JT: What led your choices to being an investment advisor and how did your passion for economics and business begin?
Mish: I have had three careers. I graduated from the University of Illinois in 1976 with a degree in civil engineering. I worked two years in the field and hated it. My passion at the time was computers and I realized I got my degree in the wrong major. Back then it was easily possible to switch careers. My free elective was an advanced programming class and that is all it took. I worked over 20 years as a computer systems analyst, mostly for Harris Bank as an assistant VP.
When the Bank of Montreal bought Harris, I did not like the culture changes and left in 1999. I became a consultant, mainly to banks. Consulting jobs diminished after Y2K, then vanished after 911.
Following the recession, the economy started booming, led by housing. But I could not find a job. When you are out of work for a couple of years it becomes difficult. I started hanging around stock message boards on the Motley Fool and Silicon Investor and quickly had two of the most popular boards on those sites.
Bill McBride better known as blogger CalculatedRisk, was a commenter on my Silicon Investor forum. One day he popped in and announced: “I just started a blog. If anyone wants help starting theirs, just ask.” He created the first template for my blog. We went on to become two of the top three economic bloggers in the country. The third member of the top-three trio was Barry Ritholtz at the Big Picture who also helped me by promoting my blog.
I would not be where I am without the help of McBride, Ritholtz, and a hedge fund manager from the UK whom I believe wishes to remain anonymous.
After putting in 18-hour days writing about the economy for a couple years, ad revenue started coming in.
Sitka Pacific founder Brian McAuley is the final piece of this lengthy story. He emailed me one day and suggested I take the Series 65 exam and join him as an investment advisor at his firm.
I asked him, “why did you pick me?” and he answered that he could tell that I was honest with people.
At the time, I was a firm believer in the property bubble and expected interest rates to crash when the bubble popped. Most people thought inflation was getting out of hand and the Fed would be hiking like mad.
JT: Describe what being a registered investment advisor entails.
Mish: First, one needs to be licensed. There are different licenses for broker-dealers, financial planners, and investment advisors.
For what I wanted to do, I needed to pass what’s known as a series 65 exam.
The test is not all that hard. After studying for a few weeks, I passed on the first try. But also recall that I had already spent several years on stock boards and writing about the economy.
JT: What do you love most about being an investment advisor and what have been your highlights so far?
Mish: Let’s discuss both highlights and lowlights.
I like the interaction with people, but it’s a lot more fun when you are on the right side of the market.
I got the bubble right and the bust right. I was bullish in 2009. But I did not stay bullish long enough. I never thought the Fed (central banks in general), would quickly blow another bubble even bigger than the one that preceded it.
But they did.
There is also a huge difference between being correct on the economy and government bond yields than being correct about the stock market.
This is the way I look at things: You better admit your mistakes, or someone else is highly likely to admit them for you.
JT: Can you describe a typical workday as an investment advisor and what skills are required the most to be an investment advisor?
Mish: I am certain my typical day looks nothing like the typical day of most investment advisors.
For starters, I work out of my house. If I want to mow the grass or weed the garden in the middle of the afternoon, then I mow the grass or weed the garden.
Second, I am frequently up at 2:00 AM writing and I am seldom up when the US markets first open.
Over the course of a day, most of my time is spent reading the news and writing about the news.
I also spend up to 2 hours a day answering emails. If someone has a question or problem, I try to help, whether or not I think they are potential clients.
Third, I am not in a mad rush to take on new clients. If someone is not a believer in holding gold and gold miners, they are not suitable clients.
I talked to a potential client last week. He felt he was missing the runup and was looking to diversify.
The problem was, we did not offer much diversification. He was in nearly the same holdings as Sitka.
I advised him to hold tight and keep a significant amount of cash to buy a real dip, not these 1% dips that everyone likes to buy these days.
If I was working for a big Wall Street firm I would probably be fired for such advice.
As to your question: What are the most needed skills?
I suggest, honest conversation and a lot of humility. In the industry, those traits are very lacking.
JT: Who are the most important people you follow daily and how significant is it to keep up with current affairs and news?
ZeroHedge is the most popular blogger now, by far. He occasionally reposts some of my articles, and I frequently get ideas from him.
I follow Bloomberg Econoday, primarily to mock it, but sometimes we agree. I subscribe to the Wall Street Journal, Financial Times, and the Telegraph.
I follow 72 people and have almost 15,000 followers.
JT: What are some tips for students wishing to go into an economics-related course and then into a career in investment and business?
Mish: My number one tip would be to get a good foundation in Austrian economics. The Keynesian, MMT, and Monetarist philosophies are precisely what leads to the big asset bubbles and boom-bust cycles that we have today.
All but Austrian economics has a belief in something for nothing. The average 5th grader understands that it is better to get more for your money than less. The average Keynesian and Monetarist believes the opposite. The MMTers believe government can print money at will with no consequences.
One must be trained to believe such nonsense. Unfortunately, nonsense is precisely what most colleges and universities teach. Many academics have never had a job in the real world.
JT: Do you have a reading list of books that you think would be helpful for Economics students?
Post Interview Comments
Thanks to John Tan for some interesting questions. It is encouraging to see high school students interested in economics.
Best wishes to John Tan and CoverShr in 2018 and beyond.
Mike "Mish" Shedlock