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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is Masters in

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Speaker 1: Business with Barry Ritholts on Bloomberg Radio.

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Speaker 2: This week on the podcast an extra special Masters in

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Speaker 2: Business Live from the Phillips Collection in Washington, d C.

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Speaker 2: I sit down with Samantha maclamore of Patient Capital. She's

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Speaker 2: known as really the protege of Bill Miller, who she's

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Speaker 2: worked with for the past twenty years, first at leg Mason,

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Speaker 2: then at Miller Value. She runs Patient Capital and it's

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Speaker 2: taken over the opportunity equity funds from Miller Value. Her

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Speaker 2: firm now runs it. I thought the conversation was fascinating

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Speaker 2: and I think you will also with no further ado,

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Speaker 2: my live conversation with Patient Capitals. Samantha Macklamore, all right,

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Speaker 2: let me look at my notes, which says I'm Barry Ridholtz.

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Speaker 2: I'm the host of Masters in Business, a podcast that's

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Speaker 2: been on Bloomberg for the past eleven years, the first

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Speaker 2: Bloomberg podcast. Now there are dozens, many, many award winning podcasts.

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Speaker 2: Forgot to button my shirt after the ran the backup mic,

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Speaker 2: so let's get that taken care of.

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Speaker 3: Since we're on TV, so most of you have some idea.

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Speaker 2: Who I am, sam Why don't you tell people who

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Speaker 2: you are?

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Speaker 4: My name is Samantha Maclamore. I'm the founder and CIO

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Speaker 4: of Patient Capital Management. I started my career many many

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Speaker 4: years ago. Now I don't know how it's been so long,

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Speaker 4: as an analyst at leg Mason working for Bill Miller,

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Speaker 4: who is a very well known value manager.

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Speaker 2: I want to talk a little bit about your time

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Speaker 2: with Bill Miller. But before we get to that, let's

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Speaker 2: start in college Magna cum laude from Washington and Lee.

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Speaker 2: Originally chemistry, but eventually changes to accounting and business. What

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Speaker 2: was the original career plan.

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Speaker 4: Well, I didn't have so much a plan when I

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Speaker 4: first decided to major in chemistry. I took chemistry in

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Speaker 4: high school and thought I was really good at it.

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Speaker 4: And then I got to so I was like, hell,

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Speaker 4: major in this. I like to be good at things.

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Speaker 4: And I got to college and that first class, I

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Speaker 4: quickly realized I was not so good at it. You know,

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Speaker 4: I'd never worked so hard for a bee, and so

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Speaker 4: I was like, you know, some of my friends were,

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Speaker 4: you know, doing much better. So I was like, nah,

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Speaker 4: that's not We're going to have to re examine this

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Speaker 4: whole thing. So I wound up in the business school

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Speaker 4: because I was analytical and that was a much better fit.

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Speaker 2: So accounting and business, not necessarily finance and investing.

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Speaker 3: When when did that spark light?

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Speaker 2: Oh?

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Speaker 4: Well it was they didn't have a finance degree at

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Speaker 4: the business school. So again I was very good at accounting.

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Speaker 4: It just came naturally. I don't know what that says

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Speaker 4: about my brain, but and I got involved with the

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Speaker 4: investment club. I've had some investing experience with my dad,

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Speaker 4: who tried to get me interested in markets in high school.

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Speaker 4: You know, in the late nineties, it was a roaring

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Speaker 4: tech bull market, much like we're seeing today, although I

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Speaker 4: don't think we're peak bubble. And he bought Dell, and

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Speaker 4: I had some funds that were for college, so he

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Speaker 4: had invested those and tried to get me engaged. I'd

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Speaker 4: had a little bit of experience in high school, and

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Speaker 4: then I joined the investment club and I just liked that.

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Speaker 2: So how did you find your way over to leg Mason?

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Speaker 2: Was that your first job right out of college?

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Speaker 4: That was? And I like to say I won the

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Speaker 4: job lottery because it was the fall of two thousand

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Speaker 4: and one. So now we were in the tech market crash.

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Speaker 4: It wasn't a great job market. Fortunately, you know, there

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Speaker 4: were a lot of investment banks recruiting from my alma mater,

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Speaker 4: so my plan was to go there. I was ready

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Speaker 4: to do the all nighters in New York. And Bill,

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Speaker 4: who also went to Washington le happened to come back,

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Speaker 4: you know, the fall of my senior year. He did

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Speaker 4: some speaking, he met with the investment club, and I

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Speaker 4: got very lucky. I asked him if I could send

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Speaker 4: him my resume, and he said sure. So I sent

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Speaker 4: him my resume and joined him as a junior analyst

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Speaker 4: right out of college.

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Speaker 2: So I imagine Bill Miller comes to an investment club

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Speaker 2: at his alma mata and every person is handing him

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Speaker 2: a resume.

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Speaker 3: Is that accurate or were people a little more.

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Speaker 4: You would think? I mean, if I have advice to

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Speaker 4: young people, it's.

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Speaker 3: Like, give Bill Miller your resume, Give.

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Speaker 4: Anyone your resume, go after it, go for the job.

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Speaker 4: Everyone said there's no way you can get a job

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Speaker 4: in investment management, and so I just think people thought, Okay,

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Speaker 4: this isn't what you know. I'll go do banking. I'm

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Speaker 4: not going to try. So actually I think I was

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Speaker 4: the only the only one that sent.

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Speaker 3: In my real life.

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Speaker 4: Yeah, that's it, the only one that asked to do that.

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Speaker 2: There's a lesson in that. So you start as an

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Speaker 2: unlisted leg mason. How long did you do that? When

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Speaker 2: did you transition to a portfolio manager?

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Speaker 4: I was an analyst for a few years. So I

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Speaker 4: started in two thousand and two and became the assistant

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Speaker 4: portfolio manager of the Opportunity Trust, which is the mutual

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Speaker 4: fund that Bill and I worked on for many years

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Speaker 4: together that I now run in two thousand and eight.

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Speaker 4: In August of two thousand and eight, right, good time, Yeah,

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Speaker 4: right before the markets fell apart during the.

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Speaker 3: Financial The next month was all help broke.

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Speaker 4: Yeah.

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Speaker 2: We'll talk about that a bit. But you spend twenty

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Speaker 2: years working pretty much shoulder with Bill Miller.

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Speaker 3: What was that like?

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Speaker 2: What did you take away from that experience?

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Speaker 4: I mean, it was amazing. I can't express how lucky

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Speaker 4: I was. I was just so lucky, you know, I

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Speaker 4: think it's an apprenticeship business. So I really my desk

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Speaker 4: was always right beside Bills, and he liked to teach,

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Speaker 4: and so I would go in his office. We would

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Speaker 4: look at the Bloomberg and you know, look at stock charts,

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Speaker 4: and I got to attend a lot of meetings with

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Speaker 4: great CEOs. Jeff Bezos spoke at our investment conference in

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Speaker 4: two thousand and three of the year after I joined,

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Speaker 4: and I got to hear his speech and be in

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Speaker 4: some meetings with him, And so I couldn't have been

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Speaker 4: luckier in terms of what I was exposed to and

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Speaker 4: that learning opportunity.

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Speaker 2: So it's kind of interesting. You work with a legendary

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Speaker 2: value investor who is doesn't really fit the mold of

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Speaker 2: a traditional value investor. How much of his philosophy did

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Speaker 2: you make your own? How similar or different you to

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Speaker 2: the Bill Miller style of investing.

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Speaker 4: Well, we have a lot of similarities. I think that's

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Speaker 4: one of the reasons we hit it off. And you know,

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Speaker 4: I would say, at my core, I'm a contrarian value investor.

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Speaker 4: I didn't grow up with a lot of money. I

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Speaker 4: had to make money go far. I looked at the markets.

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Speaker 4: I like stuff that was down, that was generating cash.

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Speaker 4: Bill and I, you know, when I first applied, talked

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Speaker 4: about Eastman Kodak, which ended up being one of our

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Speaker 4: biggest mistakes, both of us. So we kind of bonded

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Speaker 4: over that and what was much more, you know, transformational

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Speaker 4: to me was Bill's view, and he was He was

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Speaker 4: criticized when I joined him as not a true value

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Speaker 4: manager because he had invested in names like Amazon, you know,

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Speaker 4: in the early two thousands, and people said, you can't

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Speaker 4: possibly be a value manager if you're investing in these

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Speaker 4: very high multiple stocks. And you know, Bill used to

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Speaker 4: joke that he liked to hire people young so he

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Speaker 4: could imprint them, like the baby bird that whatever the

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Speaker 4: first thing it sees, it thinks is its mother. So

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Speaker 4: I was definitely imprinted. But when Bill made the point, listen,

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Speaker 4: we don't know what the best values in the market

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Speaker 4: are today because it depends on the future, and the

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Speaker 4: future is unknowable, so no one knows what they are.

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Speaker 4: But we do know if we look back over long

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Speaker 4: periods of time, what the best values are, because we

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Speaker 4: have hindsight biased and we can look back and say, well,

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Speaker 4: what went up the most clearly that was the most

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Speaker 4: the best value. And if you look, it's always names

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Speaker 4: that can grow and compound value over long periods of time,

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Speaker 4: and those types of companies, because their prospects are so promising,

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Speaker 4: they don't tend to trade at low multiple. So he said,

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Speaker 4: as a value manager, why would you have a process

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Speaker 4: where you explicitly exclude what you know are the best

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Speaker 4: values in the market. That doesn't make sense. And I thought, well, yeah,

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Speaker 4: that just doesn't make sense now to a contrarian type investor.

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Speaker 4: You know, it's not easy to because it depends on

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Speaker 4: a future that's unknowable. It always does, and so where

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Speaker 4: can you get that conviction? That can be challenging, But

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Speaker 4: I think that had a, you know, certainly a big

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Speaker 4: impact on me, and it's a core part of our

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Speaker 4: process to look at a mix of different types of

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Speaker 4: opportunities in the portfolio.

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Speaker 2: So you use the word conviction a couple of times.

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Speaker 2: Opportunity Equity has always been a high conviction fund, somewhat

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Speaker 2: idiosyncratic strategy. Tell us a little bit about the funds

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Speaker 2: philosophy and what makes it so unique amongst I don't

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Speaker 2: want to say value funds, but funds that look at

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Speaker 2: reasonable purchase prices for equities.

