Watch the full video of our conversation on the Spread Great Ideas YouTube channel.

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Full Transcript of Our Conversation

Introducing Taylor Pearson: Author, Investor, and Former Athlete

00:00:01.79 – Brian David Crane

All right, please welcome my friend Taylor Pearson to the show. Taylor’s a fellow father, an entrepreneur, the author of The End of Jobs, an essayist with his Interesting Times newsletter, a fellow Tennessean, one of the founders of a long volatility and tail risk hedge fund, and a former college football player, where he played offensive line.

00:00:21.96 – Brian David Crane

He spent the last decade researching and writing about how you can better invest your time and money in an uncertain world. In other words, how to become anti-fragile. Welcome, Taylor. Thanks for coming on.

00:00:31.81 – Taylor

Yeah, thanks for having me. Thanks for tuning in.

00:00:34.77 – Brian David Crane

All right. I was going back through my bookmarks of things that you had written on Twitter over the years, and I came across a gem that I wanted to start with. It is, you led on a tweet here. It says, the best lesson I ever got about how to stop procrastinating was from a podcast episode called The Drama Denominator.

The Drama Denominator: Owning Your Role in Life’s Challenges

00:00:54.32 – Brian David Crane

The drama denominator is a simple yet powerful concept. You are the common denominator of all the drama in your life. You haven’t had five crappy jobs. That was three crappy relationships in a row that did not happen to you, you happened to them.

00:01:06.18 – Taylor

Thank you.

00:01:06.18 – Brian David Crane

You are crappy at your job or you are crappy at your relationships. So strong statements. Let’s see a little bit more. Like, uh, even you talked about a personal experience you had where you had a job teaching English that you didn’t like very much. There was a moment while I was listening to the podcast that it clicked with me so clearly that the problem was me, not the job.

00:01:22.76 – Brian David Crane

So, how does this tie in with the drama denominator being the theme that you had from the end of jobs? And what I mean by that is that I think they both touch on agency.

00:01:35.69 – Brian David Crane

Is that right?

00:01:36.52 – Taylor

They do. Yeah. And I think I was, I remember listening to that podcast. You have these distinct memories of certain things. I like to remember listening to that podcast. I was teaching English in Brazil. This is the year after I graduated from college.

Teaching English in Brazil: A Turning Point in Self-Discovery

00:01:49.16 – Taylor

And, you know, but whatever classic year after, I had no idea what I was doing with my life. I thought I was going to go to law school. I said not to do that. I was trying to figure it out.

00:02:00.38 – Taylor

I got this English teaching job. I’ve got to be in Brazil and teach. I thought that was cool. I did that, and I think like at that point in my life, I was like, I was on, I was,

00:02:14.72 – Taylor

You know, I guess I was in that transition phase of like everything up to then had been kind of scripted. You know you go to elementary school, middle school, and high school. Like, next, it was kind of scripted, right? Like, at least for my college, it was like more or less… That wasn’t really a decision that I made. It was just like that was always the expectation, and I never even thought to question it. Like maybe I wouldn’t go to college or something.

00:02:35.97 – Taylor

But then, after that, you can do anything. And I think that was… I guess I was overwhelmed, like I just didn’t know how to deal. It was like a meta problem that I’d never had. Like I was good at school.

00:02:46.52 – Taylor

Like, okay, you have to be good at school or good at sports. And I was pretty good. I don’t know. was fine. Right. Like I could, I could, I could be great, and I tried hard at sports and all that kind of stuff.

00:02:56.56 – Taylor

And then I was, yeah, I was just like 22 and I was dealing with this. Like, oh, now I have to pick them, like, there’s not an obvious next thing to do.

00:03:03.38 – Brian David Crane

Something You’re in a foreign country.

00:03:04.79 – Taylor

Like, I actually have to figure it out.  sort of thing. And so I think I was like, still sort of like, I got this job to do. I was like, Oh, I just had to be really good at teaching English or just do this thing.

Understanding Personal Agency and Life Choices

00:03:17.61 – Taylor

And I think I can match it. It was just like a crummy manager, like a super classic basic situation. Like, it just wasn’t a good company to work at. Like,  the school wasn’t well run. Yeah. And I was like, Oh, like I’m complicit in this because like, I’m letting this happen. Like, I’m just letting this happen to me more or less. I’m like, I could quit.

00:03:39.79 – Taylor

Like I, you know, I sort of, and I think that was like I don’t know. I’d never like to quit something. Like I’d never quit school. I’d never, you know, like I hadn’t quit a lot of things. I just kept sort of doing the things.  Yeah.

00:03:53.94 – Taylor

And so, yeah, I think at that stage in my life, there were just a lot of things like that where I was like, oh no, like, you know, the word agency was very prominent in my mind. Like, oh, I have agency over this situation. Like, I can just quit this jo,b and there are all these things I can do.

00:04:07.14 – Taylor

And those things have, right.

00:04:07.11 – Brian David Crane

But then what’s next after that? Then the question becomes, yeah, sorry.

00:04:10.74 – Taylor

There are implications and costs and trade-offs and, you know, all those sorts of things that have to be considered. But the first step is acknowledging some level of agency. And I think like, ah you know, you don’t have 100% agency over everything, but you almost might as well act as if you do, because, you know, in most situations, like the things you don’t have control over, but you mean it’s right you don’t have control and you just have to chalk those up to trade-offs. Like you can’t do this, you can’t do that, fine, fair enough.

00:04:41.16 – Taylor

So like within the possibility space. What can you do? And I think I just find that I still like to catch myself in that not infrequently that I’m like, oh, I could do this, thing you know, and I like, you know, someone will bring, oh, you could just do X. And I’m like, oh, I could just do X actually.

00:05:03.48 – Brian David Crane

Yeah, there’s there’s a very, sorry, sorry do there’s a very, innate there’s a prayer that is, pray as if, yeah, it’s like act as if, act as if it is all up to you, pray as if it is all up to God or something like that.

00:05:03.93 – Taylor

But

Lessons from the Serenity Prayer and Personal Responsibility

00:05:10.23 – Taylor

Serenity prayer.

00:05:17.25 – Taylor

Oh, no, my grandma had one on her pillow that was,  oh gosh, now I’m blanking on it. I have it written on a sticky note in my room.

00:05:17.53 – Brian David Crane

I don’t get it exactly right, but it’s, it’s

00:05:27.68 – Taylor

Uh, was it like,

00:05:29.93 – Brian David Crane

Grant me the serenity to change it to accept the things I cannot change and the strength to change the things I can, or something to that effect.

00:05:35.51 – Taylor

Yeah, that’s right. The courage to change the things I can, the serenity, except the things I can’t change, in the wisdom to know the difference or or something like that.

00:05:38.19 – Brian David Crane

Yeah.

00:05:41.68 – Brian David Crane

Yeah.

00:05:42.34 – Taylor

Yeah. Which I think is, uh,

00:05:42.82 – Brian David Crane

Bingo. Yeah.

00:05:45.09 – Taylor

I don’t know.

00:05:45.18 – Brian David Crane

Very profound.

00:05:45.88 – Taylor

I remember my grandma had a pillow with that, ah, like, what is it? Knit, like quilted or stitched into it.

00:05:51.03 – Brian David Crane

Yeah.

00:05:51.58 – Taylor

And I think about it all the time.

00:05:53.32 – Brian David Crane

Yeah, yeah it’s yeah it’s something that I’ve heard said in different ways. Another way of saying it is like everything’s your fault, although that’s a bit rough for some people. And then also another one, which is why you can and can’t do everything you want. And that guy’s argument was that basically, you cannot do things that violate the law of nature or that other people are going to.

00:06:17.07 – Brian David Crane

Like basically, like it’s for the core non-aggression principle where you can’t like you can’t steal from somebody else or like take like to do something that violates their sovereignty.

00:06:28.93 – Brian David Crane

But outside of that, you can’t do just about anything else.

00:06:29.09 – Taylor

Be

00:06:32.46 – Brian David Crane

But you need to know what the laws of nature are, and you also need to understand that personal sovereignty does not give you an idea of what you can and can’t do. Like that’s how you kind of form a form of philosophical boundary in which you decide what’s capable for yourself.

00:06:50.97 – Taylor

Yeah, I think ah, um.

00:06:51.06 – Brian David Crane

I’m watching you. I’m watching your face on that. What do you think about that? That’s ah That was a big mouthful.

00:06:57.83 – Taylor

In the word metaphysics, I think it’s like there’s physics, and like everything else is mad. This is not really what the word metaphysics means, but if you just look at the two root words, like there’s physical reality, like you can’t know you can’t violate the law of thermodynamics as far as we know, right? Like that seems to be pretty robust, but like more or less everything else is negotiable.

00:07:19.92 – Taylor

And yeah, I think that’s like a helpful thing. I don’t know. I think that’s something that I think, I think it can be taken. Sometimes you’ll hear this excuse, like treating other people shittily. Like, I think that’s one, like, like, oh, I can just do, I’m this individual entity and like, I can do anything I want sort of thing. I think that’s maybe the naive interpretation of that.

00:07:43.06 – Taylor

Yeah.

00:07:44.27 – Brian David Crane

Or a narcissistic one.

00:07:45.59 – Taylor

Yeah, or a narcissistic interpretation of that. But like, I think there’s like a healthy interpretation of that, which is just like, yeah, like, let’s, let’s have more agency, basically, right? Like, let’s accept that the realm of things that can change is actually quite broad. And I think that’s cool and empowering. And yeah, so that, that, yeah, that package hit me at the right time. And I think that’s, I still find myself reflecting back on that pretty frequently.

How “The End of Jobs” Was Shaped by Early Experiences

00:08:10.87 – Brian David Crane

Did it, did it play into, for those listening, what is the core message of the end of jobs? And did your experience in Brazil teaching English, did it, how did it play into the creation of that book?

00:08:24.43 – Taylor

So, I get kind of the end of the job, the way I’ve been describing that, it’s sort of like, I’m going to call it like a career self-help book that was sort of like the internet changed a bunch of stuff about how business and careers, and industries work. And like, you can take advantage of that. And that’s kind of an interesting opportunity.

00:08:42.15 – Taylor

I think sort of one of the through lines of that is basically like the role technology plays in like agency right I think kevin kelly has a great book called what technology wants he talks about this little bit more philosophical than I talked about it but like more technology means you can do more things right like without but there’s no bach without a piano or I don’t know what I did whatever the precursor the piano was to do yeah um

00:09:07.32 – Brian David Crane

Yeah, Beethoven without a piano. Yeah.

