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Speaker 1: This is Master's in Business with Barry rid Holds on

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Speaker 1: Bloomberg Radio.

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Speaker 2: This week on the podcast, I have another extra special guest. A. C.

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Speaker 2: Shaw is COHED and CIO of Public Investing at Goldman

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Speaker 2: Sachs's asset Management. He helps to oversee two point three

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Speaker 2: trillion dollars of assets at g SAM. He has a

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Speaker 2: fascinating background both in technology and innovation, in equity, and

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Speaker 2: perhaps most importantly, in credit and fixed income. He just

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Speaker 2: has a unique set of experiences that have placed him

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Speaker 2: in the right place at the right time, doing the

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Speaker 2: exact right job. There aren't a lot of people in

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Speaker 2: the world of asset management who have such a broad

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Speaker 2: and round set of skills and experiences that have led

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Speaker 2: him to this position. Fascinating bund Aliance Barnstein and Lehman Brothers,

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Speaker 2: as well as a couple of Silicon Valley tech startups.

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Speaker 2: I found his discussion about what went on during the

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Speaker 2: financial crisis at Lehman Brothers and the sort of leadership

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Speaker 2: that you didn't really hear about at the time. You

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Speaker 2: only saw the criticism of the c suite executives who

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Speaker 2: at various companies had kind of run into problems, but

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Speaker 2: underneath that, it's just a whole layer of people doing

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Speaker 2: their jobs for themselves, their clients, their staff. And I

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Speaker 2: just found that conversation to be fascinating and I think

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Speaker 2: you will also, So, with no further ado, my discussion

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Speaker 2: with Goldman Sachs asset manager's CIO a cease shot.

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Speaker 1: Thanks so much for having me.

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Speaker 2: So let's talk a little bit about your background. You

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Speaker 2: come out of the Wharton School at University of Pennsylvania

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Speaker 2: with a BS in economics. What was the career plan?

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Speaker 1: Look, I had no plan. This whole world was completely

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Speaker 1: new to me, but I knew two things. First, I

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Speaker 1: knew I loved markets. You know, I'd worked for Jeremy

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Speaker 1: Siegel as a research assistant when I was at Wharton,

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Speaker 1: and that really kind of embedded in me this love

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Speaker 1: of macro and love of markets. And the second thing

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Speaker 1: was I knew I didn't want to go into an

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Speaker 1: investment banking track. I wanted something where I could work

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Speaker 1: on interesting problems that would allow me to cast the

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Speaker 1: career that I wanted without being kind of showed into

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Speaker 1: like this, you know, analyst associate kind of fixed career track.

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Speaker 2: And you have some really interesting and unusual experience, both

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Speaker 2: both as a trader and working as an entrepreneur, innovator

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Speaker 2: and start up. Let's talk about some of that. First,

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Speaker 2: you were a trader at a hedge fund that was

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Speaker 2: funded by Soros. Is it Blue Border? What's the name

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Speaker 2: of the funds, Blue Border Partners?

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Speaker 1: Uh huh?

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Speaker 2: And what was it like being a trader in that space?

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Speaker 1: Yeah, So I had joined that organization right after nine

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Speaker 1: to eleven and right after I had come back to

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Speaker 1: New York City, and you know, it was a fantastic experience.

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Speaker 1: The markets were all over the place, but it was

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Speaker 1: a very small organization. There were five or six of us,

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Speaker 1: and we were spread all across the world. It was

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Speaker 1: nice because I got to work with Greg Coffee, who

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Speaker 1: was one of the partners there and obviously has gone

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Speaker 1: on to fantastic things. But I basically sat in a

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Speaker 1: cubicle by myself, trying to come up with investment ideas

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Speaker 1: and realize that that is not my best best place.

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Speaker 1: My performance wasn't the best. But I learned a lot

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Speaker 1: from that experience and knowing that I'm very much a

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Speaker 1: team player and I work well in kind of mid

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Speaker 1: to larger size organizations.

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Speaker 2: And you said, you came back to New York. I

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Speaker 2: know you were on the West coast working in a

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Speaker 2: few startups. Tell us a little bit about Level three

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Speaker 2: and some of the other work you did out west.

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Speaker 1: Yeah. So, you know, go back to the late nineties

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Speaker 1: and the Internet was all the rage. I had a

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Speaker 1: brother in law that had joined a company called Level

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Speaker 1: three Communications that was literally building out the internet. Calls

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Speaker 1: me one day he's like, Hey, we're looking for people.

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Speaker 1: They have the following profile. I think you meet it.

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Speaker 1: Come visit and meet with our folks. And I was like,

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Speaker 1: this is my opportunity to really build out my skill sets.

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Speaker 2: Right.

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Speaker 1: I was a head of a prop trading desk at

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Speaker 1: Banker's Trust. I had a series of skill sets. But

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Speaker 1: I was really interesting in kind of going to business school.

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Speaker 1: But without going to business school. I saw this as

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Speaker 1: a fantastic opportunity to do that. So I go out.

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Speaker 1: I learned the telecom industry at work one hundred and

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Speaker 1: twenty hour weeks helping Level three raise money, build out

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Speaker 1: its business plan, and I learned a tremendous amount of

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Speaker 1: about business, about startups, about innovation in that period of time.

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Speaker 2: And what was the other startup that you helped to

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Speaker 2: co found.

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Speaker 1: Yeah, so once I left there, you know, I left

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Speaker 1: there because I saw that the industry needed a greater

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Speaker 1: level of transparency and financial discipline. So I went on

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Speaker 1: to found Sage Logics, which was really meant to be.

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Speaker 1: It was a software ASP in the telecom space, focused

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Speaker 1: on telecom providers, and my thesis was, Hey, if these

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Speaker 1: organizations don't get their head around their cost structure, that

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Speaker 1: they're all going to go bankrupt. Reality is I should

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Speaker 1: have come back to Wall Street and expressed that view

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Speaker 1: in two thousand and one, because that's essentially what ended

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Speaker 1: up happening.

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Speaker 2: Right, betting against docks instead of trying to advise people, Hey,

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Speaker 2: you better get your act together or else there's going

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Speaker 2: to be trouble exactly. So you come back to New York.

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Speaker 2: Eventually you get into credit and asset management at Alliance Bernstein.

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Speaker 2: I'm going to hold off your Lehman experience for a

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Speaker 2: few moments, just I know we can spend a lot

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Speaker 2: of time talking about that. So eventually you go to Leman,

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Speaker 2: then to Alliance Bernstein. Tell us what you did at

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Speaker 2: Alliance where you were CFO and portfolio manager.

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Speaker 1: Yes, so I was brought in by Doug People's and

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Speaker 1: Peter Krause to lead the credit organization. And I think

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Speaker 1: that when I think back to that period of time,

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Speaker 1: what they were trying to accomplish is that they had

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Speaker 1: really strong credit capabilities, but they needed to unify a

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Speaker 1: team and they needed to build an investment process that

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Speaker 1: was going to be scalable. They had some of the

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Speaker 1: most talented portfolio managers and kind of investors the world.

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Speaker 1: They really understood how to construct portfolios, which were things

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Speaker 1: that I learned from those portfolio managers, portfolio managers like

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Speaker 1: Grishaun Distenfeld that leads income at AB today. What I

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Speaker 1: brought to the table was an ability to kind of

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Speaker 1: bring the team together or to operate to singular set

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Speaker 1: of incentives, ie. Delivering performance right, not being distracted by things,

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Speaker 1: and to be able to do that at scale. I

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Speaker 1: brought the hedge fund skills, the derivative skills that you

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Speaker 1: kind of learn in operating in hedge fund and prop

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Speaker 1: desks to that traditional asset management. And what I learned

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Speaker 1: was how do you construct portfolios in a way where

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Speaker 1: you can stick with your bets over long haul but

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Speaker 1: at size right where you are the market and so

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Speaker 1: you don't have the ability to kind of increase risks

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Speaker 1: decrease risk, but rather that you are building your portfolio

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Speaker 1: so you can stick with the risks that you think

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Speaker 1: makes sense over time.

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Speaker 2: What you're describing sounds like a set of challenges that

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Speaker 2: faces any large asset manager. The ability to scale, the

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Speaker 2: ability to make sure all members of the team are

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Speaker 2: pulling in the same direction, to make sure the incentives

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Speaker 2: are aligned properly. How universal are the things that you

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Speaker 2: did at Alliance Bernstein credit to any large asset manager.

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Speaker 1: Look, those are absolutely critical elements. And it's amazing how

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Speaker 1: as the asset management industry has consolidated and these investment

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Speaker 1: organizations have grown, how difficult it is for those organizations

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Speaker 1: to pivot into those things.

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Speaker 2: Why is that? Is it just legacy systems that people

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Speaker 2: can't get past the sung costs? Or is it something no?

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Speaker 1: Or I think it ends up being cultural. I think

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Speaker 1: that investing requires focus and very similar to a lot

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Speaker 1: of organizations. You are built around these teams that are

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Speaker 1: small and agile, right because you have to adapt to

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Speaker 1: the market. Sure, but how do you pull those teams

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Speaker 1: together into larger organizations to be able to do bigger things.

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Speaker 1: And I think, you know, that's where the innovation experience

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Speaker 1: that I had within technology and within software really came

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Speaker 1: in handy because I not only understood markets and investment process,

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Speaker 1: but I was able to take kind of how do

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Speaker 1: you invest at scale? How do you bring technology as

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Speaker 1: a force multiplier for your investors so that your investors

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Speaker 1: can focus, they can be and operate in smaller or

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Speaker 1: teams make decisions quickly, but at the same time that

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Speaker 1: you can build large scale customization on behalf of your clients.

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Speaker 2: So let's talk about a little innovation. You found ab

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Speaker 2: Labs in twenty fifteen. Tell us a little bit about

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Speaker 2: what ab labs did and what it allowed you to

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Speaker 2: express within that project.

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Speaker 1: Yeah. So when I go back to that period of time,

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Speaker 1: I think there were four of us at Align Spurn

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Speaker 1: scene that realized there was something maturely changing in the market,

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Speaker 1: which was fintech was really changing and accelerate the changes

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Speaker 1: within the broader asset management system. And so myself and

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Speaker 1: you know, Vicky Waally, Matt bass carled Sprouls CTO, decided

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Speaker 1: that in order to get our organization ready, that we

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Speaker 1: needed to build that muscle, not just set the top

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Speaker 1: down as an initiative, but actually at as a bottom

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Speaker 1: up engagement tool for the organization, and so we tackled

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Speaker 1: topics like robo advisors, crypto blockchain within that construct as

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Speaker 1: a way to educate the organization much more rapidly and

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Speaker 1: get people leaning forward into innovation.

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Speaker 2: So was this a pure research group or was this

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Speaker 2: a bit of a venture fund that's focused on fintech.

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Speaker 1: So it ended up leading to both, right, it ended

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Speaker 1: up leading to venture investments, But in large part, most

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Speaker 1: of that effort was a really around building organizational readiness

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Speaker 1: to innovate. And you know, a lot of the things

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Speaker 1: that spun out of that effort really to continue to

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Speaker 1: impact that organization today in terms of the forward lean

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Speaker 1: when it comes to innovation and the overall operating stack

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Speaker 1: that allows them to be able to again allow the

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Speaker 1: portfolio managers to focus on markets and yet to be

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Speaker 1: able to deliver scalable solutions.

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Speaker 2: You mentioned culture earlier. How important is it for an

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Speaker 2: organization to have the right mindset to lean into technology,

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Speaker 2: to be aware of the fact that, hey, if you're

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Speaker 2: not caunabilizing yourself, someone else will look.

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Speaker 1: I think that culture defines success in investing and particularly

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Speaker 1: in investing organizations, that you have to set in an

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Speaker 1: investment culture where your investors, first of all, are very

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Speaker 1: aligned to delivering performance and the type of performance that's

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Speaker 1: going to end up making your clients happy. I think

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Speaker 1: that you need to have a culture where people collaborate.

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Speaker 1: If you don't, it's going to be really tough to

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Speaker 1: have scaled performance.

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Speaker 2: Right.

