Information Cascades

As Long As Human Beings Price Securities, There Will Always Be Investment Opportunities

During his recent interview with Tobias chats with Jim O’Shaughnessy, best selling author and Co-Chief Investment Officer at O’Shaughnessy Asset Management (OSAM), discusses why there will always be investment opportunities as long as human beings price securities. Here’s an except from the interview:

Q1 hedge fund letters, conference, scoops etc

Jim O’Shaughnessy: People used to say to me “Why did you write What Works on Wall street? Why didn’t you keep that secret?” Well, I know enough about human nature that I could give you the exact formula right now, I could just email it over to you. Well, maybe not you, but I could email it to-

Tobias Carlisle: You can send it to me Jim.

Jim O’Shaughnessy: Right. The minute it stops working you’re going to say “Well, this O’Shaughnessy is a fool. This doesn’t work anymore.” You’ve got to scream this stuff from the mountaintops, you’ve got to repeat it ad nauseam and you might get a few people to be willing to stick it out with you. Again, it’s not the way that we evolved right. I was talking to a new hire here and we were talking a little bit about… he was like “Why are you so into behavior?” I’m like “Well, because that’s the whole thing, that’s it right.” As long as human beings price securities, we’ve got something to arbitrage. I said to him “By the way, all of us sitting in this room are the descendants of who? The people who ran away.” Not the people who were like “Huh, that bush over there is moving, I wonder what that is? I’m going to go check that out.” No no, they all died!

Tobias Carlisle: Pick up that snake like object.

Jim O’Shaughnessy: Exactly. We are the descendants of the ones who went “Run Forrest, run.” Right, risk aversion. We are the descendants of the people who were the most cautious, the most afraid, the most I’m going to protect me and mine, right. All of that, and it makes sense right. It makes a lot of sense. It made sense for people who were optimized for living on a savanna and being hunter gatherers. It doesn’t make so much sense for people who go to whole foods and pay for it in Bitcoin right.

Jim O’Shaughnessy: Here we are and here we find ourselves. Evolution works, but it works very very slowly. I think it’s going to continue on it’s merry way. I have two grandchildren I’m delighted to say. My grandson Pierce is five and my granddaughter Mave is three. They’re Patrick’s children and his wife Lauren. It’s going to be the same in their lifetime too. I think it’s going to take a long, long time for human nature to change. It’s going to require just mountains of not only evidence, but money.

The Acquirers Podcast

You can find out more about Tobias’ podcast here – The Acquirers Podcast. You can also listen to the podcast on your favorite podcast platforms here:

For more articles like this, check out our recent articles here.

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