Speaker 1: This is Bloomberg Business Week with Carol Messer and Bloomberg
Speaker 1: Quick Takes Tim Stinovik from Bloomberg Radio. Welcome to the
Speaker 1: Bloomberg Business Week Extra. It's our weekly podcast bringing you
Speaker 1: a highlight or favorite interview from the week. This was
Speaker 1: a fun conversation. This week it's with Ted SAIDs. Ted
Speaker 1: began his career at the Yale University investments officer under
Speaker 1: the famed and iconic David Swenson, later co founding a
Speaker 1: multibillion dollar alternative investment firm. Today, Ted said is founder
Speaker 1: and managing partner of Capital Allocators, host of the Capital
Speaker 1: Allocators podcast, where he talks with some of the world's
Speaker 1: top professional investors, and he's got a new book out
Speaker 1: by the same name. It's called Capital Allocators How the
Speaker 1: world's elete money managers lead and invest. We had so
Speaker 1: much to talk about, including all the frenzy trends of
Speaker 1: the past month from SPACs, crypto, e s G, and
Speaker 1: so much more. Honestly, it's been one of the best
Speaker 1: years of my life. Why well, it's a combination of
Speaker 1: things on the professional side, the podcast. As it turns out,
Speaker 1: right this medium can grow and continue in an environment
Speaker 1: like this, so I've been able to focus. It's been
Speaker 1: easier to get access to some of the people that
Speaker 1: I get a chance to talk to because their schedule,
Speaker 1: their travel schedules are down, and the engagement with the
Speaker 1: content we've been putting out has just grown. It grew
Speaker 1: over a last year in terms of downloads, so that's
Speaker 1: been great. On the personal side, I got married last year,
Speaker 1: so that's the love of my life and things have
Speaker 1: been great. Congratulations, Wow, like kidding, get out of the park.
Speaker 1: That is incredible. UM. You know, it's funny that you
Speaker 1: say that about access to people, because I think that's
Speaker 1: something we realized too, that everybody once you realized it
Speaker 1: was kind of okay to talk. Uh, everybody was home
Speaker 1: and in the same situation. And you're right, we had
Speaker 1: like access to people too that we hadn't before. So
Speaker 1: it's interesting that that that was your experience as well.
Speaker 1: Let's talk about UM, your book and capital allocators, because
Speaker 1: I do think we're in an interesting time where we're
Speaker 1: watching a lot of investment trends. We're watching this back explosion,
Speaker 1: the Reddit revolution, We're watching crypto bitcoin values continuing to
Speaker 1: grow and actually go more mainstream. UM how do you
Speaker 1: see it? What are some of the things that you
Speaker 1: find interesting, what's worries and what screamed opportunity to you? Sure? Well,
Speaker 1: you know, the people that I talked to regularly in
Speaker 1: the world I came from are really these asset owners,
Speaker 1: these long duration, long term pools of capital, and not
Speaker 1: a lot changes in the way they go about investing
Speaker 1: day to day or week to week. So there are
Speaker 1: always a few key trends that come into play and
Speaker 1: come in and out of their idea generation. But for
Speaker 1: the most part, what they're finding, um is that generally speaking,
Speaker 1: capital markets look expensive, and they all have spending obligations
Speaker 1: they need to meet, call it, you know, five for
Speaker 1: a foundation or a little bit more for pension fund.
Speaker 1: So they're really scratching their heads and saying, how are
Speaker 1: we gonna meet these long term objectives given that the
Speaker 1: easy ways of accessing, say you know, index funds or
Speaker 1: things like that, just don't look like they're priced to
Speaker 1: reach these long term return objectives. Okay, So then having
Speaker 1: said that, when you look at some of them more,
Speaker 1: maybe you know other areas to go. Whether it's crypto,
Speaker 1: I mean, you like crypto, correct the crypto do I
Speaker 1: like it for a particular reason, which is we are
Speaker 1: in this world of fiat money debasement, and all of
Speaker 1: the risk assets, whether you like stocks or bonds, or
Speaker 1: venture capital or private equity, they're all sort of predicated
Speaker 1: on dollar based instruments. And so crypto is this kind
Speaker 1: of asymmetric option for the potential of digital gold uh
Speaker 1: and bitcoin in particular. So you have a combination of
Speaker 1: the thought of something that may be very important ten
Speaker 1: years from now in terms of maintaining your store of value,
Speaker 1: and then you have attached to that sort of the
Speaker 1: venture capital thesis, which is, if you look at we're
Speaker 1: all the talent is going of these young people coming
Speaker 1: out of school, all these engineers, something like twenty or
Speaker 1: of them um And according to christisaid that Andrews and Horost,
Speaker 1: who I had on the show, he said something like
Speaker 1: of them, they're all going to build blockchain technologies. And
Speaker 1: when all the talents, that's what Silicon Valley does. When
Speaker 1: the talent moves in a certain direction, they go and
Speaker 1: look to access it. And so you put those two
Speaker 1: things together, and I have a small percentage of my
Speaker 1: personal portfolio invested in crypto in particular, I'm taking baby steps,
Speaker 1: so for me, it's just bitcoin and ethereum at this
Speaker 1: point in time. Hey, Ted, one thing I want to
Speaker 1: ask you, and we just did a story Charlie and
Speaker 1: I um for some of our audience, and it's about
Speaker 1: E s G. And it's an opinion column here at Bloomberg.