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Speaker 4: Yeah. Well, I think we are unconventional and we've always

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Speaker 4: been unconventional. And Bill started the Opportunity Trust in nineteen

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Speaker 4: ninety nine at the peak of that tech bubble. And

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Speaker 4: the idea was, let's create a fund with the maximum

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Speaker 4: flexibility possible to go wherever it wants. And again, there's

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Speaker 4: lots of structures in the business that make that hard

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Speaker 4: because style boxes don't like that. People allocators want to

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Speaker 4: put you in a box, and so it hurts demand

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Speaker 4: for your fund when you're like, no, I'm just going

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Speaker 4: to go wherever the best values are. But the idea

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Speaker 4: is over time that should allow you to earn better

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Speaker 4: returns if executed properly. So I think the fund has

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Speaker 4: migrated around over time. It has had a different mix

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Speaker 4: of you know, what we call attractively valued compounders like

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Speaker 4: Amazon and Alphabet, which we own more classic value names

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Speaker 4: that everyone would recognize as value like City Group and

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Speaker 4: General Motors. And then we like to look at companies

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Speaker 4: early in their life because they're more likely to be misunderstood.

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Speaker 4: There's a wider range of potential future outcomes, and you know,

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Speaker 4: a lot of people don't feel comfortable, especially in the

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Speaker 4: value invest in community, where I think it's it's a

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Speaker 4: more risk averse group who want to see the value

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Speaker 4: today there what's today's value and what's today's price. And again,

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Speaker 4: you know, growth people tend to look further out in

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Speaker 4: the future. But we we like to have a mix,

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Speaker 4: and I think that helps the fund do well in

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Speaker 4: different environments.

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Speaker 2: And let me put a little flesh on those bones,

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Speaker 2: because this morning, the first thing I did was, Hey,

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Speaker 2: let's see how Opportunity is done year Today it has

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Speaker 2: beaten its benchmark year to date, one year, three year,

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Speaker 2: and since inception. So it's not just like this is

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Speaker 2: a theoretical stock picking approach. It's done better than average.

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Speaker 2: Is that a fair way to describe it without getting

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Speaker 2: you into trouble with the compliance department?

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Speaker 4: Now you're going to get me in trouble with compliance,

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Speaker 4: But well, I said it, not you. So we have

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Speaker 4: had a good track record, especially relative to value managers,

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Speaker 4: which have recently, you know, struggled in a very you know,

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Speaker 4: growthy sort of market.

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Speaker 2: Since the financial So since you went there, since the

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Speaker 2: financial crisis, value has been a pretty ugly lagger compared

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Speaker 2: to growth. We've been in a very strong ear for growth,

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Speaker 2: especially since the end of the pandemic. What sort of

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Speaker 2: challenges does that create to someone that's labeled a value manager?

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Speaker 4: Oh? Well, I mean I think it creates a lot

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Speaker 4: of value in terms of some people say, oh, your value,

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Speaker 4: we only want to talk to you. So my colleagues

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Speaker 4: hereously had a conversation the other day and they're like,

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Speaker 4: we just don't have any demand for value. No one cares.

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Speaker 4: We're like, but we've done really well and we're beating

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Speaker 4: the market every year since Sam took over. And it's like,

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Speaker 4: it doesn't matter. So I think it does. You know.

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Speaker 4: My view is our primary job is to deliver for

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Speaker 4: our clients, and so if we do that, everything else

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Speaker 4: will work out. I've seen this in this business time

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Speaker 4: and time again. If you deliver a result, everything else

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Speaker 4: will work itself out. And so and I strongly believe

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Speaker 4: value will have it stay in the sun again, but

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Speaker 4: it might take an ugly market, so I'm not hoping

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Speaker 4: for that.

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Speaker 2: So I've always tried to figure out way to more

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Speaker 2: appropriately describe what you do what Bill Miller does. Is

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Speaker 2: it growth at a reasonable price? Is it value and growth? Like,

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Speaker 2: how do you sum it up in an elevator pitch?

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Speaker 4: Well, you know, again, I think it's value because if

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Speaker 4: you look at every name in the portfolio, we think

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Speaker 4: they're all undervalued. But the value of any business is

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Speaker 4: the present value of the future free cash flows and

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Speaker 4: growth is a very very important input into you know,

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Speaker 4: that calculation, and so we are valuing businesses. But I

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Speaker 4: also think it's important to have diversification between different types

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Speaker 4: of names in the portfolio, and so, you know, I

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Speaker 4: wouldn't feel comfortable being fully invested in this market and

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Speaker 4: all the growthiest stuff that has higher valuations. You know,

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Speaker 4: I like having some cheaper names in there that are

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Speaker 4: likely to perform well in a different sort of environment.

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Speaker 4: And there's really attractive values in the value area that

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Speaker 4: have just been left for dead. So we'll be patient

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Speaker 4: waiting for the market to close those gaps.

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Speaker 2: So since Patients was brought up, let's talk about Patient Capital.

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Speaker 2: What inspired you to launch the firm and tell us

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Speaker 2: a little bit of the thinking behind the name.

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Speaker 4: Yeah, so I think, I mean, I've always been pretty

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Speaker 4: driven and I've always had entrepreneurial interests, and so when

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Speaker 4: I became the co manager with Bill on the Opportunity

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Speaker 4: Fund in twenty fourteen, I was also interested in developing

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Speaker 4: my own independent track record. So Bill gave me some

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Speaker 4: of his personal money to run independently and be the

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Speaker 4: sole decision maker. So at the end of twenty nineteen

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Speaker 4: that had a really good track record. We didn't have

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Speaker 4: an institutional business at Miller Value Partners. We head back

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Speaker 4: in the day at LEG but Bill was more optimizing

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Speaker 4: for the kind of life you wanted to live. He

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Speaker 4: didn't want to grow and build a business. So I said, hey,

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Speaker 4: let me go after this institutional business. And there was

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Speaker 4: at least stated interest in women and minority led opportunities there,

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Speaker 4: so I said, it looks like there might be interest

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Speaker 4: in the marketplace for this. It was important to me

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Speaker 4: to have. I think it's a great profession for women.

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Speaker 4: I think I've read a lot of research on the

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Speaker 4: importance of role models in the industry. So you know,

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Speaker 4: that was, you know, part of my decision. So we

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Speaker 4: decided to turn it into a private fund like a

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Speaker 4: hedge fund structure, and we did. We made the decision

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Speaker 4: in twenty nineteen, and then we actually launched it in

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Speaker 4: twenty twenty right in COVID, which was not the best time.

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Speaker 3: It's not a good time to launch it.

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Speaker 4: Whenever I made these big decisions, the market, you know,

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Speaker 4: goes a little wonky.

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Speaker 3: Right.

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Speaker 2: So, since you've become the sole manager of the opportunity

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Speaker 2: equity strategy is it run the same way it was.

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Speaker 2: How has it changed since Bill has retired from being

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Speaker 2: co manager there?

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Speaker 4: Yeah, so the philosophy and process is exactly the same

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Speaker 4: as what we've always done. And you know, the decision

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Speaker 4: making is different because it used to be a co

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Speaker 4: decision making structure. When I first became co manager with Bill,

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Speaker 4: he said, okay, great, you're co manager, but I'm not

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Speaker 4: going to let some thirty something year old tell me

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Speaker 4: what to do on my fund. And I said, I

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Speaker 4: got it. I got to you know, I have to

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Speaker 4: convince you. And so over time, you know, it became

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Speaker 4: came more equal co and then I took it over

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Speaker 4: obviously when he stepped off at the end of twenty

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Speaker 4: twenty two.

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Speaker 2: And Patient Capital has acquired this, it's now a wholly

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Speaker 2: owned subsidiary.

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Speaker 3: Is that right now?

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Speaker 4: Patient Capital is, you know, the Opportunity Trust mutual fund

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Speaker 4: business and the institutional business that I started under Patient

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Speaker 4: And so all the team and the structure.

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Speaker 2: How did they differ aside from a mutual fund has

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Speaker 2: its own rules, regulations, and well.

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Speaker 4: That's the primary way again for me. I like to

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Speaker 4: think one philosophy, one process, one team, and we're just

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Speaker 4: looking for the best ideas in the market, and then

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Speaker 4: if it's appropriate for the strategy. The mutual fund has

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Speaker 4: more restrictions on what it can do, even though it

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Speaker 4: has the widest latitude possible for a mutual fund. So

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Speaker 4: you know, we owned bitcoin starting at twenty twenty in

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Speaker 4: the private fund, but we couldn't in the mutual fund.

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Speaker 4: Now we owned the bitcoin ets, but it would be

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Speaker 4: differences like that.

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Speaker 2: Coming up, we continue our conversation with Samantha maclamore, chief

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Speaker 2: investment officer and founder of Patient Capital, talking about the

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Speaker 2: state of the economy today. I'm Bury Results. You're listening

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Speaker 2: to Masters in Business on Bloomberg Radio. I'm Bury Results.

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Speaker 2: You're listening to Masters in Business on Bloomberg Radio. Let's

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Speaker 2: return to my previously recorded conversation live at the Phillips

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Speaker 2: Collection in Washington, d C. With Patient Capitals. Samantha macklamore.

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Speaker 2: So that one doesn't think of bitcoin as a value trade,

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Speaker 2: tell us what you're thinking was there?

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Speaker 4: Yeah, Well, my thinking was I really screwed that one

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Speaker 4: up because Bill got involved in bitcoin when it was

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Speaker 4: like one hundred dollars a coin, and I was like, oh,

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Speaker 4: this is another one of those things that's going to

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Speaker 4: go to zero, as Bill said, you know it could

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Speaker 4: go to zero or but if it goes up, it's

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Speaker 4: going to go up a lot. And I was like,

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Speaker 4: I don't need another thing going to zero. Big, big,

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Speaker 4: big mistake. But you know, then it had its run.

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Speaker 4: It made it almost to twenty twenty eighteen. You know,

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Speaker 4: I again was telling Bill when it got to three thousand, Bill,

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Speaker 4: you should he had it fun and I was like,

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Speaker 4: it was a huge position. I was like, you should

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Speaker 4: cut it back. You know, this is you know, has

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Speaker 4: some risk. And it went to twenty and then it

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Speaker 4: did crash, but back to three thousand. So that was

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Speaker 4: another good lesson. But by twenty twenty, again I thought

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Speaker 4: that there was you know, potential inflation risk given all

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Speaker 4: the you know, monetary and fiscal stimulus. And by that time,

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Speaker 4: you know, Bill was on the phone every day with

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Speaker 4: institutions and you know, big individuals that wanted to get

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Speaker 4: up to speed. And there was a bulcase early on

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Speaker 4: about it being digital gold, but I thought it was

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Speaker 4: very unlikely because there's one gold and it has a

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Speaker 4: special psychological space in the investment universe. But by twenty

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Speaker 4: twenty I thought it was much more likely and it

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Speaker 4: was developing along the path. And usually after you have

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Speaker 4: these crashes, things don't keep coming back. And so I

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Speaker 4: bought it in the fund there on the belief that

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Speaker 4: it was digital gold, which I could actually analyze. And

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Speaker 4: you can look at the market cap of gold and

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Speaker 4: look at you know, the younger generations are much more

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Speaker 4: inclined to digital assets. So if this is a proxy

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Speaker 4: for the long term potential here, what's the upside? And

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Speaker 4: if you do that math today, you know bitcoin could

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Speaker 4: be worth one point three to one point four million

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Speaker 4: dollars to share or a coin sometime in the future.

