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Speaker 1: M. This is Mesters in Business with very Renaults on

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Speaker 1: Bluebird Radio this weekend. On the podcast, I have a

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Speaker 1: special guest. His name is Robert Boglesworth, and he has

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Speaker 1: a brand new book out called Trillions, all about the

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Speaker 1: rise of passive investing and indexing. I thought I knew

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Speaker 1: a lot about this space, having covered Vanguard, Black Rocks,

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Speaker 1: State Street, having interviewed basically all of the CEOs of Vanguard,

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Speaker 1: people from Black Rock, Jim Ross from State Street, Jack Bogel, Uh,

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Speaker 1: all the d f A folks. I mean, I I

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Speaker 1: feel like I really know this space, and I learned

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Speaker 1: a ton of new stuff from the book. It's deeply researched.

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Speaker 1: He spent a lot of time doing a deep dive

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Speaker 1: into the area. I was kind of surprised by a

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Speaker 1: number of things. And if you're remotely interested in the

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Speaker 1: rise of passive and indexing and all the academic background

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Speaker 1: and how that translated in the real world into the

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Speaker 1: practice of of investing, well, I think you're gonna like

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Speaker 1: this book, and you're gonna like this conversation with no

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Speaker 1: further ado. My interview with the f t S Robin Wigglesworth,

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Speaker 1: This is Mesters in Business with very renaults on Bloomberg Radio.

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Speaker 1: My special guest this week is Robin Wigglesworth. He is

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Speaker 1: the Financial Times Global Finance correspondent residing in Oslo, Norway.

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Speaker 1: His focus is the biggest trends reshaping markets and investing,

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Speaker 1: including technological disruption and quantitative investing. But more importantly, he

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Speaker 1: is the author of a fascinating new book, Trillions, How

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Speaker 1: a band of Wall Street renegades invented the index funds

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Speaker 1: and changed finance Forever. Robin Wigglesworth, Welcome to Bloomberg. Thanks by,

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Speaker 1: it's so happy to be here. I'm happy to have you.

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Speaker 1: Let's let's start with a little bit of background about

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Speaker 1: you and your career. How does one go from the

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Speaker 1: London School of Economics to the United Arab Emirates. Tell

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Speaker 1: us about how that happened and how that led to

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Speaker 1: a career in journalism. It's basically a happenstance. Um. I

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Speaker 1: thought I always wanted to be a physicist, but realized

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Speaker 1: eventually that I, you know, I was good at numbers,

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Speaker 1: but not good enough to be anything other than the

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Speaker 1: mediocre physicists. And journalism sounded interesting, and I studied journalism,

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Speaker 1: but I didn't actually like that that much. I did

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Speaker 1: a master's that the LC and international relations Political Islam.

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Speaker 1: You know, it was very much the topic of the day.

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Speaker 1: And I was working as a subject at The Guardian,

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Speaker 1: just doing online putting pictures and captions and things like that.

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Speaker 1: And I saw a job for a financial journalist in

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Speaker 1: Dubai and I thought, well, you know, I know nothing

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Speaker 1: about finance whatsoever, but you know, to bio sounds kind

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Speaker 1: of interesting. I've studied the Middle East. This could be cool.

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Speaker 1: It's either that or do my my service in the

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Speaker 1: Norwegian Army. We start conscription over here. So yeah, I

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Speaker 1: grabbed my bags and jetted off to Dubai to cover

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Speaker 1: Islamic finance. Quite interesting. I totally relate to being interested

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Speaker 1: in physics but only being a mediocre um mathematicians. So

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Speaker 1: they're they're when's that. So you're in Dubai, what was

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Speaker 1: your first big story? A day after a landed, I

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Speaker 1: interviewed the local sheiks about Islamic reinsurance, which is as

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Speaker 1: esoteric as it sounds. So Islamic insurance is actually called takaffle,

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Speaker 1: and Islamic reinsurance is called a retakuffle, and it's actually

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Speaker 1: got a quite a cool, interesting twist to its fundamental

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Speaker 1: Islamic finances, all about risk sharing that he's not supposed

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Speaker 1: to getting money for nothing. So famously, interest is banned,

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Speaker 1: it's hot um under Sharia. So they were were various

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Speaker 1: work grounds there that ranged essentially from gimmicks two actual

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Speaker 1: series interesting mechanisms to make sure that people share in

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Speaker 1: the risk and reward equally. And it was fascinating. I

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Speaker 1: was petrified. I knew nothing about insurance reinsurance instead of

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Speaker 1: not Islamic reinsurance. But you know it just it fascinated me.

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Speaker 1: I loved learning about new things, and here I was

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Speaker 1: getting paid to learn about something new and interesting from

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Speaker 1: interesting people. So I fell in love with journalism that day.

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Speaker 1: And they have never left and never will leave. Industry

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Speaker 1: really quite interesting. So let's talk a little bit about journalism. Uh,

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Speaker 1: the Ft is printed five days a week. That's right,

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Speaker 1: there's no weekend edition. The New York Times is seven days,

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Speaker 1: The horse Rejournal is six days. What's it like having

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Speaker 1: to shove all their content into the more of that

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Speaker 1: daily beast? How how much of a stressor is needing

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Speaker 1: to keep the beast built? Well, it's actually a lot

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Speaker 1: of fun. I mean, it's stressful, but it's not stressful

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Speaker 1: compared to a lot of other jobs out there. My

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Speaker 1: wife is a nurse. She used to work in a

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Speaker 1: cancer ward. That certainly helps kip a bit of perspective.

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Speaker 1: And uh and you know, and my my first job

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Speaker 1: in some of a big mainstream organization was actually Boomberg

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Speaker 1: News and that's certainly know, a competitive driven organization. And

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Speaker 1: you know, it was very much oriented around news and yeah,

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Speaker 1: feeding the beast and getting stuff out there quickly. And

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Speaker 1: I loved it. You know, I always joked that, you know,

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Speaker 1: I mean that the ft far longer now, but if

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Speaker 1: you cut me and I still believe a little bit

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Speaker 1: of orange, it really left its marks. So you know,

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Speaker 1: these days, actually my job is fantastically relaxed because I

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Speaker 1: primarily write columns, features, um long form stuff and and

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Speaker 1: the occasional book when time allows it. And this was

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Speaker 1: your first book. Did you have to stop working to

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Speaker 1: dive into this or was this a side project? Well,

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Speaker 1: it started off as a side project because it overlaps

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Speaker 1: a lot with my day job. You know, I cover

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Speaker 1: paths of investing a lot. It's one of the biggest

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Speaker 1: trends in markets and finance these days. But my plan

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Speaker 1: was to take a decent chunk of off to write it.

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Speaker 1: So I've been doing research on an ongoing basis, but

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Speaker 1: writing is something I find, at least long form. I

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Speaker 1: needed to vote a big chunk of time to do

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Speaker 1: it properly. Unfortunately, when COVID hit I had to those

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Speaker 1: plans just completely collapsed. There was no chance I could

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Speaker 1: take any time off work. I was essentially doing twofold

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Speaker 1: time jobs, trying to homeschool the children because my wife

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Speaker 1: was not home she was a nurse. And yeah, writing

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Speaker 1: this every time I had like a spare evening, a weekend,

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Speaker 1: every holiday in and parts of one went to this book.

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Speaker 1: So it I think it worked. But I think if

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Speaker 1: I'm having to write a book again, I'm going to

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Speaker 1: definitely managed to carve out some proper time off and

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Speaker 1: pray that there isn't another pandemic, to say the least.

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Speaker 1: So you've been writing about markets and investing for well

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Speaker 1: over a decade. What do you think the investing public

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Speaker 1: doesn't know about the business of news that that they

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Speaker 1: really should. Now, it's a really interesting question. I get

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Speaker 1: this a lot. In fact, sometimes we discussed it internally. Um,

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Speaker 1: I think one thing that surprises people isn't purely business related,

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Speaker 1: but it's the lack of a house view and even

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Speaker 1: Frankie politics in journalism. I think fundamentally most journalists actually

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Speaker 1: just think like journalists. It's a culture rather than politics.

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Speaker 1: We think in terms of good and bad stories, rather

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Speaker 1: than pandering to owners. Advertising is and so on the

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Speaker 1: way that many people think it operates. A lot of

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Speaker 1: what outside is a tribute to ideology or commercial imperatives,

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Speaker 1: is sometimes simply the culture of journalism, for good and bad.

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Speaker 1: But on the business side, I mean, it's no secret

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Speaker 1: that running or working at a newspaper is not a

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Speaker 1: great way to get rich these days. To paraphrase Richard Branson,

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Speaker 1: I think the best way to become a newspaper millionaire

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Speaker 1: is probably to start off as a billionaire and buy

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Speaker 1: a newspaper. But I think where I changed, but I'm

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Speaker 1: a little bit different from a lot of my colleagues,

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Speaker 1: is that I'm actually quite optimistic on journalism as in

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Speaker 1: the practice of it, as opposed to the business or

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Speaker 1: the future for journalists, because I actually think the quality

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Speaker 1: is getting better on average, not worse. We just have

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Speaker 1: so many more tools at our disposal. There's so much

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Speaker 1: exciting stuff going on, so I try to remain an optimist,

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Speaker 1: and I still think this is just a phenomenally fun

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Speaker 1: thing to do. I'm going to agree with you, but

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Speaker 1: I'm also going to credit the non journalists for forcing

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Speaker 1: journalism to up its game, at least in the finance space. Historically,

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Speaker 1: financial media coverage, especially in the nineties and two thousand's,

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Speaker 1: it was it was really superficial and a lot of

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Speaker 1: clickbait and and you know, just what is the sexiest,

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Speaker 1: flashiest thing. And I think a lot of people from

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Speaker 1: from bloggers to now sub stack and newsletter writers forced

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Speaker 1: a reckoning where the major media outlets how to how

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Speaker 1: to up their game. They used to be pretty mediocre.

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Speaker 1: They're not. They're much better than they once were. No,

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Speaker 1: I completely agree. Actually, I think you know, the dirty

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Speaker 1: secret is really that nobody used to dream of being

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Speaker 1: a financial journalist when they grew up, right. You know,

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Speaker 1: I'm no different and I wanted to be a walk correspondent.

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Speaker 1: I got to pay a walk correspondent for half a

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Speaker 1: year during the Arab Spring when I worked at the

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Speaker 1: FT and it was incredibly exciting. But just the intellectual

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Speaker 1: stimulation of financial journalism is just incredible. And I think

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Speaker 1: the financial crisis was the tipping point that before then

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Speaker 1: people ended up in financial journalism because that's where the

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Speaker 1: jobs were for a long time and they generally paid

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Speaker 1: better than other jobs. But since the financial crisis kind

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Speaker 1: of hammered home to absolutely everybody how essential business finance

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Speaker 1: economics markets are. I just see the quality of the

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Speaker 1: graduate trainees we have coming in just so much better

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Speaker 1: when Frankie, when I applied for jobs, and these are

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Speaker 1: people that want to be financial journalists. I actually know

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Speaker 1: and have, you know, expertise far beyond what I had

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Speaker 1: when I stumbled into that conference room to talk to

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Speaker 1: a shake about Islamic reinsurance. So I definitely think things

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Speaker 1: are getting better. Yeah, I think your absolutely answer something

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Speaker 1: with that. Let's talk a little bit about passive investing

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Speaker 1: in index funds. It's really well trialed ground. There's only

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Speaker 1: so much to say about it. One inspired you to

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Speaker 1: write a whole long history of it. Well, as I mentioned,

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Speaker 1: you know, the the rise of passive investing was something

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Speaker 1: that I was covering, maybe not daily, but a lot.

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Speaker 1: It was the the overall backdrop to almost everything I

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Speaker 1: was writing about for a long time when I when

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Speaker 1: led the market's coverage for the Financial Times in New York,

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Speaker 1: and you know, it was unambiguous. Lee this hugely important

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Speaker 1: story that was not just affecting the investment industry. We

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Speaker 1: know obviously the pressures it's brought on fees, but reshaping

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Speaker 1: how the financial industry works in many ways, and investment

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Speaker 1: banks were retooling their trading desk to deal with this phenomenon.

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Speaker 1: Markets were functioning and acting differently in the area of

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Speaker 1: path investing. So I started scratching around into the back

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Speaker 1: story this. I mean, I'm not just a financial nerds,

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Speaker 1: come one. I have always loved history, and I do

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Speaker 1: believe that we understand better where we're going if we

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Speaker 1: understand where we came from. And lo and behold the

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Speaker 1: history of the invention of passive investing. It was just

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Speaker 1: far more interesting than idea to hope. It's just filled

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Speaker 1: with these combative, titanic personalities having huge arguments and getting

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Speaker 1: shunned by their own industry. So you know, when when

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Speaker 1: you're a journalist and you have a combination of an

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Speaker 1: important story and a fun story, you just you have

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Speaker 1: everything you need, or you you have everything you should need.

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Speaker 1: And the more time I spent with it, I realized, No,

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Speaker 1: this isn't just a magazine piece or a long feature.

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Speaker 1: This this would make, I hope, a really gripping book,

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Speaker 1: a way to kind of explain this huge, important trend,

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Speaker 1: but through the prism of these people and and what

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Speaker 1: they did and who they were, because they were just

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Speaker 1: fascinating people. Really, So let's talk about his history. As

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Speaker 1: I was reading the book, I was surprised how deeply

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Speaker 1: researched it felt. Tell us how you did this deep dive?

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Speaker 1: How did you uncover all the little tidbits that you did. Yeah,

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Speaker 1: there's a there's a published history, you have Bogel's biography,

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Speaker 1: and there's a bunch of other stuff out there. But

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Speaker 1: you really went very deep into this space. Well, I

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Speaker 1: mean it sounds incredibly um over the top that you know.

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Speaker 1: Isaac Newton once said, if I've seen further, it's because

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Speaker 1: I stood on the shoulders of giants. And I am

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Speaker 1: no Isaac Newton, but like you say, I stood on

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Speaker 1: the shoulders of many giants that went before me. So

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Speaker 1: Jack Bogel famously wrote many, many books. There are many

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Speaker 1: people that have written about parts of this. You know,

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Speaker 1: people journalists and Bloomberg have written phenomenally interesting features about

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Speaker 1: the birth of ets. Peter Bernstein the financial history and

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Speaker 1: has written a really interesting book on on on Wall

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Speaker 1: Street in the seventies and the academic ferment. Then. So

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Speaker 1: what I try to do was essentially combine and synthesize

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Speaker 1: all these disparate sources and combine them with just I mean,

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Speaker 1: god knows hundreds of of interviews with you know, primary characters,

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Speaker 1: secondary characters, other people that fill in blanks hearing there,

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Speaker 1: and just an exhaustive dive through the archives of institutional

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Speaker 1: investor and pensions and investments in the Wall Street Journal

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Speaker 1: and combine that into one holistic narrative. But essentially it

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Speaker 1: was just a lot of work and juggling a lot

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Speaker 1: of different strands of information and then cross checking what

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Speaker 1: person A said versus what person B said, and what

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Speaker 1: the contemporary these newspapers might have said at the time.

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Speaker 1: Because you know, as as the cliche goes, success has

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Speaker 1: as many parents. You know, the Index Fund is definitely

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Speaker 1: a success story, and there are many many people that

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Speaker 1: after the fact sometimes seek to yeah, paint repaint history

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Speaker 1: a little bit, maybe give it a bit of a

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Speaker 1: chine that it might not always have had. So I'm

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Speaker 1: gonna skip over some of the early history, the Wells, Fargo,

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Speaker 1: Sam Snight, and a lot of the academic history and

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Speaker 1: just fast forward us up to Vanguard, because it, in

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Speaker 1: your telling, it almost looks like the Index itself was irrelevant.

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Speaker 1: The Jack Bogel, the founder and first CEO of Vanguard,

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Speaker 1: his cost matters hypothesis almost made the group of holdings irrelevant.

