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Speaker 1: Welcome to Trillions. I'm Joel Webber and I am Eric

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Speaker 1: bel Tunis. We're still talking with Barry rid Holes because

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Speaker 1: we couldn't stop. The first ever double episode or double

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Speaker 1: album of this podcast if you've just joined. He runs

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Speaker 1: rid Holts Wealth Management. It's an advisor, heavy et F

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Speaker 1: user and also a Bloomberg Opinion calumnist. And yeah, and

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Speaker 1: big guy on Twitter. You know a lot of people

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Speaker 1: know this guy. He's phenomenal and we were so fascinated

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Speaker 1: by him. We just kept going. You left, you have

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Speaker 1: to walk away. I know I had a hard stop.

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Speaker 1: You like to stay, that's your favorite term, and I

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Speaker 1: had to go. But Barry was just in it. Well,

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Speaker 1: he wasn't done, you could tell, and so you took

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Speaker 1: one for the team. You stayed with him and talk

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Speaker 1: for another forty five minutes. It was it was longer.

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Speaker 1: We had to edit it down. Uh. And you know

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Speaker 1: the best part about talking with Barry is just that

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Speaker 1: he's he's a fabulous interview and of you were so

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Speaker 1: that was we just kept It was like we brought

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Speaker 1: out a couch and he laid down on the couch

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Speaker 1: and we just kept going. Yeah, you can tell talking

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Speaker 1: to him that he's thought about most everything. So here's

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Speaker 1: this equel use your disillusions too with Barry Ridthholtz. So

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Speaker 1: you've done twos interviews for Masters of Business. What do

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Speaker 1: you think are that things that you've really learned? That

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Speaker 1: the things that made you go ah ha, what are those?

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Speaker 1: There's a handful of things that continue to surprise me.

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Speaker 1: Um and I think at this point I'm a pretty

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Speaker 1: good read it when people are just b SNG for spin.

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Speaker 1: So first, the role of luck in successful people's lives.

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Speaker 1: This isn't false humility. This is when you have people

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Speaker 1: like Leon Kooperman and Howard Marks and Ray Dalio say,

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Speaker 1: you know, it helps to be smart, but you gotta

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Speaker 1: get lucky. I've heard that over and over and over

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Speaker 1: again from people. But how do you how do you

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Speaker 1: think people get lucky? Well, there's an old line about

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Speaker 1: luck is what preparation meets opportunity, and there's a lot

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Speaker 1: of that that's absolutely true. And I think if you're

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Speaker 1: born to middle class parents in the United States and

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Speaker 1: the latter half post war era, you're lucky. You're ahead

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Speaker 1: of you guess what you were born on third base?

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Speaker 1: You got your your head of eighty or maybe the

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Speaker 1: rest of the world's population. I was born in Brooklyn,

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Speaker 1: I lived outside either in New York or outside of

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Speaker 1: New York my whole life. That's a huge bit of

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Speaker 1: luck for me, and somehow I wander into finance. That's

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Speaker 1: tremendously lucky. When you when you when when Ray Dalio

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Speaker 1: talks about that, when, um, I'm just going down the list.

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Speaker 1: When Cliff Astenest talks about serendipity, When when people like

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Speaker 1: that say, hey, you know, I know I did well

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Speaker 1: in school. Um, well, sometimes there's there's just fortuity. I

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Speaker 1: don't know how you make yourself lucky. But but when

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Speaker 1: and when Nobel Laureates say that, When when Richard Faylor

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Speaker 1: or Danny Kahneman or Robert Schiller says it helps to

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Speaker 1: be lucky, you don't dismiss. So that's that's one thing.

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Speaker 1: The second thing is is how many people are willing

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Speaker 1: to say I was wrong. I got this wrong, and

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Speaker 1: I realized I had to make a change otherwise I

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Speaker 1: was I was in trouble. The ability to be have

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Speaker 1: some humility and put your ego aside and recognize the

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Speaker 1: real world um is another theme that comes up over

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Speaker 1: and over again. I'm impressed how often And I've added

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Speaker 1: that as a standard question on the podcast. Hey tell

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Speaker 1: us about a time you failed and what you learned

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Speaker 1: from it? Oh god, Um, so I have a lot

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Speaker 1: of failures. Um I uh, I'm I tend to be

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Speaker 1: dismissive of of people. I I sometimes get frustrated when

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Speaker 1: I'm trying to explain something that's obvious to me. How

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Speaker 1: do you not understand this? Mark Andreas, and I'm dropping

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Speaker 1: names left and right, keep going. Mark and Reason tells

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Speaker 1: the story that their favorite investors are the guys who

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Speaker 1: they like peppering with questions, peppering with question and these

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Speaker 1: guys are getting frustrated. Hey man, you're supposed to be smart,

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Speaker 1: You're Marked and Reason. How do you not understand this?

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Speaker 1: He tells that story like you could see. These guys

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Speaker 1: are just they've thought it out so well, and it's

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Speaker 1: such a deep part of who they are. They're frustrated

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Speaker 1: that that he the venture capitalist, doesn't get it. And

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Speaker 1: he tells the story. It's very charming. He speaks even

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Speaker 1: faster than I do. Um. I love that story because

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Speaker 1: I totally relate to that, And sometimes I'm frustrated this

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Speaker 1: is obvious how do you not get that? So that's

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Speaker 1: a really terrible, UM personal habit. I think that's a

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Speaker 1: big failure that I've been working on. UM. There have

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Speaker 1: been decisions I've made over the years that I look

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Speaker 1: back and I just, oh, my god, how did I

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Speaker 1: make that decision that was so terrible? UM. I think

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Speaker 1: a strength is your ability to recognize error and reverse yourself.

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Speaker 1: So I'm pretty agnostic. As as much UM as this

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Speaker 1: room can barely contain my my oversized sense of self,

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Speaker 1: I am very comfortable admitting error and saying we have

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Speaker 1: to fix this, this is a mistake. There are a

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Speaker 1: bunch of of errors that are just way too embarrassing

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Speaker 1: to even bring up. But trust me when I say

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Speaker 1: I've made lots of errors. I've made lots of failures.

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Speaker 1: That my my favorite part about failing is new ones,

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Speaker 1: Like I try not to repeat the same errors. I'll

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Speaker 1: let all right, we've done that. Let's make a different

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Speaker 1: mistake and see what we can learn from that. I

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Speaker 1: think that's a healthy philosophy. What's a challenge that you're

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Speaker 1: wrestling with right now? That's an interesting question. So anytime

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Speaker 1: you're looking at the future, anytime you're trying to figure out, UM,

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Speaker 1: what you want to be in what your company wants

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Speaker 1: to be. You're kind of projecting and extrapolating out, but

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Speaker 1: really beyond a quarter or two, everything gets really really fuzzy.

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Speaker 1: And so you don't know what the economy is going

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Speaker 1: to do. You don't know what the mark is gonna do.