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Speaker 4: And so again I still believe that to be the case.

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Speaker 2: I would would not have guessed that. That's a fairly

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Speaker 2: contrriant perspective for a so called value investor. Let's talk

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Speaker 2: about some other fairly contrarian approaches. You were an aspiring

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Speaker 2: innkeeper in Vermont. I have to ask about that because

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Speaker 2: it's just so off what I know of You tell

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Speaker 2: us about adventures in innkeeping.

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Speaker 4: Well, I was an innkeeper, for I'm not the actual innkeeper,

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Speaker 4: but yes, I like to learn lessons a hard way. That's,

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Speaker 4: you know, part of my unfortunate line life. And you know,

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Speaker 4: so twenty eleven, we'd gone through the financial crisis. You know,

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Speaker 4: Bill was this genius. We'd had a really poor performance.

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Speaker 4: He spent all his time working. I just had my

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Speaker 4: first daughter, which totally rearranged everything in my life and

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Speaker 4: my priorities. And I was like, you know, do I

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Speaker 4: want to work that hard and do that or you know,

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Speaker 4: now I have this daughter and she's so important to me.

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Speaker 4: So I was considering a whole bunch of things, and

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Speaker 4: you know, innkeeper was one of them, as crazy as

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Speaker 4: that sounds because it's so not my thing, like, but

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Speaker 4: and then it was the real estate obviously bubble and crash,

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Speaker 4: and so, you know, I think I had mentioned this

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Speaker 4: to my family. They live in Vermont. My dad was like, oh,

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Speaker 4: the Vermont inn is going up for auction. And I

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Speaker 4: was like, oh, this is very interesting. It's a sign

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Speaker 4: of our times. Let me go to this auction. So

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Speaker 4: my husband and I went to the auction. You know,

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Speaker 4: I did work on what I thought the end was

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Speaker 4: worth before going into that, and you know, there was

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Speaker 4: a first bid for the end, and then we bid

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Speaker 4: the second bid and then I'm like, what are you doing?

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Speaker 4: That was crazy, Like, don't do that again, but that

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Speaker 4: was it. It was over there. There were no more bids,

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Speaker 4: and so you know, we ended up with an inn

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Speaker 4: that was closed down because it had gone through foreclosure.

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Speaker 4: Fortunately my family was all there. So then I made

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Speaker 4: I compounded the air by getting my brother in law's

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Speaker 4: sister involved to run the inn. So got family involved

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Speaker 4: in an absentee business. And you know, we also were

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Speaker 4: on a reality show. We won't go into that.

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Speaker 3: Did you do a reality show?

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Speaker 4: We did a reality show because I'm not going to

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Speaker 4: tell you the name because I don't want you to

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Speaker 4: go watch it. But I needed someone to help me

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Speaker 4: figure out how I was going to run this in.

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Speaker 4: But we got it open. So the the auction was

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Speaker 4: in October. I wanted to get it open by the

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Speaker 4: holidays because that's obviously the big ski season there.

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Speaker 3: Which we did. Did we did that?

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Speaker 4: Yeah, my dad, my husband's dad, We got everyone involved

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Speaker 4: in getting the n reopen and we had to figure

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Speaker 4: out how to get people to come. And so it

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Speaker 4: was it was not for me. I quickly figured that out,

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Speaker 4: but you know, we kind of got the business running

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Speaker 4: and then sold it.

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Speaker 2: So and what was the lesson we learned? The lesson

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Speaker 2: was don't scratch your nose at a Yeah.

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Speaker 4: The lesson was, I like markets. I can sit at

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Speaker 4: my desk and make a lot of money doing very little,

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Speaker 4: versus managing a chef who has you know, a lot

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Speaker 4: of issues on when I tell him the food's not

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Speaker 4: so good and he thinks he's an artist, and you know,

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Speaker 4: I was like, this is not for me. And the

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Speaker 4: maximum amount you could make on it, and like that

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Speaker 4: was not that.

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Speaker 3: Much, so not a lot of business money.

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Speaker 4: We did make some money, so it was okay, but

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Speaker 4: it was a lot of work for you know how

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Speaker 4: much you could make.

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Speaker 3: Yes, and you were working full time.

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Speaker 4: I was working. Yeah, I was working full time, so

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Speaker 4: you know I wasn't on site again, I had people

437
00:21:58,240 --> 00:21:58,879
Speaker 4: there working.

438
00:21:59,680 --> 00:22:03,800
Speaker 2: That's an amazing story. Let's talk a little bit about philosophy.

439
00:22:04,240 --> 00:22:09,399
Speaker 2: You have talked about Buddhism and Stoicism as related to

440
00:22:09,480 --> 00:22:13,320
Speaker 2: finance and investing. Tell us a little bit about that. Yeah.

441
00:22:13,359 --> 00:22:17,040
Speaker 4: Well, I think in investing in market and markets, having

442
00:22:17,119 --> 00:22:22,080
Speaker 4: the right mindset is probably the most important thing. And

443
00:22:22,560 --> 00:22:24,399
Speaker 4: you know, it's a mixture of art and science, and

444
00:22:24,400 --> 00:22:27,760
Speaker 4: a lot of people think the scientific part is more important,

445
00:22:27,800 --> 00:22:30,800
Speaker 4: but I think the art part is more important because

446
00:22:31,080 --> 00:22:33,680
Speaker 4: you know, there's a lot of data on how much

447
00:22:33,720 --> 00:22:36,240
Speaker 4: more you can make in equity markets over time. And

448
00:22:36,320 --> 00:22:38,320
Speaker 4: so the reason that you can make more is because

449
00:22:38,359 --> 00:22:41,280
Speaker 4: you have these periodic losses. And you know, I liken

450
00:22:41,359 --> 00:22:45,159
Speaker 4: it to dieting. It's like people don't fail at dieting

451
00:22:45,200 --> 00:22:47,480
Speaker 4: because they don't know they shouldn't eat the cookie, right,

452
00:22:47,640 --> 00:22:49,720
Speaker 4: Like you know you shouldn't eat the cookie. It's because

453
00:22:49,720 --> 00:22:52,880
Speaker 4: it's too tempting. And people know you shouldn't sell when

454
00:22:52,920 --> 00:22:57,399
Speaker 4: the markets are down mostly, but it's hard to do

455
00:22:57,440 --> 00:23:00,000
Speaker 4: that because you feel like you're you know you're well

456
00:23:00,200 --> 00:23:02,720
Speaker 4: is at risk. And so I think having tools that

457
00:23:02,840 --> 00:23:05,680
Speaker 4: help you have the right structure for how you think

458
00:23:05,720 --> 00:23:09,400
Speaker 4: about things and how you behave are really important. I mean,

459
00:23:09,400 --> 00:23:11,679
Speaker 4: some people are naturally wired that way and different people,

460
00:23:12,160 --> 00:23:15,320
Speaker 4: you know, you have different abilities, but I think having

461
00:23:15,359 --> 00:23:18,840
Speaker 4: certain tools and mindsets can help anyone be better. And

462
00:23:18,920 --> 00:23:22,879
Speaker 4: so you know, staying calm, understanding that there's only certain

463
00:23:22,880 --> 00:23:25,719
Speaker 4: things that are within your control and that's what you

464
00:23:25,800 --> 00:23:28,399
Speaker 4: can focus on, and then understanding that there will be

465
00:23:28,480 --> 00:23:32,560
Speaker 4: times when you lose money, but over time. If again

466
00:23:32,880 --> 00:23:35,119
Speaker 4: it's so sensitive to time horizon, if you have a

467
00:23:35,160 --> 00:23:37,760
Speaker 4: long time horizon, and you can put your money away

468
00:23:37,800 --> 00:23:40,119
Speaker 4: for a long time. There's almost nothing safer if you

469
00:23:40,119 --> 00:23:42,959
Speaker 4: have a twenty or twenty five year time horizon. You know,

470
00:23:43,080 --> 00:23:47,960
Speaker 4: equities have never been down over that time, ye US equities, Yes,

471
00:23:49,200 --> 00:23:52,560
Speaker 4: And so I meditate regularly, and you know, I keep

472
00:23:52,600 --> 00:23:56,480
Speaker 4: a journal. And I remember during the COVID pandemic, you know,

473
00:23:56,840 --> 00:23:59,040
Speaker 4: we were all locked away, but I was emailing with

474
00:23:59,119 --> 00:24:01,720
Speaker 4: Bill and he was stoicism and that kind of got

475
00:24:01,760 --> 00:24:04,880
Speaker 4: me interested, and we were you know, he was sharing quotes,

476
00:24:04,920 --> 00:24:07,119
Speaker 4: and so I think it can really help you in

477
00:24:07,160 --> 00:24:08,920
Speaker 4: the moment to make better decisions.

478
00:24:08,920 --> 00:24:12,280
Speaker 2: If you have these tools recognizing what is and is

479
00:24:12,440 --> 00:24:15,600
Speaker 2: not within your control, and a sense of calm, it

480
00:24:15,640 --> 00:24:17,360
Speaker 2: turns out to be useful in the markets.

481
00:24:17,560 --> 00:24:18,959
Speaker 4: Yeah, yeah, imagine that.

482
00:24:20,160 --> 00:24:23,440
Speaker 2: Whoever would have guessed that? And yet most people don't

483
00:24:23,480 --> 00:24:27,120
Speaker 2: reach that conclusion. They go the other direction. So let's

484
00:24:27,119 --> 00:24:29,719
Speaker 2: talk a little bit about where we are in the

485
00:24:29,760 --> 00:24:35,560
Speaker 2: state of the market today. I'm watching real time transcription,

486
00:24:36,240 --> 00:24:40,480
Speaker 2: which five years ago would have been magic. There's been

487
00:24:40,680 --> 00:24:45,560
Speaker 2: dictation software for decades. It's always been pretty terrible. It's

488
00:24:45,600 --> 00:24:49,080
Speaker 2: amazing how good this is in real time. So let's

489
00:24:49,080 --> 00:24:51,240
Speaker 2: talk a little bit about artificial intelligence.

490
00:24:51,280 --> 00:24:52,120
Speaker 3: What are your thoughts?

491
00:24:52,640 --> 00:24:56,280
Speaker 2: How does this affect how you're looking at overall markets

492
00:24:56,320 --> 00:24:58,200
Speaker 2: and how you're looking at individual companies.

493
00:24:58,520 --> 00:25:01,320
Speaker 4: No, well, I think it's h you know, anyone who

494
00:25:01,320 --> 00:25:04,160
Speaker 4: knows anything about technology. I have not heard anyone who's

495
00:25:04,200 --> 00:25:08,199
Speaker 4: knowledgeable about this space not say that it's completely transformational.