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Speaker 1: It was the fees that mattered most. Discuss that a bit. No,

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Speaker 1: it's a great point, and I think Jack Bogel is

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Speaker 1: a far more complicated character than Frankie. He pretended himself

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Speaker 1: and a lot of people um semas. I mean he

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Speaker 1: was undisputable, you know, one of the great men of history.

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Speaker 1: I mean, he is one of the most incredi of

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Speaker 1: people I've ever had the privilege of interviewing. But I

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Speaker 1: actually think he's more interesting than he pretended himself, because

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Speaker 1: he was not a necessarily a fan of Index thing,

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Speaker 1: not even all his private Vanguard. This was this is

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Speaker 1: an accident of fortunate accident. In his defense, he was

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Speaker 1: definitely always a fan of low cost investment. That seems

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Speaker 1: to be backed up with his writing going back to

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Speaker 1: his days when he was a wonder by at Wellington.

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Speaker 1: He was a senior executive at Wellington and the air

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Speaker 1: apparent to Walter Morgan there uh he and he liked

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Speaker 1: the idea of mutualization, well at least he at least

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Speaker 1: had thought of it before Vanguard was set up. And

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Speaker 1: with this unique ownership structure being owned by its own funds.

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Speaker 1: Let's let me stop you there and jump in, because

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Speaker 1: in your telling, the mutualization of Vanguard also seemed like

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Speaker 1: an accident. It was a function of their contract that

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Speaker 1: they previously had with the company they were with Wellington,

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Speaker 1: that they ostensibly were trying to it free from the

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Speaker 1: idea of a passively managed index was hey, it's unmanaged,

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Speaker 1: therefore it doesn't violate our manage no managed funds contract

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Speaker 1: and the idea of creating a mutual allowed them to

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Speaker 1: escape a fee structure they didn't want to be involved in. Him.

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Speaker 1: Am I overstating that? Or is that a fair assessment? No?

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Speaker 1: I think so, But I mean so. Jack would often

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Speaker 1: afterwards talk about, you know, strategy follow structure. So if

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Speaker 1: we start with the structure, the reason why Vanguard is

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Speaker 1: mutually owned it's not just because Jack Bogel liked the

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Speaker 1: idea of mutualization, which he did, but I doubt he

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Speaker 1: would have mutilized if he'd stayed the CEO of Wellington's.

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Speaker 1: But the fact is that he merged Wellington with a

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Speaker 1: hot shot go go fund manager from Boston in the sixties,

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Speaker 1: and when the sixties go go error ended with a bang,

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Speaker 1: essentially the other people his partners own more stock than

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Speaker 1: he did and they sacked in the CEO. So as

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Speaker 1: a hay Mary, he went to the board of the

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Speaker 1: Wellington Funds because all mutual funds and need to have

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Speaker 1: their own independent boards in theory, at least in the US,

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Speaker 1: and trying to argue that they should essentially buy themselves

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Speaker 1: out of Wellington's. And this was it was a hail

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Speaker 1: Mary and Frankie. The legal representation at the time was

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Speaker 1: very clear that the SEC will not like this. Clients

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Speaker 1: consue us, Wellington consue us. So as if favor to

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Speaker 1: Jack Bogel, the boards of the Wellington Funds, the independent

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Speaker 1: boards of the Wellington Funds said that they'd set up

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Speaker 1: an administrative company that just did all the clerking jobs,

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Speaker 1: all the paperwork for the funds. That would be owned

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Speaker 1: by the funds themselves, but the investment management, the distribution,

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Speaker 1: the research, the trading, all the sexy part of investment

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Speaker 1: management would stay with Wellington. But Jack Bogel basically this

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Speaker 1: really you know, first of all, the sacking hurt him,

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Speaker 1: and he used this as his platform to essentially get

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Speaker 1: revenge on the Boston Partners that sacked him. And like say,

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Speaker 1: Index Funds, he later said that he had never even

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Speaker 1: heard of this until he read about it in the

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Speaker 1: Paul Samuelson article. And I think that is, first of all,

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Speaker 1: just actually inaccurate, because he pseudonymously wrote an article attacking

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Speaker 1: the idea of Index funds and anonymously, you know, many

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Speaker 1: years earlier. But he also saw the potential right and

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Speaker 1: he saw that this was unmanaged. It was a gimmick.

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Speaker 1: It was essentially a ploy to get out from under

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Speaker 1: the thumb of the Boston partners and it worked quite interesting.

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Speaker 1: Let's talk a little bit about State Street. They're the

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Speaker 1: first ones to market with the spiders. Spy become one

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Speaker 1: of the largest CTFs ever. Tell us how that came about. Well, essentially,

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Speaker 1: that story starts with Nate Most who was this unusually brilliant, eclectic,

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Speaker 1: pretty old by then head of derivative product development at

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Speaker 1: the AMEX, the American Stock Exchange, you know, very old,

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Speaker 1: came out of the curb side in New York. Uh,

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Speaker 1: the kind of found derivatives as a way to kind

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Speaker 1: of try to stay relevant in an era where you

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Speaker 1: had Nisy years that as a big brother that dominated listings,

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Speaker 1: and NADAC was kind of the hot rising exchange. But

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Speaker 1: they still they needed to find something. So Nate Mos

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Speaker 1: had the brilliant idea together with one of his partners

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Speaker 1: called Stephen Bloom, to basically lift tradeable index funds. They

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Speaker 1: thought they might go somewhere like Vanguard for example, and

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Speaker 1: get Bogel to list index funds on the AMEX so

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Speaker 1: people could trade them throughout the day, because then they

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Speaker 1: might get more customers and the AMEX will get trading revenues. Now,

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Speaker 1: it turns out that Bogel absolutely hated the idea. It

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Speaker 1: was just anathema to him, the idea that you trade

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Speaker 1: a fund in and out all the time. He wanted

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Speaker 1: people to buy a Vanguard five fund and hold it forever.

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Speaker 1: So he turned them down and Nate Most went to

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Speaker 1: State Streets instead. A State Street had a big institutional

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Speaker 1: business in indexing, so they thought, well, yeah, we could

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Speaker 1: totally do this. This is probably possible. But it took

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Speaker 1: years and years and years, and ironically a group of

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Speaker 1: Canadian exchanges managed to essentially copy the plans and they

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Speaker 1: got help from the AMEX because the AMEX didn't see

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Speaker 1: them as a straight competitor and managed actually to list

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Speaker 1: this isn't wide, you know, the first ever ETF is

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Speaker 1: actually listed in Canada. They managed to just steal ahead

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Speaker 1: of the State Streets and AMEX team because the SEC

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Speaker 1: was very, very slow about this very new fangled product

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Speaker 1: that had a lot of hair on it essentially. But

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Speaker 1: that's how that happened. And it's quite a journey from

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Speaker 1: where it wasn't to where it is today, to say

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Speaker 1: the least. And it's become you know, a few bibs

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Speaker 1: and you know the interesting story. And I recall this

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Speaker 1: and I think All Street Journal a couple of years ago, Hey,

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Speaker 1: how did State Street end up losing their leads there?

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Speaker 1: They're one of the pioneers in the US on both

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Speaker 1: passes and ets. How did they get dethroned by Vanguard

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Speaker 1: and Black Rock? It's a great question. That actually, look,

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Speaker 1: I have an answer in my book, but it is

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Speaker 1: an answer. I think sometimes these things happened, but I

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Speaker 1: think it came down to basically State Street not realizing

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Speaker 1: what it had in its hands. So you have to

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Speaker 1: remember that this was primarily in AMEX idea that State

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Speaker 1: three did because it worked well with their strategy. But

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Speaker 1: index fees on the institutional side were under massive pressure,

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Speaker 1: so they just didn't think of indexing as a potential

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Speaker 1: cash cow. They didn't see the potential of ets as

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Speaker 1: these basically lego like bricks that you can build broad

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Speaker 1: portfolios with. So they did it, and they put something

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Speaker 1: money into it, they just didn't invest enough, and at

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Speaker 1: the beginning, e T S was not a great business. Ironically,

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Speaker 1: Barkley's Global Investors did also launched soon afterwards something called

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Speaker 1: Webb's World Equity Benchmark Securities, which is kind of a

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Speaker 1: copy of of of the spider that am X and

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Speaker 1: State Street had done. Webbs and spides I was like

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Speaker 1: the intentional gimmick, and they'd also struggled. But what b

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Speaker 1: G I later did under you know CEO Patty Donne,

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Speaker 1: I think one of the great under estimated CEOs in

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Speaker 1: American corporate history and pretty remarkable for being not as

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Speaker 1: a woman but also somebody who wrote from to be

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Speaker 1: secretary to CEO and chairman. Uh. She, together with a

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Speaker 1: guy called the Crane, first realized the potential of this,

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Speaker 1: got Barclay's the UK Bank to commit to massive funding,

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Speaker 1: and they essentially did what Silicon Valley today call blitz scaling.

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Speaker 1: They basically launched tons of ETFs, just chucked ets out

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Speaker 1: there and lies, if your first you can win, you

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Speaker 1: can become the incumbent. So I think it was a

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Speaker 1: mix of State Street kind of doing fine but not

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Speaker 1: realizing the importance of what they've invented, and b G

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00:24:13,359 --> 00:24:18,639
Speaker 1: I eventually realizing it and just chucking resources at it. Vanguard.

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Speaker 1: I think it's later done well purely because it's Vanguard

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Speaker 1: and they have an enormously positive brand among retail investors.

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Speaker 1: So let's stick with b G. I. How did how

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Speaker 1: did we go from Barclays too I shares to black Rock?

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Speaker 1: Give us that history? Well, it goes back to the

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Speaker 1: first index fund communiately for my book narrative of course,

397
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Speaker 1: but wellth Fargo set up a new into unit called

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Speaker 1: Wealth Fargo Investment Divided Advisors w f I A to

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Speaker 1: house the first index funds that they did. Now, the

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00:24:54,640 --> 00:24:56,600
Speaker 1: issue was w f I A was that it was

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Speaker 1: filled with lots of brilliant academics. I mean, it's one

402
00:24:59,600 --> 00:25:03,600
Speaker 1: point six noble laureates consulted for that unit. It was

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Speaker 1: one of the biggest economic think tanks in history. I'd argue, UM,

404
00:25:07,520 --> 00:25:10,040
Speaker 1: but they cost money, and index funds didn't pay a

405
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Speaker 1: lot of money. So w f I A was always

406
00:25:13,359 --> 00:25:16,000
Speaker 1: incredibly brilliant, but it didn't actually turn a profit until

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00:25:16,040 --> 00:25:20,119
Speaker 1: the eighties, so then it was taken over. Basically almost

408
00:25:20,160 --> 00:25:23,560
Speaker 1: came close to collapsing in a battle between w f

409
00:25:23,640 --> 00:25:28,400
Speaker 1: I A and Wealth Fargo the mothership, but eventually they

410
00:25:28,480 --> 00:25:31,359
Speaker 1: hired a guy called Fred Grower, and he managed to

411
00:25:31,359 --> 00:25:35,080
Speaker 1: turn the ship around just as the U S stock

412
00:25:35,119 --> 00:25:39,000
Speaker 1: market started on the biggest strongest bull run that's ever

413
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Speaker 1: had pretty much, and you know, so there's a bit

414
00:25:42,840 --> 00:25:44,840
Speaker 1: of luck and a bit of skill. But then he

415
00:25:44,960 --> 00:25:49,119
Speaker 1: merged it with a Japanese asset manager, but eventually managed

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Speaker 1: to sell the whole thing to Barclay's. The man merge

417
00:25:52,440 --> 00:25:56,959
Speaker 1: it with Barclay's asset management unit UM, but essentially just

418
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Speaker 1: became w f I A. Two point but under the

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00:26:00,880 --> 00:26:05,080
Speaker 1: name more Barclay's Global Investors. That was where Webb's was

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Speaker 1: invented first, and that was a bit of a nothing burger. Frankly,

421
00:26:08,720 --> 00:26:13,280
Speaker 1: Webbs became Ice Shares and then black Rock. I could

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00:26:13,320 --> 00:26:16,040
Speaker 1: see where the world was going, where the investment world

423
00:26:16,040 --> 00:26:19,600
Speaker 1: is going, quicker than many other people, and when Barclays

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00:26:19,640 --> 00:26:23,199
Speaker 1: was up the creek without a paddle at all. In

425
00:26:23,240 --> 00:26:27,879
Speaker 1: the financial crisis, Barclay's basically had to sell the family

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00:26:27,920 --> 00:26:31,240
Speaker 1: silver and black Rock was quickly cheap and they paid

427
00:26:31,560 --> 00:26:34,199
Speaker 1: to pay more. Historically, it looks like it was a

428
00:26:34,240 --> 00:26:37,399
Speaker 1: pretty cheap sale. What do you recall what this was

429
00:26:37,440 --> 00:26:40,439
Speaker 1: sold to black Rock for. Well, the agreed price was

430
00:26:40,520 --> 00:26:42,840
Speaker 1: thirteen and a half billion dollars in cash and equity.

431
00:26:42,960 --> 00:26:45,119
Speaker 1: So by the time the deal closed at the end

432
00:26:45,160 --> 00:26:47,440
Speaker 1: of two thousand and nine, I think it was the

433
00:26:47,760 --> 00:26:49,920
Speaker 1: final tag because black Rocks shares have gone up, was

434
00:26:49,960 --> 00:26:53,840
Speaker 1: around fifty billion. But yes, I mean, by far, probably

435
00:26:54,080 --> 00:26:56,240
Speaker 1: the great I mean, certainly the greatest deal in the

436
00:26:56,280 --> 00:27:00,080
Speaker 1: history of ATM management, and probably the greatest deal in

437
00:27:00,680 --> 00:27:03,959
Speaker 1: the financial industry as a whole, and possibly I mean,

438
00:27:03,960 --> 00:27:06,359
Speaker 1: I'm I'm trying to think of a such a slam

439
00:27:06,480 --> 00:27:11,159
Speaker 1: dunk in hound sight acquisition in the history of M

440
00:27:11,160 --> 00:27:13,199
Speaker 1: and A really obviously the history of M and A

441
00:27:13,359 --> 00:27:17,080
Speaker 1: litted with with car crashes. To put put some numbers

442
00:27:17,119 --> 00:27:20,560
Speaker 1: on it, black Rock now manages a little over a

443
00:27:20,600 --> 00:27:24,159
Speaker 1: little under nine and a half trillion. That's trillion with

444
00:27:24,240 --> 00:27:27,080
Speaker 1: the T like the title of your book. And their

445
00:27:27,119 --> 00:27:31,840
Speaker 1: market cap is just under a hundred forty billion. That

446
00:27:31,840 --> 00:27:36,399
Speaker 1: that fifteen billion dollar acquisition is really, you know, just

447
00:27:36,520 --> 00:27:39,920
Speaker 1: world beating talk talk about r O Y. It's quite amazing.

448
00:27:41,119 --> 00:27:43,440
Speaker 1: It's incredible. I mean it's just I mean you can

449
00:27:43,440 --> 00:27:46,240
Speaker 1: see it on the profits. I mean, black Rock is

450
00:27:46,280 --> 00:27:49,800
Speaker 1: more profitable than Google. I mean, the profit margins in

451
00:27:49,840 --> 00:27:52,119
Speaker 1: as management are actually quite good. Despite me of the

452
00:27:52,160 --> 00:27:55,000
Speaker 1: pressure that the industry is under. The dirty secret is

453
00:27:55,040 --> 00:27:57,640
Speaker 1: that it's actually quite a profitable industry and black Rock

454
00:27:57,840 --> 00:28:00,440
Speaker 1: is best in class and it is large thanks for

455
00:28:00,480 --> 00:28:03,359
Speaker 1: the acquisition or b g I, and it's et f

456
00:28:03,440 --> 00:28:06,840
Speaker 1: unit isshes and the broader indexing universe and a lot

457
00:28:06,880 --> 00:28:10,760
Speaker 1: of the more quantitative investing side that they also inherited

458
00:28:10,800 --> 00:28:13,480
Speaker 1: along with the purchase. So it's been incredible. I mean,

459
00:28:14,119 --> 00:28:17,639
Speaker 1: you know, basically the b g I now is just

460
00:28:17,840 --> 00:28:20,080
Speaker 1: that part. If you split that out, I'd argue that's

461
00:28:20,080 --> 00:28:23,280
Speaker 1: probably worth more than all of Barkeleys today, Barkleys has

462
00:28:23,320 --> 00:28:26,280
Speaker 1: essentially gone nowhere. Black Rock is now bigger than Golden

463
00:28:26,320 --> 00:28:29,720
Speaker 1: Sacks in market cap right, quite quite amazing. We were

464
00:28:29,760 --> 00:28:34,000
Speaker 1: talking a little earlier about how deeply researched the book was.