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Speaker 1: You don't know what sort of scandal is going to

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Speaker 1: come along that either helps or hurts your underlying business

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Speaker 1: or news event or whatever. And so I'm I'm wrestling

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Speaker 1: with So we've been growing really rapidly. We started with

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Speaker 1: with five people and ninety million dollars. It's now ten

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Speaker 1: x on the assets and five x on the people,

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Speaker 1: and I wonder at what point do we like have

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Speaker 1: to throttle back? Uh. I did an interview with Ken Fisher,

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Speaker 1: who who's fascinating guy runs a hundred billion dollars probably

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Speaker 1: the most successful r i A in the contrary and UM,

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Speaker 1: and our farm is also on our I A. When

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Speaker 1: when Eric says you're an advisor, I interpret that as

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Speaker 1: you you manage a registered investment advisory. So when we

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Speaker 1: UM when I had a conversation with him, he's like,

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Speaker 1: you guys are about to be a billion dollars. You're

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Speaker 1: about to be five years old. Suddenly everybody who has

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Speaker 1: those restrictions they come off, and there's a different group

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Speaker 1: of people who are waiting in the wings to talk

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Speaker 1: to you, but have been unable to buy their own

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Speaker 1: by laws. What are you talking about, Kenna, I know

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Speaker 1: of no such thing like that, So I hope he's right,

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Speaker 1: But that's going to be an interesting challenge when when

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Speaker 1: we get to that. So I have like an imaginary

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Speaker 1: pool of water that you just kind of like eventually

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Speaker 1: wait into. You know, institutional is a very different business

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Speaker 1: than high net worth and families and or even you know,

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Speaker 1: UM modest net worth on the on the robo side,

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Speaker 1: on the on the lift off is are are automated

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Speaker 1: UM investor. It's a very different arc of conversation. When

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Speaker 1: most people come to us, they know who I am,

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Speaker 1: they know Josh, they know Ben. You know, it's always

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Speaker 1: one of the guys in the office was telling a

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Speaker 1: story that they're they're speaking to somebody and the person says,

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Speaker 1: you know, I was reading bat Nick the other day

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Speaker 1: and it's like, wait, we call him Batnick? How are

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Speaker 1: you calling him Batnick? So it's it's it's that's a

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Speaker 1: very different interaction than writing up responding to an RFP

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Speaker 1: for an uh an investing statement and what does the

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Speaker 1: portfolio look like and what does the cost structure look like? Bloah.

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Speaker 1: So I think that's a really interesting side of the

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Speaker 1: business that I don't want to say we've neglected. We

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Speaker 1: just haven't focused our attentions on it because we've been

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Speaker 1: busy with everything else. I'm kind of fascinated by that

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Speaker 1: and somewhat concerned, Hey, is this something we could bite off?

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Speaker 1: Do we have the skill set, do we have the personnel?

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Speaker 1: Do we have the intellectual child ups to play in

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Speaker 1: those waters? I think we do, or can easily shore

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Speaker 1: them up with one or two highers. But to me,

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Speaker 1: if if Eric is right about hey, is this active

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Speaker 1: to passive transition taking place on the institutional side. I

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Speaker 1: think it is. And whether we can and swim in

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Speaker 1: the that ponds time will tell. But that's something I'm

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Speaker 1: I'm really thinking about and kind of fascinated by. What

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Speaker 1: do you think you need to swim in it? I

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Speaker 1: think you need a multi year Gibbs track record. I

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Speaker 1: think you need a number of I hate the word products,

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Speaker 1: but a number of institutionally focused products that are more

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Speaker 1: than simply plane jane Um indices. We never want to

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Speaker 1: try and sell performance to people because then I think

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Speaker 1: that's the worst side of the business. Because every you

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Speaker 1: look at the turn rate at a lot of active shops,

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Speaker 1: and I don't mean giant active shops, I mean any decent,

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Speaker 1: well regarded shop with a relatively good track record that

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Speaker 1: is the least sticky money that money moves. I'll give

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Speaker 1: you a perfect example. I won't mention the name because

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Speaker 1: I don't want to embarrass anybody, because I think they're right. Also,

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Speaker 1: that's why I don't want to embrass them. So value

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Speaker 1: has significantly underperformed growth for most of the past decade.

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Speaker 1: Value typically goes through these long periods of time where

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Speaker 1: it underperforms growth, but over over longer periods of time,

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Speaker 1: value actually significantly outperforms growth, not by a small margin,

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Speaker 1: by a nice junk of of performance. So if you're

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Speaker 1: a value shop with a great long term track record

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Speaker 1: and your past five years you've you've lagged by a

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Speaker 1: percent or three, I'm amazed how money flies out of

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Speaker 1: there um and and when you see these outflows, you

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Speaker 1: know that's the net outflow. You're not seeing the full churn.

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Speaker 1: A lot of these firms are adding ten billion dollars

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Speaker 1: as they lose eleven billion dollars, so they're seeing a

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Speaker 1: billion in and and outflows, but really it's a multiple of

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Speaker 1: that because of that gurn rate. And I'm I'm just

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Speaker 1: astonished at you know, what have you done for me? Lately?

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Speaker 1: Seems to be the institutional active theme And what a

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Speaker 1: surprise that there is a move too passive, because you know,

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Speaker 1: West Gray at Alpha Architect wrote a wonderful piece. I

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Speaker 1: think Jack Vogel or one of his other guys um

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Speaker 1: was on this. Even God would get fired as an

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Speaker 1: active manager because God, with a perfect knowledge and omniscience

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Speaker 1: of what various factors, what various attributes of a portfolio

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Speaker 1: are Gonnau perform still means you go through an occasional

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Speaker 1: down draft when you When you look at Amazon and

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Speaker 1: Netflix and Apple, all of them have suffered, and Google

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Speaker 1: for that matter, draw downs multiple times in their history.

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Speaker 1: So it doesn't matter how good a manager you are.

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Speaker 1: If you're long Apple, if you're long Google, if you're

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Speaker 1: along Netflix and it's down, your clients are screaming at you.

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Speaker 1: Despite the fact that Hey, I'm omniscient. I'm telling you

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Speaker 1: Apple is going to be the biggest market cap in

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Speaker 1: the world. Google is going to be right behind it. Netflix, Flixes,

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Speaker 1: and Amazon are gonna grow. Just ride it out. You're fired.

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Speaker 1: Would you pick that guy up? Oh? God, as a

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Speaker 1: portfolio manager? Um, as long as we get a fair

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Speaker 1: few negotiation, I'll put him on stamp. What's that top

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Speaker 1: line of his resume? It looks like it just says God.

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Speaker 1: It's one word resume, God, God? Do you really need

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Speaker 1: more than that created the heavens in the earth? No,

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Speaker 1: you don't need a what's this little thing about the flood?

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Speaker 1: Can we have a conversation refined print on that one?

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Speaker 1: I I don't think so. But it's called the Bible.

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Speaker 1: So another kind of meta question for you. When you

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Speaker 1: look at what you do, how you use et f s,

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Speaker 1: how you manage people's money, what do you think could

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Speaker 1: disrupt you? Well, you know, there's an inevitable market crash

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Speaker 1: out there. It's somewhere off in the future, and hopefully

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Speaker 1: the day before we don't say something like I don't

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Speaker 1: see your market crash coming for years and let's let's

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Speaker 1: we're gonna introduce leveraging options. We want we want everybody

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Speaker 1: fully right fully taking a vent. So other than like

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Speaker 1: an unforced, really stupid error like that. Uh, you know,

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Speaker 1: the next recession is going to be a challenge. Trump

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Speaker 1: is continually a challenge, not just because our clients are

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Speaker 1: left of center or right of center, whatever. It's just

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Speaker 1: a random element that people have a hard time dealing with.

