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Speaker 1: Masters in Business is brought to you by ex On

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Speaker 1: Mobile Energy Lives here. This is Masters in Business with

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Speaker 1: Barry Ridholds on Bloomberg Radio. So this week on Masters

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Speaker 1: in Business, you guys make fun of me for saying

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Speaker 1: this every week, but I have a very special guest,

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Speaker 1: Ken Fisher. God, we barely scratch the surface of this.

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Speaker 1: I really really wish we had another two hours to

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Speaker 1: keep talking. Ken Fisher, founder and chairman of Fisher Investments.

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Speaker 1: They run sixty eight billion dollars as an r A,

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Speaker 1: by by some measures, of the biggest r A in

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Speaker 1: the country. Absolutely fascinating guy, really really intriguing. We barely

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Speaker 1: touched the surface of his process for looking at stocks,

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Speaker 1: thinking about investors, looking at the universe, how he runs

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Speaker 1: a giant practice. Really just just amazing, amazing stuff. And

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Speaker 1: after we finished our our interview, he actually had to

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Speaker 1: go to another interview. I think he was on Pim

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Speaker 1: Fox's show. But we were sitting in the green room chatting.

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Speaker 1: We spoke for another forty five minutes. It literally could

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Speaker 1: have been another episode of Masters Masters in Business. It

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Speaker 1: was that um it was that it was that fascinating.

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Speaker 1: He was really intriguing. I don't think a lot of

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Speaker 1: people in the industry appreciate what he's been, he's built,

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Speaker 1: and I don't think a lot of people outside of

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Speaker 1: the financial services industry really know who he is. He

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Speaker 1: is a fascinating guy. The digression we have during the

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Speaker 1: podcast portion about redwood forests and and you really just

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Speaker 1: have to hear it. Uh. I can't wait for the

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Speaker 1: next time he's in New York because I have another

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Speaker 1: list of questions that will keep us busy for another

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Speaker 1: ninety minutes at least, just an intriguing, fascinating, UH discussion. So,

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Speaker 1: without any further ado, my conversation with Ken Fisher. This

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Speaker 1: is Masters in Business with Barry Ridholds on Bloomberg Radio.

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Speaker 1: This week on Masters in Business, I have a very

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Speaker 1: special guest. His name is Ken Fisher, and he runs

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Speaker 1: Fisher Investments, managing over sixty eight billion dollars. He's the

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Speaker 1: second largest R in America. I don't know if i'd

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Speaker 1: buy that. Um. Financial Engines at a hundred billion is

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Speaker 1: the first. I don't know who's between you two, but

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Speaker 1: I think do anything other than a U M. We're

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Speaker 1: way bigger than financial engines. I'm just doings are bigger.

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Speaker 1: We've got more employees, we operated more places, we do

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Speaker 1: more things. We think of them as they're half our size.

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Speaker 1: They just have They just have more low beat grade

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Speaker 1: A U M. That's for sure. We'll get to that um.

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Speaker 1: In case you don't know who can fish your is.

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Speaker 1: He is the third longest running columnist for Forbes and

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Speaker 1: and soon to be the all time longest running columnist,

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Speaker 1: the longest active, continually published columnist for Forbes. He was

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Speaker 1: ranked in the top twenty five most influential figures in

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Speaker 1: the financial industry by Investment Advisor magazine. Author of ten books,

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Speaker 1: four of them New York Times bestseller uh number two

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Speaker 1: eleven on the two thousand fourteen Forbes four hundred list.

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Speaker 1: Ken Fisher, Welcome to Bloomberg. Thank you for having me.

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Speaker 1: You know that that that two hundred eleven on the

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Speaker 1: Forbes four hundred is like, you know, I still can't

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Speaker 1: get above median ever in anything. That's a good list

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Speaker 1: to be median on if you're if you're stuck at

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Speaker 1: two hundred on the Forbes four hundred, they're a worse

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Speaker 1: list to be You know. I've spent my life adoring

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Speaker 1: wealthy people and trying to help them and The fact

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Speaker 1: of the matter is wealthy people need more help, and

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Speaker 1: they have more, more money and more problems. There's a

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Speaker 1: huge world of people trying to help poor people and

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Speaker 1: not enough people trying to help early people. So so

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Speaker 1: let's get into some of the stuff. I want to

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Speaker 1: talk a little bit about your background and how you

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Speaker 1: found your way towards helping wealthy people. Your dad was

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Speaker 1: a legendary investor. His name was Philip Fisher. Uh you

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Speaker 1: briefly worked with him. What was it like working with

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Speaker 1: a father who was a legendary investor. You know, my

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Speaker 1: father was a very weird person, and you have to

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Speaker 1: really understand it's fairly simple. My father, in a world

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Speaker 1: before it was known as such, had Asperger's and so

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Speaker 1: he was all of the standard things at Asperger's where

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Speaker 1: he and I got along pretty well. I was the

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Speaker 1: youngest kid in the family, and so I watched him

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Speaker 1: with my elders, and I just thought of him as him.

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Speaker 1: But the fact is he wasn't an easy person to

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Speaker 1: be with because of the things that people with Aspergers

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Speaker 1: normally are in half. And on the other hand, he

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Speaker 1: was brilliant and he had a quality that because he

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Speaker 1: taught he taught the graduate He taught the graduate investment

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Speaker 1: course at the Center Business School for a while, one

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Speaker 1: of the only three people that have ever done that.

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Speaker 1: And uh, he had this quality that I would hear

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Speaker 1: from his students where he had an ability for people

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Speaker 1: to see themselves through things that he interacted with them on.

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Speaker 1: And people would say to me, gee, your father told

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Speaker 1: me blah blah blah, and I'd say, no, my father

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Speaker 1: didn't tell you that. My father never thought that in

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Speaker 1: his whole wide life. But he had an ability to

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Speaker 1: get people to see it in themselves and pull it

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Speaker 1: out of themselves. And he did that with me, and

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Speaker 1: he did that with lots of people. And Philip Fisher

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Speaker 1: wrote the classic book Common Stocks on common profits. I

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Speaker 1: assume you've read it. I have read it. I've read

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Speaker 1: it numbers of times. And you've also wrote on the

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Speaker 1: most recent edition, wrote the introduction to it. I did

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Speaker 1: write the introduction to it. And the first time that

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Speaker 1: I read it, I was about ten. I didn't understand

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Speaker 1: any of it. Ten years old. You're reading a book, Well,

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Speaker 1: it was my dad's books, so I felt like I

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Speaker 1: had to read it, but I didn't understand it. You know,

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Speaker 1: it's like my dad's books. So I gotta read it right,

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Speaker 1: and I don't understand it. But you know, not exactly.

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Speaker 1: Most of my life I've done things I didn't understand. Well,

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Speaker 1: we'll get to some of that. Um. Speaking of your dad,

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Speaker 1: you obviously inherited your father's writing skills. Not true, Not true?

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Speaker 1: Why do you say that? Because if I inherited them,

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Speaker 1: they would have come to me naturally. I worked very

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Speaker 1: hard to learn how to write. Well, you inherited a

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Speaker 1: certain range of writing skills, and you worked your way up. No, no, no, no,

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Speaker 1: I was I was alousy writer. So I hired somebody

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Speaker 1: to teach me how to write. When was that? And

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Speaker 1: if you say Tuesday? No no, no, no, no, no

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Speaker 1: no two. Okay, So before most of your books were written,

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Speaker 1: before any of my books, before most of your columns

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Speaker 1: were written, So conquer. I believe you your genetics or clay,

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Speaker 1: and you could mold that clay in different directions. So clearly,

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Speaker 1: having a dad who was a skillful and articulate and

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Speaker 1: insightful writer, there's a worst set of genes to start.

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Speaker 1: Oh no, no, no, no, My father was great and

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Speaker 1: I my father had more marvels callities. My father was

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Speaker 1: the very best, among other things, bedtime storyteller of her.

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Speaker 1: This man told the most marvelous stories every night when

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Speaker 1: it was time to go to bed. And what I

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Speaker 1: didn't realize he was doing when he was telling me

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Speaker 1: these stories, most of which he made up himself, was

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Speaker 1: he was telling me who he wanted me to be

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Speaker 1: when I grew up. So there were parables with Yeah,

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Speaker 1: the guy he was, he was, he was, he was marvelous.

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Speaker 1: But uh, you know, I got parts of me that

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Speaker 1: are my father, and then there's parts of me that

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Speaker 1: are just me. And again, I no problem with my

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Speaker 1: father in any regard. But we're all ourselves and we

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Speaker 1: have to make up for our deficiencies, and we have

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Speaker 1: to play on our strengths. And you know, he had

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Speaker 1: his eye of mine, and that's just the way life is.

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Speaker 1: So let's let's talk about some of those strengths, and

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Speaker 1: we'll talk about you're writing. How important is writing to

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Speaker 1: your entire process of thinking about markets, thinking about stocks?

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Speaker 1: How significant is that regular monthly column and and everything

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Speaker 1: else you write? Well, you know, I think I read

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Speaker 1: from some guy named Rid Holts or something that uh,

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Speaker 1: you know, it helps you clarify your thinking when you're right.

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Speaker 1: I've stolen that from Daniel Boston Library to Congress. I

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Speaker 1: right to figure out what I think that's That's where

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Speaker 1: I took that from. And the fact of the matter

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Speaker 1: is that I'm not as prolific as you are. But

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Speaker 1: the writing forces me to think about what is it

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Speaker 1: that I want a million people to be able to

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Speaker 1: read that they will be able to come back and

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Speaker 1: shove back at me three years later if they won't.

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Speaker 1: And uh, Forbes has been a perfect podium for that.

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Speaker 1: Writing books is good for that as well, because you

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Speaker 1: really have to commit yourself and say this is what

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Speaker 1: I'm ready to have you come back and attack me

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Speaker 1: for You're listening to Masters in Business on Bloomberg Radio.

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Speaker 1: My guest this week is Ken Fisher. He is the

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Speaker 1: founder and chief investment officer of Fisher Investments, a sixty

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Speaker 1: eight billion dollar asset management shop out in the Pacific Northwest.

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Speaker 1: And you you basically you are national, correct, You have

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Speaker 1: offices pretty much all over We're global. We global. We

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Speaker 1: operate about four billion in high net worth in Europe

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Speaker 1: and we do institutional across to where we have clients

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Speaker 1: in six continents. Half of our thousand two thousand employees

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Speaker 1: are in Campus Washington, just twenty minutes from the Portland,

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Speaker 1: Oregon Airport, and then there's about five California, and then

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Speaker 1: the rest are scouted around Europe. So I want to

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Speaker 1: give you a quote because I of yours that I

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Speaker 1: really like, and I want to have you discuss it.

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Speaker 1: When you give up control, you give up quality control,

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Speaker 1: and that is deadly in the financial services business. Explain

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Speaker 1: what that means? Well, you know most of our realm

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Speaker 1: of endeavor. I don't really like the work industry, for

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Speaker 1: what goes on in finance is a world where the

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Speaker 1: people in markets like to have free reign. And when

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Speaker 1: you let people have free reign to do what ever

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Speaker 1: the dickens they want, and and you have a lot

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Speaker 1: of them, some of them will get you in trouble,

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Speaker 1: and a little bit of trouble in the world of

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Speaker 1: intangibles sinks you. The fact of the matter is integrities everything,

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Speaker 1: and you only get integrity through control and not letting

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Speaker 1: the blow ups occur that happen. You get a lot

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Speaker 1: of great people that are great, and that's all fine,

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Speaker 1: and they deserve free rain. But you can't really give

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Speaker 1: people free rein You need to build around people that

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Speaker 1: don't want so much free rein, because if you have

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Speaker 1: two thousand employees and you give hundred of them free rein,

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Speaker 1: there's going to be a hundred of them that at

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Speaker 1: some point in time will be the ones that will

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Speaker 1: cause you to have the sec on your back. This

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Speaker 1: on your back, that on your back, and at that

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Speaker 1: point in time and intangible that kills you. Control is

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Speaker 1: about quality control, which is about in a world of

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Speaker 1: dealing with the public in a world that's regulated and intangible.

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Speaker 1: We're not selling coca cola in in a world of

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Speaker 1: what's a service business where integrity ends up being crucial

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Speaker 1: to your outcome. The greatest investors in the world have

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Speaker 1: bad years, and bad years are just normal, But that's

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Speaker 1: not what I'm talking about. I'm talking about having control

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Speaker 1: of the process while you're having the bad year, so

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Speaker 1: that you actually are delivering what you say you're delivering,

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Speaker 1: and that there's no lack of control that goes haywire,

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Speaker 1: because once that happened, you know, in my life, I've

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Speaker 1: seen so many firms that went bankrupt. So there's a

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Speaker 1: huge difference between having a bad year and having a

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Speaker 1: bad process that can run amuck and allow certain people

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Speaker 1: or processes or vendors or employees to damage your own reputation.

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Speaker 1: The reality and this business is you need control so

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Speaker 1: that you deliver consistently with what you promised you would deliver,

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Speaker 1: which is not a return number. Here's what we do,

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Speaker 1: Here's how we do it. Here's what we're gonna be

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Speaker 1: trying to do for you. Here's where our bets are

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Speaker 1: going to be. If they screw up, they screw up.

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Speaker 1: But they are what they are. So it's about a

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Speaker 1: process and sticking to that process. I'm not promising an

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Speaker 1: of endeavor that is investing. Too many people think of

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Speaker 1: it like it's a doctor's office, rather so that you

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Speaker 1: doctor actually operates under a set of processes. Your card

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Speaker 1: to by law. Uh and and have hypocrite hypocritic hypocritic oath.

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Speaker 1: But the fact of the matter is, uh, it's not

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Speaker 1: a doctor's office. In our realm of endeavor. You can't

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Speaker 1: let these people do whatever they want to do. You

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Speaker 1: need to build a machine that delivers something that's consistent

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Speaker 1: with what you promised the customers you do. So let's

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Speaker 1: So how did you start finding people to help you

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Speaker 1: and then they would go to work for some company

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Speaker 1: were successful, they go to a tenure training program and

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Speaker 1: they become a career tal chemical person or IBM person

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Speaker 1: or something like that. And that world blew apart when

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Speaker 1: I was a young man and they weren't doing that anymore,

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Speaker 1: and instead of people were looking for MBAs, and then

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Speaker 1: they hired the m b A. I mean when I

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Speaker 1: graduated from college. You know, we we we create more

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Speaker 1: Before I graduated from college and nowadays, I want to

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Speaker 1: hire an MBA, you know. And then two years later

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Speaker 1: they think that's what they're supposed to do, and there's

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Speaker 1: no particular loyalty between the firm and the employee and

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Speaker 1: vice versa. What I wanted to do when I saw

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Speaker 1: wanted to hire kids, train them, keep them forever, and

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Speaker 1: have them never leave. So if you look at our firm,

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Speaker 1: the top firm never worked anywhere else. I get them

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Speaker 1: out of school. Half of them turn over in the

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Speaker 1: first year. Uh. If they succeed and stay, they might

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Speaker 1: be here. They might be higher up, they might be

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Speaker 1: higher up. But all of the top people in the firm, uh,

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Speaker 1: firm all their lives, all their adult careers, and and

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Speaker 1: and they they're kind of have the firm built into them.

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Speaker 1: So let's talk a little bit about that is very

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Speaker 1: little education. They've got no training, they've got no background,

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Speaker 1: they've got no experience except they've been with the firm forever,

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Speaker 1: so you've educated them, You've given them experience, and you've

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Speaker 1: trained them so they know they can fisher way. Except

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Speaker 1: I didn't know anything either, so we kind of had

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Speaker 1: to learn it together. Sometimes it's uh, that's the only

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Speaker 1: way you can. You can do things. You you created

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Speaker 1: the sort of firm that didn't necessary only exist. What

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Speaker 1: what did you have as a comparison when you first started?

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Speaker 1: How many years ago? Thirty years? Right? Yeah, I've been

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Speaker 1: the model for you to to think about when you

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Speaker 1: were building this? On the one hand, uh, Intel and

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Speaker 1: on the other hand, Charles Swap Uh, what I wanted

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Speaker 1: to technology on one side and discount brokerage on the

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Speaker 1: other and in both cases doing things that people otherwise

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Speaker 1: hadn't done yet. My father, my father had a great

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Speaker 1: line that always stuck in my head. Uh. It was

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Speaker 1: just one of his most marvelous lines, which is, what

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Speaker 1: are you doing your competitors aren't doing yet? Implying that

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Speaker 1: you do it and they're gonna follow. Maybe maybe they'll

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Speaker 1: catch up, maybe they won't, but they're not doing it yet,

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Speaker 1: and you're leading. And that concept as a phrase is

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Speaker 1: one that just kind of had in my head forever.

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Speaker 1: And you know, if you look at somebody like in Hill,

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Speaker 1: If you look at somebody like Schwab in the early days,

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Speaker 1: they're doing things nobody's ever done before. Uh. And they

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Speaker 1: did successive waves of that under under Chuck Schwab personally.

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Speaker 1: And uh. You know, I'm talking about the Intel of

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Speaker 1: Old and the Charles Schwap Bold and uh so those

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Speaker 1: are those are two firms in my mind, neither one

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Speaker 1: of which are conventional Wall Street firms. That's fascinating. I'm

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Speaker 1: Barry Ridhults. You're listening to Masters in Business on Bloomberg Radio.