465
00:28:35,280 --> 00:28:37,560
Speaker 1: How much access did you get Because a lot of

466
00:28:37,600 --> 00:28:40,880
Speaker 1: these figures are still around, They're they're not youngsters anymore,

467
00:28:41,520 --> 00:28:43,880
Speaker 1: um and Jack Boggle passed a few years ago, but

468
00:28:43,920 --> 00:28:46,240
Speaker 1: a lot of the main characters in the book they're

469
00:28:46,280 --> 00:28:50,840
Speaker 1: still all around. Did you get access, uh, to people

470
00:28:50,960 --> 00:28:56,840
Speaker 1: like Bill Sharp and and David Booth and Gene Farmer. Yeah? So,

471
00:28:57,280 --> 00:28:59,160
Speaker 1: I mean my access was great for the most part.

472
00:28:59,200 --> 00:29:02,760
Speaker 1: I mean, I genuinely do think most humans are actually

473
00:29:02,800 --> 00:29:05,560
Speaker 1: quite helpful if you can, you know, make sure that

474
00:29:05,680 --> 00:29:07,520
Speaker 1: you you impress upon them that you're not gonna be

475
00:29:07,520 --> 00:29:10,200
Speaker 1: wasting their time. And some people, like you said, had

476
00:29:10,200 --> 00:29:12,760
Speaker 1: sadly passed away, like Lewis P. Kelly obviously pass away

477
00:29:12,800 --> 00:29:16,760
Speaker 1: almost a century go. Jim Verton at Wealth Fargo was

478
00:29:16,800 --> 00:29:19,400
Speaker 1: an important figure. He passed away just before I started

479
00:29:19,440 --> 00:29:22,400
Speaker 1: reporting it. Bill Faust passed away in the process of

480
00:29:22,400 --> 00:29:24,760
Speaker 1: it ate most passed a few way quite a few

481
00:29:24,800 --> 00:29:28,000
Speaker 1: years ago. And there were some people who won't name

482
00:29:28,080 --> 00:29:31,479
Speaker 1: that just didn't respond to emails or calls or just

483
00:29:32,920 --> 00:29:36,280
Speaker 1: who were the difficult people and getting the book together,

484
00:29:36,320 --> 00:29:41,360
Speaker 1: you don't know they know. I mean they know who

485
00:29:41,360 --> 00:29:43,960
Speaker 1: they are. Let's go that way. But broadly speaking, look,

486
00:29:43,960 --> 00:29:45,960
Speaker 1: I mean people are busy and maybe they're working on

487
00:29:46,000 --> 00:29:47,680
Speaker 1: the Room book project. I don't want to give away

488
00:29:47,760 --> 00:29:50,680
Speaker 1: the crown jewels as it were. Um So there are

489
00:29:50,720 --> 00:29:53,240
Speaker 1: many reasons why people declined to interview. And I have

490
00:29:53,320 --> 00:29:55,480
Speaker 1: to meet like as a journalist, I want everybody to

491
00:29:55,520 --> 00:29:58,040
Speaker 1: talk to me all the time. But I think now

492
00:29:58,400 --> 00:30:01,640
Speaker 1: you have to be understanding that not everybody feels comfortable

493
00:30:01,640 --> 00:30:04,760
Speaker 1: with that. And a lot of people were incredibly generous

494
00:30:04,760 --> 00:30:07,760
Speaker 1: with the time, including Gene Farmer aspect too many times

495
00:30:07,840 --> 00:30:14,560
Speaker 1: mc McCown. David Booth built sharp but is an incredibly kind, generous, interesting,

496
00:30:14,720 --> 00:30:16,840
Speaker 1: genial man. And a lot of these people are in

497
00:30:16,840 --> 00:30:18,960
Speaker 1: the eighties and some of them are in almost in

498
00:30:18,960 --> 00:30:22,240
Speaker 1: the nineties. And I swear if I'm half as sharp

499
00:30:22,320 --> 00:30:24,960
Speaker 1: at half the age, I would be a very lucky man.

500
00:30:25,400 --> 00:30:27,480
Speaker 1: There's something about fine that's an economics that seem to

501
00:30:27,520 --> 00:30:30,080
Speaker 1: keep a lot of people quite young. Well, that's a

502
00:30:30,080 --> 00:30:33,560
Speaker 1: little bit of survivorship bias in the sample set, because

503
00:30:33,600 --> 00:30:37,120
Speaker 1: you're only speaking to people who are alive, literal survivorship bias.

504
00:30:37,520 --> 00:30:41,040
Speaker 1: Tell us about something with without spoiling the ending, tell

505
00:30:41,120 --> 00:30:44,200
Speaker 1: us something from the book that was really surprising, because

506
00:30:44,280 --> 00:30:46,760
Speaker 1: I'm going to share a few things with you that

507
00:30:46,960 --> 00:30:51,000
Speaker 1: I was genuinely surprised about. But what surprised you? And

508
00:30:51,040 --> 00:30:52,800
Speaker 1: I'm looking forward to hearing what you think. I mean,

509
00:30:52,840 --> 00:30:56,080
Speaker 1: I think that that the Bogel issue that we touched upon,

510
00:30:56,800 --> 00:30:59,080
Speaker 1: it was really interesting that here was a far more

511
00:30:59,160 --> 00:31:04,360
Speaker 1: multi facet character. Uh. Then I think people realize and

512
00:31:04,520 --> 00:31:08,760
Speaker 1: I wish I knew all the stuff I know I

513
00:31:08,880 --> 00:31:11,120
Speaker 1: now know and could talk to him about it. Not

514
00:31:11,200 --> 00:31:13,880
Speaker 1: because it's salacious or anything like that, but he's he's

515
00:31:13,920 --> 00:31:16,120
Speaker 1: become even more of a hero in my eyes because

516
00:31:16,120 --> 00:31:20,840
Speaker 1: he is more multifaceted. I think that was really interesting. Uh,

517
00:31:20,840 --> 00:31:23,760
Speaker 1: And probably sadly a lot of people only felt comfortable

518
00:31:23,920 --> 00:31:27,160
Speaker 1: talking about some of this stuff after he passed away

519
00:31:27,160 --> 00:31:31,200
Speaker 1: in twenty nineteen. One thing that didn't surprise me in

520
00:31:31,240 --> 00:31:35,480
Speaker 1: the research, but actually happened almost fortuitously in the middle

521
00:31:35,520 --> 00:31:39,480
Speaker 1: of writing my book, but it was the stress test

522
00:31:39,640 --> 00:31:42,480
Speaker 1: that happened for the E t F ecosystem in March.

523
00:31:43,720 --> 00:31:45,720
Speaker 1: I guess fortunately it is the wrong word, because obviously

524
00:31:45,800 --> 00:31:48,920
Speaker 1: that was a horrific period for the world, and I

525
00:31:49,040 --> 00:31:51,560
Speaker 1: was generally worried that we were going to have a

526
00:31:52,680 --> 00:31:56,120
Speaker 1: obviously we're having a global health crisis and an economic crisis,

527
00:31:56,160 --> 00:31:58,480
Speaker 1: but we were perilously close to having a financial crisis

528
00:31:58,560 --> 00:32:02,360
Speaker 1: on top, and especially bond ets came under a massive pressure,

529
00:32:03,080 --> 00:32:05,400
Speaker 1: and before the fact, I would have predicted that we

530
00:32:05,400 --> 00:32:09,280
Speaker 1: would have had serious breakages. But I was actually positively

531
00:32:09,320 --> 00:32:15,080
Speaker 1: supplirized by the resiliency of bond ets in March. And

532
00:32:15,120 --> 00:32:16,840
Speaker 1: I know a lot of people don't agree with me

533
00:32:16,960 --> 00:32:19,320
Speaker 1: on that, but I think that was one of my

534
00:32:19,360 --> 00:32:24,080
Speaker 1: big takeaways that I've moved from the Quartius skeptic, virgin

535
00:32:24,600 --> 00:32:27,440
Speaker 1: cautious optimists on on E t F and credit ETF

536
00:32:27,560 --> 00:32:35,040
Speaker 1: to being more wholehearted behind that this is actually more

537
00:32:35,040 --> 00:32:38,800
Speaker 1: resilient supple product and people sometimes give it credit for

538
00:32:39,120 --> 00:32:42,240
Speaker 1: So first, you're right, and the proof is in the

539
00:32:42,280 --> 00:32:44,760
Speaker 1: pudding the people. And we're going to talk a little

540
00:32:44,760 --> 00:32:47,520
Speaker 1: bit about some of the criticisms of passive and indexing

541
00:32:47,560 --> 00:32:51,360
Speaker 1: and ETS in a bit. But if ever there was

542
00:32:51,400 --> 00:32:55,960
Speaker 1: an opportunity for for those vehicles to collapse, well, not

543
00:32:56,080 --> 00:32:58,480
Speaker 1: only did they all survive O eight or nine fine

544
00:32:58,600 --> 00:33:01,560
Speaker 1: and the flash crash in on ten and later, but

545
00:33:01,760 --> 00:33:05,480
Speaker 1: they came through. I mean, how many disasters do these

546
00:33:05,520 --> 00:33:09,000
Speaker 1: products have to live through before people will admit, Hey,

547
00:33:09,040 --> 00:33:14,600
Speaker 1: they seem to be robust and resilient. They survived just fine. Yeah. No,

548
00:33:14,760 --> 00:33:18,920
Speaker 1: I I think people look at the Federal Reserves intervention,

549
00:33:19,560 --> 00:33:25,880
Speaker 1: the extraordinarily aggressive intervention, as a bailout of ETS, and

550
00:33:26,560 --> 00:33:30,480
Speaker 1: I definitely think like the FED bailed out markets, and

551
00:33:30,560 --> 00:33:34,520
Speaker 1: they did by ETS. But I am increasingly convinced, having

552
00:33:34,560 --> 00:33:37,160
Speaker 1: talked to people about this and been digging around this

553
00:33:37,240 --> 00:33:40,719
Speaker 1: for a while, that we came far closer to mass

554
00:33:40,760 --> 00:33:45,120
Speaker 1: closure of bond mutual funds traditional bond mutual funds then

555
00:33:45,200 --> 00:33:48,960
Speaker 1: we did serious breakages in the credit et f ecosystem.

556
00:33:49,600 --> 00:33:53,280
Speaker 1: Those structures might not be perfect, and maybe the next

557
00:33:53,320 --> 00:33:56,240
Speaker 1: crisis will reveal some fault line we don't know about,

558
00:33:56,920 --> 00:34:00,320
Speaker 1: but I think that nobody can be honestly looked at

559
00:34:00,600 --> 00:34:04,360
Speaker 1: March and what happened there any people from the Federal

560
00:34:04,400 --> 00:34:06,480
Speaker 1: Reserve to the Bank of Canada and other people looked

561
00:34:06,520 --> 00:34:07,880
Speaker 1: at this and it will come broadly to the same

562
00:34:07,960 --> 00:34:13,400
Speaker 1: conclusion that credit ets were at worst not a contributor

563
00:34:13,440 --> 00:34:17,320
Speaker 1: to the issues, and actually probably in some respect helped

564
00:34:17,440 --> 00:34:21,480
Speaker 1: dampen some of the issues we saw in the financial

565
00:34:21,520 --> 00:34:24,520
Speaker 1: system at the time. Dampener is a really good, good

566
00:34:24,520 --> 00:34:27,319
Speaker 1: word for that. Let's let's stay with the book. There's

567
00:34:27,320 --> 00:34:30,800
Speaker 1: a quote from Paul Samuelson. I really like that your reference.

568
00:34:31,200 --> 00:34:34,400
Speaker 1: He ranks the birth of the vanguard five hundred funds

569
00:34:34,440 --> 00:34:37,880
Speaker 1: alongside things like the invention, the wheel, the alphabets, the

570
00:34:37,880 --> 00:34:42,759
Speaker 1: printing press, wine and cheese. Is he overstating this a bit?

571
00:34:42,920 --> 00:34:46,960
Speaker 1: What that? That's really um? You know, he left out fire.

572
00:34:47,160 --> 00:34:50,279
Speaker 1: But other than that, how is an index funds comparable

573
00:34:50,360 --> 00:34:54,720
Speaker 1: to the wheel and the alphabet? Samuelson, aside from being,

574
00:34:55,239 --> 00:34:57,680
Speaker 1: you know, one of the world's greatest economists, I mean

575
00:34:57,719 --> 00:35:00,880
Speaker 1: his his textbooks are quite literally still of the textbooks

576
00:35:00,880 --> 00:35:05,480
Speaker 1: that most economist read. Um, he was that he would

577
00:35:05,640 --> 00:35:07,040
Speaker 1: He was a bit of a joker as well. He

578
00:35:07,080 --> 00:35:09,479
Speaker 1: liked tweaking people, so I think there's a fair bit

579
00:35:09,760 --> 00:35:15,000
Speaker 1: of over the top wittiness there. But he genuinely did

580
00:35:15,080 --> 00:35:19,960
Speaker 1: believe that this was an incredibly important invention because you

581
00:35:20,000 --> 00:35:23,120
Speaker 1: can imagine, you know, sometimes the gains of this are

582
00:35:23,120 --> 00:35:26,120
Speaker 1: so ephemeral that we we don't really focus on it.

