My top highlights

Highlights include:

How Kevin combined computer skills with trading intuition to capitalize on market inefficiencies The story behind his decision to leave a successful banking career to trade independently His experience growing up in a family of traders and athletes Reflections on Canadian culture and the historic final Tragically Hip concert Wisdom on maintaining long-term friendships and finding your authentic path in finance

Whether you’re interested in markets, mentorship, or memorable stories from the trading floor, this conversation offers valuable perspectives on building a meaningful career while staying true to yourself.

Guest Introduction: Kevin Muir, The Macro Tourist

Matt Zeigler:

“Now in most cultures, the tourist is a thing to be mocked—the bad shirts, the bad taste in food, the cameras around the necks—and if you’re a local, the tourists are the people who are always in the way. And if you’re a trader, well, they’re the ones who are trying to give you a bad name. But this guest has made a career out of tourism, by which I mean he’s exploring areas that others might not, turning over all the rocks that are there in the name of finding opportunities. He’s a veritable Ferdinand Magellan of who’s buying and selling, a Christopher Columbus willing to back up his portfolio’s dump truck, a Marco Polo of the occasional crapco YOLO, the Jacques Cousteau of commitments of traders and fund flows, and the Amelia Earhart of the occasional gas gauge chart. Is that too soon? Mil, you can make jokes about her, right? He’s the master in the Market Huddle universe, a real He-Man, which maybe makes Patrick O’Shaughnessy Man-at-Arms—we’re going to have to ask him that question on another episode. The ‘everything is interesting’ purist, author of The Macro Tourist himself, promising a conversation that will not be the maturest. And no, I will not play him in ‘Birds for the Bill,’ at least not this time. Bring home the Canadian—let’s bring home the Canadian bacon with me now, the one and only Mr. Kevin Muir. Kev, man, listen, that was the best intro I have ever gotten.”

Kevin Muir:

“Like, nobody will ever be able to top that. As a person who regularly does fantastic intros on Market Huddle, let me say I’m taking the praise. I’m taking—I know that is awesome.”

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The Story Behind “The Macro Tourist” Name

Matt Zeigler:

“And you know, you brought up the fact that the tourist is something that’s kind of viewed with a derogatory nature.”

Kevin Muir:

“And I remember when I first chose the name when I was writing my post, and people used to come to me and say, ‘You know, Macro Tourist, that’s actually like a bad thing, you know, like that’s an insult.’ And it’s like, ‘Yeah, of course I get it.’ It’s kind of a self-terror, like I’m making fun of myself, and that was the whole thing about it. And uh, and I laugh, and it just goes along with my um, my kind of motto, which is, ‘All I bring to the party is 25 years of mistakes.’ Now I have to update this because I started that a while ago.”

Matt Zeigler:

“It’s better if you don’t update the 25 years. I saw that and I went, ‘I think when I signed up for these newsletters 10 years ago—’”

Kevin Muir:

“Yeah, he was—you’re absolutely right.”

Matt Zeigler:

“No, but I’m still making mistakes, so that is the one thing I can assure you of.”

Kevin Muir:

“Well, may your 25 years be evergreen.”

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FMK Game: Canadian Bands

Matt Zeigler:

“I’m starting here—I’m starting with a game, okay? I don’t know if this—I assume this game migrated to Canada at some point, or at least maybe your kids played it. Well, you don’t want to talk about this one with your kids. I’m going to use the PG-13 rating, which is FMK, or as my friend Raj Bennett likes to say, ‘make sweet love to, marry, kill.’ So have you ever played this game?”

Kevin Muir:

“Uh, make swe—choose one of those?”

Matt Zeigler:

“Well, you’re going to rank them on which one you’d make sweet love to, which one you’d marry, which one you’d kill.”

Kevin Muir:

“Oh, okay, let’s uh, let’s give this a whirl. So we’re gonna give this a whirl, okay? Make sweet love to, marry, kill: Rush, The Tragically Hip, and Bachman-Turner Overdrive. Okay, so I—I’m gonna be—I could be kicked out of Canada for this, but I’m not a Rush fan. And I know that like a lot of people—so I’m gonna put Rush in the kill. So then I’m stuck with—oh, and that’s easy because um, like, Tragically Hip is the greatest band that’s ever come out of Canada, so they’re going to be ‘make sweet love.’ And then I guess I have to marry BTO. I mean, which is kind of annoying because he is um, he—he’s like, he’s a lovely human, and he actually has a radio show that he does, really, on CBC.”

Matt Zeigler:

“Yeah, he has a radio show, and he—and it’s actually terrific to listen to ‘cause he’s really old, and so he’ll talk about like meeting the Beatles and then he’ll play little bits of the songs and stuff. So it’s a great—it’s a great show.”

Kevin Muir:

“But he is definitely um—I think he was kicked out of The Guess Who for being a little too Puritan. And uh, for those who don’t know, um, is it Bachman—I guess that’s his last name, I can’t remember his first name—but he was originally part of The Guess Who. And ironically enough, I was actually—I grew up in Winnipeg, and The Guess Who were from Winnipeg. And I remember—remember hearing my dad’s uh, friends tell stories about like these crazy parties they had and what The Guess Who guys did and like, ‘Oh, we trashed this house,’ and blah blah blah. It was some great kind of Winnipeg Guess Who stories.”

Matt Zeigler:

“And last Guess Who story—I, because I love telling this um, when they asked uh, who was it, uh, who’s the lead singer for um, the uh, Led Zeppelin? Is it Plant?”

Kevin Muir:

“Robert Plant.”

Matt Zeigler:

“Robert Plant, yeah. So they asked—they said, ‘Robert Plant, you have a terrific rock ‘n’ roll voice, you know, like it obviously does—one of the greatest singers of all time. But if you had to pick someone that you would want to sound like, like who would you pick?’ And he chose Burton Cummings from The Guess Who.”

Kevin Muir:

“That’s amazing.”

Matt Zeigler:

“Yeah, kind of interesting pick.”

Kevin Muir:

“There’s all those things because it’s one of those—there’s uh, you know, growing up on this side of the border in America, the weird things that get passed back and forth between our countries. Yeah, all trade commentary aside, like I’m in a trailer park in New Jersey on family vacations—you know, a condo, but it was a trailer park—and like the Canadian kids sliding me The Tragically Hip stuff, like mid-90s, around the side, and just being like, ‘This is amazing,’ and then nobody else caring.”

Matt Zeigler:

“Yeah, you know, they tried to make it big in the States. They got on Saturday Night Live, right? And live appearance. And you know what the problem was? If you go and you watch the documentary—there’s a great documentary for those converted. My wife—full fan now, thank you for that documentary.”

Kevin Muir:

“Well um, and for those who don’t know, The Tragically Hip are like a Canadian band that at their peak could have come to Toronto and sell out the Maple Leaf Gardens for like two weeks straight and yet would go to New York and have to play like a little 5,000-square—I mean a 5,000-person venue—because they couldn’t sell out the big arena. And not only that, all 5,000 were mostly Canadians that were living in New York, the ex-shows up.”

Matt Zeigler:

“And the—and the kind of crazy story about this is that the lead singer got diagnosed with this brain cancer, and instead of just kind of quietly going off and dealing with it, he announced it to the world and said about doing this one last tour in this one last concert. And listen, he didn’t—he could barely keep the lyrics straight. They had to put like uh, uh, the—in front of him through a prompter and stuff. So it was—it was just emotionally hard, you know, felt.”

Kevin Muir:

“And the last show, because they were from this place in Ontario called Kingston, the last show from Kingston was just broadcast throughout Canada. And I can tell you, there’s like—I can remember the periods, like points at which Canada shut down, like where there’d be nobody on the highway. And it was like, generally, like um, Olympic hockey games—like we had a big one against you guys where uh, Sidney Crosby scored the winner, and that was—I remember coming in, like the highways were empty, and we had to pull over to go watch the game. And this was another one where just the whole country stopped to watch this last concert from The Tragically Hip.”

Matt Zeigler:

“Where were you? Where did you watch?”

Kevin Muir:

“I watched it at the cottage. So I was uh, and a lot of people were kind of uh, in cottage country and doing it there. And I should have gone somewhere, and you know, I was tempted to go, but it was just so expensive that—to actually go to the concerts, it was—it was crazy. It’d be like if uh, you know, you got to go to the last taping of MASH or something, like—I don’t even know, like the Super Bowl.”

Matt Zeigler:

“When I—when I tell people, I would say it’s our Bruce Springsteen. So it’s a band, but it would be the same, like imagine G Downey—if he was still alive—would have a Bruce Springsteen level. Hopefully not the same plasticky face thing going on, but—well, New Jersey adjacent.”

Kevin Muir:

“Yeah, and well, I’m very happy to hear that you were a fan. And what—what was your favorite album or song?”

Matt Zeigler:

“So uh, I ended up with a soft spot for Road Apples.”

Kevin Muir:

“Oh yeah.”

Matt Zeigler:

“And like really getting into that, and then I’m trying to think—it was—I don’t know if I made a note of it—the one—it was the one that came in Henhouse, what came out in ‘9—”

Kevin Muir:

“Trouble at the Henhouse.”

Matt Zeigler:

“Trouble at the Henhouse was like the first—I had that one and the album before it were like the tape that the Canadian friends made to me.”

Kevin Muir:

“Okay.”

Matt Zeigler:

“And that was like two summers, and then I remember being like, ‘Oh,’ ‘cause it was in uh, ‘Breen’—one of the songs was in Brain Candy too, the Kids in the Hall movie.”

Kevin Muir:

“Oh, really? I—I felt like really cool that I got the—do you know what ‘road apple’ is, by the way?”

Matt Zeigler:

“Uh, I found out, thank you to the documentary, yes, finally. I never knew until—”

Kevin Muir:

“Yeah, so, and the funny part about that story is that um, they—The Tragically Hip had chosen this name for their album, and the American record company said, ‘That sounds way too Canadian, like it was like that’s just terrible name.’ And so they were like, ‘You know, F you,’ and they decided to, you know, go, ‘What about Road Apples?’ They thought there’s no way they’re going to accept Road Apples because, for those who don’t know, road apples are basically horse crap, like that’s on the side of the road. And they loved it, and they went with it. So it’s how very Canadian that one of the best albums of all time is named after horse manure.”

Matt Zeigler:

“It’s a beautiful—did they try to name an album that first and then like it got shot down, and then they brought it back down again?”