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Speaker 1: You can succeed in one area, but you're only going

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Speaker 1: to be as good and have as much insight is

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Speaker 1: that any one, you know, small group, which is going

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Speaker 1: to limit your success if you try to do other things.

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Speaker 1: And the final point, you know exactly the one you

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Speaker 1: brought up, which is around innovation. The world is moving

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Speaker 1: really rapidly. The way you do research, the way you

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Speaker 1: put together portfolios, the way you execute in the market

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Speaker 1: is changing. And frankly, what end advisors want right for

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Speaker 1: their clients and what we as an asset manager have

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Speaker 1: to deliver is changing very rapidly. Everyone wants mass customization

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Speaker 1: but delivered with the quality of institutional asset management, and

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Speaker 1: I think it's really requires innovation and technology in order

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Speaker 1: to do that well. And frankly, that's why I joined

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Speaker 1: Goldman Sacks because I felt that you needed the scale

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Speaker 1: resources that come with a firm like Goldman Sacks in

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Speaker 1: the analytics and the ability to really invest in technology

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Speaker 1: and in data. If we were going to succeed in

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Speaker 1: going to market in the RIA and wirehouse community and

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Speaker 1: delivering to you know, institutional quality portfolios that really meet

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Speaker 1: the individual needs of every individual at minimum sizes of

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Speaker 1: one hundred thousand dollars.

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Speaker 2: It's interesting because in the past what you're describing has

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Speaker 2: been somewhat mutually exclusive. It's very hard to deliver institutional size,

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Speaker 2: asset management and mass customization together. I'm going to assume

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Speaker 2: innovation and technology is what bridges that gap absolutely. So

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Speaker 2: let's talk about a couple of related quotes that you

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Speaker 2: have that caught my ear because it relates to where

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Speaker 2: we are on this market adoption cycle of technology and

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Speaker 2: how the world is changing. Quote. As a long term investor,

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Speaker 2: all you do is worry. But it's not about what

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Speaker 2: you're thinking. It's about how you react. Explain.

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Speaker 1: Yeah, So I think that the most successful investors, the

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Speaker 1: way they invest is they decide what works, what they

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Speaker 1: believe works over time, and they're simply trying to stick

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Speaker 1: with it. And so what is the worry about. The

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Speaker 1: worry is about, first of all, is that thing that

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Speaker 1: I believe works over the long haul to what extent

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Speaker 1: is it wrong? Because where I'm really going to underperform

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Speaker 1: is if I get a long term trend. And so

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Speaker 1: you should be constantly challenging your core thesis. But inside

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Speaker 1: of that, you know, I think it's really critical to

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Speaker 1: be humble and to understand that that core thesis you

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Speaker 1: have to stick with it over time. And so the

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Speaker 1: other aspect of this is, Okay, what can you do

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Speaker 1: to make it so that you stick with your core

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Speaker 1: core thesis? Because if you have an environment where your

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Speaker 1: core thesis, whatever it is you do, whether it's investing

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Speaker 1: in growth, investing in in companies that are lined up

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Speaker 1: with a long term trend like technology, you know you're

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Speaker 1: going to be challenged, right, And so the question is

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Speaker 1: how do you construct portfolios? How do you look out

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Speaker 1: for the challenges that are going to cause your clients

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Speaker 1: to fire you? Right? And if you can tilt out

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Speaker 1: of whatever it is that works over the long haul

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Speaker 1: in those periods of time when maybe it's gotten crowded

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Speaker 1: or over extended, you're going to be much more successful

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Speaker 1: in capturing those periods of when the opportunity is the

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Speaker 1: best i e. Buying low and selling high rather than

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Speaker 1: having to sell low because your investors essentially have lost patience.

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Speaker 2: So you raise a really interesting point about constantly having

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Speaker 2: to reevaluate your underlying thesis. But it makes me think

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Speaker 2: of one of the biggest challenges there, which is how

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Speaker 2: can you tell whether or not an underlying thesis is

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Speaker 2: no longer true or if you're just in a period

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Speaker 2: of Hey, this style is out of favor. And this

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Speaker 2: is what happens on a regular basis. Value underperforms growth

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Speaker 2: for a while, or international underperforms domestic. How can you

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Speaker 2: identify when you have a giant secular shift versus simply hey,

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Speaker 2: this has fallen out of favor these days.

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Speaker 1: Yeah, So that's where doing research and developing an investment

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Speaker 1: process are absolutely critical. Right. Your investment process makes it

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Speaker 1: so that when you know there might be a challenge,

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Speaker 1: that use other tools like momentum, like you know, risk

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Speaker 1: analytics to be able to like not question whether your

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Speaker 1: thesis is out there, but actually reduce your risks before

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Speaker 1: the market has questioned your thesis. Right, so nothing may

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Speaker 1: have changed, but if the market is changing, the pricing

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Speaker 1: of that risk, right, it matters to your portfolio. So

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Speaker 1: I think that first point is really critical, which is

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Speaker 1: you need to have things that actually diversify you out

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Speaker 1: of that long term right, and they have to kind

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Speaker 1: of take place before you've already lost money. I think

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Speaker 1: the second thing is that you want to be doing

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Speaker 1: the research and developing your process so that when your

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Speaker 1: style has gone out of favor, that you know when

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Speaker 1: to double down, right, that you know when to lean in,

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Speaker 1: and you have confidence to do it. And so that's

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Speaker 1: a lot of what investment process design is is how

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Speaker 1: do you stick with the long term bets? How do

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Speaker 1: you tilt out and tilt in rather than you know,

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Speaker 1: being kind of and reacting being backfooted or reacting that

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Speaker 1: you're actually front footed and you're able to kind of,

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Speaker 1: you know, shallow out the drawdowns and lean into the opportunities.

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Speaker 2: So we've mostly been talking about things that apply to equities,

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Speaker 2: things like momentum and value and growth. Let's talk about

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Speaker 2: the other side of a balanced portfolio, which is fixed income.

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Speaker 2: How you thinking about fixed income, be it corporate's treasury

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Speaker 2: or even tips. In what's been a pretty wild environment

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Speaker 2: where the Central Bank has raised rates five hundred and

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Speaker 2: twenty five basis points in about eighteen months. How do

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Speaker 2: how do you process that?

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Speaker 1: Yeah, so from a long term perspective, this seems trite

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Speaker 1: to say, but fixed income is about income, right, And

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Speaker 1: so the starting point is evaluating income, evaluating the likelihood

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Speaker 1: that you actually can capture and hang on to the

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Speaker 1: income because a lot of the credit instruments, if you

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Speaker 1: have losses in your portfolio, that gives up the income. Right,

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Speaker 1: So starting point is income. Shape of curves matter, So

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Speaker 1: spread curves historically most of the time are steep. Interest

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Speaker 1: rate curves most of the time are steep. That happens

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Speaker 1: not to be the case today, right.

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Speaker 2: What have we been inverted for two years?

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Speaker 1: Just about almost?

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Speaker 2: That's a pretty unusual set of circumstances, at least in

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Speaker 2: the modern era.

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Speaker 1: Well, it's also very very unusual to see an inversion

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Speaker 1: like this and not see a material slow down in growth.

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Speaker 2: Right.

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Speaker 1: Part of the reason why twelve months ago people were

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Speaker 1: forecasting with high probability that we be in a recession

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Speaker 1: is because historically, yield curve inversions really kind of announce

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Speaker 1: that we're slowing down.

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Speaker 2: Pretty good track record historically too, I.

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Speaker 1: Think that what's changed this time around is that you know,

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Speaker 1: real rates and nominal rates are high enough that they

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Speaker 1: are slowing the economy down, but there's enough offsetting fiscal

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Speaker 1: impulse within the US economy at least that you know

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Speaker 1: you have growth continuing on. And so you have this

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Speaker 1: interesting situation where inflation has been coming down, right. It

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Speaker 1: maybe not in a straight line, and certainly the last

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Speaker 1: couple of data points that we've had haven't haven't really

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Speaker 1: pleased the market in terms of the FED being able

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Speaker 1: to ease aggressively. But inflation has come down from its peak,

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Speaker 1: but growth continues. And I think that you know, for

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Speaker 1: for fixed income and the income piece, you're better off

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Speaker 1: in the front end. Now if you look at value

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Speaker 1: in the curve and from a longer term perspective, look

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Speaker 1: at what are the real rates relative to the real

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Speaker 1: ability for the economy to grow, we're pretty attractive here, right.

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Speaker 1: And the one thing we do know is that if

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Speaker 1: growth does slow down in a way that like cascades

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Speaker 1: into inflation, that bonds are going to do their job

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Speaker 1: on the price side, which is they're going to diversify

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Speaker 1: the equities that you hope.

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Speaker 2: So falling inflation still robust growth and a decent yield

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Speaker 2: on fixed income. Dare I use the word goldilocks? Is

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Speaker 2: this a pretty decent investing environment for relative to what

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Speaker 2: we've seen over the past few years.

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Speaker 1: Look, certainly on a year to day basis, if you

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Speaker 1: look at your full portfolio, you've done pretty well, right,

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Speaker 1: and that that really comes from the starting point, which is,

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Speaker 1: you know, you have high nominal yields and you have

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Speaker 1: economic growth and earnings growth on the equity side. Those

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Speaker 1: two things were working together to generate a pretty good

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Speaker 1: return in absolute terms.

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Speaker 2: Really quite quite intriguing. So let's talk a little bit

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Speaker 2: about your experience in the two thousands. You came back

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Speaker 2: to New York from the West Coast and you ended

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Speaker 2: up at Lehman Brothers working on the credit strategy side.

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Speaker 2: Tell us a little bit about what brought you to

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Speaker 2: Lehman and what were your experiences like.

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Speaker 1: Yeah, so I was a client of Lehman's back in

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Speaker 1: the early nineties, mid nineties, and so I had a

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Speaker 1: lot of relationships there, and you know, I had always

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Speaker 1: loved fix income as an investor. Unfortunately, fix income became

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Speaker 1: a lot less interesting in the later nineties, and so

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Speaker 1: my team had really pivoted towards more equity strategies. And

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Speaker 1: so when I was coming back looking to get back

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Speaker 1: into Wall Street from the technology and space, Lehman was

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Speaker 1: one of the phone calls I made. Tom Corkran and

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Speaker 1: Rick Reader were people that knew me, that had done

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Speaker 1: business with me, and they said, hey, you know, what

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Speaker 1: would you think about trading prop within Lehman Brothers? And

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Speaker 1: I said, look, I haven't traded fix income markets for

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Speaker 1: coming up on five or six years. I don't think

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Speaker 1: I should be managing capital right away. But there was

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Speaker 1: a real change going on within fixed income markets and

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Speaker 1: specifically within credit markets, which is derivatives were coming into

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Speaker 1: the space. Hedge funds were coming into the space. And

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Speaker 1: so when you looked inside of the credit business at Lehman,

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Speaker 1: the people that understood derivatives didn't understand credit. The people

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Speaker 1: that understood credit didn't understand derivatives. And I happened to

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Speaker 1: be one of the rare individuals that had grown up

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Speaker 1: understanding credit, understanding derivatives, and understanding what a hedge fund

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Speaker 1: types of trades a hedge fund would be interested in doing.

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Speaker 1: And so I came into the role, you know, with

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Speaker 1: ostensibly the title of hedge fund strategist, and my job,

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Speaker 1: my day job was really to work with the traders

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Speaker 1: and the salespeople to come up with trade ideas for

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Speaker 1: hedge funds. And so all I was doing was looking

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Speaker 1: for ideas for myself that I found was interesting, and

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Speaker 1: so that cascaded into people realize that, wait, this person

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Speaker 1: understands credit, they understand rivers, they understand these alternative strategies,

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Speaker 1: and so I was able to cascade that into running

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Speaker 1: all of credit strategy, including kind of some of the

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Speaker 1: prop prop research analysts that work within the organized.