583
00:35:26,360 --> 00:35:28,960
Speaker 1: But the fact is that everybody on the planet pretty

584
00:35:29,040 --> 00:35:33,640
Speaker 1: much who has savings has benefited from the indexing revolution,

585
00:35:33,719 --> 00:35:36,440
Speaker 1: even if they don't invest in index funds, because of

586
00:35:36,520 --> 00:35:40,799
Speaker 1: the price competitive competition that they have brought. Not only

587
00:35:40,840 --> 00:35:43,359
Speaker 1: can you now put money in an index fund that

588
00:35:43,400 --> 00:35:46,200
Speaker 1: you know, I've seen people calculate, have said Americans just

589
00:35:46,239 --> 00:35:49,520
Speaker 1: in the past twenty five years three d and fifty

590
00:35:49,560 --> 00:35:53,760
Speaker 1: billion dollars. They've saved all of us trillions of dollars

591
00:35:53,760 --> 00:35:56,880
Speaker 1: in total, because the average cost of a mutual fund

592
00:35:56,960 --> 00:35:59,400
Speaker 1: or hedge fund even has fallen by a third over

593
00:35:59,400 --> 00:36:02,000
Speaker 1: the past two three, three decades. And maybe that would

594
00:36:02,000 --> 00:36:04,400
Speaker 1: have happened without the invention of the index fund, but

595
00:36:04,600 --> 00:36:07,680
Speaker 1: I don't think so to the same extent. And you know,

596
00:36:07,719 --> 00:36:09,960
Speaker 1: these somethings are going to be in the trillions. So

597
00:36:10,600 --> 00:36:14,080
Speaker 1: in a small way, but an important way, the invention

598
00:36:14,160 --> 00:36:18,360
Speaker 1: of this, how is helping hundreds of millions of people

599
00:36:18,480 --> 00:36:20,920
Speaker 1: have a little bit more for retirement than they normally

600
00:36:20,960 --> 00:36:25,040
Speaker 1: would have. So is it fire or the printing press. No,

601
00:36:25,920 --> 00:36:30,040
Speaker 1: but is it genuinely one of the finest financial innovations

602
00:36:30,080 --> 00:36:32,960
Speaker 1: in history and certainly of the past fifty years, And

603
00:36:33,120 --> 00:36:36,000
Speaker 1: ambiguously I would say yes. You know, you're not going

604
00:36:36,040 --> 00:36:40,520
Speaker 1: to get any disagreement from me about that. UM. In

605
00:36:40,560 --> 00:36:45,720
Speaker 1: the US, passive has been pretty robust. More than half

606
00:36:45,760 --> 00:36:48,040
Speaker 1: of the mutual fund and e t F world is

607
00:36:48,080 --> 00:36:52,920
Speaker 1: now consumed by by passive. It hasn't quite caught on

608
00:36:53,200 --> 00:36:55,759
Speaker 1: as aggressively in the rest of the world, but there

609
00:36:55,800 --> 00:36:58,960
Speaker 1: are signs that's changing. Tell us about this as a

610
00:36:59,800 --> 00:37:03,840
Speaker 1: you know, not necessarily US only phenomena. How quickly is

611
00:37:03,840 --> 00:37:07,520
Speaker 1: the rest of the world catching onto passive as an

612
00:37:07,560 --> 00:37:13,160
Speaker 1: investing strategy. No, it's it's an interesting theme seeing this

613
00:37:13,760 --> 00:37:17,799
Speaker 1: become more globalized. I mean, clearly the the you know,

614
00:37:18,040 --> 00:37:22,680
Speaker 1: the the origin story of of index funds is clearly American,

615
00:37:24,520 --> 00:37:26,680
Speaker 1: even though you know they the origin story of of

616
00:37:26,920 --> 00:37:29,360
Speaker 1: pooled investment trust goes back to the Netherlands and the

617
00:37:29,480 --> 00:37:34,720
Speaker 1: UK and hundreds of years ago. UM. It has caught

618
00:37:34,760 --> 00:37:38,040
Speaker 1: on in certain markets, but it depends a lot. And

619
00:37:38,120 --> 00:37:41,520
Speaker 1: this is somewhat technical and dull, but the distribution models

620
00:37:41,920 --> 00:37:46,600
Speaker 1: take Europe, for example, in Europe. The overwhelming distribution mechanism

621
00:37:46,760 --> 00:37:52,400
Speaker 1: for investment funds is banks. Banks are the sentralled locusts,

622
00:37:52,440 --> 00:37:56,080
Speaker 1: and banks tend to not want to steer people into

623
00:37:56,160 --> 00:37:59,520
Speaker 1: cheap products managed by other people. They tend to steer

624
00:37:59,640 --> 00:38:03,560
Speaker 1: people into products that they manage themselves and have pretty

625
00:38:03,560 --> 00:38:07,480
Speaker 1: empty fees. So you can always see there's not a

626
00:38:07,520 --> 00:38:10,759
Speaker 1: perfect correlation, but pretty close to one between you know,

627
00:38:10,960 --> 00:38:14,400
Speaker 1: how dominant banks are in distribution and the adoption of

628
00:38:14,480 --> 00:38:18,800
Speaker 1: passive So there are some markets where this has gotten

629
00:38:18,840 --> 00:38:21,000
Speaker 1: pretty far, and there are some markets where there's a

630
00:38:21,000 --> 00:38:24,200
Speaker 1: lot of quasi passive. Think Japan for example. There are

631
00:38:24,200 --> 00:38:26,839
Speaker 1: a lot of investors there that might not say that

632
00:38:26,880 --> 00:38:29,960
Speaker 1: they are passive or this is an index fund, but

633
00:38:30,000 --> 00:38:35,640
Speaker 1: they are essentially passive um. But clearly this is something

634
00:38:35,960 --> 00:38:39,120
Speaker 1: that works elsewhere that there are some markets that are

635
00:38:39,200 --> 00:38:42,960
Speaker 1: less efficient. Emerging markets are less efficient than large cap

636
00:38:43,040 --> 00:38:45,960
Speaker 1: us equities, so you can see that active managers do

637
00:38:45,960 --> 00:38:50,080
Speaker 1: do better there on average before and after fees, but

638
00:38:50,760 --> 00:38:54,319
Speaker 1: in the long run they still underperform the index. So

639
00:38:55,239 --> 00:38:58,000
Speaker 1: I think the data is a really hard taskmaster here,

640
00:38:58,520 --> 00:39:02,279
Speaker 1: and as the day it becomes more widely known in

641
00:39:02,480 --> 00:39:06,840
Speaker 1: more markets, whether China or India, or Europe or Norway

642
00:39:06,880 --> 00:39:09,560
Speaker 1: where I'm based. It's just going to grow and grow

643
00:39:09,600 --> 00:39:13,600
Speaker 1: and grow, because I think there's a lot of room

644
00:39:13,800 --> 00:39:18,760
Speaker 1: for money to shift from expensive on average underperforming products

645
00:39:18,800 --> 00:39:23,600
Speaker 1: the cheap passive ones really really quite interesting. Last question

646
00:39:23,640 --> 00:39:27,200
Speaker 1: before I share my surprises from the book with you,

647
00:39:27,800 --> 00:39:29,840
Speaker 1: what sort of pushed back did you? Again? And any

648
00:39:30,520 --> 00:39:33,680
Speaker 1: whole decide? The people who who ghosted you and never

649
00:39:33,719 --> 00:39:38,799
Speaker 1: responds to emails, any of the organizations or individuals push back, Vanguard,

650
00:39:38,880 --> 00:39:42,520
Speaker 1: d F A, Black Rock, anybody say, hey, your conception

651
00:39:42,560 --> 00:39:46,920
Speaker 1: of this is all wrong. No, they they were all helpful,

652
00:39:47,040 --> 00:39:51,240
Speaker 1: but too very varying degrees, and at various times maybe

653
00:39:51,239 --> 00:39:55,239
Speaker 1: one organization will fall on for this is an amazing story. Yes,

654
00:39:55,280 --> 00:39:57,960
Speaker 1: we'd love to help you tell it. And then they

655
00:39:58,000 --> 00:40:02,719
Speaker 1: suddenly ghosted me and refused to from my emails. Um

656
00:40:02,760 --> 00:40:06,960
Speaker 1: and broadly speaking, as you might imagine that the chapters

657
00:40:06,960 --> 00:40:10,839
Speaker 1: that deal with more present day issues were more sensitive

658
00:40:11,000 --> 00:40:14,080
Speaker 1: than the historical ones, even though the historical ones were

659
00:40:14,120 --> 00:40:17,120
Speaker 1: in many ways harder to report because frankly a lot

660
00:40:17,120 --> 00:40:20,600
Speaker 1: of them characters had sadly passed away or memories had

661
00:40:20,640 --> 00:40:23,920
Speaker 1: dimmed sufficiently that it was sometimes hard to piece everything together.

662
00:40:24,560 --> 00:40:26,560
Speaker 1: But broadly speaking, I have to say, you know, whether

663
00:40:26,600 --> 00:40:30,480
Speaker 1: it's a black Rock or Dimensional or Vanguard or State Street,

664
00:40:31,000 --> 00:40:33,920
Speaker 1: you know, people were incredibly helpful. I mean, the journalist

665
00:40:33,960 --> 00:40:37,200
Speaker 1: lives and dies by their sources, and my book would

666
00:40:37,239 --> 00:40:39,560
Speaker 1: be a pile of crap if I hadn't gotten so

667
00:40:39,680 --> 00:40:44,000
Speaker 1: much help from so many individual people, sometimes at these organizations,

668
00:40:44,040 --> 00:40:49,080
Speaker 1: because sometimes the organization itself might be standoffish, but there

669
00:40:49,160 --> 00:40:51,359
Speaker 1: might be other people in there that designed. Actually I'm

670
00:40:51,360 --> 00:40:54,160
Speaker 1: just going to help out anyway, because meantly, most humans

671
00:40:54,200 --> 00:40:58,000
Speaker 1: are actually kind of helpful. So you know, I cannot

672
00:40:58,120 --> 00:41:03,120
Speaker 1: fault anybody really, um everything. I'd love people to have

673
00:41:03,160 --> 00:41:06,319
Speaker 1: opened up their personal email correspondence or letty correspondents going

674
00:41:06,360 --> 00:41:09,960
Speaker 1: back fifty years, but within you know what was realistic.

675
00:41:10,040 --> 00:41:14,080
Speaker 1: I don't have any major complaints. Really interesting, all right,

676
00:41:14,200 --> 00:41:18,160
Speaker 1: So I'm going to share. Look, two things in particular

677
00:41:18,640 --> 00:41:22,120
Speaker 1: that I was genuinely surprised at in the book. And

678
00:41:22,200 --> 00:41:25,759
Speaker 1: I kind of knew around these some of things, but

679
00:41:26,280 --> 00:41:28,480
Speaker 1: I didn't I certainly didn't know all of it. And

680
00:41:28,480 --> 00:41:36,400
Speaker 1: and the first was just how really incidental the index was,

681
00:41:37,239 --> 00:41:40,320
Speaker 1: along with the mutual structure to the rise of Vanguard.

682
00:41:41,400 --> 00:41:44,160
Speaker 1: There's no doubt in my mind Vanguard would have been

683
00:41:44,200 --> 00:41:50,360
Speaker 1: successful regardless, but there's an incredible amount of just good

684
00:41:50,480 --> 00:41:55,560
Speaker 1: fortune that turned Vanguard into a behemoth. Is that a

685
00:41:55,600 --> 00:41:58,880
Speaker 1: fair statement? I think so. I mean, I think maybe

686
00:41:58,920 --> 00:42:01,960
Speaker 1: the secret here is really that in any success story,

687
00:42:02,719 --> 00:42:06,279
Speaker 1: we sometimes over attribute it to the brilliance of the

688
00:42:06,280 --> 00:42:10,400
Speaker 1: people involved, and under a attribute it to just blind

689
00:42:10,480 --> 00:42:13,040
Speaker 1: luck sometimes. I mean, when I think of my life,

690
00:42:13,280 --> 00:42:15,040
Speaker 1: I'm sure you can do the same with yours. And

691
00:42:15,719 --> 00:42:19,719
Speaker 1: we know, you know, luck in serendipity, you can be

692
00:42:20,239 --> 00:42:23,280
Speaker 1: good at taking advantage of that break. And Jack Bogel

693
00:42:23,360 --> 00:42:26,719
Speaker 1: was unambiguously brilliant, and like you say, you know he

694
00:42:26,800 --> 00:42:29,640
Speaker 1: was not going to die of failure almost whatever he did.

695
00:42:30,320 --> 00:42:34,040
Speaker 1: But a lot of it was timing. I mean literally

696
00:42:34,120 --> 00:42:37,239
Speaker 1: just imagined that Jack Bogel, the reason why he ended

697
00:42:37,280 --> 00:42:39,640
Speaker 1: up in investment management was just he happened to be

698
00:42:39,680 --> 00:42:42,840
Speaker 1: at Princeton's Library and reading out the Fortune magazine that

699
00:42:42,960 --> 00:42:46,200
Speaker 1: had an article about this hot new invention called the

700
00:42:46,280 --> 00:42:49,120
Speaker 1: mutual fund, and he thought he was interesting and cool,

701
00:42:49,160 --> 00:42:50,879
Speaker 1: so he wrote his thesis about that, and that got

702
00:42:50,960 --> 00:42:54,200
Speaker 1: him his first job at at Wellington's and then he

703
00:42:54,239 --> 00:42:57,120
Speaker 1: got sacked from Wellington by the people he had merged with.

704
00:42:57,719 --> 00:43:01,120
Speaker 1: Imagine if he hadn't imagined if Wellingtons had decided, no,

705
00:43:01,280 --> 00:43:03,160
Speaker 1: we are not going to merge with anybody who We're

706
00:43:03,200 --> 00:43:05,759
Speaker 1: just going to keep plowing on with our boring conservative

707
00:43:05,760 --> 00:43:09,239
Speaker 1: funds that looked really unsexy in the Go Go nine

708
00:43:09,520 --> 00:43:12,600
Speaker 1: sixties when everybody wanted xerox in IBM that it was

709
00:43:12,640 --> 00:43:16,160
Speaker 1: the third dot com bubble. You know, actually, Wellington's would

710
00:43:16,200 --> 00:43:20,160
Speaker 1: have looked really good when the dot basically the sixties

711
00:43:20,160 --> 00:43:22,919
Speaker 1: bubble bursts in the seventies, because they would have looked

712
00:43:22,920 --> 00:43:26,200
Speaker 1: really steady, and he probably would have retired eventually as

713
00:43:26,200 --> 00:43:31,120
Speaker 1: an immensely successful but largely anonymous CEO of a major

714
00:43:31,200 --> 00:43:34,560
Speaker 1: mutual fund company in America, and nobody would really know

715
00:43:34,760 --> 00:43:39,280
Speaker 1: the name Jack Bogul outside of some corners of finance.

716
00:43:39,920 --> 00:43:43,040
Speaker 1: So his sacking actually ended up being the making of him.

717
00:43:43,080 --> 00:43:45,960
Speaker 1: And then even when like when they basic form bangor

718
00:43:46,040 --> 00:43:50,279
Speaker 1: there's so many englisttle lucky breaks that happened, you know,

719
00:43:50,360 --> 00:43:54,040
Speaker 1: him just reading an article by Paul Samuelson about indexing

720
00:43:54,320 --> 00:43:57,200
Speaker 1: when he was sitting there skewing and angry and wondering

721
00:43:57,239 --> 00:43:59,680
Speaker 1: what he was going to do with this new grand

722
00:43:59,760 --> 00:44:04,799
Speaker 1: the those grandios be named administrative company called Vanguard. I mean,

723
00:44:04,800 --> 00:44:07,160
Speaker 1: it was a company that did paperwork from mutual funds

724
00:44:07,360 --> 00:44:10,080
Speaker 1: called Vanguard. It had to do something sexy, but he

725
00:44:10,160 --> 00:44:12,560
Speaker 1: didn't know what it was until he read Paul Samuelson

726
00:44:12,560 --> 00:44:16,000
Speaker 1: an article saying, Hey, I see lots of really interesting

727
00:44:16,040 --> 00:44:19,520
Speaker 1: pension plans are doing some interesting stuff for and index funds.

728
00:44:19,560 --> 00:44:22,719
Speaker 1: I wish somebody would do this for ordering investors. What

729
00:44:22,800 --> 00:44:25,680
Speaker 1: if you hadn't read that article? So it is incredible

730
00:44:25,719 --> 00:44:27,799
Speaker 1: to think about this and the I love this in

731
00:44:27,880 --> 00:44:31,879
Speaker 1: all history books, all stories about people, really just how

732
00:44:31,960 --> 00:44:35,640
Speaker 1: much serendipity plays a role in how events turn out.

733
00:44:36,440 --> 00:44:39,120
Speaker 1: You notice say that, say the very least, we seem

734
00:44:39,200 --> 00:44:43,640
Speaker 1: to often be one random left instead of a right

735
00:44:44,480 --> 00:44:48,960
Speaker 1: away from the world being very different than it turns out. Uh.

