soren

I write about money before the chart explains it

[soren @sorennxbt]

The hedge fund manager who taught Michael Burry to pick stocks accidentally destroyed the mutual fund industry in a free Talks at Google lecture on the two-line formula that turned $10,000 into $8.3 million.

His fund charged 2 and 20. He gave the strategy away in a $12 book.

Almost no one paying a financial advisor 1 percent of their retirement has finished the lecture.

His name is Joel Greenblatt. He founded Gotham Capital in 1985 and compounded roughly 40 percent a year for twenty consecutive years. He returned all outside capital in 1994 because his edge was too crowded to scale.

He has been teaching value investing at Columbia Business School every year since 1996. Michael Burry - the doctor who shorted the housing bubble in "The Big Short" - learned to pick stocks from Greenblatt's 1997 book.

The 55-minute clip in this video is Greenblatt at Google in 2017 walking a room of engineers through his Magic Formula.

The whole framework fits on one napkin. Rank every stock in the S&P 500 by return on invested capital, highest first. Then rank every stock by earnings yield, highest first. Sum the two rankings. Buy the top twenty. Hold for one year. Sell. Repeat.

That single formula would have beaten the S&P 500 by roughly 14 percent a year over the last three decades if any retail investor had actually followed it.

"Cheap and good beats expensive and average. Every time."

That is Joel Greenblatt at Google in 2017. He has repeated the sentence in every public talk since. Almost no retail investor buying Nvidia at $140 has heard it.

Every hedge fund on Wall Street pays $500,000-a-year analysts to backtest more sophisticated versions of the same equation. Every financial advisor in America charges you 1 percent of your account per year to underperform it.

The Talks at Google video is free on YouTube. "The Little Book That Beats the Market" is twelve dollars on Amazon.

Almost none of the millions who watched have ever run the two-line formula on their own portfolio.

The framework is free. The willingness to actually run it before your next stock pick, retirement rebalance, or brokerage transfer is the entire edge.

[soren @sorennxbt]

@itsKfrost The lift is normal. The heels are the only reason anyone stops.

[soren @sorennxbt]

@itsKfrost The lecture is the story. The year it lags the index is the process.
Almost no one finishes that year. That is the whole filter.

[soren @sorennxbt]

The hedge fund manager who taught Michael Burry to pick stocks accidentally destroyed the mutual fund industry in a free Talks at Google lecture on the two-line formula that turned $10,000 into $8.3 million.

His fund charged 2 and 20. He gave the strategy away in a $12 book.

Almost no one paying a financial advisor 1 percent of their retirement has finished the lecture.

His name is Joel Greenblatt. He founded Gotham Capital in 1985 and compounded roughly 40 percent a year for twenty consecutive years. He returned all outside capital in 1994 because his edge was too crowded to scale.

He has been teaching value investing at Columbia Business School every year since 1996. Michael Burry - the doctor who shorted the housing bubble in "The Big Short" - learned to pick stocks from Greenblatt's 1997 book.

The 55-minute clip in this video is Greenblatt at Google in 2017 walking a room of engineers through his Magic Formula.

The whole framework fits on one napkin. Rank every stock in the S&P 500 by return on invested capital, highest first. Then rank every stock by earnings yield, highest first. Sum the two rankings. Buy the top twenty. Hold for one year. Sell. Repeat.

That single formula would have beaten the S&P 500 by roughly 14 percent a year over the last three decades if any retail investor had actually followed it.

"Cheap and good beats expensive and average. Every time."

That is Joel Greenblatt at Google in 2017. He has repeated the sentence in every public talk since. Almost no retail investor buying Nvidia at $140 has heard it.

Every hedge fund on Wall Street pays $500,000-a-year analysts to backtest more sophisticated versions of the same equation. Every financial advisor in America charges you 1 percent of your account per year to underperform it.

The Talks at Google video is free on YouTube. "The Little Book That Beats the Market" is twelve dollars on Amazon.

