get me wrong. There are triads that go wrong, but usually the cost of them are totally the minimums versus the upside that you get. You know, the amount of time that a great investment idea comes to us and we realize that it came to us because of a triad that we created a decade ago. I introduced one of my best friends to a venture capitalist once, who was the venture capitalist to another person, and then two years later they asked me to be on the board of a company they were in and it's been one of the biggest investments I've ever made on the private side. Right? So that's the one advice that I would follow. When I saw another thing for a lot of these people that I've met, a lot of them go to great schools. And I think that, you know, I said that you see on the internet, it was a good school and I'm now at Columbia. And one of the things I noticed with people, intelligent people who go to good schools is they can generally fall into a position, get into a position where they're in love with their ideas. And they're so convinced they're right because they're surrounded by other people who are extremely smart and they're consistently told you are winners, you are the future of society, you are going to rule the world, you deserve the world. And sometimes I find it extremely funny and I find myself being an ambitious person, fall again to this trap going, oh yeah, wow, I've realized something that's, ooh, this is crazy. And I guess I'd like to hear it from you who's been around winners, been done extremely well for himself financially. How do you avoid these pitfalls and thought and how do you make sure that you are constantly remain that intellectual humility that everyone needs? So it won't, you have to expose your ideas to a wider public. You know, taking an idea that you have, putting it into a YouTube talk and then having people comment on it or somebody will be like, you're an idiot. Somebody also be like, hey, by the way, have you considered X, one of the insights that's changed my life, literally changed was I gave a talk on idea ingredients, it's on YouTube, Yale University, idea ingredients. And I listed 20 idea ingredients, right, and my business partner looked at the ingredients, he's like, you're making a mistake and I was like, what's the mistake is like, well, these 20 matter, but at any one time there's really four of those ingredients are 80% of the value. You should only focus on these four and when I said to him, look, do me a favor, pick the four you think, I'll take the four I think I'm the most important we picked the same four. And since then that idea criteria has been literally multiplying our performance. It would have never happened had an act to get my ideas if I cherished it such a competitive advantage to know those. Now, put it out there, if your ideas, including investment ideas are really good when people hear it, usually they're going to hate it. Okay, that's also good feedback. Why are they hating it? Right, there's a lot of really powerful competitive advantage that can be designed from that. So put yourself out there. You know, don't think that you're right. If you think in your mind when you're debing somebody, I know I'm right, he's wrong. It's time to understand the other person's perspective. Literally turn on your empathy muscles like help me understand the way you're thinking. Like what's going on, you know, and dig in, you know, the intellectual arrogance kills smart people. It's intellectual arrogance is even worse when it's secret. A lot of passive aggressive guys in the investment business have this secret intellectual arrogance. I'm right, but I'm not going to tell you I'm right. You know, I'm just going to keep that as a secret dude. Mrs. Mark is going to slap you around like her little bitch. Okay, like the the it's when you see it happen, it's always virgins. When smart people lose money, it's not, you know, they lose 10%, it's always a catastrophe. Catastrophe like like drawdowns, bro, drawdowns. I do have to run just now. Thank you so much, Ethan, for organizing it. Thank you so much for coming. I really appreciate it. Thanks so much. Of course, hope it was helpful.