Kevin Muir:

“I thought it was the other way around. I thought they wanted to name it something, and then it was kind of their, you know—they had—I could be misr—everyone should watch the four-part documentary. I think it’s even better if you know nothing about them, meaning like—meaning I’m sure if you grew up on them, it’s extra exceptional, but if you know nothing about them, you will come out of it wanting to work your way through the entire catalog because it’s so beautiful.”

Matt Zeigler:

“Yeah, I can’t remember—it just felt like that was like that was one in their back pocket that when they called him on not being able to do the other, they were like, ‘How about this?’”

Kevin Muir:

“Right, waiting for this—they’d been waiting to call it Road Apples. It’s the joke with your friends that you’ve like, you’ve been saying for years, and now you’re like, ‘All right, let’s play the card.’”

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Growing Up: Family and Early Interests

Matt Zeigler:

“Well, speaking of playing cards, take me all the way back. Mom and Dad—I’m just curious about both of them, what they did, and in particular, like, was Dad seriously trading—Vancouver penny stocks, is that right?”

Kevin Muir:

“You’re absolutely correct. So I grew up in a household um, as I mentioned, I’m from Winnipeg, and there was a company in Winnipeg called Richardson Greenshields, and the Richardson family are one of Canada’s kind of wealthy families, and they’d started the securities arm. And then my dad and mom were actually from Montreal, so they moved out to Winnipeg. My dad decided he was going to be a research analyst, and he eventually ended up being the research director, so that’s like the guy that has all the analysts working below him. Um, but I grew up listening to stories about all these crappy stocks that are just like—just—and for those who don’t know, like Toronto, and more so Vancouver back in the day, had all of these just promotional-type crazy um, mining speculations. And it’s—it’s subsequently no longer there, like because we haven’t had a real kind of resource bull market in a while, but just imagine kind of all your worst SPAC-type, you know, situations, like 2021, but for resources. And that’s what kind of crap that was going on. And I—I promised myself, I was like, ‘I don’t want to trade these things. This is not what—like I love trading.’ And I was always—I was always loving games. My dad laughs at me because he says, ‘I always knew you were going to be a trader because he says, like, you love games.’ Like, you know, even as a little boy, I’d bring them up Monopoly and play—I wanted to play Monopoly, I wanted to play this, whatever it was.”

Growing Up Studying Monopoly Statistics and Game Theory

Kevin Muir:

“And I remember my mom bought me this magazine that was uh, a science magazine, and in it, they had studied the different odds of uh, like the—the return profiles of all the different Monopoly properties.”

Matt Zeigler:

“Oh yeah.”

Kevin Muir:

“And then figured out like, you know, where it is. And so I—I remember I was like 10 or 11—I became obsessed with this because I realized, you know, ‘Oh no, New York, St. James, and all those—there’s such better value because of the—the minus-three card that puts you on them.’ And anyway, so I—I—I studied this, and it was always—my—my old man just laughs. He says, ‘I knew you were going to be a trader.’ Was like, ‘There was nothing else that you were going to do. It was always something you wanted to do, you studying the—the Monopoly table in the back of a magazine.’”

Matt Zeigler:

“Like, but that’s how you’re supposed to learn statistics and stuff, right?”

Kevin Muir:

“I loved it. It was just—this was an eye-opening, you know, experience for me. And then, you know, I went through my stage where I figured out counting cards, and then I was like, you know, flying out to—to um, Atlantic City overnight to—to try my hand as a card counter, which, you know, as I know now, it’s never going to work because the reality is your edge is so small, and you got to do it for so long, and uh, you know, it just ends up being a pain. But I—I had that stage. I had my horse-racing stage where I was like, you know, going to the horses to play the ponies.”

Matt Zeigler:

“Yeah, I got the systems in place and did like this.”

Kevin Muir:

“The only thing I didn’t ever do—and I kind of regret it now—is I never got into the poker because poker has a little—too old for it, and it came after me.”

Matt Zeigler:

“You missed the online poker window.”

Kevin Muir:

“Yeah, like I was already trading, and then once I figured out trading and—and did it, like I’m always kind of shocked at guys in our industry that are actually taking a risk that then want to go to like Las Vegas or wherever and gamble. And I’m like, ‘Why—why would you play that game?’”

Matt Zeigler:

“Yeah, well, first of all, the odds are terrible, but like, don’t you get enough? Like, isn’t there enough stimulus? Like, I don’t really get it. But like poker, at least I understand because there’s a little more mental parts of it, but like a lot of the just going and counting cards is—it’s—once you figure out the system, it’s just methodical and boring.”

Kevin Muir:

“All right, games—like top games besides—besides Monopoly and the stats—what are—what’s the board games in the house? What are the ones where you’re like, ‘I want to pull this off on family game night’?”

Matt Zeigler:

“Um, um, well, do you know—actually, I—we—I don’t play as—just like my gambling, when trading took over, I don’t play as many games.”

Kevin Muir:

“No, no, no, but back then—back then as a kid.”

Matt Zeigler:

“Oh, back then, um—but—but—but just as quick aside, my wife and I play uh, this game called Quirk. I don’t know if you know it. It’s like—it’s—you got to make like patterns, and it’s—it’s actually a terrific game, and my wife is better at it than me in some ways.”

Kevin Muir:

“Is it shapes or numbers or something?”

Matt Zeigler:

“Yeah, it’s shapes and colors, and then you make these different kind of things, and yeah, um, but my wife—I—I always laugh at because she’s—she’s very good at doing things with uh, letters and words. So when one day when we started playing Scrabble—like, we went out and played Scrabble—and uh, I’m terrible at words, like in terms of trying to figure out how to do this, I’m like, just doesn’t come to me. And she’s coming up with these great words, but I’m looking at the board, and I’m figuring out like, ‘Okay, I can block her here, I could do this,’ and I’m just applying like complete game strategy, like I’m not even thinking about the words, I am only, you know, blocking, tackling, and like just trying to do. And like, she looks at me, and she says, ‘You’re—you’re just playing to win.’ And I’m like, ‘What?’ Like, she’s like, ‘That’s—’ She was legitimately offended that I wasn’t trying to make the best words and that I was just playing to win.”

Kevin Muir:

“And then she said, ‘Well—’ She started to figure it out, and then—and then I never won again in Scrabble because she’s so good at it. But she was really upset that I was just using game theory. Um, in terms of going back then, Monopoly was my top game. Uh, eventually, I became a little bit of a Dungeons and Dragons geek, of course, like, you know, um, uh, what else did I like? Oh, then I went to university, and I figured out bridge and uh, Hearts. I started with Hearts, moved to Bridge, and uh, that was a big game for me for a while.”

Matt Zeigler:

“Dungeons and Dragons with the friends, like uh, quasi-Stranger Things going on in the neighborhood. What do we got here?”

Kevin Muir:

“I don’t even remember. I—I—I just remember buying all the books and just being fascinated by it and like having the—the different, you know, numbers, the 20-sided dice, and like—I—I can’t even remember what it was about, like it just seemed really cool at the time. That’s—you know, I was—I was—I was late maturing, meaning like I was like—everyone else was into girls, and I was still thinking about Dungeons and Dragons.”

Matt Zeigler:

“Okay, but then who—late maturing, yet learning to play bridge? Well, who was teaching you? You were fast-forward maturing in one category and late maturing in the other.”

Kevin Muir:

“You got it. I was like—I was just late. I was like—I was really, really short, like in—I can’t remember—I was 16. I learned in Winnipeg, you could learn to drive at 15 and a half, and I remember I was like—I think I was barely 5 feet tall and 16 or something, like I was really late. And one of my dad’s friends said, ‘I thought you had to be 12 to drive.’ That’s how young I looked.”

Matt Zeigler:

“This is great. You late maturing and early maturing—”

Kevin Muir:

“Yeah, at the same time is uh, is pretty funny.”

Siblings and Family Dynamics

Matt Zeigler:

“Okay, so the games are a big part of it. Now, is it just you—you got siblings, like who else is in the house with you?”

Kevin Muir:

“I actually have a younger brother and a younger sister.”

Matt Zeigler:

“Okay, oldest of three. We can go behind that. Uh, like big age gap, real deep?”

Kevin Muir:

“My brother’s three, and my sister’s eight.”

The Dog Story: Thumper’s Vacation Weight Gain

Matt Zeigler:

“Now I’m totally putting you on the spot with this one because I think I’ve been butchering this story from you for a while, okay? Uh, you guys had a dog growing up, or you had multiple dogs growing up?”

Kevin Muir:

“Yeah, we had different dogs, yeah.”

Matt Zeigler:

“You have some story—and I couldn’t find this in my notes, so maybe I have to edit this out—kinda scared that you got notes about all this.”

Kevin Muir:

“Oh yeah, I—notes about the important stuff, like this story.”

Matt Zeigler:

“Okay, which I feel like—I think this came from you, so you see if I’m wrong. Did you go on vacation and uh, the dog got like sent to be boarded somewhere, and the—the quality of the food—”

Kevin Muir:

“Oh yes, that is my story.”

Matt Zeigler:

“Is that your story? I’ve been telling the story—I’m shocked that you remember the story.”

Kevin Muir:

“I don’t remember it left such an impression. Please tell the story.”

Matt Zeigler:

“Well, you know, because I—I—I tell a lot of stories more than once. This is not one of those ones that I tell all the time, so this is a deep-cut catalog story. Um, yeah, so we had a Rottweiler growing up—very like good-natured Rottweiler. My dad traveled a lot, so he bought my—my mom this um, you know, big tough dog, but he was just the gentle soul. And he was tall—he wasn’t one of those, you know, short, squat ones. He was one of those tall Rottweilers.”

Kevin Muir:

“So, and he was—10 or 120 pounds, like he was a big muscle too.”

Matt Zeigler:

“Yeah, and it was just—that’s a scary—but he was the sweetest guy.”

Kevin Muir:

“Anyway, so my dad would buy cheap food and then just like leave it out for him, and he would eat whatever he wanted. And then we went on—I think we went on this vacation for like two weeks or a month, and uh, he asked—we boarded him, and the guy says, ‘Well, what do you do?’ And my dad says, ‘You—he just, you know, he self-feeds.’ And the guy’s like, ‘Okay.’ The trouble was that the guy gave him good food. And so this dog—Thumper, by the way, was his name—you know, we come back, and Thumper is like 25 pounds bigger ‘cause he’d been like, ‘Holy—I didn’t realize that there’s good food out there, like—what the heck happened to our dog?’”

Matt Zeigler:

“Oh, that’s funny. Oh, so he put on 25 pounds—was something—did you convert the food you get?”