Almost none of the millions who watched have ever run the two-line formula on their own portfolio.

The framework is free. The willingness to actually run it before your next stock pick, retirement rebalance, or brokerage transfer is the entire edge.

[Lumen @lumenxbt]

https://t.co/3hWKMIBJcw

[soren @sorennxbt]

@zukooxbt Pink, then green, then gold, then black. The colour is not decoration. It is the film starving.

[soren @sorennxbt]

@zukooxbt That year is the filter. Most people quit and call the formula broken.

[soren @sorennxbt]

@semichenkko That is the part. Retail can run it. A fund cannot

[soren @sorennxbt]

@mmoklaaa He did not buy 13 people. He bought the years Facebook would have lost if photos moved to a phone-native network first.

[soren @sorennxbt]

@mmoklaaa Time compounds the return. The same clock compounds the fee. A 2% drag does not stay a 2% line. It eats one of the doublings.

[soren @sorennxbt]

Ten million people have watched an Australian high school teacher accidentally destroy the entire personal finance industry.

He filmed the lesson on a whiteboard in a regular Sydney classroom and put it on YouTube.

Robo-advisors charge two percent a year to hide the exact equation he teaches for free in seven minutes.

His name is Eddie Woo. He is a Sydney high school math teacher and one of ten finalists for the 2018 Global Teacher Prize.

For years he has been filming his regular lessons for students who missed class.

His entire framework fits on a napkin.

Every growth process has three parts: rate, time, result. The exponent is time. The logarithm pulls it out. Every doubling takes the same amount of time. Divide 72 by your annual return to get years to double. Linear charts lie. Log charts do not.

That last rule alone has probably cost the retirement industry a hundred million dollars in unbought pensions.

"The greatest shortcoming of the human race is our inability to understand the exponential function."

That is Al Bartlett, the physicist behind the most-watched lecture on exponential growth in history. Woo teaches the same idea in seven minutes.

Founders build financial models on linear axes and are surprised when the market grows ten times before their next investor meeting. Retail investors move in and out of the stock market and lose the exact number of doublings that would have made them rich.

The lesson is free on YouTube. Every textbook chapter on logarithms is a hundred years old.

Woo still teaches high school in Sydney. Almost none of the ten million viewers have ever divided 72 by their portfolio's return.

The math is free. The willingness to actually work out how many doublings you have left is the entire edge.

[Lumen @lumenxbt]

https://t.co/3hWKMIBJcw

[soren @sorennxbt]

@recketino He asked for a cut. His own chair hiked, and the 10-year still went to a 2002 high. The market priced the lane, not the tweet.

[soren @sorennxbt]

@recketino Simple to say. The stack only shows up when you write the years next to your real, fee-adjusted return

[soren @sorennxbt]

@zukooxbt The sticky note does more work than the neon. A place that tells you no feels more real than a place that lets you in.

[soren @sorennxbt]

@semichenkko Wall Street does not fear the formula. It fears the person who runs it on their fee-adjusted return.

[soren @sorennxbt]

@zukooxbt Doubling is not a promise. If the rate is near zero, 72 divided by that rate is the whole warning.

[soren @sorennxbt]

Jane street pays $600,000 for the skill of selling anything to anyone, and now this 21 minute Tony Robbins masterclass filmed 30 years ago in his castle gives it to you completely free.

This is the uncut 1992 session. Just raw persuasion from the master who coached presidents and billionaires.

You will learn how to find anyone's buying state and anchor your offer to that feeling. No scripts. No tricks. Just psychology that works on everyone.

This rare tape disappears regularly. Save it while you can ↓

[Superior @andreysuperior]

https://t.co/rUN1cPDY65

[soren @sorennxbt]

Michael Bloomberg would rather hire someone who worked three shifts at McDonald's than someone with a Harvard degree.

And his reasoning is not what you might expect.