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Speaker 2: So let's set the stage a little bit. What year

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Speaker 2: do you come back to Lehman Brothers two thousand and three,

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Speaker 2: So it's post dot com implosion. Technology had fallen about

402
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Speaker 2: eighty percent if you look at the NASDAC peak to

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Speaker 2: try suddenly had become very attractive as the Gulf War

404
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Speaker 2: was beginning. What was that era like at Lehman Brothers

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Speaker 2: in the early to mid two thousands, What what were

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Speaker 2: you seeing and what was the general energy like at

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Speaker 2: that shop? Because I remember that trading floor as being

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Speaker 2: just a monster sort of noise machine.

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Speaker 1: Yeah, it was super high energy. This was the world

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Speaker 1: of fix income right, fix income was booming. The growth

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Speaker 1: of structured credit of you know, mortgage credit, you know,

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Speaker 1: was really kind of expanding the opportunity set and every

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Speaker 1: there was a lot of credit being borrowed right, you know,

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Speaker 1: to fund companies in the aftermath of two thousand, two

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Speaker 1: thousand and two, that credit cycle, there were secondary opportunities

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Speaker 1: from a distressed debt perspective. It was just a high

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Speaker 1: end energy, rapid growth area, and so it was exciting

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Speaker 1: to be there watching what was going on, helping to

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Speaker 1: influence what was going on in terms of product creation

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Speaker 1: and client education.

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Speaker 2: I don't know if people realize, oh three was still

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Speaker 2: fairly early days of the ramp up of mortgage backed securitization,

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Speaker 2: and it had already been underway, but no way near

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Speaker 2: the numbers we saw a few years later. What was

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Speaker 2: that experience like, watching this machine start to develop some momentum.

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Speaker 1: Yeah, So I didn't directly watch the mortgage side of

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Speaker 1: the business. I was on the corporate credit side of

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Speaker 1: the business. But without question, the overall fixed income franchise

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Speaker 1: was growing, and so we were able to cascade that

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Speaker 1: into you know, growth in our franchise and product innovation.

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Speaker 1: That really was serving our clients, which were largely both

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Speaker 1: hedge funds and asset managers.

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Speaker 2: So you were Leman during what probably was the five

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Speaker 2: most exciting years in the company's one hundred and eighty

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Speaker 2: year history. Any stories stand out from that period, I

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Speaker 2: would imagine you saw a lot of things happen there.

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Speaker 1: Yeah, so I tell you that, you know the number

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Speaker 1: of stories I have around the fall of Lehman in

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Speaker 1: two thousand and eight. You know, that was a period

440
00:27:23,800 --> 00:27:26,920
Speaker 1: of time that you know, obviously a very difficult time

441
00:27:26,960 --> 00:27:30,879
Speaker 1: for the economy, for everyone involved at the human level,

442
00:27:31,480 --> 00:27:35,760
Speaker 1: but you know, it was a tremendous leadership kind of

443
00:27:35,840 --> 00:27:38,960
Speaker 1: experience because you really got to understand what you were

444
00:27:39,000 --> 00:27:41,919
Speaker 1: made of, who you were about, and you got to

445
00:27:41,960 --> 00:27:46,159
Speaker 1: develop a reputation. You know, from my standpoint, you know,

446
00:27:46,240 --> 00:27:48,840
Speaker 1: the story that stands out to me. So, you know,

447
00:27:48,960 --> 00:27:52,720
Speaker 1: I had taken over from Rick Reader doing the weekly

448
00:27:52,800 --> 00:27:56,919
Speaker 1: credit call, so on a weekly basis, myself, you know,

449
00:27:57,280 --> 00:28:01,680
Speaker 1: or Eric Felder would do a call really surveilling from

450
00:28:01,720 --> 00:28:04,679
Speaker 1: a macro perspective what was going on in markets and

451
00:28:04,760 --> 00:28:09,800
Speaker 1: specifically credit markets. And so Lehman had failed on Sunday

452
00:28:10,000 --> 00:28:13,639
Speaker 1: right gone bankrupt, had gone in taken my box in

453
00:28:13,760 --> 00:28:14,600
Speaker 1: and cleaned up.

454
00:28:14,480 --> 00:28:17,440
Speaker 2: My desk, literally like walking out with the banker box

455
00:28:17,440 --> 00:28:18,480
Speaker 2: full of personalized and.

456
00:28:18,920 --> 00:28:22,160
Speaker 1: Being interviewed on, you know, on the outside by the media.

457
00:28:22,359 --> 00:28:25,760
Speaker 1: But Monday morning, I walk in, I'm wearing a suit,

458
00:28:26,160 --> 00:28:29,240
Speaker 1: ready to go and saying and we're all standing around

459
00:28:29,520 --> 00:28:33,920
Speaker 1: not knowing what to do, and post bankruptcy, post bankruptcy,

460
00:28:34,080 --> 00:28:37,400
Speaker 1: we don't know if we have salaries or head or

461
00:28:37,560 --> 00:28:41,520
Speaker 1: healthcare for that matter. And my team and I are

462
00:28:41,560 --> 00:28:46,160
Speaker 1: sitting down. Everyone's kind of, you know, at different stages

463
00:28:46,400 --> 00:28:50,680
Speaker 1: of what do we do. And we have this call

464
00:28:50,800 --> 00:28:54,880
Speaker 1: that we do every week that is the following morning.

465
00:28:55,400 --> 00:28:57,360
Speaker 1: And so Mike, wait, just let me make sure I

466
00:28:57,440 --> 00:28:57,960
Speaker 1: understand this.

467
00:28:58,400 --> 00:29:03,200
Speaker 2: So Sunday Leman files. Yeah, Monday, it's front page news

468
00:29:03,360 --> 00:29:06,400
Speaker 2: all over the world. And what time is your call?

469
00:29:06,520 --> 00:29:07,280
Speaker 2: Eight am?

470
00:29:07,400 --> 00:29:10,120
Speaker 1: It's it was at seven five am.

471
00:29:10,520 --> 00:29:13,840
Speaker 2: So you have to get on the horn and speak

472
00:29:13,880 --> 00:29:18,400
Speaker 2: to the entire sales team and and.

473
00:29:17,760 --> 00:29:22,400
Speaker 1: All of our clients, right. And I sat with my

474
00:29:22,520 --> 00:29:26,600
Speaker 1: team and I said, look, I want to do this

475
00:29:27,240 --> 00:29:29,960
Speaker 1: because it's the right thing to do. And I don't

476
00:29:30,000 --> 00:29:33,400
Speaker 1: know what our outcome is here, but you know, I

477
00:29:33,440 --> 00:29:35,240
Speaker 1: don't want to go out this way. I want to

478
00:29:35,280 --> 00:29:38,120
Speaker 1: go out with everyone knowing that the last thing we

479
00:29:38,200 --> 00:29:42,280
Speaker 1: did in our jobs was we tried to serve them right.

480
00:29:42,840 --> 00:29:45,640
Speaker 1: And and so, you know, one of my team members

481
00:29:46,360 --> 00:29:50,040
Speaker 1: got by name of Krishna hag Day and I worked

482
00:29:50,200 --> 00:29:54,200
Speaker 1: till probably eleven thirty or midnight that night, put together

483
00:29:54,280 --> 00:29:55,959
Speaker 1: the presentation the next morning.

484
00:29:56,160 --> 00:29:57,680
Speaker 2: That's till Sunday night midnight.

485
00:29:58,040 --> 00:30:03,240
Speaker 1: Sorry, that's Monday night midnight. Call goes on on Tuesday.

486
00:30:04,520 --> 00:30:07,920
Speaker 1: We show up on Tuesday morning and we're going over

487
00:30:07,960 --> 00:30:11,920
Speaker 1: the internal hoot and there's you know, probably three hundred

488
00:30:11,920 --> 00:30:15,720
Speaker 1: four hundred clients styled in however many more right, and

489
00:30:16,680 --> 00:30:20,040
Speaker 1: everyone looks up and they're like, we can't believe these

490
00:30:20,040 --> 00:30:24,160
Speaker 1: guys are still going right. And and in fact, I

491
00:30:24,200 --> 00:30:27,640
Speaker 1: think it was about an hour later that over the hoot,

492
00:30:28,720 --> 00:30:33,640
Speaker 1: the CEO of Barclays comes over and you know, announces

493
00:30:33,720 --> 00:30:38,040
Speaker 1: that Barclays is buying Lehman Brothers right the US operations,

494
00:30:38,560 --> 00:30:43,040
Speaker 1: and someone in Equities has the you know, hilarity of

495
00:30:43,240 --> 00:30:47,560
Speaker 1: playing God's Save the Queen over the hoot. But the

496
00:30:47,880 --> 00:30:53,400
Speaker 1: number of emails that I got around from clients saying, wow,

497
00:30:53,960 --> 00:30:57,240
Speaker 1: you know, we've always respected your work, but to go

498
00:30:57,320 --> 00:31:01,840
Speaker 1: on and to do your job in servicing your clients

499
00:31:03,120 --> 00:31:05,800
Speaker 1: on this day of all days, is like hats off

500
00:31:05,840 --> 00:31:08,440
Speaker 1: to you, And so I think that like that was

501
00:31:08,520 --> 00:31:11,040
Speaker 1: one of the things that I think it's lost in

502
00:31:11,120 --> 00:31:13,959
Speaker 1: all the stories and the media is that you had

503
00:31:13,960 --> 00:31:16,560
Speaker 1: a group of people here that really did care about

504
00:31:16,600 --> 00:31:21,240
Speaker 1: clients and went out of their way even when the

505
00:31:21,320 --> 00:31:23,560
Speaker 1: chips were down, to keep doing their jobs.

506
00:31:23,960 --> 00:31:29,000
Speaker 2: So Barclays takes over Lehman us with I think there

507
00:31:29,040 --> 00:31:31,479
Speaker 2: was a FED backing of that, if I remember correctly,

508
00:31:31,600 --> 00:31:33,760
Speaker 2: or there was some Was there a guarantee or did

509
00:31:33,800 --> 00:31:38,000
Speaker 2: there no backing? But it was post bankruptcy, so all

510
00:31:38,040 --> 00:31:41,960
Speaker 2: the prior liabilities would go away without a FED banking,

511
00:31:42,680 --> 00:31:46,680
Speaker 2: without a FED backing, and you end up in I

512
00:31:46,720 --> 00:31:50,920
Speaker 2: guess it's a fairly similar role at Barclays, right. How

513
00:31:51,160 --> 00:31:53,600
Speaker 2: similar was the transition? How smooth was that?

514
00:31:54,640 --> 00:31:58,520
Speaker 1: It was quite a bumpy transition. It's a pretty awkward

515
00:31:58,640 --> 00:32:02,280
Speaker 1: position to be interviewing for your own job. We had

516
00:32:02,280 --> 00:32:07,480
Speaker 1: a fantastic franchise, right, you know, the Lehman franchise was

517
00:32:07,520 --> 00:32:11,640
Speaker 1: really known for research and for it was very very

518
00:32:11,640 --> 00:32:16,000
Speaker 1: strong in credit and in the derivative space, and we

519
00:32:16,000 --> 00:32:19,200
Speaker 1: were known for serving clients right within that space, and

520
00:32:19,280 --> 00:32:25,480
Speaker 1: so that transition happened. It was messy, as you can imagine,

521
00:32:26,080 --> 00:32:29,560
Speaker 1: but also we kind of very quickly got back to

522
00:32:29,680 --> 00:32:34,160
Speaker 1: work because there were opportunities in markets, clients needed advice

523
00:32:34,200 --> 00:32:38,160
Speaker 1: in markets, and we needed to figure out what was

524
00:32:38,200 --> 00:32:40,080
Speaker 1: going to happen to the financial system.

525
00:32:40,200 --> 00:32:43,200
Speaker 2: So Barclays had, if i I'm sure I'm getting this wrong,

526
00:32:43,400 --> 00:32:46,120
Speaker 2: they had a small US presence before the.

527
00:32:46,080 --> 00:32:48,920
Speaker 1: Purchase, pretty limited US purchase, and.

528
00:32:48,840 --> 00:32:52,040
Speaker 2: This gave them a fairly substantial footprint in the United States.

529
00:32:52,440 --> 00:32:54,680
Speaker 2: Were there a lot of redundancies or did you pretty

530
00:32:54,720 --> 00:32:57,680
Speaker 2: much just pick up your whole corporate fixed income team

531
00:32:58,080 --> 00:32:59,400
Speaker 2: and slought them into Barclay's.