496
00:25:08,400 --> 00:25:13,320
Speaker 4: And you know, more important, you know, I think you

497
00:25:13,320 --> 00:25:17,199
Speaker 4: know the Capital One CEO, you know, he claims to

498
00:25:17,200 --> 00:25:19,560
Speaker 4: have the first fintech at Capital one because they were

499
00:25:19,680 --> 00:25:22,119
Speaker 4: very into data. But he said it's bigger than the

500
00:25:22,240 --> 00:25:26,400
Speaker 4: agricultural revolution that you know, invention of fire, the industrial revolution,

501
00:25:26,480 --> 00:25:30,879
Speaker 4: the digital revolution, and I haven't really heard anyone dispute that.

502
00:25:31,000 --> 00:25:33,800
Speaker 4: So there's lots of questions about how long does it take,

503
00:25:33,840 --> 00:25:37,720
Speaker 4: what exactly does it do? Are companies overvalued now? But

504
00:25:37,840 --> 00:25:41,639
Speaker 4: I think, you know, anyone who knows anything believes that

505
00:25:41,760 --> 00:25:44,040
Speaker 4: the impact of this is just going to be huge.

506
00:25:44,080 --> 00:25:46,359
Speaker 4: And so when you're in that sort of situation in

507
00:25:46,440 --> 00:25:50,080
Speaker 4: the markets, you obviously need to be aware and try

508
00:25:50,119 --> 00:25:52,359
Speaker 4: to learn, you know, everything you can. I think we

509
00:25:52,520 --> 00:25:56,240
Speaker 4: bought Nvidia in January of twenty twenty four. The interesting

510
00:25:56,280 --> 00:25:59,720
Speaker 4: thing about this is I love markets because they're so interesting,

511
00:26:00,040 --> 00:26:03,520
Speaker 4: and they're complex adaptive systems, which make them very very

512
00:26:03,520 --> 00:26:07,840
Speaker 4: difficult to outperform. They're extremely difficult, but they adapt. And

513
00:26:07,880 --> 00:26:10,760
Speaker 4: so what's interesting to me is that we have this

514
00:26:11,000 --> 00:26:17,640
Speaker 4: AI bubble, you know, hysteria basically where everyone it's all

515
00:26:17,680 --> 00:26:21,639
Speaker 4: you read all the time. And that makes sense given

516
00:26:21,640 --> 00:26:23,960
Speaker 4: that we've had, you know, the tech bubble, we had

517
00:26:24,040 --> 00:26:27,000
Speaker 4: the housing bubble, We've had some of these bubbles. But

518
00:26:27,080 --> 00:26:30,720
Speaker 4: I think and it's possible that you know, there will

519
00:26:30,720 --> 00:26:34,040
Speaker 4: be something negative here, but you're not seeing valuations at

520
00:26:34,040 --> 00:26:36,240
Speaker 4: all in line with what we saw in the tech bubble.

521
00:26:36,520 --> 00:26:39,520
Speaker 4: And the companies that are spending these enormous amounts of money,

522
00:26:39,600 --> 00:26:43,040
Speaker 4: which they are very large sums of money, they're basically

523
00:26:43,119 --> 00:26:45,200
Speaker 4: the best companies that ever existed in the history of

524
00:26:45,240 --> 00:26:47,240
Speaker 4: the world if you look at their returns on capital,

525
00:26:47,280 --> 00:26:50,400
Speaker 4: their free cash flow margin, you know, their revenue growth

526
00:26:50,480 --> 00:26:53,560
Speaker 4: rates and so so I like that there's all this

527
00:26:53,720 --> 00:26:56,800
Speaker 4: AI bubble talk because it keeps a lid on the valuations.

528
00:26:56,840 --> 00:27:00,879
Speaker 4: I think it actually makes it more sustainable that they're

529
00:27:00,920 --> 00:27:03,040
Speaker 4: you know, I would have concern in some of the

530
00:27:03,080 --> 00:27:06,160
Speaker 4: companies like open Ai, which you know, had under four

531
00:27:06,200 --> 00:27:09,040
Speaker 4: billion in revenues last year and has committed to one

532
00:27:09,040 --> 00:27:11,800
Speaker 4: point four trillion dollars and spent. So we're watching that

533
00:27:12,000 --> 00:27:14,840
Speaker 4: very closely. And I think for me, I have children,

534
00:27:14,840 --> 00:27:17,240
Speaker 4: and I'm thinking, what does this mean for the future

535
00:27:17,280 --> 00:27:20,080
Speaker 4: of employment, and is you know, what can I advise

536
00:27:20,119 --> 00:27:22,320
Speaker 4: them to go into? Which I think that's a much

537
00:27:22,440 --> 00:27:23,600
Speaker 4: tougher question now.

538
00:27:23,520 --> 00:27:26,600
Speaker 2: Than so, so I'm glad you went over there because

539
00:27:26,640 --> 00:27:30,440
Speaker 2: I wanted to ask. You've talked about the value of mentorship,

540
00:27:30,960 --> 00:27:34,159
Speaker 2: about training young people, whether analysts or fund managers, what

541
00:27:34,240 --> 00:27:38,080
Speaker 2: have you. If you look at the unemployment rate today

542
00:27:38,119 --> 00:27:41,000
Speaker 2: at four three four four, and then you look at

543
00:27:41,040 --> 00:27:45,560
Speaker 2: the college graduate under thirty unemployment, it's more than double that.

544
00:27:45,640 --> 00:27:46,600
Speaker 3: It's in the nines.

545
00:27:47,320 --> 00:27:53,080
Speaker 2: What does a I do for that demographic learning to

546
00:27:53,560 --> 00:27:57,080
Speaker 2: being mentored, learning a trade, being able to get a

547
00:27:57,200 --> 00:28:00,720
Speaker 2: job at an entry level when their competition seems to

548
00:28:00,760 --> 00:28:02,040
Speaker 2: be software.

549
00:28:02,280 --> 00:28:04,200
Speaker 4: Yeah, I mean it's a great question. I'm not sure

550
00:28:04,240 --> 00:28:06,119
Speaker 4: I have the answer to that. I mean, what we

551
00:28:06,200 --> 00:28:09,000
Speaker 4: know is you can look at industries adopting AI and

552
00:28:09,040 --> 00:28:12,880
Speaker 4: those that haven't, and there's clearly an impact on junior hires.

553
00:28:13,000 --> 00:28:16,040
Speaker 4: So it is having an impact, and uh, you know,

554
00:28:16,160 --> 00:28:19,600
Speaker 4: Dario Amide, the CEO of Anthropic, has said he believes

555
00:28:19,720 --> 00:28:24,040
Speaker 4: that the white collar unemployment rate will be you know,

556
00:28:24,119 --> 00:28:28,240
Speaker 4: five to twenty five percent in one to five years,

557
00:28:28,400 --> 00:28:31,720
Speaker 4: so huge impact, and so I think it. You know,

558
00:28:32,640 --> 00:28:35,680
Speaker 4: that's why I'm thinking, like, what do you advise young

559
00:28:35,720 --> 00:28:38,240
Speaker 4: people to do? I think I asked people at my

560
00:28:38,960 --> 00:28:40,600
Speaker 4: you know college that I went to where I'm on

561
00:28:40,640 --> 00:28:43,040
Speaker 4: the board. The professors there, they're trying, you know, they've

562
00:28:43,080 --> 00:28:45,720
Speaker 4: worked hard to set up an AI program and help

563
00:28:45,800 --> 00:28:48,280
Speaker 4: students be literate and you know, well versed in this.

564
00:28:48,440 --> 00:28:50,160
Speaker 4: I think if you can use it as a tool

565
00:28:50,240 --> 00:28:53,280
Speaker 4: to your advantage, you still need humans to do this work,

566
00:28:53,320 --> 00:28:58,280
Speaker 4: and so you know, being capable in that is really important.

567
00:28:59,200 --> 00:28:59,360
Speaker 2: You know.

568
00:28:59,400 --> 00:29:03,200
Speaker 4: I was at a Santa Fe Institute meeting a couple

569
00:29:03,280 --> 00:29:06,360
Speaker 4: weeks ago, you know, that was on AI, and they

570
00:29:06,400 --> 00:29:08,760
Speaker 4: talked about how what the models aren't good at, which

571
00:29:08,760 --> 00:29:14,520
Speaker 4: I thought was really interesting, is complex problem solving and creativity.

572
00:29:14,800 --> 00:29:18,480
Speaker 4: So those see more unique human endeavors. So leaning into

573
00:29:18,600 --> 00:29:21,760
Speaker 4: areas where you know, those are critical skills I think

574
00:29:21,800 --> 00:29:25,600
Speaker 4: are important. But areas like law or you know, obviously

575
00:29:25,600 --> 00:29:30,280
Speaker 4: customer service coding, some of these areas are getting quite disrupted.

576
00:29:30,400 --> 00:29:34,200
Speaker 2: And you're saying complex problem solving and creativity. AI is

577
00:29:34,240 --> 00:29:35,440
Speaker 2: not great at These.

578
00:29:35,320 --> 00:29:37,280
Speaker 4: Models cannot do it. Now will they get there? I

579
00:29:37,280 --> 00:29:39,360
Speaker 4: don't know, But I think what's useful is to have

580
00:29:39,920 --> 00:29:43,080
Speaker 4: a human who is well versed and can think critically

581
00:29:43,080 --> 00:29:46,520
Speaker 4: about Because these models hallucinate, they'll make up lies, they'll

582
00:29:46,520 --> 00:29:49,480
Speaker 4: tell you incorrect information. They're getting better at that. But

583
00:29:49,680 --> 00:29:52,840
Speaker 4: having someone who knows how to check facts, use different

584
00:29:52,840 --> 00:29:56,360
Speaker 4: models in different situations, you know, that's going to be

585
00:29:56,440 --> 00:29:59,240
Speaker 4: very valuable. I think who can figure stuff out that

586
00:29:59,280 --> 00:30:02,280
Speaker 4: you haven't been to go and solve real problems in

587
00:30:02,280 --> 00:30:06,160
Speaker 4: the real world, I think is also valuable.

588
00:30:06,400 --> 00:30:09,680
Speaker 2: So every time we see a back test that's based

589
00:30:09,760 --> 00:30:13,800
Speaker 2: on historical data, it always looks great and built into

590
00:30:13,880 --> 00:30:16,479
Speaker 2: the back test of the assumption the future is going

591
00:30:16,520 --> 00:30:17,000
Speaker 2: to look.

592
00:30:16,840 --> 00:30:17,440
Speaker 3: Like the past.

593
00:30:18,000 --> 00:30:21,719
Speaker 2: How much of what we're seeing in artificial intelligence is

594
00:30:21,960 --> 00:30:25,360
Speaker 2: sort of paralleling that. Hey, we're working off the corpus

595
00:30:25,440 --> 00:30:28,640
Speaker 2: of all these documents that have been previously written. If

596
00:30:28,680 --> 00:30:30,720
Speaker 2: you want to do something that's not going to get

597
00:30:30,720 --> 00:30:33,600
Speaker 2: replaced by AI, you have to go in a different direction.

