Notable lessons from a 35-year market vet

Moontower Munchies #103

Mar 19, 2025

Friends,

Matt Zeigler interviewed Kevin Muir. The interview is 5 stars so I am memorializing the transcript so I can easily refer back to it.

Watch the Full Interview: Kevin Muir – The Intentional Investor

My top highlights

Analysis of Monopoly Properties
Kris: I remember discussing exactly this topic in a SIG interview. When you come out of jail, the most likely properties you land on are the tan ones.
“Why Can’t You Just Enjoy Things?”
His wife’s question (paired with a great Scrabble story) underscores a key lesson: Do your best, work hard, but eventually just throw it out there and see what happens—then move on to the next one. This is reinforced by his unpredictable success with writing.
Getting His First Job and His Dad’s Advice
The Luck of Being a Computer-and-Markets Guy
Reminds me of Marc Andreessen’s advice about how if you are 90th percentile in each of 2 domains, you are 99th in join probability space (.1 * .1). But Kevin’s story also shows the importance of luck—his joint skills perfectly matched a short window in time before specialization took over technology.
The Pickoff Story: Honor, Ethics, and Reputation

Then these 3 parts which I bring special attention to:

Leaving Corporate Life
Romanticizing the Past
The Secondary Effect: Norwegian Art Story

Leaving Corporate Life

The emphasis is mine. 🔥

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.
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.

Romanticizing the Past

Interviewer: People romanticize the past, thinking it was easy to make money.
Kevin: Exactly.
“I tell people my story, and I always say, ‘Oh, I would have made so much money back then; it was so easy.’ And everyone always thinks it was so easy. But I always tell them, ‘Listen, it wasn’t easy.’ Right now, there’s somebody who is quietly making a fortune, someone who has figured out the equivalent of my interlisted arbitrage. When I was doing my interlisted arbitrage on my machine, I wasn’t telling everyone—I was quiet about it. There’s somebody somewhere doing the exact same thing.
“There are always people making money, and it’s always hard. I remember thinking specifically, when I would listen to their stories—like the trader above me, 5 or 10 years older than me—I’d think, ‘If I had just been there when 87 happened, if I had just been there then…’ People always look back on the past, over-romanticizing it.”

[Kris: If I had a dollar for every time I’ve heard someone think this about floor trading…The attrition rate of floor traders was insane. Another new face? Give him a month and we’ll see if he’s around. Also, if I had a dollar for every time I said this about someone before me! We project our current tools onto the past. I wont’ re-hash it because Nick Maggiulli does a great job on this topic. See The Privilege of Knowledge.]

The Secondary Effect: Norwegian Art Story

Interviewer: Tell the Norwegian art story—it relates to this.
Kevin:
I’ll quickly go through it. For those who don’t know, in the late ’60s and early ’70s, I believe, Norway discovered oil off their coast. It was this huge boom, and everyone was rushing out to get blocks of water they could drill in. There was an enormous fortune to be made with this Norwegian offshore oil boom. For those who don’t know, we think of Norway as a very rich country now, but up until that point, it wasn’t. It was actually the poorer of the Scandinavian countries, mostly reliant on fishing—not a lot was going on in Norway. So, they discovered this oil, and the long and short of it is that all these guys were rushing out to buy pieces of this water to drill in.
Then there’s this trader who looks at the situation and says, ‘Okay, that’s getting fully priced in. What can I do?’ He decides to start accumulating Norwegian art. He just starts buying all this art, and you might think, ‘What kind of crazy guy is this? Why is he buying Norwegian art?’ The long and short of it is that he had figured out that once all these guys made their fortune from the offshore oil, they’d be looking for something to do with their money. Art is a very local market, and when a Norwegian guy makes some money, yes, he might go buy a Picasso, but he’s also suddenly going to want Norwegian art. So, while everyone was busy fighting and paying too much for this offshore oil, this guy was quietly accumulating Norwegian art. A year or two later, when all these newly rich guys started looking to spend their money, he was there with offerings for them and made a fortune that way.
To me, that epitomizes trading. What’s interesting is if you go back and read Liar’s Poker again, you’ll see Michael Lewis talks about two guys who were his mentors. One of them is this guy, Dash Riprock, I think, who sits around watching for a bond to be, say, 30 seconds too expensive, and then he arbitrages it. He’s kind of a block-and-tackle kind of guy—just straightforward. But then there’s this other guy, this big, bold trader. If you reread that section, Lewis describes how, when something happens, this trader is already onto the next iteration, trying to figure out, ‘Okay, this is occurring—what’s the next step?’ Instead of just focusing on the first derivative, he goes for the second derivative. In other words, he thinks, ‘Once everyone does this, what’s that going to mean for the next thing?’ It’s like thinking multiple moves ahead in chess.

[Kris: The character in Liar’s Poker is named Alexander. This is an example of Alex’s second-derivative thinking, which I refer to in Trading Is A Team Sport:

The second pattern to Alexander’s thought was that in the event of a major dislocation, such as a stock market crash, a natural disaster, the breakdown of OPEC’s production agreements, he would look away from the initial focus of investor interest and seek secondary and tertiary effects.

Remember Chernobyl? When news broke that the Soviet nuclear reactor had exploded, Alexander called. Only minutes before, confirmation of the disaster had blipped across our Quotron machines, yet Alexander had already bought the equivalent of two supertankers of crude oil. The focus of investor attention was on the New York Stock Exchange, he said. In particular it was on any company involved in nuclear power. The stocks of those companies were plummeting. Never mind that, he said. He had just purchased, on behalf of his clients, oil futures. Instantly in his mind less supply of nuclear power equaled more demand for oil, and he was right. His investors made a large killing. Mine made a small killing. Minutes after I had persuaded a few clients to buy some oil, Alexander called back.

“Buy potatoes,” he said. “Gotta hop.” Then he hung up. Of course. A cloud of fallout would threaten European food and water supplies, including the potato crop, placing a premium on uncontaminated American substitutes. Perhaps a few folks other than potato farmers think of the price of potatoes in America minutes after the explosion of a nuclear reactor in Russian, but I have never met them.

But Chernobyl and oil are a comparatively straightforward example. There was a game we played called What if? All sorts of complications can be introduced into What if? Imagine, for example, you are an institutional investor managing several billion dollars. What if there is a massive earthquake in Tokyo? Tokyo is reduced to rubble. Investors in Japan panic. They are selling yen and trying to get their money out of the Japanese stock market. What do you do?

Well, along the lines of pattern number one, what Alexander would do is put money into Japan on the assumption that since everyone was trying to get out, there must be some bargains. He would buy precisely those securities in Japan that appeared the least desirable to others. First, the stocks of Japanese insurance companies. The world would probably assume that ordinary insurance companies had a great deal of exposure…]

You can find the full transcript here.

Stay groovy

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