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Speaker 1: I am constantly having the argument that you have to

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Speaker 1: separate the you know, the hand waving noise, the old

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Speaker 1: cap tweets, anything that doesn't impact discounted cash flow, profits

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Speaker 1: and revenue, um, you have to ignore. So now we're

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Speaker 1: not going to war with I ran that's a Russia distraction. No,

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Speaker 1: we're not. He not well, if he fires Mueller or not,

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Speaker 1: he'll have to deal with the repercussions of it. But

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Speaker 1: none of that impacts profits. Trade war and tariffs, even

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Speaker 1: though we've been told they're easy to win, it turns

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Speaker 1: out that may not actually be true. And my worst

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Speaker 1: case scenario is, and I'm on record saying ignore the

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Speaker 1: president until he does something really stupid, because most of

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Speaker 1: this is noise that doesn't matter. This is the first

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Speaker 1: you know, the camel's nose under the tent. This is

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Speaker 1: the first entry to all Right, you've said and done

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Speaker 1: a number of things that are sort of shocking and unprecedented.

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Speaker 1: Let's just say it's not business as usual in d C.

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Speaker 1: Because you're draining the swamp and all that other fun stuff.

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Speaker 1: This is the first thing that you look at, even

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Speaker 1: the tax cuts, which every analysis of them have said,

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Speaker 1: this is not a well crafted tax reform, but hey,

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Speaker 1: it's a couple of trillion dollars. And by the way,

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Speaker 1: clients hate one. I say this. I know you may

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Speaker 1: not be the biggest fan of especially if you live

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Speaker 1: in a blue state and you lost your state and

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Speaker 1: local taxes. So we have a lot of clients in

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Speaker 1: California and New York and and Oregon and and um uh, Connecticut.

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Speaker 1: We don't you know, people in debt Texas and people

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Speaker 1: in Florida. They don't have to worry about that. But

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Speaker 1: it's just still a couple of trillion dollars. And yeah,

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Speaker 1: it's bad for the deficit, blah blah blah, but give

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Speaker 1: me a trillion dollars, I'll throw you a hell of

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Speaker 1: a party. Someone much smarter than me once said, this

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Speaker 1: is the first thing that this administration has done that

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Speaker 1: you could see the immediate effect in the economic data.

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Speaker 1: We're starting to see the push through for inflation, and

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Speaker 1: that could lead to a series of dominoes that has

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Speaker 1: a very negative consequence for the stock mark. Can we

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Speaker 1: talk more about that inflation? Like, I mean, that has

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Speaker 1: been such a theme for so long, Like, I mean,

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Speaker 1: that's basically what hedge funds have lost their low INFLA

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Speaker 1: as lower for longer has been. I've been in that camp.

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Speaker 1: And yet you know, as interest rates start to end

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Speaker 1: up a little bit, we start to maybe enter a

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Speaker 1: world where that debt that we're all looking at gets

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Speaker 1: a lot more expensive. Because sure, that's a big issue.

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Speaker 1: So although I don't think it's the apocalyptic issue that

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Speaker 1: the the the faux deficit hawks have have pretended. So

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Speaker 1: play this out with me, like, what how much longer

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Speaker 1: can it stay low? And what does that end game

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Speaker 1: look like for us as investors? So to me, the

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Speaker 1: biggest two variables in inflation are commodities highly dependent on

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Speaker 1: the dollar, and wages. We've started to see wages tick

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Speaker 1: up on the endpoints of the wage distribution curve. So

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Speaker 1: we've seen a number of states and cities raise the

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Speaker 1: minimum wage that's ticked up if you're a Walmart, a Starbucks,

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Speaker 1: a Target. You've raised wages at a number of other

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Speaker 1: companies just because there aren't enough bodies and people who

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Speaker 1: used to get hired who were perhaps not here fully illegally,

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Speaker 1: that that labor pool has gone away. So that's a

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Speaker 1: very sort of um that tends the non legal immigrants

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Speaker 1: tend to be a cash business, so we're not seeing

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Speaker 1: that in the data, and they tend to be low

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Speaker 1: age workers taking jobs that Americans Americans don't want to

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Speaker 1: wash dishes or pick tomatoes or any of the other

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Speaker 1: or working Trump's kitchens. Right, So so you end up

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Speaker 1: with that hasn't had a wage and impact, hasn't an

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Speaker 1: inflation impact, either officially or unofficially. But when we look

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Speaker 1: at the tariffs and we look at so we've seen

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Speaker 1: some wages go up. On the low end, we've seen, uh,

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Speaker 1: the unemployment rate went up, but for the right reasons,

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Speaker 1: more people coming back into the labor force. We like that.

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Speaker 1: On the high end, you've seen the STEM jobs science, technology, engineering, math,

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Speaker 1: and of course anything involving technology, coding, software, whatever. But

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Speaker 1: those have consistently been well paying jobs with good benefits.

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Speaker 1: And stock options and what have you. But those continue

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Speaker 1: to rise. When you see the rent costs in places

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Speaker 1: like San Francisco, that's just telling you the tech world

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Speaker 1: is booming. And until the tech world stops booming, those

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Speaker 1: rents are going to continue to stay high. Uh So,

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Speaker 1: it's very regional. It depends on the industry, it depends

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Speaker 1: on the region, It depends on your education level, how

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Speaker 1: much your wages are going up. But now we're starting

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Speaker 1: to see um so that's not a big inflationary issue wages.

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Speaker 1: But when we look at commodities, what is half the

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Speaker 1: cost of car cars medals? What was selling sixteen seventeen

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Speaker 1: million cars a year and exporting a bunch and importing

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Speaker 1: a bunch. That's potentially problematic. You look at what happened

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Speaker 1: with Harley Davidson, You look at some of the appliance companies,

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Speaker 1: so Whirlpool and who else said something. Uh GM GM

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Speaker 1: basically had decent numbers, but said perspectively, we see this

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Speaker 1: is right. We see this as a problem. This is

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Speaker 1: gonna affect our our sales, this is gonna affect our profits.

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Speaker 1: The tariffs are really problematic for us. So you end

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Speaker 1: up with you know, if you want to call it

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Speaker 1: self inflicted wounds or unforced there. That's before we get

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Speaker 1: to this insanity of using a depression era um, a

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Speaker 1: depression era a law to send twelve billion dollars to farmers.

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Speaker 1: How about this, let's not have a trade war. I

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Speaker 1: know it's I know that's a radical view. I know

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Speaker 1: that's crazy, but it seems ridiculous to say, all right,

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Speaker 1: we're gonna have an eighteen billion dollar export tariff and

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Speaker 1: we're gonna give you twelve billion dollars of it. Why

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Speaker 1: are the taxpayers funding tariffs for one sector just farms?

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Speaker 1: What about the manufacturers? What about the people who who

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Speaker 1: are are writing software? What about Apple and and that

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Speaker 1: sector that's gonna suffer from from these tariffs. It just

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Speaker 1: seems that, you know, if it ain't broke, don't fix it.