598
00:30:34,200 --> 00:30:35,880
Speaker 4: Yeah. No, I think that's a great point. I mean

599
00:30:35,880 --> 00:30:37,640
Speaker 4: what the models do is they look at all of

600
00:30:37,680 --> 00:30:40,560
Speaker 4: the information that's out there and they can you know,

601
00:30:40,600 --> 00:30:44,160
Speaker 4: do things with it instantaneously. And so I think there's

602
00:30:44,360 --> 00:30:48,959
Speaker 4: a belief in the technology community that they will eventually

603
00:30:49,040 --> 00:30:52,600
Speaker 4: have a breakthrough where they can have novel ideas. You know,

604
00:30:52,720 --> 00:30:57,000
Speaker 4: that's unclear if and when that'll happen. You know, it

605
00:30:57,040 --> 00:31:01,520
Speaker 4: hasn't happened yet. And so you know, if you can

606
00:31:01,560 --> 00:31:05,320
Speaker 4: do that, if you can use ideas in an innovative way,

607
00:31:05,360 --> 00:31:07,479
Speaker 4: if you can certainly, I think in the investment business

608
00:31:07,520 --> 00:31:10,800
Speaker 4: for long term investors, what you've seen is machine learning

609
00:31:10,840 --> 00:31:15,000
Speaker 4: in large large language models have already been used to

610
00:31:15,160 --> 00:31:19,040
Speaker 4: optimize short term trading models. And again we don't compete

611
00:31:19,040 --> 00:31:22,120
Speaker 4: there because I think it's extremely difficult, you know.

612
00:31:22,120 --> 00:31:22,760
Speaker 3: To compete.

613
00:31:23,040 --> 00:31:26,640
Speaker 4: But I think long term, you know, those models have

614
00:31:26,720 --> 00:31:30,520
Speaker 4: not been used to think about long term investments. We

615
00:31:30,560 --> 00:31:33,920
Speaker 4: talk about time, arbitrage and patience, and you know, what

616
00:31:34,080 --> 00:31:36,160
Speaker 4: do we think the world's going to look like in five, ten,

617
00:31:36,280 --> 00:31:40,160
Speaker 4: fifteen years. The future is uncertain, No one knows. So

618
00:31:40,200 --> 00:31:42,440
Speaker 4: I don't see how the models are going to you know,

619
00:31:42,520 --> 00:31:45,160
Speaker 4: get an edge there. I mean, if they become smarter

620
00:31:45,240 --> 00:31:48,320
Speaker 4: than all humans at some point, maybe, but you know,

621
00:31:48,360 --> 00:31:49,680
Speaker 4: it'll be one of the last things.

622
00:31:49,680 --> 00:31:54,160
Speaker 3: Hopefully, So are you using AI in your firm?

623
00:31:54,240 --> 00:31:59,000
Speaker 4: And if so, have we are and we talk about

624
00:31:59,040 --> 00:32:01,720
Speaker 4: AI all the time, and so I you know, tell

625
00:32:01,720 --> 00:32:03,640
Speaker 4: the employees all the time, like you have to be

626
00:32:03,680 --> 00:32:05,720
Speaker 4: all over this and learn how to use these models

627
00:32:05,760 --> 00:32:08,840
Speaker 4: because you know they're going to displace you if you know,

628
00:32:08,920 --> 00:32:11,480
Speaker 4: not you specifically, but all of us if we don't.

629
00:32:11,600 --> 00:32:14,760
Speaker 4: And so, you know, it's still so early. So I

630
00:32:14,760 --> 00:32:18,080
Speaker 4: think a lot of what's going on now is more experimentation,

631
00:32:18,200 --> 00:32:21,320
Speaker 4: both at big companies and small companies. There was an

632
00:32:21,360 --> 00:32:24,600
Speaker 4: article in the journal yesterday about how small businesses have had,

633
00:32:25,120 --> 00:32:27,440
Speaker 4: uh you know, have been transformed by this because they

634
00:32:27,480 --> 00:32:29,760
Speaker 4: can do so many things, Like I used one to

635
00:32:29,840 --> 00:32:32,560
Speaker 4: create a profit sharing plan and I just went back

636
00:32:32,600 --> 00:32:34,480
Speaker 4: and forth with chat GPT like no, I don't want this,

637
00:32:34,560 --> 00:32:36,440
Speaker 4: no I want that, Like what is this model? And

638
00:32:36,480 --> 00:32:39,320
Speaker 4: it like created it for me, you know, with the

639
00:32:39,360 --> 00:32:40,920
Speaker 4: back and forth, and I sent it to the lawyers

640
00:32:40,960 --> 00:32:43,000
Speaker 4: and it was good to go. I mean, it was good.

641
00:32:43,040 --> 00:32:46,680
Speaker 4: It needed no changes. And so I'd been you know,

642
00:32:46,760 --> 00:32:48,160
Speaker 4: I've been wanting to do that for a long time

643
00:32:48,200 --> 00:32:49,680
Speaker 4: and the team was busy with all sorts of stuff

644
00:32:49,680 --> 00:32:51,080
Speaker 4: so I finally just did it, and it probably took

645
00:32:51,080 --> 00:32:53,240
Speaker 4: me like an hour to do that, but we try it.

646
00:32:53,320 --> 00:32:55,960
Speaker 4: We try tools on the investment side, uh you know

647
00:32:56,000 --> 00:32:58,600
Speaker 4: that are both specialized and more generalized. I use chat,

648
00:32:58,640 --> 00:33:02,000
Speaker 4: GPT all the time for you know, everything in terms

649
00:33:02,080 --> 00:33:06,320
Speaker 4: of doing research, and uh, you know, it's really you know,

650
00:33:06,440 --> 00:33:09,240
Speaker 4: quite amazing. And we have you know, we have a

651
00:33:09,280 --> 00:33:12,840
Speaker 4: new tech person that we hired who has played around

652
00:33:12,840 --> 00:33:16,200
Speaker 4: with automating and using agents to do certain tasks that

653
00:33:16,520 --> 00:33:18,160
Speaker 4: people did. So I do think it is going to

654
00:33:18,280 --> 00:33:20,560
Speaker 4: you know, replace some work now. I don't think we'll

655
00:33:20,600 --> 00:33:22,680
Speaker 4: have less jobs. People will just be able to do

656
00:33:23,400 --> 00:33:25,600
Speaker 4: you know, more higher level work.

657
00:33:26,560 --> 00:33:27,120
Speaker 3: Makes sense.

658
00:33:27,960 --> 00:33:31,840
Speaker 2: You earlier compared this to the dot COM's What are

659
00:33:31,880 --> 00:33:35,520
Speaker 2: the parallels that are a fair comparison to the late

660
00:33:35,640 --> 00:33:38,680
Speaker 2: nineties tech and telecom bubble? And what do you think

661
00:33:39,040 --> 00:33:44,800
Speaker 2: is really separating this era from the late nineteen nineties.

662
00:33:45,040 --> 00:33:48,360
Speaker 4: Well, I think the clearest uh you know parallel is

663
00:33:48,480 --> 00:33:52,680
Speaker 4: the market valuation overall is at high levels that we

664
00:33:52,680 --> 00:33:54,560
Speaker 4: haven't seen since then. So I think the market's at

665
00:33:54,560 --> 00:33:57,080
Speaker 4: twenty two times you know the next twelve months earnings,

666
00:33:57,120 --> 00:33:59,160
Speaker 4: and it peaked at like twenty five times then, so

667
00:33:59,200 --> 00:34:01,840
Speaker 4: we're you know, after the financial crisis, we were at

668
00:34:01,920 --> 00:34:04,680
Speaker 4: very low levels and we've spent you know, the past

669
00:34:04,720 --> 00:34:08,719
Speaker 4: sixteen years, you know, having great markets, some of the

670
00:34:08,760 --> 00:34:11,160
Speaker 4: best markets we've ever had, and the valuations have risen,

671
00:34:11,239 --> 00:34:14,040
Speaker 4: so I you know, again as value managers, that makes

672
00:34:14,120 --> 00:34:18,200
Speaker 4: us you know, on alert for signs that things might

673
00:34:18,239 --> 00:34:20,839
Speaker 4: be going around. But there's many more, i think, more

674
00:34:20,920 --> 00:34:26,640
Speaker 4: significant differences. So during that there was you know, I

675
00:34:26,680 --> 00:34:31,000
Speaker 4: think technology hit fifty times earnings as a sector, and

676
00:34:31,440 --> 00:34:33,759
Speaker 4: a lot of the technology companies were losing a ton

677
00:34:33,800 --> 00:34:35,560
Speaker 4: of money and there was a lot of you know,

678
00:34:35,640 --> 00:34:38,360
Speaker 4: debt financing. So there's a lot of unsustainable things. The

679
00:34:38,480 --> 00:34:41,759
Speaker 4: build out of you know, the fiber networks, they were

680
00:34:41,800 --> 00:34:46,640
Speaker 4: building for future demand that wasn't yet there. So that's

681
00:34:46,760 --> 00:34:49,440
Speaker 4: very different than today. We have this you know, big

682
00:34:49,480 --> 00:34:54,320
Speaker 4: infrastructure build out, but you know, there's still shortages of demand.

683
00:34:54,320 --> 00:34:56,840
Speaker 4: They can't meet the demand that already exists. That's a

684
00:34:56,960 --> 00:35:01,239
Speaker 4: very different situation. And the companies that are building them,

685
00:35:01,520 --> 00:35:04,040
Speaker 4: you know, building this infrastructure out for the most part,

686
00:35:04,680 --> 00:35:08,120
Speaker 4: are you know, extremely the hyperscalers are extremely well capitalized,

687
00:35:08,160 --> 00:35:10,560
Speaker 4: with great balance sheets, high free cash flow margins, so

688
00:35:11,200 --> 00:35:14,320
Speaker 4: you know, the risk that sort of risk doesn't exist.

