Invest Like the Best with Patrick O'Shaughnessy
· Paul Tudor Jones
[00:00:00] S1: Robin Hood happened the day after the crash. Maybe the worst macro call of my life was thinking we were going to go into depression. I thought for sure – I’d been looking at the parallels to 1929 for a year, all of a sudden it happens. I think, “Oh my God, this is a perfect replay, a perfect analog.” So I called up my friends and we began it. It has just been the most marvelous journey. I can't recommend anything more highly than getting involved with some cause that you believe in. The best part of philanthropy and charitable giving is the people you meet. Oh my gosh, I've met the greatest, most wonderful, most giving – it just brightens every aspect of your life to be associated with the best people, who embody the best ideals. We say we've gotta do something. So the only alternative at that – there really weren't any charities focused on fighting poverty, which I thought was gonna be rampant at the time. So, I've always believed if you want to do something, you're better off doing it yourself. So we started out very small, and we just applied basic business principles to finding the most efficacious way of helping people in need. Again, along the way, I'm learning by doing and making all these mistakes along the way, and I'm learning so much. And then I realized, boy, this is a science. And then we just started hiring the very best people that we could as our staff, and then recruited – it was so easy to recruit people from the financial world to help. The nineties were a special time. Everyone wanted to participate and give back and help. I don't know what it was, but my gosh, we created so many fantastic philanthropists in that era. In the eighties, it was completely different. Everyone wanted to be associated with the Philharmonic – and these are all great – but they wanted to be with the named social charities. And I'd say after the crash, everyone found their significance by helping others. Maybe it was just because that was when you really started to accumulate these big fortunes, individual fortunes for people. And they were just really, really wonderful about wanting to give back. And the whole financial community supported Robin Hood in such a spectacular way, and the whole hedge fund community in New York. It was really– it still is a joy.
· Patrick O'Shaughnessy, Paul Tudor Jones
[00:00:00] S0: If you think about the whole broad world, what feels the healthiest to you today about the system that is the world, that makes you the most optimistic? And where does it feel the most fragile? [00:00:00] S1: I'm trying to fast forward to the workless world. To where AI does so much for us that we don't have to work. And I used to have a really negative outlook on what that would be like, because if you think about it, so many of us define our significance through our work. Imagine a world where now the significance – that huge, incredibly important component of human happiness – is now taken away from us because of the fact that we don't have to work. I used to really despair about that, because as someone who works all the time and finds mine significant, what am I gonna do? But I've become more optimistic recently, because as I think through how athletes find significance in the sports they do, how I play bridge with my friends and find so much significance in competing with them, I think maybe humans are adaptable enough that we'll find a different way to find significance. Maybe it's gonna be in finding that intentional, simple act of kindness every day. I'm not sure what it is, but I do think that as a race, we're so unbelievably adaptable, so smart that we might be able to find out a way to find happiness. I think that's gonna be the biggest challenge potentially in four or five years, is what do we do when so many of our jobs have been replaced by AI?
· Patrick O'Shaughnessy
[00:00:00] S0: So many young people are trying to figure out what to do, what their careers are gonna be. You've talked and written a lot about the power of communication. Great communication is such an essential skill. Journalism is an interesting way of learning that. Can you talk just about that power, as a message to young people trying to figure it out? Why they should maybe focus on that?
· Paul Tudor Jones
[00:00:00] S1: I have long maintained that, better than a business school degree, Journalism 101 should be a mandatory subject in every college, which is newspaper running in particular. It was so important to my development. So, my father had a really small trade finance, legal paper in Memphis, 2500-person subscription. I would be the copy editor, front page editor, and then I would write for it. I took journalism classes, and what newspaper writing does, is it teaches you – you have to write where the conclusion comes first. So unlike writing something, and then at the end we get the story. Here, the end comes first. And you have to write it with this incredibly rigid discipline, so that every succeeding thing that you write, the most important part is in the first sentence of the first paragraph. The first paragraph's not more than two sentences. Who, what, where, when, and why, and how. That's the first one. Then the next most important thing, that's the second paragraph. No more than two sentences. Then the next one, same thing. What is that really? It's a Principal Component Analysis of taking whatever event may have transpired, and putting it in this cogent way where the most important stuff starts at the beginning, and you work your way down through it. Particularly where, in today's world, the attention spans are this short, and time clearly is money. You want to be able to communicate in the quickest and most concise fashion you can, where you get your entire point across in the shortest amount of time. There's that old saying, if you can't tell your story in 15 seconds or less, no one's gonna listen. Never been more true than right now. Because again, if you're getting a thousand emails a day, I want to know in the first paragraph whether I want to keep reading or not. As a macro thinker – man, it helped me so much to frame every potential trading decision, every single action. I could just, again, very quickly, 'cause I had to learn how to do it, do that Principal Component Analysis and hierarchize the most important things. And in trading there's so many different variables that come into play, so many different variables that come into making a trading decision. Let’s say that there's 10 really important things. Every one of those will have its day. It'll rotate through in terms of importance. Again, the yen’s a great example.
· Paul Tudor Jones, Patrick O'Shaughnessy
It's been completely undervalued for the past 24 months, way offsides. It's so ripe to rally sharply, but it needed a catalytic moment. And that catalytic moment was this new Prime Minister that was just elected. So if you take valuation, which everyone's ignored now for the past two years in the yen, all of a sudden this moment takes it from here and puts it at the very top. So newspaper style, hugely important to developing any logic framework. What's the most important thing that's actionable at this second in that particular instrument? What's my checklist and how do I hierarchize it, and that's literally what trading's all about. [00:00:00] S0: If I were to ask you to do that on the topic of the principal components of a great life, how would that read?
· Paul Tudor Jones, Patrick O'Shaughnessy
[00:00:00] S1: God, family, friends. When I think of friends, I think of fun. God, family, friends and fun. Service. I mean, my significance is not going to be from being a trader. I don't think that's where my significance is going to be. My significance is going to be, first and foremost, going to be my family. Every now and then, I actually get joy out of thinking about my funeral, because I'm so excited about the songs that I've chosen that'll be sung. I almost wish I was going to be alive for that because it's going to be such a great time. I know my family and friends will enjoy it. I'm thinking of family, because if I think about the end of my life and I look back, I'm not going to be thinking about the '87 crash or Bitcoin. I'm going to be thinking about who I loved and who loved me. That's what I'm going to be thinking about. And what kind of relationships we had and what kind of times we had. I think the professional aspects are these great tools that allow you to do more meaningful things in the things that count, which is, “What have you done with your family? What have you done with your friends? How have you served others? What have you done to leave a legacy of happiness and betterment and goodness to the people that you've been privileged enough to come in contact with?” And when I say legacy, I don't mean words, I mean deeds. So what have you done that has allowed other people to enjoy and better their station in life, their happiness in life? For me, that's the most significant thing, by far and away. [00:00:00] S0: Did you always believe in God?