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Speaker 1: My guests this week is Ken Fisher. He is the

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Speaker 1: founder and chairman of Fisher Investments. He is one of

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Speaker 1: the longest running columnists at the Forbes magazine. He is

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Speaker 1: well known and well regarded within the financial industry and

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Speaker 1: and is also in the back half of the Forbes

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Speaker 1: four hundred list. Uh. We were talking previously about uh

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Speaker 1: writing and how it's impacted the thinking process. I want

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Speaker 1: to talk a little bit about some of your books,

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Speaker 1: but probably my favorite book of yours is the only

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Speaker 1: three questions that count. Let's let's talk about that and

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Speaker 1: talk about how did you develop those three questions? What

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Speaker 1: led you to that holy trinity? Well, fundamentally, after a

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Speaker 1: long lifetime of kind of messing up on things, I've

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Speaker 1: kind of introspectively tried to learn about what I screw

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Speaker 1: up on, what I don't screw up on, and and

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Speaker 1: learn from it and get better over time. And so

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Speaker 1: one of the fundamental questions in our world is there's

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Speaker 1: so much conventional wisdom that ends up not working in

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Speaker 1: market places because market's discount all uh widely known information,

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Speaker 1: and conventional wisdom, by definition is widely known information and

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Speaker 1: therefore priced that uh, simple question like what do you

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Speaker 1: believe it's actually false? Is such an obvious one to

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Speaker 1: think of, and yet it took me forever in my

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Speaker 1: life to get to the point where I realized that

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Speaker 1: I had to be thinking all the time about what

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Speaker 1: do I believe it's false? Uh? And then the next part,

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Speaker 1: in the futuristic sense, is what can I fathom that

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Speaker 1: other people aren't fathoming work, which allows me to then

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Speaker 1: be ahead of the pack. Let's let's talk about both

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Speaker 1: of those, because they're sort of two sides of the

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Speaker 1: same coin. What do I What do I know? What

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Speaker 1: can I fathom that other people haven't is really a

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Speaker 1: way of saying, what can I see that the crowd

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Speaker 1: hasn't picked up on? I want to get ahead of

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Speaker 1: the crowd, right, But the first question is really fascinating,

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Speaker 1: which is which one of my fundamental beliefs is actually false?

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Speaker 1: How can an investors only have one I'm doing really good?

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Speaker 1: Or which one of the many? But the question I

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Speaker 1: wanted to ask is how can an investor, through their

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Speaker 1: own introspection figure out how many of their beliefs are false? Nor?

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Speaker 1: You know, the old famous uh Galberth quote is when

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Speaker 1: when presented between a choice of changing their minds or

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Speaker 1: or I'm messing up the full quote, everybody gets busy on.

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Speaker 1: The proof is that people would rather spend a lot

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Speaker 1: of time and effort dancing around the fact that they're

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Speaker 1: wrong and looking for ways to rationalize those bad choices, thoughts, decisions.

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Speaker 1: How can an individual man that was a mouthful, How

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Speaker 1: can an individual identify thoughts of their own that are incorrect?

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Speaker 1: And so? Look, look a there's multiple ways, but let

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Speaker 1: me just go with the easiest. The first is, of course,

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Speaker 1: identifying what do you believe. If you can't do that,

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Speaker 1: you're in real trouble and you probably shouldn't be in

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Speaker 1: markets at all. Secondarily, by the way, that's a key point,

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Speaker 1: and I think a lot of people gloss over that

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Speaker 1: if you don't really understand what you believe, the markets

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Speaker 1: are absolutely absolutely no, no, no. You know. The age

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Speaker 1: all saying is if you don't know who you are,

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Speaker 1: the markets are an expensive place to find out. And

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Speaker 1: the fact of the matter is that once you say, okay,

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Speaker 1: I believe this, now you kind of list those things

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Speaker 1: and then you say, this is a really simple one.

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Speaker 1: It's really one that people have a hard time with.

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Speaker 1: Is there a history that associates with that thing? And

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Speaker 1: can I run correlation coefficiens to see if it's actually

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Speaker 1: true or not? Because if it's true, it will have

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Speaker 1: a high end positive correlation coefficient. If there's no correlation there,

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Speaker 1: it's not true. And so you know, not everything can

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Speaker 1: you run a correlation coefficient for, But a lot of

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Speaker 1: things you can, particularly X causes why functions where there's data,

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Speaker 1: and so wherever you do that, you look for here's

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Speaker 1: the things I believe, here's the things where there's history

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Speaker 1: and data, let me run the correlation coefficiency if it's

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Speaker 1: actually true, and if it's not true, let me stop

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Speaker 1: believing it. So you want investors to actually use numbers

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Speaker 1: and think about what's true and what's not true. Yeah,

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Speaker 1: it's really simple that that's going to take a lot

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Speaker 1: of a lot of easy money out of the market

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Speaker 1: off people actually think about. I can't tell you how

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Speaker 1: often I hear people or read people saying stuff that

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Speaker 1: I have a familiarity with, and I'm wait, that's not true.

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Speaker 1: And not only is that correct, but additionally, in my

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Speaker 1: forty plas yers, in this realm of endeavor, I've seen,

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Speaker 1: particularly in the last fifteen that it is more true

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Speaker 1: than ever that people have these ideas, hold these ideas,

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Speaker 1: and never ever stopped to say, and I'll give you

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Speaker 1: an example one in a minute, never ever stopped to say,

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Speaker 1: I wonder if history could be a guide here where

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Speaker 1: I would use data to check myself to see if

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Speaker 1: this is even possibly true, not to say that there

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Speaker 1: can't be first ever, and there can. But you remember

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Speaker 1: John Templeton's famous line that the foremost dangerous words in

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Speaker 1: English language exactly, and the fact of the matter is

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Speaker 1: you take something like all of the fear about an

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Speaker 1: initial interest rate hike, but gee, an a logical question

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Speaker 1: would be, g has there ever been an initial interest

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Speaker 1: rate hike before in a cycle? Can I find those times?

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Speaker 1: Can I count them? And then can I measure on

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Speaker 1: a one week, one month, three months, one year, and

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Speaker 1: five year basis? What's happened to the market after that?

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Speaker 1: And the answer is a you can and be If

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Speaker 1: any of your listeners do that, they're gonna be startled

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Speaker 1: to find out that the market outcome doesn't have anything

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Speaker 1: to do with any discussion that goes on right now

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Speaker 1: in the public. You're listening to Masters in Business on

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Speaker 1: Bloomberg Radio. My guest today is Ken Fisher. He is

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Speaker 1: a money manager, author and rock on tour. Uh. And

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Speaker 1: we were discussing previously, uh the only three questions that

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Speaker 1: count a book? He wrote, God, that's gonna be about

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Speaker 1: a decade ago, is it right? Um? Almost? Let's talk.

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Speaker 1: But you're known your your reputation is that of a

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Speaker 1: stock picker. Not too long ago, Forbes published an accounting

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Speaker 1: of all your stock picks as made in your columns

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Speaker 1: and over the previous decade and a half, they found

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Speaker 1: that on average, the stock picks had beaten the SMP

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Speaker 1: five hundred and you had beaten the index eleven of

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Speaker 1: the previous fourteen years. That's a heck of a great,

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Speaker 1: great run. So let's talk a little bit about about

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Speaker 1: stock selection. Um, what's the first thing you look at

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Speaker 1: when you're picking stocks? I don't look at stocks. You

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Speaker 1: don't look at stocks. I mean, eventually you've got to

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Speaker 1: own stocks, but looking at stocks is kind of the

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Speaker 1: last thing I do. So where do you start where

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Speaker 1: I'm in the process. People don't understand this about me

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Speaker 1: because they always are looking for what they want to see.

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Speaker 1: But in reality, I'm very simple, top down macro manager,

429
00:23:25,320 --> 00:23:28,840
Speaker 1: and I've long, long, long, not always, but long, long,

430
00:23:28,960 --> 00:23:32,680
Speaker 1: long been a top down macro manager. And I didn't

431
00:23:32,680 --> 00:23:34,560
Speaker 1: start out that way, but I evolved to become that

432
00:23:35,040 --> 00:23:37,440
Speaker 1: a long time ago. And so the first thing that

433
00:23:37,520 --> 00:23:42,359
Speaker 1: I look at is the whole world, countries, sectors, subsectors,

434
00:23:42,800 --> 00:23:44,600
Speaker 1: and I figure out where I want to be because

435
00:23:44,640 --> 00:23:46,439
Speaker 1: one of the things that I've come to believe heavily

436
00:23:47,720 --> 00:23:51,040
Speaker 1: is that it's the kind of stocks that are moving

437
00:23:51,520 --> 00:23:54,320
Speaker 1: that are more important than the specific ones you want

438
00:23:54,320 --> 00:23:57,040
Speaker 1: to be fishing in. The right ponds, not the wrong ponds.

439
00:23:57,520 --> 00:23:59,720
Speaker 1: If you're fishing in a pond that doesn't have the

440
00:24:00,200 --> 00:24:03,159
Speaker 1: kind of fish and it's the wrong time, you're not

441
00:24:03,240 --> 00:24:07,639
Speaker 1: going to get fish. And so my first thing I

442
00:24:07,720 --> 00:24:11,760
Speaker 1: look at is countries than sectors. Uh. Then I break

443
00:24:11,880 --> 00:24:16,720
Speaker 1: that down. I look at factors then, which would be big, small, growth, value?

444
00:24:17,400 --> 00:24:20,000
Speaker 1: There's times for each of them. People tend to be

445
00:24:20,119 --> 00:24:22,000
Speaker 1: a value guy or a growth guy, or a big

446
00:24:22,040 --> 00:24:23,920
Speaker 1: stock guy or a small stock guy. I'm not in

447
00:24:23,960 --> 00:24:27,399
Speaker 1: any of those things. I'm let me figure out what

448
00:24:27,600 --> 00:24:31,320
Speaker 1: kind of stock should be working, where is the value

449
00:24:31,400 --> 00:24:35,639
Speaker 1: that will be perceived in a few years, and where

450
00:24:35,960 --> 00:24:38,640
Speaker 1: does it fit into the cycle. And then that gets

451
00:24:38,680 --> 00:24:40,480
Speaker 1: me down to a very small universe of stocks to

452
00:24:40,520 --> 00:24:43,080
Speaker 1: pick from. It's the picking of the last thing I do.

453
00:24:43,359 --> 00:24:45,520
Speaker 1: So this is very much along the lines of what

454
00:24:45,680 --> 00:24:48,720
Speaker 1: can I fathom that others can't or or think. The

455
00:24:48,760 --> 00:24:51,840
Speaker 1: actual picking for me is much more simple than most

456
00:24:51,880 --> 00:24:55,720
Speaker 1: people would think, because I've weeded out everything but the

457
00:24:56,000 --> 00:24:59,640
Speaker 1: kinds that I want. And then even if I picked

458
00:24:59,720 --> 00:25:02,400
Speaker 1: the long ones out of the kind, if I picked

459
00:25:02,440 --> 00:25:05,320
Speaker 1: the kind's right, I'm ahead of the games. Makes a

460
00:25:05,359 --> 00:25:07,520
Speaker 1: lot of sense. You You if you don't get the

461
00:25:07,560 --> 00:25:09,440
Speaker 1: best house in a good neighborhood, you get the second

462
00:25:09,480 --> 00:25:11,720
Speaker 1: best or third best. It doesn't matter. It's still a

463
00:25:11,760 --> 00:25:15,200
Speaker 1: good neighborhood. Location, location, location in that regard. And this

464
00:25:15,359 --> 00:25:18,640
Speaker 1: is a kind of a parallel analogy. So if you're

465
00:25:18,760 --> 00:25:22,120
Speaker 1: not starting by looking at individual stocks, when you're looking

466
00:25:22,160 --> 00:25:26,760
Speaker 1: at different regions and different sectors, what drives that selection process?

467
00:25:27,000 --> 00:25:32,960
Speaker 1: So you know, uh, this is not to uh take

468
00:25:33,000 --> 00:25:36,440
Speaker 1: anything away from the perception of Warren Buffett's business interests.

469
00:25:36,720 --> 00:25:38,399
Speaker 1: But one of the things I don't think that people

470
00:25:38,640 --> 00:25:40,240
Speaker 1: think of him as is he's just one of the

471
00:25:40,320 --> 00:25:43,320
Speaker 1: best words smiths ever. I mean, he just creates. You know,

472
00:25:43,400 --> 00:25:45,840
Speaker 1: it's one thing you write, I write. It's one thing

473
00:25:45,960 --> 00:25:48,359
Speaker 1: to write things that people like to read. It's another

474
00:25:48,440 --> 00:25:51,359
Speaker 1: thing to write short phrases that people quote over and

475
00:25:51,440 --> 00:25:53,840
Speaker 1: over and over again and like to And that's what

476
00:25:54,040 --> 00:25:56,359
Speaker 1: I mean. You gotta be Yoggie Bearer to do that successful.

477
00:25:56,800 --> 00:25:59,520
Speaker 1: And the fact of the matter is that one of

478
00:25:59,640 --> 00:26:02,199
Speaker 1: his great lines is the in the long term, it's

479
00:26:02,240 --> 00:26:04,240
Speaker 1: a weighing machine, and the short term it's a voting machine.

480
00:26:05,000 --> 00:26:08,160
Speaker 1: And the the weighing and the voting have to both

481
00:26:08,200 --> 00:26:11,919
Speaker 1: be counted. So the weighing is about the true valuation

482
00:26:12,320 --> 00:26:15,879
Speaker 1: of the quality of earnings, growth, etcetera, the correct valuation

483
00:26:16,000 --> 00:26:18,840
Speaker 1: for that. And then the voting part is really a

484
00:26:18,920 --> 00:26:22,800
Speaker 1: matter of analyzing sentiment and where sentiment is swinging and

485
00:26:22,920 --> 00:26:25,159
Speaker 1: how you measure sentiment correctly, which is something that I

486
00:26:25,200 --> 00:26:28,760
Speaker 1: don't think most people think about much. And Uh, so

487
00:26:29,280 --> 00:26:33,720
Speaker 1: you're looking at features that on that break into fundamental

488
00:26:33,800 --> 00:26:36,760
Speaker 1: economic drivers. One of the biggest ones that I always

489
00:26:36,800 --> 00:26:39,639
Speaker 1: pay attention to his shifts in the Yelk curve globally,

490
00:26:40,080 --> 00:26:42,840
Speaker 1: which most people don't think of. People underestimate the power

491
00:26:43,160 --> 00:26:49,800
Speaker 1: of the Yeld curve. Uh. The functioning Uh simply of

492
00:26:49,920 --> 00:26:52,760
Speaker 1: where we are in the length and duration of the cycle,

493
00:26:52,840 --> 00:26:55,560
Speaker 1: because different kinds of stocks performed differently at different parts

494
00:26:55,600 --> 00:26:58,639
Speaker 1: of the cycle. That's part of the voting machine. Uh.

495
00:26:58,800 --> 00:27:01,360
Speaker 1: And then what is it that And you know, I've

496
00:27:01,359 --> 00:27:04,080
Speaker 1: written a lot about this. People never really ever believe

497
00:27:04,160 --> 00:27:09,920
Speaker 1: me professional forecasters as a group can be analyzed. And

498
00:27:10,000 --> 00:27:12,440
Speaker 1: if you can figure out what they believe will occur,

499
00:27:12,720 --> 00:27:15,520
Speaker 1: you know exactly what won't happen. You don't know what

500
00:27:15,600 --> 00:27:17,840
Speaker 1: will happen, but you if you think about it like

501
00:27:17,920 --> 00:27:20,399
Speaker 1: a clock you can take about three hours of the

502
00:27:20,480 --> 00:27:22,760
Speaker 1: clock out, which stacks the odds more in your favor,

503
00:27:23,160 --> 00:27:26,400
Speaker 1: because what they collectively believe is what has already been

504
00:27:26,440 --> 00:27:28,920
Speaker 1: priced into the marketplace makes a lot of sense. And

505
00:27:29,280 --> 00:27:31,879
Speaker 1: and since it's been priced, it can't occur. It's already

506
00:27:31,920 --> 00:27:34,960
Speaker 1: been done. So now you're looking for what else there is.

507
00:27:35,480 --> 00:27:37,080
Speaker 1: And so one of the things that we always do

508
00:27:37,520 --> 00:27:41,560
Speaker 1: is spend a lot of time collecting professional investor sentiment

509
00:27:41,600 --> 00:27:45,359
Speaker 1: about sectors, about countries, about the market as a whole,

510
00:27:45,800 --> 00:27:48,520
Speaker 1: and arraying that into bell curves, and knowing that twelve

511
00:27:48,600 --> 00:27:50,400
Speaker 1: months out the middle of the bell curve doesn't happen.

512
00:27:50,760 --> 00:27:52,920
Speaker 1: We don't know which side of the bell curve happens.