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Speaker 1: I know everybody in the White House seems to think

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Speaker 1: that the United States is on the losing ends of

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Speaker 1: of the world trade. When you break that down in

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Speaker 1: specific details, that's true for people with less education, less skills,

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Speaker 1: in certain geographies in the country, in certain industries. So

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Speaker 1: maybe rather than take twelve billion dollars and give it

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Speaker 1: to farmers, which essentially is you're giving it to China.

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Speaker 1: Why don't we do what smart countries around the world,

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Speaker 1: like Germany have done, and say for the people that

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Speaker 1: global international trade which has helped keep global peace and

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Speaker 1: helped boost the economy around the world, Let's do what

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Speaker 1: they do and train these people to get the skills

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Speaker 1: to get into better paying jobs. If you were if

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Speaker 1: you used to make socks at a mill in North Carolina,

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Speaker 1: I'm sorry, but that's a very low cost industry that's

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Speaker 1: moved elsewhere. Yet Americans are not very good at having

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Speaker 1: that conversation. Um, well, it depends do we want to

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Speaker 1: be realistic and do we want to be adults or

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Speaker 1: do we just want to yell at our perceived enemies. Yeah,

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Speaker 1: but the it's easy to do that until inflation comes

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Speaker 1: up and the Fed titans and we have a recession

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Speaker 1: wholly unforced error. And the unforced error, I'm guessing if

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Speaker 1: you went to masters of business, that would be one

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Speaker 1: of the things that they would say that they would

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Speaker 1: try to avoid our unforced airs. You know I have

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Speaker 1: I don't ask that question. I asked you know who

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Speaker 1: your mentors? What are you reading? Tell us your favorite books? Um,

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Speaker 1: what what's the you know, what's the thing that most

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Speaker 1: people don't know about you but should like questions like that,

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Speaker 1: this is such a specific question to such a specific

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Speaker 1: set of policy things that it's shocking. And you know,

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Speaker 1: the outraged cycle has just exhausted everybody, so you're not

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Speaker 1: getting the intelligent debate. You know. I used to call

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Speaker 1: myself a Jacob Javits Republican growing up in New York.

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Speaker 1: Here's a guy who was against the war in Vietnam,

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Speaker 1: was against unfunded spending, and that includes um, that includes

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Speaker 1: entitlements and tax cuts. But believe the government shouldn't be

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Speaker 1: in the bedroom. The government had nothing, no business saying

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Speaker 1: who could get married, whether you can use birth control,

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Speaker 1: abortion rights, etcetera. And I thought, oh, that makes a

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Speaker 1: lot of sense. And around twenty years ago, the Republicans

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Speaker 1: just made a hard tack to the right and left

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Speaker 1: rationality behind. And it took a long time for a

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Speaker 1: lot of mainstream Republicans to sort of bolts. You look

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Speaker 1: at guys like uh Rick Wilson or Bill Crystal at

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Speaker 1: the end, r oh, they are a National Review, They're

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Speaker 1: not They're Reagan Republicans. They're not Trump Republicans. And under

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Speaker 1: Bush you had people like Bruce Bartlett, who was in

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Speaker 1: the Reagan administration on the Bush administration saying I don't

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Speaker 1: recognize the Republican Party, and a lot of people thought,

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Speaker 1: come on, Bruce, you're being a little you're exaggerating a

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Speaker 1: little bit. Turns out he was right, and he identified

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Speaker 1: a schism before the cracks were visible and the House

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Speaker 1: started to fall apart. The adults in charge of the

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Speaker 1: Republican Party just can't seem to bring themselves about to

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Speaker 1: saying we're the party of free trade, We're the party

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Speaker 1: of non government intervention. What is right that it's so,

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Speaker 1: I don't recognize this Republican Party and their affiliation. The

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Speaker 1: party affiliation was pre Trump. I don't know what what

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Speaker 1: happens post Trump, or maybe I'm wrong, Maybe the entire

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Speaker 1: former Reagan Democrats moved to UM moved to the Republican Party.

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Speaker 1: But it looks like poorly thought out economic policies could

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Speaker 1: lead to a very very significant damage. I still think

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Speaker 1: that's a low probability event. I still think the adults

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Speaker 1: are gonna are gonna take charge, but it's a non

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Speaker 1: zero event. It's I don't know, possibility that this gets

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Speaker 1: bad and spirals out of control and gets worse. That's

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Speaker 1: a happy note. Happy note. Back to portfolio management, how

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Speaker 1: do you see that changing the rise of quantz has

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Speaker 1: been a huge, huge element that evidence based investing, rules

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Speaker 1: driven portfolios, things along those lines where it's not I'm

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Speaker 1: scratching my chin and saying I think we need a

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Speaker 1: little more semiconductor in this. That that stuff has gone

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Speaker 1: uh to a large degree the way of the DODO.

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Speaker 1: And now we're you know the fact that you can

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Speaker 1: make an argument and say here's what the data shows,

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Speaker 1: here's what the evidence shows, and and here's what we

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Speaker 1: think takes place over long periods of time. The fascinating

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Speaker 1: aspect of the reflexivity of markets is whatever works currently

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Speaker 1: is likely to eventually stop working, Because isn't that a

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Speaker 1: wonderful thing? Yeah? It never ends, right, it's constantly So

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Speaker 1: you have to do, Yeah, you have to be aware

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Speaker 1: of what used to work that's not working anymore. And

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Speaker 1: is this temporary like value temporary being out of favor

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Speaker 1: or do the steam belt and leather steam steam engine

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Speaker 1: and leather belt companies? Is this a permanent uh? Sayonara?

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Speaker 1: And so that's that's a judge McColl and you have

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Speaker 1: to be pretty reasonable to figure that out. So that's

427
00:25:53,640 --> 00:25:57,879
Speaker 1: a that's a big change the concept of are you

428
00:25:57,920 --> 00:26:02,200
Speaker 1: really active or you really pass of are they mutually exclusive?

429
00:26:02,240 --> 00:26:06,800
Speaker 1: Can you be you know, two thirds passive one third active. Um.

430
00:26:06,840 --> 00:26:10,200
Speaker 1: I think that's an interesting discussion, And you know, I'm

431
00:26:10,240 --> 00:26:13,199
Speaker 1: fond of saying if if you can come up with

432
00:26:13,240 --> 00:26:17,040
Speaker 1: a defendable thesis for why you want to have some

433
00:26:17,160 --> 00:26:24,440
Speaker 1: percentage of your portfolio in an actively managed, non representative holding,

434
00:26:25,080 --> 00:26:26,760
Speaker 1: I don't have a problem with it. We we have

435
00:26:26,880 --> 00:26:30,520
Speaker 1: certain clients who are young and want a very aggressive

436
00:26:30,680 --> 00:26:34,320
Speaker 1: active strategy and we don't like paying hedge fund fees

437
00:26:34,400 --> 00:26:38,160
Speaker 1: and uh Sam with venture capital, so we found the

438
00:26:38,200 --> 00:26:43,639
Speaker 1: only outside manager we use has a micro cap funds

439
00:26:43,760 --> 00:26:49,639
Speaker 1: that seems to parallel venture capital investing without the lock up,

440
00:26:49,680 --> 00:26:53,240
Speaker 1: without the two and twenty uh James o'shanna see oh Sam,

441
00:26:53,560 --> 00:26:56,000
Speaker 1: So that that might. Now the problem is it doesn't scale.

