Transcript – 20 Minute Playbook – Luke Gromen of The Forest for the Trees

Please enjoy this transcript of my conversation with Luke Gromen, CEO and Founder of FFTT, a macroeconomic research firm.
Last updated
January 28, 2022
20
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Luke Gromen’s experience as an analyst at investment research firms led him to strike out on his own and found The Forest for the Trees.
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Please enjoy this transcript of my conversation with Luke Gromen, CEO and Founder of FFTT, a macroeconomic research firm. Transcripts for other episodes can be found here

“The ability to make the data useful, to interpret the data, to make music out of the data, if you will, I think you're seeing that dynamic across a lot of different sectors and in the economy.” – Luke Gromen 


Luke Gromen (@LukeGromen) is CEO and Founder of FFTT, LLC, a macroeconomic research firm. He publishes for institutional investors and corporate strategic planners in his weekly newsletter, Tree Rings. Prior to founding FFTT, Luke focused on investment research at Cleveland Research.




20 Minute Playbook: Luke Gromen of The Forest for the Trees


Daniel Scrivner:

Luke, it's a huge honor to have you on 20 Minute Playbook. Thank you so much for coming on.


Luke Gromen:

Thanks for having me on. It's great to be here.


Daniel Scrivner:

So this should be fun. This is a little bit faster paced, and we'll just try to get as many interesting insights in, in 20 minutes as possible. And I wanted to start, I think, you'll definitely have an interesting answer to this question. I want to start by asking what you've been fascinated about recently? So this is just things you're tracking, topics that you're researching, things you just can't get out of your head.


Luke Gromen:

There's a lot. So there's a lot going on in this head that's why all the hair is gone. I mean what's going on in the economy? What's the cognitive dissonance between watching people realize that it wasn't different last time, now making the case that it is different this time, when you talk about, "Hey, home prices can never fall nationally." Even though they had. Now you're looking at, "Hey, we can never have another sovereign debt crisis." Even though we have. What does that look like? I spent a lot of time thinking about that. Watching my sons grow up and progress, this change in my own life of, "Hey, I got one gone, I got another one leaving." We [inaudible 01:00:37] each other. There's just a lot of fascinating stuff going on right now.


Daniel Scrivner:

So you're someone, obviously we went into depth inside this, in the Infinite Games interview. And we talked a little bit about your research process. We talk a lot about the origin story as an analyst. So clearly you have an analytical supercomputer in your head. At least that's what I would think about. That may be superpower. What do you think is your superpower or superpowers when you come into work every single day, and how do you utilize those?


Luke Gromen:

I've got a couple clients say that they think I should have a PhD in connecting dots, or dot connecting. And I think that that's probably superpower number one is just, I have this unique ability to connect dots in a unique manner. I have an ability to read lots, and retain a lot really fast. I don't know why, but I do. I write well as well. There's a connection there from here to here, and I think from my brain down to the computer and that helps. And the other one for whatever reason, maybe it's the old German hard headed to me, I have a lot of perseverance. So when someone tells me I can't do something, my first reaction is always, "Oh yeah, hold of my beer, watch this." Those I think really are the superpowers is dot connecting, perseverance, the writing, and the ability to read and retain a lot of information relatively fast.


Daniel Scrivner:

That's fascinating too. Especially when you think about that in terms of this concept of a skill stack, where obviously if you could only connect dots, and you couldn't retain as much information, and you maybe weren't as good a writer, you probably wouldn't be doing what you're doing today. It's like really takes all of those things to be able to come together.


Luke Gromen:

I'm very blessed. It's fun. It's like a dream situation for me.


Daniel Scrivner:

On the flip side, what do you feel like you struggle with, and how have you either improved or worked around those things over time?