513
00:27:53,520 --> 00:27:55,280
Speaker 1: Could be the left, could be the right. We got

514
00:27:55,359 --> 00:27:57,360
Speaker 1: to try to figure that out. Might be wrong, wrong

515
00:27:57,440 --> 00:28:01,360
Speaker 1: a lot, I mean, I'm wrong a lot. I'm basically,

516
00:28:02,040 --> 00:28:04,840
Speaker 1: you know, kind of the forest gump of the world.

517
00:28:04,880 --> 00:28:07,560
Speaker 1: It gets there by running backwards with blindfolds on. But

518
00:28:07,720 --> 00:28:10,200
Speaker 1: the fact of the matter is beforest gump of the

519
00:28:10,240 --> 00:28:13,600
Speaker 1: finance world. But I mean, you know, I went to

520
00:28:13,680 --> 00:28:17,040
Speaker 1: Humboldt State University. I didn't I didn't go to Wharton, right, um,

521
00:28:17,680 --> 00:28:20,040
Speaker 1: But but when when you say that, I'm gonna push

522
00:28:20,080 --> 00:28:24,359
Speaker 1: back a little bit. People don't realize in this industry,

523
00:28:25,000 --> 00:28:28,200
Speaker 1: if you're right three out of ten times, it's like

524
00:28:28,320 --> 00:28:31,560
Speaker 1: batting three hundred. Hey, you're you're up for the All

525
00:28:31,640 --> 00:28:35,000
Speaker 1: Star team. It's not how often you're right, it's what

526
00:28:35,119 --> 00:28:37,400
Speaker 1: you do when you're wrong. You could have been wrong

527
00:28:37,520 --> 00:28:40,880
Speaker 1: frequently as long as you're controlling the downside. But when

528
00:28:40,960 --> 00:28:43,880
Speaker 1: you're right and they're towering home runs and you're batting

529
00:28:43,960 --> 00:28:48,000
Speaker 1: three hundred. To carry out the baseball analogy, that's a

530
00:28:48,160 --> 00:28:51,400
Speaker 1: great on base percentage. That's a great scoring percent Let

531
00:28:51,440 --> 00:28:53,520
Speaker 1: me let me take that and push it to the

532
00:28:53,680 --> 00:28:57,120
Speaker 1: other extreme of the same story. Uh. It's long been

533
00:28:57,200 --> 00:29:00,800
Speaker 1: proven that investors are, on balance more wrong than right,

534
00:29:01,240 --> 00:29:05,000
Speaker 1: for sure. So if you can be more right than wrong,

535
00:29:05,120 --> 00:29:09,320
Speaker 1: you're doing really good. Uh. Some investors are not many. Uh.

536
00:29:09,440 --> 00:29:11,760
Speaker 1: The more right you're expected to be, the fewer you get.

537
00:29:12,240 --> 00:29:15,040
Speaker 1: If you can be right seventy of the time, you

538
00:29:15,200 --> 00:29:18,440
Speaker 1: become a living legend in the long term. And so

539
00:29:18,600 --> 00:29:20,880
Speaker 1: therefore you better get darn used to being wrong at

540
00:29:20,960 --> 00:29:22,880
Speaker 1: least thirty percent of the time. And if you can't

541
00:29:22,960 --> 00:29:25,160
Speaker 1: take being wrong and figure out what to do when

542
00:29:25,240 --> 00:29:27,920
Speaker 1: you're wrong you. I mean, if if you think you're

543
00:29:27,960 --> 00:29:29,640
Speaker 1: going to be right all at darn time, you are

544
00:29:29,680 --> 00:29:33,240
Speaker 1: the wrongest person in the whole world. And the reality

545
00:29:33,440 --> 00:29:36,120
Speaker 1: is that so many people are so hung up on

546
00:29:36,240 --> 00:29:39,120
Speaker 1: not being able to accept their wrongness. And you know,

547
00:29:39,240 --> 00:29:43,240
Speaker 1: I've embrace my wrongness because fundamentally, I know that if

548
00:29:43,320 --> 00:29:46,640
Speaker 1: I was the greatest investor ever, which I know I'm not,

549
00:29:47,120 --> 00:29:49,840
Speaker 1: I'd still be wrong a huge amount of the time.

550
00:29:50,320 --> 00:29:52,440
Speaker 1: You know, I learned early in the career it's a

551
00:29:52,640 --> 00:29:55,280
Speaker 1: it's okay to to be wrong, it's not okay to

552
00:29:55,360 --> 00:29:57,360
Speaker 1: stay wrong. And I think a lot of people have

553
00:29:57,480 --> 00:30:00,959
Speaker 1: a hard time with accepting an error, fixing what has

554
00:30:01,000 --> 00:30:03,560
Speaker 1: to be fixed, and moving on. If you don't do

555
00:30:03,720 --> 00:30:07,600
Speaker 1: that with your your golf swing or your your tennis swing,

556
00:30:08,440 --> 00:30:10,240
Speaker 1: it affects your game if you That's why I don't

557
00:30:10,240 --> 00:30:12,640
Speaker 1: play golf or tennis. But if you make the same

558
00:30:12,680 --> 00:30:17,040
Speaker 1: mistake in finance and investing, it's usually expansive, and that's

559
00:30:17,200 --> 00:30:20,600
Speaker 1: that's the that's a huge, huge difference. Let's um, let's

560
00:30:20,640 --> 00:30:23,920
Speaker 1: keep plowing through this. I want to talk about UM.

561
00:30:24,200 --> 00:30:27,520
Speaker 1: Something you had said back in oh six, eight percent

562
00:30:27,600 --> 00:30:31,400
Speaker 1: of clients need an all equity benchmark. Is that still

563
00:30:31,440 --> 00:30:35,880
Speaker 1: true today? Uh, it's more true nowt and what's done

564
00:30:36,040 --> 00:30:38,960
Speaker 1: more true now than ever. So, so how does that

565
00:30:39,120 --> 00:30:43,120
Speaker 1: express itself in in portfolios? Are you carrying very little

566
00:30:43,160 --> 00:30:45,440
Speaker 1: in the way of fixed income or reads or other

567
00:30:46,040 --> 00:30:50,440
Speaker 1: non equity positions. Let's just back up from that. The

568
00:30:50,520 --> 00:30:53,440
Speaker 1: benchmark is about what it is, because that's the way

569
00:30:53,440 --> 00:30:56,120
Speaker 1: you phrased it appropriately. The benchmark is about what it

570
00:30:56,240 --> 00:30:59,520
Speaker 1: is you're trying to accomplish against. It's kind of like

571
00:30:59,720 --> 00:31:03,440
Speaker 1: the track in which you're going to run around. Are

572
00:31:03,520 --> 00:31:07,400
Speaker 1: you running, uh, long distance, you're running short distance, intermediate?

573
00:31:07,480 --> 00:31:11,280
Speaker 1: What's the benchmark you're running. We can come back and

574
00:31:11,360 --> 00:31:14,360
Speaker 1: talk about why that statement that you referenced is true.

575
00:31:14,920 --> 00:31:17,560
Speaker 1: But then there's a reason to vary what's in the

576
00:31:17,600 --> 00:31:20,000
Speaker 1: portfolio from the benchmark, because you're hoping to do well

577
00:31:20,040 --> 00:31:23,240
Speaker 1: compared to the benchmark. And so in a simple case

578
00:31:23,320 --> 00:31:25,400
Speaker 1: of somebody who would be in all like by benchmark,

579
00:31:26,400 --> 00:31:28,440
Speaker 1: the time to vary from the benchmark is if you

580
00:31:28,480 --> 00:31:30,320
Speaker 1: think you're gonna have a big bed bear market, and

581
00:31:30,440 --> 00:31:32,160
Speaker 1: then you might vary from Then you've gotta have good

582
00:31:32,200 --> 00:31:33,880
Speaker 1: reasons to do that, because if you're wrong, you're gonna

583
00:31:33,920 --> 00:31:36,960
Speaker 1: get left in the dust. But you can vary from

584
00:31:36,960 --> 00:31:39,400
Speaker 1: the benchmark all you want. I am and have been

585
00:31:39,520 --> 00:31:41,760
Speaker 1: now for years, you know. I mean, I've been only

586
00:31:42,160 --> 00:31:44,560
Speaker 1: seriously Barris three times ever in my career, and I'm

587
00:31:44,600 --> 00:31:47,520
Speaker 1: not bearished now. And I've thought of often as a permeable.

588
00:31:47,760 --> 00:31:50,200
Speaker 1: I'm not a permeable. That's your reputation. But I know

589
00:31:50,320 --> 00:31:55,440
Speaker 1: you've I know I've nailed three bear markets, and I've

590
00:31:55,760 --> 00:31:58,760
Speaker 1: missed bear markets too, and I missed the last one.

591
00:31:59,360 --> 00:32:02,240
Speaker 1: I got O O nine. But you were pretty cautious

592
00:32:02,280 --> 00:32:05,280
Speaker 1: heading into two thousands. Oh, I nailed two thousand. I

593
00:32:05,480 --> 00:32:08,720
Speaker 1: nailed two thousand really really well. I'm and and was

594
00:32:10,080 --> 00:32:13,240
Speaker 1: not non equity in that period. What are the bear markets?

595
00:32:13,320 --> 00:32:16,360
Speaker 1: Did you catch just right? I got eighty seven pretty well.

596
00:32:16,600 --> 00:32:20,200
Speaker 1: I was fifty percent equity in eight seven, and I

597
00:32:20,680 --> 00:32:27,160
Speaker 1: was pretty good about seventy equity in UH to sixty

598
00:32:27,560 --> 00:32:32,800
Speaker 1: equity in the small bearer market. But but you know,

599
00:32:32,920 --> 00:32:34,640
Speaker 1: you don't have to get all the bearer markets because

600
00:32:34,640 --> 00:32:36,200
Speaker 1: in the long term there's lots of bearer markets. If

601
00:32:36,240 --> 00:32:39,080
Speaker 1: you carve out a few bearer markets and otherwise are

602
00:32:39,120 --> 00:32:42,080
Speaker 1: equitized UH, you end up doing better than the market,

603
00:32:42,120 --> 00:32:44,120
Speaker 1: because fundamentally, if you can carve a few out and

604
00:32:44,160 --> 00:32:45,920
Speaker 1: you sta equitize the rest of the time, since stocks,

605
00:32:45,960 --> 00:32:47,280
Speaker 1: you pretty well in the long term. It's not a

606
00:32:47,320 --> 00:32:50,920
Speaker 1: bed function. But the reason to vary from the benchmark,

607
00:32:50,960 --> 00:32:53,080
Speaker 1: whatever the benchmark is, is I think the benchmark is

608
00:32:53,080 --> 00:32:55,400
Speaker 1: going to do really badly. That doesn't make the benchmark

609
00:32:55,480 --> 00:32:59,560
Speaker 1: inappropriate for the client. The fact is the reason people need.

610
00:32:59,720 --> 00:33:01,120
Speaker 1: You know, in this day and age, we've got a

611
00:33:01,120 --> 00:33:03,560
Speaker 1: phrase it didn't used to exist, called longevity risk. And

612
00:33:03,680 --> 00:33:06,640
Speaker 1: longevity risk is about the fact that the guy, I

613
00:33:06,680 --> 00:33:09,680
Speaker 1: mean a long time ago when people first did pension plans,

614
00:33:10,000 --> 00:33:12,600
Speaker 1: you know, you're retired at sixty five, you died at seventy,

615
00:33:12,640 --> 00:33:14,520
Speaker 1: and you've got five years worth of your pension payouts.

616
00:33:14,800 --> 00:33:16,840
Speaker 1: And and nowadays you know the sixty five year olds

617
00:33:16,840 --> 00:33:19,040
Speaker 1: likely to live to be ninety five. And if you've

618
00:33:19,040 --> 00:33:21,760
Speaker 1: got a thirty year time horizon and the primary person

619
00:33:21,760 --> 00:33:23,320
Speaker 1: of your money is take care of you the rest

620
00:33:23,360 --> 00:33:25,440
Speaker 1: of your life, you still probably need a heckuple lot

621
00:33:25,440 --> 00:33:28,680
Speaker 1: of equity exposure, subject to other factors, because you've got

622
00:33:28,760 --> 00:33:31,360
Speaker 1: a long time horizon and equities you know, as soon

623
00:33:31,400 --> 00:33:33,560
Speaker 1: as you say long time arise and that's where equities

624
00:33:33,560 --> 00:33:38,240
Speaker 1: fit in. So you talk to a standard client, you say, so,

625
00:33:38,360 --> 00:33:40,000
Speaker 1: what's the primary purpose of your money? And then they

626
00:33:40,080 --> 00:33:42,800
Speaker 1: tell you And the most common answer you ever here

627
00:33:42,960 --> 00:33:44,400
Speaker 1: is well, it's to take care of me and my

628
00:33:44,440 --> 00:33:47,080
Speaker 1: spouse the rest of our lives. That's you got anything else?

629
00:33:47,360 --> 00:33:48,640
Speaker 1: May I want to leave some money to my kids,

630
00:33:48,920 --> 00:33:50,680
Speaker 1: anything else? Them? I want to leave some money to charity.

631
00:33:50,880 --> 00:33:53,240
Speaker 1: These are standard thing here them all the time that

632
00:33:54,560 --> 00:33:55,840
Speaker 1: I want to take care of me and my wife

633
00:33:55,880 --> 00:33:57,680
Speaker 1: the rest of our lives. The next question is, so

634
00:33:57,760 --> 00:33:59,840
Speaker 1: how long you're gonna live? And it's not a matter

635
00:33:59,880 --> 00:34:02,280
Speaker 1: of your age. It's a matter of things like, so,

636
00:34:02,360 --> 00:34:04,000
Speaker 1: how long did your parents live and how long did

637
00:34:04,040 --> 00:34:07,360
Speaker 1: your grandparents live? And what's your lifestyle in terms of

638
00:34:07,440 --> 00:34:10,400
Speaker 1: health issues compared to theirs, And then you try to

639
00:34:10,440 --> 00:34:12,719
Speaker 1: figure out how long they're likely to live. And then

640
00:34:12,840 --> 00:34:15,040
Speaker 1: from that you go to these subordinate features like leaving

641
00:34:15,080 --> 00:34:16,800
Speaker 1: money to the kids or what have you, which actually

642
00:34:16,920 --> 00:34:19,440
Speaker 1: extends your time horizon, it doesn't shorten it. You now

643
00:34:19,600 --> 00:34:22,280
Speaker 1: you're not thinking even longer. And and once you figure

644
00:34:22,280 --> 00:34:24,319
Speaker 1: out that time horizon, if it's a very long time,

645
00:34:24,360 --> 00:34:26,600
Speaker 1: and of course you commonly run into this thing where well,

646
00:34:26,640 --> 00:34:28,920
Speaker 1: you know, I'm sixty five, okay, Grace, and how else

647
00:34:28,960 --> 00:34:30,920
Speaker 1: your spouse, because take care of you and your special

648
00:34:31,200 --> 00:34:34,200
Speaker 1: My spouse, she's only sixty. Uh, and how long you're

649
00:34:34,200 --> 00:34:36,120
Speaker 1: gonna live? Oh? Well, you know, my parents died when

650
00:34:36,160 --> 00:34:38,359
Speaker 1: they were seventy three, and you know, blah blah blah

651
00:34:38,360 --> 00:34:40,160
Speaker 1: blah blah. And I smoke a lot, and I'm overweight,

652
00:34:40,320 --> 00:34:43,040
Speaker 1: you know, and and you know, I try to drink

653
00:34:43,040 --> 00:34:46,239
Speaker 1: a lot of poisons. But my spouse, she's sixty and

654
00:34:46,320 --> 00:34:48,680
Speaker 1: her parents lived into their nineties and their grandparents lived

655
00:34:48,719 --> 00:34:51,080
Speaker 1: into their late eighties, and she's in great health. Is

656
00:34:51,239 --> 00:34:53,239
Speaker 1: I'll probably live to be ninety five. And you had

657
00:34:53,280 --> 00:34:55,319
Speaker 1: a thirty five year time horizon, and let's take care

658
00:34:55,360 --> 00:34:57,280
Speaker 1: of the both of you. It's the second to survive

659
00:34:57,400 --> 00:34:59,800
Speaker 1: that counts in its longevity risk for the second to survive.

660
00:35:00,239 --> 00:35:04,680
Speaker 1: And what do they need? They need an equity benchmark. Fascinating.