00:09:11.75 – Taylor

And so you can just like to do more stuff, right? And I think I, yeah, grew up in Memphis, Tennessee, went to like a small school in Alabama, graduated in 2011. And like, I didn’t know anyone doing anything remotely tech.

00:09:27.13 – Taylor

Like I think, you know, most of my friends from college, like they just, you know, worked at a bank, went to law school, like just, just normal stuff, sold insurance, you know, like just kind of the typical things.

00:09:38.70 – Taylor

And I like to find all this stuff on the internet.  Like I remember listening, I was listening to podcasts in my senior year in college, 2011. And like, no, the podcasts were not a thing then. Like the top business podcast on iTunes in 2011 got like 10,000 downloads an episode.

00:09:57.90 – Taylor

And I want Rogan to get like 50 mil. I don’t know why. Like it was, you know what I mean? It was just this super niche weird thing. But then, and I, I mean, you know, this robot, like you could just do all this stuff on the internet all of a sudden.

The Internet’s Role in Career Freedom and Entrepreneurialism

00:10:10.43 – Taylor

And you know, all this stuff.

00:10:12.55 – Brian David Crane

And anywhere in the world.

00:10:14.20 – Taylor

anywhere in the world, ah, you know, and it all sounds like a little utopian now, but like no gatekeepers, et cetera, et cetera. And I think that, you know, the book came out in 2015. It was probably less true now than it it was then, but like, yeah, I mean, and you just, I mean, if you saw all these people that started the business on their laptop doing SEO, like all these things, AdWords Arbiter, like there was just all these things going on. And it was just, I thought that was really cool and interesting. And basically you could do,

00:10:43.38 – Taylor

You could you know leverage this analogy to do more new cool stuff. But kind of my basic thesis was just that we were going through this transitional period where entrepreneurialism, not necessarily starting a business, but thinking more entrepreneurially about your career life, was going to become increasingly important.

00:11:03.52 – Taylor

And that like,

00:11:03.60 – Brian David Crane

And to take more agency over it, basically.

00:11:05.29 – Taylor

Yeah, I learned some business processes in this big company, and I can basically coast on that for 30 years because I’m really hard to replace. And this business process is complex, right? Like, I think that was like legitimately a viable thing you could do for a long time.

00:11:20.87 – Taylor

And like that was less true and I think and we I know we’re going to talk about some history stuff later and you’d sent over but you guys listen to podcasts talking about like the sort of post-World War II industrial boom in the US and like how much of that was like socially like you got back from like fighting a world war you saw people die and like

00:11:28.18 – Brian David Crane

Yep.

00:11:41.34 – Taylor

Just being able to show up nine to five and do some stuff and go home. Like, I can imagine that being real. Like if I’d just been through the most horrific, chaotic, whatever experience you could basically imagine, and like half my friends are dead, like it’d be nice to clock in and clock out and like sit on a business process and like,

00:11:50.17 – Brian David Crane

To say heaven on earth.

00:12:05.54 – Taylor

You know what I mean? Have a barbecue.

00:12:07.05 – Brian David Crane

Mm-hmm.

00:12:07.54 – Taylor

You know And I guess when I go to those chaotic, you know, there’s there’s periods too where I’m just like, everything’s been hectic and I’m stressed and like, yeah, I just want to like sit at home and watch football and TV and have a beer and like not try to pursue, you know what I mean?

00:12:21.36 – Taylor

So yeah, you know.

00:12:21.98 – Brian David Crane

Yep. Not intellectualized, not thinking about A, B, and C. Yeah. I mean, you had written, I know you’re a golfer. I was going to ask if golf is one of the ways in which you tune out, not tune out, recharge, let’s say.

00:12:36.62 – Taylor

Yeah I don chance your were it Yeah, I think it’s ah yes I figure you’re I don’t think it’s a nice way to go for a long walk and have enough going on to be sufficiently distracted that you can’t think about anything. It’s not like it’s not a super intense sport. Obviously, it’s the least intense. I don’t know if it’s even a sport.

00:12:54.79 – Taylor

Um

00:12:55.15 – Brian David Crane

Yeah

00:12:55.99 – Taylor

But it’s like, and you have to think about hitting the ball and where you want to hit the ball and what club you want to hit the ball with. And like, it’s almost like TV, right? It engages you a little bit, but not so much that it’s super stimulating. So yeah, I find it very likable, there’s for sure a meditative quality to it.

00:13:15.14 – Brian David Crane

Are you going golfing by yourself, or are you going with friends when you’re doing this most of the time?

00:13:20.60 – Taylor

Probably fifty-fifty.

00:13:23.36 – Taylor

Yeah, I like both. It’s fun. It’s fun to play with friends. Sometimes it’s nice to just like, yeah, put on some music and play myself.

00:13:30.22 – Brian David Crane

Yeah. All right. So let’s, let’s jam on some history stuff because I had written something down for myself that I really, something else you wrote that you really like. Anybody who’s listened to this, who is not subscribed to Interesting Times, it’s a very good newsletter.

Why Studying History Offers Perspective on Today’s World

00:13:44.17 – Brian David Crane

Taylor curates both the best of what he finds elsewhere online. And he also writes essays and shares them with his, uh, with his newsletter list. This is it from one of the newsletters. It says, while reading the newspaper or magazine often feels productive in the moment, my experience looking back has been that it is seeing the long arcs of history that has allowed me to make better sense of today’s events, or at least think I’m able to make better sense of today’s events. So a caveat there. So he says, in some small way, studying history takes us out of the details of our limited life experience and gives us a look at the breadth and depth of the human condition.

00:14:20.29 – Brian David Crane

In that vein, I’ve put together the top 10 history books that have most shaped my thinking about the past, about both the past and what it means for the present. The list heavily biases biographies.

00:14:31.81 – Brian David Crane

Why? Because I’ve found the narrative structure of biographies to be more helpful, and actually understanding the impact and shape of history. Humans are narrative-driven creatures, and it’s easier to read and learn from a story than a dry list of events.

00:14:44.30 – Brian David Crane

For example, suppose you want to learn about post-World War II America and American business, and what followed World War II. In that case, you’d be hard-pressed to do a better biography than one of Warren Buffett. If you’d like to understand the history of finance,

00:14:56.61 – Brian David Crane

But better than a biography of JP Morgan, these books are quite unquote epic in the sense that they are long. The shortest on the list that you put together is 496 pages, and the longest is over 1,200.

00:15:07.21 – Brian David Crane

History is complex and interdependent. Seemingly small and meaningless events can end up having a tremendous impact. So are these history books, well, since you wrote that, think that was also in 2018, if I remember correctly, you’re thinking about history books. Has it changed?

Taylor’s Top History Books and the Power of Biographies

00:15:26.46 – Brian David Crane

Are the top 10 still the top 10? Yeah. Do you still like light, and do you still gravitate towards biographies when it comes to history? or you more You and I are both fans of William Manchester, who writes some biographies, but also writes

00:15:43.15 – Brian David Crane

Like period pieces, let’s say, where it focuses on individuals, but it’s not…

00:15:45.06 – Taylor

Yeah. He’s a world that is only by fire, too. Is he? That’s what he mentioned.

00:15:48.25 – Brian David Crane

Yep.

00:15:48.88 – Taylor

Yeah.

00:15:49.74 – Brian David Crane

Yep.

00:15:50.01 – Taylor

And Yeah. Mostly still biographies. I try to think. I’ve read the LBJ Caro series since 2018. So that would certainly have to go in the top 10. Yeah.

00:16:02.47 – Taylor

And

00:16:04.01 – Brian David Crane

I’m reading that one now.

00:16:05.59 – Taylor

I think, yeah, it’s cool. I’m in Austin, so it’s funny you’re in lots of the early books, lots of the events are happening, places I recognize, which is fun, and

00:16:18.75 – Taylor

There’s no other really great history. Actually, I reread the House of Morgan finance series, so I would certainly keep that one in there. But yeah, I still mostly write biographies.

00:16:30.92 – Taylor

Yeah, I do like some of the… I went through, I guess found like a bit of an age of exploration. I don’t know. I’ve read like, Conquerors pops to mind. It’s a nice history of the early Portuguese empire when they got to Goa.

00:16:47.70 – Taylor

Yeah.

00:16:51.07 – Taylor

But yeah, I think biographies in general are easier to follow. I guess it’s hard to do biographies when you go back more than a few hundred years. I think just for research purposes, right? Because like there’s just not, there’s not sufficient literature, in the fourteen hundred to like write a material biography of someone’s day-to-day life, right?

00:17:07.96 – Taylor

Like, there are plenty of people who know what FDR was doing more or less every day, right?

00:17:12.21 – Brian David Crane

So

00:17:12.61 – Taylor

Like, there are tons of records and memos of… You know, all his public office and schooling and stuff. But yeah, I think I find as I read more history books, I think maybe the timely stuff becomes more interesting because I have some sort of overall structure to hang it off of.

00:17:33.22 – Taylor

I do love actually I was in Madrid a few weeks ago and went to the Prada and the Reina Sofia which are two like the 20th century are two of the 20th-century art museums there and the AI I was using the Claude and like the AI stuff is like, yeah, so cool.

The Rise of AI Tools in Learning and Interpreting History

00:17:51.26 – Brian David Crane

To learn about what you were looking at.

00:17:54.30 – Taylor

Like what was going on economically in Spain in the 1920s, like the backdrop as a muse guide. And so I’ve, I don’t know. I find myself using more and more of that stuff for history because you’re able to like just really specific questions that would be like hard to find a specific book on. You can sort of like piece together in an interesting way and like,

00:18:18.79 – Taylor

Yeah, like, I think for me, like, uh, economic and financial history is interesting. And then, like thinking about how that overlaps with technology or culture, like how all these things sort of go together and it’s hard to write a book.

00:18:29.83 – Taylor

It’s not, it’s like a clear thesis to turn into a book. there, but I do find my like self like doing more and more of as I’m reading other books, like being able to like more or less, you know, come up like what’s going on, what’s the backdrop, what was going on for this author at the time they wrote this book, that kind of stuff.

00:18:48.75 – Brian David Crane

And do you feel that you studied history at a university, right?

00:18:53.57 – Taylor

I did, yeah.

00:18:54.96 – Brian David Crane

And, you know, let’s say post-university Taylor Pearson, does he have this thirst for history? And I ask this in a different way, and I’ll tell it with a small personal story, which is that I didn’t study history in university.

