Investing Lessons From RATM’s Tom Morello

In their recent episode of the VALUE: After Hours Podcast, Taylor, Brewster, and Carlisle discussed Investing Lessons From RATM’s Tom Morello. Here’s an excerpt from the episode:

Jake: Well, this is more dessert because we’re are talking about music today. So, this isn’t going to be sperm whales, or mathematics, or anything.

Tobias: [laughs]

Jake: Maybe it’s more fun, but you’re probably going to learn less also. So, fair warning. Shoutout to one of my main homies, Kyle, who bought me a subscription to Masterclass for my birthday. I’m in there in the Masterclass and Tom Morello has a whole thing about guitar in Masterclass, and it’s really good because he’s got all these interesting stories of how he came up, and stories from the road and talking– He goes through every single piece of equipment that he uses and how he plays it. Anyway, if you don’t know, Tom Morello, he is the lead guitarist of Rage Against Machine and Audio Slave primarily. It is what he’d been known for. Just to rewind a little bit on him. His father was actually Kenya’s first UN ambassador, and I think his great uncle or something was the first President of Kenya. But he graduated from Harvard with a BA in social studies, and while he was– Then, he moved to LA. Successful investing starts with proper research. There are websites that can help you research stocks more efficiently and effectively. Many of them utilize automation to save you hours of time you would have otherwise spent researching the old fashioned way.

Tobias: Pre the band? Pre the band?

Jake: Pre the band, yeah. Interestingly enough, in high school, he had a friend, this guy named Adam Jones, and Adam came out to LA with him, and Tom introduced Adam Jones to Danny Carey, and Maynard James Keenan. I don’t know if what band they went on to form these three guys. Somebody in this, I’m sure in the comments will get it but it’s Tool., pretty legit band. Anyway, so, this is like one of Tom’s best friends basically is the lead guitarist in Tool.

All right, so, let’s rewind a little bit. It’s 1988, pre-Rage Against the Machine, he’s in LA, and he’s about to record a demo with one of his first bands, and all his gear gets stolen out of the back of his van. He’s like, “Ah, shit. What am I going to do now?” He only had a couple days and basically, no money to replace it. He goes into a local little music shop and they only have a PV cabinet, which is like an amp and then a Marshall head, which isn’t a bad piece of equipment.

But he was so embarrassed by the PV part because no one should be caught dead playing one of these is a real musician. He tears off the little nameplate on the PV amp, and then he ended up liking the sound so much that even after he could afford to get all this other stuff, he kept playing this stack. All the recordings of Audioslave, Rage Against Machine for the most part are through this very, very cheap setup. All of his guitars are most of them are really cheap ones that he’s just bought and tinkered around with and replaced a lot of the guts of them.

All of which is to say that, you don’t have to have all of the most trick shit to get the best sound. His setup is actually relatively straightforward, the amount of equipment that he uses. Yet, somehow, he’s able to get some of the craziest sounds. His creativity is just off the charts when it comes to getting random sounds out of a guitar setup. He actually has a little noise chart that he shows you in this masterclass. He has, what is called the feedback toggle. He figured out that if he moves the toggle on the guitar turning it on and off while messing around with it, he can get this almost a rhythmic drumming sound out of it.

Then, he takes the guitar jack out, it’s not even plugged in, and he’s banging the guitar jack to get a rhythm with that. He’s pretty famous for scratching, he’s figured out how to scratch using the strings to sound like a guy, [sound] that kind of sound with the record. He can make it sound like a helicopter, like a monkey at a zoo, or bagpipes, air raid siren, all kinds of crazy stuff that he’s able to get out of this super cheap, nothing special stack.

Perhaps, what is I think the most helpful for maybe trying to land this back to an investment context is that, he goes into a bunch about his practice regime, and what does he do, what does he work on. He breaks it up into four blocks. The way that he first started getting good– he says that he came to the guitar relatively late like I think he was 17 years old before he even really picked up a guitar.

