
Episode 164
The Long (and Short) of it: A Cynic’s Take on Markets & Investing | Jim Chanos

Episode 164
Jim Chanos
The Long (and Short) of it: A Cynic’s Take on Markets & Investing | Jim Chanos
summary
In Episode 164 of Hidden Forces, Demetri Kofinas speaks with legendary short-seller Jim Chanos, founder of Kynikos Associates, about the art and science of selling short.
What is short-selling? What does it mean to sell something short? How does one learn to do it successfully? These are just some of the questions that Demetri and Jim explore in their two-hour-long conversation on markets, politics, and life. Demetri asks Jim for his philosophy on investing and why value-oriented allocators have had a difficult time profiting during the later stages of this bull market. A vocal critic of corporate excess and malfeasance, Chanos also offers his view on what a Biden administration will mean for financial regulation, capital markets, equity valuations, and the broader economy. The two also dissect the business models and prospects of companies like Tesla and Uber and consider the value proposition of Bitcoin amid its extraordinary rise in recent weeks. They end with a conversation about history and what we might come to expect from the future by looking into the past.
This is yet another excellent, engaging, and profoundly eye-opening conversation in a series of such discussions that we have released in recent weeks. We hope you enjoy it!
You can access the episode overtime, as well as the transcript and rundown to this week’s episode through the Hidden Forces Supercast Page. All subscribers gain access to our overtime feed, which can be easily added to your favorite podcast application.
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Producer & Host: Demetri Kofinas
Editor & Engineer: Stylianos Nicolaou
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Episode Recorded on 11/17/2020
bio
Jim Chanos is the founder and Managing Partner of Kynikos Associates LP. As the world’s largest exclusive short selling investment firm, Kynikos Associates LP provides investment management services for domestic and offshore clients. The Kynikos Capital Partners, Kynikos Global Capital Partners Ursus, Kriticos, and Kynikos Opportunity funds seek to profit from the unusually high alphas found on the long and short side of the U.S. and non-U.S. equity markets. Throughout his investment career, Mr. Chanos has identified and sold short the shares of numerous well-known corporate financial disasters; among them, Baldwin-United, Commodore International, Coleco, Integrated Resources, Boston Chicken, Sunbeam, Conseco, and Tyco International. His celebrated short-sale of Enron shares was dubbed by Barron’s as “the market call of the decade, if not the past fifty years.” Mr. Chanos has testified before Congress and provided comments to regulations proposed by the U.S. Securities and Exchange Commission and the Financial Services Authority in the United Kingdom. He is currently a Lecturer in Finance at the Yale School of Management teaching a class on the history of financial fraud. Mr. Chanos received his BA in economics and political science in 1980 from Yale University.
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Non quam nostram quidem, inquit Pomponius iocans; Quis suae urbis conservatorem Codrum, quis Erechthei filias non maxime laudat? In qua quid est boni praeter summam voluptatem, et eam sempiternam? Itaque a sapientia praecipitur se ipsam, si usus sit, sapiens ut relinquat. Si est nihil nisi corpus, summa erunt illa: valitudo, vacuitas doloris, pulchritudo, cetera. Ac tamen, ne cui loco non videatur esse responsum, pauca etiam nunc dicam ad reliquam orationem tuam. Est igitur officium eius generis, quod nec in bonis ponatur nec in contrariis.
Mihi vero, inquit, placet agi subtilius et, ut ipse dixisti, pressius. Illud mihi a te nimium festinanter dictum videtur, sapientis omnis esse semper beatos; Quia dolori non voluptas contraria est, sed doloris privatio. Bonum negas esse divitias, praeposìtum esse dicis? Egone non intellego, quid sit don Graece, Latine voluptas? Ipse Epicurus fortasse redderet, ut Sextus Peducaeus, Sex. Quae cum praeponunt, ut sit aliqua rerum selectio, naturam videntur sequi; Cum ageremus, inquit, vitae beatum et eundem supremum diem, scribebamus haec.
Nam si beatus umquam fuisset, beatam vitam usque ad illum a Cyro extructum rogum pertulisset. Nihil sane. Sed utrum hortandus es nobis, Luci, inquit, an etiam tua sponte propensus es? Nam de isto magna dissensio est. Ut in geometria, prima si dederis, danda sunt omnia. Quorum altera prosunt, nocent altera. Atque haec ita iustitiae propria sunt, ut sint virtutum reliquarum communia. Quis enim confidit semper sibi illud stabile et firmum permansurum, quod fragile et caducum sit? An vero, inquit, quisquam potest probare, quod perceptfum, quod.
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Lorem ipsum dolor sit amet, consectetur adipiscing elit. Invidiosum nomen est, infame, suspectum. Certe nihil nisi quod possit ipsum propter se iure laudari. Duo Reges: constructio interrete. Eadem nunc mea adversum te oratio est. Habent enim et bene longam et satis litigiosam disputationem. Habent enim et bene longam et satis litigiosam disputationem. Re mihi non aeque satisfacit, et quidem locis pluribus. Quos nisi redarguimus, omnis virtus, omne decus, omnis vera laus deserenda est. Estne, quaeso, inquam, sitienti in bibendo voluptas? Potius ergo illa dicantur: turpe esse, viri non esse debilitari dolore, frangi, succumbere.