00:19:10.92 – Brian David Crane

Like my my interest in history became much more pronounced, I don’t know, so it’s called like my mid twenty s onwards and Oftentimes when I’m reading books now, we can I want to talk about conquerors a minute in the Portuguese empire and how this small small nation was able to you know colonize or conquer so much of the world. Because that’s like a fascinating story. But that kind of a story, where you go, I wish I had learned about this in school.

00:19:38.97 – Brian David Crane

Do you feel like when you came out of university in Alabama, that you had a, let’s call it that overarching framework of world events by which to hang things on?

00:19:51.98 – Taylor

No, no, not really. I don’t, it’s like, I don’t know how useful a modern university structure is for history. Like, it’s not clear to me. What’s the line from Goodwill Hunting? Like, you know, you paid all this money for this education that you could have gotten with like $32 in late fees at a public library. Like,

00:20:08.53 – Brian David Crane

Yeah.

00:20:09.52 – Taylor

I don’t, you know, like I really had, I enjoyed being in, I feel like a lot of people like I hated college. I actually really enjoyed college. I thought it was super fun. and I liked going to classes. I liked writing papers. I liked reading all the books. Like I thought that was great.

00:20:22.07 – Taylor

I really enjoyed it. I think probably if I didn’t have the discipline without some structure, I would have the discipline at that point in my life to sit down and read 30 books a year and write papers about them. Probably not.

00:20:34.10 – Taylor

But I didn’t,

Historiography: Why the History of History Matters

00:20:36.18 – Brian David Crane

But what was so sorry, were they trying, were they trying to instill in you like this, like ah almost like a classical education as far as understanding Western culture from like Greco-Roman times up to now?

00:20:49.52 – Brian David Crane

Or was it that you did deep dives on specific topics with these 30 books and the essays that you wrote and the university?

00:20:57.09 – Taylor

It was like, you know, taking a class like modern 19th-century China or something. Right. And then, now, the professor is an expert in that and you’d read 10 books relevant to that topic.

00:21:01.62 – Brian David Crane

Okay.

00:21:06.75 – Taylor

And think at least the school I was in, I don’t know how different issue departments work, but I think the main thing I took out of it was probably like, you wouldn’t just get from reading books, is like the concept of historiography, which is like the history of history.

00:21:21.00 – Brian David Crane

Explain that concept. Yeah, please.

00:21:23.64 – Taylor

Right. So,  I went to school in Alabama, and we all did like your sort of sophomore year project, which was and then you did your senior project. like what When you’re writing like an academic history paper, you would have to write the history of the thing, but then you’d also write like the history of the history. So we all did… The class was about the Civil War.

00:21:44.50 – Taylor

So you’d pick something from the American Civil War. topic relevant to the American Civil War. And you’d write, you’d read about it. And you’d write a paper about what I, then you know, your sort of thesis on that. and topic But then you’d also have to write a history of the history, which would say like, so, you know, if you’re reading American Civil War history, like the first 10 or 15 years after the Civil War, a bunch of books come out and they tend to either be like hagiographies from the size, hagiographies of Robert E. Lee or something that was this great thing that was lost or and this like very vitriolic, ah this thing that destroyed us, all these evil people.

00:22:25.50 – Taylor

Sort of things. And then, like you had basically the 100 year anniversary of the Civil War was during the Civil Rights Movement in the US. And so you had a bunch of new books come ah out about the Civil War that was now kind of being told through this like social lens of what was going on in America around civil rights reforms and race relations and and what was the role, what was the history of that America and what role did the Civil War play in that kind of thing.

00:22:42.70 – Brian David Crane

Race relations.

00:22:53.21 – Taylor

And then

00:22:53.49 – Brian David Crane

Yeah. Because so much of the civil rights movement was tied up in things that were happening in the South and Alabama and these kinds of places and where they would talk about things like states’ rights. and And George Wallace used to often talk about, like, yeah, it was the same arguments being made as in the lead up to the Civil War, which was like the state has state being Alabama or Louisiana whatnot, MississippI has a right to do certain things and the federal government can go pound sand right.

00:23:20.86 – Taylor

Yeah, and then obviously would the political bias of the people writing the books or whatever. And as soon as I think that that’s probably like academically, I don’t, most people that just read a bunch of history books don’t tend to think about that, I find.

00:23:38.56 – Taylor

Unless you don’t in some way read a bunch of history books and you realize, like, oh, these are all, and you read 10 books on FDR and like there’s a bunch of different ways you can interpret FDR’s, you know, role in America, right?

00:23:49.77 – Taylor

And so I think that, probably academically, that was like the thing that I took away. That’s very useful, as I tend to like, when I’m reading a history book, I tend to be very cognizant o,f like, when did the book come out? What is the background of the author who wrote it?

00:24:05.09 – Brian David Crane

What axe does he have to grind?

00:24:05.14 – Taylor

Like, yeah. Well or just, you know, even, you know, even more charitably, just like what, you know, what innate bias and like worldview do they bring to it that,

00:24:07.86 – Brian David Crane

Who’s he trying to correct? Yeah.

00:24:15.51 – Taylor

They’re being totally honest with their sort of view, but it’s like, right. They still have, you know, we all have our own sort of preconceptions, and I kind of think so.

00:24:21.26 – Brian David Crane

Hmm.

00:24:21.71 – Taylor

I tend to be, don’t know, that’s my observation, just, that’s probably the biggest thing I’ve got of like a formal history education is I tend to be much more cognizant of those factors and just much more, don’t know, like dubious.

00:24:34.48 – Taylor

I read a little bit more skeptically about like, why were these events in the book? You know what I mean? Right? Like, they selected the events that were in the book, they composed the narrative of the book.

00:24:45.73 – Taylor

And yeah, FDR is a big job. Like you can tell so many different stories about FDR. I can give you whatever your political bias is, I can give you some story about FDR and that caters to what you want it to sort of like cater to.

00:25:03.14 – Taylor

And so which of those is true and what you know what should we learn from that?

00:25:04.70 – Brian David Crane

Yeah

00:25:07.86 – Taylor

And that’s very subjective at that point.

00:25:11.39 – Brian David Crane

Yeah, I found that William Manchester, he wrote a book about FDR. It wasn’t only about FDR, but he did talk about Yalta as one of these, the Yalta conference in which the the US, the British, and the Soviets were, well, they weren’t Soviets, they were Soviets, we’re were meeting to kind of like decide post-World War II plans, and that the Republicans post Yalta always pointed at that event as a means of making whatever point they wanted to about FDR. And the way Manchester frames Yalta in that book is he’s like, it was, he talks about the issue. He talks about it in a way that you pick up some of his opinions about it, but he’s very careful in his language. And then you go back and read it and you can kind of see how he talks about different presidents

00:26:01.92 – Brian David Crane

Talks about eisenhower talks about Truman and he he I think he’s aware of his own biases as a historian and so he tries to be very neutral in his language as far as how he describes each of these personalities and why they made the decisions that they made because I think he’s also quite sympathetic to what you’re talking about sort of selection bias as far as saying yeah I chose this event to be in this book because I’m trying to tell a meta i’m trying to tell a meta story or make a meta point right

00:26:32.98 – Taylor

Uh yeah I think I mean it’s hard to do that in some ways I feel like it just kind of like those words like look this is my bias like here’s where coming from now here’s the book right and it’s like all right cool like I mean like I was just i’m just gonna read through that lens and like fair enough sort of things I I think that that’s the approach I tend like you know I have a bias you know I have a particular particular worldview along a bunch different dimensions or whatever and so to example I can try to just like make that explicit like look I’m not sure this is true, but this is kind of where I’m coming from.

00:27:04.77 – Taylor

And this is written from my perspective. So, you know, you, you, you filter it from there.

00:27:08.44 – Brian David Crane

Take it. Yep, yep, yep. Your mileage may vary, let’s say.

Taylor’s Historical Bias: Technology as the Prime Driver

00:27:13.38 – Brian David Crane

What is your bias? What I mean by what is your bias? and and what I mean by what is your bias when you and I saw each other, in Austin in January, we were talking, you mentioned at some point you would like to write your own history book or books potentially what would be in the intro to those history books about, you know, what would be your bias? You’d basically say like, cool. Hey, I’m Taylor. Here’s how I see the world.

00:27:40.06 – Brian David Crane

Yeah like yeah, I don’t know. Like I’m a pro socialist. I’m a pro capitalist. I’m pro union. I’m pro democracy. Don’t know what you’d say to it, but, uh, what would be the bias.

00:27:51.38 – Taylor

I think I had this idea a few years ago. I don’t think this is like a novel idea, but like I was calling them like philosophies of history. But I just want to notice that people talking about interpreting current events or people writing history books or whatever, like they tend to think of some force as the driver. Right. That like and so like.

00:28:14.34 – Taylor

I was trying to come up with funny names or clever names, like Carlotta Perez or BalajI Srinivasan or the sovereign individual sort of a class of like, I would call it technologically driven history, which seems to be like technology is the driving force that technology happens. And then the sort of downstream economic cultural implications of that.

00:28:36.51 – Taylor

And that’s just us. That’s us sort of like coping with not Marshall McLuhan comes to mind. We shape our tools and our tools shape us. Right. That’s probably the one I’m, that’s probably my, of all the schools I could kind of come up with, that’s probably the one that I’m most influenced by and tend to think most of. I tend to think technology happens mostly in an amoral way, right? There’s just some combination of ideas and things that happen.

00:29:05.15 – Taylor

Yeah, you know, we shape our tools and our tools shape us, right? Like, I think that’s probably the most succinct framing that we have smartphones, right? And, you know, once you have a smartphone, you know, I think about like,

00:29:19.86 – Taylor

Right, the internet came along, no one’s idea in the internet was good, the internet’s instead of having a newspaper, you’re gonna have a feed. And if you scroll on a feed, you can place ads in the feed and you can deliver content algorithmically to maximize people’s attention within the context of this feed, which you can’t do in a newspaper because you have to print it, the same one for everything. And then, okay, if you deliver content algorithmically, you shape people’s worldviews in a different way than if everyone’s reading the same newspaper or watching Dan Rather.

00:29:47.63 – Taylor

There was no one who was working on the internet in the late 80s, early 90s. Like, oh, well, this is clearly how it’s going to happen and those will be the downstream implicate. They’re just like, oh it’s cool. You can do this stuff with like ah you know computers now and you can connect them. and that’s it that that tends to be my bias.