689
00:35:14,360 --> 00:35:16,520
Speaker 4: And also at the end of the tech bubble, everyone

690
00:35:16,600 --> 00:35:19,640
Speaker 4: was piled into you know, Bill recognized the peak and

691
00:35:19,719 --> 00:35:22,080
Speaker 4: actually got out of those names. And what made him

692
00:35:22,120 --> 00:35:24,319
Speaker 4: recognize it was that, you know, I think in the

693
00:35:24,360 --> 00:35:28,359
Speaker 4: first quarter of two thousand, you know, the a very

694
00:35:28,440 --> 00:35:31,480
Speaker 4: high percent, like seventy five percent of money managers outperformed

695
00:35:31,480 --> 00:35:35,120
Speaker 4: and only two sectors outperformed, tech and telcom, And so

696
00:35:35,360 --> 00:35:38,279
Speaker 4: everyone was piled into a very narrow area of the

697
00:35:38,280 --> 00:35:40,920
Speaker 4: market that is not at all you know what you're

698
00:35:40,960 --> 00:35:44,560
Speaker 4: seeing now, and so I just now, you know, I

699
00:35:44,600 --> 00:35:47,640
Speaker 4: think the bare case would be that for some reason,

700
00:35:48,239 --> 00:35:51,400
Speaker 4: you know, the demand doesn't exist and you know, the

701
00:35:51,800 --> 00:35:54,360
Speaker 4: spend rolls over again. I still think it would be

702
00:35:54,360 --> 00:35:59,360
Speaker 4: a much more modest, uh, you know, pullback just because

703
00:35:59,400 --> 00:36:02,280
Speaker 4: of those under lying you know, fundamental business factors. There

704
00:36:02,120 --> 00:36:06,040
Speaker 4: are other areas of the market, like quantum computing and

705
00:36:06,239 --> 00:36:08,840
Speaker 4: nuclear fission that are much more speculative that have already

706
00:36:08,840 --> 00:36:11,880
Speaker 4: pulled back fifty percent actually just in this decline. So

707
00:36:12,280 --> 00:36:13,919
Speaker 4: that also is a good thing. I think it keeps

708
00:36:13,960 --> 00:36:15,480
Speaker 4: the market healthier longer.

709
00:36:16,080 --> 00:36:20,759
Speaker 2: So you don't explicitly talk about economic cycles, but every

710
00:36:20,800 --> 00:36:25,359
Speaker 2: now and then I hear you drifting over to unemployment

711
00:36:25,440 --> 00:36:29,880
Speaker 2: and growth and infrastructure and economist type speaks.

712
00:36:30,239 --> 00:36:31,440
Speaker 3: How often do.

713
00:36:31,520 --> 00:36:35,160
Speaker 2: You use what's going on in the broader economy is

714
00:36:35,239 --> 00:36:38,520
Speaker 2: part of your process? Do you think about that or

715
00:36:38,640 --> 00:36:44,160
Speaker 2: economic cycles significant to your process? Or is the economy

716
00:36:44,160 --> 00:36:45,880
Speaker 2: going to do what it's going to do and it

717
00:36:45,880 --> 00:36:47,360
Speaker 2: doesn't interfere with your approach.

718
00:36:47,440 --> 00:36:49,480
Speaker 4: Well, we definitely try to understand what's going on in

719
00:36:49,480 --> 00:36:52,279
Speaker 4: the economy because it can have you know, big impacts

720
00:36:52,320 --> 00:36:55,600
Speaker 4: on you know, investments. You know, there's a lot of

721
00:36:56,000 --> 00:36:58,040
Speaker 4: no one can forecast the economy. You know, there's a

722
00:36:58,080 --> 00:37:00,919
Speaker 4: lot of good evidence that no one does. Economists don't

723
00:37:00,920 --> 00:37:03,720
Speaker 4: do it, investors don't do it. So it's a feudal efforts.

724
00:37:04,000 --> 00:37:05,879
Speaker 4: A lot of people claim that they have some view

725
00:37:05,880 --> 00:37:06,200
Speaker 4: about the.

726
00:37:06,239 --> 00:37:08,799
Speaker 2: Future forecast in the world, but what do we see

727
00:37:08,800 --> 00:37:12,399
Speaker 2: in a recession forecast exactly every year for the past

728
00:37:12,440 --> 00:37:13,320
Speaker 2: three or four years.

729
00:37:13,480 --> 00:37:15,359
Speaker 3: They'll get it right eventually.

730
00:37:15,080 --> 00:37:19,160
Speaker 4: Right, and so you know, the best strategy is just

731
00:37:19,480 --> 00:37:21,200
Speaker 4: you know, if you have a long time horizon to

732
00:37:21,239 --> 00:37:23,840
Speaker 4: stay invested. But we want to be aware of risks

733
00:37:24,040 --> 00:37:27,719
Speaker 4: and the impact. I mean, our whole process is analyzing

734
00:37:27,719 --> 00:37:30,200
Speaker 4: the fundamentals of businesses and looking at what the intrinsic

735
00:37:30,239 --> 00:37:32,840
Speaker 4: value looks like. And that's a distribution of outcomes because

736
00:37:32,840 --> 00:37:35,759
Speaker 4: the future is uncertain, so we're doing different scenarios and

737
00:37:35,760 --> 00:37:38,920
Speaker 4: then we compare it to market expectations. And so we

738
00:37:39,080 --> 00:37:42,840
Speaker 4: like a clear gap in those two things, and we like,

739
00:37:43,120 --> 00:37:46,440
Speaker 4: you know, better risk rewards. But there's a lot that

740
00:37:46,480 --> 00:37:49,440
Speaker 4: goes into both both of those things. You know, sentiment

741
00:37:49,600 --> 00:37:54,120
Speaker 4: goes into the market expectations. You know where people are positioned,

742
00:37:54,280 --> 00:37:57,520
Speaker 4: and you know, obviously the economic cycle for certain businesses

743
00:37:57,560 --> 00:38:00,520
Speaker 4: has a big impact. It's very sensitive to your time horizon.

744
00:38:01,000 --> 00:38:03,400
Speaker 4: You know just how much it matters, and the longer

745
00:38:03,440 --> 00:38:05,120
Speaker 4: your time horizon, the lesson matters.

746
00:38:06,080 --> 00:38:10,640
Speaker 2: Coming up, we continue our conversation with Samantha Macklamore, chief

747
00:38:10,640 --> 00:38:15,279
Speaker 2: investment officer and founder of Patient's Capital, talking about the

748
00:38:15,440 --> 00:38:17,240
Speaker 2: state of the economy today.

749
00:38:17,880 --> 00:38:18,960
Speaker 3: I'm buried results.

750
00:38:19,040 --> 00:38:35,800
Speaker 2: You're listening to Masters in Business on Bloomberg Radio.

751
00:38:36,200 --> 00:38:37,160
Speaker 3: I'm bury redults.

752
00:38:37,160 --> 00:38:40,600
Speaker 2: You're listening to Masters in Business on Bloomberg Radio. Let's

753
00:38:40,640 --> 00:38:45,840
Speaker 2: return to my previously recorded conversation live at the Phillips

754
00:38:45,840 --> 00:38:50,680
Speaker 2: Collection in Washington, d C. With Patient Capitals Samantha macklamore.

755
00:38:51,760 --> 00:38:55,040
Speaker 2: So you mentioned sentiment. I'm trying to remember a moment

756
00:38:55,080 --> 00:39:00,200
Speaker 2: in history where collectively the investor, class, the punditcla as

757
00:39:00,320 --> 00:39:04,600
Speaker 2: the media, all in real time identified a major market

758
00:39:04,640 --> 00:39:09,239
Speaker 2: bubble at once. Is is it just too glib to say, Hey,

759
00:39:09,280 --> 00:39:12,480
Speaker 2: everybody's forecasting a bubble, therefore it can't be a bubble.

760
00:39:13,320 --> 00:39:16,279
Speaker 4: Well, I'm a contrarian, so you know, like that, that

761
00:39:16,400 --> 00:39:21,120
Speaker 4: kind of you know, thinking appeals to me. I think

762
00:39:21,160 --> 00:39:23,879
Speaker 4: it is true that usually what you know. Howard Marx

763
00:39:23,920 --> 00:39:27,920
Speaker 4: wrote a great memo on the whole tech space in January,

764
00:39:28,480 --> 00:39:30,719
Speaker 4: and you know, I thought the most important line in

765
00:39:30,760 --> 00:39:36,080
Speaker 4: that was, you know, a bubble is characterized by psychological extremness,

766
00:39:36,200 --> 00:39:40,319
Speaker 4: and so it is that psychological state. So we're not

767
00:39:40,719 --> 00:39:44,400
Speaker 4: when everyone's bemoaning a bubble and fearing a bubble and

768
00:39:44,400 --> 00:39:46,480
Speaker 4: claiming a bubble, that makes a bubble much less likely

769
00:39:46,520 --> 00:39:49,080
Speaker 4: because people are then not positioned in it. And usually

770
00:39:49,120 --> 00:39:51,440
Speaker 4: where the biggest risks are are not where you're focused on.

771
00:39:51,840 --> 00:39:53,480
Speaker 4: If you know there's a risk in a certain area,

772
00:39:53,520 --> 00:39:55,480
Speaker 4: you treat it much differently, you manage it much differently.

773
00:39:55,480 --> 00:39:58,520
Speaker 4: If everyone's doing that. You know, in Vidia you know.

774
00:39:58,840 --> 00:40:01,480
Speaker 4: So the risk would be in Ida's earnings are unsustainable

775
00:40:01,840 --> 00:40:04,880
Speaker 4: and they've had this huge run up and there they've

776
00:40:05,160 --> 00:40:08,520
Speaker 4: captured so far about ninety percent of the economic profits

777
00:40:08,520 --> 00:40:12,400
Speaker 4: in AI. Again, they're going to report tomorrow night. If

778
00:40:12,440 --> 00:40:14,279
Speaker 4: I are a betting man, which I'm not, I'm an

779
00:40:14,280 --> 00:40:16,799
Speaker 4: investing woman, but uh, you know, I would say they're

780
00:40:16,800 --> 00:40:19,759
Speaker 4: going to be and then the market might really like

781
00:40:19,840 --> 00:40:22,360
Speaker 4: that because it's coming into it, you know, over sold.

782
00:40:22,640 --> 00:40:27,320
Speaker 4: But I think the risk is there's something happens to earnings,

783
00:40:27,360 --> 00:40:30,400
Speaker 4: you know, and they have an earning cycle. Again, I

784
00:40:30,400 --> 00:40:32,160
Speaker 4: don't see that in the near term. But there's no

785
00:40:32,800 --> 00:40:37,759
Speaker 4: you know, valuation not you know, excesses are just not there.

786
00:40:37,960 --> 00:40:40,160
Speaker 4: Like these companies. If you look at and Videos growing

787
00:40:40,520 --> 00:40:43,560
Speaker 4: you know, forty plus percent this year, trading it twenty

788
00:40:43,560 --> 00:40:46,240
Speaker 4: eight times next year's earnings, that is not a bubble

789
00:40:46,280 --> 00:40:48,600
Speaker 4: at you know, that's not bubble valuations at all. It's

790
00:40:48,600 --> 00:40:51,800
Speaker 4: not what we see on the tech bubble. So again,

791
00:40:51,920 --> 00:40:54,600
Speaker 4: I think it is true that when everyone's worried about

792
00:40:54,600 --> 00:40:56,280
Speaker 4: a bubble, it's likely not a bubble.