Kevin Muir:

“I think we just put him back on the other food, and eventually it came off. Poor f—but he was a great dog, he really was.”

Matt Zeigler:

“Did you guys—was there always a dog in the house? Did we—”

Kevin Muir:

“Did we always have animals? And even like as—as young adults, as soon as we finished university, we all bought like animals right away. And like, at one point, before we had kids, my wife and I had two dogs and two cats. And I was like, ‘I’m never doing that again.’ I have a rule now—only one of each. There is a hard-and-fast rule, and I always tell people that, like, having two dogs—it sounds romantic, it sounds awesome, until you have it, and then like you have a little baby at home trying to sleep, and then all of a sudden the dogs start barking, you’re just like, ‘No.’ So I just do one of each. We’re very strict now.”

Matt Zeigler:

“I think I’ve cracked the code on it, on finally being accepting of having smaller dogs.”

Kevin Muir:

“Oh, have you?”

Matt Zeigler:

“Yeah, finally—I finally accepted this. But you grow up with big dogs?”

Kevin Muir:

“No, but that was the only ones that we were really around as—”

Matt Zeigler:

“Okay, we had—there was three boys in my house of not totally distant age, so we were a small herd of elephants, and my dad leaving an animal with Mom would not have been the right choice for the longevity of their marriage. So instead, it was opted of just forever promising eventually getting a dog—so we could develop a complex and then, you know, get older and get dogs later. But yeah, so do you have multiple dogs—is what you’re telling me—multiple small dogs?”

Kevin Muir:

“After—after a run here, my little guy who’s eight—we just got another small dog to go with him, and like, they’ve hit it off so far—so far, so good. Talk to me in three months, I might have changed my mind again. But it was one—what kind of dog is it?”

Matt Zeigler:

“You know, they’re—they’re little dogs. They don’t need another like m—you’re just like, ‘No, they’re just little.’ I’m not gonna tell you what kind—it’s little, you know. I’m assuming it’s white.”

Kevin Muir:

“Well, we got—we got one who’s basically too cute for his own good. He’s like a small Muppet of a dog, um, which is absolutely adorable. He’s—he’s Shih Tzu and Yorkie mix—Shorkie, I’ve been told.”

Matt Zeigler:

“And then even better name, because you can’t outdo that—we just rescued this other dog, and he is a part Chihuahua, part Dachshund, which is apparently called a Chiweenie, which is—”

Kevin Muir:

“Great marketing—great marketing.”

Matt Zeigler:

“Um, but the best part is, for a long time, I had a big dog and a little dog, and like the little dog would run between the big dog’s legs, and walking them both—it’s disaster. These two little guys just like bump into each other, and that’s the most of it. They curl up on the couch, they look all cute, and uh, there you go.”

Kevin Muir:

“And you can travel with them.”

Matt Zeigler:

“See, I—I—and I can throw them in the back of the car and go—great. So our joke is um, with my wife—we—so we had these two dogs, two cats. We eventually, you know, the two dogs pass away after 14, 15 years, and it’s time to get a new dog. And then—dogs that we had gotten previously were these like purebred Bearded Collies, and they were, you know, they were great dogs, and they were terrific. And then my wife says, ‘No, I don’t want—’ And it’s like a medium-sized dog. She says, ‘I want a small, non-shedding dog.’ So this is what she tells me. And she wants—she wants a small, non—dog, and we’re going to rescue it.”

Kevin Muir:

“Okay, so this—risky proposition.”

Matt Zeigler:

“Yeah, so we’re going, and we’re spending all this time trying to find this non—small shedding dog that we’re going to rescue. Then kind of six months, and I’m kind of like—because everyone wants that, so nobody’s going to like, you know, when you go to the thing, all it is—”

Kevin Muir:

“How dare you apply market-making tech frame of reference?”

Matt Zeigler:

“So well—no, but the thing is—so eventually though, she’s like looking through all these things, and she falls in love with these Newfoundlands. And like, a Newfoundland is like—like the exact opposite of what she wants.”

Kevin Muir:

“Yeah, it’s like the—and so I—my joke is—so we eventually went and rescued this Newf that’s been with us for—for years, and she’s terrific dog.”

Matt Zeigler:

“How big is—she’s—”

Kevin Muir:

“She’s a small Newf—she’s only 100 pounds—but um, the thing about it is, I said like, you know, ‘You—you wanted a small, non-shedding dog, and you ended up getting like a Newf.’ Is this how you uh, kinda, ‘You wanted a tall husband with a good set of hair, and you ended up with me?’ Because I was like, ‘How do we go from like the exact opposite, you know?’”

Matt Zeigler:

“You could play this spousal Scrabble card as many times as you want. Teeter on the edge here, man.”

Kevin Muir:

“Oh, it’s funny.”

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Life in the Gifted Program and Being the “Non-Athletic” Brother

Matt Zeigler:

“Oh, well—so—so you grow up—thank you for sharing the dog story. I knew I had to try to find one if I could get there. The uh, like other interests—are you playing—you playing sports? You’re playing hockey as a kid? What are you—what are you—”

Kevin Muir:

“So, are you a sports guy at all? I am—I come from a sports family. I am—okay, so here, since you’re getting me to open up—so my brother was actually a very good athlete. He played professional hockey for a living. He won the Stanley Cup, and uh, so I grew up thinking I was terrible at sports ‘cause my brother was terrific at every sport he tried. He crushed me. He was taller, he was bigger, like he was better. It wasn’t even close. I literally grew up thinking I was the worst sports guy around.”

Matt Zeigler:

“I would go and people would say like, ‘Oh, do you—you want to play baseball?’ And I’d be like, ‘I’m not very good.’ And then I would go play with them—I go, ‘I’m not very good, but you’re terrible,’ like because I was so used to playing with the guy that was like, you know, just an unbelievable athlete. Um, but no, I did not play uh, you know, a lot of sports.”

Kevin Muir:

“The only thing I ended up being good at was I have a good sense of balance. So I was actually—even though I grew up in Winnipeg—we did a lot of water skiing at the cottage, and then eventually I picked up uh, downhill skiing as I got older, and that came very naturally and easy to me. And that’s kinda the sport I would probably say I have the natural affinity to.”

Matt Zeigler:

“Is this middle brother, youngest brother?”

Kevin Muir:

“Yeah, the middle one. So yeah, so extra pain because like—oh yeah, not only that, he was tall. As I told you, I was late maturing—I was short, like he—he was the same size as me even though he was three years younger, like we would play in house league hockey, and so I would be playing in my year, and he would be coming and playing up, like basically in my year as well, like—is that embarrassing or what?”

Matt Zeigler:

“So rough.”

Kevin Muir:

“And he was better than me, like—like—like not just was he in my league, he was better than me.”

Matt Zeigler:

“So were Mom or Dad athletes at all? There was like—”

Kevin Muir:

“My mom’s side had some like tennis players, and my dad was a good hockey player growing up, but not to that extent, like it was kinda—it was unexpected that he was so good. But my dad always tells the story—he says, ‘I put skates on him, and he just skated—it worked.’”

Matt Zeigler:

“Yeah, yeah, like he would go and—I remember—so we grew up in Winnipeg—really cold, outdoor rinks everywhere—he would go after school straight to the rink, then he would come home for dinner and then go back until like they turned off the lights at the—at the place. Like, so it was just hockey, hockey, hockey.”

Kevin Muir:

“So everyone always goes, you know, like, ‘Oh, you know, you must know a lot about hockey, you must like a lot of hockey.’ I said, ‘I have watched so much hockey, I—I have no interest, like zero, like I’m so done with hockey.’ Like, let’s put it this way—the other day, like last year when Edmonton did well—I think it was Edmonton, right? They were in the Stanley Cup Finals—and I was like, ‘Okay, I’m going to watch this. I got a Canadian team in the finals.’ And then I’m like looking at this um, this MC—I’m like, ‘Who is this McDavid guy? This guy can really play.’ That’s how I was—I was like, ‘This guy can really play hockey.’ I was like—I—you know, I saw him—I was good.”

Matt Zeigler:

“You check in once in a while.”

Kevin Muir:

“Yeah, see how the boys are doing—that’s it. Only if Canada goes far.”

Matt Zeigler:

“Who—who is the team? Like, who’s the household allegiance to?”

Kevin Muir:

“Uh, there really is none, like uh, ‘cause, you know, like my brother played for a million teams. We grew up with the Jets, but we kinda left. Toronto was an easy team to hate—they—they were like—had this terrible owner, like—I guess my dad’s a Montreal fan, but like realistically, there was really nobody that we just loved. And half the time, I would just sit there, you know, analyzing left-wing lock and playing the trap and look—these different systems—and we wouldn’t be caring about like who was—who was playing. We’d be like talking about, ‘Okay, this guy did this, this guy broke down here, you know, look—this guy’s plus-minus stuff,’ like—so it was very analytical, and so it did—it kinda took the fun out of uh, you know, rooting for a team.”

Matt Zeigler:

“So like watching hockey in your house is actually critical strategy—”

Kevin Muir:

“Yeah, like critical game analysis on like who’s setting stuff up and doing stuff.”

Matt Zeigler:

“Well, listen, my wife, you know, accuses me of this all the time. She’s like, ‘Why can’t you just enjoy things?’ Like, so I—I watched this video the other day of a guy that was talking about what makes a good story, and he was analyzing it, and it was just a fascinating video. And he was talking about the elements and how it works, and then he was talking about how he took his wife to Wonder Woman, and they came out of it, and she’s like, ‘What do you think?’ And he’s like—and he’s about to talk, and she’s like, ‘Shh, don’t say anything, don’t ruin it for me, don’t—don’t say anything, just don’t—just shut your mouth.’ And he’s like, ‘Okay.’ And he’s—and then she’s like—like an hour later, she’s like, ‘Okay, tell me what was wrong with the story.’ And when—when he told you, it was true—I was like, ‘Oh no, he’s right.’ It’s good as a movie—that was—that was a poorly written part that ended up ruining the whole thing.”

Kevin Muir:

“And this guy was just—he could only see things with a critical lens that way. And he says, ‘Yeah, if you wanted—like I get it—if you just want to enjoy the—the movie, then don’t think about these things. But if you’re somebody that enjoys, you know, or thinking about crafting stories, then these sorts of things are what you have to look at.’”

Matt Zeigler:

“Do you see a difference inside of that between like being an editor or a critic or something like that versus being a creator? I think about this even like with your own stuff, your own writing—how do you balance that? Because you need the critical eye, but then you also need the creative element that just is willing to put it on the page.”