00:30:06.84 – Taylor

I guess I would contrast that Peter Zaihan, I know, is like a big… like He has a very geographic sort of demographic… view of history, right?

00:30:16.38 – Brian David Crane

Lens that you argue.

00:30:16.61 – Taylor

Like he tends to weigh those favors or weigh those factors much more heavily than weigh those factors. Or like ah Francis Fukuyama has a very sort of institutionalist view of history, right?

00:30:29.09 – Taylor

That we create these institutions, government institutions, corporate institutions, l ah you know, limited liability companies, et cetera. And like those who have become the defining, right? and features. So I think all those are certainly true in their own way. Or like, I think I think there’s certainly a cultural history, right? Like you have these cultural issues that come up, right? And these cultural issues end up being the ones that drive policy, you know, how people shape choices that shape them, you know?

00:30:55.60 – Taylor

So my bias tends to be, I can think of technology as the driving force.

00:30:59.02 – Brian David Crane

Technology first.

00:31:01.07 – Taylor

And then like the other things, know,

00:31:01.67 – Brian David Crane

Yeah.

Debating the Great Man Theory in Historical Narrative

00:31:03.54 – Taylor

Tend to coalesce around that. But like certainly that’s not certainly it’s more complex than that. It’s not, it’s not that. It’s not that we can come up with some deterministic theory of history where you have some new technology and you could even in theory work out all the different stuff that happens.

00:31:19.17 – Brian David Crane

What, what is, where does the great man theory fall into this? And are you familiar with the great man theory as I say that?

00:31:26.71 – Taylor

Yeah No, I am. I tend to be… Yeah, there I guess I kind of equate the great man to like the hedgehog and the fox sort of thing from Isaiah Berlin, which is basically his idea that there’s like two types of great men.

00:31:42.16 – Brian David Crane

What is that analogy?

00:31:49.44 – Taylor

One is the hedgehog, which tends to know one big thing, and the fox, which tends to know lots of little things.

00:32:00.26 – Taylor

And so like, like the great man theory is like a very hedgehoggy theory and my thing is like, you have this one person, Rockefeller, FDR, or whatever. And typically, when you’re like, typically a biography ends up being a sort of great man, right? Because it’s just that’s the narrative through line. And so like,

00:32:19.93 – Taylor

It just sort of works from like a writing perspective to like FDR did this. Like the causality is is it almost implicitly written in that way, if not explicitly. FDR did this and then people in Texas had electricity, right? In rural tech, you know, right?

00:32:35.25 – Taylor

Yeah. And I, but, but like ah maybe what did copper prices come down 50% over that period? And like, that’s actually, that was part of the reason people, right? Like those sorts of things.

00:32:48.66 – Taylor

So I, yeah, I tend to be like, I don’t know if 10 out 10 scale of one to 10, 10 out of 10 is like, it’s all great men. One out of 10 is not a great man. Probably like a three, a two or a three. Like I tend to think it’s more, didn’t think the great man theory is more a product of,

00:33:06.16 – Taylor

Like our need to narrativize a complex and messy reality than it is like any one individual can materially shape the course of history that much. Like I guess I didn’t think more that there is a vacuthat someone is going to step into and it just so happens that X person stepped into that.

00:33:31.24 – Taylor

Vaculike was it that the structure of the oil industry in the early 1900s like lended itself to ah centralization and like one major company because the economies of scale were so beneficial and that Rockefeller just happened to be the person that did that or was it that

00:33:50.26 – Brian David Crane

That somebody was going to do it.

00:33:56.65 – Taylor

You know Oh, no, it could have – we could have had this totally alternative history where like oil was a super fragmented thing and Rockefeller through fear – sheer force of will and determination basically overcame these forces. So I tend to think – yeah, I tend to think more like it’s a more complex mess and less people step into it. and

00:34:16.97 – Brian David Crane

You’re famous, in my mind, you did have a phrase about reality that has much more detail and color than one anticipates. I’m butchering that phrase. What’s the phrase?

“Reality Has a Surprising Amount of Detail”: Tolstoy’s Influence

00:34:27.09 – Brian David Crane

Reality?

00:34:27.52 – Taylor

Reality has a surprising amount of detail.

00:34:30.27 – Brian David Crane

Thank you. Is that also what you’re saying when you use that phrase?

00:34:34.80 – Taylor

Yeah, exactly. I love all Tolstoy is probably like my favorite author. like I mean all Tolstoy is very foxy. If you ever read like Anna Karenina or War and Peace or all his famous novels…

00:34:46.67 – Taylor

Ah like, War and Peace is basically… It’s, like, this, like, big cope that, like, actually Napoleon wasn’t that… ah Basically, a bunch of little, tiny, unpredictable shit happened, and that’s, like, all led to Napoleon, and it wasn’t actually that Napoleon was this, like…

00:35:03.51 – Brian David Crane

Brilliant strategist.

00:35:03.54 – Taylor

Great, huge, influential thing. yeah and sure There’s like some very classic scenes of this. in war red so There’s this big classic battle and like some guy trips and falls on his face and his whole regiment retreats. And like that’s the turning point in the battle. right and The story afterwards was like, oh and Napoleon had this genius flanking maneuver.

00:35:25.68 – Taylor

There just happened to be a rock there. You know what I mean? And like the guy that was leading the charge fell and everyone else turned around at that point. And then we like to tell this story afterwards because of course no one saw that the guy fell. the You could you could how could you possibly know all the complex causality of that.

00:35:43.46 – Brian David Crane

Yeah, I think there’s also something in the story of the South when it comes to the Civil War that speaks to that as well. The more that you learn about the Civil War, in my experience, that you will become…

00:35:57.70 – Brian David Crane

At least my readings of it were like, there were so many small decisions that were made that made it so that idolizing somebody like Lee or denigrating somebody like, I don’t know, Grant.

00:36:13.27 – Brian David Crane

Although It was like, they were they were both, they were brilliant. I don’t want to say they were were not in their own ways, but also they were they were still prisoners of their circumstances, and that the circumstances, the person tripping on the route or whatnot in the in in the battle that you’re talking about with Napoleon, like that stuff happened all over the place in a lot of these stories, and it tends to be downplayed downplayed.

00:36:41.52 – Brian David Crane

It’s not told in a way because it doesn’t lend itself to the narrative structure of the book, which is talking about Napoleon as a great leader, right? Like you read in the book because you already admire or think that Napoleon is a fascinating character.

00:36:52.24 – Brian David Crane

So you’re like susceptible to whatever Napoleon did and not, to you know, not, not, not the second Lieutenant who happened to bumble the order and, or like didn’t wake up because like he was with his mistress the night before, whatever the story is, you know, like, I don’t know.

00:37:07.15 – Taylor

Right.

Models vs. Intersectionalists: Two Views of History

00:37:07.72 – Brian David Crane

Yeah. So you also had an interesting phrase. I want to hear what this is about, which is called modelers versus intersectionalists when it comes to history. What do you mean by those two phrases?

00:37:18.57 – Taylor

I think I was quoting someone else. I don’t. Yeah, I mean, the intersection is where they had a lot of play around. It was sort of like trying to classify bias.

00:37:33.13 – Taylor

And stuff. so I guess I kind of turn it as like there’s sort of like a cultural theory of history there relative versus like a I don’t know more of like a technology economically driven theory of history there and I tend to be more in like the

00:37:44.96 – Brian David Crane

Okay.

00:37:47.27 – Taylor

Like technology, I don’t know. I guess I tend to like the sort of technology that is upstream of economics, which is like upstream of culture, which is upstream of politics. I kind of, and I don’t know. kind of think about the cause And like, again, certainly that’s oversimplified. Like there’s a ton of feedback loops that like, we could sit down with a bunch of explanations, a bunch of examples of that not being, ah probably not being the case, but that tends to be like,

00:38:13.57 – Taylor

The mode, which is to say, like, to what extent are, like, like, to me, cultural things tend to be downstream of and

00:38:21.22 – Brian David Crane

Technology, which is downstream of what were the layers again?

00:38:24.35 – Taylor

Sort of, like, technology feeds into, like, economic ah logic, which feeds into I guess economic and let’s call it military logic. I mean, in present times, the military logic is probably less impactful. You know, it’s, it doesn’t matter until it matters a lot.

00:38:42.91 – Brian David Crane

Yeah.

00:38:42.97 – Taylor

And then like that tends to be cultural and then like politics tends to be mostly just reacting to whatever that sort of cultural thing is. Right. Like, and I’d like, you know, you have the internet, then you have, know,

00:38:56.78 – Taylor

Social media, right, which has certain cultural implications and like politics is reacting to those cultural implications. Like that’s typical, that’s how I tend to think about that.

00:39:08.85 – Brian David Crane

And what’s interesting to me is that you and I both are reading books about political figures, LBJ, Robert Moses in New York, who were influencing, they were downstream, they were at the political level, right?

00:39:28.78 – Brian David Crane

So how do I frame my question? do You think that it’s if you if you’re at the, let’s call it the fourth order effect, ah politics being downstream of these other three, is it just that we’re that we that we like human narrative history, which is why we talk about what’s happening at the political level, or that’s what gets written about?

00:39:52.62 – Taylor

Well, I mean, we’re talking like FGR, like LBJ, like, of course, like, mean,

00:39:57.64 – Brian David Crane

That’s what I meant. If I said FDR, I meant LBJ.

00:40:00.26 – Taylor

But

00:40:00.46 – Brian David Crane

I was talking about, yeah.

00:40:01.86 – Taylor

Yeah, no, but like why it doesn’t matter. Yeah, whoever it is. Like, obviously, they make economic policy. Obviously, it’s more complex, right? Like, I can give a counter-argument I think right now. It’s like, to what extent did, like, DARPA, right, fund the whole internet thing, right? Which, right, like, so clearly it’s, like, circular and there’s, like, a bunch of feedback loops and stuff, right?

00:40:23.26 – Taylor

So…

00:40:24.68 – Brian David Crane

For those who don’t know, DARPA dar darpa is a defense and a Department of Defense Skunk Works research lab that basically crafted the version of the internet.

00:40:25.18 – Taylor

Oh

DARPA, Technology, and the Origins of the Internet

00:40:36.28 – Brian David Crane

Is that right?

00:40:37.20 – Taylor

Yeah, that they are the government funded entity that built a bunch of like, there they did a bunch of the theoretical work and built a bunch like the early infrastructure became like the World Wide Web, the internet, as we know it now.

