Transcript: Jim O’Shaughnessy on Infinite Wisdom

The transcript from this week’s, MiB: Jim O’Shaughnessy on Infinite Wisdom, is below.

You can stream and download our full conversation, including any podcast extras, on Apple Podcasts, Spotify, YouTube, and Bloomberg. All of our earlier podcasts on your favorite pod hosts can be found here.

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This is Masters in business with Barry Ritholtz on Bloomberg Radio

Barry Ritholtz: This week on the podcast. What a delight. Extra special guest, Jim O’Shaughnessy, his book that I came to know him with first was, what Works on Wall Street, which has been just a perennial seller. I think it’s in its fourth or its sixth edition, and really influenced several generations of quants on finance. O’Shaughnessy Asset Management, became a leader in direct indexing, eventually was bought by Franklin Templeton, leading him to launch O’Shaughnessy Ventures, O’Shaughnessy Fellowships, infinite Loops podcast, just so many different things. His new book is delightfully titled Two Thoughts, A Timeless Collection of Infinite Wisdom and reflects many of the insights and, and just thoughtfulness that Jim shows in in everything he does. I always find it delightful to have him on the show, and you, you can tell how much I appreciate him just by the conversation meander wherever it goes. And I occasionally look at my list of questions, but really I just want to see where Jim’s mind is gonna take it and come along for the ride. I thought this was delightful, and I think you will also, with no further ado, my conversation with Jim O’Shaughnessy

Jim O’Shaughnessy: Barry, I am always looking forward to these conversations. It’s great to be back.

Barry Ritholtz:  It, it’s, it’s a pleasure for me. Also, you and I go way back,

Jim O’Shaughnessy: Way, way back

Barry Ritholtz:  It’s kind of funny, like 25 years later I was like, oh, how do you know Jim? Oh, we met in the green room of tv. Yeah. You know, right after the.com crash. It was kind of, it was kind of funny. But let’s talk a little bit about all the different businesses and ventures that you’re, you’re involved with. So, I knew you right around the time you were getting ready to depart Bear Stearns. You were at Bear Stearns for like a decade or so?

Jim O’Shaughnessy: No, about five and a half years.

Barry Ritholtz: So in the, in the mid two thousands. And you had the great insight and business acumen to tap out of Bear Stearns in 2007 with all of those options that you had and exercise the options, sell them and launch your shortness, the asset management. So you win on the way out, you win on the way into starting the new firm. Tell us a little bit about the early days leaving Bear Stearns and setting up os a

Jim O’Shaughnessy: So, first, let me correct the EE Everyone assumes that I saw the great financial crisis coming and therefore wanted to spin out of Bear Stearns. Take the win. Yeah. What, what do they say if the story conflicts with the legend Print? The legend. The legend really isn’t correct, though. We had begun conversations with Bear Stearns folks months and months before the financial crisis came on the scene, and it was essentially a very amicable partying. As you note, when we spun out, we kept all of our Bear Stearns accounts, continued to work with all their private client service people over there. So it was very, very amicable. But of course, because the great financial crisis came along and Bear had those CDO funds that Yep. Had a little bit of a problem. It was, it was just, just irresistible for news people to say, I, I had one reporter sit with me for an hour and a half, and all she kept doing was, come on, tell, tell me the truth. Tell me the truth. Tell me the truth. You know,

Barry Ritholtz:  It’s funny ’cause when, when we look at certain books that get the timing of things right or completely wrong, people forget a book just doesn’t appear wholesale out of thin cloth. It’s the idea has to come along and then, then you gotta get a publisher that wants it, unless you’re gonna self-publish and you gotta, then you gotta write it so that it’s like a one or two year lag. I would imagine pulling out a a substantial division from a major brokerage firm doesn’t happen overnight. No. It’s gotta be like a six or 12 month

Jim O’Shaughnessy: Process. Absolutely. Because you have to have everyone with the ORs going in the same direction. You wanna make sure that it is agreeable and everyone is, whether they’re unhappy that you’re going, they’re happy with the deal that allowed you to go. And so I took extra time to make sure that that happened because I loved the folks over at Bayer and it was really just my own desire to be an entrepreneur again. And, and they really got that. And so very amicable, but as you as you know, those things take a long time to get negotiated out. Yeah.

Barry Ritholtz:  To me, the thing I’m, I was always kind of sad about with the fall of Bear Stearns eventually picked up for pennies by Jamie Diamond and J JP Morgan Chase, and then even Lehman Brothers. I, I knew a lot of great people in a lot of different divisions. You know, we all have mentors all over the street that even if they’re a counterparty or, or if they’re a salesperson, there were things to learn from folks. And Bear and Lehman were two like giant storied names. And I mean, obviously there was a massive disruption throughout society, but the tragedy that a lot of of lay people don’t know are really good people doing really good work get they’re the collateral damage from someone else’s screw

Jim O’Shaughnessy: Up. Totally agree. And the, you know, obviously just my personal opinion, but I think at that particular point in time, all of the investment banks were bankrupt or insolvent. And I think, well,

Barry Ritholtz: Some were a little more insolvent than others. Yeah,

Jim O’Shaughnessy: I agree. I agree. And, and so it was almost a bit like luck of the draw that Lehman and Bear were the ones to go down. Right.

Barry Ritholtz: You know, bear went down early enough that indeed it was salvageable. And then a little known story that a lot of people are unaware of. When I was writing Bailout Nation and doing my homework, it turned out that JP Morgan Chase had a little derivatives flare up like years earlier. And I don’t remember if it was Jamie Dimon or one of his lieutenants, but someone said, Hey, this is a mess and this is really potentially damaging. And it might have been Dimon who said, sell it all. I don’t care the price. If you have to take a 10 or 20% haircut, I want all this off the books. And that’s what they did. And so when the world went to hell, they were, they picked up Washington Mutual, they picked up Bear Stearns. They, they got to cherry pick the best of the best at pennies on the dollar. And that’s why JP Morgan is the mon monster. It is today.

Jim O’Shaughnessy: Well, Jamie is a super smart guy, and that does not surprise me at all. You know, the joke around Bear Stearns at the time was that Jamie really, the real reason he wanted to buy a bear was he wanted the building.

Barry Ritholtz: Which is now overshadowed by their brand new headquarters on Park.

Jim O’Shaughnessy: Know. Park.

Barry Ritholtz: But that was a great octagonal building, which we could see out from our firm’s windows on Bryant Park with the glass top

Jim O’Shaughnessy: It was, it was a beautiful building. And, and you walk in and it’s like, you know, the used to be Wall Street and then there was, you know, the Morgan Stanley and Lehman Brothers sort of off of

Jim O’Shaughnessy: Midtown Square.

Jim O’Shaughnessy: Yeah. Not my favorite part time Square 00:08:12 [Speaker Changed] Lehman was times, times Square.

Barry Ritholtz: . Yeah. And, and then this was just, all right. So very prescient before Vanderbilt was even a thing. That’s right. And there they are. Now one Vanderbilt is a monster. So, so let’s bring it back to, to what you are doing. So you leave Bear, you launch os a m, you’ve already had great success with what works on Wall Street. What made you think, I think we’re gonna develop a series of quantitative approaches to managing money.

Jim O’Shaughnessy: Wow. So that was a dinner when I was a teenager. My grandfather had been very successful. He was an oil speculator, and he kind of beat the pledge guys by about 70 years. He proceeded to give away the vast portion of his fortune during his own lifetime. Wa was it really a fortune? It really was. No kidding. And what he couldn’t give away, he put into a foundation, the ia O’Shaughnessy Foundation, which I think today is still about a hundred million dollars foundation. No kidding. And, but he made his five kids, the trustees. And so once a quarter there would be a dinner and it would rotate. I was brought up in St. Paul. Right. And so during the St. Paul rotation, I got lucky enough at, I think I was 16, to get invited to the adult table. And of course, like I, I’d want it to be an adult and I loved going to my parents’ cocktail parties and talking to adults.