532
00:32:59,480 --> 00:33:03,040
Speaker 1: Yeah, so, so there was a good amount of redundancy,

533
00:33:04,440 --> 00:33:07,720
Speaker 1: which was painful. But it was literally the fifth round

534
00:33:07,720 --> 00:33:11,320
Speaker 1: of layoffs that we went through at the time, and

535
00:33:11,400 --> 00:33:14,040
Speaker 1: again we said goodbye to a lot of really good

536
00:33:14,080 --> 00:33:17,600
Speaker 1: people who you know, thankfully most of the people ended

537
00:33:17,680 --> 00:33:21,840
Speaker 1: up landing well over time, but it really told you

538
00:33:21,880 --> 00:33:24,520
Speaker 1: a lot about the people that you worked with and

539
00:33:24,560 --> 00:33:28,120
Speaker 1: how they operated. And you know, for me, it was

540
00:33:28,160 --> 00:33:31,760
Speaker 1: definitely formative as a leader to be able to go

541
00:33:31,840 --> 00:33:34,800
Speaker 1: through that difficult period of time to try to do

542
00:33:34,920 --> 00:33:38,880
Speaker 1: my best to support my team and to serve my clients.

543
00:33:39,880 --> 00:33:44,520
Speaker 2: It really looks like Barclays stole you guys, stole the

544
00:33:45,160 --> 00:33:51,520
Speaker 2: crown jewels of Lehman Brothers post bankruptcy when everybody was terrified, like, hey,

545
00:33:51,560 --> 00:33:54,360
Speaker 2: we can't figure out what's going on there. Post bankruptcy,

546
00:33:55,200 --> 00:33:58,840
Speaker 2: the assumption is all the risk has attenuated and you're

547
00:33:59,000 --> 00:34:03,880
Speaker 2: just left with searched through the rubble of the collapse,

548
00:34:03,960 --> 00:34:08,200
Speaker 2: and here's some really spectacular assets, great teams and a

549
00:34:08,239 --> 00:34:13,319
Speaker 2: long history of making money. Uh, what was the experience, like,

550
00:34:13,320 --> 00:34:15,840
Speaker 2: what was the transition like to Barclays?

551
00:34:16,640 --> 00:34:19,960
Speaker 1: Look, you know, I think that it was surreal to

552
00:34:20,320 --> 00:34:24,120
Speaker 1: go from one firm to another, and it's an experience

553
00:34:24,160 --> 00:34:26,120
Speaker 1: that most people won't have.

554
00:34:26,440 --> 00:34:29,120
Speaker 2: Right literally in the same building, right you just change

555
00:34:29,120 --> 00:34:30,440
Speaker 2: the sign on the front door.

556
00:34:30,440 --> 00:34:34,920
Speaker 1: In the same building, although we moved around, but you know,

557
00:34:35,040 --> 00:34:37,440
Speaker 1: it was real. But you know, I think when you

558
00:34:37,560 --> 00:34:42,160
Speaker 1: work in financial services, you're used to change, You're used

559
00:34:42,200 --> 00:34:46,360
Speaker 1: to disruption, probably not at that scale and at that speed.

560
00:34:46,920 --> 00:34:49,560
Speaker 1: But you know, the the other thing I would tell

561
00:34:49,600 --> 00:34:52,840
Speaker 1: you is that you know what the organization was able

562
00:34:52,840 --> 00:34:58,480
Speaker 1: to accomplish and what we as individuals learned from that

563
00:34:58,600 --> 00:35:01,960
Speaker 1: experience was just like priceless. I mean, once you've been

564
00:35:02,080 --> 00:35:05,680
Speaker 1: through an environment like that, everything else kind of pales

565
00:35:05,719 --> 00:35:10,000
Speaker 1: by comparison. You kind of wake up and you know

566
00:35:09,800 --> 00:35:12,920
Speaker 1: you're able to deal with any sort of crisis, right

567
00:35:13,040 --> 00:35:20,120
Speaker 1: Like I'll contrast that with the pandemic, where which was

568
00:35:20,239 --> 00:35:22,960
Speaker 1: equally kind of a it was a much more massive

569
00:35:23,120 --> 00:35:26,880
Speaker 1: crisis at both the personal level, you know, operational level.

570
00:35:27,280 --> 00:35:30,640
Speaker 1: But you know, we've been through crisis, and I think

571
00:35:30,680 --> 00:35:34,239
Speaker 1: for managers that have been through crisis, have had to

572
00:35:34,280 --> 00:35:38,759
Speaker 1: manage risk through crisis, that you get used to it,

573
00:35:38,840 --> 00:35:42,000
Speaker 1: You learn the lessons, you're able to roll them forward.

574
00:35:42,080 --> 00:35:44,800
Speaker 1: And frankly, it's one of the things that I think

575
00:35:45,080 --> 00:35:48,680
Speaker 1: I do really well is in these periods of difficulty

576
00:35:48,800 --> 00:35:52,160
Speaker 1: and crisis that you know, I'm able to zoom out

577
00:35:52,280 --> 00:35:56,680
Speaker 1: and understand how to deal with the crisis, kind of

578
00:35:56,719 --> 00:35:59,759
Speaker 1: slow things down, get people to pull people together, to

579
00:36:00,000 --> 00:36:04,040
Speaker 1: communicate and to solve things as if there are problems.

580
00:36:04,719 --> 00:36:09,359
Speaker 2: That baptism of fire is unique to our generation. I'm

581
00:36:09,360 --> 00:36:14,000
Speaker 2: gonna imagine the previous generation went through the eighty seven

582
00:36:14,080 --> 00:36:17,799
Speaker 2: crash and the two thousand dot Com implosion sort of

583
00:36:17,920 --> 00:36:22,080
Speaker 2: was the bridge between the two. I'm curious how long

584
00:36:22,160 --> 00:36:25,720
Speaker 2: did it take before you were standing up that weekly

585
00:36:25,920 --> 00:36:29,560
Speaker 2: credit call at Barclays that used to do at Lehman Brothers.

586
00:36:30,280 --> 00:36:33,080
Speaker 1: I think it was as soon as we.

587
00:36:32,920 --> 00:36:35,440
Speaker 2: Were allowed to, like a couple of months.

588
00:36:36,480 --> 00:36:37,480
Speaker 1: It was more weeks.

589
00:36:37,680 --> 00:36:38,320
Speaker 2: Oh really?

590
00:36:38,600 --> 00:36:39,040
Speaker 1: Yeah?

591
00:36:39,120 --> 00:36:42,320
Speaker 2: And you continue doing that at Barclays for how long?

592
00:36:43,239 --> 00:36:45,919
Speaker 1: It was about eighteen months until a Lin spurn Steen

593
00:36:46,880 --> 00:36:49,080
Speaker 1: gave me a call and said, Hey, we're looking for

594
00:36:49,120 --> 00:36:52,600
Speaker 1: ahead of credit. Any interest in talking to us?

595
00:36:52,760 --> 00:36:57,799
Speaker 2: Huh? Really really quite fascinating. So what's the big takeaway

596
00:36:59,120 --> 00:37:03,799
Speaker 2: from that experience? We've talked about innovation and culture. Now

597
00:37:03,840 --> 00:37:07,359
Speaker 2: you bring up the issue of leadership. What did that

598
00:37:07,520 --> 00:37:09,160
Speaker 2: entire experience leave you with?

599
00:37:09,680 --> 00:37:12,200
Speaker 1: Yeah? So, so look, I think there are a couple

600
00:37:12,239 --> 00:37:15,600
Speaker 1: of different things that I took away. The first and

601
00:37:15,640 --> 00:37:18,400
Speaker 1: foremost is you take care of your people, and you

602
00:37:18,520 --> 00:37:21,279
Speaker 1: t take care of your clients, and everything else is

603
00:37:21,280 --> 00:37:25,359
Speaker 1: going to take care of itself. Right. I think that

604
00:37:25,360 --> 00:37:28,000
Speaker 1: that period of time for me, because I was very

605
00:37:28,040 --> 00:37:32,040
Speaker 1: involved in working with the New York Fed around what

606
00:37:32,080 --> 00:37:37,280
Speaker 1: do we do to stabilize things? And provided despite having

607
00:37:37,320 --> 00:37:42,480
Speaker 1: gone bankrupt, provided a lot of insight and ideas around

608
00:37:42,920 --> 00:37:46,120
Speaker 1: actions that could be taken to really stabilize the US

609
00:37:46,200 --> 00:37:50,719
Speaker 1: financial system. And for me, it was a calling around,

610
00:37:52,440 --> 00:37:56,120
Speaker 1: you know, making sure that I didn't just operate within

611
00:37:56,160 --> 00:38:00,120
Speaker 1: an organization and with narrow goals, but rather that the

612
00:38:00,239 --> 00:38:04,040
Speaker 1: importance that the financial system plays when it comes to

613
00:38:04,719 --> 00:38:09,360
Speaker 1: the US economy and the strength of the nation is

614
00:38:09,400 --> 00:38:12,320
Speaker 1: absolutely critical, and that we can't take that for granted.

615
00:38:12,840 --> 00:38:15,680
Speaker 1: And you know, there's a higher calling for anyone that

616
00:38:15,800 --> 00:38:19,680
Speaker 1: works in a seat like I do today, which is

617
00:38:20,080 --> 00:38:23,880
Speaker 1: you have a responsibility to make sure that the country

618
00:38:23,960 --> 00:38:27,200
Speaker 1: benefits from the work that you're doing. And so I've

619
00:38:27,239 --> 00:38:30,200
Speaker 1: always through that period of time one of my biggest

620
00:38:30,200 --> 00:38:34,239
Speaker 1: takeaways was any policy and maker calls, I'm going to

621
00:38:34,360 --> 00:38:37,360
Speaker 1: provide them the best advice I can, the best insights

622
00:38:37,360 --> 00:38:40,640
Speaker 1: I can, so that they can do the best job

623
00:38:40,680 --> 00:38:44,759
Speaker 1: they can for the US economy. And it's that economy

624
00:38:44,800 --> 00:38:49,520
Speaker 1: that impacts so many people in the country, both their wealth,

625
00:38:49,600 --> 00:38:54,359
Speaker 1: their wellbeing, as well as the country's national security. And

626
00:38:54,400 --> 00:38:56,680
Speaker 1: I think that, you know, a lot of folks look

627
00:38:56,719 --> 00:39:00,120
Speaker 1: at our industry and they question, you know, whether or

628
00:39:00,600 --> 00:39:05,400
Speaker 1: whether why we exist, whether we need to exist. You know,

629
00:39:05,800 --> 00:39:08,759
Speaker 1: I think that, you know, history has shown that the

630
00:39:10,200 --> 00:39:15,560
Speaker 1: you know, the the ability to grow the country and

631
00:39:15,719 --> 00:39:21,480
Speaker 1: invest in innovation and infrastructure is really subject to the

632
00:39:21,520 --> 00:39:24,759
Speaker 1: ability to finance that infrastructure. And so one of the

633
00:39:24,800 --> 00:39:28,200
Speaker 1: things I find amazing about working at Coleman Sachs is

634
00:39:28,200 --> 00:39:31,240
Speaker 1: that that is very much our purpose, right, We're here

635
00:39:31,680 --> 00:39:38,120
Speaker 1: to help fund, you know, the the growth in the economy.

636
00:39:38,280 --> 00:39:41,600
Speaker 1: You know, yes, we do that to to make money

637
00:39:41,840 --> 00:39:46,840
Speaker 1: as an organization, but ultimately that benefits so many people

638
00:39:47,719 --> 00:39:50,280
Speaker 1: from their longer term kind of growth.

639
00:39:50,960 --> 00:39:56,400
Speaker 2: So you mentioned you frequently were responding to various policymakers.

640
00:39:56,719 --> 00:39:59,440
Speaker 2: I'm trying to remember was was Tim Geithner new York

641
00:39:59,480 --> 00:40:02,680
Speaker 2: Fed she when you were a Lehman or did he

642
00:40:02,719 --> 00:40:03,520
Speaker 2: come in afterwards?

