How Josh Brown Created A Financial Media Empire

0:00You're being sold an AI future where you're obsolete or irrelevant. That vision is wrong. At Palantir, they're building AI that helps workers and unlocks their full potential. American workers are our nation's greatest strength. AI shouldn't eliminate them. It should elevate them. Palantir is here to tell their stories. From factories to hospitals, AI is freeing people from drudgery, letting them do what humans do best. Create. Solve. Build. Palantir, making Americans irreplaceable.

1:01Acrobat Studio. Learn more at adobe.com slash do that with Acrobat. Bloomberg Audio Studios. Podcasts. Radio. News.

1:26Hello and welcome to another episode of the Odd Lots podcast. I'm Joe Weisenthal. And I'm Tracy Alloway. Tracy, I know I'm biased. We're probably biased. I'm certainly biased. Speak for yourself, Joe. I myself have no emotions or opinions about anything. I do have some biases. That's why I host a podcast. That's right. We're the question askers. We're not the answers. But I am sort of biased about anyone who sort of grew up in financial media in like the 2008, 2009 era, 2007. You know, like we're just a different breed. We're just a little cut above, I think. It was definitely a moment in financial media that I think has yet to be recaptured because there were two things that were happening simultaneously.

2:10So one, you had the financial crisis where everything was going haywire and it was all going haywire in a relatively new way. People had to suddenly learn what synthetic CDOs were, how the repo market - I never learned, by the way. Will you tell me after the show? Okay. How the repo market worked. No, that I definitely didn't learn. All of that. Yeah. And then at the same time, you had like a big format change. Yes. Because you had all these blogs that suddenly burst out of nowhere. And at that time, the combination of the new blogging format plus the news cycle itself, which was so weird and so fast-paced, really meant that blogs were kind of the perfect platform to cover the financial crisis.

2:54They had an edge at that time. And I feel, again, to your point, probably a bit of personal bias there, but I feel like it was a very special moment. It was. You nailed it. Exactly. It was the two things happening at once that made that a distinct time, which is, right. All this stuff was happening and there were just new formats. And then, you know, Twitter came around then. So do you know when I joined, I tweet a lot. Do you know when I joined Twitter? 2009? No, March, 2008. Okay. And I was at South by Southwest when Bear Stearns collapsed. Oh. And, you know, it was before everyone knew that the world was totally melting down.

3:35But also then I remembered, I have distinct memories of that time because JP Morgan made that$2 per share offer for Bear Stearns. And a week before, Bear Stearns had been trading at like 60 or something like that. And I very distinctly remember a few people on Twitter talking about, because people thought there was a typo. Remember, they're like, oh, there must be 20 or something like that. And I saw these voices who actually knew what they were talking about. like, no, this$2 makes sense. This is a real number, et cetera. Eventually, I think they bought him for like$10 a share because the government pressured them.

4:09But that was the first place. It was like, I was getting information from people who knew what they were talking about faster and sharper than I was getting at any other platform at the time. And who were those people, Joe? I think one of them was Howard Linsen. And I think another one was Roger Ehrenberg, which were like two of the names who were like, you know, these two. But anyway, there were many other names, including someone we're going to talk to right now. I am very excited. So the person we're about to speak to, I remember linking to his stuff, right? When I started financial blogging, which was September 2008 on FT Alphaville.

4:45And again, the world blowing up around that time, Lehman collapsing, all of that. And I remember constantly linking to his stuff at the time. And then the other thing, this is kind of weird, but the other thing I associate with our guest, The first time I ever met him in person was in New York, and that was the last time I ever drank a Blue Moon. Because I think I had like three of them that night. He's a good guy. I think he's a good guy to drink a Blue Moon. Yeah, but it was too much. And ever since then, never again. No Blue Moons. But yes, lots of our guests, for sure. Well, I'm really excited.