00:40:49.74 – Taylor

Um

00:40:51.86 – Taylor

But yeah, I don’t care where I was going with that. But yeah, like, so I think, ah clearly, it’s more complex. And there’s like, just this one and downstream causality. But I guess that, yeah, I do tend to add it like,

00:41:04.22 – Taylor

And if I mean, politicians play into this all the time, but like there was a – I’m trying to remember the name of the book. It was a nice book, but the guy came up with basically like a two-factor model for predicting political elections. And it was basically like factor one. It was basically like real wages – over the like 12 to 24 months leading up to the election, right? Like were people making more money in real terms than they were and then like strong cultural affiliations. So like I want to say, leading up to JFK’s election, I’m making these numbers up, but this is vague, right? Like Catholics 70% of the time voted Republican. Right.

00:41:46.63 – Brian David Crane

Uh-huh. Uh-huh.

00:41:47.03 – Taylor

And then JFK got the Democratic nomination for that one election, 70% Catholics like voted Democrat. And then the next election, they all switched back to voting Republican. Like exactly as, you know, the trend line was exactly the same, except for this one blip where it just like super switched, right? Because he was the first Catholic president.

00:42:03.23 – Brian David Crane

Who

00:42:03.65 – Taylor

And it was just like the, I guess the, the economic point being like people, I think people tend to ascribe like, Oh, the president or Congress is going to come in and like to do all this stuff.

00:42:16.34 – Taylor

And it’s going to matter. Right.

00:42:18.84 – Brian David Crane

And the

00:42:19.59 – Taylor

People tend to describe like, oh, you know, this and like I don’t, and the Fed is all like, oh, the Fed did this. And that’s like what caused all these sorts of things. Like, I’m pretty dubious, like I don’t, I’m pretty dubious of that, that there’s like this really clear causality where like, you know, these political actors are doing these things. And like certainly, you know, whatever, you cut the funding to an institution to zero, like of course that closes the institution. Like there are certain things like that, like broadly, it seems like mostly,

00:42:47.31 – Taylor

Like those four, and like the correlation between how much can the president and or Congress impact GDP in the short to medium? Like, I think very little. Yeah.

00:43:00.63 – Brian David Crane

But is that a function of a fact that the unit of measure is funky, let’s say, right? Like GDPs, to use that example, but the one of, I think you I would argue, and I will make this argument that the Fed, the fed along with the Treasury, you you know, in the 08 financial crisis is,

00:43:23.56 – Brian David Crane

Well, let’s say the people in power in Washington, because the Fed, Treasury, the Bush administration, and the Obama administration were entirely culpable for the too big to fail, like let’s take on more risk post-08 financial crisis. There is like heads I win, tails you lose financial model. Like it’s it’s it’s clearly, to me, it’s like clearly a policy decision.

00:43:51.49 – Brian David Crane

Or a series of policy decisions that said these financial institutions are not going to be allowed to fail. We’re not going to allow the animal spirits to run. And then as a result, like we now have banks that are bigger than ever and that, yeah, like either explicitly or certainly implicitly are not going to go, go to zero.

00:44:09.96 – Brian David Crane

Right. And that’s, I would say, due to policy decisions.

COVID, Financial Systems, and Policy Unintended Consequences

00:44:14.59 – Taylor

Yeah, I think that’s right. And I think like, I like I think I got, did the COVID fiscal stimulus lead to inflation? Like probably, right. Like probably sending people a bunch of checks that they spent, you know, you can never prove the causality there.

00:44:22.95 – Brian David Crane

Mm-hmm.

00:44:29.16 – Taylor

Um

00:44:32.37 – Taylor

But yeah, I don’t, yeah, no, that’s true. I guess so like I like, guess the kind of fortune I think like, like I think I talk about like COVID specifically, like, or Or the, I mean, the 08 financial crisis too to some, know, to like, to like,

00:44:48.06 – Taylor

The question of like exogenous versus endogenous factors that lead to these sorts of things. So like, I think the policy, like for COVID, for example, exogenous is like something external that came in.

00:44:54.39 – Brian David Crane

Explain those two terms.

00:45:00.45 – Taylor

So like, you recall, like, okay, was the crash in COVID caused by exogenous factors? There was this virus that came out of the Wuhan province of China and, you know, caused all this stuff to happen, right?

00:45:12.20 – Taylor

And that was reflected in financial markets.  or like, to what extent it was endogenous was to say there were like certain structural factors in financial markets themselves,  that then led to this thing.

00:45:23.87 – Taylor

So like,  like,

00:45:26.37 – Brian David Crane

And that if the if the market if the market hurt hadn’t already been, let’s call it overheated, that or if it had been more durable or more antI fragile, to come back to your intro that that it wouldn’t have had such a like a scare or a drop from from the the threat of COVID. Is that right?

00:45:45.07 – Taylor

Correct. Yeah. So like, like, I guess I get an example with COVID. It’s like, 

00:45:51.39 – Taylor

If you read System Antics by John Gall, The Systems Bible, it’s great. I suspect you would like it and your audience would probably like it. It’s like a systems thinking book, but one of his like fun quotes, the army the army is always fully prepared to fight the previous war, right?

00:46:08.20 – Taylor

So like, you know, ah France was fully prepared for World War one when Germany invaded World War You know, they had the big concrete fortress ready for the trench warfare, but you know,

00:46:16.16 – Brian David Crane

And the mag imagine not line Yeah,

00:46:18.79 – Taylor

Up on the border or whatever. And, you know, Germany had tanks and they just went around. And so anyway, so I guess like one, like I give an example with, with COVID, like there were a bunch of changes as a result of the global financial crisis and to how banks were regulated. And a lot of the trading that had happened at big banks moved to other institutions.

00:46:42.95 – Taylor

And like,

00:46:44.05 – Brian David Crane

Like hedge funds or what does that mean? What’s another institution?

00:46:46.18 – Taylor

Yeah, hedge funds or a lot of it have become algorithmic. And so one of the implications of that was that if you’re like a bank and you have a fund, you typically, you know, you’relin you’re doing trades with your, they’re like one of your counterparties.

00:47:01.89 – Taylor

Like part of that relationship is, maybe this isn’t the ideal time I want to do this trade or the ideal price, but we have a longstanding relationship, right? Like, you know, you have a longstanding business relationship with someone you’re looking at it as this sort of like an iterated game of like, all right, this isn’t exactly what I want to do right now, but this is a good relationship I’ve had for 10 years. I think it’ll be good. So like the fact that this particular trade isn’t exactly the trade I want to do,

00:47:24.95 – Taylor

And so like one implication of that was banks would often be providers of liquidity. When you had these sort of big market dislocations, the trading desk at banks that had these really big balance sheets, right, could step in and do this.

00:47:39.57 – Taylor

And like one of the things that…

00:47:40.46 – Brian David Crane

Yeah, but what does that mean? Sorry, what does that mean for somebody listening? it basically means that the bank would step in and buy junk or stuff that ah one of these partners was selling and when nobody else wanted to buy.

00:47:52.92 – Taylor

Yeah, or I guess like when you have lots of uncertainty come in, like often spreads will blow out. So like, let’s say you have a stock and typically like a highly liquid stock ETF, like your spread is going to be like fractions of a penny, right? Like it’s trading for…

00:48:08.26 – Taylor

100, you know, the bid is $100 and the ask is like, you know, one penny off of it, right? Or what you see in these like, but when, you know, volatility, you get these big market dislocations, like they hear like spreads will blow out, right?

00:48:14.90 – Brian David Crane

Mm-hmm.

00:48:21.00 – Taylor

I’m serious. Like, there’s a ton of uncertainty. So like, something that used to trade at, you know, a penny spread is now trading at 10 cents or something, you know, so these spreads get really wide. And like that, of course, exacerbates the volatility because like, what does it mean when something is like, you’re having to cross a big spread to trade? Like there’s a big price movement.

00:48:38.12 – Taylor

And so like, 

00:48:39.43 – Brian David Crane

Well, there’s also the human dynamic, which is you’re scared because everybody else is scared. You’re looking at this going, I’m used to it only trading with one penny, you know, between the bid and ask, and now it’s a dollar. What does everybody else know that I don’t, or what is the risk that I can’t see, right?

00:48:55.54 – Taylor

I guess liquidity and price are like, you know, a house, a real estate is illiquid, but if you want to sell it for 50% less than it’s worth, you can sell it tomorrow. No problem, right? Like, you know, price and liquidity are linked in that way.

00:49:12.07 – Taylor

And so, right. So you had these like post-issue reforms, a bunch of the, like the, this, The banks were no longer doing this relationship. but as much of this was done algorithmically and ah all the algorithms said like spreads blew out.

00:49:22.97 – Taylor

We don’t know what’s going to happen. We don’t want to take a bunch of this risk. We’re just like out of the market. Right. And so something that used to be super liquid that was trading whatever X number of shares per day is now trading one tenth X. And like, what does that do? Like.

00:49:36.69 – Taylor

It can create a feedback effect, right? Where, you know, now the price is going down faster because you don’t have someone in, wanting to step in and, you know, offer the liquidity because, you know, it’s no longer this like reciprocal relationship thing.

00:49:51.17 – Taylor

So I got like, to what extent was COVID an exogenous virus?

00:49:53.61 – Brian David Crane

Well, it’s a computer now, right? so so Instead of, sorry, it’s, yeah, no, it’s like, it’s, it’s, it’s, you’re not picking up the phone to call the, the person you’ve done business with for the past 10 years is the algorithm saying, ah like, based on my parameters, I’m just not going to participate in the market any longer.

00:49:57.84 – Taylor

Yeah, go ahead.

00:50:10.26 – Brian David Crane

Right?

00:50:11.32 – Taylor

Right.

00:50:12.13 – Brian David Crane

Yeah.

00:50:12.64 – Taylor

Yeah. And so I guess to what extent was COVID an exogenous event caused by a virus that came out of Wuhan, China versus to what extent was it there was just something that happened and there was a bunch of endogenous market structure that was primed to do this.

00:50:25.13 – Brian David Crane

Mm-hmm.