And so I was really excited and literally, I, I was put down next to my Uncle John and my dad, and I’m listening, and they’re talking about IBM, but they’re just talking about the CEO. They’re, they’re not talking about how much do they make, how much do you have to pay for every dollar of earnings or sales or ebitda? And, and I kind of raised my hand and said, dad, uncle John, don’t you think it might be a better idea to look at it by the numbers? And they dismissed me. This is 1976. Right. So I decided what’s a quant? Yeah. Exact. Well, exactly. And so I decided, you know what, I’m gonna go look into this. So I took myself down to the James J. Hill Research Library in downtown St. Paul, and I thought I was gonna be really ambitious, but I am potentially the world’s laziest man.

So when I saw the 500 of the s and p, the s and p tear sheet book, I’m like, oh, I’m not, I’m not gonna be able to do that. So I align on the Dow 30 stocks, 30 stock. Right, right. Did the research found very compelling evidence that what its PE is really matters to your returns going forward. Very, very high. Valuations tended to crash and burn very, very cheap valuations tended to do well. But of course, you know, Barry, I was 16, 17 much more interested in girls. Right. And so after college got married young, I was like, I’ve gotta revisit all this and got the data set from Compus stat and essentially that became what works on Wall Street. So, so wait, so what, what’d you study in college? So, the reason I am an economics, I have a degree in economics. The reason for that was I had maybe six more credits, four to six more credits in economics than I had in history. So otherwise

Barry Ritholtz: You might have been a historian. Historian and not, not

Jim O’Shaughnessy: A Yeah, absolutely. Absolutely. Well, listen, I think a good knowledge of history is absolutely vital if you wanna be a good investor, right?

Barry Ritholtz:A hundred percent.

Jim O’Shaughnessy: I mean, like one of the, one of the Roman wits said he who does not understand what happened before they were born remains forever a child. Huh. And essentially, I didn’t wanna remain a child. If you look back at the market’s history, guess what? History doesn’t repeat itself, but it rhymes for sure. I mean, you go back to Isaac Newton losing a fortune in the South Sea bubble, and like literally the, I always do this joke because people get it. It’s like people were so in love with that stock poets wrote poetry about it. One went fill the South Sea goblet full, the gods shell of our stocks, take care. Europa please accepts the bull. But JoVE with Joy puts off the bear. And I used to, when I was still at O seven, I used to say, I’m totally a quant. But if somebody writes a poem about a stock you own, sell it. That’s the top

Barry Ritholtz:  Right. That’s a high that, that’s amazing. And it’s funny, you and I both have a love of quotations and you, the the, I tried repeatedly to track down the source of history. Doesn’t repeat, but it rhymes. It’s always attributed to Mark Twain or someone else. And I’ve never been able to really verify that on quote investigator. I love that site.

Jim O’Shaughnessy:  Yeah. It’s pretty good. They can normally get you to the original sighting of the text. What’s funny about that though is almost inevitably it’s somebody you’ve absolutely never heard of. Right? That’s right. And I think that’s why people like when that, that sounds like something Mark Twain would say. Right, right. And but then there’s also the Mark Twain, Oscar Wilde. I mean, there’s a bunch of them. Like any quote that you really love and you don’t know who did it, people tend to say Mark Twain. Right. Oscar Wild,

Barry Ritholtz: The one from Twain that stands out is, and I’m gonna mangle this, it’s not the things we know that get us into trouble, it’s the things we know for sure that just ain’t show.

Jim O’Shaughnessy:  Yeah. That was actually a character of Mark Twain’s. Oh, really? And he, he spoke like a southerner of the late 19 hundreds, and I think his last name was Ward. The character’s last name was Ward Twain. I mean, he has some of the great actual quotes that are really his, what I love is like, if you pick up a dog in the street that is starving and feed it, it will love you. If you do the same for a human, it will bite you. This is the principle difference between a dog and a man

Barry Ritholtz: Which A is true. And B, leads to the newer line. If you want a friend on Wall Street, get a dog.

Barry Ritholtz: And it’s really true. We’re gonna talk more about quotes and books in a moment. Before we do that, I just wanna bring up the first book, what Works on Wall Street. That book not only has been through multiple editions, it’s had legs, it’s influenced an entire generation or two of quants. What was the most surprising thing about what you found in the book and then its subsequent reception in finance?

Jim O’Shaughnessy: So I think the most surprising thing was a number of people at various firms that I was investigating working for before starting my own. I mean, I had my own company, but I was getting a lot of offers primarily because they knew the book was coming. Right. Many of them, when they saw the galleys of the book, the manuscript, the first thing they said to me, Barry, was We would love to hire you, but you cannot publish this book. You’re giving it away.

Barry Ritholtz: I knew you were gonna go there

Jim O’Shaughnessy: Exactly. And I was like, no, no, no, no, no. You, you can have the greatest truth in the world. You can scream it from all the rooftops. You can take full page ads in the Wall Street Journal. Most people are just gonna go, meh. They’re not gonna do it.

Barry Ritholtz: It’s so true. You know, the, my takeaway from my first book, which is now 15 years ago, was there would be these debates about what led to the crisis, what were the factors, what were, and I’m like, no, no, we, we’ve solved that. I, I’ve addressed that. Let’s, let’s move beyond that. And the arguments didn’t stop. Nope. People just kept on debating it. And my takeaway was, oh, you could just drop a truth bomb on people’s laps and if they don’t wanna believe it, they’re not gonna believe it. And that was like, maybe I was naive, but you are a hundred percent right. The fact that they thought you were giving the secret away. You could, you could, here’s a secret to investing, not, maybe you’ll do okay with it, but nobody’s gonna really adapt. Well,

Jim O’Shaughnessy: You know what’s funny is I would say to these people, it was one of the, like when I started out and actually what works wasn’t my first book, invest Like the Best was, which showed you Oh really? How to clone your favorite money managers. Right. By looking at the biggest difference between their portfolio factor distribution and then using those as screens to get a portfolio, much like your manager. Right. Note we used to update the clones versus the manager last time we did. It was years and years ago. Right. But the thing that I found really interesting was all of the clones were beating the managers that they cloned…

Barry Ritholtz:  Was that ’cause of the fee or was that, ’cause they’re not great sellers.

Jim O’Shaughnessy: It was because of our very human emotional decision. Makings almost always under extreme stress models don’t get stressed. You know, they don’t get hung over. They never fight with their spouse. They just keep applying those criteria. You’re in, you’re out. And I think that the, you know, we went through some tough times after that book came out and, and people have different ways of dealing with stress and one of ’em is not being good at selling.

Barry Ritholtz:  So there’s been a number of studies, and I don’t wanna talk about my book, we’re gonna talk about your book. But the some really fascinating things you learn are, when you look at the academic research fund manager, fund managers are actually surprisingly good buyers. Yes. But they’re terrible sellers. Yeah. And part of the reason is, is the emotionality of the sale, they tend to panic out when they shouldn’t or do the opposite. Hold on. Right. To the bitter end when they really shouldn’t

Jim O’Shaughnessy: Shouldn’t. Well, and also it’s just because it’s just part of our human os part of our human operating system. Right. I remember when Enron was going through difficulties and I was set to speak with a classic manager. Right. A fundamental guy. And we were gonna share the stage. And the first question went to me and it was like, are you, do you own Enron? And my answer was, no. The numbers are pretty bad. And so we don’t, and he looked at me kind of, you know, with the chuckle, Ugh, you quants, you know, and then he launched into this description of not only did he hold, he bought more and then he gave this as the explanation. I went to a barbecue at the CFO’s house, the CEO was there, the CFO. And I looked them in the eye and I said, is there trouble? And they assured me there wasn’t. And I’m just kinda like sitting over there with, oh, okay, just don’t touch this one. Right.

