How Leaders Lead with David Novak

Summary

David Novak's How Leaders Lead episode with Druckenmiller — uploaded January 29, 2024 on the podcast's official YouTube channel, though internal references (a predicted 2022 Steelers record, "a year ago you predicted the high inflation," the Fed heading to 4–4.5%) date the conversation itself to 2022 — is the corpus's most personal long-form interview: seventy minutes on the life underneath the record, from the 11-year-old playing poker with servicemen on the Richmond–Philadelphia train to the family-office years.

The investing content is the framework told as memoir: Drelles and the 1978 promotion to director of research at twenty-five, the Volcker bond trade that launched Duquesne, the Dreyfus years, the cold call to Soros after reading The Alchemy of Finance, the Berlin Wall deutsche mark trade, the 1999–2000 round trip and the Africa sabbatical, the 2008 crisis, and the 2010 decision to return client capital. Then Novak runs through his list of Druckenmiller's core doctrines: don't invest in the present; put all your eggs in one basket and watch it very carefully; invest, then investigate; read leading and lagging industries rather than statistics; and be imaginative about what could go wrong — and what could go right.

Because Novak interviews leaders rather than investors, the episode also reaches material the financial press never gets: the generational-theft campus tour and its framing lesson, the near-purchase of the Pittsburgh Steelers, Harlem Children's Zone and the cancer/neuroscience philanthropy, marriage and parenting, and a lightning-round self-portrait — abrupt, dry, competitive, in his own words — of a man who calls his own competitiveness a sickness he has learned to channel.

Full Text

Machine transcript (auto-captions / ASR), punctuation lightly normalized; wording as transcribed. Recognition errors possible — see sources.yaml for provenance.

Know that's a big claim, but get this: during his 30 years managing money for investors, he had an average annual return of 31% and he never, I mean never, had a down year. So if you're even a little bit interested in finance, you're going to learn a lot from Stan, including some really practical investment advice and his take on the future of our economy. But more importantly, there's a huge leadership lesson to learn. Stan isn't afraid to Envision the future differently than other people. He can see trends and patterns others can't, and then he has the courage to act on them. That's a skill every leader needs to develop. Seeing the future differently allows us to spot opportunities and prepare for what's coming. If we just go with the flow of what's current, we'll always just be a part of the trend, not ahead of it. You're about to see for yourself how great leaders aren't afraid to see the future differently. So here's my conversation with my good friend, and soon to be yours, Stanley [Music] driller. I can't wait to dig into how you become the greatest investor of all time and how you lead. But first of all, I know you've got a new puppy at the house. How's the potty training going with Otto? He's pretty good. He's about 24 for 25 every day, but the 25th episode epode is not exactly ideal.

You know, as we get into this, people are going to see that you are absolutely in love with what you do. Talk about what you call the happiness quotient. Let me just say that I like to work probably about 60 hours a week now. It used to be a lot more. So if you're not happy at work, you're kind of screwed if you add up the hours during the week. I fell in love with investing really right out of graduate school. I'll never forget my first interview. The guy asked me where I wanted to be in 10 years, and I said intellectually stimulated. I didn't get the job. He thought I was an idiot. But seriously, every event in the world affects some security somewhere.

So you're constantly keeping yourself involved with what's going on in the world and trying to figure out the puzzle and envision the world as it might be, as opposed to it is the way now. And it's been a love affair from the day I got in the business. You know, you and I talked the last time we were together about how finding passion could make an average person great. You know, why do you think that is? If you love what you do, first of all, your work ethic is going to be fantastic because you're going to work hard. If you say, oh, he's a hard worker, man, I really admire him, well, not really, he's just enjoying himself. And if you work harder than other people in your industry, I'm in a very competitive when every time you buy something there's a seller on the other side, so you better have done your homework, particularly if he's passionate. So I think a lot of is work ethic, but I also think you're just going to be better at something if you enjoy it than if you don't enjoy it. I've seen your golf game. You love golf. You're now the oldest club champion in the history of uh shinik Hills. And I think I'd say 98% of that is your passion for the game. Well, I, I think passion has a lot to do with it. You know, I was like a 2.0 student in college, but then when I got into marketing and found what I really loved, everything changed.

And I think that's really the point that you're making. You mentioned it, we both play golf, and there's nothing like hitting a shot that's close to the hole. You hit that sweet spot. What gives you that same sensation in the world of investing? You know, what's the thing that really keeps you addicted to what you do? If you envision the future and you're wrong, is not very fun. It's like shank and a wedge that really matters on a keyhole.

But if you envision the future, particularly in a way that others have not, and you bet it big and it all comes to fruition, it's not so much that you make a lot of money, it's that you figure out a problem and you won, and there's the self-satisfaction of it. So constantly looking at the world as a collection of puzzles and trying to figure out those puzzles, when you get them right, it's wonderful. When you get them wrong, it's not so wonderful, but you move one. I also remember my mentor Spiros dris in Pittsburgh saying you get your grades in the paper every day. There's no hiding in the investment business. The numbers are what they are. You can make up all the excuses you want. At least in golf, you can say it took a bad bounce or did this or that. When you screw up in my business, there's no hiding. And the converse of that is when you do something right, you have the self-satisfaction knowing you figured it out. And I'll also say that while I had clients, there was nothing better than making people money. Other than their spouse and their children, you're, you're a really important part of their life. It's also miserable when youd have draw downs. But to start with a lot of small businessmen like I did, and doctors, and be able to contribute to their lifestyle later on, that was extremely satisfying. I want to take you back, Stan, to your upbringing.

Tell us a story from your childhood that really impacted the way you lead today. Oh, that's a tough one. I, my parents were divorced when I was six and they split the children. So I was kind of shy and withdrawn, but I mean, one funny story is I used to travel on the train from Richmond, Virginia to Philadelphia to visit my mother, and the servicemen would be on the train and I used to play poker with them and I was only like 11 years old, and, and I used to win and so I kind of got addictive to gambling with an edge, which is what I do for a living, so maybe that acted it.

But to be frank, David, I had no idea I was going to end up in the investment business. I was an English major. I thought it was being an English Professor, then I took economics so I could read the paper intelligently, then I thought I'd be an economics professor. I went to graduate school, I hated it, so I kind of ended up in the business by default, and after about three or four different things. I never thought about investing on my way up, in my childhood gambling yes, investing no. You know, I had a lot of fun, you know, learning about you and doing my research, and one of the things I learned was you didn't apply to any of the Ivy League schools. I was really surprised to learn that. Why is that? Because I got 590 on my English sat boards. Funny, because then I was dumb enough to want to become an English major. My math was a lot better, but I knew I just didn't have the numbers to get an IV League school. The reason I applied to Bowden, it was the best school in the country that didn't require SATs, so I knew they wouldn't hold that against me. I'd like to it hurt my confidence, but I didn't have a lot of confidence going in. That all developed later on when I took economics. My understanding is you had your own startup when you were at Bowden. You, you actually started a little hot dog business. What did you learn from that experience? I loved it.