5:19I think it's his first time coming on the show. We are going to be speaking to the one and only Josh Brown, a legend. Back in the old days when we were linking to his blog, it was the reformed broker. He sunsetted that. He writes a new blog. He moved on to bigger things, for sure. Moved on to much bigger things, but that was huge. He's currently the CEO of Ritholtz Wealth Management. He is the author of a brand new book, You Weren't Supposed to See That, Secrets Every Investor Should Know. I'm so excited. He hosts a popular podcast as well, The Compound. Josh Brown, thank you so much for coming on OddLots.

5:56Tracy, I'm drinking a blue moon right now. That's perfect. Josh, do you remember the first - Okay with that? I can deal. As long as it's you and not me, that's good. Josh, do you remember where we met the first time? Do you remember where it was? I remember. Oh, man. You do remember? Okay, I'm going to take a guess. I remember there was one night where Scott Bell got all the bloggers together at the Campbell apartment on the Vanderbilt side of Grand Central. And that's like a speakeasy bar. And I remember meeting a lot of people who were writing and tweeting about markets for the first time that night.

6:36And I think you were one of them. I'm not sure. So it was that night. My recollection is a little different. I thought we went to the Michael Jordan Steakhouse, which is also in Grand Central and just on the other side of the stairs. We might have done both, dude. But we both agree, I think it was probably 2009, Grand Central, either in the Campbell apartment or the Michael Jordan Steakhouse, which sadly is no longer there. But yeah, that was the first time. And now we're here. It was a Cambrian explosion of market commentators who were coming from non-traditional market commentary backgrounds.

7:08Prior to that moment, just to button up what Tracy was saying, prior to that moment, most of the people who were commenting on markets in a big way and were able to get their views out to the public were coming from Wall Street or were traditional journalists. And they were like the public relations firm would book the person on TV, the person would go on Bloomberg or on CNBC. And they were like, they had pedigree and they also had guardrails. They had things that they weren't able to touch because they were connected to like a Fortune 500 company. And then all of a sudden, this Cambrian explosion on the internet, all of a sudden, you've got people amassing large followerships who have no pedigree, who have no publicist, and who have no guardrails and are able to say things that other people would gasp at, but then that became the mainstream.

8:09And then all of a sudden, the media was picking up those voices rather than the traditional voices that they had been so accustomed to booking. And I think all three of us benefited from having been early and visible in that era. And to this day, a lot of the people that came out of the woodwork at that time are now part of the establishment. So it was a really cool thing to be a part of. I can count. Yeah. Listen, I can count on maybe two hands, the people who are talking about finance on Twitter in March of 2009 when I started. It was a really small group of people because most professionals had compliance departments that just would not let them talk that way.

8:53Now, of course, the compliance department is like, when are you starting a podcast? So it's changed a lot, but we were there, the three of us, and we can come up with a whole bunch of other names, but there aren't that many. And to be fair, so one of the advantages that I think bloggers and people who were on Twitter at the time had over traditional media was just the immediacy of that publishing platform, because things were happening so fast, right? Like within a single day, you would have like 10 history-making stories all happening at once. And the newspapers and traditional media, to some extent, just couldn't keep up.

9:35Whereas if you're tweeting about it, if you're blogging about it in real time, you really had a competitive advantage. But Josh, I know you've written about this before, but for the benefit of our listeners, why did you get into blogging in the first place? Because again, people take it as a given now that you're on social media if you want to get ahead in your career. But back then, it was a very new and to some extent risky thing. So I'm working at a third tier broker dealer in 2008. And like many other firms on Wall Street, they were seeing their revenue implode and struggling and raising money to try to stay in business.

10:20And I go to the compliance officer and I'm like, hey, I'm reading this blog by this guy, Barry Ritholtz, and I'm reading a bunch of blogs and they're doing a really great job describing what's happening. Every day there's more news. It seemed like every minute there was more news. And the people that were covering it best were not at the Wall Street Journal. They were independent bloggers like Tadis Viscanta and Eddie Elfenbein and Barry and Eve Smith at Naked Capitalism and the Epicurean Dealmaker and Meb Faber. But these are people who they either work on Wall Street or they used to, or they talk to people that work on Wall Street.