Barry Ritholtz: Maybe we could get a short put on this that just like, and I’ll tell you something that’s really funny, and this just goes to how naive and stupid I am or especially was early in my career, I would listen in on quarterly calls and I would believe every word I heard, like the these guys aren’t gonna lie to their investors, everything’s gonna be great. And I very quickly learned, oh you are a terrible judge of, of people you’ll buy anything that a slick salesman is selling you. You just have to stop. And I just stop listening to calls ’cause I’m an idiot. I believe what they say. I would rather look at the numbers and Yeah, I know the numbers can lie, but not as easily as a CEO or CFO.

Jim O’Shaughnessy: You, that’s also a really big part of human os default to trust.

Barry Ritholtz: Well, we’re social primates

Jim O’Shaughnessy: Social being

Barry Ritholtz:  Right. Exactly.

Jim O’Shaughnessy: We’re domesticated primates and Yep. We grew up in groups where trust was really, really important. So your average human defaults to trust. And by the way, that’s not a bad default for the vast majority of people. It probably works better to trust who you’re listening to. Right, right. And so one of the things that we’re looking at in one of our divisions at O’Shaughnessy Ventures right now is voice software AI that does stress analysis on any type of media. So obviously earning calls present themselves as kind of number one.

Barry Ritholtz: Really.

Jim O’Shaughnessy: And I gotta tell you Barry,Wow. Exciting stuff like,

Barry Ritholtz: Oh my God.

Jim O’Shaughnessy: Now how much of that is nervousness about speaking to a large audience and nervousness? ’cause they know something and they don’t want to

Jim O’Shaughnessy: Disclose it. So as you might guess, you do baselines. You take a recording where clearly either, you know, you get some tape that was before the call. Right. Or you know, a speech that had nothing to do with earnings and that creates your baseline. And then you get to see very, very quickly like Spike. Wow, we don’t have any worries Spike.

Barry Ritholtz: Wow, that sounds like fun.

Jim O’Shaughnessy: Yeah, it is fun. And we we’re not sure how we’re gonna do it because we don’t offer asset management services to people outside of O’Shaugnessy Ventures. That was a deal that we made with Franklin Templeton that we would not launch,

Barry Ritholtz: But you competitor, you could still do a little come on. Doesn’t don’t you get the itch sometimes to say, Hey, X, Y, Z stock is wildly overvalued and the CFO is full of it. Let, let’s put on some, let’s buy some deep out of the money puts might and see where this goes.

Jim O’Shaughnessy: Yeah. You know, if you keep a secret Yeah. Secret. We might try that with some of our internal capital.

Barry Ritholtz: Let me know. I’m right there with you. I love the idea of that. Where did the title come

Jim O’Shaughnessy: From? So it came from a group of my teammates at OSV. Essentially, I have been a quote junkie all of my life. Same. So I have kept, I Barry have notebooks filled with quotes.

Barry Ritholtz: Oh really?

Jim O’Shaughnessy: From way back when I, I think the first time I started it, I was 21. And so I just love them. And, and I think that, you know, they can pack a lot of a punch if you if you put ’em together. Right. If you curate them. Right. Et cetera. If you read what works on Wall Street, I open every chapter with a quick, quote.

Barry Ritholtz:  I do that a lot also. I find that’s fun. Let me, let me ask you one other question about the, the title. So one of the things that’s fascinating, if you are, if you like music or poetry or even I’m gonna go into the weed, Shakespearean iic pentameter. I

Jim O’Shaughnessy: Love all those.

Barry Ritholtz: Okay. So there is a rhythm to, and I’m gonna write this down so you know, even if if you get this, I want you to know there is a rhythm to the phrase, a timeless collection of infinite wisdom that reminds me of another book title. And I’m curious if it was in your mind when you came out with this.

Jim O’Shaughnessy: Oh, you got me on that one.

Barry Ritholtz: “A heartbreaking work of staggering genius.” and “A timeless collection of infinite wisdom.” It just leaves off in that same rhythm. I love that connection. I don’t know if that was a coincidence..

Jim O’Shaughnessy: No. At least it wasn’t in thet purposeful the back of mind really, it wasn’t, wasn’t purposeful

Barry Ritholtz: Because I I’ve always loved that title. Oh,

Jim O’Shaughnessy: It’s a great title.

Barry Ritholtz: A heartbreaking work of staggering genius. And and it’s like, you could go with a different, it’s a staggering work of heartbreaking Gene. It’s a, like you could flip it around.  Yeah. But this phraseology just leapt that leapt right out at me.

Jim O’Shaughnessy: I am incredibly lucky to have in just extraordinarily talented teammates, we have a lot of writers on the team. We have a lot of editors and, you know, they would just go at it like, what about this title? What about, because we had to call it two thoughts because this started Barry on a whim. Well,

Barry Ritholtz: I know, I know you have been tweeting for, I don’t know, 10 years, not just a quote. And I was doing that for a long time, just throwing a quote up that I thought was relevant. Sometimes I would stagger them out. Like, you can plan a tweet six months in advance. Hey, I don’t know what’s gonna be happening in August, but I think this is relevant. You have been doing two tweets for forever.

Jim O’Shaughnessy: Yeah. And so we, it was kind of like, you know, Ken Stanley’s book, greatness Can’t Be Planned. This is a perfect example of that. So I just thought, you know, what the heck, I’m gonna put up two thoughts and I’ll see if I like it. If I keep doing it, I’ll just keep doing it. Right. And then all of a sudden, like the people that got attracted to it were, there was a lot of people. And then I started getting dms on Twitter basically saying, Hey, if you would do this in a newsletter, I, I would subscribe. And then one of my colleagues was like, well, let’s do the newsletter. And in the newsletter, why don’t we say, hey, would you like a book? And that’s what happened. Literally, we iterated, iterated, iterated and ended up publishing the book.

Barry Ritholtz: Huh. So that, that’s really interesting that that’s the genesis of the two thoughts. When you’re picking a pair of thoughts from the same author, are you looking for things that compliment each other? Are you looking for their, their most two most profound statements? How are you selecting A and B for this author?

Jim O’Shaughnessy: Yeah, it’s, it’s a little bit messy to be really honest, because I’ll usually start with the notebooks that have all my handwritten quotes out when I copied the quote over. And sometimes I’ll think, Ooh, I found like the perfect one quote from this author, and then I’ll spend some time going through the rest of their work, et cetera, finding one that would compliment it. But then sometimes some of the best two quotes that work the best, they don’t compliment each other. In other words, it’s kinda like, hey, you know, history rhymes. But then the second quote is, but always keep your eyes on the horizon. Right? Like, hmm,

Barry Ritholtz: Two very different, two very things

Jim O’Shaughnessy: Different things, different things. And so IIII, I wasn’t precious about it at all, literally, because it just grew out of me throwing two quotes from the same author up on Twitter. And so, you know, after the fact people start asking like, well, did you plan it that way? And the honest to God truth is no, I did not.

Barry Ritholtz: It was organically grew outta it organically. Hey, if you do something, my experience has been tacking into what works. Yeah. And you know, it, it’s not quite direct mail

Jim O’Shaughnessy: Hey, we’re getting a response from this. But not that, it’s not exactly an AB test, but hey, people seem to like this, let’s give them more.

And, and that’s what happened here. You know, like one of the best growth factors in investing is momentum. And if you see something gaining momentum, this is, this is a really important idea for me. I always listen to the market because if I have one opinion and the market has a different opinion, I’m wrong probably most of the time. And so momentum in this regard, you see all the dms increasing. Hey, when are you gonna do the book for this? Hey, where’s the newsletter? Et cetera. And I’m like, okay, this is, this is truly emerging from beneath, not from me saying, you know what, I’m gonna do a two quotes book and it’s gonna be great. No, this was all others in the marketplace saying to me, Hey Jim, do a two thoughts book

Barry Ritholtz:  a grassroots groundswell. So, so let’s talk about knowing that you’ve had all these quotes over the decades. How did you begin to think about organizing this? Just quotes, we, we, this Bartlett’s book of quotations and that’s alphabetical. Yeah. And you know, that’s a research piece, but you’re putting this out as less of an encyclopedia and more of a nonfiction. How’d you think about how you wanted to structure it and organize it?