I mean, you probably know this, David, but my partner was Larry Lindsay, who ended up being the chairman of the economics under President Bush, so that was kind of an odd thing. But we bought a little hot dog stand and we served these guys in bath main who were the iron workers. They'd come out. I made the sourkraut overnight, he made the chili. I couldn't stand sourkraut for the rest of my life. I can't even eat it now, smelling it all night. But it was a little bit of an entrepreneurial thing, and I'm not sure what I learned from it. I, I enjoyed physical labor a lot more.

That was the only job I had before I went to the bank that wasn't physical, but uh, we had, we had fun. That's interesting, because when I was in college I had a little hot dog business, and you know, basically, you know, boil the hot dogs and until they exploded, we called them explodo dos. You know, so you mentioned earlier, you, you go on to get your PhD, you go to Michigan, but then you dropped out after two semesters. Why? You know, I loved undergraduate economics. You think on the margin, the Invisible Hand, all that stuff. Graduate economics, they were trying to jam the world into a mathematical equation and I just didn't think it fit. I think I've been proved right on that when you look at the 800 phds at the F and their predictive record, it's not so good. But I didn't want to go into math, I wanted to go into sort of figuring out the world, and I just didn't think the world could be stuffed into a mathematical formula. And the problem is these people believed their models and there was just no way. So it wasn't for me. I thought you actually started your career as a stock analyst, but I was surprised to learn from our good friend Ken langone that your first job was as a lending officer at PNC, and he, he said you weren't any good at it. Is, is that true? Well, part of it, it's true. I was so bad I didn't even get the job as a lending officer.

So the rout to lending officer, which is the job at a Commercial Bank, is you go through this training program, and the key to the training program is the credit part. And I finished the program, I thought I was pretty good, and the head of credit called me in and he said, look, your brain is fine, but in terms of being a lending officer, you got to be able to sell to people, and with your personality you couldn't sell snowmobiles in Alaska if there was no other form of transportation.

So there's a guy up on the 30th floor who runs trust department, and that's more just a numbers business, and maybe that's where you ought to go, because I can tell you right now with your personality you just can't sell. So I didn't even like fail at the job, I didn't even get the job. Okay, I didn't know that. Well, you then get into equities and you become the head of equity research, which was the number two position in The Firm. You did it at the age of 25, which is hard to even fathom. How did that happen so quickly? Stan, it's more a comment on my mentor that on me. He was sort of like a mad genius and he liked to do radical things, and I think there were 10 of us, 10 research analysts, and the other nine had mbas and I'd say their average age was between 30 and 40. And he calls me in one day and he says, Stanley, I'm going to make you a director research, do you want to know why? I go, sure, Mr dris. And he says, for the same reason they send 18y olds to War. I looked at I might know what the hell he was talking about, and he said, yeah, because they're too dumb to not to know to charge. This was 1978. He said, the rest of us have been in a bare market for 10 years and we got scars. You can't see them, but we got scars.

Nobody here can pull the trigger, and I need somebody with a fresh M that's too stupid not to know to charge, cuz I think we're going to have a great bull market. It's pretty good call, by the way, the Dow was 800 at the time, and he put me in charge and that's how it happened, but it was more because he liked to sort of think out of the box and break the mold. I don't think a normal person would have promoted me. It wasn't so much my talent is luck, that had to teach you a lot. And another thing I know that had to teach you a lot is that all of a sudden you're in this situation where you're managing, 30 years old, 40y old people. You know, I remember coming up and getting manage year old jobs and having older people working for me.

That was really hard. How did you work through the anxiety of actually managing these people? To the credit guy's point who said I couldn't sell snowmobiles in Alaska, I'm not sure they were too thrilled with my getting the job. And it got worse. The guy who promoted me, as I just said, was a bit of a Maverick, and he lost his job. So now I was here all alone without a protector, and I was insecure and anxious. But then something really fortunate for me happened, not so fortunate for some of the United States. Iran took all these hostages, and I'm like 26 years old, I'm too dumb not to know to charge, and I said, well, this is easy. Let's put 70% of our money in oil stocks and 30% of money in defense stocks. And the people with more experience going, what the hell, you can't put 70% and 30%, that's like ridiculous. And frankly, had I been 35 years old and had any experience, I wouldn't have done it. But my portfolio went up 100%. And the S&P was flat, because the only thing anybody wanted for the next two years were oil and defense stocks. And that just kind of set me on a path where AI grain confidence and B I gained the confidence of the people in the department. At 28, you decid to go out on your own, you start duking Capital. You're on this incredible run at PNC, a very reputable Bank. You seem to be kicking ass, and now you leave and you start your own company.

What gave you the courage to go out on your own and leave that comfort zone? Well, this an unbelievable story. I'm up in New York and I'm the head of research at PNC, and I'm talking one of these tout dinners, you know, everybody touts whatever it is they own. And I give this presentation on gold, and this guy comes up to me afterward and he says, you don't sound like you work at a bank. And I said, 'w Thank you. And uh, he says, why don't you go out on your own? And I said, well, basically because I'm worth about 20 grand and I don't have money to go out on my own.

He says, why don't I pay you $10,000 a month, and all you have to do is talk to me, and then you can try and go raise your clients on your own. So I figured it was a no-brainer. I'll do this, and if I get fired, I can go get a job like the one I have. The bank was only paying me $43,000 a year, and by the way, I had a lot of people working for me who were paid a lot more. This was back to what you mentioned earlier about me being 25. So I started this company. By the way, that was Joe asorio of Dale Securities, who then had one of the most spectacular bankruptcies in the history of Wall Street and ended up going to jail two or three years later. But that's how I got the confidence. The guy just gave me, you know, an offer I couldn't refuse fuse. What advice would you give others on how to make a move like that? I think you have to weigh everything. I was 28 years old, I was single, I looked at the risk reward. The risk was there, but what's the worst that can happen? I'll go back and, you know, get another job as an analyst, probably won't be a research director. If you have a family and you need income, which I didn't because I was all by myself, it might have been a different decision. But I've always been a risk taker, and uh, if you don't shoot for the sky, you're not going to get to the sky. Your firm Duane Capital, it just takes off.

What did you do to unlock value for your clients in those early years? What were you looking at that most people weren't? Well, again, I got lucky, not dissimilar to the Iran story. Vulker had just come in, and all of allall street was talking about inflation going to 25%, and bonds, I think, yielded like 14%%, and nobody wanted anything to do with bonds. But I watched this guy give a talk, and I said, oh my God, this guy is a maniac and he's going to do whatever it takes to break inflation. And he raised rates to like 20%, and I think inflation was 12 or 13.