Kevin Muir:

“Yeah, you have to go for it. There hits points where you just have to say, ‘Ah, you know what, it’s never going to be perfect.’ Um, and one of the big problems that I have sometimes is I—I sit there, and I have a post that’s three-quarters written, and I’m just like, ‘Oh, I gotta just make it perfect,’ or, ‘I gotta do this,’ you know, like—what’s the old line about, like, ‘Perfect is the enemy of good,’ or what is it—‘Perfect is the enemy of good enough,’ or whatever? There’s some—”

Matt Zeigler:

“‘Perfect is the enemy of good.’”

Kevin Muir:

“‘Don’t let perfect be the enemy of good,’ yeah. And so you really do, at a certain point, just need to go for it. And I—I highly recommend that—do your best, work hard, but then eventually just like throw it out there and see what happens, and then the next—move on to the next one.”

Matt Zeigler:

“Yeah, you know, and you never know what you have to say that somebody else is going to latch on to. How many times have you sent something out and thought like, ‘I don’t know about this one,’ and you got 100 responses versus something where you’re like, ‘This is the greatest thing ever,’ and it’s crickets, right?”

Kevin Muir:

“Oh, Matt, I can’t tell you—so people ask me this all the time. They’re like, um, ‘Can you predict the ones that are going to resonate with people?’ Um, and I’m always like, ‘No, I have no clue.’ Because there’s ones that I am so proud of that I feel like are so smart, and I’m like, ‘Wow, I nailed this. I’m like, this is so clever, this is so well-presented.’ And as you say—just crickets. And then other ones, I’m just like, ‘Okay,’ and I just whip it off, and then people are like, ‘Oh my God, that’s the most, you know, insightful thing ever.’ And I’m like, ‘What?’ Like—like even like the other day, I was on um, I was on Odd Lots, and I don’t want to like uh, name-drop or anything, but like the—the reality is that I’ve been wanting to be on Odd Lots forever, right? Like it—and by the way, I did a—I was too nervous, and I was like—it—I don’t usually get nervous, but I was nervous because it—I had built it up in my mind so much. Um, but the whole point about this was that—that was like a throwaway piece that I had written that I was like, ‘Oh, you know what, this is interesting, you know, the—the market’s really concentrated,’ and bla—I whipped off a piece—not a throwaway, but it wasn’t something I felt super passionate about. And like, Tracy, you know, emails me—she’s like, ‘Oh, I love this, like you want to come on, you know, talk about it?’ I’m like, ‘Uh, okay.’ Like—and I had to go learn about it and because I was prepping something I was, you know, felt strongly about that I—that I’d spent a long time thinking about. And so to that, you know, extent, I’m never sure about what’s going to take off and what’s going to be the—the ones that people gravitate towards.”

Matt Zeigler:

“And I think it’s hard to unpack the critical eyes of others. And I can only imagine, like, Tracy Alloway, you know, Joe Weisenthal—like they’ve trained the critical eye of like things that they think will work, right?”

Kevin Muir:

“Yes, so now you’re getting sucked up in the vacuum cleaner of—well, I think the—the reality is that they’re looking for stuff that’s outside the box, right? So they need something that not everyone’s talking about. So the more unusual it is, and—and just kinda by its very nature, they—they’ll want to be at the early stages of it. They’ll see something, and they’ll be like, ‘Okay, let’s talk about this before it becomes everyone’s talking about it.’ And so they look at it, and uh, and that’s why it was that um, point. But it was, as I said, it was not something I expected, like I thought we were going to talk about, you know, Fed balance sheet or, you know, something that was very common, and then she’s like, ‘No, let’s talk about stock market concentration.’ I was like, ‘Great—great, so excited to go pretend I did all the research that I actually need to—to not have a panic attack.’”

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School Years: Gifted Program and Moving to Toronto

Matt Zeigler:

“But on the other side of that mic—all right, so what about—take me back to like in school. So aside from playing games, how good of a student are you? What—what are the report cards look like in middle school and high school for uh, for you?”

Kevin Muir:

“Really are just like uh, delving in there, like I feel like I’m on the therapist chair. Um, okay, so I—I was in the—the—the—the enriched or gifted program. So I went to a special school where it got—got sent off, and—and I was with the like—the geeks, like I was—Freaks and Geeks, that show, might as well be about me, like it’s—that’s what it was. And it was just—it was a very—it was a special program where people came from all across, you know, Winnipeg to go to this one class, and—and it was—it was the greatest thing ever, uh, you know, and I—my best friend to this day is still from there, and uh, I—I—I loved it, and it was so great. Um, but it—we were—we were definitely not cool.”

Matt Zeigler:

“Is this at all part of like reaction to his brother already taken off in sports at this point?”

Kevin Muir:

“He was already that way—it was—it was actually just that I—I wasn’t getting along at my—so I went to French immersion. My mom—like, my mom’s third language is English, like so uh, you know, and—and she—they thought it was important I learned French, so I went to French immersion. I wasn’t the greatest at French—I think it’s very difficult, um—so I was in a French immersion school in middle school, wasn’t going well, and then my—I was like, ‘Forget this, like, you know, this isn’t—this is for the birds.’ And so at that point, he decided, ‘Okay, let’s find something for him.’ And then he was like, ‘Okay, this is it—this is where the kid’s going to fit in.’ And uh, he put me there, and it was the greatest thing ever—changed, like it really did. I went from not enjoying school to absolutely loving it, and uh, it was—it was a great experience.”

Matt Zeigler:

“Okay, so in a school like that, it’s not just your standard fare stuff. You took some other weird classes there—had to be some like Greek mythology, some type of advanced statistics that you were like, ‘Oh my God, I love this thing,’ and now as an adult, you’re like, ‘Most people didn’t learn this thing, and I still care.’”

Kevin Muir:

“Um, yeah, so for me, it was even a little more complicated because unfortunately, in Winnipeg, you go to grade 12, and then when I got—my dad got the—the company moved to Toronto because Winnipeg is obviously not a very big financial mecca. And so they moved to Toronto and happened to move on my 12th year. So I didn’t graduate with my—with my class, and it was difficult—all as well—because not only was I going there, I would already done a lot of these programs. So I come to Ontario, and I come to Toronto, and I’m like, ‘I’ve already done all this.’ Like, I remember sitting in calculus class, and one of the girls that I was sitting beside, you know, what—test comes by, and after like halfway through the thing, and she looks at him, and like I got a good mark, and she’s like, ‘Thought you were failing.’ And I was like, ‘What do you mean?’ And she’s like, ‘I thought you were like—I like you—you seem to not pay any attention, and like you’re only here half the time.’ And like—and I’m like, ‘Well, I already did all this.’ And so it ended up being difficult, and uh, in terms of actual classes—was there something that inspired me? No, like there was just—it was standard, like, you know, calculus, physics, whatever. As I said, I was more into game theory, and there wasn’t really a lot of game theory-type, you know, courses in high school.”

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Starting at Bank of Montreal and the Path to Institutional Trading

Matt Zeigler:

“So I go to school—I—I started a school out of like—called Western. I end up playing too much bridge. I come back—I’m going to U—I’m—transfer to U of—I’m there—I living in the fraternity. I’m not a fraternity guy, but I don’t know anyone, so I join a fraternity because like I’m, you know, I missed that whole first year of university ‘cause I switched universities. So I’m living in the fraternity—I—I—I try to start looking for part-time jobs. I get a job at what’s called Bank of Montreal InvestorLine, which is like their TD—like their um, discount stock brokerage. And so this is in 1989-90, and I don’t know if people remember—maybe it’s 91—no, no, it’s 90—and people remember, but there’s the ’87 crash, which was very, very traumatic, and there was actually another crash in ’89—there was another little crash in ’89—and so a lot of the um, people were very hesitant to uh, kinda expand because they were worried about this was going to happen again. So this was a big thing—this—this starting this discount stock brokerage—but they didn’t want to go and commit to people. So they got me to come and uh, like work after hours, and I would literally just answer phone calls and give people quotes, okay? Like, that’s like, you know, I’m 20 years old or whatever—19 years old—and I’m, you know, working from 4 to 8. And I was working, and then what happens is the market starts to get busier, and they say, ‘You know what, you want to work today, like the whole day—like 8 to 8?’ I go, ‘Sure.’ The thing about it is that they’re paying me like, in essence, cash, because they don’t want to put me on this, and they’re paying me too much, and I’m like sitting there working 12-hour days. Next thing I know, I’m not going to school, and I’m just working 12-hour days ‘cause this is awesome, like I’m making all this money. And they’re like, ‘Oh, eventually—’ I kinda, you know, six months or a year into this, they go, ‘We—wait, we gotta give you a job, like this is ridiculous.’ So I take a job, and then within six months, I’m running the desk, which is even more ridiculous.”

Kevin Muir:

“I’m like, literally—wa—wait, just to be clear, you’re answering calls—”

Matt Zeigler:

“Oh, taking orders—eventually taking orders. I get registered, yeah, yeah, just like retail—retail guys—ret—how do you go from that to desk?”

Kevin Muir:

“Well, no, the desk is on—it’s like—I mean, the desk there—like I’m just talking about—so they—they put me in charge of the like the—they call it a desk—it’s not really a desk—it’s just order desk—it’s a trading operation, sure. So they put me in charge, and I do that for like six months, and I’m like a level-five manager, and like—and I’m doing really well, and I’m trying to go to school at night, and I’m like, ‘Wait, like this isn’t what I—I don’t want to be a discount stock brokerage manager, like this isn’t what I signed up for.’ And like a complete buffoon, I get a job—I find somebody who—I know the woman that works there—one of her h—her husband knows somebody in Chicago, and I get a job in Chicago because this is what I always wanted to do, like I loved Market Wizards. This was basically my book—I wanted to be the next George Soros or Stanley Druckenmiller. And so a lot of these guys, like Paul Tudor Jones—he started in the pit. So I go to Chicago, and I hate it—I can’t stand it. It’s terrible. And you know, I love Chicago—I love the Chicago people, I love Chicago traders—I think they’re the greatest bunch of traders out there—but this just is not for me, like, you know, this is a lot of testosterone, like just running through the pits, and it’s just—you’re up there, and like I remember guys putting their hands up, and they couldn’t put them down ‘cause they’re so tightly, like they’re—they’re so tightly put in there.”