Luke Gromen:

Something that I've always done and it can be both a blessing and a curse, but it's what I call moving too quickly to the second derivative. So it's a blessing when it's, "Hey, this great success happened." And you feel it for a second, but it's never like, "Oh, I'm done forever. I'm the man." It's always like, "Okay. What's next. Okay. What's next?" And so it can be helpful in terms of just maintaining that discipline to your process. But where it can be problematic is sometimes the money is just in the corner and there is no second derivative. It's just, "Hey, this happened, and don't think about how this is going to impact this and that, and this and that, and this and that." It's almost like the brain that can get going, the dot connecting, there were times when it's like, "No, no, no, it's just that, act on that."


Luke Gromen:

And that at times has made me make things more complex than they need to be. And so I think for me trying to recognize it when it happens, you'll see reactions from clients, or ask questions from clients that can help clear, "Hey, why not just that?" And it's just having that humbleness to say, "You know what, you're right. I'm wrong, you're right. Why am I worried about all that other shit? It's this." So it's having that humbleness to recognize that, or when mentors of mine say that to me, and catch that for me. And then it's just, I think, a form of being present. It's just, "Hey, that's that? Let me be here for that, before I'm on to the next other few things, and the second derivative." So that's, I think, the thing I would highlight.


Daniel Scrivner:

Yeah, it's fascinating. I love that concept too, of moving on too quickly to the second derivative. And I also gets that, I mean something I've always thought about is, that's obviously the shadow side of this supercomputer brain that's able to connect all these dots is, it connects too many dots. And sometimes you've got to learn how to rein that in, and just add a little bit of measure of control to that. When it comes to habits and routines, do you have a very buttoned up daily routine? And if not, what are some things that you try to get in whatever you can that you found helpful?


Luke Gromen:

Every day I wake up. And first thing I do actually is I noodle around on my phone for a bit, and just get a feel. I'm not looking for anything specific, but just what's the tone of the day. Is there anything really big happening? Anything that I need to know about? And usually, sometimes I set a timer for that. I need to do a better job of that, where I set a 20-minute timer and when it goes off, you're done, because then you're very focused doing that. And that's something I've tried being more consistent with, but I haven't really, as much as I'd like. I go for a walk, then every morning, it just gets things going. It gives me a chance to maybe spin around in my head things I just read. And then I sit down and I get going on, and I lay out what I need to do that day.


Luke Gromen:

My week. I publish a report Wednesday or Thursday, and the report Friday. And so Tuesday afternoons, Wednesdays, a lot of time spent in the cave. Wednesday afternoon, a little less so. Thursday morning, a little less so, then Thursday afternoons. Friday is back into the cave. I sleep when I need to sleep, I write when I need to write. There are times that I found I'll wake up at four in the morning and there's something in my head. And so I go downstairs, and sometimes it'll be two in the morning, three in the morning. I got to get it out because I'm afraid it will leave if I don't write it down. And sometimes I'll just get out of bed and just write it down, note, and I don't start writing. But sometimes it's really good, and I write. Now, sometimes I've been writing a lot, and my brain needs a rest, and I'll sleep in. I won't set an alarm. I just try to flow with where the energy is, really.


Daniel Scrivner:

Yeah. That's interesting. A question I feel like I cannot ask you is, so I do this podcast, I've done it for a bit over a year now, I think almost 18 months. And so the first thing I've had where it's an incredibly rigorous every single week, we publish one. And that is, I think, for anyone that hasn't been on a weekly cadence, and I know you now publish, it sounds like, two reports a week, so you're on a twice a weekly cadence. It's a lot. And I think there are times where it's very manageable, but there are definitely times consistently every single year where it just gets challenging. Has it ever been a challenge for you? And is there anything you've learned, or there's any way you think about it that helps you just be comfortable with this pressure to always publish, and that you have to do this every single week?


Luke Gromen:

I've been blessed in that ever really since 2015, the macro situation has gotten so that there's almost always something. With that said, there are time when it gets to the end of Monday, end of Tuesday, and I don't know what I'm going to write about. I don't know what I'm going to write. I've got nothing. And it's really, I think, important particularly like late Monday, late Tuesday, if I don't have it, I walk away. And I just trust... My wife always says, "Hey, it's the universe. The universe is going to give you something to write about. I promise."