00:50:29.68 – Taylor

And like that thing could have been the virus in Wuhan, China. It could have been whatever. and could also I think it also Russia, Ukraine thing happened and like the market just went straight up. Yeah I was like, wait, what’s going on? Like we have a land war in Asia. ah You know I mean? So I tend to think it’s a more endogenous market structure factor. And to your point, like certainly – long-term policy make like I just made basically made a policy argument right which is like there was reform there was reforms put on the banks post global financial crisis and that affected how the banks operate and like that sort of created this endogenous so like certainly in the the long run I do think that’s right like and like darpa like in the long run the policy actually matters like quite a quite a bit but like in the don’t know my

00:51:14.42 – Brian David Crane

But maybe not in the way intended.

00:51:15.96 – Taylor

Month to Yeah, and often in ways that were like, certainly like DARPA wasn’t funded with the idea of Facebook being created, like, you know, like, there was no foresight into how that was gonna play out.

00:51:29.64 – Brian David Crane

And I think that’s the part that you and I would say, very much agree on when it comes to reading history is that you start to see patterns and patterns of unintended consequences that lead in all kinds of ways that were never considered at the time that certain decisions were made. And I don’t know if it’s

00:51:51.55 – Brian David Crane

Yeah does it make you that’s the term i’m looking for Does it make you more comfortable making decisions? Does it make you a little bit more leery of making decisions?

00:52:02.60 – Brian David Crane

When you know As you read some of these books and you go, okay, cool, like I can see how… I’ll use Vietnam as an example of, you know, like how in 1955, when Dulles was, I don’t know, he was Secretary of State and he was going around the world signing alliances and agreements that tied the U.S. into certain things like that. 55 to 75 thread started from a decision that Dulles made in the State Department and it led through, you know, it’s not, he’s not at fault for it, but like that was the the initial, know,

00:52:38.40 – Brian David Crane

You know, the U S becoming entangled in, in, uh, in Vietnam or in Southeast Asia. And then it goes all the way through 75 with,   you know, the, the, the pullout and the fall of Saigon and the 40 something thousand, uh, American soldiers who died in Vietnam. Like there’s like, you start to read this stuff. And a lot of times I go, I’m like, you can see that just like, it’s the story of unintended consequences. That’s often what I come away from history books thinking. I don’t know if that resonates with you.

Parables and the Power of Second-Order Thinking

00:53:03.40 – Taylor

Yeah, there’s, ah I think I learned this from Derek’s, there’s like, I think it’s a Chinese parable or maybe an apocryphalic parable. that It’s like,

00:53:12.87 – Taylor

And you know, there’s a kid born in a village and everyone’s so excited and says, congratulations. And they’re sort of this, you know, the old wise man. It’s like, oh, well, you know, we’ll see how it goes. And then the kid goes up and breaks his leg. And I was like, oh, it’s such a shame he broke his leg.

00:53:27.37 – Taylor

That’s just that moment goes, you know, well, we’ll see how it goes. And then a war breaks out. But the kid doesn’t have to go fight in the war because he’s got a broken leg. And so he’s got an excuse. Oh, how wonderful. it and I yeah there’s like four or five iterations of this sort of thing goes on, right? But like something happens, the first order effect is obviously good or bad and everyone reacts to that.

00:53:47.27 – Taylor

And then there’s some second order effect. And so, yeah, I tend to think in those terms, I think in some ways, like it can also be like, I don’t know, I debilitating or like disimpact because it’s like, well, if I can’t possibly know anything that’s going to happen from anything, then like nothing matters and it’s all da-da-da-da-da.

00:54:05.37 – Taylor

And so Ithink

00:54:05.98 – Brian David Crane

Yeah, like it leads to nihilism, right?

00:54:08.47 – Taylor

Yeah, right. I so And I think and yeah yeah you have to you have to walk the line, right? like You can take that too far, right? Which nothing, that you know, nothing I do, matt nothing matters. It’s all unpredictable. And so, da da but I think there’s some healthy balance of like, look, I’m i’m trying to make some reasonable assessment over how much control I or anyone else has over this situation. And like, to the extent we can think through the consequences of that, like what are some reasonable and appropriate ways we could go about that, right? And I think that’s, that’s healthier than one, nothing matters and it’s all uncontrollable and we just give it all away.

00:54:45.15 – Taylor

Also I have completed, you know we can, you know, the hubris of like, oh, like, no, I’ll just come in and fix this. And like sort of a more pure great man theory of like, I can just,

00:54:56.91 – Taylor

Uh I can control all this and it’s all sort of doable and and I think to some extent that’s like a trader’s mentality you know you can’t make you no matter how hard you try the market won’t do what you want it to do and uh you know I think to the extent you can use financial markets as an analogy of just you know a complex system which are a subset of even broader you know all the thing political systems technological paradigms etc etc like okay you know it’s it’s

00:55:24.74 – Taylor

It’s not going to do what I want to do, but I do have some agency over how I’m reacting to it and how I’m interacting with it.

00:55:30.52 – Brian David Crane

And how is it? Yeah, there’s a lot there to unpack. ah one One of the questions that comes up for me is

00:55:39.45 – Brian David Crane

If somebody comes to you, a younger version of Taylor and says, I want to I want to be become a better decision maker, given what you just said, what would you counsel them? to do or how to like, how do you, I know some people come to you and they say, Taylor seems to make wise decisions, or at least he comes up with wise frameworks as far as how to come up with decisions.

00:55:59.66 – Taylor

Button

00:56:04.80 – Brian David Crane

What does that look like? What does 22 year old Taylor who’s sitting in Brazil weighing the decision to leave the English school and all the second order effects that come out of it?

00:56:18.14 – Brian David Crane

You know, we’ll see as the wise man says in your chiman Chinese ah parable. Yeah. How do you come up with better decision making?

00:56:27.14 – Taylor

I think I think about my broad framework now… and maybe this is going to sound a bit evasive. And now I’m not trying to be evasive. But like… um

00:56:37.53 – Taylor

Like every, ah you know, ah sort of all things are context dependent, right? Which is like, if you, like I used to do a lot of email marketing stuff, you go ask me how to make a good decision about optimizing your email arc in front. I’m not as good at that as I used to be, but like, I could give you a, like, I could give you an answer with high certainty that was pretty good, right? Like I had a bunch of domain expertise. I had done that a bunch of times. I’d seen a bunch of ways, like my intuition around,

00:57:03.21 – Taylor

You know, I worked for an e-commerce company, right? Like e-commerce, email marketing, funnel optimization was very good. and that’s like a pretty discrete system. and so even now if you ask, how do we fix U.S. industrial policy? like My confidence bands are much wider. You know what I know?

00:57:21.14 – Taylor

Like I have some ideas of that to do a ton more research. Even after doing five years of research, like my confidence bands would still be really wide. It’s super complex. and so I think, A, having some…

00:57:36.30 – Taylor

Like basically having some sense for the underlying complexity that you do, like what is the appropriate amount of humility to have in the situation because sometimes you can be too humble and like, look, no, like let’s just fix the thing. It’s clear what needs to be done here. And sometimes it’s like it is the sort of Chinese man and

00:57:54.11 – Brian David Crane

We’ll see.

00:57:55.10 – Taylor

Parable. We’ll see. certainly so I think I will try to make some assessments. I have to think about investing. There’s nothing I’m going to do that’s going to make the market do. You know what I mean? My ability to control is extremely limited. My ability to control and you know, what are things in my, mean is my car going to function properly? like, like, whatever, I can do that. I can get it serviced. I can, like, that’s mostly within, it ‘s 98% within my control, right?

00:58:21.96 – Taylor

I try to have some sense for that. And then, um

00:58:26.49 – Brian David Crane

Well, it sounds like there’s two factors. It’s like, what’s within my control? And also, what do I have domain expertise in

00:58:32.14 – Taylor

Yeah, like, I guess basically, like, how good is my intuition in this subject area, right? I think, like, this is, and there’s something like a clever phrase for this, it’s like famous for X talks about y right?

00:58:45.52 – Taylor

Like, I don’t…

00:58:46.10 – Brian David Crane

In? Like a guru mentality?

00:58:47.57 – Taylor

Yeah, I don’t know. Noam Chomsky is the first person that comes to mind, which is kind of a political one to pick. But like, he’s famous for like, I don’t know that much about his academic work, but like he was ah he was a linguist, right?

00:58:58.71 – Brian David Crane

He’s a linguist.

00:59:00.04 – Taylor

And he did, I think, what’s considered in the field.

00:59:00.56 – Brian David Crane

Yeah.

00:59:02.81 – Taylor

So I’m like, realizing you have to get work about… lingua like history of language. He has a bunch of other political opinions and stuff. and that you can find someone on the other side of the political aisle that does the same thing.

00:59:14.39 – Taylor

I don’t mean to be so partisan. Like how good are his intuitions about industrial policy? like Probably not good. you know what I mean like probably not good like he’s like It’s not his thing. right like the same you know. Same for me. like It’s not my thing. I don’t know that much about it.

00:59:28.72 – Taylor

And so like I guess I tend to be cognizant. I tend to try to be cognizant of that. It’s like I don’t. I don’t weigh in with some super strong opinion on most of these super macro issues because like, I don’t know.

00:59:42.86 – Brian David Crane

I don’t know.

00:59:43.07 – Taylor

I just, yeah, I just realized how little I know.

00:59:43.08 – Brian David Crane

Yeah. yeah

00:59:44.87 – Taylor

I don’t know. You know, I listened to all that. I mean, I love reading about it and like learning about it, but like, I’m so gullible in it. Like whatever, like the book I just read, I’m like, yep, that definitely makes sense. Then I’ll read a book that says the exact opposite thing.

00:59:56.15 – Taylor

And I’m like, no, that makes sense too. You know what it means? It’s just like, Whereas like that’s not the cake in a super discreet thing of like, you know, how to do your email marketing. Like, I’m like, no, that’s stupid. Like you definitely shouldn’t do that.

01:00:07.79 – Taylor

Like, that’s a bad idea. That’s a good idea. Like I’m not super gullible. Like I’m like, okay, no, no, no. No, that’s, you know this is good. This is bad. It’s sort of discreet. So I like to try to have some judgment around like, you know, big political economic issues.

01:00:16.79 – Brian David Crane

Would

01:00:20.81 – Taylor

Like, like the error brands are just super wide for me. Like I just, it’s really hard for me to, yeah, do I have an intuition? Sure, but my confidence level is just really low.

01:00:33.26 – Brian David Crane

Ah you also don’t, I think with email marketing as an example, you have hands-on real world experience. You saw if you pressed a certain button, it resulted in a certain outcome and maybe it’s even a more simple system as well.