643
00:40:03,560 --> 00:40:07,000
Speaker 1: No, Geitner was head of the New York festal.

644
00:40:06,800 --> 00:40:08,279
Speaker 2: So you must have had a lot of back and

645
00:40:08,320 --> 00:40:11,080
Speaker 2: forth with him over that time. There were some people

646
00:40:11,840 --> 00:40:16,560
Speaker 2: working both in the Treasury Department and in the New

647
00:40:16,640 --> 00:40:20,920
Speaker 2: York Fed and the Federal Reserve clearly paying very close

648
00:40:20,960 --> 00:40:22,920
Speaker 2: attention at that point to what was going on.

649
00:40:23,120 --> 00:40:25,319
Speaker 1: Yeah, I spent more of my time with the New

650
00:40:25,400 --> 00:40:30,040
Speaker 1: York Markets team, so Haley Bowski and her team, because

651
00:40:30,160 --> 00:40:34,520
Speaker 1: I was a technical individual, right, like I'm a market expert,

652
00:40:34,640 --> 00:40:39,239
Speaker 1: I'm not a policy expert, but I would say that

653
00:40:39,440 --> 00:40:41,760
Speaker 1: some of the work that I did ended up turning

654
00:40:41,800 --> 00:40:45,360
Speaker 1: into some of the programs that the FED actually launched,

655
00:40:45,440 --> 00:40:51,480
Speaker 1: including the TALF where I can trace back through some

656
00:40:51,560 --> 00:40:53,759
Speaker 1: of the books that have been written, including the one

657
00:40:53,760 --> 00:40:56,960
Speaker 1: where I'm a small character that you know some of

658
00:40:56,960 --> 00:41:00,520
Speaker 1: the work I did turned into policy, which was you're

659
00:41:00,520 --> 00:41:04,719
Speaker 1: reassuring to know that I did work that helped students

660
00:41:04,760 --> 00:41:08,840
Speaker 1: get student loans through that period of time when banks

661
00:41:08,920 --> 00:41:11,360
Speaker 1: weren't able to finance those loans.

662
00:41:11,480 --> 00:41:16,040
Speaker 2: Huh, really really fascinating when everything was frozen. Hey, the

663
00:41:16,080 --> 00:41:20,040
Speaker 2: policymakers go to the experts because they don't have that expertise.

664
00:41:20,560 --> 00:41:23,879
Speaker 2: So let's talk a little bit about your role as

665
00:41:23,960 --> 00:41:29,680
Speaker 2: a CIO. First. What is public investing we referring to

666
00:41:30,320 --> 00:41:32,880
Speaker 2: public stocks and bonds or what does this include?

667
00:41:33,040 --> 00:41:37,440
Speaker 1: Yeah, it includes public stocks and bonds managed both fundamentally

668
00:41:37,600 --> 00:41:41,960
Speaker 1: and through our quint business and in individual sleeves, as

669
00:41:42,000 --> 00:41:43,839
Speaker 1: well as multi asset portfolios.

670
00:41:43,960 --> 00:41:47,200
Speaker 2: So multi asset could be a hedge fund or is

671
00:41:47,200 --> 00:41:47,840
Speaker 2: that internal?

672
00:41:47,920 --> 00:41:52,640
Speaker 1: Is that outside it's all internally managed, but it could

673
00:41:52,680 --> 00:41:57,320
Speaker 1: include a hedge fund, it could include more traditional mutual

674
00:41:57,360 --> 00:41:58,480
Speaker 1: fund or a ETF.

675
00:41:58,800 --> 00:42:02,200
Speaker 2: So prior to this, you were co cio with fixed

676
00:42:02,239 --> 00:42:05,840
Speaker 2: income at Goldman for a couple of years. First question,

677
00:42:06,239 --> 00:42:11,800
Speaker 2: co cio always seems like that's challenging when there's multiple heads.

678
00:42:12,000 --> 00:42:13,719
Speaker 2: How do you run as co CIOs?

679
00:42:13,920 --> 00:42:17,560
Speaker 1: Yeah, I would say rather than challenging, it's actually fantastic

680
00:42:17,760 --> 00:42:21,960
Speaker 1: because you have a partner. Obviously, it takes effort. When

681
00:42:21,960 --> 00:42:24,279
Speaker 1: you have a partner, you have to invest in a relationship,

682
00:42:24,320 --> 00:42:27,560
Speaker 1: you have to communicate and over communicate. But it's fantastic

683
00:42:27,600 --> 00:42:31,800
Speaker 1: what you can accomplish where you have different perspectives, different

684
00:42:31,840 --> 00:42:36,560
Speaker 1: points of view, and the geographic and kind of resource

685
00:42:36,600 --> 00:42:41,560
Speaker 1: span of two individuals. So my cohad and cocio when

686
00:42:42,440 --> 00:42:45,520
Speaker 1: I was leading fixed income, sat in London and because

687
00:42:45,520 --> 00:42:47,680
Speaker 1: of that we were able to cover more of our

688
00:42:47,840 --> 00:42:53,239
Speaker 1: investment leaders, gather more perspectives, wider set of perspectives on

689
00:42:53,440 --> 00:42:57,040
Speaker 1: investing markets. He came from more of an emerging markets background.

690
00:42:57,360 --> 00:43:01,160
Speaker 1: I have from more of a develop market credit background.

691
00:43:01,640 --> 00:43:05,239
Speaker 1: We mixed kind of macro and bottoms up and we're

692
00:43:05,280 --> 00:43:08,000
Speaker 1: able to do I felt a really good job, but

693
00:43:08,280 --> 00:43:11,239
Speaker 1: it requires investing in the relationship. You have to make

694
00:43:11,280 --> 00:43:14,279
Speaker 1: sure you're communicating all the time. You're doing a lot

695
00:43:14,320 --> 00:43:16,879
Speaker 1: of kind of weekend calls to make sure you're caught up,

696
00:43:17,719 --> 00:43:21,319
Speaker 1: but it can be quite powerful and it prevents you

697
00:43:21,360 --> 00:43:22,279
Speaker 1: from missing.

698
00:43:21,960 --> 00:43:25,520
Speaker 2: Things, especially they're starting out six or eight hours ahead

699
00:43:25,520 --> 00:43:29,000
Speaker 2: of us, you're ending a couple hours after them. It

700
00:43:29,200 --> 00:43:34,279
Speaker 2: allows pretty much almost a full day of coverage that

701
00:43:34,360 --> 00:43:37,080
Speaker 2: you wouldn't necessarily get if both of you in the

702
00:43:37,120 --> 00:43:40,600
Speaker 2: New York of both of you in London. Absolutely, So

703
00:43:40,680 --> 00:43:44,520
Speaker 2: let's talk about your current role CIO of public investing.

704
00:43:45,000 --> 00:43:47,520
Speaker 2: That's kind of an unusual title. I don't know a

705
00:43:47,560 --> 00:43:50,680
Speaker 2: lot of firms that break the world down that way.

706
00:43:50,920 --> 00:43:54,800
Speaker 2: Tell us a little bit about the thinking behind public investing.

707
00:43:55,239 --> 00:43:57,000
Speaker 2: Why did Goldman structure it that way?

708
00:43:57,280 --> 00:44:01,560
Speaker 1: Yeah, so we have a very large effort to invest

709
00:44:01,680 --> 00:44:07,000
Speaker 1: in private assets across credit and equity. In order to

710
00:44:07,080 --> 00:44:10,720
Speaker 1: make sure that we were also investing in our public

711
00:44:10,760 --> 00:44:14,279
Speaker 1: investment strategies, we felt it was important to kind of

712
00:44:14,360 --> 00:44:20,640
Speaker 1: unify those strategies under public investing structure. I think that

713
00:44:20,960 --> 00:44:25,120
Speaker 1: when you think about and look at the evolution of

714
00:44:25,160 --> 00:44:28,319
Speaker 1: public markets, there's a lot of change going on, and

715
00:44:28,560 --> 00:44:33,120
Speaker 1: both from a trading perspective, a market structure perspective. You know,

716
00:44:33,160 --> 00:44:38,120
Speaker 1: hedge funds, non hedge funds, ETFs, passive, active, and in

717
00:44:38,239 --> 00:44:42,080
Speaker 1: order to really leverage the capabilities we have from a

718
00:44:42,160 --> 00:44:46,640
Speaker 1: data analytics perspective across all these strategies, we felt bringing

719
00:44:46,680 --> 00:44:53,760
Speaker 1: these historically kind of completely independent strategies together to deliver

720
00:44:54,000 --> 00:44:56,520
Speaker 1: better performance for clients made a lot of sense.

721
00:44:57,480 --> 00:45:00,600
Speaker 2: That's really kind of intriguing. As opposed to saying fixed

722
00:45:00,640 --> 00:45:04,560
Speaker 2: income public and private, equity public and private, you guys

723
00:45:04,760 --> 00:45:09,200
Speaker 2: are using the divining line as public versus private. Obviously

724
00:45:09,400 --> 00:45:12,920
Speaker 2: very different asset classes and different structures, so I kind

725
00:45:12,920 --> 00:45:16,960
Speaker 2: of get a better sense of that structure. Tell us

726
00:45:16,960 --> 00:45:19,880
Speaker 2: a little bit about what is the day in the

727
00:45:19,920 --> 00:45:23,880
Speaker 2: life of Goldman Sachs, chief investment Officer of public Investing

728
00:45:24,640 --> 00:45:26,880
Speaker 2: for the Asset Management Group. What does that look like?

729
00:45:27,360 --> 00:45:30,320
Speaker 1: Yeah, so I think like a lot of investors, like Frankly,

730
00:45:30,360 --> 00:45:33,600
Speaker 1: a lot of advisors, you know, I wake up every day,

731
00:45:34,040 --> 00:45:36,759
Speaker 1: get in and the first thing I'm looking at is

732
00:45:36,840 --> 00:45:41,080
Speaker 1: markets in the prior days worth of performance. Right, performance

733
00:45:41,120 --> 00:45:44,520
Speaker 1: is job one for any investor, and so that's exactly

734
00:45:44,520 --> 00:45:47,960
Speaker 1: what I'm kind of focusing my time. And then from

735
00:45:48,040 --> 00:45:51,200
Speaker 1: there it's really going to go around three things that

736
00:45:51,560 --> 00:45:55,239
Speaker 1: deliver performance over the long haul, which is people, process

737
00:45:55,360 --> 00:45:56,120
Speaker 1: and platform.

738
00:45:56,640 --> 00:45:59,759
Speaker 2: Say that again, people, process, platform, Okay.

739
00:45:59,560 --> 00:46:03,120
Speaker 1: Got it? And people as obvious, your investors. Making sure

740
00:46:03,160 --> 00:46:07,000
Speaker 1: you're checking in on them, investing in them, catching up

741
00:46:07,040 --> 00:46:11,400
Speaker 1: with them on what they're focused on, what needs they have,

742
00:46:11,560 --> 00:46:16,040
Speaker 1: what resources they need. Process. We're constantly doing performance and

743
00:46:16,080 --> 00:46:19,640
Speaker 1: process reviews across our different strategies, and really the goal

744
00:46:19,719 --> 00:46:22,600
Speaker 1: there is to make sure that our team members are

745
00:46:22,680 --> 00:46:26,279
Speaker 1: learning from best practices across the entire platform, and that

746
00:46:26,360 --> 00:46:30,960
Speaker 1: we're bringing the insights across not just public but public

747
00:46:31,000 --> 00:46:36,560
Speaker 1: and private into our portfolios and our portfolio decision making.

