Infinite Loops

Key Takeaways 

• Investing is a service-based business; focus on the karma! 
• “The four horsemen of the investment apocalypse are fear, greed, hope, and ignorance. And only ignorance is something that you can address.” –  Jim O’Shaughnessy
• Take actions that increase the surface area of your luck 
• Ironically, in a changing world, playing it safe is one of the riskiest things that you can do
• Learn how you are going to react to every phase of the market 
• You have to be selective, but you also have to be okay with rejection  
• Trust is a function of experience, and experience is a function of time
• You do not need to be right every time to dominate; the best traders in history are right just a little more than 50% of the time  
• How to add value early in your career: Find the 10% of a person’s life that they hate, and make that problem go away for them
• The investing industry is based on trust and reputation – it is wise to remember this

Read the full notes @ podcastnotes.org

Let me introduce you to the four horsemen of the investment apocalypse:

Fear.

Greed.

Hope.

Ignorance.

Notice anything?

Three of four are emotions.

I’ve long argued that effective investing is far more about emotional control than technical know-how (although the latter certainly helps!) By hook or by crook, the best investors can find a way to tame their pesky emotional impulses and overcome that primal urge to respond impulsively to panic, passion, or pride.

My guest, the razor-sharp Ateet Ahluwalia, is a veteran trader and investor who has spent well over 15 years at the coalface, from trading at Goldman at the dawn of the financial crisis to his current role as founder and managing director of the venture capital firm Island Green Capital Management. As you’ll hear from our conversation, Ateet has built an insanely deep understanding of the emotional constitution required to succeed in finance and venture capital, which informs his approach to risk management, hiring, investing, due diligence, and everything in between.

I hope you enjoy our wide-ranging conversation, whose implications extend well beyond investing. For episode takeaways, a full transcript, and various other goodies, check out our Substack.

Important Links:

• The Thinker and The Prover; by Jim O’Shaughnessy
• Ateet’s LinkedIn
• Island Green Capital Management

Show Notes:

• Why Venture Capitalists Should Shun the Glory
• “In a changing world, playing it safe is one of the riskiest things you can do."
• Risk: Why Size Matters
• The Emotional Constraints of Investing
• How to Find Out What Someone Really Wants
• The Purifying Power of Mistakes
• Pick up the Phone!
• Being Humbled by the Market
• Public vs Private Investing
• Why Hit Rates Matter
• Assessing the Macro Position
• Bullshitting, Question-Dodging, and Other Red Flags
• The Many Bosses of the Venture Capitalist
• Be a Painkiller
• Ateet as Emperor of the World
• MORE!

Books Mentioned:

• The Enlightenment Trilogy; by Jed McKenna
• Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist; by Brad Feld & Jason Mendelson
• Financial Intelligence: A Manager’s Guide to Knowing What the Numbers Really Mean; by Karen Berman, Joe Knight & John Case
• Adventures of a Bystander; by Peter F. Drucker