I’ve often heard that good investors are a bit like journalists: doggedly collecting evidence and building an understanding of how all the pieces of a company or investment fit together. My guest this week is one of my favorite writers and journalists, Bethany McLean. Across her career, Bethany has covered many of the most interesting stories in business and investing, including Enron (which became the famous book and documentary, the Smartest Guys in the Room), Valeant, Wells Fargo, SAC Capital, Fannie Mae and Freddie Mac, the great financial crisis, and most recently, fracking and the energy revolution.

Given how deeply she has investigated all of these topics– and thought about the common threads across them all–this was an amazing conversation. When talking to her, you can feel how much she cares and how diligent and fair she is when analyzing a topic. In addition to all of the great stories already listed, we discuss the art of persistence and other lessons she has learned about businesses and people gone bad. I especially loved her evolving take on housing in America.

Please enjoy my conversation with Bethany McLean

Links Referenced

Mindsets: Optimism vs. Complacency vs. Pessimism

Disgraced ex-BofA exec raises uncomfortable questions about #MeToo

The Hunt for Steve Cohen

Books Referenced

The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron”

Free Radicals: The Secret Anarchy of Science

Shaky Ground: The Strange Saga of the U.S. Mortgage Giants

Saudi America: The Truth About Fracking and How It’s Changing the World

Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy

All the Devils Are Here: The Hidden History of the Financial Crisis

Show Notes

2:22 – (First Question) – Differences and similarities between investors and journalists

3:19 – What has more of an impact on business practices, exposing negatives or reporting positive

4:57 – first story that got Bethany intrigued with finding bad behaviors

6:19 – The process of getting to know the people who know more than the market

7:43 – Mindsets: Optimism vs. Complacency vs. Pessimism

8:18 – First short seller that garnered her interest

8:57 – The process that led to The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron

10:36 – How to ask questions

12:18 – Importance of preparation

12:49 – Commonalities among the motivations for people who do bad things

14:20 – Difference between a visionary and a fraud

15:42 – Free Radicals: The Secret Anarchy of Science

16:23 – Any standout frauds that told a really compelling story

17:33 – Looking into Valient

19:32 –Writing about the #MeToo movement

19:34 – Disgraced ex-BofA exec raises uncomfortable questions about #MeToo

21:49 – Thoughts on the spectrum of chasing this story

23:26 – Ways journalist can fairly impact this movement

24:14 – The romance of owning a home in America and what it has meant for the market

24:34 – Shaky Ground: The Strange Saga of the U.S. Mortgage Giants

28:27 – What has changed on her thinking about housing

30:24 – What role does Fannie and Freddie have in the market today

31:13 – Her desire to look into energy

32:26 – Saudi America: The Truth About Fracking and How It’s Changing the World

35:05 – What have been the changes in energy market in the US

34:40 – Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy

37:01 – Where are we in the life cycle of energy production

38:27 – The more boring things that are actually the drivers of our economy

38:29 – Technologies that shaped industrial revolution in America

39:42 – Where can people learn more about how our energy independence will impact other markets

41:10 – Why is Peter Elkin the best investigative journalist

42:24 – Most relentless she has ever been

43:58 – Who is doing it right

44:38 – All the Devils Are Here: The Hidden History of the Financial Crisis

45:36 – Her take on reporting the The Hunt for Steve Cohen story

49:01 – How her views have evolved over her career and lessons learned

50:40 – Are there ways to prevent success from leading people down a bad path

53:48 – The role of empathy in her career

55:13 – Kindest thing anyone has done for Bethany’s career