Byrne generates one of the highest insights per unit of speech or writing I’ve come across.
Some of what we covered + highlights:
Interest rates and bubbles
Why interest rates have been declining over the long run
Low interest rates and private / public market valuations
Structural sellside optimism
Are Google and Facebook undervalued
Signs we might be in a bubble
This was recorded months before the Gamestop fiasco (!): “so you can find people on wall street bets who are just insanely exuberant and who are clearly just deranged gamblers who are buying out of the money call options and pyramiding up their gains until they get wiped out”
On the Buy Now Pay Later phenomenon
All about CAC, baby! “My view on that is that in FinTech, the dominant factor is always customer acquisition cost. A lot of people come up with interesting ideas for financial products that are interesting to the kinds of people who dream up new financial products. Then they figure out that very few people are interested in a financial product as such people are interested in free money”
How FinTechs typically unravel
“A lot of that comes down to the fact that it's hard to market financial products, because it's just really hard to create an ad advertising something that is so ephemeral. You can't show someone on TV having insurance. You can't show a picture of alone.”
Learning to trade stocks in high school
Dropping out of college
Realising he could be a tech analysis in a time before tech analysts – finding his niche and making it his thing
How he ended up writing full time
The natural narrowing of focus in finance careers
What he learned living in a former crack den in New York. One roommate was a currency trader who just listened to techno and day-traded the British pound all day: “I think practicing the ability to just grind out the normal thing at a fairly high quality level is a useful background for doing something different” (Byrne uses the Beatles and Picasso as examples)"
Ricardian comparative advantage: I first really appreciated Ricardian comparative advantage the first time I paid a laundromat to do my laundry and fold my laundry and while I was there, I was able to write an article that paid for the cost of the laundry.
What’s an overlooked asset class?
On investing discipline: “I try to be very disciplined about having stop losses, just so that I don't talk myself into really dumb reasons to own something or short something.”
Momentum investing: “Often being able to say, I agree only more so is actually a pretty powerful way to find things that don't look contrarian. That's why they are contrarians.”
Why shorting is such a hard game (note John Hempton!)
Self-perpetuating mechanisms for credit bubbles, and how in the short term they lead to volatility but in the long term can lead to stability and prosperity
Question from Patrick McKenzie:
I believe this is called a “lobster pot”: “In addition to being long short tech stocks and doing some stuff with futures from time to time, I have one company that is really tiny, illiquid enough that it does not trade every day. It's just a very deep value stock that I bought and have resolved to not pay attention to until the CEO dies and the company will presumably get liquidated then.”
Impressive companies, determinant optimism and recursion
Whether kids have made Byrne more or less ambitious
How the Anglosphere, largely surrounded by bodies of water as it is (UK, US, Australia / NZ) is inoculated from the existential risk of tanks rolling through, which happens from time to time basically everywhere else
On the meritocracy / nepotism tradeoff / synthesis
What Byrne disagrees with Bryan Caplan and Peter Thiel on
“You basically need a lot of natural Republicans to run a socialist country”