Invest Like the Best with Patrick O'Shaughnessy
· Paul Tudor Jones, Patrick O'Shaughnessy
[00:00:00] S1: I get up at 6:15. I work ‘til seven o'clock, I go work out ‘til 7:45. I try to do 45 minutes of hard cardio every day. I get in front of the screens for the opening. I typically won't have any meetings ‘til 10 o'clock. And then I'll probably do meetings ‘til about 12 o'clock. Typically have lunch with someone. Have a meeting after lunch. Try to make sure that I've got an hour before the close and an hour after the close to be able to map out what I want to do the next day. Because again, I want to have a plan, as well as think what's gonna happen that night in Tokyo, Hong Kong. I'll go home around five, walk with my wife for an hour. Go up and work for an hour, come back down and eat. I'll normally watch the news and the most mindless entertainment that I possibly can. I used to read a book and a half a week, and then once the internet came, forget it. I’m so tired of reading by nighttime. I've read one book in the last year, which is gonna be – by the way, I recommend everyone read it – it's David Woo. He's a newsletter writer, but he has written what's gonna be a spectacular bestseller on globalization and markets. It's fantastic. And I'll bet you it gets made into a Netflix series and I bet you it's gonna be a banger. Anyway, I'll try to watch something on Netflix, then I’ll work from say 9:30 to 10:15, and then I’ll go to bed and I'll wake up at. [00:00:00] S0: 6:15 and do it again? [00:00:00] S1: No, no, no. I'll wake up at probably 2:30 or 3 and I'll work for half an hour. [00:00:00] S0: Oh wow.
· Patrick O'Shaughnessy, Paul Tudor Jones
[00:00:00] S0: Oh wow. [00:00:00] S1: Watch the London open for 45 minutes or half an hour. And I'll do a lot of analytical work then. It's a quiet time, it's good. Then I'll go back to sleep and wake up at 6:15. [00:00:00] S0: Wow. And you've been doing that for 50 years? [00:00:00] S1: Yeah, I’ve been doing that certainly since the eighties. I feel like I work so much harder than I did 40 years ago, 30 years ago. [00:00:00] S0: Because there's more information? [00:00:00] S1: Oh my God, I get 800 to 1000 emails a day. If I think about when I was a pit trader, I think about – even the '80s when there was so much less information – I could spend more of my time intently focusing on what the highs and lows were gonna be in the day, which are really important for execution. Doing what my boss Eli did – just waiting, paying attention, focusing. Are we at a point of maximum pain? Is there so much fear right now, which is a great time to buy? Does it look like it's gonna go up forever? A great time to sell. You have to be intentional to be able to pick those points in a day. And when you're trading 25 different instruments, instrument by instrument by instrument, a lot of times they'll be correlated. Sometimes they're not, and you have to be very intentional about that. So, if while you're doing that there's 48 emails coming in at the same time, all of which could be actionable information. I think today, for me at least, it's just a lot, lot harder I think. Because the information overload distracts me from exquisite execution.
· Paul Tudor Jones, Patrick O'Shaughnessy
[00:00:00] S1: Oh my God, I get 800 to 1000 emails a day. If I think about when I was a pit trader, I think about – even the '80s when there was so much less information – I could spend more of my time intently focusing on what the highs and lows were gonna be in the day, which are really important for execution. Doing what my boss Eli did – just waiting, paying attention, focusing. Are we at a point of maximum pain? Is there so much fear right now, which is a great time to buy? Does it look like it's gonna go up forever? A great time to sell. You have to be intentional to be able to pick those points in a day. And when you're trading 25 different instruments, instrument by instrument by instrument, a lot of times they'll be correlated. Sometimes they're not, and you have to be very intentional about that. So, if while you're doing that there's 48 emails coming in at the same time, all of which could be actionable information. I think today, for me at least, it's just a lot, lot harder I think. Because the information overload distracts me from exquisite execution. [00:00:00] S0: What does that mean? Exquisite execution.
· Patrick O'Shaughnessy, Paul Tudor Jones
[00:00:00] S0: What does that mean? Exquisite execution. [00:00:00] S1: Am I buying when there's blood on the ground and am I selling when there's complete elation? Let’s take last Friday where you had the largest down day in the history of gold and silver. So you have to be paying attention every minute, because when you have a 33% move in silver in one day, you just have to be so focused on that day's activity. What you're gonna do on the opening, what you're gonna do if the price moves through a certain price that you weren't anticipating that day. It gets back to what I learned in Bed-Stuy. You better have a plan. You better have a plan ahead of time, and it better be self-executing, and you better have thought through that. And I hear it from my other friends who are macro traders. They go, “God darn it. I just feel like I'm two hours late, three hours late.” And last Friday was a great example. It can be so material. [00:00:00] S0: If I think about what's required to do that day in, day out, there's gotta be an enormous amount of passion for markets and what you do. Can you just talk about the notion of finding, nurturing the importance of passion in a life's work?
· Paul Tudor Jones
[00:00:00] S1: It's so funny, when we talk about traders, great traders – and again, I'm talking about people who are alpha generators, not investing. We had a dinner about – I guess it was a year ago Christmas, and I had four or five of my best risk takers at dinner. And we had the debate, are great traders born or made? I'd say it was unanimous agreement at the table that 70% of it is nature. And when I say born with it – by the time I was 21, I loved games. I loved chess, backgammon, Parcheesi, Monopoly, Battle, Gin Rummy. You name it, I played it. Then I started gambling in college. I had a degree in probability theory and had never taken a math course on it, but I knew it. I was such a game fanatic, and I loved it so much. If I had to pick out the number one traits – Type A personality, incredibly curious and inquisitive. And loves competition, loves games. Because again, our whole business is just another form of probability theory. And I still love it today. I play bridge with my friends all the time. I can't get enough of that. I love any kind of game of chance. And I love trading. And the other reason that I love trading, I'll never forget – my wife's Australian and we first got married back in 1989. She said, “Well. I know you gotta live in New York, but I came from the beach. So when our last child graduates from college, you're taking me to the beach.” So sure enough, my son turns 18, my fourth child. 2014, we're going. So we ended up down here in Palm Beach. She gets me a GP. The GP, a general practitioner. She makes me go in, I see the guy and this guy's 83 years old and I say to him, “You're living here in the land of the walking dead. Everyone here is basically fossilized. What is the secret to longevity?” And he goes, “It's real simple. You retire, you die.” That had a really profound impact on me, because I realize as I get older, and maybe when you get older, you will too. If you don't use it, you're gonna lose it. And that's why I try to work out two hours a day. Another reason that I enjoy trading is I want to keep my mind sharp. Because there are too many things that I want to do when I'm – my father lived to be a hundred – when I'm in my nineties, that I want to do. So I think trading is great therapy for me. The other reason that I really enjoy trading is I'd like to make an absolute pot of money so I can give it away.
· Paul Tudor Jones, Patrick O'Shaughnessy
I got so many causes that I want to give it to that I actually feel like this is the pursuit of nobility. I feel it's a privilege to wake up and I just hope I freaking kill it, so I can give it away. [00:00:00] S0: Can you tell us the story of starting Robin Hood? You talked to us earlier about the charter school work and everything in Bed-Stuy. Robin Hood started the year after. It's a really important part of your life and legacy.