Frederik Journals

Hello everyone,

I’m excited to share my second conversation with Sebastian Mallaby. Last time, we discussed his book More Money Than God. A quote from that conversation stuck with me:

“The key was to do an unreasonable amount of preparation work. It shows you're serious and not wasting people's time by asking the obvious questions."

This time, we discussed The Power Law (see my write-up) in which he tackled the history of venture capital. The two worlds make for an interesting contrast: venture capitalists, networkers by nature, are more willing to meet and chat. But they’re also natural storytellers which presents a challenge in the search for truth. In his book, Mallaby tried to disentangle luck and skill in venture investing, how to build winning and lasting cultures, and the importance of VCs for silicon valley.

And while he admits that individually “the story of every bet can seem to hinge on serendipity,” he argues that over the long run, “the best venture capitalists consciously create their luck.” Individual venture capitalists can “can stumble sideways into fortunes” and at times it seems like luck beats diligence and foresight. The best however, “work systematically to boost the odds that serendipity will strike repeatedly.”
“The great challenge at venture partnerships is that the principals must refrain from killing each other.” Michael Moritz
“When people write about the venture business, they’re always writing about the startups we back. They never write about the most important investment we make, which is in the business.” Michael Moritz.
"The fast moving of ideas, people and money until they reached their optimal use, that’s what made Silicon Valley worked. That’s what made innovation turbocharged. "But where did that fast circulation come from, and my argument is it comes from venture capitalists."

I had a lot of fun digging into these questions with him. I hope you enjoy the conversation.

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.frederikjournals.com/subscribe

Hello everyone,

I’m excited to share my conversation with Mary Childs, author of The Bond King (and co-host at Planet Money) on the rise and fall of legendary bond manager Bill Gross.

You can listen to this conversation on your podcast player of choice: Spotify, Apple, at anchor, and via RSS.

You can also add the Substack podcast feed to your favorite podcasting app via the link on the bottom-right of the player. I didn’t realize this until Liberty showed me🙏 (except Spotify doesn’t allow RSS importing😪).

Mary and I talked about Bill’s breakfast habits (did low blood sugars end his career?!), his card counting days, the culture of paranoia at PIMCO, how he combined multiple sources of edge into “structural alpha” for long-term outperformance, the difficulty for a founder to leave their firm, Bill’s desire for fame, and how emotions ultimately got in the way of investing.

I really enjoyed the book and was struck by the combination of structural factors that Gross used to build his track record (early in new products and going outside the benchmark, selling volatility, being creative with cash equivalents, figuring out how to use leverage in the mutual fund). His big picture calls are interesting but the record seems mixed.

If you’re interested in Bill’s perspective, he recently appeared on this podcast. I liked how he framed what made a great bond manager: "One third mathematician, one third economist, one third horse trader. That certainly worked for me."

It seems that at some point after the financial crisis he got stuck in bearish thinking. As his track record and public image took some hits, his behavior became more erratic and even belligerent towards the new generation of portfolio managers at PIMCO. The story illustrates how contentious the transition from founder to institutional money management firm can be.

A few notes and quotes:

Bill got started card counting in Vegas:

"You have to have that gambling instinct. This business, if it's done properly, isn't gambling. But it entails some of the gambler's spirit.

Vegas taught me that I could beat the system with a combination of hard work, ideas that no one has thought of yet, and the ability to tolerate a constant routine that to many people seems monotonous. But to me, it's the most exciting thing in the world."

Perseverance:

“My life’s plan has always been to outlive and outlast ’em. To persist. To persevere. To land on my feet, keep on running, and never stop.

Excellence for most of us blossoms and flourishes for only a brief flicker of time. Either because of human frailty, maturation, or simple outright exhaustion, it’s difficult to perform at a crescendo for an extended period. Very few stay at the top for very long.”

The culture of anxiety at PIMCO:

For a Pimco trader, a day could easily be derailed by accidentally looking up from the screens and—disaster!—making fleeting eye contact with Bill Gross. No matter how well you were doing, it wasn’t good enough. Do more, better. Your ass was always on the line.

He tested them constantly. He used to pace the trade floor, quizzing underlings … What mattered was “owning” the risk. It was yours now. Defend it. What did you think and what were your justifications, with fresh data points and prices?

On the pain of being early in a trade (in this case bearish too early before 2007/2008):

"Every investor has an alarm clock. I wish I could get up at 6 every morning and time things just right. I probably get up at 4:30."