Idemne, quod iucunde? Quae cum dixisset paulumque institisset, Quid est? Tum Torquatus: Prorsus, inquit, assentior; Atqui iste locus est, Piso, tibi etiam atque etiam confirmandus, inquam;
Nisi autem rerum natura perspecta erit, nullo modo poterimus sensuum iudicia defendere. Comprehensum, quod cognitum non habet? Quodsi vultum tibi, si incessum fingeres, quo gravior viderere, non esses tui similis; Hoc etsi multimodis reprehendi potest, tamen accipio, quod dant.
Videmusne ut pueri ne verberibus quidem a contemplandis rebus perquirendisque deterreantur? Graecum enim hunc versum nostis omnes-: Suavis laborum est praeteritorum memoria. Utrum igitur tibi litteram videor an totas paginas commovere? Omnes enim iucundum motum, quo sensus hilaretur. Quamquam id quidem licebit iis existimare, qui legerint. Causa autem fuit huc veniendi ut quosdam hinc libros promerem. Nam his libris eum malo quam reliquo ornatu villae delectari.
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Lorem ipsum dolor sit amet, consectetur adipiscing elit. Cur post Tarentum ad Archytam? Tubulum fuisse, qua illum, cuius is condemnatus est rogatione, P. Duarum enim vitarum nobis erunt instituta capienda. Bona autem corporis huic sunt, quod posterius posui, similiora. Duo Reges: constructio interrete. Deinde disputat, quod cuiusque generis animantium statui deceat extremum.
Contemnit enim disserendi elegantiam, confuse loquitur. Paria sunt igitur. Quamquam haec quidem praeposita recte et reiecta dicere licebit. Quid est enim aliud esse versutum? Non ego tecum iam ita iocabor, ut isdem his de rebus, cum L. Quem si tenueris, non modo meum Ciceronem, sed etiam me ipsum abducas licebit.
In quo etsi est magnus, tamen nova pleraque et perpauca de moribus. Quod non faceret, si in voluptate summum bonum poneret. Qui enim existimabit posse se miserum esse beatus non erit. Inde igitur, inquit, ordiendum est. Tum Piso: Quoniam igitur aliquid omnes, quid Lucius noster? Nam si amitti vita beata potest, beata esse non potest. Virtutis, magnitudinis animi, patientiae, fortitudinis fomentis dolor mitigari solet. Voluptatem cum summum bonum diceret, primum in eo ipso parum vidit, deinde hoc quoque alienum;
Sin autem eos non probabat, quid attinuit cum iis, quibuscum re concinebat, verbis discrepare? Apparet statim, quae sint officia, quae actiones. Atqui haec patefactio quasi rerum opertarum, cum quid quidque sit aperitur, definitio est. Nec hoc ille non vidit, sed verborum magnificentia est et gloria delectatus. Quid est, quod ab ea absolvi et perfici debeat? An, partus ancillae sitne in fructu habendus, disseretur inter principes civitatis, P.
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Lorem ipsum dolor sit amet, consectetur adipiscing elit. Nam quibus rebus efficiuntur voluptates, eae non sunt in potestate sapientis. Confecta res esset. Magna laus. Nam quid possumus facere melius? Neque enim disputari sine reprehensione nec cum iracundia aut pertinacia recte disputari potest. Tum mihi Piso: Quid ergo? Multa sunt dicta ab antiquis de contemnendis ac despiciendis rebus humanis; Duo Reges: constructio interrete.
Beatus sibi videtur esse moriens. Sed residamus, inquit, si placet. Multoque hoc melius nos veriusque quam Stoici. Ab hoc autem quaedam non melius quam veteres, quaedam omnino relicta.
Non igitur potestis voluptate omnia dirigentes aut tueri aut retinere virtutem. Itaque hic ipse iam pridem est reiectus; Gloriosa ostentatio in constituendo summo bono. Quid igitur dubitamus in tota eius natura quaerere quid sit effectum? Est, ut dicis, inquit; Sin aliud quid voles, postea.
Cum id quoque, ut cupiebat, audivisset, evelli iussit eam, qua erat transfixus, hastam. Quo modo autem philosophus loquitur? Quamvis enim depravatae non sint, pravae tamen esse possunt. Duo enim genera quae erant, fecit tria. Nos quidem Virtutes sic natae sumus, ut tibi serviremus, aliud negotii nihil habemus. Vide ne ista sint Manliana vestra aut maiora etiam, si imperes quod facere non possim. Non ego tecum iam ita iocabor, ut isdem his de rebus, cum L. Maximas vero virtutes iacere omnis necesse est voluptate dominante.