So in my mind, he was going to crush the economy, he was going to crush inflation. So I put 50% of all our money into 30-year bonds, and the rush into cash, I own no equities, which was heresy. And we went into a terrible recession. The bonds never traded there again. It was the luck of the draw, because trust me, David, I for 30 years, there were plenty of times if I had started in a different moment, I would have had a bad year and I probably would have gone out of business. But it was just a rocket ship, particularly relative to what else was out there, so it worked out well for me. And then, you know, dyus comes along. They look at you as this money-making machine, you're getting these great returns, and they entice you to join them, and you get to continue to run your own firm. You know, how'd you pull that off? That seemed to be an amazing fee. Well, I just told him that's the only way he could have me. I actually, it was easy to go to driis because, being 29 years old, no one believed my record. They thought it was made up, and so I couldn't raise any money. Or maybe it goes back to the snowmobiles in Alaska story, but I needed to to go to D is cu I wasn't getting the clients. I had this fabulous record, but for whatever reason, I'd go and give a presentation and think how smart I was.

And then I'd always get the same call back: "No, we're not giving you any money." But the same thing happened that happened with aor. A guy from dyus heard me at a, at A Tout dinner, and he talked Howard Stein into taking me. Stein fought very, very hard for me to give up Duane, but I always knew I was going to end up running my own firm. And I was running my own firm, and it was a no-brainer for me, but I just told him I wouldn't do it otherwise. That's how I pulled it off, I guess. When you're a superstar, you can do those kind of things. Well, I wasn't really a superstar, but maybe I thought I was.

We'll be back with the rest of my conversation with Stanley duam Miller in just a moment. Stan and I both have learned so much from the great kin langone, the co founder of Home Depot. Ken believes deep down and the power of people. And when he joined me on the podcast, we talked about helping others succeed, and that's ultimately how we succeed too. If we do nothing more than bring people to the realization that they're capable of so much more, being a better person, having solid Valu, see, these are all attributes that if we can Inspire them in people, when you unleash that Force, there's no end to where it'll end up. Don't miss my entire conversation with Ken langone, episode 89, here on how leaders lead. So you, you go to dfus, you take over five funds, and they all do at least 40% growth. It's unbelievable. What was the soundtrack that was playing in your head? I mean, what were you telling yourself at that point in time? As a teenager, I wasn't very confident. And now I was bringing with confidence, by hindsight, probably too much confidence. I, I think I was probably a little full of myself, but I was just so in love with the business. And my growth curve was learning so fast because I had now expanded into currencies and commodities. I mean, I cared about my performance, but what I really car about is how fast I was learning and how fun the business was.

When was it then, Stan, that you teamed up with the legendary George Soros, and how'd that come about? Good question. So I read his book, which apparently no, no one else understood, but there was a chapter in there on currencies that I found absolutely fascinating. This was August of 87, about six weeks before the crash. And I called him up and I said, "I read your book." We had lunch. He offered me a job at lunch. I found out later he offers everybody a job, and the ones that take it, he then fires him shortly thereafter. We started a dialogue, really about daily, right through the crash.

And it was another one of those things where I actually predicted the crash. I've been wrong plenty in my career, so again, it was just luck. He was on the wrong side of the crash, so then he started making me all these ridiculous offers. Then the guy at dyus only paid me a million dollars, and I was running five funds, and one of them was number one in the entire industry. So I went over to George about nine months later. I had four or five sort of business mentors. They all told me he was a maniac and whatever I did, not to take the job. But my wife told me to take the job, and she was very complimentary of my skill set. And again, like when I started my business, I figured, what's the downside? This guy's going to fire me in a year, but then I'll still have Duan. Same thing. I didn't give up Duan. A funny story, David, which probably didn't find in your research. I went for lunch right after I took the job at his house in Southampton, and son was there. And his son said, "Congratulations, you're successor number nine since he retired 6 years ago." That is funny. Now, can you tell us a story about how Soros managed people and how he held him accountable? He wasn't that hard to get a job with, but he was hard to keep a job with. And if you didn't perform, he didn't think twice about firing you. And as I said, I was his ninth successor.

I heard a couple stories of my previous successors, but the most amazing one was some guy had, let me say, he was doing an okay job but not up to George's standards, and a new guy came in who had had a spectacular success. George basically just called the current guy in and said, "We found a better guy. You're superflous now." But, um, he treated his employees a little bit like stocks. He was wonderful with me. I had tough periods there, draw down, and he was extremely supportive when I wasn't doing well.

And when I was doing extremely well, he was also good, and he sort of like wanted to bring me down to size a little bit and when I'd start getting a big head. So with me, he was terrific, and I had a great 12 years there. I really did. Now, I know you've told the story a million times, but indulge me. Tell us the story of one of your most famous Investments, when the Berlin Wall came down. Yeah, so when the Berlin Wall came down, the deuts mark actually got trashed for a couple days, because the convention wisdom was the osmark, which was the East German currency, which is basically bunch of Communists, was going to unite with the deark. And think about it, polluting this precious thing. But what I saw was a labor Supply and tremendous growth ahead, but with probably a lot of inflation. But I had studied Germany. I had studied the V our Republic. I'd always been kind of fascinated with how they got to hyperinflation, and I knew come H high water the bundus bank would not allow inflation. And I knew, partly from the chapter I had read in soros's book years Before that, if you have a strong economy and a central bank that is radically Raising interest rates to presentent inflation, your currency is going to go up. So for two or three days the deut Mark got trashed and I just kept buying it and buying it, and it worked out well, obviously.

And then over the next four or five years we made a lot more money because we shorted the Italian layer against it, which broke; we shorted the British pound against it, which broke; we shorted the Swedish croner against it. So it was just a succession of waterfalls of all these currencies linked to the deut mark, but their economies weren't linked to the German economy. So it was a singular case of a very strong economy with a very, very fanatical Central Bank, and if you were linked to that currency, you were kind of in a, in a tough situation.

As a head of the hedge fund, you pull the trigger on all Investments, but you have analysts and Consultants working for you. You know, a lot of hedge fund guys that I know are reputed for being screamers. You know, what's your management style? I learned a little bit from my first boss: if you have a great performer, get out of the way and let them run. And then I learned from my own experience, if they're having a difficult time, don't scream at them, be supportive. I can see why Vince Lombardi is screaming at an offensive lineman, why it might be effective. Do you think it would be effective if you had the GPS of I screamed at you every time you missed? Because investing is an emotional business, and the last thing you want to do is berate somebody who just effectively emotionally choked, which are your worst trades. That's when they need your support. So my management style was pretty much to try and be supportive when they were having hiccups. And I would also say, for 30 years in a row running that business, I never went A Year Without firing anybody, and we weren't a big firm. So if they weren't performing, we just moved on. I never enjoyed firing anybody. I never slept the night before, but I did it if I thought it was right for the business.