Luke Gromen:

And I've learned to just trust that something is going to happen, something is going to catch my eye. There's going to be something there. And almost without fail, it happens, which sounds woo-woo, but I think rather than trying to force it. Nothing ever good happens when I sit there and try to force it and grind through it. And I think that's probably the closest I can come to... Because yeah, we probably 48 weeks a year, twice a week. That's probably close to a thousand pay ages of research a year.


Daniel Scrivner:

Wow. So-


Luke Gromen:

And it doesn't feel like it. Yeah.


Daniel Scrivner:

Yeah. And so it's both this... You're both waiting for serendipity, honestly. You're waiting for something interesting to write about, and then at the same time, you're trying to be disciplined, but you're not ever forcing yourself to just sit down and write, because obviously I'm sure you won't enjoy that. People won't enjoy reading it.


Luke Gromen:

Yeah. It's almost like the sports... Is let the game come to you. And I try to let the game come to me. There are things that I know. And the thing I'm doing is I'm always reading. I read, and I love to read, I'm reading a lot. And so I've equated myself in the past to being like the catfish down at the bottom of the big river. I'm just waiting for the right piece of information to float down to me. And it's doing all the work ahead of time so that when the play happens, and the fumble is there, boom, you're in the position. And so the right piece of information pops up or something happens, and it's like, "Oh, I've got something interesting to say about that, and this is important."


Luke Gromen:

And sometimes it's, gosh, I know ahead of time I'm going to write about this. And there's times where ideas come in, and I've already got something for that week, so I jot something down and I put it for the next week, and some of them are time sensitive, some of them are not. There there've been weeks where I have a full report done Wednesday, and something happens Thursday morning, and it's like, "This has to get put aside. This has to get written about." And then it's mad scramble four or six hours to get it together, put it together, get it to compliance, and get it back, and get it out. But that's been the process.


Daniel Scrivner:

It looks much more graceful than that from the outside looking in.


Luke Gromen:

It's like the duck. I always say I'm like the duck. Then tell my boys be like the duck right. Where you're nice and calm on the surface and you're paddling like hell underneath.


Daniel Scrivner:

Yeah. It's a lot going on. On that note, I mean, I know that you're a voracious reader, so I'm going to ask a dual question. One, what books have you read recently that are interesting. And this could also be a book you read a year ago that you just are still thinking about, or still recommending to people. But I think one would be books. And then another one would be just with somebody who publishes your own research, what research do you like to read?


Luke Gromen:

I like anything Grant Williams writes or reads, writes or puts out. I read a lot of transcripts from The Investor's Podcast, transcripts from Real Vision, transcripts from Macro Voices. Anything I can see that Kiril Sokoloff at 13D writes, I read. I'm trying to think of some other authors off the top. There's so many good minds. I try to read good minds, and then I try to read things that I think are interesting topics regardless of who it is. Because part of what I like to do is understand both things that I'm interested in, and also people that have the opposite view of me. Is I want to know their view better than they do because then I won't miss something on my side. There's several names there, but I gosh, I could go on and on. There's so many thoughtful people that I feel bad about.


Daniel Scrivner:

Well, those are great ones. I mean Grant Williams and Kiril Sokoloff at 13D. Yeah. I subscribed to his research for quite a while, and that was very unique in that it's a very different perspective, and it's very broad. And it was very different, I just feel like it's refreshing when you feel like you spend an enormous amount of time reading, I don't know, tactical micro details like what happened this quarter, or what did this company do? It's really refreshing to... I go super meta and broad and Kiril does an amazing job at that.


Luke Gromen:

Absolutely. Absolutely.