Matt Zeigler:

“And so I come back, and I get a job, and so my dad says, ‘Okay, this is what you’re going to do. You’re going to go and—listen, if anyone’s young and listening to this—to this story, if you managed to last this long, um, I’m going to give some life advice here that my dad gave me that I think is really, really important, okay? He says, ‘Okay, this is what you’re going to do. You’re going to find out the head traders at the banks you want to work for or the—the broker firms you want to work for, and you’re going to write a letter, and you’re going to send it to them, and then you’re going to follow up with a phone call in a week’s time because—don’t—this is back when you had the mail stuff.’ So I find the six or seven firms I want to work for, and it’s like RBC, TD—uh, not TD—the CIBC, Midland Walwyn, and Gordon Capital. Gordon Capital was the beans, man—like that’s the one I wanted to work for. Gordon Capital was the firm that had kinda created the bought deal, and they were just awesome. So I send off all my letters, and then uh, you know, it comes day for me to phone them. So I phone, and I start with the one I want to, you know, work on the most. So I start with Gordon Capital, and I remember this—the guy’s name was Howie. Howie is just a jerk—that’s why it’s always—it stole in my mind. So I phone up and go, ‘You know, can I speak to Howie?’ They’re like, ‘Howie pick up.’ And so he goes, ‘Howie here.’ I go, ‘Hi, Howie, it’s Kevin Muir, you know, I sent you a letter, blah blah blah.’ He goes, ‘What are you doing phoning me, kid?’ And he proceeds to yell at me for 20 seconds, tell me to f off, and hangs up on my face—like literally, that’s what he did, like that’s—that’s it.”

Kevin Muir:

“And I’m some 20-year-old kid—this has just happened to me—I like wanted to cry, like I—like I—I probably did cry if I’m being honest with it—I—and I—you know, so I’m like, ‘God, this is terrible—my dad gave me the worst advice ever.’ Um, so, you know, I stop, and then my dad comes home that night—he goes, ‘How—how’d it go?’ And I said, ‘Well, didn’t go well.’ I tell him the story about Howie, and he laughs—he thinks this is hilarious. And then he says, ‘Well, how did your next call go?’ And I said, ‘What do you mean, the next call? Nobody wants to hear from me.’ And he says, ‘This is what you’re going to do—you’re going to get back on the phone, and you’re going to phone the next call.’ And sure enough, my next one was at this firm called First Marathon, and it was a guy named Mike Wekerle, who ended up being one of Canada’s greatest block traders. Um, he was super kind to me—he was the opposite of Howie, you know, like—and that’s one of the things in life—you can choose to be an idiot and—and be forever immortalized as Howie the ass—”

Matt Zeigler:

“Can I say—yeah, you can say it.”

Kevin Muir:

“Yeah, okay—Howie the ass—you don’t—to make sweet, sweet love to—you can kill—or you could be the Mike Wekerle that’s, you know, was super kind to me and—and is forever going to be remembered. And you know, I was lucky enough to have Mike on my—on my show, and I was like, ‘Mike, you probably don’t remember this, but you were instrumental in giving me kinda the confidence to go and to keep going—going.’ And because you were just kind, and there’s—it cost you nothing to be kind, and like—anyways, um, so Mike was nice to me—obviously that didn’t go anywhere—but then the next firm I phone was RBC Dominion Securities—RBC, um, happens to have uh, a trader that is who eventually ends up being my boss—but he’s intense, and the guy that’s working for him has just quit because this trader is so intense. And this—this guy who ends up being my friend—you know, he’s only like five years older than me, but back then it feels like that five years is like a lot, right—uh, he says to me, he says, ‘Kev, there was guys better at trading, there was guys better at computers, but you were the best mix of both.’ And so he hires me on the desk. So I’m literally going straight onto the institutional equity desk, and I am doing all of the index trading and the basket trading for the greatest firm in Canada at the time—and it probably still is the greatest firm, but at the time, we were by far the best. And it was the—they were—it was so awesome because they were such an entrepreneurial bunch—they let you do things, they were so, you know, great—it was—it was so—it was such a great experience, and I just—I loved every minute of it, and I just—I used to love going to work, and it was just so exciting.”

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Pioneering Computer Trading at RBC in the ‘90s

Matt Zeigler:

“And the long and short of it is that I—I remember talking to my big boss and saying, ‘You know, you want me to get my degree?’ ‘Cause you were asking about my degree. He go, ‘I don’t care if you get your degree.’ And so I got my degree—barely, like just barely—like I went to school at night while I was, you know, making all this money and doing well, um, and it was just—I got it just because I felt like if I didn’t have it, I would forever, you know, worry that I was like—I missed something. But I literally—I think I needed a 1.50 grade point average to—to pass, and I think I got a 1.50—like I think I did not—like you have to give me there—I did two decimal places—you didn’t have to round up—you didn’t mess—”

Kevin Muir:

“I did not waste any extra energy getting better marks than I needed, which is a thing of great beauty.”

Matt Zeigler:

“Perfectly executed.”

Kevin Muir:

“That’s right—perfectly executed.”

Matt Zeigler:

“This thing about the computers and the trading and the balance, like—were you aware that you could combine these two things in the way—like did you know this was a skill beforehand, or did you walk in on this and them going, ‘You possess a skill that now we suddenly value’?”

Kevin Muir:

“No—so a—a little bit of both. Um, I love computers, and I—you know, if people ask me, ‘If you hadn’t been doing trading, what would you have done?’ I definitely would have gone into computers. Um, I was lucky in that my father knew enough—like although he was in research and although he wasn’t on the trading desk, he knew enough that he would kinda talk to me about different traders. And so there was no doubt I was aware about the trend towards computers at this time, and uh, then I just took it and ran with it—like literally, we had um, so one of the things about our firm was that we were able to trade proprietary for the bank. So that was, in essence, I eventually joined a group that was—we just got a percentage of what we made. And I remember sitting there, and I figured out that, you know, all these computers that I had direct contact—or direct access to the exchange with—so that we could do baskets, I figured all they could also do interlisted arbitrage, like we could write programs to buy and sell when something got out of line between Canada versus US. And I—I’ll never forget sitting there writing it, and one of the guys—the—the—the head of like risk says, ‘What are you doing?’ And I said, ‘Well, I’m running this program to do this, blah blah blah.’ He goes, ‘I already got guys doing that, like why you bothering?’ Like he said that to me—he said, like, ‘Why you bothering?’ And this machine kinda within two years was making way more than any of those guys. And so it was—I was very fortunate to be at a place that had the technology that let me run with it at a time in history when my skill sets were perfectly aligned with what was happening in the markets, like, you know, 10 years earlier, it doesn’t—the computer skills don’t help as much.”

Matt Zeigler:

“Yeah, and 10 years after, it’s a totally different state because now there’s been a Kevin Muir at all the shops, like—”

Kevin Muir:

“Right—10 years later, it’s actually—you almost need to be a dedicated computer guy, like my—my seat at RBC ended up being the guy that’s in that uh, Flash Boys movie—I can’t remember what his name is there—like whoever it is that was like one of my—like one of my duties, and one of the things that guy was in that group and doing that thing. And so—but if you look at those guys, they were way more computer-oriented—they—they had already become like you needed to be a Waterloo or whatever, you know, like a math—like a true computer nerd as opposed to a trader who happens to be able to do computers, right? You needed that advanced computer science background—love—whatever—but you were in that window where it was like—like, ‘Sure, I can build this scale model with Legos.’”

Matt Zeigler:

“Exactly—nobody else is doing it.”

Kevin Muir:

“I—it was—it was wild, like there was times I—I still think back to that computer that we got going, and we were trading through a firm called ITG, which is a very big um, kinda direct shop that a lot of people use. And I remember our sales lady coming up to us and saying, ‘Uh, D—I just was in a meeting, and we were going through all the accounts for like the whole firm, and they said, “All right, can anyone guess what the number one account is this—this year—this month?” And everyone’s guessing like Fidelity and like CapOp and all these names, and they’re like, “Nope—RBCD’s machine number two.”’ We were literally the best client that ITG had one month—that’s how much business we were doing. And it was just like—the Americans didn’t understand that stuff was interlisted, and so we would sit there, and we would provide liquidity and just trade, like they would come for Research in Motion, and if you think about it, you guys were buyers because you love the story—or Nortel even—whatever—whatever it was, you guys were buyers, but the—the actual stock was all in Canada. So you got these kinda natural like sellings in one place, the buyings in the other place, and so there was literally periods where it just sat there—bing, bing, bing, bing—and like I was like—like I was scared at times that something was wrong because it was making so much money. I was like—because, you know, the one thing you do have to learn as a trader is if something seems too good to be true, it’s—it’s like, you’re like, ‘No, it’s definitely too good to be true.’”

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Learning Hard Lessons About Market Traps and Trading Ethics

Matt Zeigler:

“Well, because I got a great story to tell you about that if you want, uh, about being too good to be true. So one time, this machine’s going—it’s doing all this money, making all this money—and then the—the main desk—like I’m on the derivatives desk, but the main desk trader comes up to me. He says, ‘Kev, I got this trader that’s like this hedge fund guy who’s willing to do this arbitrage—not arbitrage—he’s willing to trade with me on, you know, on—in Canada of this stock, and I could immediately sell it for a 10-cent profit in the US. I’ve done like, you know, quarter million—do you want to do some?’ And I’m like, ‘Okay, wait—so you’re telling me that this hedge fund guy is phoning you up and is wanting to do this trade that is very clearly an arb—like against him?’ He says, ‘Yeah.’ He said, ‘Whoa, whoa, whoa—hey, have you played Scrabble with my wife to be?’ I’m like, ‘Turn off the machine.’ I’m like, ‘Turn it off,’ like I—like I went and told the guys, ‘Turn off the stock,’ like it was this one stock. And I’m like, ‘I gotta figure out why,’ because I know that if this guy’s doing this, it is—there’s something there that I’m missing. And sure enough, it was trading with what’s known as a due bill in the States. So it looked like there was a dime profit, but there was really like a $1.50 or $2 loss, like occurring. And I remember the um, the sales guy coming up to me for that account and saying, ‘I’m so sorry that my client tried to pick you guys off.’ And I said, ‘Are you kidding me? It’s the greatest thing that ever happened. If he hadn’t picked me off, I would—if he had just done it in the machine, I wouldn’t have figured it out, and it might have been like days before,’ because the due bill doesn’t come for another few days. And once I figured it out, I very quickly could—you know, I might—I can’t remember how much we were at—I think we were at a couple hundred grand, but I think I made back like half of it arbing it the other way—putting it to the right price—like I was like, ‘Okay, okay, now we’re going to put this to the right price.’ And so I immediately unwound everything we had done and then did a little extra the other way. Um, but I remember the guy apologizing—I was like, ‘No, you don’t have anything to apologize for—this is the greatest thing ever.’ That guy hadn’t been so greedy and tried to do blocks, like—that was it—he was trying to do blocks.”