You know, I understand you quit working with Soros in the quantum Fund in 20 000, and then you went back to running decain Capital 100% after taking a sabatical with your family in Africa. Tell us a story about how this came about. What took you to that point where you needed that sabatical? So in 99, the new internet stocks— Yahoo, uh, Amazon and 10 stocks you've probably heard of but you've forgotten them because they all went bankrupt— they'd gone all up about eight or tenfold. The Fed was easing, things had got really stupid. So I shorted a basket of about 12 of these things. I did not short Yahoo or AOL or the established winners, and I basically took a $200 million position in the quantum fund.

And in one month the 200 million turned into a $600 million loss. It went from 200 million to 800 million. I couldn't get out. So I licked my wounds, and I was someone who'd been unbelievably spoiled by success. So I found myself down 16%, and I'd never been down more than five, and I, I hate to admit, I was a basket case. I was an emotional wreck. So somehow I kind of think things through, and by June or July I decide, oh well, the fed's going to continue easing because of Asia, and Asia has nothing to do with the US other than the money will run in these stocks. So now I actually embrace the bubble in all these technology stocks and I end up the year 42%, but I know it's crazy. So I go into Soros in January of 2000 and I said, this is nuts, these things are selling for like 150 times earnings, the ones that even earn money, and I'm selling everything. And I do sell everything. But then for the next six weeks the market goes straight up, and I've got two kids I have hired to buy technology stocks with names I never heard of that I don't understand, and they're literally making like 5% a day with a small amount of money. And then I commit the cardinal sin in Money Management.

I get emotional, and I'm watching these stocks go up every day, and you know those, those little cartoons, the devil's on this shoulder and the devil's telling you to do it, and the angels on the other shoulder and tell you don't do it, don't do it. Well, every day I want to pick up the phone and buy the market because I just can't stand that I'm missing out on this. Finally, I do. I'll never forget because it was about an hour from the top, like the top of, of the dot bubble, and the market reverses like the next day, and I know I'm wrong, and a week later I'm in a whole world of hurt. And I go into Soros and I go, I think we've gone from like up 15% on the year to Flat in a week. And I go, I can't take this anymore. I'm burn out, I'm exhausted. I said, I need a break and I'm going to resign.

He accepted that. That by the time I got out of all the stuff, here we are again, we're down 18%, and this is May, and I am a complete emotional wreck and mess. So I decid to go on a sabatical and I write a letter to all my du clients say, I'm going on a break, I don't know when I'm coming back, I can't even promise you I am coming back, you can have all your money back or you can leave it in cash. So what I did is I took a real break. I didn't read the newspaper, I didn't know where the market was, I wasn't allowed to watch TV. Not only did I go to Africa, I, I would play golf and read books, but nothing financial. And then I came back four months later, extremely refreshed. I want to get to what happened after when you came back refreshed, but when You're on that sabatical, did you have a aha moment about your own self and your own being that that you wouldn't had if you wouldn't have taken that time alone? I'm almost embarrassed to admit this, it sounds so trivial, but I went to an IMAX movie about Michael Jordan, and I can't remember what was in the movie, but somehow during that movie I decided that this was just a bump in the road and 25 years or whatever it was at the time, 20 years, couldn't be an accident, and I needed at some point to come back to the business because it's the only thing I'm really good at.

And I did feel I had a special gift, but for some reason I walked into that movie feeling sorry for myself and depressed, and I walked out of that movie going, you're so fortunate to have been given this gift, and to sit here and while in your misery, you ought to be ashamed of yourself. And that was kind of the turning point for me, and about four weeks later I went back to work. So you come back to work with the fresh perspective, and then what happens on the investment front then? While I'm gone, the S&P has rallied way back, the NASDAQ has rallied way back. So I pick up the newspaper and I see this and I go, oh my God.

And then I see that the dollar is up, interest rates are up, and oil is up. Well, whenever the dollar is up, interest rates are up, and oil is up, historically that is not good looking forward. So now I start calling all my clients, 200 of 2011 stayed with me, and all their businesses aren't doing very well either. Then I start calling around, so there's a famous Wall Street Economist named ed Heyman. So I go, Ed, I'm, I'm shocked, everything's going crazy, and oil is up, interest rates are up, and the dollar is up. And he sends me a a regression analysis with oil, the dollar, and interest rates, and it leads S&P earnings by a year, and it's predicting in a year S&P earnings are going to be down 36%, and Wall Street analyst are predicting they're going to be up 18%. So I short the market, I buy all these treasuries betting on a recession. I started the fourth quarter down 18% and had written off my record of never having a down year, figured it was over, wasn't trying to get even, and ended up making 40% in the quarter. And I will tell you, had I not taken that sabatical and walled in my misel summer and try to trade my way out of it, I would have missed this entire trade that I just described. Well, I think I'm going to put a sabatical on my calendar right now. How do you keep a fresh perspective today? You don't take a sabatical every year.

How do you keep that perspective fresh today? It's hard. You go through a rough period, I just have to keep reminding myself that this has been going on for 40 years and things will get better, because I get cold, you, you know it. In golf, you see some of the greatest Putters or players in the world, and they have, they have terrible streaks, and I still have them. I would also say I'm a lot older and I'm a lot less risk averse, so that kind of tempers my gains and my losses relative to back when I had clients.

You know, I love stand to learn how leaders think in big moments, and while everybody went down, almost everybody went down in the financial crisis in 2008, again you made a ton of money. You know, how did the Stars line and how did you think through that? That was pretty easy, and I had a lot of con ition. Again, I think one of the big sins of the FED, which we just relived again, is they tend to keep monetary policy too loose for political reasons when the punch bowl should be pulled away. And by 0506, I looked at a 50-year trend line of housing, which unfortunately you can't see it through a microphone, but think of a steadily Rising line, 3% a year with very little variance around that line for 50 years, and then all of a sudden it shoots straight up in the sky for 4, five years. So you're clearly in a bubble like nothing we've ever seen. And then, um, this analyst comes into to me from Leman Brothers of all places, and this is May of5, and he lays out to me their subprime calendar, and he says there is no way this thing can last past the third quarter of 07. This guy's like a math genius, he's got the whole schedule lined up, and he says all hell's going to break loose. And, um, I gave a speech at the Arison conference, was basically plagiarizing everything he told me, and predicted the whole thing.