Jim O’Shaughnessy: We went back and forth on that forever. And then we decided, okay, let’s, let’s separate it by broad groupings like thinkers, writers, authors, you know, dy Dynamos, people who founded companies and were incredibly successful. And we, in the hardcover of the book, we made sure that each one was color quote coded. Because really the book is not meant for you to sit down and read all the quotes in it. Right. It’s really meant to have on your coffee table, have on your desk and just open it up randomly. It’s what I do. And just read the two quotes. ’cause you’ll see two quotes on each page and kind of think about them. And because people are, and by the way, that’s the way everyone I’ve ever talked to has a copy of the book. That’s the way they’re using it. And, and so it was the kind of the, you know, a lot of people do morning pages do that kind of thing in the morning. They write and the number of people who’ve either emailed me, texted me or dmd me on Twitter saying, I absolutely love this for my morning writing. Right. Because they’ll open it randomly. Right. They’ll, they’ll contemplate the quote, they’ll write it at the top of their, their morning writing. And then that’s what they talk about.

Barry Ritholtz: It inspires them. So based on that, let me suggest we need a two quote a day desktop calendar where you like, do you remember those old ones? Of course I do. Where you just pull, you know, just, it was almost like a giant pad of mine

Jim O’Shaughnessy: PostIt notes. Mine was a far side calendar.

Barry Ritholtz: I was about to say that. I still have in my head, the School for the Gifted, where he’s pushing on the, and the door says pull.

Jim O’Shaughnessy: I had that exact same calendar Calendar. Exactly. Exactly.

Barry Ritholtz: I had one of those and I had a Calvin and Hobbes and it’s just a different one every day. Another

Jim O’Shaughnessy:  One of my favorites

Barry Ritholtz:  Ab absolutely. That’s so funny. So let’s talk about what are real quotes and, and what are not. And I have a very vivid recollection of putting a quote that supposedly was Thomas Jefferson in Bailout Nation. And like a year after the book was published, I got an email from someone saying they like the boat, the book PS this is an urban legend. Thomas Jefferson never said this. And that’s how I ended up eventually tracking down quote investigator. ’cause I was so horrified. And one person said something, nobody ever mentioned it again. Yeah. And it was like, all right, so the good news is, the bad news is what a screw up the good news is. Nobody noticed. How did you go about the process of validating and verifying that the quotes were real and genuine? It’s not just Mark Twain, it’s Albert Einstein and George Carlin. Yeah. Oh yeah. Apparently said all these things they never said. Right. Compounding is the eighth wonder of the world. World. Right. Einstein never said that.

00:32:56 [Speaker Changed] Yeah, no, I know. So there I was very lucky to have a very diligent team and they identified a host of sources. We used quote investigator, but we used others as well to try to get the veracity of the author and the quote. Right. Now, having said that, I’m sure that there are still some examples in there where we got it wrong. Right. And so we even put a little thing in there saying, you know, all errors, Hey, we did our best. Yeah. All, all errors are our own. Right. But philosophically, I have a little bit of a different view of this. I I think that we all too often, because we, we anthropomorphize things to the extent where if Albert Einstein said this right then it’s important. I, I invert that and I say, it doesn’t matter who said this, let’s stay with the compounding as the eighth wonder of the world. Right. You know what you and I know that’s true.

Barry Ritholtz: It actually is true. Right.

00:34:02 [Speaker Changed] We know that’s true. And so what’s more important, that idea getting into somebody’s head or that Barry rid Holtz or Jim O’Shaughnessy actually said that to me, it doesn’t really matter. Now I’m not trying to diss the people who wanna be exact, they should be that you wanna be accurate and you, you wanna be accurate. Absolutely correct. But with me, it’s always more like I’m fascinated by the thought or the message that’s being communicated. That’s what I want people to focus on. Now, obviously, we want it to be attributed to the right person. You know, Banksy had a really funny quote. I, I don’t think we put it in the book, but I put it up on Twitter a lot and it’s, any kind of philosophical statement sounds better if you put the name of a dead famous philosopher after it. And he put Plato and then, and then waved beneath it. He wrote No Banksy. And so I thought that was really funny. But you know, that’s probably what’s actually happening, right? It’s like, hmm, I want people to really take this seriously. Right, right. So I’m gonna make sure that Einstein said this doesn’t, so that doesn’t, you know, it doesn’t add to what the, what the thought is inspiring in you.

Barry Ritholtz: ] You know, that kind of reminds me of the Abe Lincoln line. Don’t believe everything you read on the internet. Right. But let me, let me invert the question. In your research process, did you find a quote that you knew and loved and thought, oh, this is great and it fits this person so well, and then subsequently you discover, oh, it wasn’t by that person. Yes. Any, any come to mind?

Jim O’Shaughnessy: Well, we had quite a few actually, Eleanor Roosevelt quotes  that were not Eleanor Roosevelt really. And we had a lot of, well, not going back over the obvious ones. Einstein, you know, Twain, Carlin Twain, George Carlin, Oscar Wilde, et cetera. And if we love the quote, we would put it in under the actual author’s name. And I can’t, I can’t think of one that’s great right now where we did that. But it’s really funny too, because the reaction, we did this, we did a test, we, on our company Slack, I put the same quote when we found one of these, and it was originally attributed to Eleanor Roosevelt. And it actually ended up being a woman who was a friend of hers and often in the White House, but who no one had ever heard of, at least no contemporary person had ever heard of. So I, I put ’em both up on our company Slack. And I said, what do you guys think of the first one? Lots of emojis and everything. And then I put it up with the other woman’s name,

Barry Ritholtz:  The less famous, the author, crickets.

Jim O’Shaughnessy: actual author, crickets. And so to me, there’s obviously something being activated in our brain that says, Ooh, must be important. Right. ’cause Eleanor Roosevelt or Albert Einstein said it. And I always try myself to be neutral on that. I always try to focus on what is being said, not who is saying it.

00:37:26 [Speaker Changed] And, and to give you the behavioral finance spin on that, that’s the halo effect. You’re giving credit to a person for success in one area, and you’re allowing that to spill over to the quote whether or not they said it or not. Exactly. It’s not quite social proof, but hey, if it’s Oscar Wilde or Mark Twain, we know they were wordsmiths and brilliant. And hey, if they said it, it must be

00:37:52 [Speaker Changed] Valuable. It must be good.

00:37:53 [Speaker Changed] Right. Or, or, and I wonder if that’s why people, you know, attribute thing to, to George Carlin and to say nothing of of Einstein. So, so you co-wrote this book. Tell us a little bit about your co-author, Vatsal Kasic. How did you guys handle the, the workload? Did you, was he more organizational and you more philosophical? I know you’re deep down inside a philosopher. Te tell us, how did you go about putting the work together?

00:38:22 [Speaker Changed] So Vatsal was the first employee of Infinite Loops, my podcast. And he is an amazing guy. He is multi-talented, he’s a great builder of tech. But he also reads extensively. And it was actually Vasel who came to me and said, okay Jim, you’ve got all these guys and women texting you saying we want a book. He goes, let’s do the book. And so what he handled was almost exclusively the vetting, the process of making sure who I had attributed the quote to was correct. But then he also did a bit of curating. You know, he decided with ultimately my approval, you know, we don’t think this group really goes in there. We’d much prefer this group. So he was very instrumental on the actual curation of the quotes where I was, as you say, much more philosophical. If there was one that I absolutely loved and he just wasn’t finding, finding a place to fit it in, then I would say, well try harder.