Daniel Scrivner:

So we'll link to those in the show notes as well too, for anyone that hasn't discovered their works you can find it. One question that we always ask everyone around is for a favorite failure. And what we are trying to get at with that question is, I think success is very celebrated, failure is something that's very important and yet almost no one talks about it, especially successful people. So one, I think, just making it a more common thing that we talk about and reflect on. But what we're really trying to get at there is I think throughout life, you try these things. Some of them work, some of them don't. And some of the things that don't work are an amazing blessing, because you learn something, propels you in a different or a better direction. Does that resonate with you, and is there anything you think about when you think about a favorite failure?


Luke Gromen:

Favorite failure. Yeah. It would probably have to be architecture school. When I graduated from high school, I was going to be an architect. So that's why I actually went to the University of Cincinnati, originally, is they had one of the top five architecture schools in the country. I think they still do. And I got into the architecture school and went to be an architect. And about six weeks into it I knew I did not want to be an architect for the rest of my life. So I went home and I told my parents, and my dad wrote me this great letter. And I was scared to death of like, "Hey, I'm six weeks into college, and don't screw this up." And now I want to transfer. I just felt like this utter failure because I was an Eagle Scout. I didn't quit. I was an Eagle Scout, soccer player, football, [inaudible 01:11:17] high jump, I didn't quit. I didn't fail.


Luke Gromen:

And so sort of that perseverance superpower was potentially going to work against me because now the perseverance side is saying, "Well, no, no, you started this, you got to finish this." But if I hate it, I'm going to be setting myself back. I'm not going to be doing it as well. I'm not going to be doing anybody favors being an architect who hates architecture. And luckily I did have the foresight when I went to Cincinnati to say, "Hey, they've got a good engineering program, really good engineering program, really good business school, and those would be two of the next things I would think if I didn't happen to like architecture." And walking through the hall all one day in the architecture school, once I made my decision and ran through it by my parents, they said, "Look, maybe it's just the workload, give it a quarter, and then if you still don't like it, you start looking at transferring."


Luke Gromen:

And so I did. I gave myself that span of time. And I saw an advertisement for AT&T Investment Challenge, where you'd manage a $500,000 fictional portfolio contest. And I just knew, I said, "I want to do something involved with that." And so I went to business college and transferred, and began co-oping with Roulston and company in 1995, and through the University of Cincinnati. And so it's incredible. Basically not wanting to be an architect and my girlfriend at the time, actually my wife now, she was very instrumental where she said, "Listen, stop being so hardheaded. This isn't about perseverance. This is not about quitting. This is your life. What do you want to do? And do you want to do this? Yes or no."


Luke Gromen:

It was unequivocally, no. And so once you establish that, once I established that it was so freeing because you're like, "Okay. I know I don't want to do this. I want to do that." Went to the business college, excelled, got great grades, loved it, co-op loved it. And then here we are 25 years later having the time of my life.


Daniel Scrivner:

It's fascinating story. And I love just that you called out that, you have this background where you never don't finish something that you say you're going to do, and you never don't persist. Meaning if it's not snapping into place now, you just keep going after it until it snaps into place. And suddenly finding yourself in a position where all of that advice is terrible. That would've been the worst thing to do.


Luke Gromen:

It's the wrong advice. So it goes against every fiber in my body. So yeah, it was really challenging at the right time. You can always tell when you make a good decision in my view, because when you make a right decision or you make a change, it's amazing how much things just flow. And it totally really flowed after, so I could tell it was the right decision, and clearly it's definitely been the right decision.


Daniel Scrivner:

Man, to think about Luke Gromen the architect instead of the analyst.


Luke Gromen:

No one would want to do that. I have a good friend of mine who is one of my dearest friends in the world. He was, I think, one of the best, highest GPAs in Cincinnati architecture ever. And he is wildly successful architect in the Southeast US. And we joke about that all the time. He was going, "Oh my God, you'd have been so bad." I said, "You'd hired me though."