736
00:44:49,120 --> 00:44:52,080
Speaker 1: The second thing I wanted to ask about that I

737
00:44:52,160 --> 00:44:57,120
Speaker 1: was shocked, having interviewed Bogel once and Jack Brennan twice,

738
00:44:57,960 --> 00:45:02,560
Speaker 1: is I had no idea about that fallout. That fallout

739
00:45:02,680 --> 00:45:07,840
Speaker 1: is really something substantial, and you know, obviously neither of

740
00:45:07,880 --> 00:45:14,960
Speaker 1: them advertise it. Brennan still speaks very glowingly about Bogel

741
00:45:14,960 --> 00:45:19,440
Speaker 1: and the opportunity he created, but that that really was

742
00:45:19,520 --> 00:45:24,600
Speaker 1: kind of a surprise, how everybody stopped talking to each other. No,

743
00:45:25,160 --> 00:45:29,319
Speaker 1: it was you know, people can fall out, and good

744
00:45:29,440 --> 00:45:34,160
Speaker 1: friends can fall out and maybe stay enemies or don't

745
00:45:34,160 --> 00:45:36,160
Speaker 1: talk to each other for a long time, but this

746
00:45:36,360 --> 00:45:38,799
Speaker 1: was far beyond that. And I have to admit that

747
00:45:39,120 --> 00:45:41,560
Speaker 1: I think I have the broad contours of what happened,

748
00:45:42,120 --> 00:45:45,600
Speaker 1: but the two main people, Jack Brennan Jack Bogel, have

749
00:45:45,880 --> 00:45:50,880
Speaker 1: never ever talked, not just publicly about this, but frankly

750
00:45:50,920 --> 00:45:52,839
Speaker 1: to even people that know them. I spent a lot

751
00:45:52,880 --> 00:45:54,520
Speaker 1: of time talking to some of the people are very

752
00:45:54,520 --> 00:45:57,040
Speaker 1: close to both men, and none of them said they

753
00:45:57,160 --> 00:46:01,840
Speaker 1: really knew the exact details of this schism. But I

754
00:46:01,880 --> 00:46:04,319
Speaker 1: think it was incredibly painful for both because they were

755
00:46:04,360 --> 00:46:07,200
Speaker 1: so close. I mean, Jack Brendon played the role that

756
00:46:07,440 --> 00:46:10,000
Speaker 1: Bogel had played for Walter Morgan at Wellington before the

757
00:46:10,080 --> 00:46:13,120
Speaker 1: ear Apparent, the boy Wonder, and he was the yeend

758
00:46:13,160 --> 00:46:17,120
Speaker 1: to Bogel's yang. Bogel was all vision and charisma and

759
00:46:17,280 --> 00:46:21,360
Speaker 1: statesman like behavior, and Brennan was probably again one of

760
00:46:21,400 --> 00:46:25,920
Speaker 1: the great underrated CEOs of America, just somebody who everybody

761
00:46:26,000 --> 00:46:29,480
Speaker 1: I talked to said he was a phenomenal manager, that

762
00:46:29,840 --> 00:46:32,600
Speaker 1: Vanguard would not nearly be what it is today if

763
00:46:32,680 --> 00:46:36,560
Speaker 1: he hadn't taken it over at the right time. But yeah,

764
00:46:36,560 --> 00:46:39,080
Speaker 1: they fell out, and you know I have in the book,

765
00:46:39,160 --> 00:46:42,320
Speaker 1: you know, the broad contours. It was Bogel's heart failure

766
00:46:42,440 --> 00:46:45,840
Speaker 1: and he basically couldn't keep working. So he handed the

767
00:46:45,840 --> 00:46:49,279
Speaker 1: reins over to Brendon and then he got a heart

768
00:46:49,280 --> 00:46:52,680
Speaker 1: transplant and made him miraculous recovery, and when he came back,

769
00:46:52,760 --> 00:46:55,200
Speaker 1: essentially thought that he was going to take over the

770
00:46:55,239 --> 00:46:58,560
Speaker 1: company again. And that ended up with a big battle

771
00:46:58,560 --> 00:47:00,920
Speaker 1: with the board, and the board sided with Brennan and

772
00:47:01,280 --> 00:47:03,840
Speaker 1: he was no bringing chicken at that point, right. I

773
00:47:03,840 --> 00:47:08,560
Speaker 1: mean there was a mandatory retirement age coming up regardless, yes,

774
00:47:08,880 --> 00:47:11,680
Speaker 1: and the all the mandatory retirement age that Bogel had

775
00:47:11,719 --> 00:47:16,560
Speaker 1: instituted himself, right, But I think I mean clearly the board,

776
00:47:16,600 --> 00:47:19,960
Speaker 1: and this is Bogel's argument, the board could have overturned

777
00:47:20,000 --> 00:47:22,799
Speaker 1: that if they wanted to. The dirty I mean, it's

778
00:47:22,800 --> 00:47:25,960
Speaker 1: not even does think The obvious secret here that everybody

779
00:47:26,000 --> 00:47:27,799
Speaker 1: knew at the time and all the press knew. You

780
00:47:27,800 --> 00:47:30,239
Speaker 1: can see it in the subtext of the writing was

781
00:47:30,280 --> 00:47:32,719
Speaker 1: that yes, the board could obviously have overturned this, but

782
00:47:32,800 --> 00:47:35,440
Speaker 1: they thought that Brennan was a better CEO for the

783
00:47:35,520 --> 00:47:39,120
Speaker 1: Vanguard of that time than Bogel. And you do a

784
00:47:39,200 --> 00:47:42,960
Speaker 1: nice job in the book explaining that, hey, Brennan could

785
00:47:43,040 --> 00:47:47,640
Speaker 1: not have founded or launched Vanguard. It needed someone who

786
00:47:47,680 --> 00:47:51,280
Speaker 1: was more visionary. You know, the parallels today are Steve

787
00:47:51,400 --> 00:47:55,080
Speaker 1: Jobs as the visionary behind Apple, but Tim Cook is

788
00:47:55,080 --> 00:47:57,200
Speaker 1: the guy who makes the trains run on time, the

789
00:47:57,200 --> 00:48:01,319
Speaker 1: the you know, the operations wizard. That parallel was very

790
00:48:01,400 --> 00:48:06,080
Speaker 1: much there with with Brennan and Bogel, No exactly, And

791
00:48:06,120 --> 00:48:08,399
Speaker 1: I think it's it's something we see again and again

792
00:48:08,440 --> 00:48:11,719
Speaker 1: in corporate history that different types of seers work at

793
00:48:11,760 --> 00:48:14,920
Speaker 1: different points of a company's lifespan. You know, you just

794
00:48:14,960 --> 00:48:17,320
Speaker 1: think of in personal relationships, who you might have dated

795
00:48:17,360 --> 00:48:19,520
Speaker 1: and when you're in your when you're eighteen nineteen is

796
00:48:19,560 --> 00:48:22,800
Speaker 1: not necessary who you maybe should end up married to write,

797
00:48:23,640 --> 00:48:27,840
Speaker 1: And Brennan was exactly the person that Vanguard needed, and

798
00:48:27,880 --> 00:48:30,600
Speaker 1: Frankie had been running the place for quite a few

799
00:48:30,719 --> 00:48:34,239
Speaker 1: years before he formally took over. The tragedy was that

800
00:48:34,280 --> 00:48:37,160
Speaker 1: they never made up. When Bogel did kiss and make

801
00:48:37,239 --> 00:48:42,240
Speaker 1: up with the Boston Partners that had fired him decades earlier.

802
00:48:42,520 --> 00:48:45,960
Speaker 1: He'd read the story about Hamilton and Jefferson and how

803
00:48:46,000 --> 00:48:48,359
Speaker 1: they made up and was inspired and got in touch

804
00:48:48,480 --> 00:48:50,840
Speaker 1: with them and they used to hang out together. But

805
00:48:50,920 --> 00:48:54,120
Speaker 1: he never made up with Brennan. Even on his deathbed

806
00:48:54,200 --> 00:48:56,480
Speaker 1: when people, some of their friends trying to engineer some

807
00:48:56,520 --> 00:49:01,920
Speaker 1: sort of reproach more and you refused. And that's tragic. Yeah,

808
00:49:02,000 --> 00:49:04,560
Speaker 1: that that was the single biggest surprise, uh in the

809
00:49:04,600 --> 00:49:08,040
Speaker 1: book to me. Also, I want to push back on

810
00:49:08,080 --> 00:49:13,880
Speaker 1: some of the criticism of indexing, because let me just

811
00:49:13,920 --> 00:49:17,920
Speaker 1: start off with this Paul Singer quote. We are always

812
00:49:17,960 --> 00:49:22,319
Speaker 1: amazed by decent ideas and insights which are stretched so

813
00:49:22,400 --> 00:49:27,080
Speaker 1: far beyond their original version that they become caricatures of

814
00:49:27,120 --> 00:49:33,279
Speaker 1: themselves and sometimes contrafunctional. So so that's a true statement,

815
00:49:33,920 --> 00:49:37,280
Speaker 1: except I don't see how this applies to either passive

816
00:49:38,200 --> 00:49:43,439
Speaker 1: or indexing. What's the beef with indexing other than it's

817
00:49:43,480 --> 00:49:46,600
Speaker 1: costing Wall Street a lot of fees, it's costing big

818
00:49:46,640 --> 00:49:50,440
Speaker 1: firms um to have to provide more services at a

819
00:49:50,560 --> 00:49:55,560
Speaker 1: lower charge. Other than that, Mrs Lincoln, what's the problem

820
00:49:55,560 --> 00:50:02,040
Speaker 1: with passive? No, it is it's the you know, twenty

821
00:50:02,120 --> 00:50:07,360
Speaker 1: trillion dollar question now probably right, um, So clearly you

822
00:50:07,400 --> 00:50:12,280
Speaker 1: know you cannot entirely disentangle the criticism from the fact

823
00:50:12,320 --> 00:50:16,840
Speaker 1: that this is essentially cheap, simple product being offered in

824
00:50:16,880 --> 00:50:21,400
Speaker 1: an industry that does not like cheap simple products, plexity

825
00:50:21,480 --> 00:50:27,239
Speaker 1: and expense. But I think I think sometimes indexing proponents,

826
00:50:27,239 --> 00:50:31,120
Speaker 1: including men you, right, we sometimes it's too easy to

827
00:50:31,239 --> 00:50:36,120
Speaker 1: dismiss the criticism as pure sour grapes, right. I think

828
00:50:36,160 --> 00:50:39,040
Speaker 1: at some point you need at least try to engage

829
00:50:39,520 --> 00:50:42,120
Speaker 1: on the factual basis. And I think there are some

830
00:50:42,200 --> 00:50:47,440
Speaker 1: areas that I think are essentially total ball, the criticism

831
00:50:47,960 --> 00:50:51,920
Speaker 1: or the total ball. And you don't believe that indexing

832
00:50:52,040 --> 00:50:56,960
Speaker 1: is a communist plot or anti American r No, I

833
00:50:57,000 --> 00:50:58,919
Speaker 1: do not. I think it's very much. You know, it's

834
00:50:58,920 --> 00:51:03,640
Speaker 1: a free market. You know, it's most the perfect embodiment

835
00:51:03,640 --> 00:51:07,719
Speaker 1: of capitalism. But what about the criticism that, hey, all

836
00:51:07,760 --> 00:51:11,400
Speaker 1: these companies know they're all owned by big indexes, so

837
00:51:11,440 --> 00:51:15,320
Speaker 1: they're gonna get together and conspire to fix prices. I

838
00:51:15,320 --> 00:51:18,280
Speaker 1: don't mean the investment companies, but hey, all the banks

839
00:51:18,280 --> 00:51:20,560
Speaker 1: are owned by the same companies, and all the airlines,

840
00:51:20,840 --> 00:51:23,960
Speaker 1: and we're going to see price fixing. Yes, so this

841
00:51:24,040 --> 00:51:28,520
Speaker 1: is the common ownership theory. Um, so it has many

842
00:51:28,560 --> 00:51:30,239
Speaker 1: passes to it. So funny. Mean, I do think this

843
00:51:30,360 --> 00:51:32,880
Speaker 1: is one of the thornia ones. I do not think.

844
00:51:33,280 --> 00:51:36,640
Speaker 1: I am convinced that, you know, these companies, these investment

845
00:51:36,640 --> 00:51:39,759
Speaker 1: companies are not getting together with portfolio companies because they're

846
00:51:39,760 --> 00:51:42,479
Speaker 1: a black rock and Vanguard own yes, a big chunk

847
00:51:42,520 --> 00:51:44,920
Speaker 1: of very major bank in American every major airline, and

848
00:51:44,960 --> 00:51:48,640
Speaker 1: every major hotel group and telling them to essentially fix prices.

849
00:51:49,480 --> 00:51:52,480
Speaker 1: Uh why why wouldn't they do though? Isn't there a

850
00:51:52,520 --> 00:51:56,239
Speaker 1: ton of upside for them in in their struggling businesses?

851
00:51:56,680 --> 00:52:00,800
Speaker 1: Would they want to engage in illegal antitrust behavior because

852
00:52:00,880 --> 00:52:04,040
Speaker 1: they're all doing so poorly? I mean, the theme the

853
00:52:04,040 --> 00:52:07,640
Speaker 1: thesis could be one of the stupidest ideas I've ever

854
00:52:07,680 --> 00:52:11,760
Speaker 1: heard in either of finance or legal that these three giant,

855
00:52:12,000 --> 00:52:16,280
Speaker 1: wildly successful companies who couldn't care less about the cost

856
00:52:16,360 --> 00:52:20,840
Speaker 1: of hotels or airline tickets are somehow can to engage

857
00:52:20,880 --> 00:52:25,359
Speaker 1: in a conspiracy to fix prices. I don't like. I'm

858
00:52:25,400 --> 00:52:29,360
Speaker 1: looking for some rationality there, and it's just talk about

859
00:52:29,400 --> 00:52:32,840
Speaker 1: flinging stuff against the wall to see what sticks well.

860
00:52:32,880 --> 00:52:36,960
Speaker 1: I mean, it's brawling it down. It's about whether incentives matter.

861
00:52:37,760 --> 00:52:40,040
Speaker 1: And I think that we can all agree that incentives

862
00:52:40,040 --> 00:52:42,480
Speaker 1: in some form of fashion do matter in how we

863
00:52:42,560 --> 00:52:47,240
Speaker 1: structure the moderate economy. And I think I completely agree

864
00:52:47,360 --> 00:52:50,719
Speaker 1: that there is no cut how behavior whatsoever going on.

865
00:52:51,000 --> 00:52:54,160
Speaker 1: And I think the the example that the perfect example

866
00:52:54,239 --> 00:52:56,319
Speaker 1: that people have kind of shown in data that kind

867
00:52:56,360 --> 00:53:00,440
Speaker 1: of struggles in the face of common and this common

868
00:53:00,520 --> 00:53:04,120
Speaker 1: sense is airlines. The idea that airlines you could see that,

869
00:53:04,200 --> 00:53:07,320
Speaker 1: you know, whether it's great cross holding between investment managers

870
00:53:07,360 --> 00:53:10,920
Speaker 1: and airlines. They seem to compete less aggressively. The problem is,

871
00:53:10,960 --> 00:53:13,680
Speaker 1: of course, there's hard in industry that's gone more serily

872
00:53:13,800 --> 00:53:18,719
Speaker 1: bankrupt for half a century than airlines. Massive consolidation. What

873
00:53:18,760 --> 00:53:21,840
Speaker 1: are they're like for what are their four major carriers today?

874
00:53:21,840 --> 00:53:26,520
Speaker 1: They used to be fourteen. It's just they they you know,

875
00:53:26,680 --> 00:53:29,120
Speaker 1: that's the exception that proves the rule. They had to

876
00:53:29,239 --> 00:53:33,520
Speaker 1: use airlines, but they ignored technology, they ignored finance, they

877
00:53:33,560 --> 00:53:38,160
Speaker 1: ignored consumers. There's a million other sectors that they had

878
00:53:38,200 --> 00:53:42,719
Speaker 1: to ignore because there's no evidence. So almost randomly, you know,

879
00:53:43,000 --> 00:53:46,240
Speaker 1: airlines have never been a good business, at least dating

880
00:53:46,280 --> 00:53:49,160
Speaker 1: back to kitty hawk, And so think about all the

881
00:53:49,239 --> 00:53:53,359
Speaker 1: airline companies that have gone belly up. It shows you

882
00:53:53,400 --> 00:53:56,520
Speaker 1: if you're gonna use airlines as your example, and you

883
00:53:56,600 --> 00:54:01,680
Speaker 1: can ignore technology or consumer goods or fine, as you've

884
00:54:01,719 --> 00:54:07,479
Speaker 1: already lost, you've admitted your your thesis is intellectually bankrupt. Well,

885
00:54:07,520 --> 00:54:10,000
Speaker 1: I mean, so we need to split out the theory

886
00:54:10,120 --> 00:54:12,480
Speaker 1: from the evidence. And I agree that the reason why

887
00:54:12,480 --> 00:54:15,280
Speaker 1: they use airline is purely that they had very granular

888
00:54:15,400 --> 00:54:19,840
Speaker 1: data on the costs of individual lines and competition between

889
00:54:20,120 --> 00:54:22,319
Speaker 1: hubs and so on. So this is what they had

890
00:54:22,360 --> 00:54:26,120
Speaker 1: good data for. The theory is and again this is

891
00:54:26,160 --> 00:54:28,920
Speaker 1: something that you know I can I am very much

892
00:54:28,960 --> 00:54:31,920
Speaker 1: on the fence on and probably leaning through the all skepticism.