793
00:40:56,440 --> 00:40:59,280
Speaker 2: So people have been talking about a CA shaped economy

794
00:40:59,360 --> 00:41:01,799
Speaker 2: that the upper arm is doing great, the lower arm

795
00:41:01,920 --> 00:41:04,600
Speaker 2: is doing poorly. Can you apply the same thing to

796
00:41:04,719 --> 00:41:07,759
Speaker 2: valuations with the market. If you take the top ten

797
00:41:07,840 --> 00:41:11,040
Speaker 2: or twenty stocks, they seem to be much more richly

798
00:41:11,160 --> 00:41:15,040
Speaker 2: valued than the rest of the whatever you want to use,

799
00:41:15,120 --> 00:41:18,080
Speaker 2: we'll shoot five thousand or s and P five hundred.

800
00:41:18,120 --> 00:41:20,440
Speaker 2: How do you think about that bifurcation?

801
00:41:20,680 --> 00:41:23,319
Speaker 4: Yeah, well, I think there are certain areas you know

802
00:41:23,400 --> 00:41:27,400
Speaker 4: in the market, like quality or like return on capital

803
00:41:27,480 --> 00:41:30,640
Speaker 4: where those again, if you have high quality, high return

804
00:41:30,680 --> 00:41:33,680
Speaker 4: on capital, high free cash fulw margins, those companies should

805
00:41:33,680 --> 00:41:36,400
Speaker 4: be valued at it, you know, overall a higher level.

806
00:41:36,440 --> 00:41:39,080
Speaker 4: But we've seen very wide gaps there. So I think

807
00:41:39,320 --> 00:41:41,279
Speaker 4: I have a huge respect for the market though, so

808
00:41:41,320 --> 00:41:44,239
Speaker 4: because we're every day we're doing the work on Okay,

809
00:41:44,680 --> 00:41:46,920
Speaker 4: this company might be attractive. Let's do the work on

810
00:41:46,960 --> 00:41:48,799
Speaker 4: that and see what the market's pricing in, and we'll

811
00:41:48,800 --> 00:41:50,840
Speaker 4: say what is the market telling us as business can do?

812
00:41:51,360 --> 00:41:53,879
Speaker 4: And usually the market's pretty good at like okay, yeah,

813
00:41:53,920 --> 00:41:56,560
Speaker 4: that's the easiest case to make and the market will

814
00:41:57,080 --> 00:42:01,120
Speaker 4: reflect that. So it's more anomalist to find areas where

815
00:42:01,160 --> 00:42:04,000
Speaker 4: that's wrong. Especially you know, the markets had a huge

816
00:42:04,040 --> 00:42:07,440
Speaker 4: move up, so the more it moves up the harder

817
00:42:07,480 --> 00:42:10,360
Speaker 4: it is, but we're still finding, you know, opportunities. I

818
00:42:10,360 --> 00:42:14,239
Speaker 4: think we added significantly to healthcare and small caps you

819
00:42:14,280 --> 00:42:17,120
Speaker 4: know earlier this year, and healthcare until recently it was

820
00:42:17,160 --> 00:42:20,040
Speaker 4: at a fifty year relative valuation low. And those are

821
00:42:20,080 --> 00:42:23,360
Speaker 4: good businesses with good returns on capital, and so, you know,

822
00:42:23,400 --> 00:42:26,560
Speaker 4: the market gets so hyper short term focused. You know,

823
00:42:26,719 --> 00:42:28,839
Speaker 4: so many people these days are focused on the next

824
00:42:28,960 --> 00:42:31,680
Speaker 4: quarter and they want to outperform every month and every quarter.

825
00:42:32,040 --> 00:42:34,320
Speaker 4: So again, if you can look out longer, I think

826
00:42:34,120 --> 00:42:36,880
Speaker 4: you do have opportunities. But the reason people don't is

827
00:42:36,880 --> 00:42:39,799
Speaker 4: because you sometimes have more downside in the short term

828
00:42:39,800 --> 00:42:42,240
Speaker 4: if you're buying into you know, weakness.

829
00:42:42,800 --> 00:42:46,640
Speaker 2: So how do you think overall about valuation and future

830
00:42:46,719 --> 00:42:51,000
Speaker 2: return expectations when generally the markets had a good run

831
00:42:51,040 --> 00:42:55,680
Speaker 2: and valuations are, if not bubb malicious, a little more

832
00:42:55,800 --> 00:42:57,000
Speaker 2: rich than average.

833
00:42:57,360 --> 00:43:00,239
Speaker 4: Yeah, I mean my view on valuations is the high

834
00:43:00,280 --> 00:43:02,640
Speaker 4: end of the historical range. So again that makes me

835
00:43:03,080 --> 00:43:06,600
Speaker 4: more alert, more cautious. I think if you look, you know,

836
00:43:06,719 --> 00:43:09,960
Speaker 4: at the underlying fundamentals and just the returns on capital

837
00:43:10,000 --> 00:43:12,880
Speaker 4: of businesses, the free cash flow margins, the balance sheets,

838
00:43:13,400 --> 00:43:17,040
Speaker 4: higher valuations are justified. But markets go through these cycles

839
00:43:17,080 --> 00:43:21,000
Speaker 4: of undervaluation, overvaluation, and then back again, and so that's

840
00:43:21,200 --> 00:43:25,040
Speaker 4: just part of markets. You know. Again, I don't think

841
00:43:25,080 --> 00:43:27,920
Speaker 4: we're at you know, levels that I'm extremely concerned. I

842
00:43:27,960 --> 00:43:31,600
Speaker 4: still think there are you know, attractive opportunities in markets,

843
00:43:32,040 --> 00:43:35,080
Speaker 4: but where we can add ballast to the portfolio, defensive

844
00:43:35,440 --> 00:43:38,799
Speaker 4: areas like healthcare. Again, I think that helps position the

845
00:43:38,840 --> 00:43:43,319
Speaker 4: portfolio for a variety of different sorts of environments. And

846
00:43:43,360 --> 00:43:46,840
Speaker 4: there's still plenty of cheap, you know, cheap cheap names

847
00:43:46,840 --> 00:43:47,320
Speaker 4: in the market.

848
00:43:48,760 --> 00:43:52,040
Speaker 2: So I have three of my favorite questions I always

849
00:43:52,080 --> 00:43:54,680
Speaker 2: ask guests, But before I get to that, I want

850
00:43:54,680 --> 00:43:56,520
Speaker 2: to throw a little bit of a curve ball at you.

851
00:43:57,239 --> 00:44:00,359
Speaker 2: What do you think investors are not talking about when

852
00:44:00,520 --> 00:44:02,640
Speaker 2: when they're not thinking.

853
00:44:02,320 --> 00:44:05,560
Speaker 3: About AI bubbles? What are they overlooking?

854
00:44:05,600 --> 00:44:10,319
Speaker 2: What topics or ideas or strategies are they just not

855
00:44:10,400 --> 00:44:12,160
Speaker 2: thinking about that perhaps they should be.

856
00:44:12,520 --> 00:44:14,640
Speaker 4: Yeah, well that's a really hard one because I think,

857
00:44:15,280 --> 00:44:19,080
Speaker 4: you know, there's so many investors out there thinking about

858
00:44:19,160 --> 00:44:21,600
Speaker 4: so many things. And now in today's day and age,

859
00:44:21,640 --> 00:44:24,560
Speaker 4: with great podcasts like yours and Twitter and X and

860
00:44:24,600 --> 00:44:27,080
Speaker 4: all the research online, you can get access to all

861
00:44:27,120 --> 00:44:30,080
Speaker 4: of the thinking. So you know, I'm not sure that

862
00:44:30,120 --> 00:44:32,960
Speaker 4: there's things people aren't thinking about that much, but I

863
00:44:32,960 --> 00:44:35,399
Speaker 4: would say, you know, one of my biggest lessons from

864
00:44:35,400 --> 00:44:38,360
Speaker 4: Bill was the big money are made in the big moves,

865
00:44:38,680 --> 00:44:40,640
Speaker 4: and so you need to be looking for those, and

866
00:44:40,719 --> 00:44:43,840
Speaker 4: you need to you know, hold those, and actually holding

867
00:44:43,920 --> 00:44:47,000
Speaker 4: them is even harder than looking for them. And so

868
00:44:47,160 --> 00:44:50,520
Speaker 4: I think people focus if you have a long time

869
00:44:50,520 --> 00:44:54,080
Speaker 4: horizon and you're interested in growing your wealth, which is

870
00:44:54,120 --> 00:44:56,520
Speaker 4: what we want to do. You know, that's our number

871
00:44:56,520 --> 00:45:00,799
Speaker 4: one objective is to make money. You know, I never

872
00:45:00,840 --> 00:45:04,160
Speaker 4: saw Bill get upset about a stock that went down

873
00:45:04,480 --> 00:45:06,440
Speaker 4: or you're losing money on us certain stock, because you

874
00:45:06,520 --> 00:45:08,799
Speaker 4: know that you know, in our business, you know, the

875
00:45:08,840 --> 00:45:11,560
Speaker 4: best investors are wrong about half the time, like half

876
00:45:11,600 --> 00:45:13,880
Speaker 4: the stocks go down, and that's just part of the business.

877
00:45:13,880 --> 00:45:15,600
Speaker 4: So you get really comfortable with being wrong. I never

878
00:45:15,600 --> 00:45:19,160
Speaker 4: saw him mad. I saw him mad when he identified

879
00:45:19,200 --> 00:45:23,000
Speaker 4: a stock Qualcom and an analyst said, no, this is

880
00:45:23,080 --> 00:45:25,120
Speaker 4: really bad investment, like don't buy it, and then it

881
00:45:25,120 --> 00:45:27,000
Speaker 4: went up ten times because he's like, you just don't

882
00:45:27,000 --> 00:45:29,600
Speaker 4: get the opportunity to make money. And most of those

883
00:45:29,640 --> 00:45:32,360
Speaker 4: type of errors, when something's not in your portfolio, you

884
00:45:32,400 --> 00:45:34,680
Speaker 4: don't see it, you don't notice it's not there, but

885
00:45:34,760 --> 00:45:38,120
Speaker 4: it has a huge impact on, you know, your ability

886
00:45:38,160 --> 00:45:41,680
Speaker 4: to grow well. So I think there's not enough discussion

887
00:45:41,719 --> 00:45:45,240
Speaker 4: about that. And you know, if you look at endowment returns,

888
00:45:45,280 --> 00:45:47,879
Speaker 4: I think for the last decade, they're like six point

889
00:45:47,920 --> 00:45:51,800
Speaker 4: eight percent on average, and so the US equity market's

890
00:45:51,880 --> 00:45:55,880
Speaker 4: up over thirteen percent. So that's a huge shortfall that

891
00:45:56,280 --> 00:45:59,120
Speaker 4: if you do the math on like thirty years of

892
00:45:59,239 --> 00:46:04,279
Speaker 4: thirteen versus six point eight, it's like you either you're

893
00:46:04,360 --> 00:46:07,719
Speaker 4: up seven times versus your up thirty plus times. I mean,

894
00:46:08,120 --> 00:46:12,600
Speaker 4: that compounding math is it's shocking, actually, even to me

895
00:46:12,640 --> 00:46:14,799
Speaker 4: who I'm in this business. I know patients, I'm all

896
00:46:14,800 --> 00:46:16,440
Speaker 4: about compounding, and I do the math and I'm like,

897
00:46:16,480 --> 00:46:18,800
Speaker 4: oh my goodness, the amount of wealth left on the table.