00:39:39 [Speaker Changed] Alright. So, so I know, I know there are certain authors you really appreciate, but I’m curious what thinkers, what philosophers, what books found their way into the gestalt of this book? What, what really influenced your approach to this?

00:39:59 [Speaker Changed] So it was not necessarily because hint, there’ll probably be another version of this book coming out. It could be 10

00:40:08 [Speaker Changed] More versions of

00:40:09 [Speaker Changed] This book, right? So some I held in abeyance because I really wanted them to go into the second book. But, you know, I admire greatly all of the age of enlightenment authors and thinkers. You know, your Adam Smith’s, your, you know, all the, the people who were like, wait a tick, we, we could actually do things that we might call the scientific method and really test all of our beliefs much to the chagrin of the ruling churches of the time period. And so, Voltaire always big, big fan of his work. And you know, but I, I didn’t go at it from that vantage point, what I really wanted to do because of the nature of the book. In other words, I never expected anyone to sit and go from the front page to the last page. Right. If I had, I would’ve done it differently then I would’ve tried to tell a story, an overall story with the quotes, something we might actually try with the, one of the next versions of the book. But with this one, since I knew I wanted it to be kind of a jumping off point for people to get an idea to think about it, I just was very much not, you know, I’m not gonna make it obvious and I’m not gonna follow them in sequential order or you know, this group all are together and absent from other places in the book. So yeah, I mean like, you’ll get a very good idea for some of my favorite thinkers by just looking at who I’m doing quotes by.

00:41:56 [Speaker Changed] Why a book, why not some other media? You’re so, you know, digital forward and have been for a long time. I, I always find I like physical books, but you know, you and I are from a earlier generation, everything seems to be moving in a different direction.

00:42:15 [Speaker Changed] It is. But number one, like if you look at Ojay Ventures, it’s everything that I love, like Infinite Books, the publisher, infinite film, I love movies, the Fellowships, which you know all about. Sure. But I think that it’s not just people of our generation who like beautiful books. In fact, the people who were the most excited about it were younger people. Oh really? ’cause we took a great deal of care to make it beautiful. And we had the printer from Italy do the printing and it’s got color and the spine isn’t glued. So the number of younger people, and when I say younger, anyone probably under 35, the notes that I would get saying, this is the most beautiful artifact. And I heard that term more than once. Artifact. Artifact. So there, so one was a friend, and so I called him and I’m like, why are you calling this an artifact?

00:43:23 And he goes, because I’m beginning to look at these hardcover books as works of art. Right, right. And, and so that was surprising to me. But I love, I love books. You know, I I I have big libraries at my house. What I mostly, by the way, Barry read on Kindle for iPad. Really? But if I love a book, I always buy the hard copy. And if I really love a book, I buy the hard copy for my library and three paperbacks to give to friends. Huh. And, and so one of the things, it’s kinda like vinyl, right? We grew up on vinyl, that’s how we made our mixed tapes, everything else, right? But guess what, a lot of young people are going back and sampling vinyl. So I guess that everyone seems to like it.

00:44:14 [Speaker Changed] There’s there’s a certain tactile Yeah. Feel I I used to love the Me too all the album art. Oh. Which not only do you not get with the same way with small CDs, but when you move to streaming, you don’t even know the names of half the songs on an album. ’cause it just all kind of comes through at

00:44:35 [Speaker Changed] Once. It’s a different experience.

00:44:36 [Speaker Changed] Yeah, very much so. So let’s talk a little bit about both O’Shaughnessy Ventures and os a, I sort of look at them as part of a continuum on your, on your career. You let your son Patrick take over as CEO of, of Shawnessy Asset Management. He was a key driver of Canvas, which was built on top of a database that you’ve been refining since the 1990s is and do I have that right?

00:45:06 [Speaker Changed] Yeah, yeah. And actually you might remember I started the first online investment advisor called Net Folio. That’s right. In 1999, 2000. I was just, you know, 23 years too early. And I also made the mistake of making a B2C, whereas that’s supposed, that was a, a huge mistake should have gone B2B because I later learned, you know, I was a level playing field guy and like people couldn’t just buy their no loads and everything. But the more the data presented itself to me, the more I came over to the side where advisors are earning every dollar, you pay them. Right? Because the results, the outcomes were just so much better. So we started building the tools that became Canvas during the great financial crisis. I’m like, okay, we’re probably not gonna sell another long only US stock portfolio for the next three years. So let’s really attack the data.

00:46:10 Let’s clean it. By the way, really hate it by my research team for that entire period. Right. Because it’s really mind-numbing genius. Yeah. Bad. But by the way, now that’s a great use case for ai. It can do it much faster. It can do it, you know, you, you can free your staff to not have to do that laborious mind-numbingly dull type of work so that they can work on better research, more interesting topics. But yeah, and as we were doing it, and Patrick walked into my office and he is like, you know, dad, we, he actually did say this to me and I know it became Lore, but he goes, we built the Death Star to kill a mouse here. And I am like, what do you mean? He goes, well, our, our clients, the, the Riol Wealth Managements of the world could, could use this and it would be amazing for their business. Now obviously, because I had already tried with Net Folio, I was like, let’s do it. So yeah, building out the actual technology though, that was a multi-year effort. It took us a long time.

00:47:27 [Speaker Changed] What, what, you know, I you, our mutual friend Dave Ick has been a supporter of direct indexing and ETFs obviously for a long time. And my complaints were always Yeah, but it’s Klugy. Yeah. But I get these 200 page, you know, quarterly appointments and it’s not very fine tuneable. And, and I’ll never forget when BATNA came back to the office having seen a demo, he, he, if he had hair, it would’ve been on fire. Like that’s what it was. That’s what it was. Like. He was jumping up and down and just the demo is like, oh wow, this is slick. And wow, this really looks good. I can’t believe it’s that definable. It’s that user. And like the deeper you went into it, it was just every step along the way, there was a ton of stuff. What was the vision when you originally were building this? Was it, Hey, let’s pump this up and sell it, because I know you guys never were really shopping this around. Yeah, no. Kind of fell out of the blue.

00:48:31 [Speaker Changed] Yeah, no, we, we, it was not to pump it up and sell it at all. It was, we wanted to have the absolute best software for the way we managed money. And there was really nothing off the shelf that suited our needs. And so we put on a pretty significant developer team that had background in portfolio management. This is key. The problem with just a technologist trying to come into our industry and build a platform like this, they don’t know all of the junk that goes on underneath we do. Right. Because that’s what we do. Right? They, they don’t think about, well who’s the clearance agent, who’s the custodian, all of those types of things. So by actually having people very, very, with very deep domain knowledge in asset management and the way it really works, that was a huge help in us building out the software. But the original thing Barry, was we wanted to serve you our clients better and faster. And then when we saw that the customization that the tax management, that all of that would be really appealing to not only our advisors but to our advisors clients. That’s when it clicked. Wow. Like kind of our AWS moment was, huh, we think other people might really like this too.

00:50:02 [Speaker Changed] No, abso absolutely. The, the tax side of it was a game changer. And when I was doing some recent research for another project, I just started going through the list of trillion dollar asset managers that either bought or built a direct indexer. And when you see 10 or 20 of the largest firms in the world all moving in the same direction, Hey, pay attention.

00:50:25 [Speaker Changed] Something’s going on in space, space, customization is the future. Yeah. We are absolutely, we are leaving one size fits all. And the ability to customize your client’s portfolio down to their specific needs is re it really is a game changer. Especially on the like tax alpha that you can generate.

00:50:48 [Speaker Changed] So you mentioned you were AI earlier, I know you’ve been appointed chairman of the board at Stability ai.

00:50:55 [Speaker Changed] I was.

00:50:56 [Speaker Changed] Oh, so that’s no longer, so let me rephrase that question. So you mentioned AI earlier. How do you see AI transforming either the investment management industry or venture capital? What is the role of AI gonna be going forward?