11:02And there's so much more urgency to the way that they're describing this unfolding crisis. So I said to my compliance officer, hey, I know we have compliance restrictions and stuff, but if I stay within the lines of FINRA is at that time I'm a retail broker. If I stay within the lines of what FINRA says I can and can't say, can I do a blog? And he looks at me to his credit. He goes, I got to be honest with you. I don't even know if this place is going to be around tomorrow. I don't give a shit. Do whatever you want to do. Just make sure you print a copy of everything that you're hitting publish on and bring it to me and I'll sign it.

11:43And so I appreciate him to this day because he was dealing with much bigger issues. And around that time, there were so few people that had been given the liberty to do that. I always tell people how lucky I am. There were so few people in my position who had been given the liberty to speak freely on the internet. I was one of them. And as a result, there was such a thirst for knowledge amongst the general public that I was able to build a really big following before thousands of other people would start blogs. So being early and, you know, having that having that advantage, I'll never not appreciate that I had the opportunity to do that.

12:39Silicon Valley is selling you a future where you're obsolete, or worse, identical. At Palantir, they're witnessing something different and revolutionary, From re-industrializing the nation's defense base to shipyard workers building faster and frontline workers boosting productivity, AI is transforming work across the nation. AI is not replacing American workers or flattening them into conformity. It's unleashing what makes each one irreplaceable. Their judgment, their craft, their creativity. When American workers become more powerfully themselves, they own the future. Palantir, making Americans irreplaceable.

13:47leading 3.6 % APY high yield cash account. Switch to the platform built for those who take investing seriously. Go to public.com slash market and earn an uncapped 1 % bonus when you transfer your portfolio. That's public.com slash market. Paid for by public investing. All investing involves the risk of loss, including loss of principal. Brokerage services for U.S. listed registered securities, options, and bonds in a self-directed account are offered by Public Investing, Inc., Member FINRA and SIPC. Crypto trading provided by ZeroHash. Complete disclosures available at public.com slash disclosures.

14:20I have a personal question. When 2008, 2009, and your boss is saying, I don't even know if we're going to be around. So I was like living in an apartment in Brooklyn. I had two roommates at the time. It was sort of the whole thing was very interesting. You had a career. You were at a brokerage. I believe you had a daughter, at least by that point. What's that like? The anxiety of, like, you have, like, I didn't really have any responsibilities. I could sort of sit there eating my popcorn, watching things implode, but you were in it, and presumably, you know, you had, like, supportive. What's that like, supporting a family and being in the mix and being at a company where it looks like the world is ending?

14:59So I'm living in a rent-controlled apartment on the Upper East Side, Rupert Towers, which used to be the Rupert Brewery that sponsored the Yankees. I'm up on 90th and 3rd Avenue. I'm commuting down on the 6th train to 42nd Street every day. My office is in the Helmsley Building, which is now called 230 Park, but I'll always call it the Helmsley Building. And on the left side of the building is Bear Stearns. On the right side of the building is J.P. Morgan. You know, a lot of my friends from college are bond salesmen at Bear. My wife's best friend works at Lehman Brothers. She works at Golden Sacks.

15:36and I'm just surrounded by people that work at some of the biggest banks in the country because those were the big employers in New York. And so it was highly anxious. We were in our, I don't know, mid to late 20s. So everybody was going out and drinking a lot and just commiserating. But I'll never forget the day Bear Stearns closed because it was the same day as the St. Patrick's Day parade. So out of morbid curiosity, myself and all my fellow brokers walk around the corner from Helmsley over to the quote unquote, the Bear Stearns building, which by the way, had just finished construction a year before.

16:16A lot of people don't know that. They spent 10 years building it and then the firm went out of business a year later. So we walk around the corner, we see Erin Burnett, who at that time is CNBC. She's sitting at a folding table doing live coverage from in front of the Bear Stearns building. And behind her, almost the entire St. Patrick's Day parade is coming off of Fifth Avenue where it ends. And people are publicly drunk and there's green hats and bugles and they're blowing horns and there's horses. And meanwhile, you look behind that and you see white collar workers coming out of the front of the building with cardboard boxes with all their stuff in it.