748
00:46:37,000 --> 00:46:40,840
Speaker 1: The final thing really goes back to that story around innovation,

749
00:46:42,000 --> 00:46:45,280
Speaker 1: which is I don't think a lot of asset managers

750
00:46:45,320 --> 00:46:48,160
Speaker 1: out there are like, oh, we have systems, We've outsourced

751
00:46:48,160 --> 00:46:51,880
Speaker 1: our systems. That's a good way to fall behind the

752
00:46:51,920 --> 00:46:55,440
Speaker 1: evolution in the marketplace. If you look at innovations like

753
00:46:55,760 --> 00:46:59,759
Speaker 1: what's happening in AI. The only way to keep up

754
00:46:59,840 --> 00:47:03,640
Speaker 1: and deliver strong performance going forward is going to be

755
00:47:03,760 --> 00:47:06,759
Speaker 1: to be investing in your data and analytics, and that

756
00:47:06,880 --> 00:47:11,239
Speaker 1: requires a scale and a focus that very few CIOs

757
00:47:11,360 --> 00:47:15,799
Speaker 1: actually put in. And so from my perspective, you know,

758
00:47:15,960 --> 00:47:19,279
Speaker 1: all those things come together in delivering strong performance. But

759
00:47:19,760 --> 00:47:22,839
Speaker 1: but you know, I think the other dimension of this

760
00:47:23,400 --> 00:47:25,920
Speaker 1: is that clients are looking for more than just a

761
00:47:25,960 --> 00:47:30,600
Speaker 1: return number, right, They're increasing looking for customization so that

762
00:47:30,640 --> 00:47:34,399
Speaker 1: the returns match up with their needs and that they're

763
00:47:34,440 --> 00:47:39,760
Speaker 1: delivered in a tax efficient manner and delivered customized specifically

764
00:47:39,840 --> 00:47:42,920
Speaker 1: for them. And so when it comes to direct indexing,

765
00:47:43,400 --> 00:47:47,000
Speaker 1: you know, when it comes to a SMA of communis

766
00:47:47,200 --> 00:47:50,880
Speaker 1: and taxable fixed income, those are things that we're able

767
00:47:50,960 --> 00:47:57,719
Speaker 1: to deliver with the quality of institutional quality, portfolio construction

768
00:47:57,840 --> 00:48:01,480
Speaker 1: and insight, but all the way down as I mentioned before,

769
00:48:01,640 --> 00:48:05,840
Speaker 1: to one hundred thousand dollars minimum size, and we're able

770
00:48:05,920 --> 00:48:10,880
Speaker 1: to kind of take all this knowledge, all this investment expertise,

771
00:48:11,239 --> 00:48:14,600
Speaker 1: and really use it to solve client problems, which is

772
00:48:14,680 --> 00:48:16,880
Speaker 1: the solutions dimension of our business.

773
00:48:17,800 --> 00:48:22,600
Speaker 2: Really interesting. Your recent background was more credit and fixed income.

774
00:48:23,080 --> 00:48:26,000
Speaker 2: Lier in your career a little more on the equity side.

775
00:48:26,520 --> 00:48:32,800
Speaker 2: What's it like being responsible for the whole public investing side,

776
00:48:33,000 --> 00:48:37,560
Speaker 2: especially given how much things have changed on the equity side.

777
00:48:37,600 --> 00:48:39,160
Speaker 1: I got to say I have the best job in

778
00:48:39,200 --> 00:48:42,920
Speaker 1: the world, right. I get to see every investment process,

779
00:48:43,000 --> 00:48:46,960
Speaker 1: every investment decision. I get to interact with the smartest

780
00:48:47,000 --> 00:48:51,880
Speaker 1: people that genuinely care about delivering performance to their clients

781
00:48:52,200 --> 00:48:55,719
Speaker 1: and solving helping their clients solve their problems. Like every

782
00:48:55,800 --> 00:48:58,360
Speaker 1: day I wake up and I can't believe how lucky

783
00:48:58,400 --> 00:49:01,439
Speaker 1: I am to be able to walk in and learn

784
00:49:01,480 --> 00:49:05,960
Speaker 1: something new from my investors every single day, And that, frankly,

785
00:49:06,080 --> 00:49:09,200
Speaker 1: is one of the things that I think differentiates our organization.

786
00:49:09,440 --> 00:49:13,360
Speaker 1: Every organization has smart people, but the density of smart

787
00:49:13,360 --> 00:49:17,399
Speaker 1: people and their humility and willingness to learn from each

788
00:49:17,400 --> 00:49:22,799
Speaker 1: other and willingness to teach other people and particularly newcomers.

789
00:49:22,800 --> 00:49:25,719
Speaker 1: But even for me as a CIO, you know, one

790
00:49:25,760 --> 00:49:28,640
Speaker 1: of the most senior people within the investment work. Every

791
00:49:28,760 --> 00:49:30,520
Speaker 1: day I'm learning from my team.

792
00:49:30,400 --> 00:49:33,160
Speaker 2: And we keep coming back to culture, which you talked

793
00:49:33,200 --> 00:49:38,080
Speaker 2: about earlier. How important is culture towards those sort of values.

794
00:49:38,239 --> 00:49:42,960
Speaker 1: Look, culture is foundational. You can't succeed without it. And

795
00:49:43,239 --> 00:49:45,960
Speaker 1: every day we wake up we ask ourselves what we

796
00:49:46,000 --> 00:49:49,040
Speaker 1: can be doing to improve our culture, to continue to

797
00:49:49,120 --> 00:49:52,279
Speaker 1: invest in our culture and our people, because that's the

798
00:49:52,320 --> 00:49:56,440
Speaker 1: only way we keep up. This is a competitive environment, right,

799
00:49:56,480 --> 00:49:59,080
Speaker 1: It's one of the most competitive games in the world.

800
00:49:59,680 --> 00:50:04,080
Speaker 1: Is markets, and so if you're not always training to

801
00:50:04,160 --> 00:50:07,040
Speaker 1: get better, you're going to fall behind. And we've seen

802
00:50:07,120 --> 00:50:11,719
Speaker 1: plenty of players do that, their performance WANs and you know,

803
00:50:11,960 --> 00:50:14,560
Speaker 1: suddenly you wake up they've been gobbled up by someone else,

804
00:50:14,800 --> 00:50:16,520
Speaker 1: or you know, they're out of business.

805
00:50:17,040 --> 00:50:21,080
Speaker 2: So we mentioned that your focus is on public investing,

806
00:50:21,200 --> 00:50:26,440
Speaker 2: but Goldman has a very substantial private investing side where

807
00:50:26,960 --> 00:50:31,080
Speaker 2: it's either private credit or private equity or a lot

808
00:50:31,080 --> 00:50:33,680
Speaker 2: of different things that on the equity side as well

809
00:50:33,680 --> 00:50:37,080
Speaker 2: on that are privates. How how do you interact with

810
00:50:37,239 --> 00:50:40,600
Speaker 2: your peers on the private side and how does that

811
00:50:41,080 --> 00:50:44,040
Speaker 2: integrate into Goldman sax asset management in total.

812
00:50:44,120 --> 00:50:46,680
Speaker 1: Yeah, So one of the cores to our culture, core

813
00:50:46,760 --> 00:50:50,440
Speaker 1: values of our culture is around collaboration and so on

814
00:50:50,520 --> 00:50:54,080
Speaker 1: a regular basis, i e. You know, weekly and monthly,

815
00:50:55,120 --> 00:50:59,359
Speaker 1: we have collaboration across public and private investing where we

816
00:50:59,440 --> 00:51:04,080
Speaker 1: share again you know, with appropriate governance around it, so

817
00:51:04,120 --> 00:51:06,520
Speaker 1: that we're not sharing things we're not supposed to, but

818
00:51:06,560 --> 00:51:11,759
Speaker 1: we share insights around what's going on in markets for

819
00:51:11,800 --> 00:51:16,080
Speaker 1: the benefit and broader benefit of our investment teams and

820
00:51:16,600 --> 00:51:20,120
Speaker 1: ultimately our clients that were investing on behalf of So.

821
00:51:21,640 --> 00:51:24,120
Speaker 2: I would not be doing my job if I didn't

822
00:51:24,160 --> 00:51:27,759
Speaker 2: ask you a few questions about stocks and bonds, and

823
00:51:27,840 --> 00:51:31,919
Speaker 2: especially some quotes of yours. One thing that leapt out

824
00:51:32,360 --> 00:51:36,160
Speaker 2: you had said late last year, I think twenty twenty

825
00:51:36,160 --> 00:51:37,880
Speaker 2: four is going to be the year of the bonds.

826
00:51:38,400 --> 00:51:39,600
Speaker 2: Explain sure.

827
00:51:39,880 --> 00:51:44,800
Speaker 1: So we had seen late late last year really started.

828
00:51:44,880 --> 00:51:48,120
Speaker 1: I think that quote was from either late October or

829
00:51:48,120 --> 00:51:51,960
Speaker 1: early November. We had seen kind of a steady pace

830
00:51:52,080 --> 00:51:54,840
Speaker 1: of inflation coming down, so the FED hikes were working,

831
00:51:55,120 --> 00:51:58,520
Speaker 1: the economy was normalizing, and we felt that rates were

832
00:51:58,680 --> 00:52:02,480
Speaker 1: too high relative to what was necessary to continue to

833
00:52:02,520 --> 00:52:06,120
Speaker 1: see inflation come down. I think in six weeks of

834
00:52:06,280 --> 00:52:09,680
Speaker 1: twenty twenty three we ended up seeing the rally that

835
00:52:09,719 --> 00:52:11,759
Speaker 1: we were hoping to see in twenty twenty four.

836
00:52:11,880 --> 00:52:14,920
Speaker 2: That was huge, and it was like the last couple

837
00:52:14,960 --> 00:52:17,840
Speaker 2: of months of the year, just a giant one hundred

838
00:52:17,840 --> 00:52:21,160
Speaker 2: bases point move in yields, which is kind of unusual,

839
00:52:21,239 --> 00:52:22,040
Speaker 2: isn't it.

840
00:52:22,040 --> 00:52:26,920
Speaker 1: It's a reminder of when the coast is clear, everyone's

841
00:52:26,960 --> 00:52:28,759
Speaker 1: going to go for yield and it's going to be

842
00:52:28,800 --> 00:52:32,240
Speaker 1: too late. And so you know, since then, we've seen

843
00:52:32,360 --> 00:52:37,040
Speaker 1: kind of the data revert a bit. Growth has been strong,

844
00:52:37,120 --> 00:52:39,880
Speaker 1: which is good, right. We want growth to be strong,

845
00:52:40,200 --> 00:52:44,240
Speaker 1: you know, for our overall portfolio. But inflation has ticked

846
00:52:44,320 --> 00:52:48,000
Speaker 1: up a little bit, so it broke its its nearer

847
00:52:48,080 --> 00:52:51,720
Speaker 1: term pathy. Every data point that we end up seeing

848
00:52:51,880 --> 00:52:55,680
Speaker 1: kind of confirms that the long term trend is still

849
00:52:55,760 --> 00:53:00,840
Speaker 1: towards inflation normalizing. And so, you know, our our ethos,

850
00:53:00,840 --> 00:53:03,879
Speaker 1: our focus has been, Look, you're going to get these

851
00:53:03,920 --> 00:53:07,359
Speaker 1: periods of time of retlacement. You want to make sure

852
00:53:07,400 --> 00:53:10,919
Speaker 1: you have room to add into those because you don't

853
00:53:10,920 --> 00:53:13,880
Speaker 1: want to miss it, because you know when inflation turns,

854
00:53:13,880 --> 00:53:16,120
Speaker 1: it's going to turn quickly and everyone is going to

855
00:53:16,200 --> 00:53:16,560
Speaker 1: jump in.

856
00:53:17,040 --> 00:53:19,320
Speaker 2: That kind of reminds me of another quote of yours.

857
00:53:19,360 --> 00:53:23,560
Speaker 2: The market still has runway. Explain what you mean by that?

858
00:53:23,680 --> 00:53:25,320
Speaker 2: How much runway is left?