00:51:12 [Speaker Changed] I I truly believe that AI is the most powerful technology that has ever come on the scene during my career. Wow. And it is going to be used primarily for replacing arduous, boring, mind-numbing type activities that humans are currently doing. The AI can do, let me give you an example. In our publisher, if you work with a legacy publisher, you’re done with your manuscript, you send it in, you probably had this experience.

00:51:48 [Speaker Changed] Typos, typos. Typos,

00:51:49 [Speaker Changed] Right? Typos, typos, typos. But it didn’t get back to you probably for a couple of months, right? With Infinite Books, it’ll probably get back to you the next day really, because we have an AI that takes all of those typos, fixes them, it prints it in galley format because non auths might not believe this, but an author, when they see their work in the way it’s gonna look as a book, it kind of freaks you out. You, you start reading it differently. Very much so. And so we’ll have that, that will go back to the author. All the typos will be gone and any incongruity in the manuscript will be noted. We won’t touch it because we wanna leave it to the author to make whatever changes they want. But if it says, Hey Barry, in chapter one you said this, but in chapter four you said the exact opposite thing, which one do you want? And then finally we’re, we have plagiarism routines where, you know, a million little pieces where you have to go on and get scolded by Oprah, well should never happen again. Because sometimes people aren’t plagiarizing intentionally. They are maybe doing it from memory, something they read, et cetera. And wouldn’t it be far better for everyone concerned if you just bring that to the author’s attention and they can fix it.

00:53:15 [Speaker Changed] So you have a lot of interest. So it’s not just venture investing, it’s ai, it’s publishing, it’s fellowships where you find somebody who you sponsor for a year and you know, sort of a MacArthur GR genius grant. Where can you go, what can you do with this? You know, where do you really focus your time and effort? What most interests you?

00:53:41 [Speaker Changed] So I’m gonna cop out and give you the answer. All of it interests me, Barry, or I wouldn’t have it true, but I’m very lucky in that we have a senior person at the head of each one of these verticals. And so I let them, I’m, I’m very big on hiring people with super high agency and who are really, really bright, mostly brighter than me. And I let them run with what they wanna do. They always keep me informed as to, hey, we might be trying this big change. And then I sign off there. But I mean, basically the verticals were all areas that I loved. I loved movies, I love books, I love media, I love podcasts, et cetera. And they were also areas where I felt that there was a lot of arbitrage opportunity available. For instance, like most legacy publishers are operating under best principles, but they’re operating under the best principles from 1925, not 2025.

00:54:48 And so there is so much that can be improved in the process to make the author a good deal. Happier to make the reading public have access to their authors work sooner than they might otherwise. But also because of the technology, we are able to offer a much better deal to our authors. Our authors typically will take 70% of the royalties Wow. After the costs have been cleared. So we can still make a great deal of money at the 30% that we maintain. But there’s also cross pollenization, right? There’s a great podcaster who is gonna be a great author, there is a great author who might be a great podcaster, or we’ll do the whole thing for them. We’ll set ’em up on a substack, we’ll give them a podcast, we’ll publish their book. What we really wanna focus on is ideas that ended up in slush piles in days of your, a lot of great writing is there. And so we want to be able to not only see that, but publish the best of it.

00:56:03 [Speaker Changed] So you’re publishing books, you’re hosting your own podcast, infinite Loops. I’m kind of intrigued by the idea of investing in movies, which tend to be a black hole of losses. You know, it’s like restaurants, plays and films.

00:56:23 [Speaker Changed] Tell

00:56:24 [Speaker Changed] Us what you’re doing

00:56:25 [Speaker Changed] Cinematically. So cinematically we started, I, our, our little mantra is crawl, walk, run. And so, you know, it, it was odd for me because, you know, I had a very established reputation and asset management. And here I’m the total underdog. I I, I mean like we are the rebel alliance, if you will, going up against some very, very tough competitors. So on the film side, we started with documentaries. One of our first flip side actually premiered at the Toronto Film Festival. Got amazing reviews, got bought out by a distributor. And so that went very, very well. We are now commissioning documentaries with some younger talent that isn’t really bound up by the way Hollywood currently does things. And by that meaning a little

00:57:21 [Speaker Changed] More nimble, light,

00:57:22 [Speaker Changed] Fast, responsive, much more nimble, much faster, much more responsive. Someone

00:57:28 [Speaker Changed] Had shot a film on an iPhone sort of as a little bit of a publicity stunt on, I wanna say, eight or 10 years ago. But that’s really very feasible today, isn’t

00:57:40 [Speaker Changed] It? Oh, absolutely. And when you add in all of the things that Ai, I mentioned all of the laborious stuff that you get rid of with publishing, same is true in film. So this is gonna sound weird, but you know what eats up like huge amounts of time and is ridiculously boring color matching really. When, when things are filmed over a variety of days or locations or what have you, one day is cloudy, one day is sunny. You’ve got to have that matchup so that your film appears of a piece.

00:58:16 [Speaker Changed] So it’s more than just continuity.

00:58:19 [Speaker Changed] Absolutely. It’s, it’s the next step beyond that. It’s the next step beyond that. And there’s just so much that can be done with, with the visual part, with the editing ais that we have always gonna have a human editor. But we are giving them tools that just makes them able to do their job in a, a much more creative way. Because they don’t have to take that hour or two hour and, and do the ly, oh I’ve gotta move this to here and that to their, they literally can press a button and it happens. So what we’re finding is a great amount of the workflows in these industries are time consuming, boring, and just like they take forever. And we can fix that to the point where they no longer take forever. And the people we’re working with absolutely love it because they can spend their time making that edit like Supreme, right? We’re giving them back time that they can use artistically.

00:59:30 [Speaker Changed] So, so many people have been pessimistic about ai, it’s gonna kill jobs, it’s going to damage society. You won’t know what to, to do, to believe, to trust we’ll all be outta work. I don’t get the sense that you’re looking at AI that way. You seem to think that this, or it sounds like you are finding this is just an incredible useful tool and it’s gonna make all of us more productive and more

00:59:57 [Speaker Changed] Creative. Precisely. You know, we always get frightened when some new technology comes on the scene. And by the way, this goes back forever. Like when

01:00:06 [Speaker Changed] The Ludite right,

01:00:07 [Speaker Changed] The Luddites right? It goes back to Ned Lud and, and who broke up all the machines? ’cause they were gonna take their jobs while he ended up working on one of those looms and he vastly preferred his new job because he didn’t have to do it the old horrible way. Same thing’s gonna happen here, but it happens all the time, right? So when records first came out, you know, that symphony orchestras took full page ads in newspapers saying that isn’t real music, real music is live and you have to hear it live or you’re listening to a counterfeit, right? So when this type of advance comes along, you always axio magically, people get freaked out. I think, you know, AI is not gonna take your job a human being using the AI tools will because they are going to be so much more proficient at what they’re doing.

01:01:05 They’re gonna have so much more time to focus on the really high value stuff and not have to worry with all the stuff that, you know, they had to do in the past. But now we can automate it through AI workflows. So a i I subscribe to what they call the C model. You remember the Mythical Beast? Sure. Half horse, half man. That’s what is gonna happen with ai. It’s going to be AI plus human being. That’s where all the great stuff is gonna come. Right now we’re gonna see a tsunami of slop that’s gonna be just AI generated and people will think, oh, that’s good enough. Right? And so going forward you can create a huge edge by having good taste and curating it well, right? Right. But I can guarantee you almost all of that is going to be human using AI as a tool to make their jobs better, easier, more creative. The way I look at it is, you know, Steve Jobs famously said, computers were bicycles for your mind, AI is a rocket ship for your mind.

01:02:18 [Speaker Changed] Huh? I I like the way you you phrase that. You know, someone once asked me, you know, what’s the secret to putting out the daily reads? And my answer was, curate viciously.

