Nick is the author of The Nature of Value: How to Invest in the Adaptive Economy (Columbia University Press 2014) and involved in a technical confidential project with one of the world’s largest global macroeconomic hedge funds. He lectures in Columbia University’s MBA value investing program on innovation, macro-economic portfolio, and scenario risk management. Meanwhile, he is a top 1% performer as a portfolio manager for a long/short hedge fund (+20% v. -60% for S&P 500 2007-2009) and advises large banks on risk management, including the Flash Crash, and is a chief analyst managing commercialization for a science research institute modeled on the MIT Media Lab. His primary fields of inquiry include biotechnology, nanotechnology, artificial intelligence, renewable energy, genetics, quantum computation, and others such as
o Venture capital screening and start-up advisory work
o Founding software startups in social media and crypto currency space
o Expert testimony to the United States Senate on the international risks associated with the $200 billion Y2K technology issue
o Human behavior studies with an undergraduate degree in cultural anthropology from the University of Iowa focused on sustainable economic development in West Africa
He earned an MBA from The Ecole Nationale de Ponts et Chaussees in Paris with a thesis on a quantitative approach for hedge funds and is a designated Chartered Alternative Investment Analyst (CAIA). Nick resides in Greenwich (CT) with his wife and daughter.
Here is an excerpt from Part 1 of my interview of Nick. To read the complete interview, please click here.
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Morris: Before discussing The Nature of Value, a few general questions. First, to what extent has your formal education been invaluable to what you have accomplished in life thus far?
Gogerty: Formal education isn’t invaluable, it is incidental. Most formal education revolves around gaining a social credential as an extrinsic reward. An unquenchable thirst to learn and pursuit of intrinsic goals are more important than an increasingly overpriced piece of paper which confers social recognition. The intrinsic rewards of pursuing discovery and personal mastery of a craft or body of knowing are far more important than most formal education. Formal education can provide a base, but true achievements and breakthroughs, scientific, leadership, cultural or artistic come from a deeper place.
Morris: What do you know now about the business world that you wish you knew when you when to work full-time for the first time? Why?
Gogerty: I wish I had been introduced to value investing at age 13 when I bought my first stock. I am quantitative by nature and chased the ghost of price for many years.
Morris: From which non-business book have you learned the most valuable lessons about business? Please explain.
Gogerty: Many books stand out as providing pieces to the puzzle, from autobiographies to history etc. I could easily create a list of 50-75 very worthwhile books, half of them come from outside the traditional “business” domain.
Within the business domain, The Essays of Warren Buffet are useful in combining many sound concepts into a clear narrative. Poor Charlie’s Almanack is useful for acknowledging the importance of multi-disciplinary thinking while simultaneously keeping things as logical as possible. Bridgewater’s public site (www.economicprinciples.com) is great on macroeconomics and credit.
Morris: Here are several of my favorite quotations to which I ask you to respond. First, from Lao-tse’s Tao Te Ching:
“Learn from the people
Plan with the people
Begin with what they have
Build on what they know
Of the best leaders
When the task is accomplished
The people will remark
We have done it ourselves.”
Gogerty: Having taken a class or two in Taoism and Confucian rhetoric but not being a gifted writer, I respond with a quote from someone else and my own lines.
“If you want to build a ship, don’t drum up people to collect wood and don’t assign them tasks and work, but rather teach them to long for the endless immensity of the sea.” — Antoine de Saint-Exupery
“When leading inspire others to their greater self.
When challenged ingest the lessons within the gift of failure.
When winning reflect success onto others rarely accept it personally.” — Nick Gogerty
Morris: From Howard Aiken: “Don’t worry about people stealing your ideas. If your ideas are any good, you’ll have to ram them down people’s throats.”
Gogerty: I agree with this suggestion that the truly novel idea is often so novel that no one thought of it or thought enough of it to give it a go. Having managed scientists, entrepreneurs and software entrepreneurs; often the first lessons are a discussion of the how truly common “good” ideas are. Well-executed and elegantly designed solutions are another matter altogether.
Morris: From Richard Dawkins: “Yesterday’s dangerous idea is today’s orthodoxy and tomorrow’s cliché.”
Gogerty: I respond again with another quotation, another quotation from Arthur Schopenhauer: “All truth passes through three stages. First, it is ridiculed. Second, it is vigorously opposed. Then, third, it is accepted as being self-evident.” Arthur Schopenhauer
Morris: From Isaac Asimov: “The most exciting phrase to hear in science, the one that heralds the most discoveries, is not “Eureka!” (I found it!) but ‘That’s odd….’”
Gogerty: I totally agree with Asimov after having seen scientists involved with basic research. Willful ignorance to counterfactual evidence is all too common and often hides far greater truths. Willful ignorance can be illustrated by frauds like Bernard Madoff or a scientific “truth” advanced only for the sake of career or tenure.
Science, “truth” and facts are often misunderstood as physical objects. They are all processes involving creation and destruction. The nature of progress (our “truths”) will become tomorrow’s folly’s clung to during a naïve age. It has always been like this.
I strongly recommend that people read Thomas Kuhn’s Structure of Scientific Revolutions and The Half Life of Facts by Samuel Arbesman to appreciate the fleeting nature of truth and the dangers of pursuing fixed dogmas and cultures. According to Arbesman, so-called economic “facts” have a 3.5 year half-life while physics-based facts average a half-life of 13 years.
The power of Science comes from the fact that it is an evolving body of knowledge possessing zero truths. Science is the process of a set of hypotheses awaiting their fate to fail on the path to deeper understanding.
Morris: Finally, from Peter Drucker: “There is surely nothing quite so useless as doing with great efficiency what should not be done at all.”
Gogerty: Not much to add to that.
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To read all of Part 1, please click here.
Nick cordially invites you to check out the resources at these websites:
His Amazon page link
The Nature of Value Amazon link
The Nature of Value website link
Eric J. Chaisson link