Some highlights from the conversation:

Opening the door to a story:

“If you're staring at a closed door … you just have to come up with a little piece of information to get that person to open that door, to crack it open. A little piece of gossip, a story that everyone's talking about. In and of itself that gossip is useless to you as a journalist, of course. But you can asking somebody, Hey, I keep hearing this ridiculous story. You have a little nugget of truth in there. You don't know what it is yet. … A lot of people want to help you understand and don't want to see the story misrepresented.”

Traits of a founder:

“The things that make someone capable of achieving the track record that Bill Gross did, building the kind of firm that Bill Gross was a part of, those personality traits are: you're going to be exacting. You're going to be really intense and focused. You're going to be a perfectionist, a micromanager. You're going to keep a really tight grip. These things, generally speaking help contribute to the success of the firm.

… For the most part, these are things you see very frequently among founders, and also that toxic culture that can often come along with some of those traits. Those traits also make it very difficult, if not impossible, to have a graceful transition away from that founder. Because the minute they start to loosen their grip, they freak out. … The tight grip is who they are. This firm is who they are.”

Being the house:

“Bill gross learned from Ed Thorp’s book called Beat the Dealer that you can count cards. … I think that this sensibility of both understanding the math but also feeling the pace of the table and knowing when you have that edge and when you don't, and also watching all the people around you who have no edge whatsoever and who were just flopping around taking dumb chances. All of that helped to inform how he approached the market and who he saw as his competitors. His competitors, aren't the dumb people doing the dumb stuff. His competitor is the market, is the dealer.

This shows up when PIMCO figured out that the US government wasn't going to let certain institutions fail in the financial crisis. That there was going to be a government backstop … If I know that the US government is the house, I'm going to be the house, I'm going to try to align my own interests. … The point was to do what the government's going to do, but do it first: buy what they're going to buy and then sell it to them or ride that wave as the news of their purchase causes the price of those assets to soar. And that's exactly what happened.”

Becoming number one over time:

“Ben Trotsky, this hilarious person who managed the junk fund in nineties, said, I want to be the best bond manager over a 10 year period. He ran a bunch of simulations. And every time he found that if you want to be the best manager over 10 years, you got to not be the best manager in any given year. If you're the best manager in one year, you probably took too much risk. You probably did something … that was not that informed of a risk. And you just got lucky. You're doing something that could blow you out. So the idea is to be in the top decile, top quartile, and just outlast everybody else who is taking too much risk trying to be number one.”

Emotion:

“What happened to Bill at Janus was he needed to prove to PIMCO that they had made the wrong choice by ousting him. This is a little my overlay. He told anyone who would ask that he was obsessively checking every day his performance against PIMCO’s. My read of that is that he was not emotionless. He was locked in this dynamic with PIMCO that became more his obsessive focus than pure performance. … I think he allowed emotion to cloud his investing.”

Disclaimer: I write and podcast for entertainment purposes only. This is not investment advice. I am not your fiduciary or advisor. Do your own work and seek your own financial, tax, and legal advice before making any investment decisions.

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.frederikjournals.com/subscribe

I’m excited to share my conversation with Mary Childs, author of The Bond King (and co-host at Planet Money) on the rise and fall of legendary bond manager Bill Gross.

Mary and I talked about Bill’s breakfast habits (did low blood sugars end his career?!), his card counting days, the culture of paranoia at PIMCO, how he combined multiple sources of edge into “structural alpha” for long-term outperformance, the difficulty for a founder to leave their firm, Bill’s desire for fame, and how emotions ultimately got in the way of investing.

Some highlights from the conversation:

Opening the door to a story: “If you're staring at a closed door … you just have to come up with a little piece of information to get that person to open that door, to crack it open. A little piece of gossip, a story that everyone's talking about. In and of itself that gossip is useless to you as a journalist, of course. But you can asking somebody, Hey, I keep hearing this ridiculous story. You have a little nugget of truth in there. You don't know what it is yet. … A lot of people want to help you understand and don't want to see the story misrepresented.”