01:00:47.46 – Brian David Crane

So like you have real world experience plus it plus it’s an easier, ah maybe not an easier, but like it’s a more simple or a simpler system. And you know, economic policy is not only more complex, but you don’t have, you’ve never set economic policy yourself, right?

01:01:03.69 – Taylor

Yeah, I think it is, but like, I don’t like, does someone that’s done 40 years of economic policy have amazingly good intuition? Like I’m dubious.

01:01:11.11 – Brian David Crane

Not necessarily.

01:01:11.94 – Taylor

I mean, it’s just sort of, Tedlock has his whole like super forecaster.

01:01:12.53 – Brian David Crane

Yeah.

01:01:16.51 – Taylor

Sort of thing. And like, a lot of the conclusion is like, it’s really hard. Like, like who predicted the fight? Did someone say the Cold War lasted for 40 years? Like, were they that much better at predicting the fall of the Cold of the Berlin Wall? Like, nope.

01:01:30.16 – Taylor

They weren’t, you know what I mean? Like, cause it’s really hard, you know, it’s just like, that’s super,  Dave Snowden has a nice, he calls it the Kenevan framework, but like his, it’s like simple, complicated and complex problems. I think it’s like a nice way that I often think about it. Right. So like,

01:01:46.83 – Brian David Crane

And there’s three different types.

01:01:47.24 – Taylor

You know print together yeah Putting together a piece of IKEA furniture is a simple problem. but there’s ah There’s a correct and an incorrect way to put together your piece of IKEA furniture. you know Fixing your car is probably… I read a manual about IKEA furniture.

01:02:00.75 – Taylor

Fixing your car is complicated. And that like you can then probably email marketing is… kind With sufficient domain knowledge, you can arrive at a good solution. Maybe there’s a right and wrong way to do IKEA. There’s probably not a right and wrong way to do email marketing, but there’s a range of good solutions and then a bunch of bad ones.

01:02:17.09 – Taylor

And then complex tends to be more, don’t know, that’s for me more like Chinese man parable, which is like

01:02:25.81 – Taylor

How much, yeah, how much, does domain expertise matter?

01:02:25.90 – Brian David Crane

Unintended consequences.

01:02:29.39 – Taylor

Yes, but even with domain expertise, probably still extremely wide. Yeah.

01:02:35.90 – Brian David Crane

Bands of confidence.

01:02:36.79 – Taylor

Extremely wide bands of confidence, right? Like even having 40 years of studying Cold War history and political dynamics did not make anyone sufficiently capable of predicting the fall of the Berlin Wall, right?

01:02:51.07 – Taylor

Like it’s just, there’s too much.

01:02:51.24 – Brian David Crane

Yeah.

01:02:52.50 – Taylor

There was way too much going on.

01:02:55.44 – Brian David Crane

Fascinating. I like that, the three different, uh, let’s call it the three different types of problems, right? Simple, kind, simple, complex, and complicated. I had a friend who often said, uh, when you’re looking at a problem, you need to figure out if it’s a problem that’s manageable or one that’s solvable.

01:03:09.89 – Brian David Crane

And even, even getting to the answer on that and tends to dictate.

01:03:13.43 – Taylor

Yeah.

01:03:14.35 – Brian David Crane

What but your course of action would be. So if i’m if we’re talking and into 2025, some of the, let’s say problems that,

01:03:25.67 – Brian David Crane

I know, face, this is a bad way to put it. But basically, what I understood of a mutiny fund, which was the the hedge fund that you had set up was you guys were looking at tail risks and tail risks are things that are not likely to occur, but if they do occur, are going to have a very large impact, i.e. black swan events, and trying to basically hedge for those kind of tail risks. Is that an accurate description of the mutiny fund?

01:03:58.01 – Taylor

The 50 yeah no exactly like probably the philosophy is okay uh financial markets are a complex system which is to say trying to like right trying to figure out like have a you know a lot of friends that like oh I like this stock or like that stock did it like my get like a…

01:03:58.59 – Brian David Crane

Not really. Yeah. ah yeah

01:04:22.50 – Taylor

You are an amateur, non-professional investment business owner person, whatever, like the odds that you have alpha, you have outperformance ability picking single stocks over the next 10 years, I would benchmark to zero.

01:04:28.49 – Brian David Crane

Hmm. Hmm. Hmm.

01:04:39.01 – Taylor

Like I would take the opposite of that trade, basically a hundred percent certainty because it’s so incredibly complex. Your competition, I mean, it’s like, it’d be, you know, but to me, it’s like, oh, well, I’m just going to train for the Olympics part time.

01:04:55.72 – Taylor

Like, I’ll just do a little bit of Olympics training on the side. It’s like, no, you’re going against the best, most motivated, capable people in the world that are focused, that are

01:05:04.24 – Brian David Crane

Who just put in a lot more time.

01:05:05.80 – Taylor

We’re doing way more on this than you are. And like your argument is like, oh, I’ll like to spend two hours a week on this and like to be good at it. And I find that incredibly implausible. Certainly you can get like, can you get lucky and have performed?

01:05:19.29 – Taylor

Absolutely. Right. Like that happens all the time. and so I sort of like broadly that’s, 

01:05:26.38 – Brian David Crane

But let me ask you something about that because basically, if you’re, let’s call it net, you’re not positive about the individual stock picker outperforming the market.

01:05:37.35 – Brian David Crane

What are you doing with your money? Are you picking individual stocks?

01:05:40.72 – Taylor

No, I don’t know.

01:05:42.28 – Brian David Crane

Okay.

01:05:42.39 – Taylor

So I get kind of kind of my broad view and the way that I’ve implemented this in the past is trying to get as so something as close to like a ah an agnostic portfolios, which is like broad stocks, broad bonds, ah broad commodities, some quantitative overlay stuff of what’s like the tail risk would be one component, but basically trying to take the perspective of like, I don’t think I can predict.

01:06:08.76 – Taylor

Macroeconomic trends. Let’s just assume I have zero predictive ability around macroeconomic trends. Working back from that, what do I do? And I guess I said, like, it’s, and think one thing that people, like,

01:06:24.42 – Taylor

You can be right about something, but still lose money. I think it is because it always depends on the pricing of the market, right? Like I think this is a conversation now. People are like, oh, I think the US economy is going to be the best. And it’s like, well, ah the US economy could, A, it may or may not be.

01:06:36.91 – Taylor

Let’s just take for granted that the US economy is the best economy in the world and it’s going to be for the next 20 years. A, it doesn’t mean it’s going to equal its historical performance, right? Everything could go really bad.

01:06:49.20 – Taylor

And B, something is already priced into the market, right? If something is priced in to grow at 10%, it grows at 8%, you lose money on that, right? That’s sort of, that’s how the…

01:06:58.88 – Brian David Crane

If you bought it at the price it was selling at when the 10% was the common concept.

01:07:06.15 – Taylor

Correct, or I So like inflation expectations are priced in, and growth expectations, are all these things are priced in, right?

01:07:06.85 – Brian David Crane

Yeah.

01:07:11.11 – Taylor

So like when you’re buying, you’re basically saying, I I think my I think the I think the market expectation is wrong, right? Like I think that this is gonna do better or worse for whatever reason than what’s being so…

01:07:21.39 – Brian David Crane

Yeah, that ‘s underpriced. That’s why I’m willing to trade my dollar for whatever the asset is, right?

01:07:25.51 – Taylor

Right.

01:07:26.28 – Brian David Crane

Yeah.

01:07:26.39 – Taylor

So my view is on anything macro, have zero edge, have zero ability to say this stock or that stock, or even like stocks as a whole are broadly over or underpriced.

01:07:30.57 – Brian David Crane

Mm-hmm.

01:07:38.94 – Taylor

So yeah, my approach and the approach we use like strategy and stuff is, let’s start from that framework and then work back. So, you know generally that’s going to look like something super diversified, right?

01:07:52.88 – Taylor

You want to have broad stock, broad bonds, I like commodity exposure. And then you know you can do some derivatives. there’s you know I guess you can get increasingly complex with it.

01:08:05.07 – Taylor

But as a basic framework, that’s more or less where I’m starting.

01:08:10.63 – Brian David Crane

And was it country specific or is it country specific? Is it all U.S. concentration or what?

01:08:16.14 – Taylor

No global. I mean, I guess to me again, that’s like a, this is like a funny person. I guess I was talking with someone that’s a financial advisor and they’re talking about like, Pat, everyone’s like, it’s, it’s like smart to be passive investing right now.

01:08:28.39 – Taylor

Like that’s cool, like, Oh, I’m, I’m passive. Like that’s a, that’s a smart thing. You know, you would say that you’re doing that like a cocktail party. Like, Oh, that person’s a smart Putin in person. They’re like passive investing.

01:08:36.78 – Brian David Crane

Hmm. Hmm.

01:08:37.77 – Taylor

But then people just want to like, like, Oh, I want to do passive investing, but I’m just like, put it all in us tech. It’s like, well, it’s not pat is the only like the only truly passive thing is I own a fractional percentage of every asset in the world. Right.

01:08:54.76 – Taylor

And in practice, that’s impossible because there’s a bunch of real, there’s a bunch of things you just, you can’t own because they don’t, To me, like they don’t exist or whatever. But like if you’re like, oh, I’m passive, but I just do US large cap stocks. like Well, you’re making a huge active decision, which is to focus on US large cap stocks.

01:09:11.45 – Taylor

And that’s fine if that’s what you want to do. But like that not you’re basically and like you’re you’re basically implicitly saying, I think these are mispriced relative to everything else. right I think these are going to outperform all the other things I could potentially allocate to.

01:09:25.83 – Brian David Crane

Put the money that I could buy with my wife. Yeah, like if it’s dollars or euros or, you know, seashells or whatever the unit of value is.

01:09:29.05 – Taylor

Yeah

01:09:32.34 – Taylor

Yeah. So the to me, the limit is most it’s mostly that just we’re just like, I can’t own a fraction of all the real estate in my goal, you know, but it’s just like, there’s there’s not a, there’s not an instrument or mechanism by which I could possibly do that.

01:09:33.22 – Brian David Crane

Right. Yeah.

01:09:44.09 – Taylor

Right. But to the extent there are, you know, publicly tradable or accessible vehicles for doing those sorts of things, I want to be more or less as broad as possible.