893
00:54:31,920 --> 00:54:34,680
Speaker 1: But the idea that if you are a CEO of

894
00:54:34,719 --> 00:54:39,200
Speaker 1: a company and you know your major shareholders are also

895
00:54:39,560 --> 00:54:43,840
Speaker 1: the major shareholders and all your competitors, does that somehow

896
00:54:43,880 --> 00:54:49,359
Speaker 1: even subconsciously dent your winningness to compete aggressively even by

897
00:54:49,480 --> 00:54:53,560
Speaker 1: a little bit. Now, I think there are all sorts

898
00:54:53,560 --> 00:54:57,399
Speaker 1: of other incentives embedded in a CEO job. I mean,

899
00:54:57,440 --> 00:55:00,560
Speaker 1: just the fact that obviously they comp is usually time

900
00:55:00,600 --> 00:55:04,040
Speaker 1: to share price. So if competition makes sense, then they

901
00:55:04,080 --> 00:55:08,600
Speaker 1: will compete aggressively. But it is within I think theoretical

902
00:55:08,680 --> 00:55:13,560
Speaker 1: possibility that if you are the THEO of a company

903
00:55:13,600 --> 00:55:17,400
Speaker 1: and your major shareholders are all major shareholders in your rivals,

904
00:55:17,640 --> 00:55:21,000
Speaker 1: that you might be slightly on the margin less inclined

905
00:55:21,040 --> 00:55:24,600
Speaker 1: to compete aggressively. That is at least possible. But I

906
00:55:24,960 --> 00:55:28,399
Speaker 1: see these concerns is more a manifestation of this. Why

907
00:55:28,480 --> 00:55:32,480
Speaker 1: the concern that the big three, State three, black Rock,

908
00:55:32,520 --> 00:55:35,920
Speaker 1: and Vanguard, but primarily Vanguard and black Rock are just

909
00:55:36,000 --> 00:55:39,520
Speaker 1: so enormously gigantic now and I'm just going to get

910
00:55:39,520 --> 00:55:42,319
Speaker 1: bigger and bigger. And this was something that bothered even

911
00:55:42,400 --> 00:55:45,960
Speaker 1: Jack Bogel before he passed away. So so to put

912
00:55:46,000 --> 00:55:48,000
Speaker 1: pieces of pushback on this and you could see you

913
00:55:48,000 --> 00:55:51,279
Speaker 1: I've spent some time thinking and writing about this. The

914
00:55:51,320 --> 00:55:55,960
Speaker 1: first is everybody wants to talk about the fund industry,

915
00:55:56,239 --> 00:56:00,080
Speaker 1: but that's a tiny percentage of the overall assets. Have

916
00:56:00,239 --> 00:56:04,000
Speaker 1: more than half fifty something per cent of mutual funds

917
00:56:04,000 --> 00:56:07,919
Speaker 1: and ETFs are passive, not active. But you know, that's

918
00:56:07,960 --> 00:56:12,399
Speaker 1: a twenty trillion dollar industry out of a hundred plus

919
00:56:12,480 --> 00:56:17,239
Speaker 1: trillion dollars. The vast majority of stocks, bonds, and other

920
00:56:17,320 --> 00:56:23,080
Speaker 1: assets are still owned actively outside of funds. So within

921
00:56:23,200 --> 00:56:27,120
Speaker 1: that little group, you're gonna ignore the balance of the

922
00:56:27,200 --> 00:56:30,799
Speaker 1: ownership structure of your that that's what makes this a

923
00:56:30,880 --> 00:56:36,480
Speaker 1: fever dream of of law professors and and not reality.

924
00:56:36,960 --> 00:56:41,600
Speaker 1: I mean, the reality is most equities are held actively,

925
00:56:42,440 --> 00:56:47,840
Speaker 1: majority of funds are passive, but funds are a minority

926
00:56:47,920 --> 00:56:52,839
Speaker 1: of of investing dollars. Tell me where that's wrong. No, No,

927
00:56:52,920 --> 00:56:55,759
Speaker 1: I agree, And like I said, I'm the reason why

928
00:56:55,840 --> 00:56:58,240
Speaker 1: I said I'm still on the fence rather than fully

929
00:56:58,440 --> 00:57:01,400
Speaker 1: kind of shrugging off this there it's not just a

930
00:57:01,440 --> 00:57:05,319
Speaker 1: concern about where we are now, but where we are heading, right,

931
00:57:05,360 --> 00:57:10,720
Speaker 1: I mean, given the economics of indexing, black Rock, State Street,

932
00:57:10,760 --> 00:57:13,960
Speaker 1: and Vanguard are already you know, the biggest and the

933
00:57:14,000 --> 00:57:16,920
Speaker 1: cheapest providers of index funds and in funds in general.

934
00:57:17,400 --> 00:57:19,760
Speaker 1: And this is a an oligopy that benefits us in

935
00:57:19,800 --> 00:57:22,720
Speaker 1: the form of cheaper investments. But they are now account

936
00:57:22,720 --> 00:57:26,480
Speaker 1: for around the quarter of all vote casts on average

937
00:57:26,480 --> 00:57:31,720
Speaker 1: in the sure Yeah, and with the next couple of decades,

938
00:57:32,240 --> 00:57:35,920
Speaker 1: we're going to be colosted given the growth rates. And

939
00:57:35,920 --> 00:57:39,680
Speaker 1: this is something Jack Bogel not exactly you know, an

940
00:57:39,760 --> 00:57:42,680
Speaker 1: enemy of indexing said that this kind of concentration would

941
00:57:42,720 --> 00:57:45,439
Speaker 1: probably not be in the national interest. So I see

942
00:57:45,480 --> 00:57:49,520
Speaker 1: that the common ownership theory is just one part of

943
00:57:49,520 --> 00:57:55,600
Speaker 1: a multiheaded hydra. That is the the gigantism that the

944
00:57:55,600 --> 00:57:58,760
Speaker 1: the inexorable logic of index funds and the economics of

945
00:57:58,800 --> 00:58:02,200
Speaker 1: index funds means that the big will become bigger, and

946
00:58:02,880 --> 00:58:05,360
Speaker 1: at some point we are going to be in a

947
00:58:05,520 --> 00:58:08,920
Speaker 1: world where essentially they control the majority of most major

948
00:58:08,960 --> 00:58:11,920
Speaker 1: companies in America and even in the world. But to

949
00:58:12,480 --> 00:58:15,920
Speaker 1: get there we have to ignore. To get there, we

950
00:58:15,960 --> 00:58:21,720
Speaker 1: have to ignore. The past two years have not been

951
00:58:21,760 --> 00:58:26,360
Speaker 1: about indexing, have not been about passive investment. It's been

952
00:58:26,400 --> 00:58:31,440
Speaker 1: about memestocks and robin hood and actively trading. And by

953
00:58:31,520 --> 00:58:36,640
Speaker 1: this cell that you know, the mind share that active

954
00:58:37,800 --> 00:58:43,000
Speaker 1: um investing and trading has grabbed from passive since the

955
00:58:43,040 --> 00:58:47,800
Speaker 1: financial lockdown has begun, has told you that half the

956
00:58:47,840 --> 00:58:52,480
Speaker 1: world are our closet day traders just waiting for an

957
00:58:52,480 --> 00:58:56,360
Speaker 1: opportunity to come out of there um spidy holes and

958
00:58:56,720 --> 00:59:01,200
Speaker 1: uh start trading. How do you explain the rise of

959
00:59:01,320 --> 00:59:04,840
Speaker 1: everything we've seen over the past two years in the

960
00:59:04,880 --> 00:59:09,640
Speaker 1: face of efficiency and low cost of of the passive

961
00:59:09,680 --> 00:59:15,440
Speaker 1: side of the world. Well, fundamentally, I think hope springs eternal.

962
00:59:15,800 --> 00:59:18,200
Speaker 1: Everybody thinks and wants to try and beat the index.

963
00:59:18,200 --> 00:59:21,160
Speaker 1: Everybody wants to get rich. And we've seen throughout history

964
00:59:21,240 --> 00:59:24,640
Speaker 1: these these manias, sometimes the last for a few weeks

965
00:59:24,640 --> 00:59:27,320
Speaker 1: in the weird esoteric corners of the market. Sometimes they've

966
00:59:27,360 --> 00:59:30,720
Speaker 1: been you know, countrywide or even global, such as the

967
00:59:30,760 --> 00:59:35,560
Speaker 1: dot com bubble famously, and over time they they tend

968
00:59:35,600 --> 00:59:38,360
Speaker 1: to end always the same way, in a massive burst,

969
00:59:38,400 --> 00:59:41,280
Speaker 1: and people get their faces ripped off, and there will

970
00:59:41,320 --> 00:59:43,880
Speaker 1: be congressional hearings and so on. I think this is

971
00:59:43,880 --> 00:59:46,640
Speaker 1: a little bit different in that there are secular changes

972
00:59:47,240 --> 00:59:51,080
Speaker 1: in the financial system, such as free trading, gamified apps,

973
00:59:51,120 --> 00:59:54,240
Speaker 1: social media. That means that this is probably going to

974
00:59:54,320 --> 00:59:56,680
Speaker 1: be a little bit different at some point that things

975
00:59:56,680 --> 00:59:58,800
Speaker 1: will settle down, but it's not going to settle band

976
00:59:58,840 --> 01:00:01,680
Speaker 1: to what we saw before. But even this year, a

977
01:00:01,760 --> 01:00:04,040
Speaker 1: year that has I agree, in the past eighteen months

978
01:00:04,240 --> 01:00:09,160
Speaker 1: characterized and largely by the the rise of retail trading

979
01:00:09,800 --> 01:00:12,320
Speaker 1: and active funds have actually taken in billions of bowls

980
01:00:12,440 --> 01:00:15,479
Speaker 1: this year. It's more it's almost the exception that proves

981
01:00:15,520 --> 01:00:17,400
Speaker 1: the rule that even in a year where this has

982
01:00:17,440 --> 01:00:19,720
Speaker 1: been going on and active has had inflows for the

983
01:00:19,760 --> 01:00:23,920
Speaker 1: first time in over a decade. Essentially, hundreds of billions

984
01:00:23,920 --> 01:00:26,320
Speaker 1: of dollars have gone out every year from active funds,

985
01:00:26,400 --> 01:00:29,360
Speaker 1: year after year after year after year, essentially for fifty

986
01:00:29,400 --> 01:00:32,160
Speaker 1: and sixteen years since the dot com bubble, and this

987
01:00:32,240 --> 01:00:33,760
Speaker 1: year they've got taken in. There were I think a

988
01:00:33,800 --> 01:00:37,160
Speaker 1: hundred fifty billions. Passive is still taken in. I think

989
01:00:37,240 --> 01:00:41,040
Speaker 1: close to five or six hundred billion dollars, And if

990
01:00:41,080 --> 01:00:44,160
Speaker 1: include market gains, we're still saying it's it's gaining market share,

991
01:00:44,240 --> 01:00:49,520
Speaker 1: it's growing, and it's broadening out. Index bond funds, passive

992
01:00:49,560 --> 01:00:53,400
Speaker 1: bond ETFs. They are now growing. So what was primarily

993
01:00:53,520 --> 01:00:57,560
Speaker 1: an equity phenomenon is now gaining groups, setting routs and

994
01:00:57,680 --> 01:01:02,240
Speaker 1: far broader swaths of markets. So definitely this year is

995
01:01:02,280 --> 01:01:04,840
Speaker 1: all about active, but we know that the data will

996
01:01:04,840 --> 01:01:07,960
Speaker 1: show that the majority of active managers at the end

997
01:01:08,000 --> 01:01:11,440
Speaker 1: of one will have underperformed, and over the ten years,

998
01:01:12,040 --> 01:01:15,240
Speaker 1: past ten years, the vast majority of them will underperform

999
01:01:15,320 --> 01:01:17,320
Speaker 1: and the money will keep shifting because a lot of

1000
01:01:17,320 --> 01:01:20,800
Speaker 1: this is an autopilot target date return funds, pension funds,

1001
01:01:20,880 --> 01:01:23,480
Speaker 1: let know the data. They will just put money in

1002
01:01:23,760 --> 01:01:26,400
Speaker 1: cheap index funds and forget about it, essentially and do

1003
01:01:26,520 --> 01:01:29,320
Speaker 1: better than most of the active traders out there, who sadly,

1004
01:01:29,400 --> 01:01:31,160
Speaker 1: I think, you know, at some point some of them

1005
01:01:31,160 --> 01:01:34,320
Speaker 1: will become millionaires, but most of them will end up

1006
01:01:34,360 --> 01:01:36,080
Speaker 1: losing a lot of money and it will be a

1007
01:01:36,160 --> 01:01:40,439
Speaker 1: very sad denial. More. Yeah, farmo is a big deal.

1008
01:01:40,800 --> 01:01:44,160
Speaker 1: And as much as people like saving money and being

1009
01:01:44,800 --> 01:01:49,280
Speaker 1: passive and guaranteeing themselves some beta, you know, the idiot

1010
01:01:49,280 --> 01:01:54,120
Speaker 1: next door buys some hard stock or some crypto coin

1011
01:01:54,160 --> 01:01:56,520
Speaker 1: and makes a ton of money and suddenly everybody thinks

1012
01:01:56,560 --> 01:02:00,520
Speaker 1: their day traders, So let's talk. Let's talk a little

1013
01:02:00,520 --> 01:02:05,440
Speaker 1: bit about um. You mentioned smart data and factor investing

1014
01:02:05,560 --> 01:02:09,240
Speaker 1: seems to have been struggling over the past couple of years.

1015
01:02:09,320 --> 01:02:11,640
Speaker 1: Value oriented funds like d f A you have seen

1016
01:02:11,680 --> 01:02:17,040
Speaker 1: a performed performance lag value has underperformed growth for more

1017
01:02:17,080 --> 01:02:20,320
Speaker 1: than a decade. How do you put that into context?

1018
01:02:20,480 --> 01:02:24,680
Speaker 1: We we thought we saw a factor investing and the

1019
01:02:24,720 --> 01:02:28,800
Speaker 1: farmer French factors as as a sea change. Is this

1020
01:02:28,840 --> 01:02:32,480
Speaker 1: going to turn out to be a temporary phenomena or

1021
01:02:32,600 --> 01:02:38,959
Speaker 1: or or is this the underperformance temporary. Uh, it's it's

1022
01:02:38,960 --> 01:02:40,880
Speaker 1: one of my favorite themes. I mean, apart from some

1023
01:02:41,000 --> 01:02:43,760
Speaker 1: past investing, it's the quant investing is one of my

1024
01:02:44,200 --> 01:02:48,040
Speaker 1: main favorite subjects out there. I think, I mean katy.