01:02:30 [Speaker Changed] Exactly. And

01:02:31 [Speaker Changed] You, you know, ai, I don’t think in our lifetime and probably not our kids’ lifetime is gonna reach the point where it can be a taste maker.

01:02:40 [Speaker Changed] We believe, passionately believe that if you have good taste and you are a great curator, your future looks incredible

01:02:50 [Speaker Changed] Really.

01:02:50 [Speaker Changed] ’cause you’ll be able to use these tools. You won’t have to spend all the time that you used to. And that’s gonna even make, it’s gonna be the rocket ship to give you, get you to the next level of your good taste and curation.

01:03:03 [Speaker Changed] So a couple more questions before we get to our final question. And that is, first I have to ask you about the O’Shaughnessy Fellowship. What, what I’ve been calling your MacArthur award. Tell us a a little bit about the support you offer for young entrepreneurs. What inspired you to start this program? I know we’ve had at least one Oh Shaughnessy Fellowship person, Kyle Scanlan as a guest on the show. Maybe one other, I’ll have to go through the list and, and see what, what motivated you to create this program and, and how has it been running?

01:03:43 [Speaker Changed] So it’s running really, really well. We have the applications, we’re now in our third year, the applications are much more numerous and the quality of the applicant, I mean, Barry literally, if I could, I I would give most of them them fellowships, right? But the, the real reason that I did it was because I had become convinced that geography, time and space have all collapsed. And in the old days, you know, you and I would know each other still because we both live here in New York and we both are in the same business. But other than that, like prior to the internet, prior to what I call the human colossus, we couldn’t find those geniuses elsewhere. We can now. And I believe that it is absolutely imperative to show the world that there are a ton of brilliant people in this world, many of them young, who don’t have an opportunity to demonstrate what they have to offer to the world.

01:04:51 Now we can find and more importantly, fund them. And the way we do it is, it’s totally no strings funding. So if you’re a fellow, you get a hundred thousand dollars over a one year period to work on your project. If you’re a grantee, you get 10,000. We have obviously many more grantees than we have fellows, but just the blossoming of the way the groups work together, like, I thought that it would take us at least five years to build like a really cool network of super smart switched on people. It’s already happened. We have, we have gr we have in-person meetings once a year. And the last one we had, I’ll just give you a quick example. We, we have a scientist who is developing an in-home way to test your baby’s poop to make sure that it’s okay. She had no idea how to market this.

01:05:50 Another fellow was sitting right next to her. He’s a writer, he’s a thinker, and he knows all about this. And literally he, over the course of an hour and a half, he gave her a completely different marketing plan that she adored. She came over to me and she said, I can’t believe that in an hour and a half, he totally changed the way I’m gonna bring this to market. Huh. So the, the cross pollinization and the synthesis of these great minds is really a thing to behold. I, I’m just very, very excited about what’s coming out.

01:06:27 [Speaker Changed] And, and before we get to our favorite questions, I wanna throw you a curve ball.

01:06:32 [Speaker Changed] Curve ball.

01:06:33 [Speaker Changed] So, since we first met back in A-C-N-B-C Green Room in the early two thousands, so a few decades ago, you’ve had a fairly unique perch on the world of finance and investing and asset management. How has financial media and asset management changed over the course of your career?

01:06:58 [Speaker Changed] Well, at the beginning of my career, kind of squawk box on CNBC was the gold standard and the format they used at that time, I used to co-host with Mark Haynes all

01:07:11 [Speaker Changed] The time. Sure. I’ve done that a few times.

01:07:13 [Speaker Changed] Back then, it was a three hour program in which the portfolio manager or the strategists that we were talking to was given like 20 minutes

01:07:24 [Speaker Changed] I recall to

01:07:25 [Speaker Changed] Actually articulate their thesis about why they were bullish or bearish, why they liked this particular group or that particular group. So one of the things that I saw happening when that changed was we were not giving the audience like that kind of treatment, which is really a really incredible treatment. It was a three hour period that gave you enough time to actually talk things out. Now what’s happened, podcasts like yours clearly have come along and you’ve replaced that aspect. And so, you know, I would bemoan when I saw that happening with Squawk, especially, oh, I would really wish that they could return to the old format. But then you and many, many other, my son with advice, like

01:08:17 [Speaker Changed] The best right. Patchy Absolutely.

01:08:18 [Speaker Changed] Came in and filled the void. So I think what investors are able to get access to now is just, it dwarfs are the early days when you and I met in that green room. They have so many podcasts they, they can choose from. They can, they can still watch financial media, then there’s the YouTube people, right? But like everything, you’ve gotta aggressively curate somebody like you, you know, you’re way up here and you’re kind of the gold standard. But it, how many shows have you done? You’ve, you have proof of work?

01:08:54 [Speaker Changed] I’ll, I’ll tell you a funny story. So we’re July will be 11 years. It’s 550 shows. The origin story, I don’t know if I ever told this on my own podcast. I’m pretty sure I’ve told it elsewhere. It’s coming back from a conference in Vancouver, Canada. And I had to either change planes in Chicago or Montreal. I don’t remember coming back to New York. And I, I’m in the lounge and I wanna say it was CNBC and they were interviewing Bill Ackman. I could be wrong, maybe it was Einhorn, I don’t remember. But it was a fund manager like that, who back then was not, there’s no Twitter, they weren’t doing a lot of tv. They’re like, you really don’t go on TV unless you were marketing or had a really good quarter. And I just remember hearing the worst, like it was a five minute hit, not a 20 minute hit.

01:09:54 That’s right. And when you have five minutes, it’s what’s your favorite stocks when the fed’s gonna cut? Where’s the Dow gonna be next year? Thanks for coming by. And the moment that guy walks out of the building, those answers are stale. Totally. And so, so I was flying back after you changed planes, I bumped into a friend and I was kind of like grinding my teeth. And he’s like, what, what’s on your mind? You look like you’re annoyed. And I relate the story. And he said, what questions would you ask? And the questions we’re about to ask, I’m about to ask you. Those were some of the questions. Who are you? How’d you get that way? What are you reading? Who are your mentors? How did you develop your philosophy? If you were giving me advice as a college grad, what would you tell me if I wanted to go like just off the top of my head? Sure. Just because I wanted the person to have to use the word you used earlier agency and control over the story, but also express what they’ve learned over the decades. Exactly. And 30 seconds doesn’t, doesn’t give you that. So on that note, let, let’s jump to our speed rounds. All right. And do our, our favorite questions that we ask all of our guests. I think this is probably the third or fourth time I’ve had you do these.

01:11:12 [Speaker Changed] I hope I don’t give the same

01:11:13 [Speaker Changed] Answers. So, hey, listen, we’ll have AI go through it and find out how your, how your thinking has evolved.

01:11:18 [Speaker Changed] Let’s describe that. There we go. I love that. Right?

01:11:20 [Speaker Changed] So starting with what’s keeping you entertained these days? What are you watching or listening to?

01:11:26 [Speaker Changed] So mostly listening to the normal group of podcasts that you would, yours, my son’s on my own. But do you find

01:11:38 [Speaker Changed] Listening to your own is a challenge in that it sucks up time that you can’t listen to others or you don’t wanna listen to somebody you’re going to interview and you don’t want someone else’s questions

01:11:50 [Speaker Changed] In your head. So, so, so my dirty little secret is that I very, very seldom listen to my own. I do read the transcripts, right. Just to make sure, Ooh, I really screwed that up. I gotta fix that.

01:12:03 [Speaker Changed] Transcripts don’t come across the same way as Yeah. Know.

01:12:05 [Speaker Changed] I know, I know. But I, I prefer to give my active listening time to like your podcast and, and Patrick’s in terms of reading. I continue to read very, very broadly. My favorite sort of literary fiction author is David Mitchell, who wrote Cloud Atlas. Oh really? And I’ve started reading Made

01:12:27 [Speaker Changed] Into a movie.