He has zero natural ability when it comes to it. It was all just pure hard work, grinding practice that got him to where he was, which is a little encouraging, I guess for us schlubs that are trying to play things or learn things. The first block is, he just works purely on technique. Oh, I should say like how much time did he spend. He had a friend tell him when he was 17, if you spend one hour a day really dedicated working on this and never miss a day that you will be capable of great things. He took that really to heart and instead of– it’s very common, and I’m guilty of this as well where it’s like you don’t play at all for a week and then you try to play for three hours on the weekend because you have some time, and then you go back, and it’s another week before you play, it’s really hard to make progress like that. It doesn’t match very well probably with how your brain wires learning things.

This just consistent never miss a day practice which– Block one of the time that he spends is on technique. What that means is actually playing scales just over and over again. Just getting your fingers to move where you want them to go. Translating what you have in your mind and making your fingers do it. It’s boring, it’s solitary– The other thing he says is move very slowly and perfectly, and then eventually speed comes. Everybody wants to be a shredder and just hop in there and look like Eddie Van Halen, but the trick is you have to move slowly and perfectly, and then eventually the speed will come, and it’ll be actually clean instead of very sloppy.

Block two of time, he spent on musical theory. He’d read books on the mathematics of music. Why does a certain scale sound right to us? What’s the progression of chords? So, it’s all musical theory. That really tells you where you can go with the guitar and why would you want to go play that next note? It really serves to broaden your horizons of what’s capable from a theoretical standpoint.

Block three is songwriting, he calls it, which is bringing the technique and the theory together, and actually doing the real work at that point. Practicing songs, a little bit of experimentation, and really honing your craft in a little bit more holistic way than just purely scales and theory.

Then, the last block is he calls improvisation, and that should be the most fun part, which is you’re jamming, you’re maybe jamming with a friend– or he said he would just put the radio on, and they would randomly change the channel, and then try to play along with that song and just get into that song, and then move to the next one, which has helped him to integrate.

All right, from an investing standpoint, let’s see if we can back into some of his practice routines that will maybe be helpful for us if we’re trying to get mastery of the investment process. The first one is that working on your technique, and to me, it’s the boring stuff. It’s the blocking and tackling. Studying accounting, learning business models, maybe, reading financial history, it’s the little stuff like that. Theory part block would be investment philosophy.

Maybe some stoicism might fit in there. Really trying to work on the head game part of it, and being theoretically sound. I think probably Howard Marks type of writing is some of the best when it comes to investment theory and just how to think about it in a bigger context. Block three is the songwriting part, actually doing the work. This is being in the 10Ks and 10Qs and working on the– Actually, not just sharpening the saw, but actually cutting some wood there.

Block four is the fun part, the improvisation, the jamming. That’s maybe talking to your friends about investment ideas, or reading more widely to see if you could pull in random shit and turn it into an investment context. Really opening up the aperture wide so that you have a lot– maybe you’re able to make connections that you previously couldn’t because you’re really– or maybe even reversing to use the playing along with the radio. Maybe looking at 13F and trying to reverse engineer, why do they own something? That’s almost like joining someone else’s band while they’re playing on the radio, and you try to figure out if you can play along with that song. So, maybe not all that helpful in the investment context, but just fun to talk about Tom and his practice routine and some of his stories.

Tobias: How much of that do you do explicitly? How much of that four quadrants do you do or would you do from now?

Jake: I’m pretty cognizant of it. I didn’t break it up exactly like that, but I did break it up in accounting, doing the actual work, history, less and less actually investment looks because they’ve all started saying the same things over and over again. But I think I’ve done a pretty good job on that front. I was pretty mindful of it for a long time. So, I don’t know. How about you guys.

Tobias: Are you purposefully abstracting beyond investment books now? The veggies as a result of reading outside of?

Jake: Yeah, it’s on purpose, but it’s also fun, and it may or may not be as helpful as I hope it would be. But it’s [laughs] I don’t know at some point you have to enjoy what you’re doing also to keep coming back.

Tobias: I got my piano just below us here– not piano, whatever. We’ll jam next time for everybody. I can’t sing. We’ll have to be– Bill’s going to be the hype man.

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