661
00:35:04,840 --> 00:35:08,120
Speaker 1: We've been speaking with Ken Fisher of Fisher Investments. If

662
00:35:08,160 --> 00:35:10,200
Speaker 1: people want to find your writing, they could either go

663
00:35:10,360 --> 00:35:14,400
Speaker 1: to Forbes or fish fi dot com. There's a slew

664
00:35:14,440 --> 00:35:17,359
Speaker 1: of your writing available. There is that correct, absolutely plus

665
00:35:17,400 --> 00:35:20,960
Speaker 1: Amazon or Barnes and Noble. You have books eleven. We

666
00:35:20,960 --> 00:35:23,160
Speaker 1: should really get one more out, making an even dozen

667
00:35:23,440 --> 00:35:26,680
Speaker 1: eleven books. You know, hopefully I'll live that long. Eleven

668
00:35:27,040 --> 00:35:29,680
Speaker 1: books for New York Times Bestsellers, thirty one years of

669
00:35:29,760 --> 00:35:32,800
Speaker 1: Forbes columns. There's actually a book about my first twenty

670
00:35:32,840 --> 00:35:37,239
Speaker 1: five years of Forbes columns. I don't remember I was

671
00:35:37,320 --> 00:35:39,320
Speaker 1: reading it, and I can't read. I don't remember, you know,

672
00:35:39,440 --> 00:35:41,560
Speaker 1: But the fact of the matter is I don't have

673
00:35:41,719 --> 00:35:44,000
Speaker 1: very good memory. I'm you know. I told you I'm

674
00:35:44,000 --> 00:35:46,480
Speaker 1: basically kind of the forest Gump of finance. Right. It's

675
00:35:46,520 --> 00:35:49,320
Speaker 1: a miracle that I'm even here. Check out my daily

676
00:35:49,400 --> 00:35:52,040
Speaker 1: column on Bloomberg View dot com. Follow me on Twitter

677
00:35:52,600 --> 00:35:56,160
Speaker 1: at Ridolts. I'm Barry Ridholts. You've been listening to Masters

678
00:35:56,200 --> 00:36:00,560
Speaker 1: in Business on Bloomberg Radio Masters in Bisines. This is

679
00:36:00,680 --> 00:36:04,200
Speaker 1: brought to you by ex On Mobile Energy Lives here.

680
00:36:05,160 --> 00:36:08,799
Speaker 1: Welcome back. This is the podcast portion of our show,

681
00:36:09,080 --> 00:36:12,720
Speaker 1: and I've actually been really enjoying my conversation with Ken Fisher.

682
00:36:13,040 --> 00:36:17,320
Speaker 1: There are so many questions I skipped for time purposes.

683
00:36:17,360 --> 00:36:22,399
Speaker 1: We're gonna come back to this um, but let's let's

684
00:36:22,480 --> 00:36:26,000
Speaker 1: talk about Let's start out with some of the books. Um,

685
00:36:26,080 --> 00:36:28,439
Speaker 1: you just mentioned the book. Quiet, Let's talk about other

686
00:36:28,520 --> 00:36:32,319
Speaker 1: books that you've read, either finance related or holy unrelated

687
00:36:32,719 --> 00:36:37,600
Speaker 1: that you found to be helpful, insightful, worthwhile what what

688
00:36:37,840 --> 00:36:43,560
Speaker 1: what are some of your favorite books? Um, Hunting with

689
00:36:43,640 --> 00:36:47,200
Speaker 1: Bow and Arrow by Saxton T. Pope Hunting with Bow

690
00:36:47,280 --> 00:36:50,440
Speaker 1: and Arrow? Interesting? What what was that about? Exactly what

691
00:36:50,560 --> 00:36:53,480
Speaker 1: it says or something? Well, Saxton Pope was the kind

692
00:36:53,520 --> 00:36:57,120
Speaker 1: of the father of modern not modern American bow hunting.

693
00:36:57,600 --> 00:37:01,480
Speaker 1: And when issued the last Native America was brought into

694
00:37:01,719 --> 00:37:06,319
Speaker 1: uc med in San Francisco. Uh, and I recalled nineteen eleven. Uh.

695
00:37:06,440 --> 00:37:10,200
Speaker 1: Saxton Pope became his doctor and if she taught Saxton

696
00:37:10,239 --> 00:37:11,600
Speaker 1: Pope how to make a bow and how to hunt

697
00:37:11,640 --> 00:37:13,160
Speaker 1: all on, and then he went on to become this

698
00:37:13,600 --> 00:37:15,640
Speaker 1: famous bow hunter. And he wrote this book that includes

699
00:37:15,640 --> 00:37:18,680
Speaker 1: all that. But if you think about hunting, and I'm

700
00:37:18,719 --> 00:37:21,200
Speaker 1: not a hunter, but if you when I was a kid,

701
00:37:21,200 --> 00:37:22,279
Speaker 1: I wanted to be a hunter, but I was just

702
00:37:22,360 --> 00:37:23,840
Speaker 1: a kid. When I was a kid, I want to

703
00:37:23,880 --> 00:37:26,000
Speaker 1: be a professional baseball player too, And that was ridiculous.

704
00:37:26,239 --> 00:37:27,960
Speaker 1: But every kid in the fifties want to be a

705
00:37:28,000 --> 00:37:31,520
Speaker 1: professional baseball player. The fact of the matter is that

706
00:37:32,120 --> 00:37:36,160
Speaker 1: hunting is a lot like investing. Let's expand them that

707
00:37:36,680 --> 00:37:39,000
Speaker 1: why why So if you go back to things that

708
00:37:39,040 --> 00:37:41,600
Speaker 1: I said in the prayer segment about you want to

709
00:37:41,640 --> 00:37:43,919
Speaker 1: fish in the right pond, you gotta figure out where

710
00:37:43,960 --> 00:37:46,320
Speaker 1: the animals are gonna be that you're gonna hunt. You

711
00:37:46,440 --> 00:37:48,759
Speaker 1: gotta make sure you're going after the right kind at

712
00:37:48,760 --> 00:37:51,000
Speaker 1: the right time. Uh. And then you gotta have the

713
00:37:51,080 --> 00:37:53,600
Speaker 1: tactics for how to do the final part, which is

714
00:37:53,640 --> 00:37:55,360
Speaker 1: actually the last part of the hunt, which is what

715
00:37:55,440 --> 00:37:58,200
Speaker 1: happens when you actually get close to it. And so

716
00:37:58,320 --> 00:38:00,800
Speaker 1: it's really kind of a parallel. Another one of my

717
00:38:00,960 --> 00:38:03,279
Speaker 1: favorite books, again that that book was written in the

718
00:38:03,360 --> 00:38:05,759
Speaker 1: nineteen twenties. Another one of my favorite books, which is

719
00:38:05,800 --> 00:38:08,359
Speaker 1: written in the forties was called Hunting the American Lion,

720
00:38:08,480 --> 00:38:11,160
Speaker 1: which is a book about mountain lion hunting. I've never

721
00:38:11,200 --> 00:38:12,600
Speaker 1: handed a mountain lion. I'm not going to hunt a

722
00:38:12,600 --> 00:38:14,839
Speaker 1: mountain lion. But but it's a great book because it's

723
00:38:14,840 --> 00:38:20,480
Speaker 1: about the long, arduous pursuit because hunting mountain lions, you know,

724
00:38:20,520 --> 00:38:23,560
Speaker 1: which is always done with dogs, and the terrible to

725
00:38:23,640 --> 00:38:25,520
Speaker 1: rain because the cats want to lose you and they're

726
00:38:25,719 --> 00:38:27,840
Speaker 1: very smart and are very mean. You know, these are

727
00:38:27,880 --> 00:38:30,560
Speaker 1: critters that can jump twenty feet straight up in the air. Um.

728
00:38:31,520 --> 00:38:35,680
Speaker 1: Pursuing inquires endurance and investing is an endurance game. Another

729
00:38:35,719 --> 00:38:37,160
Speaker 1: one of my all time favorite books. Of course, I

730
00:38:37,239 --> 00:38:40,319
Speaker 1: love these parallels. These are fascinating today. Uh. And then

731
00:38:40,440 --> 00:38:43,759
Speaker 1: you know there's investment books that I love a lot. Um.

732
00:38:43,920 --> 00:38:47,400
Speaker 1: You know Fred Twins where the customer shots literally sitting

733
00:38:47,480 --> 00:38:50,920
Speaker 1: on my night table. Book I started and and and

734
00:38:50,960 --> 00:38:54,320
Speaker 1: it's available now is a wily classic. And before I forget,

735
00:38:55,200 --> 00:38:58,839
Speaker 1: if anybody ever wants to go to our website, uh,

736
00:38:59,080 --> 00:39:02,279
Speaker 1: you know, it's to a Google search officier investments. Uh.

737
00:39:02,960 --> 00:39:06,400
Speaker 1: You know on the website there's uh access to and

738
00:39:06,440 --> 00:39:07,920
Speaker 1: I don't remember exactly where you find it, but you

739
00:39:07,960 --> 00:39:10,680
Speaker 1: find it on the first front page, access to resources.

740
00:39:11,080 --> 00:39:13,880
Speaker 1: And on the under the resources there's a list of

741
00:39:14,680 --> 00:39:16,759
Speaker 1: my all time favorite books. And so you know, I

742
00:39:16,800 --> 00:39:19,879
Speaker 1: can't rattle them all off in three and a half

743
00:39:19,920 --> 00:39:22,560
Speaker 1: hours we have ahead of us here. But um, but

744
00:39:22,880 --> 00:39:24,759
Speaker 1: but the fact of the matter is they're they're all

745
00:39:24,840 --> 00:39:26,480
Speaker 1: listed there. But you know, in other one's how to

746
00:39:26,560 --> 00:39:31,439
Speaker 1: Lie with Statistics by Darryl Huffing Table, no one would

747
00:39:31,480 --> 00:39:34,640
Speaker 1: believe me. That is literally it's a great book. I've

748
00:39:34,640 --> 00:39:36,440
Speaker 1: been I've been rereading and I read it a long

749
00:39:36,520 --> 00:39:39,440
Speaker 1: time ago. It's charming and if you didn't know it

750
00:39:39,560 --> 00:39:41,880
Speaker 1: was written forty years ago, you would have thought it

751
00:39:41,920 --> 00:39:43,799
Speaker 1: was written last week. And you can read it really

752
00:39:43,880 --> 00:39:47,960
Speaker 1: really quickly, very quickly, and it's a delight. Uh. And

753
00:39:48,120 --> 00:39:54,440
Speaker 1: then of course How to Succeed uh excuse me, uh,

754
00:39:55,960 --> 00:39:59,200
Speaker 1: Think and Grow Rich by Napoleon Hill, which is a

755
00:39:59,280 --> 00:40:01,719
Speaker 1: classic book about learning, among other things, how to use

756
00:40:01,800 --> 00:40:06,279
Speaker 1: his mastermind principle to guide yourself. Uh. And then there's

757
00:40:06,280 --> 00:40:09,720
Speaker 1: a course of classic investment books by the classic people

758
00:40:09,800 --> 00:40:11,919
Speaker 1: that we all know. And you know you could rattle

759
00:40:12,000 --> 00:40:13,800
Speaker 1: those off for me as well, but you know, this

760
00:40:13,920 --> 00:40:18,640
Speaker 1: would be Graham, this would be I mean I adored uh. Oh.

761
00:40:18,800 --> 00:40:21,160
Speaker 1: When let me point out another one that you can

762
00:40:21,200 --> 00:40:25,040
Speaker 1: find you can find used online, which is John Templeton's

763
00:40:25,080 --> 00:40:29,000
Speaker 1: book that's not about investing but about spirituality. It's a

764
00:40:29,080 --> 00:40:31,120
Speaker 1: great freaking book. What's the what's the name of the

765
00:40:31,360 --> 00:40:35,800
Speaker 1: Humble Approach? Humble Approach by John Templeton. I adored John Templeton.

766
00:40:35,840 --> 00:40:38,239
Speaker 1: I knew John Templeton a little bit, and I just

767
00:40:38,280 --> 00:40:40,040
Speaker 1: thought he was the coolest guy. I mean, this guy

768
00:40:40,239 --> 00:40:44,520
Speaker 1: was calm and steady and gentle and thoughtful and everything

769
00:40:44,600 --> 00:40:47,680
Speaker 1: that I'm not. And he was. I mean, you seem

770
00:40:47,920 --> 00:40:50,600
Speaker 1: fairly kind and you've been Do I look calm, look

771
00:40:50,640 --> 00:40:52,319
Speaker 1: at me, Look at me, Barry, Do I look calm.

772
00:40:52,920 --> 00:40:55,960
Speaker 1: You're you're sitting You're sitting motionless, your hands are folded

773
00:40:56,000 --> 00:40:59,080
Speaker 1: in your lap. I've got your voices over control. But

774
00:40:59,160 --> 00:41:01,759
Speaker 1: I have to do self control. I don't think John

775
00:41:01,800 --> 00:41:03,759
Speaker 1: Templeton had to do self control. I think he had

776
00:41:03,800 --> 00:41:06,800
Speaker 1: it spiritually. That he was much more zen than you.

777
00:41:06,960 --> 00:41:09,520
Speaker 1: Is that what you're gonna say? Uh? What back zen?

778
00:41:11,320 --> 00:41:15,640
Speaker 1: Back zens? That was true? So um so that's that's

779
00:41:15,680 --> 00:41:21,120
Speaker 1: really interesting. The John Templeton I visited I've never read.

780
00:41:21,239 --> 00:41:24,160
Speaker 1: I visited him in the Bahamas this one time, and

781
00:41:24,320 --> 00:41:28,239
Speaker 1: he lived he has little office over this it was

782
00:41:28,400 --> 00:41:34,319
Speaker 1: lime green colored over the police station. And uh, he's

783
00:41:34,320 --> 00:41:36,560
Speaker 1: the most humble guy. And this is one of the

784
00:41:36,600 --> 00:41:39,080
Speaker 1: most successful guys ever, and and and and he doesn't

785
00:41:39,120 --> 00:41:43,600
Speaker 1: have the prolific quality of phrases that everyone knows that

786
00:41:43,800 --> 00:41:46,560
Speaker 1: Barren Buffett has. But he had some great lines, you know,

787
00:41:46,640 --> 00:41:48,800
Speaker 1: including the one that we used earlier in the segment

788
00:41:48,840 --> 00:41:51,560
Speaker 1: about the fore most dangerous words. But the other, you know,

789
00:41:51,600 --> 00:41:53,719
Speaker 1: another one that of his that I use over and

790
00:41:53,920 --> 00:41:57,560
Speaker 1: over and over again is bullmarkets are born on pessimism,

791
00:41:57,640 --> 00:42:00,279
Speaker 1: growing skepticism, ature an optimism, and diet you forhor you.

792
00:42:00,520 --> 00:42:02,759
Speaker 1: And while that's not always true, it's true pretty often.

793
00:42:02,880 --> 00:42:06,160
Speaker 1: I was gonna say it's pretty for a general statement,

794
00:42:06,239 --> 00:42:09,120
Speaker 1: it's a prett pretty good one, and it really sums

795
00:42:09,239 --> 00:42:13,480
Speaker 1: up there's a huge amount of contrarian thought in fact,

796
00:42:14,000 --> 00:42:17,719
Speaker 1: that goes back to um, that goes back to what

797
00:42:17,840 --> 00:42:20,360
Speaker 1: do I believe that's wrong? What do I know or

798
00:42:20,440 --> 00:42:24,759
Speaker 1: what can I fathom that others can recognizing that bullmarkets

799
00:42:24,800 --> 00:42:28,400
Speaker 1: are born on pessimism and Diane euphoria, that's a huge

800
00:42:28,520 --> 00:42:31,160
Speaker 1: juge insight that I think a lot of people can

801
00:42:31,200 --> 00:42:34,399
Speaker 1: glibly say, but you have to kind of live through

802
00:42:34,480 --> 00:42:37,600
Speaker 1: it to really understand how true it is and be

803
00:42:37,680 --> 00:42:39,920
Speaker 1: able to step back and take a look at it.

804
00:42:40,200 --> 00:42:42,799
Speaker 1: I can't tell you how often I've had people give

805
00:42:42,880 --> 00:42:45,520
Speaker 1: me these aphorisms and you know, I'm I'm making the

806
00:42:46,080 --> 00:42:48,799
Speaker 1: yapping gesture with my hand, but then when you watch

807
00:42:48,880 --> 00:42:53,280
Speaker 1: their behavior, they're just completely oblivious. Being able to truly

808
00:42:53,440 --> 00:42:57,680
Speaker 1: understand that internalize it is is harder, easier said than done,

809
00:42:59,280 --> 00:43:04,120
Speaker 1: So let me offer a clue for that. Behavioralism teaches

810
00:43:04,239 --> 00:43:08,360
Speaker 1: us that we're prone to activity, and in fact, behavioralism

811
00:43:08,880 --> 00:43:11,880
Speaker 1: in finance teaches us that the less decisions we make,

812
00:43:12,040 --> 00:43:14,440
Speaker 1: the better we tend to do, absolutely, and that the

813
00:43:14,560 --> 00:43:17,800
Speaker 1: more decisions we tend to make, the more bad decisions

814
00:43:17,880 --> 00:43:20,719
Speaker 1: we tend to make. And most people don't have that

815
00:43:20,840 --> 00:43:23,720
Speaker 1: part that says I'm making a decision now, the odds

816
00:43:23,760 --> 00:43:27,000
Speaker 1: are I'm probably wrong, let me slow myself down. The

817
00:43:27,320 --> 00:43:30,439
Speaker 1: fact is most people want to do it, get it over, move,

818
00:43:30,960 --> 00:43:35,200
Speaker 1: let me make the bat and uh. The reality is

819
00:43:35,560 --> 00:43:41,799
Speaker 1: that those kinds of features like the gut instinct, they

820
00:43:42,320 --> 00:43:44,760
Speaker 1: want to fly in the face of these simple concepts

821
00:43:44,800 --> 00:43:47,320
Speaker 1: like born on pessimism, growing skepticism, mature and opt to

822
00:43:47,560 --> 00:43:50,360
Speaker 1: die of euphoria. Before you go and make the decision,

823
00:43:50,400 --> 00:43:52,120
Speaker 1: you want to stop and say to yourself, so are

824
00:43:52,160 --> 00:43:54,000
Speaker 1: we in a euphoric world or not? And how would

825
00:43:54,000 --> 00:43:56,000
Speaker 1: I measure that? And am I really sure I'm right

826
00:43:56,040 --> 00:43:57,439
Speaker 1: about that? And let me think about that a little

827
00:43:57,480 --> 00:44:00,600
Speaker 1: more before I go do something. And that's hard for

828
00:44:00,719 --> 00:44:02,759
Speaker 1: most people to do because they just want to jump

829
00:44:02,800 --> 00:44:04,319
Speaker 1: to the conclusion and then they want to be right,

830
00:44:04,640 --> 00:44:07,400
Speaker 1: and again, most of the time we're all wrong. I

831
00:44:07,480 --> 00:44:10,680
Speaker 1: love the expression don't just do something. Sit there. It's

832
00:44:10,719 --> 00:44:13,799
Speaker 1: an inversion of what what people typically expect, even lie down.

