Invest Like the Best with Patrick O'Shaughnessy
· Gavin Baker, Patrick O'Shaughnessy
[00:00:00] S1: It does feel like since 2020 kicked off and 2022 punctured this, a series of rolling bubbles. So in 2020, there was a bubble in startup EVs that were not Tesla. And that's for sure a bubble, and they all went down 99%, and there was a bubble in more speculative stocks. Then we had the meme stocks, GameStop. And now it feels like the rolling bubble is in nuclear and quantum. And these are fusion and SMR. It would be a transformative technology. It's amazing. But sadly, from my perspective, none of the public ways you can invest in this, or really good expressions of this theme are likely to succeed or have any real fundamental support. And same thing with quantum. I've been looking at quantum for 10 years. We have a really good understanding of quantum, and the public quantum companies, again, are not the leaders. From my perspective, the leaders in quantum would be Google, IBM, and then the Honeywell Quantinuum. So the public ways you can invest in this theme, which probably is exciting, are not the best. So you have two really clear bubbles. I also think quantum supremacy is very misunderstood. People hear it, and they think that it means that quantum computers are going to be better than classical computers at everything. With quantum, you can do some calculations that classical computers cannot do. That's it. That's going to be really useful- [00:00:00] S0: That's exciting. Yeah.
· Patrick O'Shaughnessy, Gavin Baker
[00:00:00] S0: That's exciting. Yeah. [00:00:00] S1: ... and exciting and awesome, but it doesn't mean that quantum takes over the world. I think the thought that I have had, and this is maybe less related to markets than just AI. I have just been fascinated that for the last two years, whatever AI needs to keep growing and advancing, it gets. Have you ever seen public opinion change so fast in the United States on any issue, as nuclear power? Just happened like that. Like that. And why did that happen right when AI needed it to happen? Now we're running up on the boundaries of power on earth. All of a sudden, data centers in space. It's just a little strange to me that whenever there is something, a bottleneck that might slow it down, everything accelerates. Rubin is going to be such an easy, seamless transition relative to Blackwell, and Rubin's a great chip. And then AMD getting into the game with the MI450. Whatever AI needs, it gets. [00:00:00] S0: You're a deep reader of sci-fi. [00:00:00] S1: Yeah, exactly. [00:00:00] S0: You're making me think of Kevin Kelly's great book, What Technology Wants. He calls it the Technium, the overall mass of technology that just is supplied by humans- [00:00:00] S1: Absolutely. [00:00:00] S0: ... to grow more powerful. [00:00:00] S1: Yes. It just wants to grow more and more powerful. [00:00:00] S0: It sounds like the name of a movie. [00:00:00] S1: And now we're going into an end state.
· Gavin Baker, Patrick O'Shaughnessy
[00:00:00] S1: And now we're going into an end state. [00:00:00] S0: I have a selfish closing question, speaking of young people. So my kids, who are 12 and 10, but especially my son who's older, is developing an interest in what I do, which I think is quite natural. And I'm going to try to start asking my friends who are the most passionate about entrepreneurship and investing why they are so passionate about it and what about it is so interesting and life-giving to them. How would you pitch what you've done, the career you built this part of the world to a young person that's interested in this?
· Gavin Baker
[00:00:00] S1: I do believe at some level investing is the search for truth. And if you find truth first, and you're right about it being a truth, that's how you generate alpha, and it has to be a truth that other people have not yet seen, you're searching for hidden truths. The earliest thing I can remember is being interested in history, looking at books with pictures of the Phoenicians and the Egyptians and the Greeks and the Romans. I loved history. I vividly remember, I think in the second grade, as my dad drove me to school every day, we went through the whole history of World War II in one year, and I loved that. And then that translated into a real interesting current events very early. So as a pretty young person, I don't know if it was eighth grade or seventh grade or ninth grade, I was reading The New York Times and The Washington Post, and I would get so excited when the mail came, because it meant that maybe there was an Economist or a Newsweek or a Time or a US News, and I was really into current events because current events is like applied history and watching history happen, thinking about what might happen next. I didn't know anything about investing. My parents were both attorneys. Anytime I won an argument, I was super rewarded. If I could make a reasonable argument why I should stay up late, my parents would be so proud and they'd let me stay up late. But I had to beat them. That was the way I grew up. I was just going through life, and I really love to ski, and I loved rock climbing, and I go to college, and rock climbing is by far the most important thing in my life. I dedicated myself to it completely.
· Patrick O'Shaughnessy, Gavin Baker
[00:00:00] S0: I didn't know that. [00:00:00] S1: I climbed. I did all my homework at the gym. I got to the rock climbing gym at 7:00 AM, would skip a lot of classes to stay in the gym. I'd do my homework on a big bouldering mat. Every weekend I went and climbed somewhere with the Dartmouth Mountaineering Club. It was super important to me. I'm not a good athlete, so I was never a very good climber, but I did dedicate myself entirely to rock climbing. And as part of that, on climbing trips, the movie Rounders came out while I was in college, so we started playing poker. I like to play chess. I was never that good at chess or poker, never really dedicated myself to either. And my plan after two or three years of college was I was going to leave. I was a ski bum at Alta in college. I was a housekeeper. I've cleaned a lot of toilets. It was shocking to me how people treated me and it has permanently impacted how I treat other people. You'd be cleaning somebody's room and they'd be in it and they'd be reading the same book as you, and you'd say, "Oh, wow, that's a great book. I'm about where you are." And A, they'd look at you like you were a space alien like, "You speak?" [00:00:00] S0: It speaks.
· Patrick O'Shaughnessy, Gavin Baker
[00:00:00] S0: It speaks. [00:00:00] S1: And then they get even more shocked, "You read?" So it had a big impact on how I've just treated everyone since then. Being nice is free. But anyways, I was going to be a ski bum in the winters. I was going to work on a river in the summers, and that was how I was going to support myself. And then I was going to climb in the shoulder seasons. I was going to try and be a wildlife photographer and write the next great American novel. [00:00:00] S0: Wow. I can't believe I never knew this. [00:00:00] S1: That was my plan. This was my plan of record. I was really lucky. My parents were very supportive of everything I wanted to do. My parents had very strict parents. So of course, they were extremely permissive with me. So I'll probably end up being a strict parent, the cycle continues. [00:00:00] S0: The cycle continues.