Conversation between Patrick O’Shaughnessy and Brad Gerstner

I haven’t listened to podcast for a while. Simply because I read a lot more than I listen to podcasts. But this podcast between Patrick and Brad is very good, packed with insights, nuances and common sense. Though there are a few points that I don’t fully agree with him, I learned a lot from his talk. A few key highlights are quoted below, but do give it a try. It’s worth for time if you are interested in technology, business and investing.

Buffett, although he comes out of the quantitative school, he has a quote where he says: my highest returning investments, those that really made the cash register ring, have come from simple qualitative insights applied to a big business opportunity

Source: Invest like the best with Brad Gerstner

While we’ve been talking about the cloud, since really 2002 and 2003, and I remember by 2010 and 2011, we actually started decelerating rates of growth of a lot of cloud companies, people started wondering: Did we overestimate the cloud? Just as they wondered in 2005 and 2006, after the demise of companies like Danger, whether we overestimated mobile. And the reality is we weren’t even getting started. So, we look at, we break down the backend of cloud software really into system infrastructure, the infrastructure software that enables companies to do the things they wanna do in the cloud and the application software. When you look at the TAM (total addressable market) of all three of those, by our account, we are still a decade away from having 50% penetration to the cloud.

Source: Invest like the best with Brad Gerstner

For almost all investors, a hugely disproportionate amount of their career profits that they generate, whether in public markets or private markets, will come from a few bets, a few great investments. And if you succumb to the ego that is easy to succumb to which is if I study it hard enough, I’ll be able to figure it out. You look at your Bloomberg everyday, and you have 100 different opportunities you can go and invest everyday and maybe a couple of hundreds of opportunities. People tend to overtrade, invest in too many things. It divides their attention. And so the opportunity cost is they are not there when the fat pitch comes. So they don’t have capital available when the fat pitch comes. And I’d argue for myself at least to less happiness because I can’t go as deep on a particular subject as I want to go because I am managing too many things at once…

Source: Invest like the best with Brad Gerstner

Far more has been lost betting on the end of times, trading out of your good ideas, trying to hedge out of Covid than just making great bets on great companies and allowing them to compound.

Source: Invest like the best with Brad Gerstner

Right? Is going to this dinner, is having this coffee, is having this meeting, is joining this board, is making this investment, is it an easy yes? If it’s not an easy yes, then it’s an easy no. Organizing your life with less, but enriching the stuff you do choose to do. Your children, your interaction with friends and family, your time in nature, your time spent with a couple of management teams, instead of divided across 15 boards. I can’t promise that leads to maximum financial return for you. But I am pretty confident that your return on happiness is going to be pretty extraordinary

Source: Invest like the best with Brad Gerstner

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