Kevin Muir:

“And I really don’t understand that guy because that was a dumb play in—in lots of different reasons. One of them was—you ultimately—you got found out quicker, but the other thing is that you were picking off your friends, like even though like you’re—they’re your brokers, like you’re—you’re talking to them, and you shouldn’t ever do that, like—and another quick story about this—like I remember um, one time we figured out there was something called the—the—an EFP, which is exchange for physical. So we were trading the index versus the futures, and so we figured out that there was a dividend everyone was missing on a big stock—like one—like Bell Canada or something—and it changed the EFP um, price significantly. And I remember going out there and like—let’s say it was trading like a dime to 15 cents, like a 10-cent bid, 15-cent offer—and it was all of a sudden worth a dollar. And I was like, ‘Holy smokes.’ And like Peter and my boss were like, ‘Let’s—let’s just get on the dime bid and see if anyone hits us.’ And I said, ‘No, no—let’s move it and let’s get some size,’ right? So I remember going out there, and we like go, ‘What’s the market?’ And they go, ‘10 to 15.’ I go, ‘Okay, bought from you at 15—I’m 15 bid—where does it come?’ And then someone sells us some at 20, and I go, ‘Bought from you at 20,’ and—what—and I start marching it up. And so like—I can’t remember—guys are selling me—like this is an EFP, so it’s like 5 million, 10 million. Finally, I move it up from like 20 to 50—50, okay—don’t forget, it’s worth a dollar in my books, okay? And my—my arch-nemesis at CIBC—he’s woken up to the fact that there’s—that I’m moving it, and he offers me size, and I’m like, ‘There it is.’ And I’m like, ‘Okay,’ like—I can’t remember—it’s 200 or something—it was a big number—and I was like, ‘Bought from you,’ and, ‘We’re bid,’ okay? And so—and then immediately I get a call overhead, and he’s like—it’s him—and he’s like, ‘Kev, you just lifted me on this EFP—what’s going on?’ And like, you know, I—at that point, I can do a lot of different things, but the right thing to do is like—I tell him—I don’t say to him, ‘Everything’s okay—sell me another 200.’ I say to him, ‘Go check your numbers,’ like I don’t—like—he—and he doesn’t ask to be let off of it, you know—he goes and checks his numbers, and then next thing I know, he’s 60 bid trying to get it back because he’s realized he’s screwed up.”

Matt Zeigler:

“Yeah, but the point is that—like guys that don’t behave honorably, like that—and like—are trying to pick guys off—it—it comes back to you, like it’s—it’s—it’s a small street. It’s that the guys, you know, try to be picking off clients, picking off their dealers, or picking off even each other—I—I never felt that that was fair, like if you were on the pit and you were trading, that’s fine—I had no problem with it—but if you’re going to fool me overhead, I’m not going to like, you know, try to pick you off to your face.”

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Meeting His Wife at a Fraternity Party

Matt Zeigler: Where did you meet your wife? Did you meet her in school? I know I met my wife at a fraternity party.

Kevin: Okay, frat boy Kevin! Yeah, I met my wife at a fraternity party. Funny enough, I was working at the time and financing all of our kegs. I was the only one who could afford the deposit—$5,000 or $3,000, whatever it was. You had to put the deposit down on the kegs, and our fraternity was terrible at keeping track of things. So I was like, “Okay, fine, I’ll finance the stupid things.”

Matt Zeigler: So your wife comes to one of these keg parties that you’re self-financing with your stockbroker job?

Kevin: Yes, that’s correct. We hit it off immediately.

Matt Zeigler: Did you know right away?

Kevin: Yeah, we hit it off, and that was it. It’s been a while—lots of good years. A lot of good Scrabble, not too much scrabbling on occasion!

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Starting a Family and Career Progression

Matt Zeigler: Fast forward a bit—when do you start having kids? Is that once you’re in the prop trading job? How far along into the role do you start expanding the family?

Kevin: So, I get my job at RBC when I’m 23. By 26, I’m fully into equity derivatives, in charge of all the risk. Probably from 26 to 27 or so, my wife’s sitting there saying, “I want to travel,” and I’m like, “I can’t travel.” She’s like, “Well, I’m not going to just sit here.” I’d started making some money, and she’s like, “Why am I working?” She was at Talstar or something and said, “I’m quitting.” I was like, “Okay.” She goes off traveling with my little sister—to Nepal, Tibet, all these places.

I’ve got a funny story about that. She goes to Nepal because of Seven Years in Tibet, the Brad Pitt movie. This is during either the Long-Term Capital crisis or the Asian financial crisis—I can’t remember which. She’s trekking from monastery to monastery, hasn’t slept in a decent bed, and finally gets on a plane to Thailand. She gets off, hasn’t booked anywhere to stay, and says to the taxi driver, “Take me to your best hotel.” She’s a low-key person, but she was just so sick of roughing it. She phones me—this is the ‘90s, when calling wasn’t easy—and says, “I don’t know where I am. I’m in the fanciest hotel in Thailand. It’s 8,000 baht or something, I don’t know what’s going on.” I’m sitting there thinking, “Oh my God, what has she done? This bill’s going to be brutal.” But it’s during the Asian crisis, so it ends up being like $210—or even less. Nothing!

Anyway, we have our first kid when I’m 29. I’d been at RBC for six years or so. At that point, the bank was slowly overtaking the dealer. It started as an entrepreneurial place, but over time, the bank got more involved. Rightfully so—I look back at some of the stuff we were doing, and I’m like, “I’d never let some 27-year-old punk do this.” It was irresponsible. We made tons of money, and it was fun, but I wasn’t mature enough to realize that was a unique time, not how life always works.

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Challenges at RBC and Quitting

Kevin: The bank starts creeping in, telling me, “You can’t trade this, you can’t trade that.” I’m getting in trouble—“Kev, you can’t do this.” Then we have our daughter. She’s born with a heart defect, corrected at birth, but it was a very emotional time for me. It was like a near-death experience—not that I died, but it hit me hard. I never felt the same way about work after that. A couple of other things made it less fun too. Three months after she’s born, we have our best quarter ever, and I think, “I’m going to be like Michael Jordan—sink the basket and walk away.” So I quit.

At the time, I didn’t know what I’d do next. I hadn’t made enough to never work again, but enough to not worry about the next year. I thought, “I could work for a hedge fund, but I don’t want to do sell-side again for a while.” If I worked at a hedge fund for a year and quit, people would remember me as the schmuck who lasted a year. But if I tried something on my own for a year and then went to a hedge fund, no one would care about that year. So I started trading for myself. Eventually, another guy from my old shop joined me, and that was it. Along the way, I started writing the letter and doing the podcast.

One thing I laugh about—I’ve never really had a steady paycheck. Even at RBC, it was a small draw, and it’s been “eat what you kill” for the last 35 years.

Matt Zeigler: When you tell your wife you’re leaving the job—obviously after the scary moment with your daughter’s heart defect—are you both freaked out about it?

Kevin: She was more worried about the child. She’s always been supportive. I never felt tension about it. She wasn’t like, “No, stay!” She’s not a fan of the Bay Street douchebags—our version of Wall Street. When we meet some larger-than-life trader guy trying to impress her by being brash, I’m like, “That’s not going to work with her.”

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Building The Macro Tourist Community

Matt Zeigler: That commitment to figuring things out for the right reasons ties into the community you’ve built with The Macro Tourist. I love the letter—not just for the memes, though I come back for those. Where can people find you if they want to learn more?

Kevin: Go to themacrotourist.com. If you want samples, email me at kevin@themacrotourist.com—I’ll send them off. Also, join our chat—it’s easy to find, with lots of smart people. I’m proud of how it’s taken off. Twitter got mean and unfriendly, and when I got frustrated with Elon, I committed to Substack. The chat’s been a great surprise.

Matt Zeigler: Between the Market Huddle podcast and the letter, you’ve built a real community. I love those summer emails with chat highlights—it’s my favorite thing in my inbox.

Kevin: Glad you like that! It’s a real community, and that’s rare. Thanks for being part of it.

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Reflections on Trading and Life

Matt Zeigler: Does it bother you that there aren’t monocultural moments like The Tragically Hip’s last concert for your daughter?

Kevin: That wasn’t that long ago—she remembers it. I’m not fussed. I think there’ll be moments like that for her and my other kids—different, but they’ll happen. Humans haven’t changed.

Matt Zeigler: Here’s a trading aside—people romanticize the past, thinking it was easy to make money.

Kevin: Exactly.

Matt Zeigler: Tell the Norwegian art story—it relates to this.

Kevin:

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The Importance of Finding What You Truly Love in Markets

Matt Zeigler: You’ve talked about trying things—like going to Chicago, thinking it’d be great, then hating it.

Kevin: Yeah, I thought it’d be the greatest thing ever, but it wasn’t. We tell our kids, “Don’t fuss—you’ll figure it out.” I saw guys at RBC try trading, hate it, and go back to research. You’ve got to find what matches you. This industry attracts a lot of people, but you better love it—not just do it for the money. You can hear it in their voice when they truly love markets.

This Seinfeld/Ferris interview is great:

Jerry Seinfeld — A Comedy Legend’s Systems, Routines, and Methods for Success (#485)

There are good notes here and I’ll list my favorite lessons despite the feeling that you should really take the whole thing in bc the delivery is as good as the lessons.

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I recently listened to my first episode of Dan Carlin’s Hardcore History — a tour of the transatlantic slave trade entitled: Human Resources. Dan’s story-telling and research shine in this nearly 6-hour episode. He deserves all the accolades he gets. The style, quality and nuance of his work is well-advertised, I’m just late to the party. He immediately jumped into my favorite creators.

As a fan of the Founder’s podcast I found an interview with its host David Senra to be as compelling if not more than the books he highlights (a high bar), so I decided to hunt down interviews with Carlin. The first one I clicked on with Lex Friedman did not disappoint. I include 4 excerpts that stood out to me but most of the interview was enlightening and wide-ranging so I wouldn’t stop at these excerpts.