442
00:26:56,040 --> 00:26:58,560
Speaker 1: You can't put a billion dollars into it. But if

443
00:26:58,600 --> 00:27:02,040
Speaker 1: you have someone right, but if somebody wants, well, you

444
00:27:02,080 --> 00:27:04,879
Speaker 1: can't because there's only so many micro caps. More. On

445
00:27:04,920 --> 00:27:07,280
Speaker 1: the other hand, if someone has you know, five million

446
00:27:07,359 --> 00:27:09,800
Speaker 1: dollars and wants to put half a million into something

447
00:27:09,880 --> 00:27:13,520
Speaker 1: that is wildly volatile and but is gonna scream when

448
00:27:13,560 --> 00:27:17,679
Speaker 1: the market goes higher. It's one of those. Uh, we

449
00:27:17,760 --> 00:27:20,720
Speaker 1: work with an outside manager from municipal bonds. We work

450
00:27:20,800 --> 00:27:23,919
Speaker 1: with an outside manager for just that. And it's a

451
00:27:23,920 --> 00:27:28,119
Speaker 1: certain kind of drug, right, We don't have the expertise

452
00:27:28,119 --> 00:27:31,920
Speaker 1: in that. O'shannessy stuff is great. Go read What Works

453
00:27:31,920 --> 00:27:34,560
Speaker 1: on Wall Street is one of those seminal books that

454
00:27:34,640 --> 00:27:41,000
Speaker 1: really is amazing. Um. So I'm not like a proselytizer.

455
00:27:41,040 --> 00:27:43,400
Speaker 1: I'm not one of these people says no, never own

456
00:27:43,440 --> 00:27:47,879
Speaker 1: anything active. Hey, our tactical portfolio has to be considered active.

457
00:27:48,280 --> 00:27:51,720
Speaker 1: It's evidence based, its rules driven, it's it's done well.

458
00:27:51,800 --> 00:27:56,200
Speaker 1: But it's not passive. You can't say that's a passive holding.

459
00:27:56,520 --> 00:27:59,399
Speaker 1: But there has to be to us. If that's the

460
00:27:59,400 --> 00:28:03,280
Speaker 1: emotional the valve that allows people to leave their main

461
00:28:03,359 --> 00:28:06,680
Speaker 1: portfolio alone during a market crash, then it served this purpose.

462
00:28:07,960 --> 00:28:11,240
Speaker 1: But you know, we don't want to find ourselves rationalizing

463
00:28:11,280 --> 00:28:14,520
Speaker 1: things constantly. We don't want to find ourselves making excuses.

464
00:28:15,200 --> 00:28:17,480
Speaker 1: We try and think it through beforehand, and that's when

465
00:28:17,520 --> 00:28:21,479
Speaker 1: you you add that sort of holding. I think that

466
00:28:21,520 --> 00:28:24,360
Speaker 1: there's going to be more of that in portfolio management.

467
00:28:24,359 --> 00:28:28,000
Speaker 1: I think rather than just saying this is the mad

468
00:28:28,080 --> 00:28:32,440
Speaker 1: pursuit of alpha, it's gonna be something closer to how

469
00:28:32,520 --> 00:28:36,040
Speaker 1: does this particular holding help you reach your long term goals.

470
00:28:37,200 --> 00:28:43,160
Speaker 1: That's a very different conversation than I think X funds

471
00:28:43,240 --> 00:28:46,680
Speaker 1: is going to outperform the SMP five. Well, what's your

472
00:28:46,800 --> 00:28:48,960
Speaker 1: what's your track record and picking X funds? How has

473
00:28:49,000 --> 00:28:50,800
Speaker 1: it done? Why should I think you have the ability

474
00:28:50,840 --> 00:28:54,400
Speaker 1: to do that. So there's a funny story about this.

475
00:28:54,680 --> 00:28:57,280
Speaker 1: Most people can't pick stocks, so they hire somebody to

476
00:28:57,320 --> 00:29:01,240
Speaker 1: be their stock picker. But most stock pickers can't pick

477
00:29:01,280 --> 00:29:04,480
Speaker 1: stocks an octopus, So you're you're right, you're hiring somebody

478
00:29:04,520 --> 00:29:07,400
Speaker 1: else to hire the person who's gonna pick stocks. And

479
00:29:07,400 --> 00:29:11,480
Speaker 1: and you get that like recursive um fractal, So you're

480
00:29:11,520 --> 00:29:13,560
Speaker 1: hiring a person to hire the person to hire the

481
00:29:13,560 --> 00:29:18,000
Speaker 1: person to pick the stuff. And it simply doesn't work.

482
00:29:18,000 --> 00:29:21,640
Speaker 1: And when once you build in the cost structure over

483
00:29:21,720 --> 00:29:25,960
Speaker 1: long periods of time, it's a losing bet. A you

484
00:29:26,000 --> 00:29:29,280
Speaker 1: can't find those people, be finding the people who are

485
00:29:29,360 --> 00:29:34,360
Speaker 1: worth it um beyond their their fee structure. I'll give

486
00:29:34,400 --> 00:29:37,040
Speaker 1: you another active fund that I think is kind of fascinating.

487
00:29:37,600 --> 00:29:41,400
Speaker 1: Um Joel Greenblatt who ran Gatham Capital and put up

488
00:29:41,400 --> 00:29:45,760
Speaker 1: insane numbers in the nineties a year for ten years.

489
00:29:45,800 --> 00:29:50,680
Speaker 1: That's just insane. So he came up with a quantitative

490
00:29:50,720 --> 00:29:52,640
Speaker 1: way to look at the SMP five hundred. You want

491
00:29:52,640 --> 00:29:55,120
Speaker 1: to own an index, here's what we're gonna do. We're

492
00:29:55,120 --> 00:29:57,760
Speaker 1: gonna own the SMP five hundred that We're gonna run

493
00:29:57,760 --> 00:30:00,880
Speaker 1: around quantitative screen through this and I'm gonna add a

494
00:30:00,880 --> 00:30:05,000
Speaker 1: big slug of the best stocks in this index long.

495
00:30:05,080 --> 00:30:08,120
Speaker 1: So now we're like a hundred and I'm making up

496
00:30:08,120 --> 00:30:11,920
Speaker 1: the number long. Now we're going to run a similar

497
00:30:11,960 --> 00:30:13,880
Speaker 1: screen and we're gonna find the worst stocks and we're

498
00:30:13,920 --> 00:30:17,240
Speaker 1: gonna be short that. So you're long the SMP five

499
00:30:17,320 --> 00:30:20,720
Speaker 1: hundred and then balanced long short long the best, short

500
00:30:20,800 --> 00:30:23,800
Speaker 1: the worst. In theory, if that works, the next time

501
00:30:23,800 --> 00:30:27,200
Speaker 1: the market crashes, you'll do much better than the average INDEP.