Traits of a founder: “The things that make someone capable of achieving the track record that Bill Gross did, building the kind of firm that Bill Gross was a part of, those personality traits are: you're going to be exacting. You're going to be really intense and focused. You're going to be a perfectionist, a micromanager. You're going to keep a really tight grip. These things, generally speaking help contribute to the success of the firm. … For the most part, these are things you see very frequently among founders, and also that toxic culture that can often come along with some of those traits. Those traits also make it very difficult, if not impossible, to have a graceful transition away from that founder. Because the minute they start to loosen their grip, they freak out. … The tight grip is who they are. This firm is who they are.” 

Being the house: “Bill gross learned from Ed Thorp’s book called Beat the Dealer that you can count cards. … I think that this sensibility of both understanding the math but also feeling the pace of the table and knowing when you have that edge and when you don't, and also watching all the people around you who have no edge whatsoever and who were just flopping around taking dumb chances. All of that helped to inform how he approached the market and who he saw as his competitors. His competitors, aren't the dumb people doing the dumb stuff. His competitor is the market, is the dealer.

This shows up when PIMCO figured out that the US government wasn't going to let certain institutions fail in the financial crisis. That there was going to be a government backstop … If I know that the US government is the house, I'm going to be the house, I'm going to try to align my own interests. … The point was to do what the government's going to do, but do it first: buy what they're going to buy and then sell it to them or ride that wave as the news of their purchase causes the price of those assets to soar. And that's exactly what happened.”

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.frederikjournals.com/subscribe

Hello everyone,

I’m excited to share my conversation with Max Frumes, co-author of The Casesar’s Palace Coup (with Sujeet Indap). I’m a big fan of the book and previously shared some notes on Twitter. It’s a deep dive into the buyout and bankruptcy of casino giant Caesar’s Entertainment and the slugfest between investors like Apollo, Oaktree, Appaloosa, GSO, Elliott, and some of the nation’s most expensive law firms.

It’s a great introduction into the world of distressed investing and the prevailing culture. I’ve written previously about how distressed credit is a “knife fight over a limited number of slices” which shapes a scarcity mindset. The book illustrates the intense negotiations and explains the “creditor on creditor violence” that can take place (a recent example is Wesco).

Max and I discussed how to break down such a complex story, explored key turning points, discussed the culture among distressed investors, what makes distressed investors successful, why there was no long-term damage for Apollo, how other investors were actually inspired by their moves, and how the space has changed in general.

A key takeaway for me was that the participants in this game are very smart, creative, ruthless, and extremely competitive. This is a complex and difficult game to play and one should consider very carefully whether to enter the competition.

I hope you enjoy the conversation. You can listen to it at: Spotify, Apple, at anchor, and via RSS.

Marc Rowan, CEO of Apollo about the demise of Drexel:

“You want chaos, things to be shaken up, the system to be brought down and built up again. When you think the world is coming to an end, that is the time to build a career and build the next great fortune.”

A few quotes from the conversation:

* “It is a very rich, fascinating industry because it is a combination of chess and poker, depending on what stage a restructuring is at.”

* “Each of these firms does have their own personality. We go into detail about the origins of Apollo which was the most interesting because it was defined by brilliance and impunity, willing to push the bounds to the very edge of what is what's permissible under the law, under the credit docs. And that does go back to Mike Milken’s firm Drexel Burnham. That's where Leon Black was one of the senior directors at the time it went bankrupt.”

* “Firms who are the most successful in this industry are those who have expert knowledge and a good handle on the legal aspect, understanding valuation, and then the industry knowledge itself mixed with understanding game theory. Some people are more savvy with the press. Some people are more savvy with the orchestration of creditor or organization. Some people are more willing to be an iconoclast and go against the grain.”

* “Ultimately the examiners reports said they had actual and constructive fraudulent conveyance claims against and corporate governance claims … a lot of them were simply because the creditors did not have independent directors during the time these decisions … where there's conflicts of interest. It seemed like the private equity sponsor was basically controlling everything. … So the lesson wasn't, maybe we shouldn't do those things. The lesson was let's put some independent directors in there.”

Disclaimer: I write and podcast for entertainment purposes only. This is not investment advice. I am not your fiduciary or advisor. Do your own work and seek your own financial, tax, and legal advice before making any investment decisions.

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.frederikjournals.com/subscribe

I’m excited to share my conversation with Max Frumes, co-author of The Casesar’s Palace Coup (with Sujeet Indap). I’m a big fan of the book and previously shared some notes on Twitter. It’s a deep dive into the buyout and bankruptcy of casino giant Caesar’s Entertainment and the slugfest between investors like Apollo, Oaktree, Appaloosa, GSO, Elliott, and some of the nation’s most expensive law firms.

