Key Insights From The Man Who Solved The Market

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During his recent interview with Tobias, Gregory Zuckerman, author of The Man Who Solved the Market, discussed his key takeaways from the book. Here’s an excerpt from the interview:

Tobias Carlisle: Look, I absolutely loved the book. Thoroughly recommend everybody go and take a look at it. It’s The Man Who Solved the Market. Final takeaways for you, you think that we should be applying algorithms in in every aspect of our life?

Greg Zuckerman: Takes that we can. There’s an argument that quantum mental approach combining the two is more effective. I subscribed to that, but all things being equal, turning decisions over to systems as opposed to relying on stories and narratives. It’s just dangerous when you… I’ve seen it over my career just getting caught up in stories and you see it’s our nose and we work in Uber and all kinds of examples where we as investors aren’t as good judging executives as we think we are and judging stories. But, I do have to say that there are niches in the market where the fundamental investors still can outperform it.

Greg Zuckerman: One of the things that was crazy to me is when you go out to talk to like a Sandra Strauss who is one of the key individuals early in my book and at Renaissance or even Simons, you would think that in there with their personal money, it would be all allocated to quantitative managers and yet they also are investing with traditional kind of guys. David Einhorn, who looks for stories and is a super smart guy. I was blown away by that and their argument is, “Well, yeah. It works for us at Renaissance, but there are other approaches that you can still make money in other ways.” I thought they would scoff and make fun of it and giggle at guys like Buffet even. They don’t feel that way genuinely.

Greg Zuckerman: So even though I came away skeptical of the traditional approach, they still hold out possibilities in some markets. You got to have some competitive advantage and increasingly it’s just so hard to get this information advantage. But, there are still approaches be it in illiquid markets, markets where in quants don’t really focus on it and maybe one of the lessons is try to be a little more of a longer term investor. You don’t want to go up ahead, go up against Renaissance day to day and there are short term, so maybe you need to be a little bit longer term as a result because they haven’t really figured out longer term investing.

Greg Zuckerman: Those are among the lessons I drew, but also just how you manage people. To me, in some ways, the book was as much of a management book and how he’s been able to get super smart, often cantankerous, difficult, stubborn people to work together and create incentives and motivate. I find that fascinating and eye-opening in a lot of different ways, in surprising ways. Anyway, those are some of my own observations.

Tobias Carlisle: I’ve got to say as a quantum mental guy, that’s music to my ears. But, the big takeaway for me was that just the humility was so important. As you find things, you’ve got to expect them to break down. You just got to plan for the worst and hope for the best maybe.

Greg Zuckerman: Yes. People internally, I ask them, “You guys are wealthy and you’ve got these returns. You just go in, press the button and drink your coffee.” And no, there’s a level of urgency there and nervousness about the future and competing for talent. That’s part of the reason why there was a lot of people and fear. There was a lot of morale issues with raw politics and Bob Mercer we suggest earlier because they have to compete with Facebook and Google in terms of talent-wise. So yeah, there’s a level of humility as you suggest, which surprised me.

Tobias Carlisle: And it’s genuine.

Greg Zuckerman: It does feel that way. Yeah. They’re not putting on a show. Part of it is Bob Mercer. I’m sorry, part of it is Peter Brown who runs the firm today and the guy’s still working his tail off and as a result, everybody else does. And yeah, even though they live in whatever big, huge homes and they got these returns and they’re wealthy, they’re a little bit like a team, a sports team that just won the championship. They want to keep doing it the next year. I was a little bit surprised by that.

Tobias Carlisle: Well, I love the book and I’ve really enjoyed chatting to you, too. Gregory Zuckerman, thank you very much.

Greg Zuckerman: Thank you for having me.

You can find out more about Tobias’ podcast here – The Acquirers Podcast. You can also listen to the podcast on your favorite podcast platforms here:

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