01:09:55.75 – Taylor

And then, you know, I think, are there very specific things that I want to buy a particular business where I think the email marketing is under optimized. And I think I can double them, like, oh sure. Right. But that’s, I’m making a very specific thing, which is, I have control over this very one micro component of very, you know, a very micro thing. And I think Harry Brown has a great book called fail safe investing from the seventies. And like, he opens up with, and think it’s like my, it’s my favorite investment book just because the first chapter is like,

01:10:28.59 – Taylor

You being good at your job basically is like, what that’s the thing. That’s your alpha. That’s where you make the money, right?

01:10:33.53 – Brian David Crane

Yeah

01:10:34.44 – Taylor

Like if you’re the best person in the world at email marketing, you don’t need to pick stocks. It doesn’t, you know it doesn’t matter, right? You’re going to make, so you should be able to make so much money just doing email marketing that it’s economically irrelevant.

01:10:47.71 – Taylor

Whether you’re just time and energy is so much better spent on or whatever, being the best person. OBGYN, any sort of thing, right? Like that that’s way more practical, right?

01:10:57.66 – Brian David Crane

Yeah

01:11:01.99 – Taylor

It’s like that, it tends to be, when it gets down to that level, right? Like, if you know, being better at writing, being better at whatever, you know, my craft or trade or profession.

01:11:14.52 – Taylor

I think my agency in that domain is pretty high.

01:11:18.70 – Brian David Crane

Mm-hmm. Mm-hmm.

01:11:19.50 – Taylor

And so I think I tend to sort of segment it that way, which is like, there’s some broad savings stuff.

01:11:19.66 – Brian David Crane

Who

01:11:25.95 – Taylor

And with that, I want to be as diversified and as agnostic as possible, because I don’t think I have any control over that. And then at the very micro level, I want to be very opinionated and intentional.

01:11:36.00 – Brian David Crane

And intentional about the skills that you’re, yeah, makes sense. Yeah.

01:11:39.51 – Taylor

Yeah.

01:11:40.39 – Brian David Crane

Yeah. So the OBGYN is top of his field. The funds that he makes or she makes from being, you know, the best OBGYN, they should turn around and put it into, let’s call it a passive, but a very a broadly diversified ah investment strategy that doesn’t assume that just because they’re an excellent OBGYN that they’re also going to be an excellent stock picker.

01:12:04.37 – Taylor

Which is very common. Most excellent doctors do not think that they are not, I shouldn’t say most. I said, it’s a very common archetype, which is like, uh, actually doctors in particular are the worst in my experience, but like, they’re really, they’re, they’re smart I don’t know you’re smart and hardworking.

01:12:17.05 – Taylor

Like it’s hard to, like, it’s hard to become a doctor and be a good doctor. Like it’s impressive, but like how, like, you know, I’d be like,

01:12:23.58 – Brian David Crane

How does that lend itself to you managing money?

01:12:25.06 – Taylor

Yeah. If you’re one of the best options traders in the world, like, does that mean you can do open heart surgery? Like, nope.

01:12:30.17 – Brian David Crane

Hmm.

01:12:30.68 – Taylor

Like, does it have no, you know what it means? Maybe with 10 years of training, you could, but kindly maybe you have the capacity to become good at it. But like, sort of same thing, right? Like how, how translatable is being great at your individual thing to, you something that’s even like plausibly, you know, you run a great e-commerce store, like how good are you at picking tech stocks? Like, I don’t think you’re much better than, you know, I like, I’m just dubious that that’s that advantageous.

01:12:57.77 – Brian David Crane

Ah want I want to ask you about, ah you and I also interested, invested in crypto and what percent in this allocation that you’re talking about or that you’re mentally modeling, what percentage crypto? Does that fall under commodities?

01:13:15.70 – Brian David Crane

And then also inside of crypto as a bucket, I believe you own Bitcoin, maybe you don’t own anything else. Are you? Is Bitcoin the diversification play in crypto? And then how does Bitcoin fit into your overall asset allocation if it does?

01:13:36.53 – Taylor

I’ve also, I’ve done math financial advice, do your own research, et cetera, et cetera. I’ll give the disclaimer now that we’re getting specific. i

01:13:42.96 – Brian David Crane

Thanks.

01:13:46.33 – Taylor

Done, I’m not currently working for an entity with regulated compliance, but I’ve been there.

01:13:53.90 – Taylor

Low single digits as part of like a sort of, yeah, sort of like part part of a bottom portfolio.

01:13:58.06 – Brian David Crane

In terms of allocation.

01:14:01.54 – Taylor

I don’t like,

01:14:04.28 – Taylor

There’s ah There’s a bunch of different… like Sorry, going back to the broad asset allocation. link There’s a bunch of different frameworks for like, okay, how do you size? Okay, let’s say you start with that like How do you size things? like How much do you put in these sort things? I’m not sure how interesting it is to go into the weeds there.

01:14:16.76 – Taylor

But one of the more popular approaches is to just look at what the volatility of that thing is. right and like Something that’s super volatile, you probably don’t want to own a ton of it because it’s gonna it’s going to drive your portfolio returns. right So if you have…

01:14:30.72 – Taylor

90% in T-bills and like 10% in crypto, like your portfolio returns are completely denominated dominated by crypto, even though it’s only 10%, right? Because the volatility is so high. So crypto is like super, I I haven’t looked at it in a while, but I want to say it’s like,

01:14:46.37 – Taylor

The one standard deviation annual volatility is like 75%, right? Which means like in a typical year, it’s like going up and down 75%. It’s super bad.

01:14:56.85 – Taylor

Stocks are like 15%, gold’s 20%.

01:14:57.18  – Brian David Crane

Wow.

01:15:00.63 – Taylor

The year treasury is like five, just ballpark numbers.

01:15:06.37 – Brian David Crane

And

01:15:07.24 – Taylor

So it’s super volatile. What’s to me is like, right, well, you want to be pretty conservative in how you’re sizing it in that perspective. And then, 

01:15:16.46 – Brian David Crane

They call it crypto for a reason, like, like holding on, right?

01:15:16.54 – Taylor

I don’t. Yeah. And I, yeah, yeah, yeah. And then I don’t know.

01:15:29.19 – Taylor

I think maybe, I don’t know. Maybe when I got involved, it was probably like the mid 2010s, late 2010s, like. It was kind of niche and I thought maybe I know something someone else does, but like, I don’t know anything. I do. I know, is there like something about crypto that I know now that other people don’t like, no, I I don’t think that they’re, 

01:15:50.06 – Taylor

There is sort of thing. And so, yeah, I think it’s interesting. Like, I think the technology is still super interesting. I think there’s like active traded stuff you can do in crypto markets that’s interesting, but just sort of like a passive exposure ah thing.

01:16:08.09 – Taylor

Like, yeah, something in the low single digits seems appropriate.

01:16:09.59 – Brian David Crane

Yeah. but there’s also a religious and a philosophical component to it, right? Maybe that’s true with stocks as well. But like, I think crypto also incites in people, especially Bitcoin.

01:16:18.28 – Taylor

Yeah.

01:16:22.21 – Taylor

If I’ve been on the Bogleheads for I assure you it is also true in stocks for sure.

01:16:22.56 – Brian David Crane

Yeah.

01:16:25.42 – Brian David Crane

Okay. Yeah. Yeah.

01:16:28.74 – Brian David Crane

Yeah It’s an expression of one’s worldview in a way, right?

01:16:31.99 – Taylor

Yeah, I had some tweets that I thought were so clever and I was proud of like years ago. It’s like people like I was told growing up never to talk about religion, politics or money. And the reason people get so upset about crypto is you’re talking about all three at the same time.

01:16:45.85 – Brian David Crane

Hmm.

01:16:47.20 – Taylor

And I think I think that’s right. It symbolically represents all these incredibly important things. sensitive and like emotional topics for people.

01:16:53.86 – Brian David Crane

Complex. Hmm.

01:16:56.56 – Taylor

Right. And so people infuse all that emotion into the ah thing that it’s a state, it’s a political statement, it’s your religious statement. It’s a um

01:17:05.59 – Brian David Crane

Economic statement. It’s like, yeah, I mean, yeah.

01:17:06.66 – Taylor

All those sorts of things. Yeah. and As much as possible, I try, I guess as an investor, I don’t like,

01:17:11.18 – Brian David Crane

To avoid those things.

01:17:13.87 – Taylor

Whatever. I may have religious or political views, but like that’s not an investment decision, right? That’s what. That’s something else that I’m making a decision about for whatever reason.

01:17:26.29 – Brian David Crane

Let’s call it a matter of the heart instead of a matter of the head.

01:17:29.04 – Taylor

Yeah.

01:17:29.95 – Brian David Crane

Yeah.

01:17:32.04 – Taylor

And I think Taleb had a great, it was the last thing I’ll say, I was just in relation to that.

01:17:32.12 – Brian David Crane

Let’s…

01:17:35.89 – Taylor

He had a great line. It was like talking about political systems. He was like, was something be communist in your family family, socialist in your neighborhood, democratic in your town, Republican in your state and libertarian in your thing and I just yeah and I mean like it’s just kind of like of course we all have like i’m fully communist with my family right like you know to each as they deserve

01:17:48.64 – Brian David Crane

The federal level, at the national level, yeah.

01:17:58.99 – Brian David Crane

Charlie a… I don’t Yeah, sorry.

01:18:02.56 – Brian David Crane

I don’t know you have sorry

01:18:03.95 – Taylor

Correct yeah I have no expectation that my one-year-old is going to like be economically productive right like you know he just get whatever he needs yeah of course like he’s whatever he gets you needs uh sort of things I think that I was kind of the same thing right like it’s like there’s a The idea of like everything sort of context dependent, right? Like there’s an appropriate place for everything. Or and maybe not for everything, but yeah different things have different appropriate places.

01:18:30.53 – Brian David Crane

Amazing place to end on. Let’s wrap up. Taylor, for those who’ve been listening, where should they go to follow you or support your work?

01:18:39.74 – Taylor

If you just Google my name, Taylor Pearson, I’m somewhat active on Twitter. I have a website and Brian mentioned I have just like a monthly reading newsletter sent out. So you can sign up for that on my site.

01:18:52.26 – Brian David Crane

Yeah, and you’re doing consulting as well. I don’t know how much consulting you are still doing, but if you’re looking to make better decisions, Taylor can listen to you and serve as both a consigliere and a psychotherapist, let’s say, right?

01:19:07.88 – Taylor

Yeah, light up on psychotherapy, not my specialty. partner Yeah, thanks for having me, and thanks everyone for listening.

01:19:11.15 – Brian David Crane

Okay, yeah. Lovely. Thanks for coming on, Taylor.