It’s a great introduction into the world of distressed investing and the prevailing culture. I’ve written previously about how distressed credit is a “knife fight over a limited number of slices” which shapes a scarcity mindset. The book illustrates the intense negotiations and explains the “creditor on creditor violence” that can take place (a recent example is Wesco).

Max and I discussed how to break down such a complex story, explored key turning points, discussed the culture among distressed investors, what makes distressed investors successful, why there was no long-term damage for Apollo, how other investors were actually inspired by their moves, and how the space has changed in general.

A key takeaway for me was that the participants in this game are very smart, creative, ruthless, and extremely competitive. This is a complex and difficult game to play and one should consider very carefully whether to enter the competition.

A few quotes from the conversation:

• “It is a very rich, fascinating industry because it is a combination of chess and poker, depending on what stage a restructuring is at.”


• “Each of these firms does have their own personality. We go into detail about the origins of Apollo which was the most interesting because it was defined by brilliance and impunity, willing to push the bounds to the very edge of what is what's permissible under the law, under the credit docs. And that does go back to Mike Milken’s firm Drexel Burnham. That's where Leon Black was one of the senior directors at the time it went bankrupt.”


• “Firms who are the most successful in this industry are those who have expert knowledge and a good handle on the legal aspect, understanding valuation, and then the industry knowledge itself mixed with understanding game theory. Some people are more savvy with the press. Some people are more savvy with the orchestration of creditor or organization. Some people are more willing to be an iconoclast and go against the grain.”


• “Ultimately the examiners reports said they had actual and constructive fraudulent conveyance claims against and corporate governance claims … a lot of them were simply because the creditors did not have independent directors during the time these decisions … where there's conflicts of interest. It seemed like the private equity sponsor was basically controlling everything. … So the lesson wasn't, maybe we shouldn't do those things. The lesson was let's put some independent directors in there.”

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.frederikjournals.com/subscribe

Hello everyone,

I’m happy to share my conversation with Evan Tindell of Bireme Capital. I’ve enjoyed Evan’s thoughtful letters over the past couple of years and it was time to talk about this approach to investing. We dove into Evan’s background as a poker player, how he looks to exploit biases in his investment process, and how he navigated the ‘20-’21 bubble in growth stocks as a short-seller and value-oriented investor.

If you’re interested in his work, check out his three letters with thoughts on the bubble (part I - birth, part II - anatomy, part III - apex -“We believe inflation is likely to be the catalyst that ultimately pops the everything bubble” from 2Q21).

Books mentioned: The Theory of Poker by David Sklansky.

I hope you enjoy the conversation as much as I did. You can listen to it on: Spotify, Apple, at anchor, and via RSS.

Through Evan I also found this interesting research paper on poker players as investors: “our findings suggest that skilled poker players are, on average, better fund managers.”

“Extant academic work shows that winning poker players are more patient and less susceptible to behavioral biases such as the disposition effect … “patience is rewarded” among winning poker players, and these players tend to avoid “overweight[ing] frequent small gains vis-à-vis occasional large losses.”

However, it’s not as simple as picking a prominent poker player and hedge fund manager. It seems that after winning public tournaments, these managers take in more capital which leads to a decline in alpha. 🤷‍♀️

The smart bet seems to be to pick someone good at poker but under the radar and not playing tournaments.

Disclaimer: I write for entertainment purposes only. This is not investment advice. I am not your fiduciary or advisor. Do your own work and seek your own financial, tax, and legal advice before making any investment decisions.

Some favorite quotes

* “What poker teaches you is how to think rationally in the face of that incomplete information. You always have to be updating your model based on the new information. Whereas in chess you know exactly what's going on and the pieces are fixed on the board. In poker, you never really know what's going on. One thing that I think is interesting to take away from poker is you can never actually be totally sure if you had the right strategy at all.”

* “Over time, you have to capitalize on their mistakes essentially. It's a little bit more clear in poker. You're sitting right across the table from someone. You can just see that they're calling pre-flop with 37 off-suit and you just have to punish it by waiting until you have pocket tens and then raising a lot before the flop. It's a little bit more clear in poker that I see what exactly you're punishing. Obviously in investing, people don't think about this really, but any alpha that you are generating relative to the overall market is coming out of someone else's like negative alpha.”