16:58I want to find that footage because I don't think people appreciate the extent to which it was just an absolute daily circus. And not long after that same scene would be repeated in Times Square, where Lehman Brothers was headquartered, they literally took the sign off the front of the building, almost symbolically. And you have thousands of people coming out of the front of the building with cardboard boxes. Some of them would get recalled the next day when Barclays bought it. But those were the times that we lived in. And I think one underappreciated aspect of this is it's only like five or six years removed from the 9-11 era.

17:40And it just felt like trauma after trauma after trauma. So that was the New York in which I worked and lived and started to write. And about a month after I launched the reformed broker, the Madoff thing broke. So we went from Bear Stearns to a year later, Lehman Brothers, AIG, the TARP vote, blah, blah, blah, blah, blah. And just when you think it's over, the most trust shattering revelation of a Ponzi scheme in the history of finance breaks. And so I just had endless fodder to write about. And maybe to answer your question, that helped serve as a distraction from all of the anxiety in which people working on Wall Street, you know, had to live.

18:33I remember when the Madoff thing broke. I think it was later in 2008. Was it? Yeah. And I remember the headline. December. Yeah. And the headline on the FT Alphaville post, the very first post on this topic is one of my all time favorites. It wasn't by me. I think it was by our founder, Paul Murphy, but it was he made off with it, which was at the time, a very original pun. And sticks in my it became less original as the months went on and the story went on. Okay, what happened? So what happened to the brokerage that you were working at? And like, how did you manage the career transition away from blogging and into, I mean, you basically run an investment and a media empire at this point.

19:19So how did that happen? All right. So I'm still a broker, but I'm also a co-branch manager. And it's interesting. Retail investors didn't, at least the type of, we weren't really dealing with investors. We were dealing with gamblers, people that were trading stocks. And around that same time, you had the introduction of the 2X and then the 3X index ETFs. So the ticker symbols are now infamous. You had the TNA and the TZA. One of those was triple long, the Russell 2000. The other was triple short. You had the FAS and the FAZ. Those were the triple long and triple short financial sector index ETF.

20:07And that's what the retail brokers pivoted to. They were no longer pitching stocks because everything looked uninvestable. I mean, you literally had a 57 % peak to trough decline in the S &P. And by the way, again, that same thing had happened from the dot-com bubble through Enron WorldCom 9-11. So after 10 years of that kind of volatility, people were just like, you know what? I'm going to invest in volatility. And so that's what the brokers, the retail brokers pivoted to. I'm a co-branch manager. I have to send letters to the clients where they disclaim, yes, I want to be trading the 3X long or short Russell 2000.

20:49The clients would sign the letters and that would give the brokers carte blanche to just, all right, let's play. We're in the game. These are ETFs that are trading, I don't know, hundreds of millions of dollars, maybe billions of dollars in volume. And you could be down 20 % in the morning and then up 20 % in the afternoon. It was just the wild west. And I looked around and I said, what the hell am I doing this for? No one is being helped by this activity. Even the brokers, they were barely making money. So it was just like, it was an epiphany that I had up until then spent 10 years doing retail brokerage and nobody was better off for it.

21:30Not me, not my clients, not the firm I worked for. So I started to get really curious about, well, what are normal people doing? and what should I be doing to actually help people in this profession? And it became really obvious that I was on the wrong side of the boat. So the brokerage side, the series seven side, where you're selling investments versus the investment advisor side, where you're giving advice and the investing is incidental to the advice. And you're not selling products, you're building portfolios and you're helping people really solve the puzzle of how are they going to retire?

22:08How are they going to pay for their kids' college, et cetera? So I knew that I was on the wrong side within the profession. And in those days, most people were. There were more people that were registered representatives or series seven licensed brokers than there were true financial advisors. And so my decision, guys, was I'm going to be a reformed broker, and I'm going to go over to the investment advisor side. But then the catch was, well, how do you do that? Yeah. How do you leave? How do you leave the brokerage side and go over to the advice side? And I didn't know. So it wasn't until 2010 that I met Barry, who is, you know, at that time, my idol.