502
00:30:27,800 --> 00:30:29,800
Speaker 1: So you could you could rationalize that a little. We

503
00:30:29,840 --> 00:30:32,720
Speaker 1: can package that right, Yeah, And he has a three

504
00:30:32,760 --> 00:30:35,640
Speaker 1: year track record now, which is which is so? So

505
00:30:35,760 --> 00:30:39,360
Speaker 1: that's the sort of I don't remember the g I

506
00:30:39,480 --> 00:30:42,560
Speaker 1: N d X. I think it's called index plus UM.

507
00:30:42,600 --> 00:30:44,600
Speaker 1: I may be getting the ticker wrong, but it's Joel

508
00:30:44,640 --> 00:30:47,080
Speaker 1: Green Black Index Plus. So what's what's incredible to me

509
00:30:47,160 --> 00:30:50,280
Speaker 1: about how ETFs have sort of changed investing is that

510
00:30:50,520 --> 00:30:53,560
Speaker 1: that thing that you just described that is out there

511
00:30:54,120 --> 00:30:56,960
Speaker 1: and the dude who used to put up massive returns

512
00:30:57,080 --> 00:30:59,600
Speaker 1: like that guy can't do that anymore because there's this

513
00:30:59,720 --> 00:31:02,720
Speaker 1: other et F that can do it for well, I

514
00:31:02,760 --> 00:31:05,320
Speaker 1: don't know if he can't do that anymore, I think

515
00:31:05,400 --> 00:31:08,120
Speaker 1: he after you've run a fund like that. By the way,

516
00:31:08,440 --> 00:31:11,040
Speaker 1: Gotham at fifty a year, I want to say, about

517
00:31:11,080 --> 00:31:14,960
Speaker 1: halfway through its run, like Renaissance Technology said to the

518
00:31:15,000 --> 00:31:19,360
Speaker 1: outside investors, Hey, thanks for everything, but you're all a

519
00:31:19,400 --> 00:31:21,280
Speaker 1: pain in the ass. I'm going to just manage my

520
00:31:21,360 --> 00:31:24,440
Speaker 1: own money and continue to put up killer numbers. Okay, So,

521
00:31:24,560 --> 00:31:27,680
Speaker 1: speaking of managing your own money, how do you deal

522
00:31:27,760 --> 00:31:31,400
Speaker 1: with that? I eat my own cooking, my own four

523
00:31:31,400 --> 00:31:35,520
Speaker 1: oh one, my own portfolio, and all your wife, everybody

524
00:31:35,560 --> 00:31:37,560
Speaker 1: in the firm invest in our own four o one,

525
00:31:37,720 --> 00:31:39,760
Speaker 1: our four oh one case are in our portfolio, our

526
00:31:39,840 --> 00:31:44,880
Speaker 1: personal investments on our own portfolio. Anybody who doesn't do that,

527
00:31:45,680 --> 00:31:49,520
Speaker 1: I would never even remotely consider giving my money to.

528
00:31:50,040 --> 00:31:52,080
Speaker 1: And when someone says to me, Well, I want to

529
00:31:52,160 --> 00:31:56,760
Speaker 1: remain objective. You still have market exposure. You're not trading

530
00:31:56,800 --> 00:32:00,400
Speaker 1: individual stocks. It's a broad allocation. What do you care?

531
00:32:00,800 --> 00:32:05,040
Speaker 1: So A hundred every single person in our firm, our

532
00:32:05,200 --> 00:32:09,320
Speaker 1: entire four O one k um. Although I think it

533
00:32:09,440 --> 00:32:13,920
Speaker 1: was Rick Edelman said in My Pantheon of name Dropping said, um,

534
00:32:15,360 --> 00:32:20,040
Speaker 1: I'm deeply invested in in speculative small cap company, meaning

535
00:32:20,120 --> 00:32:22,800
Speaker 1: his own company. So there's that. Also, if I had

536
00:32:22,840 --> 00:32:27,080
Speaker 1: to pick my single biggest holding, it would have to

537
00:32:27,160 --> 00:32:30,800
Speaker 1: be me and my partners own the firm, were employee owns.

538
00:32:31,400 --> 00:32:33,680
Speaker 1: Uh So eventually everybody in the firm will have an

539
00:32:33,720 --> 00:32:36,960
Speaker 1: opportunity to be to be an owner. But we all

540
00:32:38,040 --> 00:32:40,560
Speaker 1: eat our own cooking. I don't see how you can

541
00:32:40,640 --> 00:32:43,360
Speaker 1: run an asset management shop and not. So I'm gonna

542
00:32:43,440 --> 00:32:47,960
Speaker 1: retitle the conversations with you the world according to Bury

543
00:32:48,080 --> 00:32:51,160
Speaker 1: rid Holes. But I'm gonna ask a question, okay, which is,

544
00:32:52,320 --> 00:32:54,800
Speaker 1: having talked about a lot of things, what is the

545
00:32:54,840 --> 00:32:59,600
Speaker 1: world of investing? According to Bury Dholes, I think investing

546
00:32:59,800 --> 00:33:02,680
Speaker 1: is really misunderstood. It's weird. I was such a critic

547
00:33:02,760 --> 00:33:05,720
Speaker 1: of Wall Street in Bailout Nation that I find myself

548
00:33:06,080 --> 00:33:11,719
Speaker 1: defending Wall Street, Bogel recently said wall finance subtracts value,

549
00:33:12,120 --> 00:33:14,320
Speaker 1: and I don't think that that's true. We all carry

550
00:33:14,360 --> 00:33:18,080
Speaker 1: these powerful little computers in our pockets called mobile phones.

551
00:33:19,200 --> 00:33:21,680
Speaker 1: That company doesn't come public without Wall Street. When you

552
00:33:21,720 --> 00:33:25,120
Speaker 1: look at the financing of bridges and tunnels and highways

553
00:33:25,640 --> 00:33:28,360
Speaker 1: back when America used to build bridges and tunnels and highways,

554
00:33:29,280 --> 00:33:32,920
Speaker 1: Wall Street has has done that. The problem is that

555
00:33:33,200 --> 00:33:37,360
Speaker 1: we took was was essentially a support industry for the

556
00:33:37,400 --> 00:33:40,280
Speaker 1: rest of the country and turned it into a main industry.

557
00:33:40,960 --> 00:33:44,280
Speaker 1: Wall Street should exist to service everybody else. It should

558
00:33:44,320 --> 00:33:47,600
Speaker 1: provide the ability for small companies to go public. It

559
00:33:47,640 --> 00:33:52,200
Speaker 1: should provide the ability provide the ability for um, mom

560
00:33:52,280 --> 00:33:54,640
Speaker 1: and pop to make investments in the long term, be

561
00:33:54,800 --> 00:33:57,440
Speaker 1: it their kids, college or retirement or what have you.

562
00:33:58,160 --> 00:34:04,760
Speaker 1: And the entire universe of complexity and opaqueness and high

563
00:34:04,840 --> 00:34:09,359
Speaker 1: expense should really be replaced. And by the way, complexity

564
00:34:09,360 --> 00:34:13,560
Speaker 1: and packness the it's not a bug, it's a feature

565
00:34:13,640 --> 00:34:16,960
Speaker 1: that it's high cost. Opaqueness and complexity hides the cost.