859
00:53:25,520 --> 00:53:28,800
Speaker 1: We have been watching growth very carefully. As I mentioned,

860
00:53:29,239 --> 00:53:33,280
Speaker 1: central banks outside the US are actually becoming more accommodative

861
00:53:33,360 --> 00:53:37,120
Speaker 1: with the exception of Japan, and underlying growth is actually

862
00:53:37,160 --> 00:53:41,160
Speaker 1: looking pretty good and diverse. Right. Economies are growing and

863
00:53:41,239 --> 00:53:44,479
Speaker 1: companies are being very disciplined on the cost side, which

864
00:53:44,520 --> 00:53:47,719
Speaker 1: is leading to earnings growth that's out outpacing kind of

865
00:53:47,719 --> 00:53:51,960
Speaker 1: nominal growth. And so for those reasons, we do think that,

866
00:53:52,360 --> 00:53:56,080
Speaker 1: you know, equity markets have continued runway. Having said that,

867
00:53:56,880 --> 00:53:58,759
Speaker 1: you know, the other thing we have realized is that

868
00:53:58,800 --> 00:54:02,720
Speaker 1: parts of the market, you know, particularly around technology and AI,

869
00:54:03,120 --> 00:54:06,600
Speaker 1: have run up so fast right that the risk return

870
00:54:06,920 --> 00:54:11,080
Speaker 1: is setting up for potential for corrections.

871
00:54:11,200 --> 00:54:13,920
Speaker 2: And so they're definitely ahead of themselves.

872
00:54:14,160 --> 00:54:17,040
Speaker 1: And so there are these long term trends in places

873
00:54:17,120 --> 00:54:21,040
Speaker 1: like Japan and India, and you know, a lot of

874
00:54:21,120 --> 00:54:23,920
Speaker 1: value even in other parts of the market that we

875
00:54:24,000 --> 00:54:28,520
Speaker 1: think represent you know, nearer and longer term opportunities to

876
00:54:28,640 --> 00:54:33,040
Speaker 1: diversify your portfolio. And and so we one of the

877
00:54:33,040 --> 00:54:36,440
Speaker 1: things we think a lot about is when something has

878
00:54:36,480 --> 00:54:39,760
Speaker 1: gotten overdone, when it's crowded, right, how do you tilt

879
00:54:39,840 --> 00:54:44,160
Speaker 1: out of that area and into places that are going

880
00:54:44,239 --> 00:54:46,040
Speaker 1: to work for you either in the short term in

881
00:54:46,080 --> 00:54:51,440
Speaker 1: the long term. And we see that as material opportunities,

882
00:54:51,560 --> 00:54:54,840
Speaker 1: particularly in India and Japan that are going to be

883
00:54:54,920 --> 00:54:58,800
Speaker 1: long term and even more broadly in the industrial space.

884
00:54:59,520 --> 00:55:02,120
Speaker 1: When it comes to to global equities.

885
00:55:01,719 --> 00:55:05,040
Speaker 2: And let's talk about an area that's had some challenges.

886
00:55:06,000 --> 00:55:09,799
Speaker 2: Some of the Treasury auctions have been pretty mediocre over

887
00:55:09,800 --> 00:55:13,719
Speaker 2: the past couple of sessions. You mentioned, hey, at a

888
00:55:13,760 --> 00:55:17,560
Speaker 2: certain point auction buyers just you know, shrug their shoulders

889
00:55:17,600 --> 00:55:20,359
Speaker 2: at the whole process. Tell us you're thinking about what's

890
00:55:20,400 --> 00:55:22,040
Speaker 2: going on with treasury auctions.

891
00:55:22,280 --> 00:55:26,440
Speaker 1: Yeah, so I think the comment was more around, and

892
00:55:26,480 --> 00:55:30,480
Speaker 1: it probably came from the fall around. We will get

893
00:55:30,520 --> 00:55:34,600
Speaker 1: these times. The Treasury has to auction off a lot. Right,

894
00:55:34,760 --> 00:55:39,719
Speaker 1: the deficit is quite large and structural, and so to

895
00:55:39,760 --> 00:55:43,560
Speaker 1: the extent the curve doesn't represent value, it is going

896
00:55:43,600 --> 00:55:47,319
Speaker 1: to cause auctions to tail right. This is not going

897
00:55:47,400 --> 00:55:50,359
Speaker 1: to be the first time that we've seen it, and

898
00:55:50,800 --> 00:55:56,000
Speaker 1: it's really critical for both the US government right US

899
00:55:56,040 --> 00:56:01,600
Speaker 1: Treasury to focus on kind of managing its its liability side,

900
00:56:01,640 --> 00:56:05,120
Speaker 1: as well as investors to be thinking about whether there's

901
00:56:05,200 --> 00:56:08,840
Speaker 1: good value or not. I think that, you know, a

902
00:56:08,840 --> 00:56:11,800
Speaker 1: lot of investors are very concerned about the long term

903
00:56:11,880 --> 00:56:15,640
Speaker 1: stability of running deficits at the pace that we are,

904
00:56:16,320 --> 00:56:21,239
Speaker 1: and that's going to require political solutions and choices over

905
00:56:21,280 --> 00:56:24,440
Speaker 1: the coming years. A lot of this is tied to demographics,

906
00:56:24,760 --> 00:56:29,759
Speaker 1: social security, you know, medicare you know, and frankly, these

907
00:56:29,760 --> 00:56:32,759
Speaker 1: were things that we were looking at thirty forty years

908
00:56:32,800 --> 00:56:37,160
Speaker 1: ago when I was in school and are finally taking place,

909
00:56:37,239 --> 00:56:41,359
Speaker 1: which is we're having the baby boomers retire and the

910
00:56:41,400 --> 00:56:45,040
Speaker 1: fiscal you know, costs of that are now have to

911
00:56:45,600 --> 00:56:48,960
Speaker 1: get charged the economy, and so I think in the

912
00:56:49,040 --> 00:56:52,120
Speaker 1: near term, you know, we're in pretty good shape because

913
00:56:52,520 --> 00:56:57,000
Speaker 1: duration does represent value on a real basis, right, and

914
00:56:57,040 --> 00:57:00,239
Speaker 1: we are growing, which is a big big deal. To

915
00:57:00,360 --> 00:57:04,439
Speaker 1: grow nominally actually is a fantastic thing for debt load.

916
00:57:04,840 --> 00:57:07,000
Speaker 1: But it's something that we're going to have to be

917
00:57:07,120 --> 00:57:09,960
Speaker 1: very focused on. As debt investors. We talk a lot

918
00:57:10,040 --> 00:57:14,680
Speaker 1: about within our fixed income or debt sustainability and the

919
00:57:15,239 --> 00:57:16,880
Speaker 1: types of things that would worry us.

920
00:57:17,200 --> 00:57:20,680
Speaker 2: So when rates were zero, nobody really seemed to be

921
00:57:20,760 --> 00:57:24,280
Speaker 2: worrying too much about debt. You had the usual suspects

922
00:57:24,320 --> 00:57:28,280
Speaker 2: come out and say, oh, debt's unsustainable, but they've been

923
00:57:28,280 --> 00:57:32,080
Speaker 2: saying that for forever. Five hundred and twenty five basis

924
00:57:32,120 --> 00:57:37,160
Speaker 2: points higher. Suddenly, hey, the interest income on this is substantial.

925
00:57:37,880 --> 00:57:41,480
Speaker 2: Is there any pressure on the Fed despite a slight

926
00:57:41,560 --> 00:57:44,640
Speaker 2: uptick in inflation, to say, hey, we got to bring

927
00:57:45,080 --> 00:57:48,360
Speaker 2: rates down a little bit just to make the fiscal

928
00:57:48,440 --> 00:57:50,960
Speaker 2: side more sustainable or is that just not part of

929
00:57:51,000 --> 00:57:51,680
Speaker 2: their charge.

930
00:57:51,760 --> 00:57:53,920
Speaker 1: I don't think that's part of their charge. They do

931
00:57:54,000 --> 00:57:57,600
Speaker 1: look to liquidity and treasury markets, which is absolutely critical.

932
00:57:58,040 --> 00:58:02,240
Speaker 1: But I think with this level of debt and this

933
00:58:02,480 --> 00:58:06,439
Speaker 1: cost of debt, if we don't grow, if growth slows down,

934
00:58:06,480 --> 00:58:09,480
Speaker 1: it can slow down really hard, and that can cascade

935
00:58:09,560 --> 00:58:13,360
Speaker 1: into a real problem for the FED, which is employment, right,

936
00:58:13,440 --> 00:58:16,440
Speaker 1: And so you know, I think the FED is watching

937
00:58:16,520 --> 00:58:20,440
Speaker 1: very carefully the evolution of some of the debt stacks

938
00:58:20,480 --> 00:58:24,080
Speaker 1: where you know, in commercial real estate, let's say, where

939
00:58:24,320 --> 00:58:27,080
Speaker 1: rates are very high and it's impacting the value of

940
00:58:27,120 --> 00:58:29,840
Speaker 1: that commercial real estate as it sits in the banking

941
00:58:29,880 --> 00:58:34,360
Speaker 1: system and other financial institutions. And were that to become

942
00:58:34,600 --> 00:58:39,360
Speaker 1: even more problematic and spill into growth and you know,

943
00:58:39,480 --> 00:58:44,440
Speaker 1: cause deflation, then I think you would see or disinflation.

944
00:58:44,680 --> 00:58:47,680
Speaker 1: I think you would see the FED moved pretty rapidly.

945
00:58:48,240 --> 00:58:51,320
Speaker 2: Let me ask you one curveball question before we get

946
00:58:51,360 --> 00:58:54,919
Speaker 2: to our favorite questions, which is you're on the board

947
00:58:54,920 --> 00:58:59,520
Speaker 2: of directors for Minds Matter, a nonprofit that focuses on

948
00:58:59,760 --> 00:59:03,240
Speaker 2: hell being to prepare young people from low income families

949
00:59:03,320 --> 00:59:06,720
Speaker 2: to become ready for college. Tell us a little bit

950
00:59:06,720 --> 00:59:09,440
Speaker 2: about the organization and how you got involved with them.

951
00:59:09,800 --> 00:59:13,080
Speaker 1: I got involved with Minds Matter because I followed a

952
00:59:13,160 --> 00:59:18,080
Speaker 1: girl that I really liked she was volunteering every Saturday.

953
00:59:18,600 --> 00:59:22,120
Speaker 1: And this May is going to be the thirtieth anniversary

954
00:59:22,240 --> 00:59:26,240
Speaker 1: of me being married to that young woman. So, you know,

955
00:59:26,360 --> 00:59:30,919
Speaker 1: my wife introduced me to minds Matter. I've always cared

956
00:59:30,920 --> 00:59:33,640
Speaker 1: about education as a path for people to be able

957
00:59:33,640 --> 00:59:38,560
Speaker 1: to better themselves. And you know, Minds Matter serves over

958
00:59:38,600 --> 00:59:42,920
Speaker 1: one thousand students in fourteen cities across the country. It

959
00:59:43,040 --> 00:59:46,640
Speaker 1: helps those students get into college, it helps them believe

960
00:59:46,800 --> 00:59:50,240
Speaker 1: that they belong in college and succeed in college, and

961
00:59:50,280 --> 00:59:54,760
Speaker 1: then it helps them post college build the network that

962
00:59:54,760 --> 00:59:56,400
Speaker 1: they need to to succeed in life.

963
00:59:56,600 --> 00:59:59,480
Speaker 2: Huh. Really really interesting. All right, let's jump to our

964
00:59:59,520 --> 01:00:02,840
Speaker 2: favorite questions that we ask all of our guests, starting

965
01:00:02,880 --> 01:00:06,560
Speaker 2: with who were some of your mentors who helped shape

966
01:00:06,600 --> 01:00:07,160
Speaker 2: your career?

967
01:00:07,680 --> 01:00:11,080
Speaker 1: Yeah, so three that stand out to me early in

968
01:00:11,080 --> 01:00:16,160
Speaker 1: my career. Doctor Jeremy Siegel at the Wharton School, who

969
01:00:16,200 --> 01:00:21,560
Speaker 1: I worked for three years, was just fantastic in terms

970
01:00:21,600 --> 01:00:24,840
Speaker 1: of educating me, in terms of frankly feeding me with

971
01:00:24,920 --> 01:00:29,720
Speaker 1: the pay he gave me. And you couldn't find a

972
01:00:29,800 --> 01:00:36,760
Speaker 1: better person to learn about markets and macro than doctor Siegel.