* “Availability bias, the way we look for that is stocks that have done poorly where there’s an obvious newsworthy story, some type of like legal or regulatory action or some reputational thing that happens. That's one reason I have enjoyed digging into some of these Chinese stocks, because there's an obvious story about why the stocks are falling, having to do with regulation. And it's not directly related to the business doing. So that's the key, those are the kind of stories where I say, okay, there's this story about why people are selling the stock. It's not directly related to the business. Let me go do some research to try to figure out if it will end up affecting the business in the long-term. … Those situations are obviously very rare. Most of the time the problems that the market sees are roughly correct.”

* “A number of times I've gotten ideas from following a competitor of my current company and they did something or they merged with another company or, I have a list of, uh, of companies that I'm following. The way I describe it is I'm constantly updating my notes on all those companies until something just hits me over the head.”

Enjoyed this piece? Please let me know by hitting the ❤ button. It makes my day to see whether my readers like the content (it really does!) Thank you!

If you enjoy my work, please consider sharing it with friends who might be interested.🙏

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.frederikjournals.com/subscribe

I’m happy to share my conversation with Evan Tindell of Bireme Capital. I’ve enjoyed Evan’s thoughtful letters over the past couple of years and it was time to talk about this approach to investing. We dove into Evan’s background as a poker player, how he looks to exploit biases in his investment process, and how he navigated the ‘20-’21 bubble in growth stocks as a short-seller and value-oriented investor.

Disclaimer: This content is for entertainment purposes only. This is not investment advice. I am not your fiduciary or advisor. Do your own work and seek your own financial, tax, and legal advice before making any investment decisions.

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.frederikjournals.com/subscribe

Happy Friday everyone!

I’m very excited to share with you my conversation with Jimmy Soni. We discussed the many lessons from his new book The Founders about the origins of Paypal. I had an absolute blast and would highly recommend the book if you’re interested in business, technology, startups, and examples of company culture

I hope you enjoy the conversation as much as I did. You can listen to it at: Spotify, Apple, at anchor, and via RSS.

Disclaimer: I write for entertainment purposes only. This is not investment advice. I am not your fiduciary or advisor. Do your own work and seek your own financial, tax, and legal advice before making any investment decisions.

💡You could be sponsoring conversations like this one if you’re looking to reach 8,700+ thoughtful investors and many more readers on Twitter.

A few favorite quotes:

“I told Peter, look, there was a year and a half of history here that no one's documented. And I anticipate that if I went back and looked, there'll be even more. And then I think the thing that clinched it, as I said something like, look, I see this in my eyes as like Lord of the Rings, but set in Silicon Valley. And I think that's what got to him. Like, he like laughed. Even after that he had a bunch of really good questions for me, he like pushed back on the notion and the notion of the book, but then agreed to essentially what he agreed to was like I'll sit for interviews with you.”

“It's important that you had an inaugural CEO on the x.com side like Elon, an inaugural CEO, like Peter on the Cofinity side and an inaugural CTO in Max Levchin. Because the three of them are not going to hire people who cannot operate at the level that they operate. Not in the same ways. But part of what I discovered in, in researching this story is the high bar that was placed on aggressiveness hard work, intellect, puzzle, solving a kind of disposition to want to find the answer right, as opposed to leaning on experience.

And so you, you have three leaders who do set the tone for their respective organizations. But let me be clear though, that doesn't mean that they're hiring just lookalike people, right? There are plenty of people in this story who don't, who don't, um, there's a lot of heterodoxy. There's a lot of like differences and differences of opinion too, that come out in pretty profound ways.

But it does mean that when you are trying to recruit, you know, Peter is biased in the direction of like intelligent, interesting people. Max, when it comes to engineering, like he, he knows his stuff and is hiring people who are at his level as well. And so you don't, you know, I found again and again, that actually the company had remarkably low turnover for over it's four years.”

“The reason that Max and Peter and their sort of side of the company clashed with, uh, Elon is because of a difference of founder vision. It wasn't, it wasn't personal. It was Elon wanted to build X dot com into a financial services Superstore. The other side of the company felt like that's a big vision at a hard time, we're running out of money because of fraud. And because we have, you know, overhead and we're doing bonuses, we don't have much money left.

