Investor Psychology & Trading on the Future With Raoul Pal

August 18, 2022

AI Summary

5 min read

Investor Psychology & Trading on the Future With Raoul Pal

Raoul Pal spent years at Goldman Sachs and later co-ran a macro hedge fund at GLG Partners, but he left because the industry had changed. Pension funds and insurance companies piled into hedge funds demanding low volatility and bond-like returns, which forced managers into two-week to two-month time horizons. As Pal puts it, "your idea horizon" — the time it takes for a macro thesis to play out — is roughly eighteen months, but the industry's monthly mark-to-market forces you to think in weeks. That mismatch made the game unplayable for anyone with genuine conviction.

Pal moved to Spain, started Global Macro Investor, and built a 17-year public track record proving that long time horizons generate real outperformance. The core insight is simple: most people are forced to be short-term, so if you can be genuinely long-term, you have structural edge.

The Bitcoin Trade That Was Actually Terrible

Pal tells a revealing story about his own Bitcoin investing to illustrate how even good trades can be executed badly. He first bought Bitcoin in 2013 at $200, with a thesis that it could be worth $1 million based on stock-to-flow analysis of gold. He assumed he was 90% wrong, so the risk-reward was still extraordinary. He planned to hold for ten years.

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What you'll learn

1 (00:15) **The Exponential Age Thesis** - Raoul introduces the core concept: multiple groundbreaking technologies (crypto, AI, robotics, space, EV, IoT, genetic sciences) are all adopting simultaneously, creating an unprecedented "exponential exponentiality" via Metcalfe's and Reed's Laws.
2 (05:08) **Raoul's Path: From Goldman Sachs to Entrepreneur** - He explains why he left traditional finance, citing the shift in the hedge fund industry from high-conviction, long-term macro to low-volatility "asset gathering."
3 (12:46) **The Hedge Fund Time Horizon Problem** - Raoul explains why it is nearly impossible to be truly long-term oriented in the modern hedge fund industry.
4 (16:39) **Investor Psychology: The Core Problem** - The conversation shifts to why smart investors sabotage themselves, using a friend who sold all equities at the market bottom as a case study.
5 (18:36) **The Bitcoin Case Study: A "Terrible" Great Trade** - Raoul uses his own Bitcoin history to illustrate the cost of not following your plan.
6 (23:02) **Staying Sober During Drawdowns** - Practical advice for maintaining discipline when markets fall.
7 (27:16) **The Danger of Smart Group Chats** - The conversation explores how surrounding yourself with "smart" opinions can destroy alpha.

+ Full timestamped outline available in the app

Show Notes

Do you have what it takes to grow your investments from good to great? Today we share why Web3 will be the best investment in your lifetime, explain how India is the future of the internet, and explore the depth of knowledge needed to trade successfully. Hosts Sahil Bloom and Greg Isenberg are joined by guest Raoul Pal, a former Goldman Sachs investment banker turned entrepreneur, who founded Real Vision and Exponential Age Asset Management. Raoul divulges the secret to becoming a special investor, explains why you need to stay true to your convictions (especially in a bear market), and shares his vision for the future of the financial world.

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Raoul Pal: https://twitter.com/RaoulGMI

Sahil Bloom: https://twitter.com/SahilBloom

Greg Isenberg: https://twitter.com/gregisenberg

Production & Marketing Team: https://penname.co/

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