3 things you don’t know about Josh

I have known Josh for almost 15 years.

Despite the fact that he’s been writing publicly all this time, hosting two weekly shows on our YouTube channel, and appearing on CNBC three times a week, you don’t know him. Public persona aside, he is surprisingly private. I know him as well as anyone besides Sprinkles and maybe Batnick.

I’m going to share three things about Josh that you may not know. I feel comfortable taking him out because he already featured in his fabulous new book, “You weren’t supposed to see that.”

It’s unlike any other finance (finance?) book I’ve ever read: compulsively devourable, beautifully written and quite revealing.

Instead of writing a direct review, I’ll use quotes from his book as an excuse to share three things about my partner. should i know

1. It is an extraordinary history of Wall Street and the financial services industry:

There are few people who have a better understanding of this industry than Josh. Not just because of his personal experiences as a stockbroker or advisor, or as a brokerage firm manager and now RIA – but also because of his deep curiosity about what makes this industry work.

He sees what others miss—he dives into data, understands personalities, and is an astute student of human behavior. All this emerges from the book.

In the chapter “When everything that matters cannot be counted,” he explains why buying increasingly expensive stocks is both the key to outperforming — and why no mutual fund manager is capable of doing it:

“You don’t go home to Greenwich from your Park Ave office in a good mood when the market sets out to remind you how vestigial your skills have become by the day.”

He explains the impact of free capital, the subtle shift from value to growth, away from hard assets and towards intellectual property.

But it is data that determines how changing business strategies affect our understanding of market behavior. From “Relentless offer” comes the first resonant explanation of how and why the character of the market changed so much in the 2010s:

“Morgan Stanley Wealth Management recorded massive $51.9 billion in fee-only asset flows for the full year 2013; 37% of Morgan Stanley’s total client assets are now in fee-based accounts at a record high.

Bank of America Merrill Lynch’s wealth division had similarly stunning results: $48 billion in flows to long-term AUM in 2013; the brokerage reported that 44 percent of its advisors had half or more of their clients’ assets in a commission-based relationship.

Wells Fargo Advisors said at the end of 2013 that it had $375 billion in account assets under management, about 27% of its $1.4 trillion in total AUM…”

As he notes, it wasn’t the shift from active to passive—which has been growing for decades—but the shift from the transactional fee business to a fiduciary fee-based model that made all the difference.

Josh shares even deeper insights into the investment industry in “8 lessons from our first year.” We were all a little overwhelmed that first year, but he was bright-eyed about the challenges ahead. This is also reflected in his Wall Street presentations – if you ever get the chance to see one, Don’t-Walk-Run to be in that audience. Not only are his decks hilarious, but you’ll leave more knowledgeable about the industry than you can imagine.

2. Josh has one of the highest EQ’s of anyone you will ever meet. (This matters a lot).

This manifests itself in a few interesting ways: First, it has zero tolerance for fools, quacks, crooks, and anyone who tries to separate honest investors from their money. (We all share this trait in common). But he has an uncanny ability to see into people’s souls and judge them for who they really are deep down.

This is an extremely useful skill when hiring people. I lost count of the times in those 30 seconds in an interview I got a look from him that said “Lame duck. I left.” It’s weird. Over the years I learned to trust his instincts because he was invariably right.

Second, his EQ is revealed in who he is willing to trust: the guests he has The Compound & Friendsaffiliates with whom we associate and various companies with whom we do business.

“At every market moment, there is a man – and it is always a man – who is deified by his peers and the media; a the anointed one in every sense of the term. His every word is hung upon, his statements are the talk of the day, his offhand remarks make the next day’s business press headlines. David Tepper now occupies this place in the firmament, wholly and completely…

All of his insight into who is worth your time (or not) is laid out in the book; oh, and he gives names:

“David Tepper is becoming today’s hedge fund God. He’s younger than Soros and Cooperman, less scoundrel than Loeb and Icahn, can claim bigger profits than Einhorn and Ackman, carries none of Steve Cohen’s regulatory taint, and has all the gritty authenticity that almost none of his peers have possess it when in a public setting.”

I can look at someone’s high media profile or history at legendary firms like Goldman Sachs, Merrill Lynch or Morgan Stanley. He does not suffer from any of these. If you are worthy, he informs us; if you’re a bastard, you can’t hide from him.

“Hard pass, next candidate.”

3. He’s a tormented poet, not a financial bro.

This is the deepest and darkest secret I am sharing with you today. And it’s his worst kept secret, because all you have to do is read the beautiful and elegant prose that flows from his pen. Not just his insights, but his eloquence is unmatched in financial writing. Ignore the Long Island accent and TV persona – just read the words he writes.

from The new fear and greed:

“Livermore had rivals and counterparts that you saw as the enemy, but it was small and close. A knife fight. This today is nuclear war. No survivors. It’s a Squid Game event on a global scale. Millions of nameless and faceless strangers in an online environment that literally knows no spatial or geographic limitations. It is an environment where the richest successful players like Chamath and Steve Cohen could be public…daily— accompanied by the mob throwing fistfuls of horse shit at them from the alleys. I don’t know if the heuristics that Livermore played the game on would be that easy to apply…”

Brutal honesty.

To really see where the poet flourishes, check out the shortest chapter in the book: “I did everything I had to do.” Instead of reiterating the active versus passive debate, he tells the story from the perspective of the losing side of that debate, the real person who is set in motion by The tireless offer:

“I could explain how people don’t care about the opportunity to outperform by 100 basis points every year. What the SPIVA chart calls us scoundrels every 90 days. So are bloggers, but they don’t wait 90 days, they just log in all day. I could tell him how all the brokers who used to sell us funds have changed careers, they are all financial advisors now, they don’t send money to clients in anything they might have to defend. Cover your own ass. No one ever has to defend an index. It is an absurd proposition. It’s like you have to defend the weather. No one ever has to answer for the weather. The S&P 500 is the weather…”

Most of us don’t think about the poor bastard on the other side of our jobs who calls his wife to tell her he’s just been fired. Josh does it.

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Do yourself a favor and get yourself a copy of this book. Read it slowly. You won’t regret it.