And then 06 was a frustrating year, David, because everybody else was making a ton and I was short betting that the world was going to come to end. I think I was up 5%, my competitors were all up 10 or 15, but then in '07 when all hell broke loose, we were well positioned. But it was a historic bubble, it was obvious. Just because housing prices went up for 50 years every year doesn't mean they're going to continue to go up if all the circumstances have changed. People had borrowed $800 billion dollar against their homes and they were flipping them and doing all this crazy stuff. It was kind of obvious.

And then in 2010 you decid to end your Duan capital, return your client's money, and invest your own money. That's a huge deal, big change as a leader. How' you come to that decision? I looked at the history of successful money managers, Soros, steinhardt, Bruce covner, some of my Idols. By the time they hit late 50s, they're kind of burned out. It doesn't make any sense. I know why a golfer is better at 28 than 58, but you would think with all this wisdom you'd be a better investor, but you lose your risk appetite or your Enthusiasm or your ability to work as hard, I don't know what it was, but I could see that I was not the manager I was 15 or 20 years ago, and I was starting to lose it. And frankly, ego wise, I was worried about destroying a great record, and I became obsessed with the fact that I never had a down year and wasn't willing to take the risk I should be taken, because that should have absolutely nothing to do with any trading you make. And it was time. It was 30 years. I didn't want to compete anymore. I want to. I want the intellectual satisfaction, stimulation, but not the fire of competition that I once had. How do you look at competitions, Dan? Well, as you know, because you know me, I'm, I'm overly competitive. I know it. It's a sickness. It's a disease, but it's not one I can cure.

I'm, I'm born with it, and I just kind of Channel it and realize that I'm sick and, and that I'm an overly competitive person, and I try and work around and, and do the best. But it obviously has its advantages. Everyone's always said to me, what makes a great money manager? And they're always astonished with my first answer. I said, they're all overly competitive. It's like, that's rule number one, which goes along with the passion you mentioned earlier, because they're passionate about competing. They're passionate about the business. You openly tell others that you have a bearish, sometimes pessimistic mindset.

How do you manage that when it comes to the decisions you make? Well, I just have to know my own bias, so I'm constantly fighting my bearishness about the world. And one of the great hedge fund managers of all time, Bob Wilson, the greatest short seller ever, he said he made 90% of his money on the long side. The math just works against you. If you're perfect on a short, you can double your money. But if you're wrong on a short, you can lose 10 times your money if you're dead wrong. And along, you lose your money, but if you're right, you can make 10 times your money. And it's a mathematical inverse of that with shorting. And I, you don't have to be a rocket scientist. I know, therefore, that if you have a bearish bias, you have to be very aware of it, and you have to work around it, and I always have. You've got a real strong self-awareness of what your strengths in areas of opportunity might be. What advice can you give to others on how to build that self-awareness, because a lot of people kind of put their head in they're saying on their own being? These successful people have all failed. They learn from their failures. Probably the most famous commencement speech ever with Steve Jobs' speech at Stanford, when he talked about failure.

And I would just say that, a, admit that you've had failures, and then go back and analyze those failures and why they happened, and learn from them. The people that aren't self-aware, look, self-aware people like myself, and I do think I'm self-aware, I've had a lot of failures, but I use them to learn from, as opposed to pretend they didn't happen. If you pretend they didn't happen, they're going to keep repeating themselves. So I would say that's the main thing, is admit your failures and then learn from their failures. You know, I recall eight or nine years ago that you toured college campuses urging reform in taxation, Health Care, Social Security.

Why did you feel compelled to do that, and what did you learn from getting out there with the students? That was the most incredible experience. Look, I knew since 1994, because I looked at the demographics of the baby boom, and I looked at what our government was doing, that we're going to have a problem sometime between, say, 2020 and 2030. So this was like 15 or 20 years before that, that when the Baby Boomers turn 65, you're going to have all these people not earning any money anymore but collecting Social Security, Medicare, all this stuff. So, so I knew we had a math problem. I waited until when I did because the spending boom that occurred after 1994 alarmed me. The most amazing thing, David, was I started at Bowden. I went to really liberal places like Brown, Berkeley, and then I went to places like North Carolina, USC, Notre Dame. I thought I was going to get absolutely annihilated at the leftwing places, and the students all loved it. They were all like insanely in favor of it, and they got it, because I presented the picture that we're not talking about just paying seniors. We're talking about, instead of calling them young people, future seniors not having any money so they can enjoy retirement. So it was more about a wealth transfer.

And then I showed them how the government had started the internet, they'd started GPS, and the government wasn't making any of these kind of Investments anymore cuz they were all going to transfer payments. But the most shocking thing to me was just how incredible the students were. But it was kind of like, and this is not shocking to me because I was in college once too, it lasted for a couple days. You know, you get them all worked up in the meeting, but then there's no follow through. And then, of course, four years later, it was very discouraging, because the only thing Hillary Clinton and Donald Trump agreed on was we can't touch entitlements.

And now you got Biden screaming about entitle, almost like you're going to be screwing old people. You're not going to be screwing old people. You're going to be screwing future old people, but no one frames it properly. Stan, you still took that time. You still went out to all these colleges. You know, what made you do it? I— what compelled you to do it? You had a great story you wanted them to hear, but why did you, as Stanley dram Miller, say, I got to take this upon myself and and get out there and get this message there? I don't know. You remember, I was a failed English professor and a failed economics professor. I wanted to teach, and I felt I had a particular Insight here. I love America, and we just can't keep doing this. And you keep eating your seed corn, eventually it's going to hit one day, and I just saw this tsunami coming 10 to 15 years ahead. So far it hasn't hit, by the way. The fundamentals that I outlined, they've all gotten worse. What bailed you out was Zero interest rates. Don't matter how much debt you have— if you're not paying anything on the debt, no one cares. It will be very interesting if the fed and rates do go to 4, four a half here, because the bills that I talked about, they assumed a 4% interest rate. That's why it hasn't hit yet. It's because rates weren't four, they were zero. But I'm I'm more concerned about it than I've ever been.

I just felt I had an obligation to ring the bell for other people listen to. I rang it, they didn't care, so I went back to my hole. Well, people do listen to what you have to say. You know, we've talked about this already, we both love golf, but I also know that you happen to be a huge Pittsburgh Steelers fan, which I know you almost bought the Pittsburgh Steelers. Could you tell us that story? I guess, um, Pittsburgh has always been a love affair with me. I moved there right after Michigan. It was a bluecollar town, there was a work ethic there and a workingman thing that kind of appealed to me.