22:51Now he's my partner. But I when I met him, I sat with him and I said, all right, here's my problem. Or he said, here's I didn't say anything first. Barry did like an hour. That sounds about right. So I want to remind people. And of course, Barry is a host of a show on Bloomberg. And so, okay. So Barry says, here's my problem. I have the number one bestselling book in the country about the financial crisis. It's called Bailout Nation. And I think it preceded Too Big to Fail and all the rest. So he's like, all right, I have the number one book in the country on the financial crisis. I actually predicted the crisis on my blog.

23:31I called it in real time. I predicted the market crash. And my phone is ringing off the hook because I also predicted the bottom. So in the New York Times, three days before the market bottomed, he said, I don't know if there's a thousand more points down from here, but I think you buy them. And literally three days later, the market bottomed. So the phones are ringing off the hook at the RIA that he works at. And he's not a financial advisor. He's a strategist. He doesn't talk to clients. So he's like, my problem is the phone's ringing off the hook. The emails are pouring in. People are like, Barry, just take my money, take my money, take my money.

24:08I don't do that. So I don't, I don't know how to help these people. I said, oh, okay. I have the opposite problem. I'm ready to help people. Nobody's calling me. I don't know. I don't know where to get my next client from. So we teamed up and it was like lightning in a bottle. Like I'm, I'm telling you guys, we had like hundreds of people a month just call the firm. I would start talking about like how we're going to invest their money. And they'd be like, just shut up. Here's my social security number. Like open me an account and I'm leaving Merrill Lynch. I'm leaving Lehman. I'm leaving this firm, leaving that firm.

24:46I got to get my money out of there and I want to work with Barry. So my transition was like this insane rollercoaster of going from like, nobody wants to talk to me. And then the next day it's like, oh my God, Josh, how do I get you guys money? And that's how it started. And, you know, we've been, we've been running ever since. When, so there's a lot of questions that I have a different path we could go down. And so you start the advisory with Barry and now it's huge and you have all advisors all over the country. So multiple offices, et cetera. And we can talk about that more on the media side.

25:27So you had been doing the blogging. I think both of us, I started blogging in 2006 or whatever. It was just to write and I didn't think anything would really come of that aspect other than personal notebook, et cetera. When did it seem like the media side of your career was also good? Could be like a real thing that like is not just like a notebook or whatever, but something that like, oh, there's like this can grow and this can grow your profile. And obviously now you're on CNBC and you have a conference biz. And by the way, if you're listening to this, I believe it is going to be released the day that we're all out at your future proof conference.

26:07But when did you sort of realize that there's something big happening on the media side that could be more than just a blog that you like, you know, tell people what's going on? So, all right. So I'm writing every day. Yeah. And I'm writing. You really were writing literally every day. Yeah, I'm a man on fire. And I am and I don't. So I think the charm of what I was doing then is that I I never presented myself as like I'm like this, you know, billionaire hedge fund manager or I'm a cheap strategist that, you know, Goldman Sachs, you know, caliber market commentator. I can't help it. I was always ever just me.

26:46And so I was writing from the perspective of a grunt in the trenches on Wall Street, suffering through all the ups and downs like everyone else, and talking about what it was like to talk to clients, talking about what it was like to navigate all of the various cross currents that were happening, but from a street level. And I think the readership appreciated that. And what ended up happening was it became popular enough that professionals in the financial media started, like people were sending them links. And then they started to share those links in their editorial meetings. And the first people that put me on TV were CNN Money, my friend Caleb Silver.

27:27I was in with this group of other financial bloggers with Howard Lindzen, who's a venture capitalist at the time, and a whole bunch of people. And CNN is starting to do more financial content because the whole country is wrapped with what's going on. So CNN Money really was my first shot at being able to take my writing and turn it into television and commentary. I was also getting a lot of calls from the Wall Street Journal. They were linking to me every day. And they were like, because they didn't, So at that time, and Tracy will attest to this, Joe, you were writing at Cluster Stock, which became Business Insider.