833
00:44:15,480 --> 00:44:18,040
Speaker 1: So let's go back to the three only three questions.

834
00:44:18,080 --> 00:44:19,800
Speaker 1: That the problem is when I lie down, I always

835
00:44:19,800 --> 00:44:22,320
Speaker 1: fall asleep. That that's that's a potential issue. This this

836
00:44:22,440 --> 00:44:25,759
Speaker 1: is a nice carpet to stretch out on um on

837
00:44:25,920 --> 00:44:29,080
Speaker 1: the three only three questions account we didn't get to

838
00:44:29,200 --> 00:44:31,880
Speaker 1: the last question. We kind of did. Just now, well,

839
00:44:31,960 --> 00:44:33,680
Speaker 1: that's what made me think of coming back to it.

840
00:44:33,800 --> 00:44:36,680
Speaker 1: What is my brain doing to mislead me? So so

841
00:44:36,840 --> 00:44:39,000
Speaker 1: let's talk a little bit about the various things your

842
00:44:39,040 --> 00:44:41,880
Speaker 1: brain does to mislead. So, every part about us, and

843
00:44:41,960 --> 00:44:44,719
Speaker 1: this is really hard for the human to accept, but

844
00:44:44,840 --> 00:44:48,000
Speaker 1: every part about us is stone age. That is, our

845
00:44:48,080 --> 00:44:53,000
Speaker 1: brains are still stuck evolution wise in a world that

846
00:44:53,160 --> 00:44:55,040
Speaker 1: what we were set up to function in very well,

847
00:44:55,200 --> 00:44:57,560
Speaker 1: and we did function in very well. I mean, if you,

848
00:44:58,400 --> 00:45:02,160
Speaker 1: I mean the human is created to dominate nature, and

849
00:45:03,120 --> 00:45:07,520
Speaker 1: we pretty much completely have and no other species lives

850
00:45:07,719 --> 00:45:12,280
Speaker 1: in every square corner of the earth completely dominates this environment.

851
00:45:12,360 --> 00:45:15,320
Speaker 1: And has the ability to utterly change it to its liking.

852
00:45:15,400 --> 00:45:17,759
Speaker 1: We are the only species on the planet. So I'm

853
00:45:17,760 --> 00:45:20,680
Speaker 1: going off in a different direction here. But and your

854
00:45:20,719 --> 00:45:22,879
Speaker 1: listeners wouldn't know this about me, But I have more

855
00:45:23,560 --> 00:45:27,080
Speaker 1: scientific and technical background about things that relate to wilderness

856
00:45:27,280 --> 00:45:30,000
Speaker 1: than most people in the world by a wide shot.

857
00:45:30,080 --> 00:45:32,160
Speaker 1: We're going to get the redwood trees, and not just

858
00:45:32,239 --> 00:45:38,800
Speaker 1: redwood trees, tall conifers wilderness. There is no more area

859
00:45:39,080 --> 00:45:45,160
Speaker 1: anymore that hasn't been touched by the interplay of humans

860
00:45:46,200 --> 00:45:49,000
Speaker 1: with biotics. That is, if you go into the most

861
00:45:49,040 --> 00:45:53,239
Speaker 1: primitive wildernesses, there is evidence of things that have gone

862
00:45:53,360 --> 00:45:57,200
Speaker 1: all around the world and are now in those Nature

863
00:45:57,520 --> 00:46:03,200
Speaker 1: is no more truly primitive. It's now been touched and

864
00:46:03,280 --> 00:46:07,240
Speaker 1: affected in some ways, not not not necessarily intentionally or actively.

865
00:46:07,440 --> 00:46:10,560
Speaker 1: Not necessarily. For example, with the chainsaw, it's just stuff

866
00:46:10,640 --> 00:46:14,440
Speaker 1: that blows in the wind, it's just stuff that birds drop,

867
00:46:15,080 --> 00:46:18,080
Speaker 1: it's just stuff that happens, but it's there. We're gonna

868
00:46:18,160 --> 00:46:21,799
Speaker 1: come back to that. Let's stick with the the human brain. Um,

869
00:46:22,120 --> 00:46:25,279
Speaker 1: I'm fond of saying saying something similar to what you

870
00:46:25,400 --> 00:46:28,360
Speaker 1: just said, which is, you know, we use the human

871
00:46:28,440 --> 00:46:32,799
Speaker 1: brain for off label purposes. Most people don't realize. Um,

872
00:46:33,120 --> 00:46:37,600
Speaker 1: there was an angina and hypertension medication that had the

873
00:46:38,280 --> 00:46:42,600
Speaker 1: side effect of causing significant erections in their users, and

874
00:46:42,680 --> 00:46:46,759
Speaker 1: it turned out, Hey, this hypertension drug, we have a

875
00:46:46,840 --> 00:46:50,560
Speaker 1: different purpose for it, and it became VIAGRAA was originally

876
00:46:50,920 --> 00:46:55,480
Speaker 1: designed for something completely different. They call that off label use,

877
00:46:56,320 --> 00:47:01,160
Speaker 1: but the human brain is similar. So perhaps a less uh,

878
00:47:01,719 --> 00:47:05,000
Speaker 1: a less racy version is bena. Drill is the allergy medication,

879
00:47:05,600 --> 00:47:09,960
Speaker 1: and it's used in essentially the key chemical, and that

880
00:47:10,080 --> 00:47:13,120
Speaker 1: isn't used in all the sleep medications because allergy medicine

881
00:47:13,120 --> 00:47:15,759
Speaker 1: makes people drowsy. Hey, here's an idea. Let's take the

882
00:47:15,800 --> 00:47:18,719
Speaker 1: allergy medicine put it in sleep over the countersleep aids.

883
00:47:19,040 --> 00:47:22,920
Speaker 1: So our brains are being used to make risk reward

884
00:47:23,000 --> 00:47:26,279
Speaker 1: decisions in the capital markets when really their purpose, as

885
00:47:26,320 --> 00:47:29,840
Speaker 1: you described it, is keeping us alive in a changing,

886
00:47:30,080 --> 00:47:33,120
Speaker 1: challenging environment. Let me give you an ancient analogy and

887
00:47:33,280 --> 00:47:37,799
Speaker 1: translate that into modern finance story. So modern finance theory

888
00:47:37,840 --> 00:47:40,320
Speaker 1: would say that markets are discounters of all known information,

889
00:47:40,880 --> 00:47:45,160
Speaker 1: and what everybody's working about talking about focusing on is

890
00:47:45,600 --> 00:47:48,360
Speaker 1: very quickly priced into markets and then loses its subsequent

891
00:47:48,400 --> 00:47:51,040
Speaker 1: pricing power. There's nothing novel about what I just said.

892
00:47:51,600 --> 00:47:53,800
Speaker 1: If you think of where we come from, our stone

893
00:47:53,840 --> 00:47:56,480
Speaker 1: age bodies are easy to understand. If we think of

894
00:47:56,560 --> 00:48:00,840
Speaker 1: ourselves around an ancient campfire, uh, and at our campground

895
00:48:01,239 --> 00:48:03,520
Speaker 1: with the rest of the people that we've known very well,

896
00:48:03,640 --> 00:48:06,920
Speaker 1: and it's night and it's dark, and outside that campfire,

897
00:48:07,000 --> 00:48:09,320
Speaker 1: in the dark, we hear a loud noise. What do

898
00:48:09,440 --> 00:48:11,400
Speaker 1: we do. We turn and look towards the noise to

899
00:48:11,480 --> 00:48:13,440
Speaker 1: make our ears hear it better, and we focus on

900
00:48:13,520 --> 00:48:15,120
Speaker 1: it because we can't see so well on the dark,

901
00:48:15,640 --> 00:48:17,880
Speaker 1: and our biggest risk at that moment in time is

902
00:48:17,920 --> 00:48:20,200
Speaker 1: what's behind us, not what's in front of us. And

903
00:48:20,280 --> 00:48:22,719
Speaker 1: if truly we were being attacked by an enemy force,

904
00:48:22,960 --> 00:48:24,839
Speaker 1: they'd want to make that noise and attack us from

905
00:48:24,840 --> 00:48:27,279
Speaker 1: the rear, or maybe attack us from the side, but

906
00:48:27,400 --> 00:48:30,920
Speaker 1: not attack us from the front, and they'd create that diversion. Now,

907
00:48:31,360 --> 00:48:34,759
Speaker 1: in markets, what people want to do is figure out

908
00:48:34,800 --> 00:48:37,800
Speaker 1: what everyone else is worrying about, and then not worry

909
00:48:37,840 --> 00:48:39,880
Speaker 1: about it because they're already doing it for you as

910
00:48:39,920 --> 00:48:41,759
Speaker 1: a free service. Send them a little Christmas card and

911
00:48:41,800 --> 00:48:43,880
Speaker 1: thank them for it. You've worried about this stuff for

912
00:48:44,000 --> 00:48:45,640
Speaker 1: me all year long, and therefore I don't have to

913
00:48:45,719 --> 00:48:49,600
Speaker 1: do it, thank you all, and it's already priced, and

914
00:48:49,640 --> 00:48:52,040
Speaker 1: instead you worry about something else that's a such a

915
00:48:52,160 --> 00:48:55,960
Speaker 1: time saver, so consistent with finance theory, and so hostile

916
00:48:56,040 --> 00:48:58,520
Speaker 1: to the way we normally think. Look at all of

917
00:48:58,560 --> 00:49:01,239
Speaker 1: the noise and attention that you can see today in

918
00:49:01,320 --> 00:49:05,200
Speaker 1: the media right now about everything about the French terrorist attack,

919
00:49:05,280 --> 00:49:08,760
Speaker 1: which is a tragedy about it a borrn in always.

920
00:49:09,320 --> 00:49:11,680
Speaker 1: But as soon as you see that attention, and of

921
00:49:11,760 --> 00:49:14,000
Speaker 1: course we have a long history of terrorist attacks, we

922
00:49:14,120 --> 00:49:16,600
Speaker 1: know they really don't move markets, and you see the

923
00:49:16,640 --> 00:49:19,719
Speaker 1: market since then launch it off. Why because everybody else

924
00:49:19,800 --> 00:49:21,439
Speaker 1: is worrying about it. You don't have to worry about

925
00:49:21,440 --> 00:49:24,080
Speaker 1: something more important to worry about what they're not worrying about.

926
00:49:24,560 --> 00:49:26,600
Speaker 1: And that's the part where you want to worry about it.

927
00:49:26,719 --> 00:49:31,680
Speaker 1: That's your brain blindsighting you now, because listen, these big

928
00:49:31,760 --> 00:49:36,960
Speaker 1: emotional events naturally draw people's attention, even though you know

929
00:49:37,120 --> 00:49:39,959
Speaker 1: that I'm again I'm fond of saying what you think,

930
00:49:40,280 --> 00:49:43,200
Speaker 1: what we worry about are rarely the things that do

931
00:49:43,440 --> 00:49:46,640
Speaker 1: damage to us or our portfolios. I can't tell you

932
00:49:46,719 --> 00:49:50,560
Speaker 1: how often I read people making forecasts about here comes

933
00:49:51,520 --> 00:49:55,160
Speaker 1: seven like crash. Well, you know you get crashes or

934
00:49:55,440 --> 00:49:58,600
Speaker 1: certainly bear markets on a regular basis, But that's not

935
00:49:58,800 --> 00:50:01,359
Speaker 1: really what seems to her most people. What hurts most

936
00:50:01,440 --> 00:50:05,400
Speaker 1: people are the access trading, the high fees, the turnover,

937
00:50:05,800 --> 00:50:09,320
Speaker 1: the mistakes we talked about. You mentioned earlier that people

938
00:50:09,400 --> 00:50:11,920
Speaker 1: make time and again and they don't really seem to

939
00:50:12,520 --> 00:50:16,759
Speaker 1: pay attention to their focused on the noise outside the campfire.

940
00:50:16,920 --> 00:50:19,360
Speaker 1: Let me let me give you a different parallel to that. Please,

941
00:50:19,480 --> 00:50:22,279
Speaker 1: there's a famous set of studies that people don't seem

942
00:50:22,320 --> 00:50:25,239
Speaker 1: to pay attention to, put out by an organization. You're

943
00:50:25,239 --> 00:50:28,920
Speaker 1: probably know these very dal Bar and the dal Bar

944
00:50:29,040 --> 00:50:34,920
Speaker 1: studies show that people actually do worse than the funds

945
00:50:35,000 --> 00:50:38,400
Speaker 1: they invest in by a lot, and that in fact,

946
00:50:38,560 --> 00:50:40,800
Speaker 1: in some of the studies, they show that people invest

947
00:50:40,880 --> 00:50:43,040
Speaker 1: in load funds do better than people invest in no

948
00:50:43,239 --> 00:50:47,440
Speaker 1: load funds, not because the funds do better, but because

949
00:50:47,800 --> 00:50:50,800
Speaker 1: they feel imprisoned by their load fees and they hold

950
00:50:50,920 --> 00:50:52,960
Speaker 1: them so much longer, whereas the people in the no

951
00:50:53,080 --> 00:50:55,160
Speaker 1: load funds trade them in and out at all the

952
00:50:55,239 --> 00:50:57,919
Speaker 1: wrong times. And while the no load funds do better

953
00:50:57,960 --> 00:51:01,520
Speaker 1: than the load funds. The flow of funds actually favors

954
00:51:01,560 --> 00:51:04,040
Speaker 1: the people that don't flow the funds. They just sit

955
00:51:04,520 --> 00:51:07,040
Speaker 1: And that's that part about you know, stop doing something,

956
00:51:07,160 --> 00:51:11,359
Speaker 1: just sit there, and and that reality is the same thing.

957
00:51:11,920 --> 00:51:15,520
Speaker 1: It's this part where people in and out do themselves

958
00:51:15,600 --> 00:51:20,680
Speaker 1: in and it's regardless of cause, reason, this thing, that thing.

959
00:51:21,000 --> 00:51:22,719
Speaker 1: But as soon as you see everybody else where, you

960
00:51:23,040 --> 00:51:28,440
Speaker 1: can take so many examples. I spent a fair amount

961
00:51:28,480 --> 00:51:30,680
Speaker 1: of time in front of large groups of our customers

962
00:51:30,760 --> 00:51:34,680
Speaker 1: because we do large client only seminars all around the country, uh,

963
00:51:35,640 --> 00:51:38,440
Speaker 1: client only seminars where they get to ask questions endlessly.

964
00:51:39,680 --> 00:51:43,080
Speaker 1: The questions are almost not always, but almost always it's

965
00:51:43,200 --> 00:51:45,600
Speaker 1: almost exclusively about what's been in the news the last

966
00:51:45,640 --> 00:51:50,880
Speaker 1: forty five days. And there often the ones that are evergreen,

967
00:51:51,000 --> 00:51:54,400
Speaker 1: ones like but isn't the debt a big problem? And

968
00:51:54,480 --> 00:51:57,000
Speaker 1: then you say, so, how many people haven't heard we

969
00:51:57,120 --> 00:51:59,800
Speaker 1: have a debt problem? And you know, you get you

970
00:52:00,080 --> 00:52:02,160
Speaker 1: know their reaction, and then so therefore you know it's

971
00:52:02,200 --> 00:52:04,520
Speaker 1: priced and therefore you know in terms of markets. Now,

972
00:52:04,880 --> 00:52:06,760
Speaker 1: so let me just give you one more real quick please,

973
00:52:08,160 --> 00:52:11,000
Speaker 1: long term problems way down the road markets don't care

974
00:52:11,080 --> 00:52:13,680
Speaker 1: one darn about those because markets don't believe it. Markets

975
00:52:13,719 --> 00:52:16,160
Speaker 1: don't discount things fifteen years from now. They're not they're

976
00:52:16,160 --> 00:52:18,359
Speaker 1: not gonna, you know. They worry about more or less,

977
00:52:18,560 --> 00:52:21,160
Speaker 1: more or less the next three to thirty months. And

978
00:52:21,440 --> 00:52:25,000
Speaker 1: you know, the French terrorist packets over, you know, but

979
00:52:25,120 --> 00:52:28,279
Speaker 1: we have more terrorism, climate, climate change down the road

980
00:52:28,320 --> 00:52:30,480
Speaker 1: that's not the next three thirty months. The bankruptcy, have

981
00:52:30,560 --> 00:52:32,759
Speaker 1: social security, that's not the next three to thirty months.