1025
01:02:48,160 --> 01:02:52,280
Speaker 1: Factor investing has fallen out of favor primarily because, I mean,

1026
01:02:52,360 --> 01:02:54,840
Speaker 1: some factors have done well. Momentum has done wealth quite

1027
01:02:54,840 --> 01:02:57,880
Speaker 1: a while, but the big mainstream ones like value especially

1028
01:02:57,960 --> 01:03:01,600
Speaker 1: has had a awful run. I've seen studies that show

1029
01:03:01,640 --> 01:03:06,280
Speaker 1: it's done. The worst is basically financial records began essentially

1030
01:03:06,320 --> 01:03:10,640
Speaker 1: like two three hundred years ago UM and most most

1031
01:03:10,680 --> 01:03:13,040
Speaker 1: notably a lot of quant hedge funds. You know, the

1032
01:03:13,080 --> 01:03:17,400
Speaker 1: more sophisticated complex strategies also did suffer a lot in

1033
01:03:19,040 --> 01:03:22,440
Speaker 1: because we entered an entirely newmarket regime and models that

1034
01:03:22,480 --> 01:03:27,680
Speaker 1: were trained on existing financial data essentially, you know, data

1035
01:03:27,760 --> 01:03:33,120
Speaker 1: that that didn't have any pandemics in them um discontackle.

1036
01:03:33,400 --> 01:03:36,960
Speaker 1: So they they fizzled. But I think the broader phenomenon

1037
01:03:37,080 --> 01:03:40,040
Speaker 1: or factor investing in quant investing, certainly it's still alive

1038
01:03:40,080 --> 01:03:43,560
Speaker 1: and well because fundamentally, I do believe the data on

1039
01:03:43,600 --> 01:03:48,360
Speaker 1: these factors is pretty robust. The problem is, I think

1040
01:03:48,720 --> 01:03:51,360
Speaker 1: that when it comes to the factor stuff. I think

1041
01:03:51,400 --> 01:03:54,080
Speaker 1: for a lot of order investors, the discipline needed to

1042
01:03:54,160 --> 01:03:58,080
Speaker 1: hold onto them is so enormous that the vast majority

1043
01:03:58,120 --> 01:04:01,880
Speaker 1: of people should stick to boring play dumb beta, as

1044
01:04:02,160 --> 01:04:06,280
Speaker 1: you know, one might call it, because essentially, yes, over

1045
01:04:06,320 --> 01:04:08,440
Speaker 1: a twenty thirty year period, you might do better in

1046
01:04:08,440 --> 01:04:11,400
Speaker 1: a value fund. But you know, when you've got a

1047
01:04:11,440 --> 01:04:14,760
Speaker 1: ten fifteen year draw down like we've had now the

1048
01:04:15,160 --> 01:04:17,320
Speaker 1: long run, you know, in the long run, we're all dead, right,

1049
01:04:18,280 --> 01:04:20,640
Speaker 1: it just becomes so difficult to hold on. The reason

1050
01:04:20,680 --> 01:04:23,960
Speaker 1: why these factors work is because on the drawdowns to

1051
01:04:24,120 --> 01:04:28,640
Speaker 1: large extent, West Gray famously said even God couldn't stay

1052
01:04:28,640 --> 01:04:33,800
Speaker 1: invested in a deep value fund. No, I think, I think,

1053
01:04:34,160 --> 01:04:36,439
Speaker 1: I think God would have bailed out a few years ago.

1054
01:04:36,880 --> 01:04:39,880
Speaker 1: I think it's only a few very dedicated value people

1055
01:04:40,040 --> 01:04:42,680
Speaker 1: and Cliff Fastness left standing and that in that trade.

1056
01:04:42,960 --> 01:04:45,800
Speaker 1: So good year, now, right? Yeah? No, this year, This

1057
01:04:45,880 --> 01:04:48,840
Speaker 1: year has been good for both both some value players

1058
01:04:48,880 --> 01:04:51,400
Speaker 1: and some of the quant funds. Let's talk about that

1059
01:04:51,480 --> 01:04:55,040
Speaker 1: a second. You you cover quant funds in the f

1060
01:04:55,080 --> 01:04:57,720
Speaker 1: T and it kind of seems like, I don't know,

1061
01:04:57,760 --> 01:05:00,560
Speaker 1: the past eighteen months twenty four months cover Ridge news

1062
01:05:00,560 --> 01:05:05,720
Speaker 1: flow on it has really died down, perhaps following some

1063
01:05:05,800 --> 01:05:09,520
Speaker 1: softer performance of the big quants. What's going on in

1064
01:05:09,520 --> 01:05:14,320
Speaker 1: the world a quant well, I think broadly speaking it

1065
01:05:14,480 --> 01:05:17,080
Speaker 1: because you know I talked about the cultural journalism, right,

1066
01:05:17,120 --> 01:05:20,320
Speaker 1: I mean, we knew is better than old, bad is

1067
01:05:20,360 --> 01:05:23,480
Speaker 1: better than good, and kind of nothing to write home

1068
01:05:23,520 --> 01:05:28,720
Speaker 1: about is nothing to write about, essentially. So when quant

1069
01:05:28,800 --> 01:05:31,600
Speaker 1: was considered hot and sexy and fun and that's what

1070
01:05:31,920 --> 01:05:33,760
Speaker 1: where all the money was going, there was naturally a

1071
01:05:33,800 --> 01:05:36,880
Speaker 1: lot of coverage on that. And when quant funds had

1072
01:05:36,880 --> 01:05:39,840
Speaker 1: a terrible time in twenty a lot of them that famously,

1073
01:05:40,080 --> 01:05:43,440
Speaker 1: even Renaissance, you know that the big daddy of the

1074
01:05:43,480 --> 01:05:46,080
Speaker 1: quant world had a terrible years in many of its

1075
01:05:46,200 --> 01:05:49,520
Speaker 1: public funds. UM people wrote a lot about that, including me.

1076
01:05:49,680 --> 01:05:52,840
Speaker 1: But now it's kind of just generally a story of

1077
01:05:52,920 --> 01:05:57,240
Speaker 1: improving returns. Nothing kind of sensational, nothing that's going to

1078
01:05:57,320 --> 01:05:59,640
Speaker 1: make the front page of the journal, war or the ft,

1079
01:06:00,000 --> 01:06:02,280
Speaker 1: but you know, it's just better across the board a

1080
01:06:02,400 --> 01:06:05,720
Speaker 1: qu are. There's a big factor quant fund is doing

1081
01:06:05,760 --> 01:06:08,880
Speaker 1: better as well. But for the reason why I spent

1082
01:06:08,960 --> 01:06:11,400
Speaker 1: so much time thinking about this and covering about this,

1083
01:06:11,440 --> 01:06:16,080
Speaker 1: it's just fundamentally whether way our investor is going to

1084
01:06:16,080 --> 01:06:20,200
Speaker 1: be using more technology to invest more systematically in the

1085
01:06:20,200 --> 01:06:23,240
Speaker 1: future or less, And I think the direction of travel

1086
01:06:23,400 --> 01:06:27,120
Speaker 1: is just clear. So that's why I spent lots of

1087
01:06:27,160 --> 01:06:29,080
Speaker 1: time on this, because if you want to understand how

1088
01:06:29,120 --> 01:06:32,800
Speaker 1: mark is actually functioned today, let's learn how they are

1089
01:06:32,840 --> 01:06:35,320
Speaker 1: going to function in the decades time. You need to

1090
01:06:35,400 --> 01:06:38,400
Speaker 1: understand the quant ecosystem. So I'm just trying to go

1091
01:06:38,440 --> 01:06:40,200
Speaker 1: where the puck is heading. And I think we are

1092
01:06:40,240 --> 01:06:43,400
Speaker 1: going to see convergence as more and more discretionary people

1093
01:06:44,080 --> 01:06:47,200
Speaker 1: kind of become more quantity and some of the quants

1094
01:06:47,280 --> 01:06:50,120
Speaker 1: even add a bit of a discretionary overlay that this

1095
01:06:50,360 --> 01:06:53,880
Speaker 1: kind of always a little bit blurry line between systematic

1096
01:06:53,960 --> 01:06:56,680
Speaker 1: and discretionary investing is is going to get washed out

1097
01:06:56,680 --> 01:06:58,480
Speaker 1: a little bit, I think in the coming ten years

1098
01:06:58,560 --> 01:07:01,320
Speaker 1: or so. Let's tackle a bit about skating to where

1099
01:07:01,360 --> 01:07:07,240
Speaker 1: the park might be going. You briefly mention um direct indexing.

1100
01:07:07,560 --> 01:07:10,439
Speaker 1: What do you think about this? It's small, but it's

1101
01:07:10,520 --> 01:07:14,640
Speaker 1: rapidly growing and it's a very interesting take on the

1102
01:07:14,720 --> 01:07:19,120
Speaker 1: concept of passive investing. No, there's a fascinating trend and

1103
01:07:19,160 --> 01:07:22,520
Speaker 1: I do actually think it has a great future. People

1104
01:07:22,840 --> 01:07:26,640
Speaker 1: clearly do want customization. I mean, I might make it

1105
01:07:26,720 --> 01:07:28,960
Speaker 1: like it in many areas as well. We've got to

1106
01:07:29,080 --> 01:07:31,600
Speaker 1: use it some many other parts of life. That makes

1107
01:07:31,640 --> 01:07:33,960
Speaker 1: perfect sense that this is coming to indexing as well.

1108
01:07:34,800 --> 01:07:37,600
Speaker 1: But I still think that the vast majority of people

1109
01:07:38,520 --> 01:07:43,280
Speaker 1: still want simplicity and especially in their financial products. So

1110
01:07:43,640 --> 01:07:47,880
Speaker 1: you and I, you know, slightly moved, slightly more interested

1111
01:07:47,880 --> 01:07:50,640
Speaker 1: in these things than the average punch on the street.

1112
01:07:51,000 --> 01:07:53,680
Speaker 1: Might want to fiddle around with a broad let a

1113
01:07:53,680 --> 01:07:56,280
Speaker 1: a Vanguard total stock market fund and take away the

1114
01:07:56,320 --> 01:08:01,240
Speaker 1: companies that might do stuff we find reprehensible. Or maybe

1115
01:08:01,320 --> 01:08:03,680
Speaker 1: American Airlines dumped you from a flight and you feel

1116
01:08:03,800 --> 01:08:06,560
Speaker 1: angry about that. Or you might want to cut out

1117
01:08:06,560 --> 01:08:09,280
Speaker 1: your employer, right because you don't want to have double

1118
01:08:09,320 --> 01:08:14,120
Speaker 1: economic risk or expise working there. Yeah, so that makes

1119
01:08:14,120 --> 01:08:16,479
Speaker 1: perfect sense. But the vast majority of people don't want

1120
01:08:16,479 --> 01:08:19,160
Speaker 1: to fiddle around with this, right, I mean, who likes

1121
01:08:19,160 --> 01:08:23,200
Speaker 1: doing their taxes? Nobody? I mean, so I can see

1122
01:08:23,200 --> 01:08:24,920
Speaker 1: it as a really useful tool for a lot of

1123
01:08:24,920 --> 01:08:27,559
Speaker 1: financial advisors, but most people are still going to be

1124
01:08:27,600 --> 01:08:31,200
Speaker 1: basically better off and prefer buying broad index fund. So

1125
01:08:31,240 --> 01:08:34,920
Speaker 1: I see this it can easily become a trigging stolar thing.

1126
01:08:35,360 --> 01:08:37,479
Speaker 1: But I do not see it as the truth of

1127
01:08:37,600 --> 01:08:40,519
Speaker 1: indexing three point oh as some people see it, nor

1128
01:08:40,600 --> 01:08:45,439
Speaker 1: as a viable, genuine competitor in size and scale to

1129
01:08:46,080 --> 01:08:49,880
Speaker 1: ETF and some traditional index mutual funds. So there's a

1130
01:08:49,960 --> 01:08:53,599
Speaker 1: huge trend. They're definitely going to grow, But right now

1131
01:08:53,640 --> 01:08:57,599
Speaker 1: I feel some of the hype around it is probably

1132
01:08:57,960 --> 01:09:00,760
Speaker 1: people are getting a little bit over their skis. Yeah,

1133
01:09:00,840 --> 01:09:04,040
Speaker 1: I can see that that makes some sense. I'm intrigued

1134
01:09:04,080 --> 01:09:06,800
Speaker 1: by it, but I want to get your take, so

1135
01:09:06,840 --> 01:09:09,519
Speaker 1: I only have you for a fine amount of time.

1136
01:09:09,600 --> 01:09:13,240
Speaker 1: Let's jump to some of our favorite questions that we

1137
01:09:13,280 --> 01:09:16,559
Speaker 1: ask all of our guests, starting with tell us what

1138
01:09:16,600 --> 01:09:21,040
Speaker 1: you're streaming these days? Give us your favorite Netflix, Amazon podcast?

1139
01:09:21,360 --> 01:09:25,280
Speaker 1: What's keeping you entertained during lockdown? Well, I mean, I

1140
01:09:25,400 --> 01:09:28,760
Speaker 1: just had our third child, so I have to meet

1141
01:09:28,880 --> 01:09:32,960
Speaker 1: my sort of entertainment time budget has been a little

1142
01:09:33,000 --> 01:09:37,920
Speaker 1: bit destroyed lately. But during Lockdown, one of my my

1143
01:09:38,000 --> 01:09:40,280
Speaker 1: paying guilty pleasures when I actually did have a little

1144
01:09:40,280 --> 01:09:44,719
Speaker 1: bit of time between work, childcare, and and writing the book,

1145
01:09:45,080 --> 01:09:50,160
Speaker 1: was actually rewatching Buffy, the Vampire Slayer series from my teens. Okay,

1146
01:09:50,439 --> 01:09:52,559
Speaker 1: and I thought it held up really well. It was

1147
01:09:52,640 --> 01:09:56,760
Speaker 1: quite a lot of fun. Um. So yeah, I still

1148
01:09:56,800 --> 01:09:59,840
Speaker 1: recommend that to people. It's still very it was a nostalgic,

1149
01:10:00,000 --> 01:10:03,639
Speaker 1: guilty pleasure. UM. I recently watched Turning Point, the nine

1150
01:10:03,680 --> 01:10:07,040
Speaker 1: and eleven Netflix documentary, which was excellent. I knew a

1151
01:10:07,080 --> 01:10:10,080
Speaker 1: lot of the history of again, but something sometimes putting

1152
01:10:10,120 --> 01:10:12,840
Speaker 1: it all in one place together in a nice bowl

1153
01:10:13,040 --> 01:10:16,880
Speaker 1: just really worked. I thought that series was really good. UM.

1154
01:10:16,920 --> 01:10:19,839
Speaker 1: I watched the low Key Marble series, which was entertaining.

1155
01:10:19,880 --> 01:10:21,280
Speaker 1: I mean, I've got kids, so I had to get

1156
01:10:21,280 --> 01:10:26,120
Speaker 1: Disney plus UM. On podcasts, obviously Masters of Business. I

1157
01:10:26,120 --> 01:10:29,280
Speaker 1: hear great things about it. You've got fantastic guests, especially today.

1158
01:10:30,760 --> 01:10:33,960
Speaker 1: But New Bizarre it's a podcast started by two of

1159
01:10:34,000 --> 01:10:36,760
Speaker 1: my former colleagues at the FT. I've listened a few

1160
01:10:36,760 --> 01:10:39,320
Speaker 1: episodes of that. That sounds really promising. I like a

1161
01:10:39,320 --> 01:10:43,280
Speaker 1: lot of the economic podcasts. I tend to be more

1162
01:10:43,280 --> 01:10:46,360
Speaker 1: oppositistic when it comes to the podcast, So when there

1163
01:10:46,400 --> 01:10:48,519
Speaker 1: is a specific topic or guest that I really want

1164
01:10:48,560 --> 01:10:51,120
Speaker 1: to get into, I don't have it on in the background.

1165
01:10:51,120 --> 01:10:57,840
Speaker 1: It's more for specific reasons. Yeah, and then yes, essentially, yes,

1166
01:10:57,960 --> 01:11:01,400
Speaker 1: I'm constantly entertained by the antics of my children, which

1167
01:11:01,439 --> 01:11:03,920
Speaker 1: never seemed to end that maybe will at some point

1168
01:11:04,000 --> 01:11:07,080
Speaker 1: and obviously start missing it. Then tell us about your mentors.

