Becoming a "Fool on the Hill" One of the things I tell young people who are trying to bootstrap a fund like I was is, you have to look for a couple opportunities to take some risks to deliver some outsize returns because otherwise you're going to be stuck in the small fund trap. I split it into two periods, the first dozen years or so I really did knock the cover off the book, is a great time for investing and to some extent I was smart and lucky but a lot of hustle led to the luck. What's the old saying, the harder I work, the luckier I get. So as an example, only a year after I started, we're now in the spring of 2,000, a year after I had launched, I was up to about $4 million and I heard that investing legend Joel Greenblatt who I'd read his book you can be a Stock Market Genius. Again, one of those classic early value investing books that he was teaching a class up at Columbia Business School. So I found out when the first class was, and then what classroom, and I just showed up, and I looked like a student. I was only five years out of business school myself. So I sat in the back of the classroom, and he didn't notice me or anything, and I learned for a couple hours he was teaching that day, and then I went up to him after class, and I introduced myself, and confessed that I wasn't a student but that I was a big fan of his, I'd read his book, I'm launching my own little hedge fund. Would he mind if I sat in the rest of the semester? And he got a very uncomfortable look on his face because it's against Columbia Business School policy to let just random- Right. -to come sit in on their classes and he said, " I'm not supposed to do this but if you promised to keep quiet, if you can't participate in any of the discussions like a regular student, but if you just want to sit there and keep quiet, I'll look the other way." And so I did, and that was an incredible investing education because this was the absolute very peak of the Internet Bubble. It was March, 10th of 2,000, I was taking this class that week and he was preaching the gospel of special situations and it's hard for young people today who didn't live through it to understand anything that wasn't nifty 50 Internet-related then was incredibly cheap, good industrial kind of businesses trading it, three or four times earnings, Berkshire Hathaway had fallen from 70,00 a share, down to over $40,000 a share which was cash and investments. So you've got much younger Buffets and Munger, 75 operating businesses for free. You're just- Right. -trading a cash and investments. So that was an opportunity that I put 30 percent of my little $4 million fund into Berkshire Hathaway. It happened I got lucky on the timing had been buying it, I'd owned it since I started my fund a year earlier, I bought a little more on the way down, so I wasn't perfect on the timing but the day I really backed up the truck on it was happened to be just coincidentally the final day of the Nasdaq blow off to the upside, and not coincidentally because money was coming out of value stocks to go into or whatever, and was the day Berkshire bottomed within two months. Berkshire was up 50 percent and that was a 30 percent- Wow. Yes. -position for me. So that's a combination of being lucky but also being good and having some courage and being willing to take a big bet early in my career. Because one of the things I tell young people who are trying to bootstrap a fund like I was is, you have to look for a couple opportunities to take some risks, to deliver some outsized returns because otherwise you're going to be stuck in the small fund trap. Good. The vast majority of funds that start with a million dollars out of their bedroom like I did. The vast majority never even get to 10 million and that's just not a viable business. So I got lucky in that the market offered me an opportunity to put 30 percent of my fond into something that was both super safe and super cheap. The dilemma today is, you can take a big bet and put 30 percent of your fund into Bitcoin or something but chances are you going to get clobbered. So there was some luck there early in my career. So I made the pivot away from being a nifty 50 big cat popular momentum stock investor into small cap value stuff, very obscure little businesses, universal stainless steel, little company called Aon , and I can't even remember Imperial parking. These obscure little companies that were super cheap and beaten down, and I could see big picture that large-cap growth was trading at a valuation premium relative to small cap value. The sectors- Right. -were trading at I don't know, 20 or 30 year gap, in terms of valuation, and so I had written the large cap growth stocks for a few years, mostly out of ignorance. Not because I said," Hey, I know these are really overvalued ". But momentum is momentum and I'm just going to write it. Even that, I would've had some respect for, I didn't even have the good sense to do that but it was a very deliberate decision over the course of roughly 2,000, and 2001. I got Warren Buffett value investing religion and I thank Bill Ackman and Joel Greenblatt and some other real value investors who helped teach me, and it was in the nick time and so I got into the cheapest most beaten down sector at the right time. So as the Internet Bubble burst and the market was crapping out in 2,000, 2,001, into 2002, I was in a sector that did pretty well. So I started putting up pretty good numbers. So it was beating the market every year and I picked up a writing gig at the Motley Fool. Yes. That website had a lot of traffic and was riding the AOL, Iomega Internet Bubble, and then when that burst, there was basically nobody over there that had much credibility because they had been giving advice that incinerated all of their readers and then there was me and I'd been pounding the table for over the course of dozens of articles. I was writing at least one article a week, sometimes two or three a week and with a pretty consistent message listen to Warren Buffett, buy Berkshire Hathaway, the Internet is a Bubble, get out of these overvalued tech stocks. One of my favorite articles back then was called Cisco, Apple, and Probabilities. It's still on the internet today- Interesting. -because when he tells him Cisco, Apple, and Probabilities and basically Cisco was the market darling at that time for awhile anyway. Had the biggest market cap in the world, to this day 20 years later still a great company. The stock has not reached the peak that it hit 20 years ago and meanwhile Apple and this is after Steve Jobs had come back in, sitting on a big pile of cash, basically not losing money but wasn't making any money yet. But you had Steve Jobs, and the Apple brand, lot of loyal customers, and a big pile of cash. So you had a clean balance sheet. Apple was trading, If I recall, it had something like a $3 billion enterprise value. $3 billion for a company today, that's about a trillion? Right? Right. I said," I'm not arguing that Apple is as good accompany as Cisco ". What I'm arguing is that Apple the stock at three times earnings is a better by then Cisco- Right. -started at a 150 times earnings. So that was the kind of message out there. So as the Internet Bubble burst, The Motley Fool promoted me to one of their highest profile writing positions called Fool on the Hill. So I was the Fool on the Hill every week, and so that really got my name out there and helped me build my business combined with the good numbers I was putting up. So my fund grew and grew and basically for the next ten years or so up through the housing crisis and all, I was consistently beating the margin. I think 10 or my first 12 market I should say, 10 to the first 12 years I was head of the SMP, money was coming in, I nailed the internet bubble, I later nailed the housing bubble, ended up on 60 Minutes. There is a piece on the Housing Crisis that ended up winning an Emmy and I was the feature guy who predicted it. Let's play a game. I'm going to read out three senses. You have to guess what they have in common. All right? Here we go. Sense number one, this has literally changed my life, I'm currently up enough on this trade to pay off my house. Here sense summer two. This call has been absolutely spot on, it has made a big difference to my year and portfolio returns unlikely up 30 percent by the end of the year. Sense number three, it's effectively a macro mentoring program from two of the best. Give up. Each sense comes from one of our many subscribers to macro insiders that's the actual Macro Mentoring Service from Raoul Pal and Julian Brigden. To play along yourself, checkup Macro Insiders today, to see what kind of membership works for you.