982
00:52:33,040 --> 00:52:36,320
Speaker 1: The darn millennials that are no darn good. Well, you

983
00:52:36,400 --> 00:52:38,160
Speaker 1: know again, I don't know about climate change, and I

984
00:52:38,200 --> 00:52:40,279
Speaker 1: don't know about millennials, and I don't know about the

985
00:52:40,320 --> 00:52:42,520
Speaker 1: bankruptcy so security. What I do know about all of

986
00:52:42,600 --> 00:52:44,320
Speaker 1: them is they're not going to impact things in a

987
00:52:44,440 --> 00:52:46,200
Speaker 1: hugely terrible way in the next three to thirty months.

988
00:52:46,200 --> 00:52:47,839
Speaker 1: And everybody else is worrying about them, so I don't

989
00:52:47,880 --> 00:52:50,359
Speaker 1: have to because it's priced in and with much more

990
00:52:50,400 --> 00:52:53,200
Speaker 1: concerned with what's not priced All right, So let me

991
00:52:53,280 --> 00:52:58,120
Speaker 1: come back to some of the questions, um that I missed, uh,

992
00:52:58,239 --> 00:53:00,480
Speaker 1: and you mentioned these client events. How often are you

993
00:53:00,560 --> 00:53:04,640
Speaker 1: speaking to clients? Is that a regular we we we

994
00:53:04,760 --> 00:53:07,120
Speaker 1: have people don't notice that. I mean, I got a

995
00:53:07,120 --> 00:53:08,560
Speaker 1: lot of people are pretty critical in my firm, but

996
00:53:08,560 --> 00:53:10,960
Speaker 1: they don't know my firm. We do more client service

997
00:53:11,000 --> 00:53:13,320
Speaker 1: offerings than any other asset management firm. And you have

998
00:53:13,560 --> 00:53:16,520
Speaker 1: you have last I checked, sixteen thousands something like that

999
00:53:17,000 --> 00:53:20,919
Speaker 1: clients or is it five thousand I'm looking at old data.

1000
00:53:21,239 --> 00:53:24,640
Speaker 1: So you have thirty five thousand clients sixty eight billion dollars.

1001
00:53:25,000 --> 00:53:27,040
Speaker 1: So you have to be doing these events. You're not

1002
00:53:27,120 --> 00:53:30,040
Speaker 1: taking phone calls. You're doing big events pretty regularly. We

1003
00:53:30,120 --> 00:53:33,080
Speaker 1: have a whole variety of different types of events for clients,

1004
00:53:33,480 --> 00:53:35,400
Speaker 1: but one of them is where they'll be two to

1005
00:53:35,520 --> 00:53:38,560
Speaker 1: four people in a room for a lunch or a dinner.

1006
00:53:38,840 --> 00:53:41,239
Speaker 1: There's a presentation and then a Q and A. We

1007
00:53:41,400 --> 00:53:44,040
Speaker 1: do uh, seventy of those around the country a year,

1008
00:53:44,280 --> 00:53:46,400
Speaker 1: seventy seven. Oh, but I don't do seventy. I do

1009
00:53:46,520 --> 00:53:49,080
Speaker 1: about twenty uh. And then we've got other people in

1010
00:53:49,120 --> 00:53:50,920
Speaker 1: the firm that senior people in the firm that do

1011
00:53:51,040 --> 00:53:54,320
Speaker 1: them as well. Uh. And I believe that interacting with

1012
00:53:54,480 --> 00:53:57,080
Speaker 1: the clients is important for every CEO in the world,

1013
00:53:57,080 --> 00:53:59,640
Speaker 1: because if you forget who the customer is, you lose

1014
00:53:59,719 --> 00:54:02,040
Speaker 1: the bus. No, I'm I'm amazed at how many ceo

1015
00:54:02,160 --> 00:54:05,600
Speaker 1: spend no time with customers and that that's a serious

1016
00:54:05,680 --> 00:54:08,480
Speaker 1: mistake in my opinion. And let's talk a little bit

1017
00:54:08,480 --> 00:54:12,480
Speaker 1: about that, because I'm I'm intrigued by the idea not

1018
00:54:12,600 --> 00:54:15,360
Speaker 1: only of getting out in front of clients, but what

1019
00:54:15,840 --> 00:54:20,400
Speaker 1: competitors are doing wrong. You've said some interesting, interesting things

1020
00:54:20,680 --> 00:54:24,480
Speaker 1: about competition and staying uh, And I'm looking for my

1021
00:54:25,320 --> 00:54:30,399
Speaker 1: specific question that I had on on competition. You how

1022
00:54:30,520 --> 00:54:36,160
Speaker 1: closely do you pay attention to what your competition is doing? Some?

1023
00:54:36,640 --> 00:54:39,560
Speaker 1: Not much, a little? And who? So who is your

1024
00:54:39,640 --> 00:54:44,000
Speaker 1: competition really? Uh? You know, it depends where you're talking about.

1025
00:54:44,000 --> 00:54:47,000
Speaker 1: In the United States, it's almost everything in the world,

1026
00:54:47,040 --> 00:54:50,320
Speaker 1: because the United States has such a diverse and diffuse

1027
00:54:50,760 --> 00:54:54,880
Speaker 1: financial services world of offerings. Uh. In Europe it's just

1028
00:54:55,000 --> 00:54:57,800
Speaker 1: the banks, Uh, in the continent of Europe. In Britain

1029
00:54:57,840 --> 00:55:01,839
Speaker 1: it's in between. And because I'm truly in so many things,

1030
00:55:01,880 --> 00:55:03,920
Speaker 1: you can say America's here, the continents there in Britain's

1031
00:55:03,960 --> 00:55:09,160
Speaker 1: kind of halfway in between. But Uh, in reality, the

1032
00:55:12,440 --> 00:55:15,680
Speaker 1: industry is very diffuse. Very little of it thinks like

1033
00:55:16,320 --> 00:55:21,680
Speaker 1: it's really a business. It thinks like it's a practice

1034
00:55:22,400 --> 00:55:25,279
Speaker 1: and too much of the world wants to focus I'm

1035
00:55:25,280 --> 00:55:29,000
Speaker 1: not suggesting that investing and investment returns shouldn't be very

1036
00:55:29,160 --> 00:55:33,759
Speaker 1: importantly treated, and they should, but you want to do

1037
00:55:34,040 --> 00:55:37,719
Speaker 1: all of the business disciplines in a very excellent way,

1038
00:55:37,880 --> 00:55:42,800
Speaker 1: because in the end, it's about returns, it's about service,

1039
00:55:43,040 --> 00:55:46,719
Speaker 1: it's about convenience, it's about all the same things that

1040
00:55:46,840 --> 00:55:50,480
Speaker 1: are in every other part of consumer services. And people

1041
00:55:50,560 --> 00:55:53,919
Speaker 1: forget that, and they forget that. I mean, I learned

1042
00:55:53,960 --> 00:55:56,600
Speaker 1: this as a kid when I was you know, before

1043
00:55:56,640 --> 00:55:58,440
Speaker 1: I ever got to this part of my life, when

1044
00:55:58,480 --> 00:56:00,520
Speaker 1: I would be analyzing companies, and one of the ones

1045
00:56:00,600 --> 00:56:02,160
Speaker 1: that I was very close to in its early days

1046
00:56:02,200 --> 00:56:05,319
Speaker 1: was new Core, which is, you know, today's largest U steelmaker,

1047
00:56:05,640 --> 00:56:08,440
Speaker 1: and kenn Iverson was determined that New Core would be

1048
00:56:09,000 --> 00:56:12,200
Speaker 1: excellent at everything. Now I don't mean necessarily the best

1049
00:56:12,239 --> 00:56:14,000
Speaker 1: at everything. You can't be the best at everything, but

1050
00:56:14,200 --> 00:56:19,040
Speaker 1: excellent across the disciplines. And also, you know, I mean

1051
00:56:19,200 --> 00:56:22,120
Speaker 1: all of the great firms in the world are excellent

1052
00:56:22,239 --> 00:56:26,959
Speaker 1: across the disciplines, and in the realm of finance, people

1053
00:56:27,120 --> 00:56:30,560
Speaker 1: mostly kind of forget that. That's how you want great service,

1054
00:56:30,760 --> 00:56:34,000
Speaker 1: you want great pricing, You want great investment stuff, which

1055
00:56:34,000 --> 00:56:38,760
Speaker 1: includes great research, But you want you want great hr,

1056
00:56:39,160 --> 00:56:43,840
Speaker 1: you want great internal finance. You can't you know, investment

1057
00:56:43,880 --> 00:56:46,200
Speaker 1: firm isn't going to try to be the best have

1058
00:56:46,320 --> 00:56:49,319
Speaker 1: the best control, financial controller and treasurer in the world.

1059
00:56:49,520 --> 00:56:51,560
Speaker 1: But you better have a you better really make a

1060
00:56:51,680 --> 00:56:55,760
Speaker 1: point to be across the board excellent because that ripples

1061
00:56:55,800 --> 00:56:57,800
Speaker 1: into the culture that you create in the firm. And

1062
00:56:57,840 --> 00:56:59,560
Speaker 1: when you ripple it into the culture that you create

1063
00:56:59,600 --> 00:57:01,479
Speaker 1: in the firm, it takes a life of its own

1064
00:57:02,080 --> 00:57:08,040
Speaker 1: that comes and and in my realm, nobody's really ever

1065
00:57:08,080 --> 00:57:12,000
Speaker 1: had market share until black Rock came along, and still

1066
00:57:12,080 --> 00:57:14,720
Speaker 1: nobody has dominant market share. It's a very diverse industry.

1067
00:57:15,280 --> 00:57:18,160
Speaker 1: And in that diverse industry, it's a little bit like

1068
00:57:18,280 --> 00:57:21,320
Speaker 1: the analogy of the two guys with the bear in

1069
00:57:21,360 --> 00:57:23,640
Speaker 1: the woods, the guys putting on his tennis shoes, like,

1070
00:57:23,680 --> 00:57:25,280
Speaker 1: I don't have to beat the bear is to beat you.

1071
00:57:26,000 --> 00:57:28,920
Speaker 1: And the fact is you can be in parts of

1072
00:57:29,440 --> 00:57:32,680
Speaker 1: the investment world that are shrinking, and if you're gaining

1073
00:57:32,760 --> 00:57:35,000
Speaker 1: market share, you can still grow at a pretty good rate.

1074
00:57:35,320 --> 00:57:37,280
Speaker 1: And what you have to do is outrun the other guys.

1075
00:57:37,640 --> 00:57:40,760
Speaker 1: You're not worrying about the bear and the This is

1076
00:57:40,840 --> 00:57:43,920
Speaker 1: the part where they forget that. It's one part of

1077
00:57:43,960 --> 00:57:45,880
Speaker 1: it is you're up against the market, and another part

1078
00:57:45,920 --> 00:57:49,000
Speaker 1: of it is you're up against the fact that you're somehow,

1079
00:57:49,160 --> 00:57:52,080
Speaker 1: some way supposed to be helping a client. And if

1080
00:57:52,160 --> 00:57:55,080
Speaker 1: you can't actually effectuate the helping of the client beyond

1081
00:57:55,160 --> 00:57:57,240
Speaker 1: the returns, the client's going to fire you before they

1082
00:57:57,280 --> 00:57:59,360
Speaker 1: get the returns. It's a little bit like trying to

1083
00:57:59,400 --> 00:58:02,920
Speaker 1: get them to take unpleasant, bad tasting medicine. They got

1084
00:58:03,040 --> 00:58:05,560
Speaker 1: to take the medicine the full course or the thing's

1085
00:58:05,600 --> 00:58:07,080
Speaker 1: going to come back and get them worse than ever.

1086
00:58:07,560 --> 00:58:09,680
Speaker 1: And if they stop because it's unpleasant, which is the

1087
00:58:09,760 --> 00:58:13,440
Speaker 1: natural human tendency to hurt themselves. I think people are

1088
00:58:13,480 --> 00:58:16,720
Speaker 1: gonna be rewinding that five minutes segment right there and

1089
00:58:16,920 --> 00:58:19,280
Speaker 1: listening to it over and over again, because there's a

1090
00:58:19,320 --> 00:58:23,200
Speaker 1: lot of really really juicy stuff in that. Before I

1091
00:58:23,280 --> 00:58:27,080
Speaker 1: get to some of my favorite questions, I have to ask,

1092
00:58:27,960 --> 00:58:33,160
Speaker 1: what is really an insane question? You're deeply committed to

1093
00:58:33,240 --> 00:58:37,600
Speaker 1: advancing the world's understanding of redwood forest ecology and are

1094
00:58:37,760 --> 00:58:40,360
Speaker 1: known and this comes right out of your bio. I'm

1095
00:58:40,400 --> 00:58:43,280
Speaker 1: not making this up as one of the world's foremost

1096
00:58:43,400 --> 00:58:47,480
Speaker 1: experts on nineteen century logging. I know you're from the

1097
00:58:47,560 --> 00:58:50,280
Speaker 1: Pacific or now in the Pacific Northwest. How did you

1098
00:58:50,360 --> 00:58:55,720
Speaker 1: ever develop an expertise in that area of interest? That's

1099
00:58:55,800 --> 00:59:01,040
Speaker 1: quite unusual and fascinating to me. You know, again, I'm

1100
00:59:01,080 --> 00:59:03,880
Speaker 1: kind of a forest gump kind of person. So when

1101
00:59:03,880 --> 00:59:06,480
Speaker 1: I was a kid, I could walk out my parents

1102
00:59:06,640 --> 00:59:09,080
Speaker 1: house hitchhike for twenty minutes in a world where hitchhiking

1103
00:59:09,200 --> 00:59:12,720
Speaker 1: was common, and say and be in uh, second growth

1104
00:59:12,760 --> 00:59:14,920
Speaker 1: redwoods that have been cut over in the nineteenth century,

1105
00:59:15,520 --> 00:59:18,240
Speaker 1: and I would see all this stuff and I wouldn't

1106
00:59:18,240 --> 00:59:19,840
Speaker 1: have a clue what it was, but it fascinated me,

1107
00:59:19,920 --> 00:59:22,640
Speaker 1: you know, reminisc of shacks and old pieces of equipment,

1108
00:59:22,760 --> 00:59:25,520
Speaker 1: and you know, it hadn't all been hauled away, and

1109
00:59:25,840 --> 00:59:29,000
Speaker 1: I was just I thought it was cool. And so

1110
00:59:30,080 --> 00:59:32,040
Speaker 1: I love the forest, and I decided I wanted to

1111
00:59:32,040 --> 00:59:33,880
Speaker 1: go into forestry. So I went to forestry school. And

1112
00:59:33,960 --> 00:59:37,200
Speaker 1: that's why I went to Humboldt State University, because for forestry. Yeah,

1113
00:59:37,200 --> 00:59:39,320
Speaker 1: because it was okay forestry school. And in the days

1114
00:59:39,400 --> 00:59:41,520
Speaker 1: that I was young, it was in nineteen sixties and

1115
00:59:41,640 --> 00:59:43,560
Speaker 1: the world was in turmoil, and I didn't think I was.

1116
00:59:43,640 --> 00:59:45,040
Speaker 1: I went to school young, and I didn't think I

1117
00:59:45,080 --> 00:59:47,560
Speaker 1: was old enough and mature enough to handle UC Berkeley,

1118
00:59:47,840 --> 00:59:50,680
Speaker 1: which was a better forestry school. But I'm pretty sure

1119
00:59:50,680 --> 00:59:52,960
Speaker 1: I couldn't handle UC Berkeley. I was mature enough. So

1120
00:59:53,080 --> 00:59:55,040
Speaker 1: I went to Humboldton. It was a nice, quiet place.

1121
00:59:55,080 --> 00:59:56,800
Speaker 1: It was good school, and the teachers treated me while

1122
00:59:56,840 --> 00:59:59,280
Speaker 1: I was, you know, pretty pretty good student in the

1123
00:59:59,320 --> 01:00:01,000
Speaker 1: world of not very good students, said they paid more

1124
01:00:01,040 --> 01:00:04,200
Speaker 1: attention to me. And I liked forestry, and I liked

1125
01:00:04,720 --> 01:00:06,920
Speaker 1: but but I decided to be a lousy career. I

1126
01:00:07,000 --> 01:00:09,240
Speaker 1: took a summer job for the Forest Service and said

1127
01:00:09,240 --> 01:00:10,800
Speaker 1: I'm never going to work for the government again, under

1128
01:00:10,840 --> 01:00:14,680
Speaker 1: any circumstances, no matter whatever, which also precluded me from

1129
01:00:14,680 --> 01:00:17,560
Speaker 1: ever thinking about a potential world in politics. All of

1130
01:00:17,600 --> 01:00:20,640
Speaker 1: that then led to me having a career in the

1131
01:00:20,880 --> 01:00:24,160
Speaker 1: realm of endeavor, in which I engage by keeping everything

1132
01:00:24,200 --> 01:00:27,640
Speaker 1: about trees and forests as my life long other interests.