And when 2008 hit, I was worried about the city, and I thought it would be tremendous. A, I'm passionate about the Steelers, I'm passionate about the city. But um, the man who really made the franchise, Dan Rooney, who was Art the chief's son, he was dead set against it, and he didn't want it to happen, and all sorts of forces that were put in place, and it got messy. And you know, I didn't really want it that bad. I could have had it, but it all worked out, because the minute I withdrew, um, Uber, Microsoft, Google, they've all moved to Pittsburgh, and carnegi melon is sort of like a mini Stanford, so Pittsburgh is doing [Music] tremendously. I believe every great leader must have a plan to get better. In fact, I think it's so important that I actually send out a weekly leadership plan. Each week, the plan focuses on a different leadership topic and gives you actionable steps you can take to develop that skill on a practical level. Think about it like a leadership development program, only it's simple: no fluff, practical skills will help you lead your team to success. You can get free access at how leaders lead.com slpl. That's how leaders lead.com. Stan, I've learned you've been successful by following a number of Concepts, and I'd like to talk about a few of them, just get a quick snapshot of how you think about these things. I've called them drug nuggets. Okay.

And nugget number one is do not invest in the present. Give me a for instance. I learned this way back in the 70s from my mentor dris. I was a chemical analyst. So when should you buy chemical companies? Traditional Wall Street is when their earnings are great. Well, you don't want to buy them when their earnings are great, because what do they do when their earnings are great? They go out and expand capacity into a bunch of capital spending, and then three or four years later there's overc capacity and they're losing money. Um, what about when they're losing money?

Well, then they stop building capacity, so three or four years later capacity will have shrunk and their profit margins will be way up. So you always have to sort sort of imagine the world the way it's going to be in 18 to 24 months, as opposed to now. If you buy it now, you're buying into every single fad, every single moment, whereas if you envision the future, you again try and imagine a world, how that might be reflected differently in security prices. Nugget number two: put all your eggs in one basket and watch it very carefully. Well, that's a playism of of Mark, but absolutely. If you look at all the really great investors, from Warren Buffett, Soros, to Icon, they don't have 200 Big positions. They take massive positions in something they really believe in. Or think about this: Ken langone with Home Depot. It's not a law that he needed to keep owning Home Depot, but he knew Home Depot really well, he knew what he had, so that's what he did. Or Jeff Bezos— he does need to own all that Amazon, but he could have Diversified at any point. So if you know something really well and you believe in it— and I also say it imparts discipline— if you have massive positions in something, you're not going to have what they call in my industry lazy Longs, where you're not really paying attention and you get blindsided.

If you got a position that's really going to hurt you when it goes down, human nature, you're going to watch that thing much more carefully. Dru nugget number three: if you have an idea, invest quickly, study it more later. I think I stole a phrase from Soros. Even though I was already doing it, he called it invest and then investigate. And that's become much more true as time has gone by, because when I got in the industry, two people in my class of Bowden went to Wall Street in 75.

By 2000, most of the hot shots in the ivy league we're going to Wall Street, so things have gotten much more competitive, information's gotten much more competitive, it's gotten quicker. We got the internet, so if you get an idea and you wait two or three weeks while you're analyzing it to death, a lot of times the stock will already move during those two or three weeks. And then God forbid, you're paralyze, you can't buy it because you saw the stock at 100 and now it's 150. So if I have a good concept, I buy it, do my work, and if it done work out, if my concept was wrong, I get rid of it. Because we're in a world of very, very fast moving information and security prices reflect it. You also believe, another drug nugget is that you need to be looking at leading and lagging Industries. You were one of the first to really take that approach to investing. Talk about that one. My macro approach to the economy has always been looking at businesses as opposed to statistics like unemployment figures or all the stuff that the phds look at. So if you got a business like housing that leads or retail that's coincident or Trucking that leads, I have found that if you get into management and even one level down from Top management and you talk about the trends, and if all those leading Industries are really, really strong, the econom is probably about to turn up and do very well.

And vice versa, if housing is weakening and trucking is weakening, usually the economy is not going to have a good future. You know, and, and I love this druck nugget: be imaginative around what could go wrong. What's your process for doing that, Dr? My first boss dellis, what's obvious is obviously wrong, and it's already reflected in security prices. This kind of goes back to the invest in the present. If everything is Rosy, it's already in the stock price and already in the market. There's nobody left to buy. So you have to constantly be a evaluating what could go wrong.

But I'll turn that on its head. You also have to evaluate what could go right. And it's not an accident that almost every stock market bottom happens during a recession and during lousy earnings, and every top happens with consumer confidence High, not low. The world changes, and you're only going to pick up change if you're opening your mind up to how things could be different, whether it's better or worse. Another nugget just watching what you've done is you're very dispassionate about your decisions, and that's hard for me to really fathom, because I'm a pretty emotional guy, and you get so focused on your decision, yet you can like change your mind in a hurry. Look, I feel the emotion, so don't think I'm like dispassionate. I feel the emotion, but I've learned through experience, just move on. And so yeah, I would say in actions I'm extremely cold-blooded for an investor, but trust me, I'm feeling inside. It's sort of like watching Patrick kley play golf. He looks like his own autopilot and he doesn't care. I would guess a lot that that yes, that young man is feeling it. But if, if you can control your actions as opposed to what you're feeling, that's the only thing that matters. You know, I want to shift gears a little bit, just talk about what's going on today, you know, because I, I think everybody would kill me if I didn't ask you.

A year ago, you predicted the high inflation we have right now and that the markets would correct, and, and you were right once again. What do you predict in the next few years? Yeah, let me start by saying the cold emotion we just talked about, I changed my mind a lot. So it's always dangerous for anybody to listen to me, because I can be in love with something on Friday and then on Wednesday I'm actually short it. And there said, well, Dr said this or that. So that's qualifier number one. Qualifier number two is probably more important right now.

We've never seen an environment where you had the Gap we have now between monetary policy and inflation. And a lot of my gig is to go back and find Historical analoges and see how they worked out and learn from them. This is the most unprecedented cocktail I've ever been served up, so I have more humility than I've ever had in terms of a fore class. In fact, my positions reflect that. They're very light, not because I'm scared, just because I can't see a fat pitch, I can't figure it out. We've borrowed so much from our future, and with corporate profits at an all-time high here and interest rates presenting a challenging situation, it's just hard for me to Envision that we might not be ending the secular bull market. You know, on TV I heard a guy this morning morning say, but I'm really bullish on the long term. I'm actually not really bullish on the long term. I mean, anything could happen over 18 or 24 months, but what I'm worried about is like a 68 to 82 period where you go up and down three or four times but you basically go nowhere. I don't know whether that's enough of a Dodge, but that's my answer. You know, one of the things you said that I thought was really interesting, that after we had the recession in 2008, he said that it would take about 4 years for us to have something like this happen again. But, you know, that old Dolly Parton song, Here We Go Again.