3+ hour interview (Lex Friedman on YouTube)

I used GPT-4 to clean up sections of this transcript: https://www.happyscribe.com/public/lex-fridman-podcast-artificial-intelligence-ai/136-dan-carlin-hardcore-history

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An example of how propaganda can scramble your beliefs in a way that creates collective distortions that are hard to see

[Carlin is a war historian and while he admits to his bias towards individualistic ideals “I’m famously one of those people who buys in to the ideas of traditional Americanism”, his characteristic nuance is well-displayed in his deep skepticm of the “military industrial complex” and how its inclination towards self-preservation as an institution often exerts undue influence in when America looks at its menu of choices]

“Many people living today seem to think that patriotism requires a belief in a strong military and all the features we have in the present. However, this is a departure from traditional Americanism, which viewed such elements with suspicion during the first hundred years of the republic. They saw them as foes to the very values that Americans celebrated. The question arises, how could freedom, liberty, and individualistic expression thrive with an overarching military always engaged in warfare?

The founders of this country examined examples such as Europe and concluded that standing militaries or armies were the enemy of liberty. Today, we have a standing army deeply woven into our society. If one could go back in time and converse with John Quincy Adams, an early president of the United States, and reveal our current situation, he would likely find it terrible and dreadful.

Somewhere in our history, Americans seemed to have strayed from their path and forgotten their founding principles. We have successfully combined the modern military-industrial complex with the traditional benefits of the American system and ideology, so much so that they have become entangled in our thought process. Just one hundred and fifty years ago, they were seen as polar opposites and a threat to each other. When discussions arise about the love of the nation, I harbor suspicion towards such sentiments.

I am wary of government and strive hard not to fall prey to manipulation. I perceive a substantial part of what they do as manipulation and propaganda. Therefore, I believe a healthy skepticism of the nation-state aligns perfectly with traditional Americanism.”

The problem with dictators or strongmen even if they are wise and benevolent

“The challenge in a system such as a strongman system is the question of succession. When you have someone who can control and navigate the ship during a violent storm, if you’re not establishing a system that can function without you, then the severe instability and the dreadful future that you justify the strongman for is only postponed. Unless he’s actively building the system that will survive him and allow successors to carry on his work, you’ve merely created temporary stability. It’s the same problem that occurs in a monarchy.

In a monarchy, you have a king who might be good or perceived as good, but he will eventually hand over his duties to someone else. However, the system doesn’t guarantee a smooth transition because no one has really worked on it. For instance, you would need to inform me if Putin is establishing a system that can survive him and that will maintain the stability that the Russian people appreciate him for, even after he’s no longer in power.

If the oligarchs simply assume control afterward, one could argue that there were 20 good years of stability. However, if we consider the metaphor of a ship of state, the person steering the ship, from the Russian perspective, may have done an excellent job, but the challenges still exist and he won’t be in command indefinitely.

Therefore, it seems logical to assume that his responsibility is to ensure there’s a successor who can continue to steer the ship for the Russian people after he’s no longer there.”

Lex asks how we will “destroy ourselves”. Carlin gives a framework for handicapping what calamity will undo us.

Lex: If you were to wager on the method in which human civilization collapses, rendering the result unrecognizable as progress, what would be your prediction? Nuclear weapons? A societal breakdown through traditional war? Engineered pandemics, nanotechnology, artificial intelligence, or something we haven’t anticipated? Do you perceive a way humans might self-destruct or might we endure indefinitely?

My perspective is primarily influenced by our ability to unite and focus collectively. This informs my estimates of the likelihood of one outcome versus another.

Consider the ’62 Cuban missile crisis. We faced the potential of nuclear war head-on. That, in my view, is a hopeful moment. It was one of the few instances in our history where nuclear war seemed almost certain. Now, I’m no ardent Kennedy admirer, despite growing up during a time when he was almost revered, especially among Democrats. However, I believe John F. Kennedy, acting alone, likely made decisions that spared the lives of over a hundred million people, countering those around him who preferred the path leading to disaster.

Reviewing that now, a betting person would have predicted otherwise. This rarity underpins our discussions about the world’s end. The power to prevent catastrophe was in the hands of a single individual, rather than a collective.

I trust people at an individual level, but when we unite, we often resemble a herd, degrading to the lowest common denominator. This situation allowed the high ethical principles of one human to dictate the course of events.

When we must act collectively, I become more pessimistic. Consider our treatment of the planet. Our discussions predominantly center around climate change, which I believe is too narrow a focus. I become frustrated when we debate whether it’s occurring and if humans are responsible. Just consider the trash. Disregard climate for a moment; we’re harming the planet simply through neglect. Making the necessary changes to rectify this would necessitate collective sacrifice, requiring a significant consensus. If we need around eighty-five percent agreement worldwide, the task becomes daunting. It’s no longer about one person like John F. Kennedy making a single decisive move. Therefore, from a betting perspective, this seems the most likely scenario for our downfall as it demands a massive collective action.

Current systems may not even be in place to manage this. We would need the cooperation of intergovernmental bodies, now largely discredited, and the national interests of individual countries would need to be overridden. The myriad elements that need to align in a short span of time, where we don’t have centuries to devise solutions, make this scenario the most probable simply because the measures we would need to undertake to avoid it appear the least likely.”

[a later thread that rounds out his thinking on this]

“Returning to our primitive instincts, we are conditioned to address immediate and overwhelming threats. I hold a considerable amount of faith in humanity’s response to imminent danger. If we were facing a cataclysmic event such as a planet-threatening explosion, I believe humanity could muster the necessary strength, empower the right individuals, and make the required sacrifices. However, it’s environmental pollution and climate change that pose a different challenge.

What makes these threats particularly insidious is their slow development. They defy our innate fight or flight mechanisms and contradict our ability to confront immediate dangers. Addressing these problems requires a level of foresight. While some individuals can handle this, the majority are more concerned, understandably so, about immediate threats rather than those looming for the next generation.

Could we engage in a nuclear war? Absolutely. However, there’s sufficient inertia against this due to people’s instinctive understanding. If I, as India, decide to launch an attack against China, it’s clear that we will have 50 million casualties tomorrow. If we suggest that the entire planet’s population could be extinguished in three generations if we don’t act now, the evolutionary trajectory of our species might hinder our response.”

Will the US tear itself apart in a second civil war?

Lex: What’s the way out of this, is there some hope to avoid something, and I hate to use the terminology, but something that looks like a civil war? Not necessarily a war of force, but a division to a level where doesn’t any longer feel like a United States of America with the emphasis on “United”. Is there a way out?

I read a book a while back. George Friedman, the Stratfor guy, wrote it. It was called “The Next Hundred Years”. I remember thinking I didn’t agree with any of it. One of the things he might’ve said in the book was that the United States was going to break up. Something stuck in my memory about that.

Some of the arguments were connected to the differences we had and the fact that those differences are being exploited. We talked about media earlier and the lack of truth. We have a media climate that is incentivized to take the wedges in our society and make them wider. And there’s no countervailing force to help.

There was a memo from a group called Project for a New American Century, and they took it down. But the Wayback Machine online still has it. It happened before 9/11 and spawned many conspiracy theories because it suggested that the United States needs another Pearl Harbor type event. Such events galvanize a country that, without them, is naturally geared towards pulling itself apart. These events act as the countervailing force that otherwise is not there. If that’s true, then we are inclined towards pulling ourselves apart.

The media environment profits from widening those divisions. I was in talk radio, and there were those who used to be upset with me for not playing into this. We would have intense discussions after broadcasts, with program directors emphasizing heat. They wanted heat not for political reasons, but to attract listeners and engagement. Because of the format’s constraints, you don’t have a lot of time. They once told me the audience needs to know your stance on every issue within five minutes of turning on your show. This system is designed to pull us apart for profit.

That’s one example of many in our society that function in that manner. The Project for a New American Century document suggests we’re naturally inclined towards disunity. I think that’s what George Friedman’s book was suggesting, which I disagreed with at the time.

In answer to your question about civil wars, it’s different now. We don’t have a clear geographical division like before. Now, we’re divided within communities, families, and voting districts. So you can’t disengage. We’re stuck with each other.

If there’s a civil war now, it might resemble the late 1960s and early 1970s with bombings and domestic terrorism. You don’t even need a large chunk of the country pulling apart 10 percent of people who think it’s it’s the end times can do the damage, just like we talked about terrorism before and a can of gas and a big lighter. 

Terrorism doesn’t need a particular origin or agenda. It could be someone upset about election results. If we’re looking at probabilities, everyone has to behave for society to work. Only a few need to act out for things to go sideways. For every action, there is a reaction, all they have to do is start the retribution cycle. And there’s an escalation. It creates a momentum of its own, which leads fundamentally, if you follow the chain of events down there to some form of dictatorial government as the only way to create stability. You want to destroy the republic and have a dictator? That’s how you do it. And there are parallels to Nazi Germany, the burning of the Reichstag, etc.

Video game designer Gabriele Leydon went on Invest Like The Best and dropped deeply provocative bits about what I might describe as design and gamification as a response to a future that has thus far proved disappointing or alienating. I don’t know how much of it I agree with it though I’ll admit I have had similar thoughts (and a few essays sitting in my drafts on the topic) with respect to financialization. I’d describe listening to this as Patrick interviewing the Ben Hunt of video games. If there’s something I’d probably disagree with most it’s the pastoral sense that the frontier seemed somehow more accessible to the common man 100 years ago beckoning people to go West for opportunity. There are frontiers, and they are always crushing by the standards of their time. I think a lot about the stories of cab-driving immigrants and have a sense that they are deeply courageous and today’s modern day pioneers, leaving all that is familiar behind (and probably why the success of immigrants in the US shouldn’t be surprising. They are built different). The definition of frontier is context-dependent. Still, I really enjoyed listening to this interview and any disagreement I’d have is well worth the brain food Gabriele serves. Patrick does a great job as usual asking questions.

episode link

These notes are just pulled from the transcript and a (lightly edited) snippet of what I wanted to refer back to. It’s not a summary. All emphasis is mine.

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A Dark Interpretation of Our Obsession With Stories and Design

Patrick: I know you’re going to restrain yourself, but we’ll do our best. The first red pill of the discussion is around the topic of design. There’s a huge emphasis on design right now, and I think you’ve got an interesting take on what an emphasis on design means about where we are in capitalism. What are your thoughts on the importance of design or what it might mean?

Gabriel: There’s this pattern where when things are innovative, nobody really cares what they look like. If I made up a teleport machine and it was the size of an arena and it was covered in slime and smelled really bad or something nobody would care. There’d be a line around the block. Everybody would just jump in and they would think it’s the greatest thing ever. But over time we kind of would make it smaller, and then the artists would come in and try to make it look nicer and feel better. And once you kind of get to that design phase, where Silicon Valley’s been for about 10 years, there’s only so much you can do to make something look better.