566
00:34:17,400 --> 00:34:20,560
Speaker 1: It should be much more simple and much more transparent

567
00:34:20,600 --> 00:34:25,840
Speaker 1: and much more lower cost. That process, while long overdue,

568
00:34:26,840 --> 00:34:32,440
Speaker 1: is finally happening, Vanguard occupied the niche of low cost.

569
00:34:33,080 --> 00:34:37,279
Speaker 1: The impact of Vanguard has affected everybody. And I think

570
00:34:37,600 --> 00:34:43,080
Speaker 1: that finance or fifty years from now, is going to

571
00:34:43,320 --> 00:34:47,000
Speaker 1: go back to that service industry that supports the rest

572
00:34:47,040 --> 00:34:50,040
Speaker 1: of the economy as opposed to the tail wagging the dog.

573
00:34:50,200 --> 00:34:53,719
Speaker 1: And so there's still lots of things that I think

574
00:34:53,800 --> 00:34:57,879
Speaker 1: finance does wrong, and there are lots of of UH

575
00:34:58,120 --> 00:35:00,360
Speaker 1: products that shouldn't be sold, and there are lots of

576
00:35:00,480 --> 00:35:06,120
Speaker 1: behaviors and lots of rules right. But overall, it turns

577
00:35:06,160 --> 00:35:09,919
Speaker 1: out that this capitalism thing works that when Vanguard rolls

578
00:35:09,960 --> 00:35:12,680
Speaker 1: out a cheaper product that does the same thing, only

579
00:35:12,719 --> 00:35:16,680
Speaker 1: it's better. Eventually the market place, you know I've described

580
00:35:16,960 --> 00:35:20,040
Speaker 1: um Gene Fama and E. M. H. I have an

581
00:35:20,120 --> 00:35:24,680
Speaker 1: OH five post called the mostly kind of sort of

582
00:35:24,880 --> 00:35:29,960
Speaker 1: eventually efficient market, and eventually markets get it right. It's

583
00:35:30,000 --> 00:35:32,200
Speaker 1: wrong for long, could be wrong for long periods of time.

584
00:35:32,600 --> 00:35:37,480
Speaker 1: Eventually competition drives price down. Eventually, Look, we we had

585
00:35:37,520 --> 00:35:42,600
Speaker 1: a a wrongly regulated market until the early seventies when

586
00:35:43,239 --> 00:35:47,520
Speaker 1: the constraints on commissions dropped. Stop and think about Wait,

587
00:35:47,680 --> 00:35:50,120
Speaker 1: you could do a trade for seventy five and that's

588
00:35:50,120 --> 00:35:53,520
Speaker 1: considered cheap. That was forty years ago. Now it's free

589
00:35:53,719 --> 00:35:59,799
Speaker 1: or or insignificant eight dollars. That competitive factor is driving

590
00:36:00,600 --> 00:36:04,799
Speaker 1: things towards the benefit for investors. We're not there yet.

591
00:36:04,920 --> 00:36:08,000
Speaker 1: We have a way to go, but you have to

592
00:36:08,120 --> 00:36:14,120
Speaker 1: be unless you're losing half your revenue because of companies

593
00:36:14,200 --> 00:36:17,719
Speaker 1: like Vanguard and black Rock and State Street and d

594
00:36:17,840 --> 00:36:19,839
Speaker 1: f A and go down the list that are are

595
00:36:19,920 --> 00:36:22,560
Speaker 1: providing a service at a lower cost at a higher quality.

596
00:36:23,800 --> 00:36:26,480
Speaker 1: You have to like the direction this is moving towards

597
00:36:26,560 --> 00:36:30,879
Speaker 1: the investors favor. What began as as Bogel's folly has

598
00:36:31,360 --> 00:36:35,000
Speaker 1: has expanded and where I don't know, maybe we're in

599
00:36:35,040 --> 00:36:37,440
Speaker 1: the third or fourth ending of that set of changes.

600
00:36:37,520 --> 00:36:40,360
Speaker 1: I could be completely wrong, but I like the direction

601
00:36:40,440 --> 00:36:46,239
Speaker 1: it's going. So what haven't we asked you? That we

602
00:36:46,280 --> 00:36:50,239
Speaker 1: should have asked you my favorite books? Who my mentors were.

603
00:36:50,320 --> 00:36:52,160
Speaker 1: I don't want answering go down, so I I asked

604
00:36:52,200 --> 00:36:55,200
Speaker 1: those questions every week. Um, I don't know you. We

605
00:36:55,400 --> 00:36:59,200
Speaker 1: we have been really narrow and trying to stay and

606
00:36:59,280 --> 00:37:01,759
Speaker 1: I know that's difficult. All with me. You've been great, man.

607
00:37:02,320 --> 00:37:03,680
Speaker 1: It's a little bit like a river. You know. We're

608
00:37:03,680 --> 00:37:06,279
Speaker 1: just gonna go with the current and go in to

609
00:37:06,320 --> 00:37:14,080
Speaker 1: the UH. To me, the the most interesting change that's

610
00:37:14,160 --> 00:37:19,840
Speaker 1: taking place is how the millennial generation thinks about money.

611
00:37:20,440 --> 00:37:24,160
Speaker 1: And I think my observation is working with a lot

612
00:37:24,200 --> 00:37:27,040
Speaker 1: of young people in my office and just you can't

613
00:37:27,080 --> 00:37:30,640
Speaker 1: help but rub shoulders with millennials in Manhattan. They're far

614
00:37:30,800 --> 00:37:35,880
Speaker 1: less materialistic than previous generations. Although that whole concept of

615
00:37:36,000 --> 00:37:40,840
Speaker 1: experiences versus materialism, um, they're they're brutally blunt and honest.

616
00:37:40,920 --> 00:37:43,880
Speaker 1: It's very different than you know, you have a conversation

617
00:37:43,920 --> 00:37:47,440
Speaker 1: about money with a with a millennial and you say, well,

618
00:37:47,480 --> 00:37:50,239
Speaker 1: here's a math about small cap and value, and and

619
00:37:50,280 --> 00:37:53,759
Speaker 1: they're like, prove it, like they show me. They don't

620
00:37:53,880 --> 00:37:55,520
Speaker 1: want to take your word for anything. They want to

621
00:37:55,560 --> 00:37:58,839
Speaker 1: see it. Um. Like I walk around with a couple

622
00:37:58,880 --> 00:38:01,200
Speaker 1: of bucks in cash in my pocket. They like, I

623
00:38:01,320 --> 00:38:04,200
Speaker 1: pull money out and it's like, what's that paying for lunch?

624
00:38:04,239 --> 00:38:07,799
Speaker 1: Pull out of twenty Why wouldn't you use a card? Well,

625
00:38:07,880 --> 00:38:13,680
Speaker 1: you know it's all right that that's even even the

626
00:38:13,760 --> 00:38:16,920
Speaker 1: next generation. It's well, on my card, I get points.