Speaker 1: But it's just there is a feeling that because there's
Speaker 1: so much money flowing into the E s G space,
Speaker 1: it's where investors, a lot of institutional investors are increasingly
Speaker 1: looking to commit new money that a lot of you know,
Speaker 1: investment houses are fund offerings are just kind of slapping
Speaker 1: a E s G label it. What do you think
Speaker 1: about I know you like the E s G space
Speaker 1: and that you are following it. How do you you know,
Speaker 1: how do we make it purer and more true? Yeah? Well,
Speaker 1: I think you have to start with that perspective. If
Speaker 1: you look backwards, as this sort of research study showed,
Speaker 1: there will be a lot of that. And the reason is,
Speaker 1: as one of my guests, James Aiton had said, there's
Speaker 1: a tsunami as capital coming into this space for all
Speaker 1: the right reasons. And so really starting with Greta Thunberg
Speaker 1: a year and a half ago. Her her description of
Speaker 1: what was happening Davos just before COVID, every description was
Speaker 1: about climate change. We know that this is really important
Speaker 1: and it will be a very strong secular change and
Speaker 1: how capital gets allocated worldwide. Now, as soon as money
Speaker 1: starts flowing, it's not that surprising that people trying to
Speaker 1: capture their share of it will do, you know, what
Speaker 1: you call greenwashing. But let's not be too short term
Speaker 1: about that. If you look over time, the first thing
Speaker 1: is we now have interest. We have interest in doing
Speaker 1: things that are better for the environment. We have interest
Speaker 1: in promoting more socially diverse people throughout the economy, all
Speaker 1: of which is good for the long term. Now, as
Speaker 1: that happens, we need definitions. We need to understand in
Speaker 1: the capital markets and public markets, we need benchmarks. And
Speaker 1: if you look at the different benchmarks, nobody really knows
Speaker 1: yet what is a good company what is a bad company,
Speaker 1: And that will get worked out, but it does take time.
Speaker 1: And in that process, I'm not that surprised that you
Speaker 1: have products that want to say they have in the
Speaker 1: s G lens for the first time, and maybe they
Speaker 1: do and maybe they don't. But over time, I think
Speaker 1: We'll see the stronger companies that have the those trends
Speaker 1: and doing the right things for a broader constituency than
Speaker 1: just the shareholder will be the winners over time. And
Speaker 1: you know that will play out as capital markets do.
Speaker 1: Until then, Yeah, there'll be a little bit of a
Speaker 1: mess along the way, okay, but ultimately that the long
Speaker 1: game is that we get to a better point. Yeah,
Speaker 1: I think so. Hey, listen your book, your podcast, your approach.
Speaker 1: There's a lot of useful information. Informative, it's you know,
Speaker 1: really on how the best invest. It's very instructional. I
Speaker 1: think even in maybe the forward call it a textbook. Um,
Speaker 1: you talk with the best. Are there common threads among
Speaker 1: the best capital allocators and elite money managers on how
Speaker 1: they lead and how they invest? There really are, And
Speaker 1: you could really break it down into two sets of disciplines,
Speaker 1: one or the investment related and then the other are
Speaker 1: the leadership related. So if you start with the ladder,
Speaker 1: the investment industry is known for managing money well, not
Speaker 1: for managing people well. And one of the things I've
Speaker 1: had the benefit of doing on the podcast is interview
Speaker 1: people from other disciplines who are talented at leadership and
Speaker 1: management and things like decision making. Annie Duke the Great,
Speaker 1: the great form of poker player, and so the great
Speaker 1: c I O S are really like Baseball's five tool yers.