If you remember 5 years ago, everybody was talking about delighting their users, and delighting is “We don’t have any more ideas. So we’re just going to feel a little bit better because we’re out of ideas. So now we’re going to just delight you.” The game design stuff is, “we don’t know how to make this look better, so now we’re just going to tap into your human condition of biology and psychology to make our products better. Because we don’t know how to make them more innovative, we don’t know how to make them better looking, but we can add levels and achievements.”

How that presents itself is all of a sudden you’re getting achievements for buying erectile dysfunction pills from Hims. You buy extra orders of minoxidil to max out your Hims account. That’s what we’re seeing…You see this kind of talk about everything becoming a video game, but I actually see it as a bad sign. We’re basically running out of new ideas. The economy is just becoming more and more psychological and it’s less about innovation and more about understanding your condition as a person and then building a product around biological and psychological reflexes rather than a teleport machine that can move you around the world.

Patrick: It reminds me of that Neil Postman book, Amusing Ourselves to Death [Kris: I’m coincidentally about to start this book], that Huxley’s version of the future was more accurate than Orwell’s.

Gabriel: I think it’s because when people think about capitalism, they think about the early 1900s. They think about cars and radios and TVs and microwaves and it almost never ends. And I think it peaks in the ’60s and the ’70s with all that futurism. The futuristic art, flying cars, and skyscrapers. And that’s the same time we go off the gold standard and there was this infinite optimism around money printing and innovation basically. And we could just print as much as we want because we’re going to be immortal space beings, zapping around the galaxy. So who cares?

That didn’t happen. So when the innovation growth didn’t really match the expectation, it’s just like things just start getting designed, they start moving towards the design phase, and then eventually a gamification phase, like what you’re seeing in the financial markets and software and pretty much everything.

I’m not a big person on late-stage capitalism. Capitalism is just a human condition. What does that even mean? I think it’s more like we just don’t know what to do anymore. So we’re just going to add levels to the stuff that we already know how to do. And there’s a lot of margin in it too. So it’d be, it’s like a big gravity well where it’s like, “Well, we can just take the existing stuff and add achievements to it and we’ll sell more pills.”

There’s also another part of it in Silicon Valley where … And you’re a VC, so has anybody ever tried to pitch you a video game? Do you understand it at all?

Patrick: What did you learn about the reasons why people will pay? Famously in free to play there’s this crazy power law of who pays and how much. And the 0.1% of the players, I don’t know what it is. Some crazy high percentage of the revenue. So maybe a better way of asking the question is like, what have you learned about what characterizes that willingness to spend?

Gabriel: We’re tribal people by nature. And when I say tribe, I don’t just mean your culture. I also mean the size. Tribes tend to be pretty small. If you look at early America and people say, go West and land of opportunities. What does land of opportunity mean? It means if I’m a blacksmith and I’m the only blacksmith around for 100 miles, it doesn’t matter if I’m the world’s best at making horseshoes or not. I’m the only one around. So, that’s my land of opportunity. I could just keep going West essentially, and there’ll be less and less people, and I’ll have more and more of an opportunity to become important to the community that I’m in.

And we’re in this age of hyper-competition. We have these social networks, forums, and chat rooms, clubhouses, whatever, where we have essentially this real-time leaderboard of who matters and who doesn’t. So when you say that 1% of spenders, that group is even smaller with who matters online.

So the answer is that the world has become so soul-crushingly competitive. Being good at something doesn’t matter anymore — you have to be the best. If you make horseshoes, doesn’t matter if you’re good at it, I’ll just order it for someone else and it’ll arrive in two days. And you better be cheap, because if not I’ll wait a week and get it from China.

So we’re in this hyper state of competition, that makes people feel like they don’t matter. Because they don’t. They actually really don’t, and everybody knows it. That’s the honest truth. So you end up with these online communities with a seductive and simple way to belong to something, where these things actually reward time spent, rather than skill. So if I just spend more time, I’ll be more important. You see that a lot on social networking, they’re all designed that way. Spend more time, you’ll matter more. You see so much like online activism, for example. Online activism that you would never see in person because all I got to do is post something, or whatever. And they matter because they’ll get lots of likes, they’ll get lots of retweets.

You get the culture and then the counterculture. And they’re both essentially the same thing, like one side saying thing because that’s the thing to say. The other side is saying the opposite because that’s the opposite to say. And both sides get a lot of likes. Video games give more structure to that than Twitter does. A lot more structure. They could have levels, and Kings, and Queens, and weapons, and kingdoms, and whatever you want, you just make it up. So you get more structure. And the video games become a place to get lost in because they have so much structure. That’s what I did. And I loved it. And for me it was really important to me, because before that I was just like, what’s the point? I don’t even know what the point of my life was basically. It’s like, you’re working at Target, and Dave & Buster’s, and whatever, and you’re not going to college, what else do you have? That’s what I had. And I think that’s what made me understand it. There’s just too much competition, and people need environments to excel in. This whole hyper-globalization thing just crushes souls because they can’t excel. And they know it. Everybody’s like, robots are going to replace you. And AI is going to replace you, and you got to go eat bugs and go live in a box. It’s so funny, I talk to these AI guys in Silicon Valley. They’re all trying to make God versions of themselves. They always say to the game developers “We need you.” Because what are people going to do when my God AI thing works?

It’s so sick. It really is sick, like they know what they’re doing. They know exactly what is going to happen. And they’re looking at the game designers like, well maybe you’ll distract everybody. Maybe everybody will just be distracted as the whole world collapses around them. Like every person in AI, every single person in AI, every single one. They’re all, “We’re going to need VR.”

I wish they would be more honest in public about it. Because they all say it. I think this game design worldwide takeover is partly because the innovators think that’s what should happen. And also because they don’t know what else to do.

Patrick: Give me one more thing at least. One more what I would call purple pill. Something not too inflammatory. Something you think that is true about the world that people wouldn’t like to hear.

Gabriel: I think we need AI more than we think. I think that we’re at an IQ limit and the reason why innovation feels like it’s slowing down is because we can’t do it. We just literally, physically can’t do it. And there may be an exit ramp through AI, but it’s not exactly clear that we can do that either.

I really think that the 60s and 70s futurism is the reason why we’re suffering so much today. Because there was no reason to not print money, to not full-on inflationary mindset and everything because we were going to live in paradise. We were going to be on the moon. We’ll be able to pay all this back, there’s no problem. And then financialization happened, and gamification of financialization happened because that was easier and it worked. But it’s not better. Innovation is better. It’s clearly better. If I make a teleport machine, I don’t need to make a video game, I don’t need to have levels and achievements. It doesn’t need to look nice. It doesn’t need any of those things. It’s just is what it is and everybody wants one. That is better. That’s the only way to really have prosperity. And this design/now gamification is a symptom of the limits of our minds. So instead of doing things in the physical world, we’re doing things in the psychological world now, and that may be permanent. And I hope that’s not true, but more and more of the economy is going into this exploit, automation, high-frequency trading, that kind of thinking. And it’s not rockets to Mars.

We’ve gotten to the point where we look at the two richest men… Like we used to have the Wright brothers, these two guys trying to make an airplane, they’re in the middle of nowhere, who are these guys like? Now we look to the two richest men in the world to solve our most difficult problems. The regular person has no chance in participating in the future of the economy now. The only people who have the chance [appear to be these rich people], “I hope Bill Gates figures out solar panels.” And the regular people are just kind of looking up to them saying, “Well, I don’t know what to do.” And I think the reality is the rich guys don’t know what to do either. We got the rockets going. Those are cool. And we’re making some incremental innovations. There’s been some really important things like crypto. So it’s not hopeless. It’s just not what we thought was going to happen. The dislocation between the economy and the reality of innovation is that the economy moved way ahead of innovation, under false expectations that we would be able to keep innovating at an exponential rate.

I think there’s a fear that we know that we can’t. So then you’re staring at deflation, like a reset, essentially. We’ve got too much of everything and there’s not enough innovation to pay this back. It doesn’t exist so we got to abandon ship basically. That’s pretty bad. But from my lens, from my point of view, it’s why gaming is becoming so important. It’s because we don’t have the teleport machine and we need one. And if we had teleport machines, nobody would be playing games.

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Something More Uplifting: A Qualitative Screen For A Promising Investment

Patrick: Does the idea, I’ll call it the gooey teleportation principle or something, is this also an investing principle? You should look for stuff that has terrible design or is breaking?

Gabriel: NFTs are important the same way the App Store was important. Meaning that at the beginning of the App Store, everything was broken. It took like three months to get an app approved. Just crazy stuff. It was a real nightmare. And it was growing like crazy. That’s what you want. You want environment that’s completely broken. There’s like a couple spaces still in the innovation phase and crypto is clearly one of them.

You always hear these VCs who don’t know what they’re talking about. They go, “You know what crypto needs, it needs a good UI.” I’m like, “Oh my God, just stop. Like stop it.” It’s innovative, it doesn’t need that. It’s still growing despite that. If we get to the phase where all crypto can do is add UI, it’s over. That’s it. Right? Then it’s just a matter of who’s got more DAU at that point, and it’s over.

So crypto is a good example of something that’s still really deep in the innovation phase. It’s not everything, but crypto will eventually turn into a game too. It’s obvious. It’s kind of got elements like that. But my favorite stuff is you go to the websites, they look terrible. You ever noticed that? If you look at this DeFi projects, it’s like the worst looking website you’ve ever seen. That’s a good thing. That’s what I want. I want it to look terrible like it’s crashing all the time, and it’s just growing. That’s the sign. Because when you clean it up, when you do put the good UI in, and you do gamify it, it will be 100x bigger. If you’re 10 years deep and still looks terrible and still growing like crazy, that’s all you need to know.

VC is right that when it does get cleaned up, it’s going to be bigger. But that’s not what you’re looking for. You’re actually looking for it being a mess and it’s still growing.

Put all your money there. Anything that’s just growing like crazy and totally broken, just put all your money there because obviously when it gets fixed, it’s going to be better. And there are tons of examples of this. There’s like the MySpace/Facebook example, right? They both had the broken but working thing, but MySpace couldn’t fix itself fast enough. So that’s kind of the bet. But if I didn’t know the future, I’d go, “Yeah, put all your money in MySpace.” I mean it’s growing and it’s like totally broken all the time. That’s where I would look at the risk. I think you kind of have to be an entrepreneur to even understand that. But that’s how I look at it, where’s the space that’s just totally screwed up and it’s still working? That’s what you want to be involved in.