The market's cratering, uh, $12.5 million burn rate against 60 million or so in funding is only going to last you X amount of time. And it's not gonna last you long enough to do the financial services superstore. Peter acknowledged to me, he said, you know, you do have to give credit to Elon for having the biggest vision of what the company could have become, meaning that if the role, if the situation were different and maybe there were a longer runway, or there were some other dynamics that worked in their favor that maybe, maybe you could have turned that vision into a reality.”

“Big takeaway number three, and this is maybe the hardest one to get right, you, you need people who come from very different perspectives and you need them to be able to respectfully disagree with you with each other at a very high level. I read so much like of the internal email and documents and things that were shared with me. And I can tell you that, like, this was not a place for the faint of heart. It was a place with really high IQ points and a lot of just like very intense battling over ideas, building a team that has the capacity to do that strikes me as one of the hardest things to do in business, because it requires a few things.

One, you have to be courageous enough to walk into a room with David Sacks and tell him that he's wrong, which is not easy. Right. As played back to me by multiple employees, that's not easy. The second is you have to actually think very hard about what the right answer is in a given context, not what you think about the person presenting the idea, right?

So you have to have to think about like the idea itself. Not like I don't like Joe. Right. I have to think about Joe's idea. And then the third thing is you have to do this, despite the fact that the person that you're talking to might be a subordinate or might be three levels above you, meaning it has to be done in some way, irrespective of hierarchy.”

Questions and time stamps:

* [Time] – Question

* [00:01:00]: Introduction, how did Jimmy find the story and go about the research process?

* [00:17:00]: Paypal’s unique team and recruiting.

* [00:24:00]: Paypal’s journey of pivoting and iterating the product and business model.

* [00:34:00]: Culture of truth-seeking and debate, workaholism, “Paypal PTSD.”

* [00:42:00]: Paypal’s three leadership coups.

* [00:49:00]: Risk-mitigation and timing were key to survival.

* [00:57:00]: What were the lessons for the Paypal diaspora?

* [01:061:00]: Culture of ownership and giving people a lot of responsibility quickly.

Enjoyed this piece? Please let me know by hitting the ❤ button. It makes my day to see whether my readers like the content (it really does!) Thank you!

If you enjoy my work, please consider sharing it with friends who might be interested.🙏

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.frederikjournals.com/subscribe

“PayPal started off as a product with no use case. Then we had a use case but no business model. Then we had to build a sustainable business.” Amy Klement

I’m very excited to share my conversation with Jimmy Soni, the author The Founders: The Story of Paypal.

• [00:01:00]: Introduction, how did Jimmy find the story and go about the research process?


• [00:17:00]: Paypal’s unique team and recruiting.


• [00:24:00]: Paypal’s journey of pivoting and iterating the product and business model.


• [00:34:00]: Culture of truth-seeking and debate, workaholism, “Paypal PTSD.”


• [00:42:00]: Paypal’s three leadership coups.


• [00:49:00]: Risk-mitigation and timing were key to survival.


• [00:57:00]: What were the lessons for the Paypal diaspora?


• [01:061:00]: Culture of ownership and giving people a lot of responsibility quickly.

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.frederikjournals.com/subscribe

This is my conversation with Will Thomson of Massif Capital, a long-short fund in real assets, and particularly the “sectors most important to a low carbon economy: Energy, Basic Materials and Industrials.” It complements a written Q&A on the firm's process and thematic outlook.

A few highlights:

• Will is fairly bearish on the current setup of a stable, globalized world. He believes we’re moving from a highly integrated world to a multi-polar one in which “spheres of influence” play a much greater role and affect commodities and trade. Energy and food are example sectors in which nations will increasingly to protect their own interests and create resilience.


• “What comes next is going to be very different from the past 30 years. And it’s going to be very good, I think, for real assets and natural resources.”


• “We're gonna see a fundamental re-working of trade flows along different geopolitical lines.”


• Political acumen will become more important for management teams. (An anecdote from Disney on its philosophy operating abroad: “We always ask, ‘how does it reflect on the Mouse?’”)


• The collapse of the USSR led to a decline in Russia’s industrial capacity relative to its commodity production, leaving global commodity markets well supplied. That stability has come to an end.


• Europe’s decarbonatization efforts could go into overdrive and lead to attractive long-term opportunities among utilities and industrials.


• Will doesn’t believe he can forecast commodity cycles but his best guess is that we’re in the "first third."

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.frederikjournals.com/subscribe