I mean, it happened a lot earlier than what you might have imagined. Why do you think that is? Well, what I was talking about was a financial crisis, and to be fair, we haven't had another one yet. But it's a great question, because the reason it takes so long between crisises is because the public learns from the catastrophe and they get what Drell is called scars, and it takes them a long time to screw it up again, but beri threw so much Firepower at the thing. And then oddly, for the next 10 years when it wasn't really necessary, the FED has continued to throw Firepower at the thing.

So instead of taking 30 or 40 years for people to get there speculative juices all turned on again, zero rates for 10 or 11 years has said up a potentially dangerous situation that I could have never imagined 10 years ago. We'd be in this position, but it's basically the policy response has been unrelenting. We've never had a policy response like this. In fact, banki bragged about the fact that the policy response in the 30s was, and I applaud what he did in '0809, but the fact that we've continued to use emergency measures until the last nine months when there was no emergency. Every big economic problem I've ever seen is preceded by an asset bubble: '29 here, '89 in Japan, '07 here in housing. So to have a really big problem, you need an asset bubble, and these guys created the biggest asset bubble I've ever studied in the last five or six years: crypto, mem stocks, equities, credit, bonds. This isn't necessarily going to happen, but that's why I'm scared. We've got what is basically a G2 economy now, the US on one side, China on the other. How do you see that playing out? Well, the answer is I don't know, but I think G doesn't understand what made China Great the last 20 or 30 years, which was dun sha ping moving toward free market reforms, letting these entrepreneurs flourish.

This common Prosperity thing and going back to maoism and communism— I'm not as high on them as an economic threat as the consensus. I am concerned that they're a geopolitical threat as an autocracy that's building a lot of military. But the economy, they seem to be moving in all the right directions pre, and they seem to be moving in all the wrong directions now. So I'd say relative to consensus, they remind me— not as extreme, but a little bit of all the predictions that the Soviet Union was going to surpass us in the 60s and Japan was going to surpass Us in the 80s. I still think, despite all our problems, we have a good chance of remaining the king of the hell.

Besides being so renowned as an investor, you've been widely recognized as one of the most giving people in the world. You co-founded the Harlem's Children Zone. Tell us how that cause touched your heart and how it came about. Well, like you David, I've been lucky enough to live the American dream, and I believe in the American dream. But when I joined the Robin Hood board in New York City, it became quickly apparent that the American dream's not open to, I'd say, 5% of our population. There are these pockets in these inner cities and these neighbors— they even have to be in inner city— they've got some in Kentucky that aren't in the inner city, as you know. And I just passionately would like to help that not be the case. And when I met Jeff k Canada, I knew he was maybe the most extraordinary leader and person I'd ever met within an hour. And he came up with a dream of the Harlem Children Zone, which was kind of level the playing field for central Harlem— not guaranteed outcomes, but guaranteed opportunities, so these kids would have a chance to have a shot. And that's why it touched my heart. That's great. And you and your family, you've been just a huge investor and, you know, looking for the cures to cancer, and where we've made a lot of progress. And you're also big time into Neuroscience, seeking a cure for Alzheimer's and Dementia.

What do you see happening on that front? So cancer, we're already moving rapidly up the scurve, and I think the discoveries in cancer cure the next 10 or 15 years are going to blow your mind. They've already been amazing the last 10 years. We had basically shooting chemo into people for 50 years, and then 10 or 15 years ago we figed figured it out. And we got AI, we got genetic sequencing, we got immunotherapy. So I'm very bullish near and intermediate term on cancer cures.

Neuroscience, think the S curve, but you're still down on the bottom part before it rises, but it's sort of the Last Frontier of the brain between, um, Alzheimer's, Parkinson's, ALS. And I just believe in human Ingenuity. I see the science that's being applied there, and we have invested a lot in basic research. And we talked a lot earlier about failure: you got to fail at basic research for a long time before you get the solutions. But I believe that Neuroscience is probably 10 or 15 years behind cancer, and that hopefully in 20 or 25 years we'll be seeing in these brain things the kind of thing we just talked about with cancer. Well, thanks for everything you're doing on both those fronts. And S, this has been awesome, it's been a lot of fun. And and I want to have some more with my lightning round of Q&A. Are you ready for this? Probably not. What are three words that others would use to describe you? Abrupt, um, dry, and uh, I'd say competitive. If you could be one person for a day beside yourself, who would it be in why? Probably Jeff Bezos 5 years ago, before he went on the benjis on now, cuz I think he invented the greatest company I've seen in my lifetime and, uh, brought so much change to so many of our Lives. What's your biggest pet peeve? I would say what's happening— and I hope it's temporary— with the work ethic and the culture in the United States postco.

What would you be if you weren't an investor? A failure. My, my mother-in-law says I'm an idiot savan, and I totally agree. With her, what's something about you few people would know? Probably that I have, you know, exem bouts of, uh, emotional anxiety in terms of my investing career. What's one word you'd use to describe being a parent? Just joy. What's one word you'd use to describe being a grandparent? More joy. That's two words, Dan. That your best golf coach in why? Well, I'm going to cheat and give you two, but Phil riton.

I needed major heart surgery and he started from the bottom of it, took me. But if, if you're even a decent golfer, there's nobody like Butch Harmon. Your predicted 2022 Pittsburgh Steeler record? Nine and seven. If you could boil your superpower down to one word, what would it be? I would say drive. Stan, you've made so many decisions. What do you think is the most important decision you've ever made? Oh, not even close. When I married Fiona. Unbelievable partner, unbelievable mother. I have smart children because of her. She keeps me grounded. You know, I think both of us have been blessed and we have incredible families and in different ways, you know, we've experienced high levels of wealth. What advice can you give to people who have been blessed from a monetary standpoint on how to raise your kids and your grandkids? My wife and I couldn't have disagreed more, and everything to do with the home, she wins, and she did not hold back on giving them material things. But what she did do was spend an unbelievable amount of time with them. And one of the things I bristle at is people that say they spend quality time with their children. To me, raising children is all about quantity, not quality. And if you're with them and youve just let by example, you don't need to lecture them. But if you're with them a lot, they'll get it.

And I don't know how she pulled it off, but I've got three overachieving children with high integrity and values, and I wouldn't have done a thing she did, and I'd say that's the number one I've L learned. Just spend as much time as you can with your children. How do you do that, Stan? You, we're talking earlier about tout meetings you have to go to and all, you know, you could spend your whole life going to all these meetings, and how did you get that time with your kids? Because I know you made that a huge priority. I didn't get enough.