898
00:46:19,239 --> 00:46:21,960
Speaker 2: All right, So let's jump to our speed round, and

899
00:46:22,000 --> 00:46:25,360
Speaker 2: then afterwards we'll open it up for questions from the audience.

900
00:46:26,160 --> 00:46:29,000
Speaker 2: I always like to get book ideas from people. Tell

901
00:46:29,080 --> 00:46:31,239
Speaker 2: us what you're reading and what are some of your

902
00:46:31,239 --> 00:46:32,040
Speaker 2: favorite books.

903
00:46:32,120 --> 00:46:34,319
Speaker 4: Well, I'm not reading right now. What I'm reading is

904
00:46:34,360 --> 00:46:36,839
Speaker 4: nineteen twenty nine by Andrey Russwalker. So that's nothing new.

905
00:46:36,920 --> 00:46:39,360
Speaker 4: Everyone's reading that, but I think it's it's in.

906
00:46:39,239 --> 00:46:41,799
Speaker 3: The probably helping the bubble talk.

907
00:46:41,920 --> 00:46:43,520
Speaker 4: Well, it's you know, you have to be aware. And

908
00:46:43,560 --> 00:46:47,160
Speaker 4: I think studying history is really important. You know. I

909
00:46:47,200 --> 00:46:50,400
Speaker 4: think have you read The Comfort Crisis by Michael Eastern

910
00:46:50,800 --> 00:46:53,799
Speaker 4: That's a really good book. And uh, you know, my

911
00:46:54,000 --> 00:46:57,000
Speaker 4: kids get sick of me preaching, but it's all about how,

912
00:46:57,400 --> 00:47:00,160
Speaker 4: you know, we are in a society where you know,

913
00:47:00,400 --> 00:47:04,759
Speaker 4: it's all about comfort and the benefits of you know.

914
00:47:04,800 --> 00:47:07,200
Speaker 4: He has this thing Misogi where he goes into nature

915
00:47:07,239 --> 00:47:10,000
Speaker 4: and does really physically challenging things that are challenging enough

916
00:47:10,040 --> 00:47:12,399
Speaker 4: that he will and it's not his thing, it's actually

917
00:47:12,440 --> 00:47:15,320
Speaker 4: a Japanese thing, but that you are most likely to fail,

918
00:47:15,400 --> 00:47:19,440
Speaker 4: but you and make it challenging enough, just shy of

919
00:47:19,480 --> 00:47:22,440
Speaker 4: like maybe dying. So again, I'm not a proponent of

920
00:47:22,440 --> 00:47:25,120
Speaker 4: taking it to that level, but I am a proponent

921
00:47:25,280 --> 00:47:28,319
Speaker 4: of you know, if you listen to Jensen Wong at

922
00:47:28,400 --> 00:47:31,400
Speaker 4: NVIDIA and he talks about the value of pain and suffering,

923
00:47:31,680 --> 00:47:34,040
Speaker 4: and he's like, he talks about being a CEO, He's

924
00:47:34,080 --> 00:47:35,520
Speaker 4: like a lot of people want to be a CEO.

925
00:47:36,000 --> 00:47:39,200
Speaker 4: He's like, but the experience is not power and glory

926
00:47:39,320 --> 00:47:42,440
Speaker 4: it's pain and suffering and like all the hardest problems

927
00:47:42,480 --> 00:47:46,080
Speaker 4: come to you. So I think, you know, exposing yourself

928
00:47:46,120 --> 00:47:48,239
Speaker 4: to things out of your comfort zone where you have

929
00:47:48,320 --> 00:47:52,600
Speaker 4: the opportunity to grow and have some pain, you know,

930
00:47:52,640 --> 00:47:56,040
Speaker 4: I think that's kind of what makes life interesting. And

931
00:47:56,600 --> 00:47:58,200
Speaker 4: so that would be a book that I would recommend.

932
00:47:58,320 --> 00:48:01,120
Speaker 2: So final two questions, what sort of advice would you

933
00:48:01,120 --> 00:48:04,680
Speaker 2: give to a recent college grad interest in the career

934
00:48:04,800 --> 00:48:06,160
Speaker 2: in investing in finance?

935
00:48:06,880 --> 00:48:08,879
Speaker 4: Well, I mean, back to my experience, I would say

936
00:48:08,920 --> 00:48:11,719
Speaker 4: go for it and be persistent. I mean, we have

937
00:48:11,840 --> 00:48:14,520
Speaker 4: a few job postings now and so we're trying to

938
00:48:14,560 --> 00:48:17,480
Speaker 4: fill those postings. And it's amazing to me. You know

939
00:48:17,520 --> 00:48:19,439
Speaker 4: a lot of people will go on LinkedIn and they'll

940
00:48:19,440 --> 00:48:23,560
Speaker 4: blast out their resume everywhere and that they're putting very

941
00:48:23,560 --> 00:48:25,960
Speaker 4: little time and little thought into that. And we actually

942
00:48:25,960 --> 00:48:27,960
Speaker 4: have on our site you have to email it, and

943
00:48:28,000 --> 00:48:31,040
Speaker 4: we're paying attention to who's actually reading that instruction and

944
00:48:31,120 --> 00:48:34,200
Speaker 4: emailing it. But very few people follow up. I think

945
00:48:34,200 --> 00:48:36,680
Speaker 4: we had one candidate who followed up like three times.

946
00:48:36,760 --> 00:48:40,560
Speaker 4: And it makes a huge difference. You know, it demonstrates interest,

947
00:48:40,760 --> 00:48:43,239
Speaker 4: it demonstrates you know, you're paying attention to it. So

948
00:48:43,320 --> 00:48:48,560
Speaker 4: I would say in a tough job environment especially, it's

949
00:48:48,600 --> 00:48:51,919
Speaker 4: it's easier than you think to distinguish yourself if you're

950
00:48:51,960 --> 00:48:55,759
Speaker 4: actually interested in something, you know, perseverance, taking the time

951
00:48:55,800 --> 00:48:58,719
Speaker 4: to learn, really what the firm is, the person you're

952
00:48:58,719 --> 00:49:01,799
Speaker 4: talking to, who they are are, what they're trying to accomplish.

953
00:49:01,880 --> 00:49:06,160
Speaker 4: With this, it's amazing to me how little people actually

954
00:49:06,200 --> 00:49:07,120
Speaker 4: spend doing that.

955
00:49:07,960 --> 00:49:08,800
Speaker 3: Good good advice.

956
00:49:08,840 --> 00:49:11,520
Speaker 2: And our final question, what do you know about the

957
00:49:11,560 --> 00:49:15,080
Speaker 2: world of investing today? Would have been useful twenty five

958
00:49:15,160 --> 00:49:17,920
Speaker 2: years ago or so when you were first getting started.

959
00:49:18,680 --> 00:49:20,640
Speaker 4: Yeah, by Nvidia, I know, you told me I couldn't

960
00:49:20,680 --> 00:49:23,759
Speaker 4: do this, By Amazon, by bitcoin, don't miss you know.

961
00:49:24,320 --> 00:49:27,560
Speaker 4: But if there's a broader point, I mean, part of

962
00:49:27,560 --> 00:49:30,919
Speaker 4: it is like you know again, this kind of will

963
00:49:31,200 --> 00:49:34,359
Speaker 4: go full circle. But the power of patients and compounding. Again,

964
00:49:34,400 --> 00:49:36,960
Speaker 4: it's like teach what you need to learn. But Bill

965
00:49:37,080 --> 00:49:38,759
Speaker 4: used to tell me when I was young. I'd be like, Bill,

966
00:49:39,120 --> 00:49:40,440
Speaker 4: you know, I need to make more money, I need

967
00:49:40,480 --> 00:49:42,920
Speaker 4: to find more stocks. You need to give me more responsibilities.

968
00:49:42,960 --> 00:49:45,640
Speaker 4: And you're like, calm down, like be patient. I'm like, no,

969
00:49:45,680 --> 00:49:47,680
Speaker 4: I can't be patient. My friend who I graduated with

970
00:49:47,719 --> 00:49:49,919
Speaker 4: he's at Golden Sacks. He's making like ten million dollars

971
00:49:49,960 --> 00:49:53,200
Speaker 4: a year, and he's like, calm down, And you know,

972
00:49:53,280 --> 00:49:57,400
Speaker 4: now twenty years twenty five years later, it is amazing,

973
00:49:57,719 --> 00:49:59,719
Speaker 4: just the power of compounding. If you find a name

974
00:49:59,800 --> 00:50:02,600
Speaker 4: like Amazon or you know, and you invest and again

975
00:50:02,640 --> 00:50:04,600
Speaker 4: you're gonna have a couple, you know, number of big

976
00:50:04,680 --> 00:50:06,600
Speaker 4: draw ownds in those you know, stocks that go up

977
00:50:06,600 --> 00:50:08,279
Speaker 4: a black go down a lot, and that's just part

978
00:50:08,280 --> 00:50:12,080
Speaker 4: of the journey. But it's so easy to underestimate, you know,

979
00:50:12,280 --> 00:50:13,440
Speaker 4: just how powerful that can be.

980
00:50:15,920 --> 00:50:21,239
Speaker 2: That was my live conversation with Samantha maclamore, formerly of

981
00:50:21,320 --> 00:50:26,680
Speaker 2: leg Mason and Miller Value now with Patient Capital. I

982
00:50:26,719 --> 00:50:28,600
Speaker 2: have to thank the Crack team that helps put these

983
00:50:28,600 --> 00:50:34,960
Speaker 2: conversations together, especially the live event. Alexis Noriega and Elizabeth

984
00:50:35,000 --> 00:50:38,960
Speaker 2: Sedrin have been instrumental in making these sorts of things happen.

985
00:50:39,840 --> 00:50:43,520
Speaker 2: Sean Russo is my researcher, Ana Luke is my producer.

986
00:50:44,040 --> 00:50:48,040
Speaker 2: Sage Bauman is the head of podcasts at Bloomberg. I'm

987
00:50:48,120 --> 00:50:51,720
Speaker 2: Barry Ritoults. You've been listening to a special live edition

988
00:50:52,320 --> 00:51:00,440
Speaker 2: of Masters in Business on Bloomberg Radio.