1133
01:00:27,840 --> 01:00:29,680
Speaker 1: And so I came back, and then I started building

1134
01:00:29,760 --> 01:00:32,360
Speaker 1: up the interest living in that same region where those

1135
01:00:32,400 --> 01:00:36,960
Speaker 1: mills were. That's where I moved to, twenty minutes from

1136
01:00:37,000 --> 01:00:40,520
Speaker 1: where I was raised. Will were you raised? San Mateo, California?

1137
01:00:40,680 --> 01:00:44,880
Speaker 1: And I started my firm in Woodside, California, in the Redwoods.

1138
01:00:45,560 --> 01:00:48,040
Speaker 1: And so then I stood side is where a relative

1139
01:00:48,080 --> 01:00:52,120
Speaker 1: to San Francisco, north of It's just northwest of Stanford University. Okay,

1140
01:00:52,160 --> 01:00:55,840
Speaker 1: so your woods not that farther, a little bit further

1141
01:00:55,880 --> 01:00:58,080
Speaker 1: north on the other side of the bay. But but

1142
01:00:58,240 --> 01:01:01,400
Speaker 1: Humbolt Courses in the Redwoods, Humble State University, where I

1143
01:01:01,440 --> 01:01:04,160
Speaker 1: went to schools in the redwoods. Uh, and so I was,

1144
01:01:04,280 --> 01:01:07,160
Speaker 1: you know, I'm kind of a redwood addict. And uh.

1145
01:01:07,640 --> 01:01:10,200
Speaker 1: But then I started collecting catalogs to figure out what

1146
01:01:10,320 --> 01:01:12,320
Speaker 1: these things were in the woods. And then I get

1147
01:01:12,360 --> 01:01:14,640
Speaker 1: old books, and you know, I started building. I got

1148
01:01:14,680 --> 01:01:17,439
Speaker 1: three thousand volumes of nineteenth century for which I believe

1149
01:01:17,440 --> 01:01:19,600
Speaker 1: it's the largest private collection and force history stuff in

1150
01:01:19,640 --> 01:01:22,880
Speaker 1: the world. Uh. And then I right on the topic

1151
01:01:23,280 --> 01:01:25,520
Speaker 1: and you know I can. I dug up thirty five

1152
01:01:25,560 --> 01:01:28,640
Speaker 1: mill sites and catalog the artifacts and you know, gave

1153
01:01:28,720 --> 01:01:32,880
Speaker 1: stuff to museums, built my own museum and which is

1154
01:01:32,920 --> 01:01:36,440
Speaker 1: now dismantled, and uh, you know, I've always loved that.

1155
01:01:36,520 --> 01:01:39,120
Speaker 1: But then but then I got into going back and

1156
01:01:39,800 --> 01:01:42,720
Speaker 1: tree science got to a point where suddenly it could

1157
01:01:42,720 --> 01:01:45,560
Speaker 1: be pushed. And it was partly because of technology and

1158
01:01:45,600 --> 01:01:48,680
Speaker 1: partly because one person. And so I started pushing tree science,

1159
01:01:49,280 --> 01:01:51,640
Speaker 1: uh through this one guy financing it because I had

1160
01:01:51,680 --> 01:01:55,120
Speaker 1: the money and he had the ideas. And we've pushed

1161
01:01:55,120 --> 01:01:57,040
Speaker 1: tree science quite a lot of weeks, and and he

1162
01:01:57,320 --> 01:02:00,680
Speaker 1: and others we keep pushing tree science. I've got major

1163
01:02:00,760 --> 01:02:03,480
Speaker 1: project going on in conjunction with the University of Washington

1164
01:02:03,560 --> 01:02:08,000
Speaker 1: now on uh Pacific Northwest non redwood conifer, and we're

1165
01:02:08,160 --> 01:02:10,360
Speaker 1: learning things about trees that nobody ever knew before. So

1166
01:02:10,840 --> 01:02:14,560
Speaker 1: you endowed a chair at the Humboldt State University, the

1167
01:02:14,720 --> 01:02:18,360
Speaker 1: Kenneth al Fisher Chair in Redwood forest Ecology. It is

1168
01:02:18,440 --> 01:02:21,280
Speaker 1: the only known chair in the world focused on a

1169
01:02:21,400 --> 01:02:24,960
Speaker 1: single species of tree, because redwood's the coolest tree in

1170
01:02:25,000 --> 01:02:28,160
Speaker 1: the world. It's there, it's the weirdest tree in the world. There.

1171
01:02:29,200 --> 01:02:31,040
Speaker 1: They do so many things that no other tree does.

1172
01:02:31,240 --> 01:02:34,360
Speaker 1: Or that's give me it. For instance, Well, you know

1173
01:02:34,840 --> 01:02:37,560
Speaker 1: what I said was wrong. Lots of trees will do

1174
01:02:37,920 --> 01:02:39,920
Speaker 1: one of the things that redwoods do. There's no other

1175
01:02:40,000 --> 01:02:41,840
Speaker 1: tree that does all of the things that redwoods do.

1176
01:02:42,480 --> 01:02:44,120
Speaker 1: You know, it's the tallest tree species in the world.

1177
01:02:44,240 --> 01:02:46,240
Speaker 1: Be you cut them down, they don't die right. The

1178
01:02:46,400 --> 01:02:48,760
Speaker 1: roots brown, But it's called compass growth. There's a lot

1179
01:02:48,840 --> 01:02:52,840
Speaker 1: of hardwoods that will do that, but not the conifers. Uh.

1180
01:02:53,200 --> 01:02:57,000
Speaker 1: They You take a take a second growth redwood that's

1181
01:02:57,120 --> 01:02:59,840
Speaker 1: you know, forty fifty years old, take a thirty ft

1182
01:03:00,000 --> 01:03:01,320
Speaker 1: action out of the middle of it, PLoP it in

1183
01:03:01,400 --> 01:03:04,760
Speaker 1: good soil, and it'll root, sprout, it'll grow tree off

1184
01:03:04,840 --> 01:03:10,920
Speaker 1: of that. There's again it's got all these You put

1185
01:03:11,000 --> 01:03:15,200
Speaker 1: a put a fire m hm in more mature trees,

1186
01:03:15,400 --> 01:03:19,880
Speaker 1: it will not hurt the tree because the bark doesn't

1187
01:03:19,960 --> 01:03:23,080
Speaker 1: have anything in it that's flammable. The bark has no

1188
01:03:23,560 --> 01:03:26,280
Speaker 1: what you otherwise think of his pitch in it. The

1189
01:03:26,320 --> 01:03:29,480
Speaker 1: function is that why there's no there's less insect damage

1190
01:03:29,520 --> 01:03:33,480
Speaker 1: and that yeah, it naturally produces a complex carbohydrate tannic

1191
01:03:33,520 --> 01:03:36,439
Speaker 1: acid UH. And the tannic acid is bitter to a bug,

1192
01:03:36,520 --> 01:03:38,120
Speaker 1: and so the bugs don't want it. But it's also

1193
01:03:38,440 --> 01:03:41,320
Speaker 1: it's it plays the function that pitch plays in a

1194
01:03:41,560 --> 01:03:47,520
Speaker 1: pitchy like sticky tree and and in that function UH,

1195
01:03:48,080 --> 01:03:53,240
Speaker 1: the fire then stimulates its desire to cone and it

1196
01:03:53,360 --> 01:03:55,840
Speaker 1: increases to conage rate the next year hugely because it

1197
01:03:55,920 --> 01:03:58,360
Speaker 1: knows that the subordinate trees get burned out in the fire,

1198
01:03:58,440 --> 01:04:01,320
Speaker 1: and it doesn't. It's a space more. Really, it's really

1199
01:04:01,360 --> 01:04:04,920
Speaker 1: fascinating it. It's a weird it's a weird critter. It

1200
01:04:05,120 --> 01:04:07,800
Speaker 1: almost it seems like it thinks. It doesn't think, of course,

1201
01:04:07,960 --> 01:04:09,760
Speaker 1: but it almost seems like it thinks, and it does

1202
01:04:09,920 --> 01:04:11,720
Speaker 1: so many of these things that know where the tree

1203
01:04:11,760 --> 01:04:15,320
Speaker 1: species does. Let me just say that we recently completed

1204
01:04:15,720 --> 01:04:21,000
Speaker 1: uh studies on its relationship to climate change. It loves

1205
01:04:21,040 --> 01:04:23,520
Speaker 1: brutal climate because just like with the fire, it knows

1206
01:04:23,600 --> 01:04:26,040
Speaker 1: the brutal climate hurts lesser species and let's it then

1207
01:04:26,120 --> 01:04:29,560
Speaker 1: become aggressive. And it's really a very well evolved tree.

1208
01:04:29,840 --> 01:04:32,040
Speaker 1: You know, it's amazing tree. Yeah. That and what I

1209
01:04:32,120 --> 01:04:35,320
Speaker 1: find fascinating when you're in a place like Murr Woods

1210
01:04:35,360 --> 01:04:39,040
Speaker 1: or any of the other redwood places, photos simply do

1211
01:04:39,160 --> 01:04:41,600
Speaker 1: not do it justice. The only photos that I've ever

1212
01:04:41,640 --> 01:04:43,840
Speaker 1: seen that begin to do with justice are the photos

1213
01:04:43,960 --> 01:04:45,760
Speaker 1: that are people take from the tops of the trees

1214
01:04:45,800 --> 01:04:49,200
Speaker 1: looking down. Because it's a it's a it's a visual

1215
01:04:49,320 --> 01:04:53,040
Speaker 1: it's impossible for a human to get otherwise, it's it's astonishing.

1216
01:04:53,080 --> 01:04:55,520
Speaker 1: And I every time I'm there, I just you walk

1217
01:04:55,560 --> 01:04:58,440
Speaker 1: out of those sort of woods and mind blown. It's

1218
01:04:58,560 --> 01:05:00,240
Speaker 1: it's and you look at on the phone what you

1219
01:05:00,280 --> 01:05:02,680
Speaker 1: look on the camera. But but if photos are just

1220
01:05:02,760 --> 01:05:06,280
Speaker 1: don't work. If you go to the National Geographic Channel

1221
01:05:06,440 --> 01:05:09,680
Speaker 1: and you see the stuff from Steve Sillett climbing the Redwoods,

1222
01:05:09,920 --> 01:05:14,200
Speaker 1: so Steve's got the kennethal Fisher uh chair and the

1223
01:05:14,240 --> 01:05:20,840
Speaker 1: forcedechnology and uh at humblet and that stuff get you know,

1224
01:05:20,880 --> 01:05:23,520
Speaker 1: anybody on the can you wait long enough and they'll

1225
01:05:23,640 --> 01:05:26,480
Speaker 1: that stuff will roll around and you can get a

1226
01:05:26,480 --> 01:05:29,600
Speaker 1: pretty good visual at Redwoods in somebody's TV. Al Right,

1227
01:05:29,640 --> 01:05:31,640
Speaker 1: that sounds fastering. Let's let's go to some of my

1228
01:05:32,360 --> 01:05:36,680
Speaker 1: favorite questions in the last twenty minutes that we have. Um,

1229
01:05:36,960 --> 01:05:42,520
Speaker 1: your dad obviously a significant influence, mentor whatever word we

1230
01:05:42,640 --> 01:05:45,840
Speaker 1: want to use. Who else we were mentors to you

1231
01:05:46,520 --> 01:05:51,280
Speaker 1: in your career? In my career, I didn't really have

1232
01:05:51,320 --> 01:05:54,200
Speaker 1: a lot of career mentors per se. There's a guy

1233
01:05:54,240 --> 01:05:57,560
Speaker 1: named Tony Spear who's now deceased, who was the head

1234
01:05:57,600 --> 01:06:00,640
Speaker 1: of investments at an operation called the Bank at California

1235
01:06:00,720 --> 01:06:03,480
Speaker 1: that doesn't exist anymore. Uh. And he was a student

1236
01:06:03,520 --> 01:06:08,600
Speaker 1: of my father's at Stanford and then. Uh. He was

1237
01:06:08,680 --> 01:06:10,720
Speaker 1: a pretty good mentor to me for a long time.

1238
01:06:10,960 --> 01:06:14,720
Speaker 1: Very nice guy. Also a little bit of an unusual guy.

1239
01:06:15,880 --> 01:06:18,520
Speaker 1: But I didn't have a lot of professional mentors. I

1240
01:06:18,560 --> 01:06:20,880
Speaker 1: have a lot of people that impacted me in life,

1241
01:06:20,960 --> 01:06:25,000
Speaker 1: but not so many professional mentors. Give us an example, Um,

1242
01:06:25,680 --> 01:06:28,400
Speaker 1: you know when I was I mean, my grandfather was

1243
01:06:28,480 --> 01:06:30,760
Speaker 1: very important to me when I was a child. Uh.

1244
01:06:31,040 --> 01:06:35,800
Speaker 1: My grandfather actually was friends with Saxon Pope. Um. Coming

1245
01:06:35,840 --> 01:06:38,560
Speaker 1: back to our prior discussion, and your grandfather was not

1246
01:06:38,720 --> 01:06:41,880
Speaker 1: Irving Fisher and old. A number of people have said, oh,

1247
01:06:41,960 --> 01:06:46,320
Speaker 1: you're speaking to no, no, no, no, that is this.

1248
01:06:46,720 --> 01:06:50,520
Speaker 1: That was not As my grandfather was a doctor, and

1249
01:06:50,600 --> 01:06:55,200
Speaker 1: he was actually an amazing doctor at UH private practice

1250
01:06:55,240 --> 01:06:58,760
Speaker 1: and UC MED in San Francisco. Again, I'm a fourth

1251
01:06:58,800 --> 01:07:02,240
Speaker 1: generation San Francisco who moved away from San Francisco. Uh.

1252
01:07:02,840 --> 01:07:06,560
Speaker 1: And so he, going back to our prior discussion in

1253
01:07:06,560 --> 01:07:08,600
Speaker 1: the earlier segment, he knew Saxon Poe because they were

1254
01:07:08,680 --> 01:07:12,680
Speaker 1: using med together. Um. And uh, that's part of how

1255
01:07:12,760 --> 01:07:14,600
Speaker 1: I got interested in that. My grandfather had a big

1256
01:07:14,640 --> 01:07:17,400
Speaker 1: impact on me. Uh. He was a marvelous man in

1257
01:07:17,480 --> 01:07:19,240
Speaker 1: his own way. So I had after he died, I

1258
01:07:19,280 --> 01:07:21,800
Speaker 1: had a kind of a substitute grandfather who was a

1259
01:07:21,840 --> 01:07:24,000
Speaker 1: tree guy, and he had a big impact on me.

1260
01:07:24,520 --> 01:07:27,360
Speaker 1: And I've been impacted by it. I mean at these

1261
01:07:27,400 --> 01:07:30,120
Speaker 1: serendipitous moments with people like I. I spent a bunch

1262
01:07:30,160 --> 01:07:33,120
Speaker 1: of time with Richard Nixon and just a serendipitous thing.

1263
01:07:33,200 --> 01:07:34,800
Speaker 1: And he just taught me so much and not not

1264
01:07:35,000 --> 01:07:37,720
Speaker 1: very long, and he was such a marvelous guy that

1265
01:07:37,760 --> 01:07:39,840
Speaker 1: almost no one wants to believe was marvelous because by

1266
01:07:39,880 --> 01:07:42,040
Speaker 1: that point in time, he's older and he doesn't really

1267
01:07:42,080 --> 01:07:44,760
Speaker 1: care about politics anymore, and he's got all the rough

1268
01:07:44,880 --> 01:07:48,920
Speaker 1: edges worn off of him. And this was in California,

1269
01:07:50,000 --> 01:07:55,040
Speaker 1: and uh, and you know, again, I've been blessed to

1270
01:07:55,080 --> 01:07:57,000
Speaker 1: be able to meet people. So you know, I didn't

1271
01:07:57,040 --> 01:07:59,200
Speaker 1: know John Templeton well, but I met John Templeton a

1272
01:07:59,320 --> 01:08:01,640
Speaker 1: number of times, and you know, he had such a

1273
01:08:01,760 --> 01:08:05,080
Speaker 1: huge impact on me. Um And so then I read everything,

1274
01:08:05,240 --> 01:08:06,360
Speaker 1: you know that I could get my hands on it

1275
01:08:06,440 --> 01:08:10,560
Speaker 1: with John Templeton, and but I didn't actually have the

1276
01:08:10,680 --> 01:08:14,600
Speaker 1: active mentor function because I'm pretty much of an extreme introvert,

1277
01:08:14,640 --> 01:08:16,840
Speaker 1: and I'm not much of a people guy, and so

1278
01:08:17,640 --> 01:08:19,840
Speaker 1: you know that mentor thing didn't work really well for me.

1279
01:08:20,120 --> 01:08:22,599
Speaker 1: So let me ask a different question, a related question.

