Invest Like the Best with Patrick O’Shaughnessy
I’ve often heard that good investors are a bit like journalists: doggedly collecting evidence and building an understanding of how all the pieces of a company or investment fit together. My guest this week is one of my favorite writers and journalists, Bethany McLean. Across her career, Bethany has covered many of the most interesting stories in business and investing, including Enron (which became the famous book and documentary, the Smartest Guys in the Room), Valeant, Wells Fargo, SAC Capital, Fannie Mae and Freddie Mac, the great financial crisis, and most recently, fracking and the energy revolution.
Given how deeply she has investigated all of these topics-- and thought about the common threads across them all--this was an amazing conversation. When talking to her, you can feel how much she cares and how diligent and fair she is when analyzing a topic. In addition to all of the great stories already listed, we discuss the art of persistence and other lessons she has learned about businesses and people gone bad. I especially loved her evolving take on housing in America.
Please enjoy my conversation with Bethany McLean
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Links Referenced
Books Referenced
Free Radicals: The Secret Anarchy of Science
Saudi America: The Truth About Fracking and How It's Changing the World
Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy
All the Devils Are Here: The Hidden History of the Financial Crisis
Show Notes
2:22 - (First Question) – Differences and similarities between investors and journalists
3:19 – What has more of an impact on business practices, exposing negatives or reporting positive
4:57 – first story that got Bethany intrigued with finding bad behaviors
6:19 – The process of getting to know the people who know more than the market
7:43 – Mindsets: Optimism vs. Complacency vs. Pessimism
8:18 – First short seller that garnered her interest
8:57 – The process that led to The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron
10:36 – How to ask questions
12:18 – Importance of preparation
14:20 – Difference between a visionary and a fraud
15:42 – Free Radicals: The Secret Anarchy of Science
16:23 – Any standout frauds that told a really compelling story
17:33 – Looking into Valient
19:32 –Writing about the #MeToo movement
19:34 - Disgraced ex-BofA exec raises uncomfortable questions about #MeToo
21:49 – Thoughts on the spectrum of chasing this story
23:26 – Ways journalist can fairly impact this movement
24:14 – The romance of owning a home in America and what it has meant for the market
24:34 – Shaky Ground: The Strange Saga of the U.S. Mortgage Giants
28:27 – What has changed on her thinking about housing
30:24 – What role does Fannie and Freddie have in the market today
31:13 – Her desire to look into energy
32:26 – Saudi America: The Truth About Fracking and How It's Changing the World
35:05 – What have been the changes in energy market in the US
34:40 – Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy
37:01 – Where are we in the life cycle of energy production
38:29 – Technologies that shaped industrial revolution in America
41:10 – Why is Peter Elkin the best investigative journalist
42:24 – Most relentless she has ever been
43:58 – Who is doing it right
44:38 – All the Devils Are Here: The Hidden History of the Financial Crisis
45:36 – Her take on reporting the The Hunt for Steve Cohen story
49:01 – How her views have evolved over her career and lessons learned
50:40 – Are there ways to prevent success from leading people down a bad path
53:48 – The role of empathy in her career
55:13 – Kindest thing anyone has done for Bethany’s career