The Death of Passive Investing: Seth Cogswell Unloads on Capitalist Contradictions, Market Myths & Raising Ethical Alpha
I’m thrilled to share some exciting insights from the latest episode of Capitalist Culture. This time, I had the pleasure of chatting with Seth Cogswell, the founding and managing partner of Running Oak Capital. Seth’s journey and philosophy on markets, risk, and investment are nothing short of fascinating. Here are some key takeaways that I think you’ll find intriguing:
Key Lessons and Ideas:
• Decision-Making Sciences: Seth’s background in decision-making sciences and operations research has profoundly shaped his analytical approach to markets and risk. It’s a blend of math, statistics, and computer science that’s both rigorous and insightful.
• Early Trading Lessons: Seth’s first foray into trading was a rollercoaster. From losing his initial investment on a bad stock tip to becoming obsessed with market dynamics, his journey is a testament to learning from mistakes and persevering.
• Market Cycles and Humility: Navigating through the 2008 financial crisis and the COVID-19 market turmoil taught Seth invaluable lessons about humility and adaptability. His experiences highlight the importance of staying grounded and flexible in the face of market unpredictability.
• Drawdowns vs. Returns: Seth emphasizes that understanding and managing drawdowns is crucial for long-term success. It’s not just about chasing returns but ensuring that your investment strategy can withstand market downturns.
• Founding Running Oak Capital: Seth’s mission with Running Oak Capital is to simplify clients’ lives through disciplined risk management and transparency. He’s passionate about providing real value and ensuring clients can invest with peace of mind.
Curiosities and Insights:
• Investment Industry Shortcomings: Seth critiques the traditional investment industry for its high fees and average returns. He advocates for more transparent and client-focused approaches, like those at Running Oak Capital.
• Passive Investing Pitfalls: While passive investing has its merits, Seth warns against its potential risks, such as ignoring valuation and risk factors. He believes in a more thoughtful, disciplined approach to investing.
• AI and the Future: Seth is cautiously optimistic about AI’s potential to revolutionize various industries. However, he stresses the importance of maintaining a disciplined approach to valuations, even amidst the AI hype.
• Capitalism and Ethics: Seth offers a nuanced view of capitalism, acknowledging its role in prosperity while critiquing its potential for sociopathic behavior. He believes in balancing profit with genuine value creation for customers and employees.
Personal Reflections:
• Integrity and Impact: Seth’s personal definition of success revolves around integrity and having a positive impact on as many people as possible. He’s committed to honesty, transparency, and preparing the next generation for future challenges.
• Navigating Challenging Times: Seth is deeply concerned about the current socio-political climate and the division it creates. He advocates for focusing on shared values and common ground to navigate these turbulent times.
I hope these insights spark your curiosity and entice you to listen to the full episode. Seth’s journey and philosophy offer a wealth of knowledge and inspiration for anyone interested in markets, risk, and the broader implications of capitalism.
Stay curious and keep learning!
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