But first of all, my wife, when our kids were young, gave up her job until they were older, so she spent tremendous amount of time with them. One of my mentors in life, Sam Reeves, told me the best thing you can do if you have more than one child is spend one-on-one time with each child, because they're always competing. That was helpful. And because I had a decent amount of money by the time I was, say, 42 or 43, and I had my kids at 35 or 36, I was able to spend a lot of time with them on the weekends. But you know, you just make your priorities. I had an English teacher who said to me when we had our children, just remember, it all happens in the first five years. And if you screw it up, you're going to pay for it the rest of your life. And if you get it right, you're going to be rewarded the rest of your life. And even after the first five, you're only with those kids like 17 years. It's only a fifth of your life life. So during those 17 years, you got to try and pack everything you can in. I know it's hard, but you really do. That's great advice. And we've talked about our great mentor and friend Ken langone, the co-founder of Home Depot. He's been an important mentor in your life. What's the biggest thing you've learned from him?

The amazing thing about Ken, and I haven't learned it because I can't execute on the way he does, is he just, every day that man wakes up and want to make himself a better person. He just wants to keep learning and keep improving. And he's 87 years old, and in my opinion, he represents Perfection, but he's in improved mode every day of his life. He's striving to be a better person. Another person you mentioned just a few minutes ago is Sam Reeves. You know, he was the king of cotton commod training. You know, he's just sort of like, I call him the most interesting man in the world, you know, like those, those seis commercials. But what's something he's taught you? Just an unbelie bable parent and grandparent.

And also, he so-called retired 20 or 30 years ago. He has kept himself very disciplined about maintaining intellectual stimulation. I don't care whether it's biotechnology or investing or world events or parenting, or even what's new in golf, that man, he is just the me of never giving up in terms of pushing himself intellectually. And then, few people know that when Jimmy Dunn lost his firm in 911, you walked him home every night. You were with him when he needed you most. Tell us about that experience. I don't know whether I walked him home every night. That's probably an embellishment. But he's just one of the most extraordinary leaders, human beings, I've ever met. And here again, we talked about priorities, about children early on, and setting things aside. I mean, he, he had just gotten to the point in his career when I think he thought he could play a lot of golf and he was ready for a transition. And bam, that thing hit, and that man gave up everything. He did like 200 eulogies. He met with those families. And the way he dug deep when a lot of people could have felt sorry for themselves, and it was just all go with Jimmy, and he impacted so many lives. But I think he would agree, as horrible as that was to go through, he's probably a lot better man now than one could Have ever imagined pre it happening.

He took strength from adversity, and that's really the measure of a human. Last but not least, I know another good poers is is Zed hurle. He's a great friend and adviser. What's he taught you? Well, Ed's just smarter than the rest of us, and, uh, the thing about Ed is he, he doesn't need to wear his success or his brains on his sleeve. And he's very quiet about what he does, but he's got a hidden aggression, and I say that in the highest complimentary ways. He's so understated relative to the impact he has on people's lives, and frankly on American Business. It's just, it's all inspiring. I couldn't agree more.

And Stan, Wendy and I, we watched your interviews on YouTube, and, and afterwards she said, we need Stan to run for president. And I said, why? Why would you think that? And she answers, well, he's smart, he tells it like it is, he's a better Communicator than I thought he was, and he's always been really nice to me. Well, s, what do you think, drug for president? I have sleep apne, I'd probably be about where Biden is in about six months. Stan, you are, in all seriousness, you are a great American, a great guy, every s of the world, and I, I want to thank you for taking the time to have this conversation. It means a lot to me, and, uh, it's, it's been really special. I had so much fun getting to know you better, uh, by getting to do this. It was a lot of fun, and, uh, I appreciate you're doing it. Hopefully we had some impact on some [Music] people. Boy, I just love how Stan sees the world. He's got such an incredible mind, and we all learn that he's even got a more incredible heart. He's unlike anyone else out there, and, you know, he sees the future unlike anybody else too, and that's been a major driver of his unrivaled success in the investment World. He's always learning and seeing patterns, and then he's bold enough to trust that thinking and take a big swing.

Like Stan, if you can anticipate trends before everyone else, you'll have an incredible opportunity to capitalize on it. The problem for us is we get so wrapped up in the urgency of the present that we don't give oursel the proper space to Envision the future. So let's fix that this week. Grab coffee or lunch with a trusted colleague at your company and just have a conversation about the future of your industry in the next 18 to 24 months. What are your bold predictions? What can you see that others might miss? What actions can you take to leverage those opportunities? When you make it a habit to think about the future in this way, you'll give yourself a really rare competitive Advantage.

Because, you know what, most people just don't do it. So, do you want to know how leaders lead? What we learned today is the great leaders see the future differently. Coming up next on how leaders lead is Brian Cornell, the chairman and CEO of Target. How do you manage your energy? How do you train like you're an athlete and transfer some of that learning from tennis and golf and football and baseball into the corporate environment? How do you make sure that you're at your best when you have to be at your best? So be sure to come back again next week to hear our entire conversation. Thanks again for tuning in to another episode of how leaders lead, where every Thursday you get to listen in while I interview some of the very best leaders in the world. I make it a point to give you something simple on each episode that you can apply to your business so that you will become the best leader you can. [Music]

Key Themes

The episode is the character foundation beneath intellectual humility: the self-diagnosed competitiveness "sickness," the bearish bias he has to fight every day, and the willingness to describe himself in 2000 as "a complete emotional wreck" are the traits that keep the feedback loop honest. The doctrines Novak collects map directly onto the concept map: don't-invest-in-the-present is the 18-month rule; eggs-in-one-basket is extreme concentration with the watch-it discipline attached; invest-then-investigate is speed as an information edge; leading-and-lagging industries is top-down macro built from business contact rather than statistics; and imagining what could go wrong — and right — is asymmetric risk/reward as a habit of mind. The campus-tour passage is the generational theft campaign recounted by its author, including the sobering postscript that the fundamentals he outlined have "all gotten worse."

Context & Significance

The corpus already has the definitive market-facing long interview of this era in the Norges Bank session; Novak supplies the person-facing counterpart. Read together they explain each other: the man who tells Nicolai Tangen that competitiveness is "a bit of a sickness" here shows where the sickness came from — a shy kid from a divorced home who won at poker with an edge, was told he couldn't sell snowmobiles in Alaska, and was handed a research department at twenty-five precisely because he was too inexperienced to be afraid.

Two provenance notes govern use of this transcript. First, the text derives from YouTube auto-captions: wording is as transcribed, with recognition errors possible (names suffer most — "Bowden" for Bowdoin, "dfus" for Dreyfus); the speaker labels in bold are editorial insertions over the unpunctuated caption text, and quotations destined for outside use should be checked against the video. Second, the 2024 upload date is a distribution date; the conversation's internal references place the recording in 2022, between the inflation call he made "a year ago" and the Steelers' 2022 season. For the Soros apprenticeship and the sizing doctrine, pair with George Soros and the New Market Wizards chapter; for the mentor doctrine in its fullest form, Lost Tree.