01:12:27 [Speaker Changed] Right? Yeah. Yeah. The book’s much better than the 01:12:29 [Speaker Changed] Movie. Someone else said that. Yeah.

01:12:32 [Speaker Changed] And I love Howard Bloom’s work. You know, the, he’s 01:12:36 [Speaker Changed] Closing of American Minds.

01:12:38 [Speaker Changed] No, no different guy. Sounds like, right, right. But Howard is a very fun, eccentric genius who’s sort of started life as a scientist and now takes all of what he learned there and applies it to the social world or the business

01:12:53 [Speaker Changed] World. Closing of the American Mind, or entertaining ourselves to

01:12:56 [Speaker Changed] Death. No, no, no. One of his would be the Lucifer Principle. Oh, really? About how all of our evolutionary things that are driving a lot of our actions have profound implications for markets, for societies, for all of these things. And like, he’s got a great book, taming Re-Imagining the Beast, where he talks about capitalism. Huh. Saying, Hey, capitalism is hands down the winner, but we can still improve it and we should improve it. And here’s how I think we should. So love his work, read pretty much any paper I can get my hands on, having to do with advances in AI and, and that sort of thing. For fun, I just saw the new Bob Dylan movie Loved it. And

01:13:50 [Speaker Changed] A complete unknown.

01:13:51 [Speaker Changed] A complete unknown. And I also loved the way Timothy Chalamet the lead in that. Yep. I loved his speech when he got up and said, you know what? I could say, ah, shucks, and I’m nothing, but I wanna tell you something. I am aspiring to great this, I wanna be great. And I love actually seeing the younger generation start saying things like that because it’s so, for so often, you know, we, we, you know, oh, wasn’t really anything. Come on. False

01:14:23 [Speaker Changed] Humility.

01:14:23 [Speaker Changed] It’s false humility. It’s just, it’s like 01:14:25 [Speaker Changed] It stands out,

01:14:26 [Speaker Changed] Doesn’t it? Right.

01:14:27 [Speaker Changed] It jars when you hear it, jars come

01:14:29 [Speaker Changed] On. It’s when you hear it, and it’s like, when I heard him give that speech, I’m like, right on. That’s what I love hearing from a young actor or a writer or whatever. I, hey, I aspire to this.

01:14:41 [Speaker Changed] Don’t we all aspire to greatness or least? So I think, shouldn’t we, we should. Like you got one bite of the apple, you get one run, make it, make it worth

01:14:49 [Speaker Changed] Something. Make it worthwhile. Yeah. And so I was very happy to see that again, just for total fun. I love Billy Bob Thornton. So we really enjoyed Landman.

01:15:01 [Speaker Changed] You know, you’re like the third or fourth person who told me how much they love that series. It, it

01:15:05 [Speaker Changed] Is so much, it’s just fun. And, and so you’re probably not gonna learn a lot by watching it. Other than that Billy Bob Thornton chews up every scene that he appears in. He’s such a good actor.

01:15:18 [Speaker Changed] Always is. Every time I see him in something, 01:15:20 [Speaker Changed] Me, me

01:15:21 [Speaker Changed] Too. He’s, he’s a delight. You know, you have such an interesting background. I’m curious if you had any mentors help shape your career?

01:15:31 [Speaker Changed] I did. I had a gentleman who was, when I was very, very young, I’m not gonna mention his name because some of his kids might be listening, but we’ll go with Jim. He was also a Jim and he probably did more for me when I was young and filled with, you know, vinegar and, and very definitive beliefs. And I will tell you all I’m gonna proselytize this is the way to do it. And he was really, really good at saying, Jim, you might want to take that a step back because what do you really want? Well, I want people to know about this. Okay. But what’s the broader implication here? Process over outcome. Okay. Well why don’t you talk a little bit more about that. Why don’t you talk about the way that people can actually take what you’re saying to them and make them useful in their own life. So he, he was an amazing mentor to me because he was very patient, wicked sense of humor, and always good at reminding me that you might wanna take it back a notch or two.

01:16:45 [Speaker Changed] That’s great. Let’s, you mentioned a few books. Any other favorites you wanna mention before we get to our favorite questions?

01:16:53 [Speaker Changed] The, the what? Let me reference our infinite books. We have a, a list that you can get anywhere. It’s, you can go to Twitter, you can go to our substack, and it’s kind of our seminal books, you know, books like The Beginning of Infinity by David Deutsch, I think is a masterpiece beginning

01:17:12 [Speaker Changed] Of Infinity.

01:17:13 [Speaker Changed] Infinity by David Deutsch, who’s a quantum physicist in the uk. I love all of his work, but I also think people should be reading things like the, my Perennially read the Do de Jing by lasu packs a Wall Up Man because you can read the whole thing in an hour. Right. But I used to joke, you know, I started reading that when I was 18 and I read it every year, sometimes multiple times every year. And I finally started to understand it when I was about 55. Right.

01:17:44 [Speaker Changed] I was gonna say, it’s a different book each time you read it.

01:17:46 [Speaker Changed] It really is. It’s like Haitis, you know, no man steps in the same river twice because it’s not the same man and it’s not the same river.

01:17:56 [Speaker Changed] Absolutely. All right. Our final two questions that we ask all of our guests. What sort of advice would you give to a recent college grad interested in a career in either investing quantitative analytics or venture capital?

01:18:12 [Speaker Changed] Understand the leverage that you get from all of the new AI tools. It gives you several advantages. The older people on those desks might not be rapidly adopting use of those tools. And if you walk into a job interview with some mastery of them, what they’re doing in terms of what they can uncover for like vc, for traditional, long only, or long short management is staggering. Get a deep domain knowledge there as it fits into your particular passion, be it investing or analysis, et cetera. But that would be my number one piece of advice. Wow.

01:19:05 [Speaker Changed] And our final question. What do you know about the world of investing today that would’ve been helpful back in the 1990s when you were first starting out?

01:19:15 [Speaker Changed] People don’t change. Markets change. And when I really, really came to understand that was after actually the great financial crisis. I went through the crash in 1987. I went through the other bear markets, but I didn’t really lock in on the fact that markets change millisecond by millisecond human behavior. Barely budges, millennia by millennia arbitraging human nature is the final moat.

01:19:55 [Speaker Changed] Arbitraging human nature is the final moat. That’s fantastic place to end it. Jim, thank you so much for being so generous with your time and for being just such a great colleague, mentor, source of wisdom. Like it’s been my privilege to know you my whole career. I, I remember, I wanna say it was like the late two thousands sitting at an outdoor in a Starbucks. Yeah. In I remember it Well, I remember it. Well, hey, don’t we know each other? Yes. And it was, it was just like one of those small world moments and you’ve always been just so thoughtful, so in inspiring and your insights, just, I know so many people you’ve had such a positive impact on it. It’s just a delight and a pleasure to know you. Well, right back at you Barry. I, it’s been my great pleasure knowing you all of these years. So, so this mutual admiration society has to come to an end. It’s a bro, it’s a bromance.

01:21:03 We have been speaking with Jim O’Shaughnessy, founder and CEO of O’Shaughnessy Ventures. If you enjoy this conversation, well check out any of the 500 previous ones we’ve had over the past 10, almost 11 years. You can find those at iTunes, Spotify, YouTube, Bloomberg, or wherever you find your favorite podcast. Be sure and check out my new book, how Not to Invest the Bad Ideas, numbers, and Behaviors That Destroy Wealth Coming wherever you get your favorite books. On March 18th, 2025. I would be remiss if I did not thank the crack team that helps put these conversations together. Anna Luke is my producer, Meredith Frank is my audio engineer. Sage Bauman is the head of podcasts at Bloomberg. Sean Russo is my researcher. I’m Barry Riol. You’ve been listening to Masters in Business on Bloomberg Radio.

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