627
00:38:17,000 --> 00:38:18,680
Speaker 1: I get this, I get that I don't have to

628
00:38:18,719 --> 00:38:21,080
Speaker 1: walk around with cash. I know I have a record

629
00:38:21,120 --> 00:38:23,440
Speaker 1: of everything I've done, why would you use cash? And

630
00:38:23,440 --> 00:38:26,520
Speaker 1: I had to stop and say, habit, there's no good

631
00:38:26,520 --> 00:38:28,520
Speaker 1: reason to use cash. So but one of the things

632
00:38:28,600 --> 00:38:31,719
Speaker 1: that you know, everybody talks a lot about monials, but

633
00:38:31,800 --> 00:38:33,080
Speaker 1: like one of the things that I don't think gets

634
00:38:33,120 --> 00:38:35,120
Speaker 1: talked about that when nobody wants to do anything about

635
00:38:35,160 --> 00:38:38,120
Speaker 1: it's like the weather. But here's the thing though, it's like,

636
00:38:38,360 --> 00:38:40,480
Speaker 1: how are they gonna, how are they going to change?

637
00:38:42,040 --> 00:38:44,799
Speaker 1: I don't know. I mean they were gonna they would

638
00:38:44,800 --> 00:38:47,800
Speaker 1: delta bed hand, they would dealta bed hand. They graduated

639
00:38:47,800 --> 00:38:52,040
Speaker 1: into a terrible recession, UM, a disproportionate numbers still living

640
00:38:52,080 --> 00:38:55,800
Speaker 1: at home to save money. Uh. That that's you know,

641
00:38:56,640 --> 00:39:00,120
Speaker 1: those become seminal experiences that sometimes shape your views. So

642
00:39:00,360 --> 00:39:05,040
Speaker 1: if you remember or read about the post depression generation,

643
00:39:05,480 --> 00:39:07,960
Speaker 1: they never used debt, They paid cash for everything. There

644
00:39:08,000 --> 00:39:11,680
Speaker 1: was no credit cards, there's no loans. Uh. Maybe they

645
00:39:11,920 --> 00:39:13,800
Speaker 1: took a mortgage on the house and then had a

646
00:39:14,000 --> 00:39:18,120
Speaker 1: mortgage burning party when they paid it off, usually early. UM.

647
00:39:18,800 --> 00:39:22,680
Speaker 1: Very different headspace with with this generation. Yet that that

648
00:39:22,920 --> 00:39:29,880
Speaker 1: generation created the boomers. Yeah, again, they're every the pendulum

649
00:39:29,960 --> 00:39:32,800
Speaker 1: swings this way and then it goes too far. In

650
00:39:32,880 --> 00:39:35,640
Speaker 1: the opposite direction. It swings that way, and that's a

651
00:39:35,800 --> 00:39:42,040
Speaker 1: continual set a headaches. There's no no getting away from that. Alright.

652
00:39:42,040 --> 00:39:44,279
Speaker 1: Gonna wrap it up with my last question, Favorite E

653
00:39:44,360 --> 00:39:53,719
Speaker 1: t F ticker, Favorite E t F ticker. UM. I

654
00:39:53,840 --> 00:39:56,320
Speaker 1: don't believe weed is not a pot E t F

655
00:39:56,719 --> 00:39:59,640
Speaker 1: that that has to be Uh. There was one I

656
00:40:00,160 --> 00:40:03,080
Speaker 1: heard about some time ago, but it did not come

657
00:40:03,239 --> 00:40:08,520
Speaker 1: to fruition warm for global warming ticker um. And then

658
00:40:08,680 --> 00:40:13,600
Speaker 1: there was she is kind of an interesting ticker, although

659
00:40:14,320 --> 00:40:20,040
Speaker 1: although it hasn't attracted ascid outside of the Calister's fun

660
00:40:20,239 --> 00:40:23,400
Speaker 1: you know, may that massive influ at the beginning and

661
00:40:23,440 --> 00:40:26,960
Speaker 1: then it just kind of sat there. It's so you know,

662
00:40:27,239 --> 00:40:31,640
Speaker 1: I mentioned in the beginning the behavioral economics and how

663
00:40:31,719 --> 00:40:34,120
Speaker 1: important that is to not only manage your own emotions

664
00:40:34,200 --> 00:40:38,840
Speaker 1: but your own behavior. There's something fascinating about either stocks

665
00:40:39,320 --> 00:40:45,120
Speaker 1: or funds that have a memorable ticker. And I hate

666
00:40:45,160 --> 00:40:48,239
Speaker 1: to say this because it's so irrational, but if if

667
00:40:48,400 --> 00:40:53,399
Speaker 1: you don't have a really good ticker like spy UM

668
00:40:53,640 --> 00:40:55,719
Speaker 1: or q q Q which turned out to be a

669
00:40:55,800 --> 00:41:01,319
Speaker 1: really good ticker, uh, you're starting as an et with uh.

670
00:41:02,480 --> 00:41:05,200
Speaker 1: You know, you got a thirty pound pack on your

671
00:41:05,360 --> 00:41:08,840
Speaker 1: on your back and you're running up a mount because

672
00:41:09,040 --> 00:41:13,040
Speaker 1: it's memorable if and you know, there's a whole narrative

673
00:41:13,560 --> 00:41:16,719
Speaker 1: aspect that that humans love stories not data, and so

674
00:41:16,800 --> 00:41:20,279
Speaker 1: if you could tell a really good story about something um,

675
00:41:21,200 --> 00:41:24,880
Speaker 1: it resonates, it's memorable, it it rationalizes the decision. And

676
00:41:25,040 --> 00:41:30,360
Speaker 1: a ticker that follows that narrative story is the cherry

677
00:41:30,400 --> 00:41:34,000
Speaker 1: on top of the Sunday. And it's I hate to say,

678
00:41:34,080 --> 00:41:36,160
Speaker 1: we go through all this, all this math and all

679
00:41:36,200 --> 00:41:38,600
Speaker 1: this thinking about diversification and how do we keep our

680
00:41:38,640 --> 00:41:40,960
Speaker 1: costs low and how do we make sure people's behavior

681
00:41:41,080 --> 00:41:42,920
Speaker 1: is good and blah blah blah, and then it's like,

682
00:41:43,360 --> 00:41:45,440
Speaker 1: but if you could tell a good story and have

683
00:41:45,480 --> 00:41:47,560
Speaker 1: a good ticker, all that stuff goes out the window.

684
00:41:48,000 --> 00:41:53,480
Speaker 1: And that is really human investing in a nutshet. Thank

685
00:41:53,480 --> 00:41:55,360
Speaker 1: you so much, Thank you guys for having me. This

686
00:41:55,480 --> 00:42:03,799
Speaker 1: has been directed. Thanks for listening to trillions. Until next time.

687
00:42:04,040 --> 00:42:06,759
Speaker 1: You can find us on the Bloomberg terminal, Bloomberg dot com,

688
00:42:07,160 --> 00:42:10,640
Speaker 1: Apple podcasts, and wherever else you like to listen. We'd

689
00:42:10,680 --> 00:42:14,359
Speaker 1: love to hear from you. We're on Twitter. He's at

690
00:42:14,520 --> 00:42:21,040
Speaker 1: Ritholtz R I T h O L t Z, I'm

691
00:42:21,200 --> 00:42:26,880
Speaker 1: at Joel Webber Show, Derek's at Eric Falchis. Trillions is

692
00:42:26,920 --> 00:42:30,600
Speaker 1: produced by Magnus Hendrickson. Francesca Levy is the head of

693
00:42:30,640 --> 00:42:32,719
Speaker 1: Bloomberg podcast Bye