Episode 029 Brendan Moynihan

Summary

• Brendan Moynihan is a managing director at Market Field Asset Management and senior advisor to the editor in chief of Bloomberg News
• He wrote the book What I Learned Losing a Million Dollars, which was praised by Nassim Taleb as one of the rare non charlatanic books in finance
• The book looks at the few ways in which people consistently lose money, and how to define rules for yourself to be a better investor, business person, and succeed better in life
• Taleb labeled the book as non charlatanic because it is an opposite tact to books that promise to teach readers how to get rich quickly
• The book is part of the Tim Ferris Book Club, which is supported by readers who purchase the books through Amazon
• Brendan Moynihan had a meeting with Jim Rogers in his senior year of college, which sparked his interest in the financial services industry.
• He interned at a regional investment bank and then worked for a few years in Chicago before returning to Nashville.
• At a lunch with Jim Paul on his last day of work, Brendan proposed writing a book about Jim's experience of losing a million dollars.
• Brendan suggested that Jim tell his story to someone who hadn't heard it before and record it, which he would then transcribe and match with his own theory.
• Brendan has a good memory for dates and facts, but not names.
• Jim called Brendan in May and November of 1990 to tell him a story
• Brendan flew to Chicago and Jim's wife left for the weekend
• Jim and Brendan watched a movie and Jim was sobbing at the end
• Jim and Brendan talked for 8 hours and drank screwdrivers and beer
• Brendan transcribed the tapes on Thanksgiving Day and weekends
• It took Brendan 34 years to finish the book
• Brendan sent out a letter with a synopsis and manuscript to 30 people
• He got 810 people to read the book and put a blurb on the back cover
• He sent out 2030 press releases and got lucky with the book's success
• Brendan Moynihan sent out 2030 made up press releases and Mark Hulbert at Forbes Magazine picked it up, resulting in a byline on the cover of Forbes Magazine.
• The book broke even in three months and they sold the German rights.
• Jim was 6’1”6’2”, 170175 pounds, lean, angular, and had a gravel voice.
• Brendan Moynihan identified three mistakes investors and traders make: internalizing losses, equating selfworth with net worth, and going through a mental process.
• Jim had a funny story about getting pulled over for driving 18 mph in a Porsche.
• There are five types of market participants: investors, speculators, traders, betters, and gamblers.
• Investors part with capital with the expectation of return in the form of interest, rent, or dividends.
• Traders buy at the bid and sell at the offer and go home flat.
• Speculators buy and sell, go long or go short, and are looking for the price differential.
• Betters are interested in being right and not necessarily the money.
• Gamblers are in it for the adrenaline rush and money is just a ticket to enter.
• People should make decisions based on facts and not emotions.
• Having a plan that is developed when not in the market is important.
• The plan should include a checklist of potential mistakes and if/then scenarios for when to enter and exit the market.
• Brendan Moynihan suggests using a onepage checklist to condense a large amount of data into a smaller mental unit.
• He also suggests writing out the checklist with a pen to ensure it is followed.
• Tim Ferris mentions The Checklist Manifesto, which talks about the profound changes that can be made when a simple checklist is employed.
• Brendan Moynihan mentions Jim Rogers, who suggested shorting soy beans to learn more in one week than two years at a business school.
• He also mentions Tom Baldwin and Bruce Kodner, who were featured in Market Wizards.
• Brendan Moynihan believes a good trader is able to take a loss and not relive it, rehash it, mull over it, or complain about it.
• Running a business is not about being right or wrong, but making judicious, risk management decisions in a condition of uncertainty.
• Money is just a way of keeping score and should not be the be all end all.
• There are two positions in the market: too little and too much.
• It is important to set rules in advance to prevent misbehavior and impulse decisions.
• Warren Buffet is an example of emotional detachment from investments.
• Recommended books on investing include "The Money Game" by Adam Smith and "Once in Golconda" by James Brooks.
• Brendan Moynihan is writing a book titled "Fooled by Similarity: The Art of Risk Management"
• The book looks at how societies have pooled risk for thousands of years
• In the 1600s, probability was developed to understand manmade environments where something good or bad could happen
• In the 1880s, statistics was developed, which was mistaken for probability
• The book looks at how people can be fooled by the similarity between probability and statistics
• It also looks at how mass media can misinterpret observational data and create mass hysteria
• Brendan Moynihan discussed the importance of stories and examples in helping people digest data in the right format and context.
• He has not read fiction since finishing Atlas Shrugged in 1987, the day before the stock market crashed.
• He prefers facts and figures and does not watch movies.
• His advice to his 1820 year old self would be to wait longer to make major life decisions such as moving to the city, job length, marriage, having kids, and buying a house.