Daniel Scrivner:

On the flip side of that, around success what does success mean to you now, and how has that changed over time? And I think what we're trying to get at there is similarly with success, it's not really fixed. You're at a point like you talked about where your kids are starting to leave, basically move on, and have lives of their own, going outside the house. There's a lot going on. How does that change? How has that shaped the way you think about success now?


Luke Gromen:

I think it changes as you age in my experience. And what I mean by that is when I was in college, I remember wanting to make X dollars a month, and X dollars a year. And I wanted that car, and then I wanted that house, and I wanted to be... It was very much in your 20s and your early 30s. It's almost like about showing up the bully. Rolling up to the high school reunion and-


Daniel Scrivner:

Like outcome driven, like very focused on this thing.


Luke Gromen:

Yeah. Very materialistically outcome driven. I want to make this much money, this car, and so on. And what I've found is that at least for me, as I've gotten older, it's been less about the stuff, and then it starts to morph into the experiences. I want to travel here. I want to be there with my kids. I want to take my wife here. And what I'm finding as I even move on from... And not even move on from there because I think that's a permanent thing, is it gets even more simplified to freedom. Right now I am free to go here, go there, afford this if I want it, afford that if I want it. I can make these opportunities available to my children. I can stop working at two o'clock tomorrow if I want, and go drink beer all afternoon. That's okay. I probably can't do that every day, but just that freedom to do what I want, when I want, and have that level of personal professional financial. I jokingly said to a buddy, "It's not fuck you money, but it's fuck you for a little while money."


Daniel Scrivner:

It sounds a little bit more achievable.


Luke Gromen:

Right. And it's just that translation of just that freedom to do what you love, with who you love, when you would love to do it.


Daniel Scrivner:

Yeah. I've thought about that and heard that talked about in the vein of, and it's a weird word, but sovereign. Just like you want to be in charge of yourself, and the decisions you make, and what you're able to do with your time, and I relate a lot to that.


Luke Gromen:

Yes. 100%. That's a great word for it.


Daniel Scrivner:

Last question. You're somebody that obviously spent an incredible amount of time studying the markets, studying great investors, being around, getting to spend time with wonderful, brilliant people like Grant Williams and Simon Mikhailovich who we've had on the podcast before. What is your favorite piece of investing advice or wisdom?


Luke Gromen:

I think it's a combination of knowing what your edge is, position sizing, making sure you have the right position size. But then I think also a combination of those two, and this is something Stanley Druckenmiller and Soros talked about. When you know you who have an edge push the advantage. I would say those are probably...


Daniel Scrivner:

I love those. Those are great. I think those are great, especially when you stack those together. Because I feel like it's almost starts to put together a formula for success. Know what you're good at, understand how to size that correctly, and then when you see you have an amazing opportunity, make sure you don't undersize it, it's maybe another...


Luke Gromen:

That's a very good way of putting it.


Daniel Scrivner:

I think as Soros said, you need to know when to be a pig or something like that, when to be pig.


Luke Gromen:

Yeah. Something to that effect, but I think [crosstalk 01:17:23].


Daniel Scrivner:

It's a little bit more colorful. So I know people can find you on Twitter, and I highly recommend anyone that's following you follow you. I really enjoy just the stuff that you share. People can find you on Twitter at Luke Gromen, G-R-O-M-E-N. And people can also find your research service, the Forest for the Trees at FFTT-llc.com. Thank you so much for the time. This has been such a delight.


Luke Gromen:

Thanks for having me on, Daniel. It was great talking with you.






On Outlier Academy, Daniel Scrivner explores the tactics, routines, and habits of world-class performers working at the edge—in business, investing, entertainment, and more. In each episode, he decodes what they've mastered and what they've learned along the way. Start learning from the world’s best today. 

Explore all episodes of Outlier Academy, be the first to hear about new episodes, and subscribe on your favorite podcast platform.

Daniel Scrivner and Mighty Publishing LLC own the copyright in and to all content in and transcripts of the Outlier Academy podcast, with all rights reserved, including Daniel’s right of publicity.

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