1280
01:08:23,080 --> 01:08:28,920
Speaker 1: What investors influenced your approach to invest in Templeton? Templeton

1281
01:08:29,040 --> 01:08:32,920
Speaker 1: of course, my father, of course, Graham, of course, Buffet,

1282
01:08:33,000 --> 01:08:39,080
Speaker 1: of course, Dean LeBaron, Uh, Dreaming, Um, you know, I

1283
01:08:41,000 --> 01:08:43,840
Speaker 1: you know, Dreaming wrote for Forbes and still occasionally gets

1284
01:08:43,880 --> 01:08:46,080
Speaker 1: a column in Uh. And Dreaming wrote for a long

1285
01:08:46,160 --> 01:08:50,800
Speaker 1: time huge value guy, huge low pe guy in particular. Uh.

1286
01:08:51,000 --> 01:08:53,360
Speaker 1: And of course, you know le Baron was really kind

1287
01:08:53,360 --> 01:08:56,479
Speaker 1: of the original quant guy. I'm not a quant guy

1288
01:08:56,560 --> 01:09:01,080
Speaker 1: per se, but I appreciate the power of quantification and mathematics.

1289
01:09:01,800 --> 01:09:04,720
Speaker 1: And I mean there's a place for numbers and there's

1290
01:09:04,760 --> 01:09:11,080
Speaker 1: a place for non numbers, and um, that's pretty much it.

1291
01:09:11,280 --> 01:09:14,400
Speaker 1: I mean, that's that's a good list, to say the least.

1292
01:09:14,479 --> 01:09:17,800
Speaker 1: And we went over your books. Um, let's talk about

1293
01:09:17,880 --> 01:09:21,600
Speaker 1: the industry itself. What's changed that you think is significant

1294
01:09:22,080 --> 01:09:25,719
Speaker 1: for the better or worse since you joined the finance industry?

1295
01:09:27,880 --> 01:09:31,559
Speaker 1: Complexity has changed a lot, meaning it's gotten more complex,

1296
01:09:31,880 --> 01:09:33,880
Speaker 1: much more complex. I mean, you know when when I

1297
01:09:34,040 --> 01:09:36,360
Speaker 1: was a kid. You become an investment advisor, and it

1298
01:09:36,520 --> 01:09:40,040
Speaker 1: was extreme generalist. Again, that's the world, as I said

1299
01:09:40,040 --> 01:09:43,360
Speaker 1: in an earlier segment, where you know, we are now

1300
01:09:43,439 --> 01:09:45,880
Speaker 1: creating more MBA's per year than all the NBA's that

1301
01:09:45,920 --> 01:09:48,120
Speaker 1: have been created cumulaily up to that point in time.

1302
01:09:48,520 --> 01:09:51,600
Speaker 1: Technology has become a level playing field for people. So

1303
01:09:51,760 --> 01:09:54,960
Speaker 1: once upon a time, big firms had made frame computers

1304
01:09:55,000 --> 01:09:58,320
Speaker 1: and little firms had pens and pencils. Today everybody's got

1305
01:09:58,400 --> 01:10:01,639
Speaker 1: technology and and it's leveled a lot of playing field

1306
01:10:01,800 --> 01:10:03,600
Speaker 1: for good and for bad. I mean a lot of

1307
01:10:03,640 --> 01:10:07,160
Speaker 1: these things are dual ate swords. Uh, so many more securities.

1308
01:10:07,560 --> 01:10:10,200
Speaker 1: If you go back to the original Forbes Mutual fund

1309
01:10:10,280 --> 01:10:13,479
Speaker 1: survey once upon a time, Uh, it was thought of

1310
01:10:13,520 --> 01:10:16,200
Speaker 1: as a leading edge thing then, and it had a

1311
01:10:16,320 --> 01:10:19,160
Speaker 1: few hundred mutual funds because a few hundred because that's

1312
01:10:19,200 --> 01:10:21,640
Speaker 1: all you needed in those days. I mean, that's when

1313
01:10:21,680 --> 01:10:23,559
Speaker 1: you say needed, that's what there was. You covered pretty

1314
01:10:23,640 --> 01:10:27,160
Speaker 1: much the whole universe, and that was a leading edge thing. Then. Uh.

1315
01:10:27,400 --> 01:10:30,800
Speaker 1: If you look at the complexity of things like uh,

1316
01:10:31,479 --> 01:10:34,479
Speaker 1: I mean, Nathan most creates the first et F the spider,

1317
01:10:35,080 --> 01:10:37,400
Speaker 1: and you know if I remember, right, that's the early

1318
01:10:37,520 --> 01:10:40,560
Speaker 1: nineteen nineties. Then you know, then you get the Triple Q,

1319
01:10:41,520 --> 01:10:44,000
Speaker 1: and then now we've got E. T. F. Settle, you know,

1320
01:10:44,400 --> 01:10:49,479
Speaker 1: hundreds almost exactly, and so the complexities increased. The other

1321
01:10:49,560 --> 01:10:53,200
Speaker 1: part that's changed hugely has been journalism. And you know,

1322
01:10:53,320 --> 01:10:56,920
Speaker 1: journalism when I was young was a few TV channels,

1323
01:10:57,680 --> 01:11:02,120
Speaker 1: a few important magazines, a morning and evening newspaper at

1324
01:11:02,160 --> 01:11:04,479
Speaker 1: your home in the Wall Street Journal, and that's what

1325
01:11:04,680 --> 01:11:07,960
Speaker 1: it was. Uh. You know, there were specialty rags for

1326
01:11:08,120 --> 01:11:11,400
Speaker 1: industries that came out once a month, and you know

1327
01:11:11,479 --> 01:11:15,720
Speaker 1: that that was what it was. Today, everything's moving over

1328
01:11:15,800 --> 01:11:21,800
Speaker 1: the night lightning speed. Uh. Journalists heads turn very fast.

1329
01:11:21,920 --> 01:11:24,880
Speaker 1: That turnover in the industry is much faster. There's so

1330
01:11:25,080 --> 01:11:28,000
Speaker 1: much noise. I think that's a dual edge short it

1331
01:11:28,040 --> 01:11:30,360
Speaker 1: works for good and for bad. For good, you can

1332
01:11:30,439 --> 01:11:32,160
Speaker 1: use it because you can see what people are focused

1333
01:11:32,200 --> 01:11:34,799
Speaker 1: on and focused on something else. For bad, it's easily

1334
01:11:34,920 --> 01:11:39,200
Speaker 1: easy to be overtaken by the noise. And so you know,

1335
01:11:40,040 --> 01:11:43,120
Speaker 1: you take both of these features and it's just a

1336
01:11:43,200 --> 01:11:46,120
Speaker 1: matter of learning to how to cope with it successfully.

1337
01:11:46,560 --> 01:11:48,600
Speaker 1: And if you can do that right, it actually is

1338
01:11:48,680 --> 01:11:52,879
Speaker 1: to your advantage. Things that I mentioned earlier, like quantifying sentiment,

1339
01:11:53,479 --> 01:11:55,439
Speaker 1: can be done today in ways that once upon a

1340
01:11:55,520 --> 01:11:58,920
Speaker 1: time they couldn't be done, because the technology allows you to.

1341
01:11:59,000 --> 01:12:01,240
Speaker 1: I remember when I was young and was first working

1342
01:12:01,280 --> 01:12:03,960
Speaker 1: on the price sales ratio, which, by the way, Jim O.

1343
01:12:04,080 --> 01:12:08,080
Speaker 1: Shaughnessy gives you credit for essentially creating that ratio. No

1344
01:12:08,160 --> 01:12:12,160
Speaker 1: one else had had done that previously. You will find

1345
01:12:12,479 --> 01:12:15,400
Speaker 1: no literature on the price sales ratio. Until I started

1346
01:12:15,439 --> 01:12:18,519
Speaker 1: writing on the price sales ratio. You will find none. Uh.

1347
01:12:18,960 --> 01:12:23,760
Speaker 1: That is Graham made a reference uh in The Intelligent

1348
01:12:23,800 --> 01:12:28,160
Speaker 1: Investor to the fact that it might be interesting. And

1349
01:12:28,439 --> 01:12:31,719
Speaker 1: other than that, nobody else really there's there's there's nobody

1350
01:12:31,920 --> 01:12:34,080
Speaker 1: ever worked on it until I started writing about it.

1351
01:12:34,439 --> 01:12:36,760
Speaker 1: And I, you know, I think it's a it's a

1352
01:12:37,080 --> 01:12:40,320
Speaker 1: one useful tool. It's not, you know, kind of be

1353
01:12:40,400 --> 01:12:41,920
Speaker 1: all in end all. I don't believe in be all

1354
01:12:42,640 --> 01:12:45,519
Speaker 1: be all in end alls, but be that as it may.

1355
01:12:46,400 --> 01:12:49,040
Speaker 1: Um And now I lost my train of thought as

1356
01:12:49,040 --> 01:12:50,439
Speaker 1: to how I got into the price sales race. But

1357
01:12:50,520 --> 01:12:54,000
Speaker 1: it doesn't matter. It's fascinating that, you know, until I

1358
01:12:54,080 --> 01:12:58,000
Speaker 1: started researching background on you for this conversation, I had

1359
01:12:58,040 --> 01:13:01,400
Speaker 1: no idea that that was a can fisher. Now I

1360
01:13:01,479 --> 01:13:04,080
Speaker 1: remember why I was because in the in the seventies

1361
01:13:04,120 --> 01:13:06,559
Speaker 1: when I was working on that, I paid Goldman Sacks

1362
01:13:07,479 --> 01:13:10,040
Speaker 1: dollars to do a one time screen of the New

1363
01:13:10,120 --> 01:13:13,640
Speaker 1: York Stock Exchange for me because they had mainframe computer. Uh.

1364
01:13:14,520 --> 01:13:18,160
Speaker 1: That's back was real money, low price sales ratio stocks.

1365
01:13:18,360 --> 01:13:20,960
Speaker 1: And in that point in time, low price sales ratio

1366
01:13:21,000 --> 01:13:23,760
Speaker 1: by itself, because you couldn't get it was something that

1367
01:13:23,880 --> 01:13:26,280
Speaker 1: provided value added by itself because you could look do that,

1368
01:13:26,400 --> 01:13:29,040
Speaker 1: find companies that had very low price sales ratios which

1369
01:13:29,080 --> 01:13:31,200
Speaker 1: you knew fundamental issued to have their earnings come back,

1370
01:13:31,280 --> 01:13:33,560
Speaker 1: and they were just flat on their face, and you

1371
01:13:33,640 --> 01:13:35,400
Speaker 1: could figure out that the market was too afraid of

1372
01:13:35,520 --> 01:13:38,519
Speaker 1: this stock. And and that was a useful tool in today.

1373
01:13:38,600 --> 01:13:40,800
Speaker 1: So you think it's less useful. It's got value, but

1374
01:13:40,880 --> 01:13:42,360
Speaker 1: not as much, not as much as it had in

1375
01:13:42,400 --> 01:13:44,040
Speaker 1: those days because because what you're trying to get as

1376
01:13:44,080 --> 01:13:45,920
Speaker 1: information other people don't have. But my point is the

1377
01:13:45,920 --> 01:13:48,760
Speaker 1: world was more primitive then, and so what's gotten what's

1378
01:13:48,800 --> 01:13:51,080
Speaker 1: happened is we got more complexity, we got more tools,

1379
01:13:51,120 --> 01:13:54,240
Speaker 1: we got more noise. Uh. And then of course the

1380
01:13:54,320 --> 01:13:55,960
Speaker 1: other thing that we have with that we have more

1381
01:13:56,520 --> 01:14:00,559
Speaker 1: We have more global custodial reach than we ever had before,

1382
01:14:00,800 --> 01:14:02,960
Speaker 1: and so we have more global nous. And if you

1383
01:14:03,000 --> 01:14:05,880
Speaker 1: go back to the world, Templeton's the only guy that

1384
01:14:06,000 --> 01:14:08,120
Speaker 1: was doing any kind of global nous in those days,

1385
01:14:08,160 --> 01:14:10,240
Speaker 1: and he's going way out of his way because it's

1386
01:14:10,240 --> 01:14:12,200
Speaker 1: hard to do. Today, it's easy to be global. And

1387
01:14:12,280 --> 01:14:14,400
Speaker 1: our last question that telling me we have to wrap

1388
01:14:15,280 --> 01:14:18,439
Speaker 1: you apparently have other places to go and be, is

1389
01:14:19,200 --> 01:14:22,280
Speaker 1: what do you know today about investing that you wish

1390
01:14:22,320 --> 01:14:26,960
Speaker 1: you knew forty years ago when you began. I wish

1391
01:14:27,000 --> 01:14:32,040
Speaker 1: I understood then that we were going to go through

1392
01:14:32,200 --> 01:14:35,360
Speaker 1: a process some of the pieces of which we've been

1393
01:14:35,400 --> 01:14:40,200
Speaker 1: talking about that takes the Warren Buffet line that in

1394
01:14:40,280 --> 01:14:42,160
Speaker 1: the long term, the market's a weighing machine and in

1395
01:14:42,200 --> 01:14:45,360
Speaker 1: the short term it's a voting machine, and stalls off

1396
01:14:45,479 --> 01:14:50,960
Speaker 1: the weighing and makes the voting process longer. Sentiment has become,

1397
01:14:51,000 --> 01:14:55,200
Speaker 1: in my opinion, more important and more enduring, not permanently enduring.

1398
01:14:55,840 --> 01:14:59,479
Speaker 1: Weighing still is the ultimate outcome finally, but it takes

1399
01:14:59,560 --> 01:15:02,559
Speaker 1: longer to get there because I believe views of our

1400
01:15:02,720 --> 01:15:08,920
Speaker 1: society can be maintained wronger, longer, longer, longer before they

1401
01:15:09,000 --> 01:15:11,000
Speaker 1: get to the point where they get overturned by the weighing.

1402
01:15:11,400 --> 01:15:14,760
Speaker 1: I mean, the weighing is about fundamental valuation relative to

1403
01:15:14,880 --> 01:15:19,559
Speaker 1: real quality and real growth, and the voting is about sentiment.

1404
01:15:19,680 --> 01:15:22,160
Speaker 1: And here's what we think is true. And we now

1405
01:15:22,360 --> 01:15:25,439
Speaker 1: can think things that are just total nonsense for a long, long,

1406
01:15:25,560 --> 01:15:28,800
Speaker 1: long time and fail to actually see them. And I

1407
01:15:28,880 --> 01:15:31,400
Speaker 1: wish that. And I think that comes from technology, which

1408
01:15:31,479 --> 01:15:33,160
Speaker 1: ripples over into all parts of our lives. And I

1409
01:15:33,200 --> 01:15:35,479
Speaker 1: wish i'd seen that impact between Twitter and the blog

1410
01:15:35,640 --> 01:15:38,720
Speaker 1: is fhere and everything else. Would it would have made

1411
01:15:38,760 --> 01:15:41,160
Speaker 1: me better at seeing markets? And I've been if I

1412
01:15:41,200 --> 01:15:43,400
Speaker 1: could have figured that. I wish I knew that. You

1413
01:15:43,800 --> 01:15:46,400
Speaker 1: asked a question, what one big thing? Would? I wish

1414
01:15:46,400 --> 01:15:49,720
Speaker 1: I would have known earlier. That's it, Ken, this has

1415
01:15:49,760 --> 01:15:52,720
Speaker 1: been absolutely fascinating. Thank you so much for being so

1416
01:15:53,080 --> 01:15:55,080
Speaker 1: generous with your time. We'll have to have you back

1417
01:15:55,160 --> 01:15:58,559
Speaker 1: and do another three hour stints. I'd love to okay

1418
01:15:59,000 --> 01:16:01,240
Speaker 1: your next trip to New York. Put sign me up.

1419
01:16:02,120 --> 01:16:04,400
Speaker 1: Uh So, if people want to find any of his

1420
01:16:05,080 --> 01:16:08,200
Speaker 1: Ken Fisher's writings, you can go to Fisher Investments dot

1421
01:16:08,280 --> 01:16:11,519
Speaker 1: Com Forbes on the Fisher side. I'll put up a

1422
01:16:11,600 --> 01:16:14,280
Speaker 1: link to all his favorite books. Um, if you just

1423
01:16:14,439 --> 01:16:17,439
Speaker 1: google me, you don't find they'll find more nonsense than

1424
01:16:17,439 --> 01:16:20,080
Speaker 1: they ever wanted. Okay, be sure and check out all

1425
01:16:20,120 --> 01:16:22,320
Speaker 1: our other interviews. Just look up an inch er down

1426
01:16:22,360 --> 01:16:25,439
Speaker 1: an inch on Apple iTunes and you'll see our other

1427
01:16:25,560 --> 01:16:29,719
Speaker 1: seven or so interviews. I want to thank Mike Batnick,

1428
01:16:29,800 --> 01:16:32,960
Speaker 1: he is my head of research, and Charlie Vollmer, who

1429
01:16:33,080 --> 01:16:37,639
Speaker 1: is both my producer and engineer. I'm Barry Ridholts. You've

1430
01:16:37,680 --> 01:16:44,439
Speaker 1: been listening to Masters in Business on Bloomberg Radio. Masters

1431
01:16:44,479 --> 01:16:47,439
Speaker 1: in Business is brought to you by ex On Mobile

1432
01:16:48,000 --> 01:16:49,120
Speaker 1: Energy lives here.