Speaker 1: They really understand all of these different disciplines. And that
Speaker 1: what I tried to do in that section of the
Speaker 1: book is describe some of the basics, like how do
Speaker 1: you do this well? Then you turn to the investment side.
Speaker 1: And you know, I was very fortunate to learn in
Speaker 1: the formative part of my career from David Swinson who
Speaker 1: is sort of the dean of this and wrote the
Speaker 1: seminal book twenty years ago. Um, And it does start
Speaker 1: with really an understanding of what's the purpose of the capital,
Speaker 1: what is the time horizon, what beliefs about investing the
Speaker 1: people bring in, and then the discipline process that I
Speaker 1: walked through in the book of how did these people
Speaker 1: find their investment ideas, how do they do their research,
Speaker 1: how do they make decisions? And then how do they
Speaker 1: monitor and manage their portfolio, manage risk over time? Is
Speaker 1: there something to like do all of them admit that
Speaker 1: they've made some really big mistakes And that was kind
Speaker 1: of a big learning opportunity. Not all of them, but
Speaker 1: only the good ones. Okay, you mean admit that they
Speaker 1: made a mistake. You know. The investment business in some
Speaker 1: ways is very humbling. Morgan Howe will who recently with
Speaker 1: the book Psychology of Money, has this great analogy that
Speaker 1: he says, you could be trained at the greatest academic institution,
Speaker 1: worked for the best place on Wall Street, and still
Speaker 1: underperform someone who knows nothing. If you were a brain surgeon,
Speaker 1: that would never ever happen. So yeah, the great investors
Speaker 1: are only right six of the time in the public market.
Speaker 1: So um. Yeah, it's a very humbling business and it's
Speaker 1: important for people who learn from their mistakes. How do
Speaker 1: you hope people use this book? You know, I wrote
Speaker 1: this book in large part because it was what I
Speaker 1: wanted to distill from my own investing in the investing
Speaker 1: that I do. And what I hope is that people
Speaker 1: see it as incremental ways that they can get better.
Speaker 1: And that's what the podcast has been. This is just
Speaker 1: phenomenal way of sharing in public with some of these
Speaker 1: great investors how they go about doing what they do,
Speaker 1: and every single one of them has a little nugget
Speaker 1: of wisdom along the way, which in fact is the
Speaker 1: whole third section of the book is just a series
Speaker 1: of quotes that are some of the very best quotes
Speaker 1: about how these people think about it, nuggets of wisdom,
Speaker 1: nuggets of wisdom, and how they think about life too. Well. Listen,
Speaker 1: I'm not going to ask you to say your favorite conversation.
Speaker 1: That wouldn't be fair because I I, you know, somebody
Speaker 1: who talks to a lot of people. When people ask
Speaker 1: me that question, I'm like, I like everybody. I mean,
Speaker 1: you know, it's just a it's fun to kind of
Speaker 1: go back and forth. Um, but you have some that
Speaker 1: stand out for you, It's hard. I do have two
Speaker 1: hundred children, and probably nine of them have been outstanding students.
Speaker 1: Um or any surprises, Yeah, go ahead, Yeah, there there
Speaker 1: is one I loved to point to. Not so much
Speaker 1: that it's so much different or better than any others,
Speaker 1: but it really was what I thought I might be
Speaker 1: able to get at. And that was the conversation I
Speaker 1: had with Scott Malpass, who's the recently retired chief investment
Speaker 1: officer at Notre Dame University. And I had known Scott
Speaker 1: from when I worked at Yale, but I hadn't seen
Speaker 1: him and I hadn't seen him in over a decade,
Speaker 1: and when we sat down, that conversation for me was, Hey,
Speaker 1: how have you evolved investing over the last ten years?
Speaker 1: And he walked through every aspect of what they had
Speaker 1: done in that office, and there was so much rich
Speaker 1: information about his investment process. And he's uniquely positioned because
Speaker 1: he had been in the seat for thirty years and
Speaker 1: really had just stellar results. So that wasn't so much.
Speaker 1: It wasn't my favorite or least favorite. It was just
Speaker 1: something that was really emblematic over the lessons that people
Speaker 1: can learn from listening to the show. Those Ted Siddy's
Speaker 1: founding and managing partner of Capital Allocators, host of the
Speaker 1: podcast by the same name, and author of the book
Speaker 1: the new book Capital Allocators, How the world's elete money
Speaker 1: managers lead and invest. You've been listening to Bloomberg Business
Speaker 1: Week Extra, be sure to listen to our Bloomberg Business
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Speaker 1: Stanebeck and I'm Carol Masser. This is Bloomberg