973
01:00:37,320 --> 01:00:41,440
Speaker 2: And he's probably the person that got this inflation cycle

974
01:00:42,400 --> 01:00:45,280
Speaker 2: more right than anybody else out there. When the first

975
01:00:45,320 --> 01:00:48,880
Speaker 2: Cares Act passed, he was the first person saying, you

976
01:00:48,960 --> 01:00:52,200
Speaker 2: realize how inflationary this fiscal stimulus is going to be.

977
01:00:52,520 --> 01:00:54,560
Speaker 2: And everybody looked at him like he had two heads.

978
01:00:55,360 --> 01:00:56,480
Speaker 2: Turned out to be dead right.

979
01:00:56,960 --> 01:01:02,000
Speaker 1: He's such a fantastic individual. I own a lot of

980
01:01:02,040 --> 01:01:05,240
Speaker 1: my career of success, so others. The two others I

981
01:01:05,240 --> 01:01:08,160
Speaker 1: would call out Eddie Raja, who is my first trading

982
01:01:08,200 --> 01:01:11,920
Speaker 1: boss ex Solomon Brothers trader uh is out there in

983
01:01:12,040 --> 01:01:18,040
Speaker 1: Duncan Hennis who ran markets at at Banker's Trust, ended

984
01:01:18,120 --> 01:01:21,560
Speaker 1: up being one of the CIOs at Soros Group, you

985
01:01:21,600 --> 01:01:24,200
Speaker 1: know three kind of really early mentors, and then more

986
01:01:24,360 --> 01:01:28,760
Speaker 1: more recently you know at and my former employer was

987
01:01:29,120 --> 01:01:32,160
Speaker 1: Peter Kraus for giving me the opportunity. Learned a lot

988
01:01:32,200 --> 01:01:36,120
Speaker 1: about leadership from from Peter as well as Doug. People's

989
01:01:36,720 --> 01:01:41,720
Speaker 1: learned a lot about investing and and asset management from Doug.

990
01:01:41,840 --> 01:01:46,240
Speaker 1: So really really appreciative of of There's a long, much

991
01:01:46,280 --> 01:01:48,680
Speaker 1: longer list of people that I would love to shout

992
01:01:48,720 --> 01:01:53,160
Speaker 1: out because I've learned from pretty much everyone I've ever

993
01:01:53,200 --> 01:01:53,680
Speaker 1: worked for.

994
01:01:53,920 --> 01:01:56,440
Speaker 2: So let's talk about books. What are some of your favorites.

995
01:01:56,520 --> 01:01:57,680
Speaker 2: What are you reading right now?

996
01:01:57,960 --> 01:02:01,040
Speaker 1: I would say I read a lot outside of industry,

997
01:02:01,160 --> 01:02:04,840
Speaker 1: but things that are going on and then I love

998
01:02:05,040 --> 01:02:08,680
Speaker 1: me a good like you know, Navy seal that is

999
01:02:08,720 --> 01:02:11,840
Speaker 1: going and taking down the terrorists and defending a country

1000
01:02:11,920 --> 01:02:14,880
Speaker 1: kind of book. So in that genre, I read a

1001
01:02:14,880 --> 01:02:19,200
Speaker 1: lot about Brad Taylor, Brad thor, Vince Flynn. You know,

1002
01:02:19,440 --> 01:02:22,800
Speaker 1: give me anything that's like a techno thriller and I'm

1003
01:02:22,880 --> 01:02:27,440
Speaker 1: there when it comes to reading for content. One of

1004
01:02:27,480 --> 01:02:30,080
Speaker 1: my favorite books I've read kind of more recently in

1005
01:02:30,120 --> 01:02:32,960
Speaker 1: the last twelve months has been Chip War. I think

1006
01:02:33,040 --> 01:02:36,280
Speaker 1: the history of the chip is amazing. The gene was

1007
01:02:36,400 --> 01:02:40,880
Speaker 1: like eye opening around you how genetics really works. And

1008
01:02:40,920 --> 01:02:43,080
Speaker 1: there are a lot of There are a lot of

1009
01:02:43,120 --> 01:02:47,120
Speaker 1: implications to investing and the way you design investing systems,

1010
01:02:47,160 --> 01:02:51,280
Speaker 1: particularly with AI. The Hard Thing About Hard Things by

1011
01:02:51,960 --> 01:02:55,600
Speaker 1: Horowitz is a great kind of leadership and startup book

1012
01:02:55,640 --> 01:02:58,280
Speaker 1: and how to think about kind of running an organization.

1013
01:02:59,360 --> 01:03:02,760
Speaker 1: And I'd also throw in that the latest Elon Muss

1014
01:03:02,800 --> 01:03:07,400
Speaker 1: book is is fantastic. It's a really interesting read, kind

1015
01:03:07,400 --> 01:03:11,520
Speaker 1: of an interesting personal dissection, but a great read around

1016
01:03:11,600 --> 01:03:15,640
Speaker 1: how to think about value engineering in a physical sense,

1017
01:03:15,760 --> 01:03:19,919
Speaker 1: not in a computer sense. So so those are those

1018
01:03:19,920 --> 01:03:22,000
Speaker 1: are a couple that, uh, that's best.

1019
01:03:22,600 --> 01:03:26,080
Speaker 2: And our final two questions, what sort of advice would

1020
01:03:26,080 --> 01:03:29,480
Speaker 2: you give to a recent college grad interested in a

1021
01:03:29,520 --> 01:03:32,320
Speaker 2: career in either investing or asset management.

1022
01:03:32,840 --> 01:03:35,959
Speaker 1: Yeah, so the first thing I tell you is read

1023
01:03:36,080 --> 01:03:39,880
Speaker 1: voraciously about markets and then build yourself a model portfolio,

1024
01:03:40,800 --> 01:03:43,000
Speaker 1: because the best way to learn is to actually be

1025
01:03:43,240 --> 01:03:47,760
Speaker 1: doing things. To use that to figure out your style,

1026
01:03:48,800 --> 01:03:53,840
Speaker 1: and from a style investing style perspective, read about other investors.

1027
01:03:55,040 --> 01:03:57,440
Speaker 1: You know, every investor has a tail of how they've

1028
01:03:57,440 --> 01:04:01,160
Speaker 1: lost money and the lessons they've learned through that. It's

1029
01:04:01,200 --> 01:04:04,600
Speaker 1: a lot easier to learn from someone else's mistakes than

1030
01:04:04,640 --> 01:04:07,000
Speaker 1: from your own. You'll make plenty of your own, but like,

1031
01:04:07,080 --> 01:04:11,560
Speaker 1: make sure you're reading about how others failed and really

1032
01:04:11,600 --> 01:04:13,919
Speaker 1: try to get to the core of it, not the

1033
01:04:13,920 --> 01:04:17,840
Speaker 1: the kind of polished version. And then the third thing

1034
01:04:17,880 --> 01:04:22,160
Speaker 1: I would recommend them do is be process oriented, right,

1035
01:04:22,240 --> 01:04:26,080
Speaker 1: build a process, say, you be really conscious about how

1036
01:04:26,120 --> 01:04:29,400
Speaker 1: you're making decisions and why you're making decisions and what

1037
01:04:29,560 --> 01:04:31,760
Speaker 1: is going into each of those decisions.

1038
01:04:32,760 --> 01:04:35,400
Speaker 2: And our final question, what do you know about the

1039
01:04:35,440 --> 01:04:39,000
Speaker 2: world of investing in asset management today you wish you

1040
01:04:39,080 --> 01:04:41,959
Speaker 2: knew thirty or so years ago when you were first

1041
01:04:42,000 --> 01:04:42,760
Speaker 2: getting started.

1042
01:04:42,960 --> 01:04:47,000
Speaker 1: I'd leave you with kind of three observations that strike

1043
01:04:47,120 --> 01:04:49,640
Speaker 1: me or you know that that have really kind of

1044
01:04:49,640 --> 01:04:54,200
Speaker 1: accumulated over the last thirty years. So three things you know.

1045
01:04:54,240 --> 01:04:58,960
Speaker 1: The first is discipline works over smarts, So the smartest

1046
01:04:58,960 --> 01:05:02,760
Speaker 1: people loose the most money. You know, the most disciplined

1047
01:05:02,920 --> 01:05:07,760
Speaker 1: people actually generate strong returns over time. The second thing is,

1048
01:05:08,320 --> 01:05:11,439
Speaker 1: when in doubt, do what works over time. Don't try

1049
01:05:11,440 --> 01:05:14,880
Speaker 1: to time the market, just you know, be humble in

1050
01:05:14,960 --> 01:05:18,000
Speaker 1: what you understand about what's going on, and then do

1051
01:05:18,120 --> 01:05:22,800
Speaker 1: what works over time, because that's the highest likelihood you

1052
01:05:22,880 --> 01:05:26,480
Speaker 1: are to deliver returns. And then the final thing I

1053
01:05:26,520 --> 01:05:29,880
Speaker 1: wish I had learned this one earlier in life, is that,

1054
01:05:30,320 --> 01:05:35,600
Speaker 1: particularly as an individual investor, that if you don't think

1055
01:05:35,640 --> 01:05:40,840
Speaker 1: about after tax returns when you're making investment decisions, you're

1056
01:05:40,880 --> 01:05:44,680
Speaker 1: missing the whole game. Is the highest hit ratio, the

1057
01:05:44,760 --> 01:05:49,480
Speaker 1: lowest cost that you will ever face, is to really

1058
01:05:49,520 --> 01:05:55,240
Speaker 1: align your investing approach to be low, to be tax efficient.

1059
01:05:55,720 --> 01:05:59,600
Speaker 1: And I think your taxes change over time, particularly given

1060
01:05:59,600 --> 01:06:04,040
Speaker 1: the fiscal situation. If you're earning good money, your tax

1061
01:06:04,520 --> 01:06:08,280
Speaker 1: rates are likely to rise, right and you should be

1062
01:06:08,320 --> 01:06:12,480
Speaker 1: happy to pay them. That you're successful enough to pay them,

1063
01:06:12,560 --> 01:06:15,960
Speaker 1: but you know, make sure you're investing your money through

1064
01:06:16,080 --> 01:06:17,880
Speaker 1: a tax efficient lens.

1065
01:06:18,040 --> 01:06:21,880
Speaker 2: Huh really quite fascinating, A cise, thank you for being

1066
01:06:21,960 --> 01:06:25,880
Speaker 2: so generous with your time. We have been speaking with

1067
01:06:25,960 --> 01:06:30,160
Speaker 2: A c Shah Cohaed and CIO of public Investing at

1068
01:06:30,160 --> 01:06:34,840
Speaker 2: Goldman Sachs's Asset Management. If you enjoy this conversation, well

1069
01:06:34,960 --> 01:06:37,080
Speaker 2: check out any of the previous five hundred or so

1070
01:06:37,440 --> 01:06:39,720
Speaker 2: we've done over the past nine and a half years.

1071
01:06:40,160 --> 01:06:44,400
Speaker 2: You can find those at iTunes, Spotify, YouTube, wherever you

1072
01:06:44,480 --> 01:06:49,000
Speaker 2: find your favorite podcasts, check out my new podcast at

1073
01:06:49,040 --> 01:06:54,320
Speaker 2: the Money, short conversations with experts about your money, earning it,

1074
01:06:54,400 --> 01:06:58,640
Speaker 2: spending it, and most importantly, investing it. Find that in

1075
01:06:58,680 --> 01:07:01,800
Speaker 2: your master's and business fees, or wherever you get your

1076
01:07:01,840 --> 01:07:05,040
Speaker 2: favorite podcast. I would be remiss if I did not

1077
01:07:05,280 --> 01:07:08,920
Speaker 2: thank the crack staff that helps put these conversations together

1078
01:07:09,040 --> 01:07:13,120
Speaker 2: each week. Sarah Livesey is my audio engineer. A tik

1079
01:07:13,160 --> 01:07:16,880
Speaker 2: of Albron is our project manager. Sean Russo is my researcher.

1080
01:07:17,200 --> 01:07:21,320
Speaker 2: Hannah Luke is my producer. I'm Barry Rittolts. You've been

1081
01:07:21,360 --> 01:07:25,560
Speaker 2: listening to Master's in Business on Bloomberg Radio.