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Michael: So, it sounds like part of the challenge was, you live in a large company environment where, as is common for a lot of them, they organized study groups of top advisors, of top producers, of those that are doing well and growing well, and driving the business profitably. In fact, we probably would have been much more profitable.
I — I loved math, but really, I was going to go down that literature route more than anything else and — and study Spanish literature. And so, it’s a little bit of an educational process, but …. It’s late in the summer in 2022, markets sold off 22, 24 percent, recovered about half of those losses …. RITHOLTZ: Sure.
.” RITHOLTZ: So people also should realize, for those of you who’ve never traded futures, it’s not like options where essentially you could put up your losses in advance and all they could do is go to zero. RITHOLTZ: Put up your losses in advance. And so it’s one of these things that math works.
And I found that subsegment really interesting because we did studies on kind of decision making biases, human biases like loss aversion and other biases that impact otherwise what should be rational decisions and make them less than rational. And I did a lot of options math, which I thought was interesting. Absolutely.
It’s a matter of making better decisions and being more profitable. But if you look at luck in the much broader context of I was born in a free, wealthy country, France, to parents who were both educated and value education, not particularly wealthy but middle class, upper middle class, right? RITHOLTZ: It’s alpha.
So I think that resiliency piece, never giving up, never giving in, redefining, Barry, success as going from failure to failure without loss of enthusiasm, I think that’s everything. You don’t give them education, so they don’t know any, they can’t only have a skillset. My dad thought that cash flow was profit.
And they had a belief at the time of driving growth profitably whereby you could organically acquire customers. 00:40:26 [Speaker Changed] They, they know, they know math, they know math. Was it a loss? It, it’s education that you get paid for, which is awesome, huh. That’s a great question.
But as a private equity owner, again, first of all, you do invest heavily of your own money in the transactions, plus you have additional ownership through, you know, the carried interest, the profits interests. You got 60 percent of losses ahead of you. RITHOLTZ: So it’s different math then I need 100x winner versus 99?
Barry Ritholtz : So, so let’s talk a little bit about your career in real estate, but before we get to that, I just gotta ask on your LinkedIn under education, it says, didn’t graduate, none working for a living. So in mortgages, the borrower can stop paying maybe a year to two years before the lenders actually book a loss.
And, you know, therein began, I think the unraveling and, and a little bit of the, the loss of that, you know, cultural juice that had kind of historically made that firm special. 00:31:40 [Speaker Changed] So there’s the emotions and then there’s the math, right? I don’t wanna experience loss. Just extreme.
So, I did the math, 20 million times a hundred. So, let me just repeat the math. And so, again, I went through this simple math. BROWDER: And I’ll just point out that this was back in the days when $100 million profit is real money. How many do you have in your fleet? It is $2 billion on the ship. RITHOLTZ: Wow.
And I, and I really like the application of math and statistics and computer science to markets. Let me see if I can go to grad school, continue this education. You learn the math that can help you with, with market making operations. It’s just not smart on a math basis to do that. And I just caught the bug.
Colin Camerer : So I, some of it was when I was in college at Johns Hopkins, I, I studied physics and math. And there was people, Physics didn’t have, people, psychology didn’t have math, economics was kind of the right mix. The math doesn’t math. That was too abstract. Yeah, I’m gonna vote.
And so I, and I don’t mean attending class for your own education, but I meant if you want to teach, you have to go to the local schools, Jeffrey Sherman : Order a course, watch a teacher, do what you’re studying to do and say, Hey, is this for me? The, the math came easier. And I really hated physics, really.
So when I was at this very fancy private school that I was at as a kid, I did math because it gave me a huge amount of free time to do the things I really cared about. But when I got to Cambridge, you know, the math was sort of serious there. So, you know, I took my math into statistics and things. Am I getting right?
SUNSTEIN: Yeah, we probably need a progressive income tax or something and jobs programs and educational opportunity. It’s a power law, this is very slightly technical for yours truly, the English major, not technical for you, the math guy. Humans are rational profit-maximizers, we’re not. SUNSTEIN: Completely.
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