Practice 4: Research as if You’ll Argue Both Sides Like Warren Pies
“I can generally, take an issue and argue both sides....ultimately you’ve got to weigh all the evidence and be honest with yourself and come up with the right answer… the ability to take an issue, see both sides, argue both sides, build a case for both sides…and that causes you to just dig and read and turn over stones and understand underlying processes and things like that.”
Welcome Listeners,
Warren Pies is the real deal. Most investors are ready to offer an opinion at any time without much backing. When Warren offers a view, you know he has a well researched, thought out, and quantified reason behind it. My kind of investor and frankly my kind of human. I try to operate the same way and this does not mean our hit rate is 70% when most folks hovers around 50% - but it does mean that Warren understands what is making him right or wrong and when and why to change his mind. That can make all the difference over time. Warren was a lawyer and part of being a good lawyer is being able to argue for what seems nonsensical and argue against what seems iron clad. I think that ability is one of the things that makes Warren special. Arguing against a recession in 2023 (iron clad) as he did made a difference. Arguing that higher rates may offer stimulus (nonsensical) as he did made a difference. Warren does the work and that is the hallmark of a Taylor Made Macro guest…plus Warren is a good dude and interesting away from the screens. I know you will enjoy this one and if for some reason you have not been paying close attention to Warren’s views - fix that.
Cheers,
Chase
“Soros…was always talking about how he likes making mistakes...he prides himself on his mistakes and all this stuff, and I hate making mistakes...you know what, you’re going to make them and you’ve got to move incrementally and you’ve got to be able to weigh the evidence and the only way you’re ever going to get out of a mistake is to understand the evidence… ”
Listen Here | Watch Here
Show Notes:
The Transcript
This episode features Warren Pies of 3Fourteen Research. Chase and Warren dig deep into construction data, Warren’s process, models, and why he finds construction so important for macro. Warren teaches us how to research trades like a lawyer, but also how important saying, “I don’t know” is for your credibility…unless you’re at a cocktail party. Ultimately, he argues that sticking to what you know and picking high quality businesses will both keep you alive in the markets. We also learned that Gothic Western Fiction is an actual genre (!?). Enjoy this meeting of the minds and learn how to balance granularity with accuracy.
This Episode’s Charity:
Bridge A Life Charity – Local group in Sarasota area in Florida that provides resources to foster families. Donate here: https://www.bridgealife.com/get-involved/donate-2021
Referenced in the Show:
Kevin Muir & Warren Interview: Warren’s Market Huddle Interview
Books: Blood Meridian by Cormac McCarthy & Understanding Modern Money: The Key to Full Employment and Price Stability by Randall Wray
David Einhorn – The Long and Short of Investing
Warren Mosler – This Guy Says the Fed Has Got Everything Precisely Backward, 2022, NYT Article
Where You Can Find Warren:
Warren’s X : https://twitter.com/WarrenPies
3Fourteen Research: https://www.3fourteenresearch.com/
“My worst losses I can remember so well, and they were all low-quality businesses, without like, real cash flows…Um, and the real lesson, the way that’s impacted me, we’ve built this into our models at 3Fourteen is: I’m really big on quality.”