Speaking alongside Warren Buffett and Goldman Sachs' former CEO, Bloomberg described his ideal candidate: someone whose father was never around, whose mother was in drug treatment, and who had to work three shifts at McDonald's just to support their siblings.

He wasn't looking for the most impressive résumé. He was looking for someone who had already learned what responsibility, sacrifice, and hard work actually mean.

Then he went further.

Why he avoids hiring friends and relatives. Why he tore down the walls at Bloomberg to create an open office. And why a prestigious university degree doesn't necessarily tell you who will succeed in business.

These are the principles behind the company he built from scratch into a global financial powerhouse with 20,000 employees.

Nearly 9 minutes of Bloomberg explaining how he thinks about people, hiring, and building a business.

Bookmark this so you don't forget to watch the whole thing later.

[Lumen @lumenxbt]

https://t.co/3hWKMIBJcw

[soren @sorennxbt]

@xbtnoah harsh but fair. Trusts them with millions for charity, but won’t lend 30k for a kitchen. So they don’t grow up waiting for handouts.

[soren @sorennxbt]

Insurance is the oldest of the four ways. It is a nine-trillion-dollar global industry. The equation underneath it was invented in 1560 by a broke Italian gambler.

His name was Girolamo Cardano. He wrote a book called Liber de Ludo Aleae. A short manual on how to win at dice. Nobody in finance read it for four hundred years.

Then in 1996 a ninety-year-old man in New York wrote a book that traced every modern risk model back to that manual. He called it Against the Gods. One thesis. Every dollar of premium ever collected on Earth is a footnote to a gambler scribbling in Milan.

His name was Peter Bernstein. He founded the Journal of Portfolio Management in 1974 and ran money at Bernstein-Macaulay before that. Wall Street called him the historian of risk.

In 2008 a small production company filmed him for thirteen minutes. He walked through the entire five-hundred-year arc. Cardano to Pascal to Fermat to Black-Scholes. Then he stopped and said the industry had built glass towers on the back of an idea a broke Italian scribbled to settle a card debt.

He died the following summer. Age ninety.

Reinsurance premiums crossed six hundred billion dollars last year. Every actuary on Earth prices catastrophe risk with the same expected-value framework Cardano invented to shave the house edge in Milan.

The video is thirteen minutes and twenty-two seconds long. Free. Eleven years on YouTube. Twenty-nine thousand people have watched it.

Almost none of them work in insurance.

[Superior @andreysuperior]

https://t.co/rUN1cPDY65

[soren @sorennxbt]

Ten million people have watched an MIT professor accidentally destroy the executive coaching industry.

He filmed the lecture once in January 2018 and died eighteen months later.

Executive coaches charge fifteen thousand dollars a session to teach a third of what he covered in one hour for free.

His name was Patrick Winston. He ran the MIT Artificial Intelligence Laboratory from 1972 to 1997 and wrote the AI textbook every computer science major in the world read for thirty years.

Every January for four decades, he gave a lecture called "How to Speak."

His entire framework fits on a napkin.

Do not read. Be in the image. Keep images simple. Eliminate clutter. Start with an empathetic connection. End with a punch line the audience can repeat over dinner. Never open with a joke. Never end with "thank you."

That last rule alone has probably cost the executive coaching industry a hundred million dollars.

"Your success in life will be determined largely by your ability to speak, your ability to write, and the quality of your ideas. In that order."

That is the actual opening line of the lecture. Winston believed it strongly enough to spend fifty years teaching computer scientists how to talk.

Founders spend $80,000 on an MBA and then hire a communications coach to teach them the same material Winston filmed once for free. Engineers write brilliant code and lose promotions to teammates who watched this lecture on the train.

The lecture is free on MIT OpenCourseWare. The textbook is free on his page.

Winston died in 2019. Almost none of the ten million viewers have actually implemented the four rules on the napkin.

The napkin is free. The willingness to actually use it in your next meeting is the entire edge.

[Lumen @lumenxbt]

https://t.co/3hWKMIBJcw