1169
01:11:07,080 --> 01:11:10,720
Speaker 1: Who are the folks who helped shape your career. I

1170
01:11:10,760 --> 01:11:13,679
Speaker 1: wouldn't mentor is such a big word, and I don't

1171
01:11:13,680 --> 01:11:17,639
Speaker 1: have to downplay their their importance, but maybe, um, who

1172
01:11:17,640 --> 01:11:21,400
Speaker 1: are the influential people who affected you? Yeah, well, let's

1173
01:11:21,400 --> 01:11:25,439
Speaker 1: say three. So Paul McNamara was my my boss at

1174
01:11:25,479 --> 01:11:28,519
Speaker 1: my financial journalism job covering Islamic finance in the Middle East.

1175
01:11:29,360 --> 01:11:31,960
Speaker 1: He was a very acerbic guy and I loved them

1176
01:11:32,000 --> 01:11:33,760
Speaker 1: to bits, and he gave me my first job and

1177
01:11:33,800 --> 01:11:36,439
Speaker 1: I learned a lot from him, mostly just that sense

1178
01:11:36,479 --> 01:11:38,760
Speaker 1: of that actually enjoying the job because this held a

1179
01:11:38,760 --> 01:11:42,200
Speaker 1: lot of fun. When I joined Bloomberg News, I had

1180
01:11:42,200 --> 01:11:44,800
Speaker 1: a guy called Chris Kirkham was my team leader, and

1181
01:11:44,840 --> 01:11:48,120
Speaker 1: he was phenomenal. He was also stardly, even more on

1182
01:11:48,160 --> 01:11:50,400
Speaker 1: the on the gruff and grumpy side of the spectrum,

1183
01:11:50,640 --> 01:11:54,880
Speaker 1: but just a phenomenal editor, a really great guy who

1184
01:11:55,320 --> 01:11:58,479
Speaker 1: you know, Bloomberg can be a little bit tough at times,

1185
01:11:58,520 --> 01:12:01,800
Speaker 1: and he knew the right time to yell at you.

1186
01:12:01,920 --> 01:12:03,559
Speaker 1: And they're the right time to sort of take a

1187
01:12:03,600 --> 01:12:06,599
Speaker 1: metaphorical armor on your shoulder. I remember especially one time

1188
01:12:06,640 --> 01:12:10,120
Speaker 1: I made a genuine screw up, like a huge mistake

1189
01:12:10,800 --> 01:12:12,920
Speaker 1: and it was and he didn't yell and me. He said, look,

1190
01:12:12,960 --> 01:12:14,760
Speaker 1: I think you know you made a mistake, so I'm

1191
01:12:14,760 --> 01:12:16,400
Speaker 1: not going to say anything more. Ground have a drink

1192
01:12:16,439 --> 01:12:19,200
Speaker 1: and expense it and we'll speak tomorrow. And I really

1193
01:12:19,240 --> 01:12:23,040
Speaker 1: appreciated that. And at the FT, my first editor, the

1194
01:12:23,080 --> 01:12:25,160
Speaker 1: guy that had to have beat my copy into FT

1195
01:12:25,280 --> 01:12:29,240
Speaker 1: shape was a guy called James Drummond, again very much

1196
01:12:29,280 --> 01:12:32,080
Speaker 1: on the on the grumpy side of the spectrum, but

1197
01:12:32,200 --> 01:12:34,599
Speaker 1: he was great. And I've learned from so many people

1198
01:12:35,240 --> 01:12:40,320
Speaker 1: and John authors, Jillian Te, James Macintosh, through phenomenal colleagues too,

1199
01:12:40,320 --> 01:12:42,920
Speaker 1: of which sadly are with the FT anymore. You know,

1200
01:12:42,960 --> 01:12:46,080
Speaker 1: they've gone to the enemies at Boomberg and the journal

1201
01:12:46,680 --> 01:12:49,400
Speaker 1: Um and just so many people outwhere in the industry,

1202
01:12:49,479 --> 01:12:52,080
Speaker 1: and it is really areas where you can just learn

1203
01:12:52,160 --> 01:12:54,960
Speaker 1: so much from people like Jason's I got the journal right,

1204
01:12:55,000 --> 01:12:58,679
Speaker 1: I mean, a phenomenal journalist still that just churns out

1205
01:12:58,760 --> 01:13:01,680
Speaker 1: stuff that every time I say, I wish I had

1206
01:13:01,680 --> 01:13:04,400
Speaker 1: written that, so I think that's that's my mentors are

1207
01:13:04,400 --> 01:13:06,800
Speaker 1: all the people I read and love their work. Essentially.

1208
01:13:07,040 --> 01:13:10,479
Speaker 1: That's the key line is when when you see something

1209
01:13:10,520 --> 01:13:13,559
Speaker 1: you say, damn, I wish I wrote that. That's how

1210
01:13:13,600 --> 01:13:17,400
Speaker 1: you know someone's doing really, really good work. Um, let's

1211
01:13:17,439 --> 01:13:21,280
Speaker 1: talk about everybody's favorite question reading. What are some of

1212
01:13:21,320 --> 01:13:25,920
Speaker 1: your favorite books and what are you reading recently? Well,

1213
01:13:25,920 --> 01:13:28,600
Speaker 1: I've got a backlog because of the work related to

1214
01:13:28,680 --> 01:13:32,080
Speaker 1: my book. Given all the work in that, that that was

1215
01:13:32,200 --> 01:13:34,080
Speaker 1: the one thing that just had to end, like any

1216
01:13:34,080 --> 01:13:36,439
Speaker 1: sort of pleasure reading, But I picked up again The

1217
01:13:36,439 --> 01:13:40,439
Speaker 1: Emperor of All Maladies, book on the history of cancer,

1218
01:13:40,560 --> 01:13:42,920
Speaker 1: came out over a decade ago. My wife had already

1219
01:13:43,000 --> 01:13:45,840
Speaker 1: read it, but I've wanted to read it for a

1220
01:13:45,840 --> 01:13:48,400
Speaker 1: long time, so I finally got around to us reading that.

1221
01:13:48,520 --> 01:13:51,439
Speaker 1: I'm almost done. So I've also started reading The World

1222
01:13:51,439 --> 01:13:54,479
Speaker 1: for Sale, by two former colleagues, history of a busy

1223
01:13:54,479 --> 01:14:00,280
Speaker 1: commodity trading. It's absolutely fascinating. I'm very angry at Jack

1224
01:14:00,320 --> 01:14:02,600
Speaker 1: Farcie and having a blast for leaving the Ft and

1225
01:14:02,680 --> 01:14:08,120
Speaker 1: joining the evil Bloomberg death Star, but it's a phenomenal books.

1226
01:14:08,160 --> 01:14:12,760
Speaker 1: I'm enjoying that. There are many fifty in really really

1227
01:14:12,880 --> 01:14:15,960
Speaker 1: quite interesting. What sort of advice would you have for

1228
01:14:16,000 --> 01:14:20,240
Speaker 1: a recent college grad who was interested in a career

1229
01:14:21,120 --> 01:14:27,120
Speaker 1: uh in financial journalism? Who financial journalism is hard? I mean,

1230
01:14:28,680 --> 01:14:33,479
Speaker 1: read a lot, a lot, and maybe develop a niche

1231
01:14:33,840 --> 01:14:38,599
Speaker 1: that that you know really well, because that can help

1232
01:14:38,600 --> 01:14:42,280
Speaker 1: get you your first job. Uh. And you know this

1233
01:14:42,360 --> 01:14:44,840
Speaker 1: is advice that lots of trolls give all journalists on

1234
01:14:44,880 --> 01:14:48,080
Speaker 1: the internet. But you know, learning to code or at

1235
01:14:48,120 --> 01:14:52,000
Speaker 1: least understanding some of those fives is incredibly helpful. The

1236
01:14:52,080 --> 01:14:57,680
Speaker 1: days when journalism used to hoover up so humanities graduates

1237
01:14:59,600 --> 01:15:02,479
Speaker 1: I think are over. I think the value of a

1238
01:15:02,600 --> 01:15:07,360
Speaker 1: journalism degree is primarily in the piece of paper saying

1239
01:15:07,400 --> 01:15:09,920
Speaker 1: that you are a journalism graduate, but in practice it

1240
01:15:10,040 --> 01:15:14,360
Speaker 1: is pretty minimal compared to the practical experience. I'd rather

1241
01:15:14,439 --> 01:15:18,559
Speaker 1: have somebody who, let's say, studied finance, took an internship

1242
01:15:18,560 --> 01:15:21,280
Speaker 1: at a bank or an investment fund, absolutely hated it,

1243
01:15:22,000 --> 01:15:25,280
Speaker 1: and try to get an internship at the FT or

1244
01:15:25,280 --> 01:15:28,759
Speaker 1: Bloomberg or the journal I think that's far better than having,

1245
01:15:28,800 --> 01:15:32,320
Speaker 1: you know, studied as I did. Sadly journalism and history

1246
01:15:32,320 --> 01:15:34,760
Speaker 1: and the international relations. It's worked out for me, but

1247
01:15:35,240 --> 01:15:38,519
Speaker 1: it's going to become progressively harder. I think for the

1248
01:15:38,560 --> 01:15:41,600
Speaker 1: next generations of journalists, and I would I mean, this

1249
01:15:41,720 --> 01:15:45,400
Speaker 1: is also well trodden ground, but we desperately need more

1250
01:15:45,400 --> 01:15:48,920
Speaker 1: diversity in journalism. So I joke a lot that I'm

1251
01:15:49,000 --> 01:15:52,439
Speaker 1: the Norwegian diversity candidate at the FT. We don't. We

1252
01:15:52,479 --> 01:15:57,040
Speaker 1: only have one other journal and Norwegian journalists, but um,

1253
01:15:57,360 --> 01:16:01,600
Speaker 1: we need more people from all walks of life applying

1254
01:16:01,800 --> 01:16:05,360
Speaker 1: and thinking about careersing financial journalism. So if anybody's listening

1255
01:16:05,360 --> 01:16:09,320
Speaker 1: to this and it's mildly curious, then drop me a line.

1256
01:16:09,400 --> 01:16:12,560
Speaker 1: I will jump on the phone our slide with anybody,

1257
01:16:13,200 --> 01:16:16,080
Speaker 1: because that's something I care quite a lot about. And

1258
01:16:16,160 --> 01:16:19,080
Speaker 1: our final question, what do you know about the world

1259
01:16:19,200 --> 01:16:26,519
Speaker 1: of investing, finance, journalism, indexing, quantitative investing today that you

1260
01:16:26,680 --> 01:16:29,759
Speaker 1: wish you knew when you were first getting started twenty

1261
01:16:29,840 --> 01:16:33,719
Speaker 1: or so years ago. Mm hmm. Well, aside from maybe

1262
01:16:33,760 --> 01:16:35,800
Speaker 1: if I had a time machine I traveled back and

1263
01:16:35,800 --> 01:16:39,280
Speaker 1: tell myself to buy long dated out of money, Apple calls, well,

1264
01:16:39,320 --> 01:16:42,200
Speaker 1: that's a cheap. This isn't a This is less a

1265
01:16:42,240 --> 01:16:46,920
Speaker 1: time travel question and more a process question. What what

1266
01:16:46,920 --> 01:16:51,439
Speaker 1: what have you incorporated into your process now that would

1267
01:16:51,439 --> 01:16:55,280
Speaker 1: have been helpful to do, you know, years ago. Uh,

1268
01:16:57,000 --> 01:16:58,600
Speaker 1: there are certain things I've always been good at, like

1269
01:16:58,640 --> 01:17:02,200
Speaker 1: taking notes, keeping notes, writing stuff down. There's always been

1270
01:17:02,240 --> 01:17:05,280
Speaker 1: a fairly handy mnemonic tool for me. It helps me

1271
01:17:05,360 --> 01:17:08,040
Speaker 1: remember things that once I've written something down, I remember

1272
01:17:08,040 --> 01:17:10,280
Speaker 1: it pretty well. And I see quite a lot of

1273
01:17:10,280 --> 01:17:12,800
Speaker 1: people that aren't good at writing stuff down. And if

1274
01:17:12,800 --> 01:17:15,320
Speaker 1: it works electronic, no otherwise do that. But that's not

1275
01:17:15,320 --> 01:17:18,280
Speaker 1: the advice I give to myself. I'd say, and this

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01:17:18,360 --> 01:17:24,000
Speaker 1: is very sad and tragic, but very cynical and useful,

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01:17:24,720 --> 01:17:27,960
Speaker 1: which somebody told me this, um, and it worked in

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01:17:27,960 --> 01:17:33,360
Speaker 1: many professions. But every job is sales. Yeah, it's it's

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01:17:33,400 --> 01:17:36,400
Speaker 1: the dirty truth that people don't want to always say.

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01:17:36,439 --> 01:17:39,479
Speaker 1: But every job in sales is yet sales. And when

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01:17:39,479 --> 01:17:42,760
Speaker 1: you're young, everybody has this realization. Some people realize it

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01:17:42,800 --> 01:17:45,000
Speaker 1: in the mid twenties, some people in their thirties, maybe

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01:17:45,040 --> 01:17:47,280
Speaker 1: some people later. But you always think that, you know,

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01:17:47,400 --> 01:17:49,960
Speaker 1: good work will always get recognized, and it can. Again,

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01:17:50,000 --> 01:17:52,200
Speaker 1: you can be lucky or you can be unlucky. But

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01:17:52,280 --> 01:17:55,439
Speaker 1: every job is sales. Um and that is certainly not

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01:17:55,520 --> 01:17:59,960
Speaker 1: something I appreciate for a long time. Um, And yeah,

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01:18:00,280 --> 01:18:04,559
Speaker 1: it's It's not the fun, sexy, inspiring piece of advice,

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01:18:04,600 --> 01:18:07,840
Speaker 1: but it's probably something that more people could do with Harry.

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01:18:08,160 --> 01:18:11,800
Speaker 1: Thanks Robin for being so generous with your time. We

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01:18:11,880 --> 01:18:15,600
Speaker 1: have been speaking with Robin Wigglesworth. He is the financial

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01:18:15,680 --> 01:18:19,479
Speaker 1: correspondent for The Financial Times and author of Trillions, a

1293
01:18:19,520 --> 01:18:23,479
Speaker 1: new book on indexing and passive investing. If you enjoy

1294
01:18:23,600 --> 01:18:26,160
Speaker 1: this conversation, well be sure and check out any of

1295
01:18:26,200 --> 01:18:30,000
Speaker 1: the nearly four hundred prior discussions we've had over the

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01:18:30,040 --> 01:18:34,400
Speaker 1: past is it seven years? Yes? Since you can find

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01:18:34,439 --> 01:18:40,240
Speaker 1: that at Spotify, iTunes, wherever you get your podcasts. We

1298
01:18:40,320 --> 01:18:43,559
Speaker 1: love your comments, feedback and suggestions right to us at

1299
01:18:43,960 --> 01:18:47,360
Speaker 1: m IB podcast at Bloomberg dot net. Sign up for

1300
01:18:47,439 --> 01:18:50,320
Speaker 1: my daily reads at Rit Halts dot com. Check out

1301
01:18:50,320 --> 01:18:54,479
Speaker 1: my weekly column at Bloomberg dot com slash Opinion. Follow

1302
01:18:54,520 --> 01:18:57,639
Speaker 1: me on Twitter at Rit Halts. I would be remiss

1303
01:18:57,640 --> 01:18:59,839
Speaker 1: if I did not thank the craft team that helps

1304
01:19:00,040 --> 01:19:04,559
Speaker 1: with these conversations together each week. My director of research

1305
01:19:04,680 --> 01:19:09,280
Speaker 1: is Michael Batnick, My producer is Harris Wald. My project

1306
01:19:09,360 --> 01:19:13,599
Speaker 1: manager is a tick of Alban I'm Barriers Hubens in

1307
01:19:13,600 --> 01:19:16,439
Speaker 1: into Master's Business on Bloomberg Radio