"Corporations are going to respond to incentives. And you can go all the way back to Adam Smith and the Wealth of Nations and the idea of capitalism. You want people pursuing profit to do that in a way that is also good for the society. Where I think a lot of economists, and this is left and right of center, got it wrong was to think that's just always the case. As long as they're pursuing profit, it's going to be good. And it's going to be good it it's within certain constraints."

— Oren Cass, Chief Economist at American Compass, The Daily Show, April 1, 2025

Digital Zeros and Human Folly: Lessons from Sowell's Investment Cafe with Jason Hsu 

On this particular Friday, Jason Hsu's vocal cords were nearly out of commission—laryngitis had him whispering through sentences punctuated by dry wit and half-grins. But his ideas? Loud and clear.

What started as a casual team lunch turned into a masterclass in behavioral finance, macroeconomics, and the future of investing. Hsu, Founder of Rayliant and Chief Economist for East West Bank turned trade wars, inflation, and passive investing into a captivating narrative. Equal parts professor, stand-up comic, and philosopher, he left the room nodding, laughing, and thinking twice about logging into their brokerage accounts.

The Real Power of Doing Nothing

"The best investors?" Hsu began. "They forgot their passwords."

He was dead serious. In fact, data from Schwab and others show the top-performing accounts often belong to those who forgot they had them—literally. No trades, no panic-selling, no rebalancing every time the market hiccupped. Just time in the market.

He compared this to the worst cohort: male doctors. Smart, accomplished, and wildly confident—too confident. "A little knowledge is a dangerous thing," he quipped. These are the investors who think they can beat the market. Spoiler: they rarely do.

Hsu didn't just make it personal; he made it universal. We live in a world that rewards activity. Work more hours, get promoted. Study harder, score higher. But investing flips that logic on its head. "The more you try, the worse you do," he said. "And that's why most people need an advisor: to protect them from themselves."

The Illusion of Control

The most striking metaphor of the day came not from finance but from optics. Hsu pulled up an image of a red Coca-Cola can. Zoom in, pixel by pixel, and there is no red—only black, white, and green dots. The human brain fills in the gaps. It wants to see red, just as it wants to see patterns in stock charts and headlines.

"Behavioral bias isn't a bug. It's the default," he said. The investor's mind sees what it wants to see. Confirmation bias, recency bias, and loss aversion are not just terms from a textbook; they're the invisible hands pushing you to make bad decisions.

And that's where the role of quant investing comes in. Not to replace human advisors but to give them tools to counter human error. Data doesn't lie, Hsu said, but people can certainly lie with data. It takes integrity to wield it wisely.

Tariffs, Trade Deficits, and the Art of De-Escalation

Hsu framed tariffs not as serious economic policy but as strategic tools. "We don't manufacture goods; we manufacture digital zeros," he said. The U.S. exports its currency and imports the world's labor. Other countries send us phones, clothes, and oil. We send them... IOUs.

So when a trade war brews, it's often a tactic to get someone to the negotiating table. "We threaten tariffs not to hurt others, but to bring them to the table. What do they need to buy from the U.S.? How much do they need to invest here to make it go away?"

He noted that this approach shifts global dynamics away from ideological standoffs and into dealmaking. "We no longer say, 'We're democracies, they're not.' We just say: trade deficit, trade deficit."

By treating trade more like business than moral combat, Hsu believes the U.S. is de-escalating the risk of hot wars and focusing instead on transactional compromise. It may rattle markets in the short term, but it might also create paths to long-term stability.

The Two-Option World

One of Hsu's most recurring themes is the fantasy of the third option: high returns, no risk. It doesn't exist.

"You can have high return with high risk, or low return with low risk. That's it. Option three? That's how people lose money."

He tells this to institutional clients and retail investors alike. The difference? Institutions accept the truth. Retail investors want to believe in magic. Advisors, he argued, are in the business of truth-telling. Of helping people avoid the seductive promise of option three.

The Noble Profession

"This work isn't complex," he said. "It's noble."

Advisors don't need to have a crystal ball. What they need is the wisdom to guide clients through uncertainty. That means keeping them from selling at the bottom, reminding them that staying the course beats chasing trends and showing them the value of patience in a world addicted to instant gratification.

As Daryl Seaton put it later, "We don't need to do anything right now. If we did our job right, our clients are already positioned where they should be."

The Rise of AI and the Fall of Mentorship?

Toward the end, the conversation turned to AI. Hsu had strong praise and a quiet warning. AI, he said, is revolutionizing industries from law to medicine. But there's a cost: we're removing the ladder.

Junior lawyers, consultants, and analysts used to learn by doing grunt work. Now, AI does it faster and better. That's great for margins, but it's not so great for mentorship.

"If there's no junior generation learning the ropes, where does the next generation of leaders come from?"

AI, he says, is a phenomenal assistant. But without a human to guide and contextualize, we risk losing the depth that comes from real experience.

Bringing It Home

In the end, what stood out most wasn't the depth of knowledge, though there was plenty. It was the clarity. The ability to distill dizzying complexity into something memorable, something sticky. Like this:

"The fastest way to make a million dollars? Start with two."

Jason Hsu isn't interested in making investing sound easy. He's interested in making it real. For a team of advisors committed to doing right by their clients, it was a timely reminder of both the science and soul of this business.

Or, as Hsu put it: "Everyone wants to get rich fast. But no one wants to get rich slow. The other option? Get poor fast."