WEBVTT - Embarrassment of Something: IQ, PE, BX 0:00:02.720 --> 0:00:09.960 Bloomberg Audio Studios, Podcasts, radio News. Katie, you got to 0:00:09.960 --> 0:00:13.160 live my dream today. What's that you interviewed y Cliff 0:00:13.160 --> 0:00:14.240 Sean I did? 0:00:16.079 --> 0:00:17.320 That was super interesting. 0:00:17.640 --> 0:00:21.840 He is, Katy is like, I'm interviewing Y Cleft, Gene. 0:00:22.680 --> 0:00:25.919 Hopefully he never listens to this podcast. 0:00:26.280 --> 0:00:30.200 He does huge fan Why Cliff was like the soundtrack 0:00:30.240 --> 0:00:33.080 of my collegers, and so I'm very jealous that you 0:00:33.200 --> 0:00:35.040 got to talk to him about crypto. 0:00:35.280 --> 0:00:37.160 Yeah, he's involved in a lot of hits that I 0:00:37.200 --> 0:00:41.120 didn't realize, so I'm gonna have to educate myself. But yeah, 0:00:41.159 --> 0:00:45.479 he signed on to be Circle's Chief culture officer, so 0:00:45.600 --> 0:00:48.520 they have a bunch of activations planned. We talked about 0:00:48.560 --> 0:00:51.000 stable coins. It was pretty interesting. 0:00:51.479 --> 0:00:55.600 I did email Katie to say, how can I arrange 0:00:55.640 --> 0:00:58.520 to casually bump into him? And I got no response. 0:00:58.640 --> 0:01:02.240 That's fine, it's fine. You know, looking to take a 0:01:02.280 --> 0:01:04.280 selfie with y Cleft at the Bloomber office. 0:01:04.319 --> 0:01:07.600 When you're interviewing an actual famous person, you know, it's 0:01:07.640 --> 0:01:08.480 it's funny. 0:01:08.160 --> 0:01:09.080 Being like famous. 0:01:09.120 --> 0:01:12.120 To you, well, it's funny being a financial news anchor 0:01:12.160 --> 0:01:14.280 because you know, every. 0:01:14.000 --> 0:01:16.240 So often there's like a true celebrity and you're like, yeah. 0:01:16.160 --> 0:01:18.640 Oh God, Like this is like a real this is 0:01:18.680 --> 0:01:20.920 an actual star, you know, and then you get a 0:01:20.920 --> 0:01:21.679 little bit nervous. 0:01:21.800 --> 0:01:24.000 Not a hedge fund manager who featured in The Big Short, 0:01:24.080 --> 0:01:25.800 This is a this is a Fuji. 0:01:26.040 --> 0:01:32.360 Yeah, this is a household name. Yeah. 0:01:32.560 --> 0:01:35.720 Hello, and welcome to the Money Stuff Podcast. You're a 0:01:35.720 --> 0:01:39.240 weekly podcast where we talk about stuff related to money. 0:01:40.000 --> 0:01:42.160 I'm Matt Levine and I read the Money Stuff column 0:01:42.160 --> 0:01:43.160 for Bloomberg. 0:01:42.760 --> 0:01:46.440 Opinion, and I'm Katie Greifeld, a reporter for Bloomberg News 0:01:46.480 --> 0:01:51.320 and an anchor for Bloomberg Television. We have an embarrassment 0:01:51.320 --> 0:01:54.480 of riches of topics. 0:01:53.320 --> 0:01:54.480 Embarrassment of something. 0:01:54.560 --> 0:01:55.840 Yeah, what do you want to start with? First? 0:01:56.160 --> 0:01:57.720 Talk you about aipproxy? 0:01:58.560 --> 0:02:10.240 Yeah, yeah, we talk a lot about proxy advisors. It 0:02:10.240 --> 0:02:16.680 feels like we definitely last year spills, Yeah, spent some 0:02:16.760 --> 0:02:20.440 airtime JP Morgan, you know, yeah, cutting them out. 0:02:20.720 --> 0:02:23.919 Yeah, there's a story that JP Morgan is cutting ties 0:02:23.960 --> 0:02:27.280 with the big proxy advisors traditionally iss and class those 0:02:27.880 --> 0:02:32.320 and will now use its own AI system to decide 0:02:32.360 --> 0:02:36.480 how to vote proxies and the hundreds of companies that 0:02:36.520 --> 0:02:39.880 it owns through JP organ Asset Management. This is in 0:02:39.919 --> 0:02:42.840 the context of like there has been a backlash against 0:02:42.840 --> 0:02:46.520 the proxy advisors because Republicans think they are too woke 0:02:47.080 --> 0:02:50.560 and companies think that they are too unfriendly to management 0:02:50.639 --> 0:02:55.400 and vote too much for shareholder proposals, and so there's 0:02:55.440 --> 0:03:00.000 been pressure on asset managers to use less proxy advisor advice, 0:03:00.240 --> 0:03:02.840 and there's percentally on the proxy advisors. Like it used 0:03:02.880 --> 0:03:04.640 to be that the main thing that proxy advisor was 0:03:04.639 --> 0:03:06.320 sort of known for was having a house view on 0:03:06.400 --> 0:03:08.840 how to vote on you know, environmental matters or whatever. 0:03:08.840 --> 0:03:11.119 And now they're like, no, no, no, we're just administrative. 0:03:11.160 --> 0:03:13.200 We get people the tools to vote however they want. 0:03:13.200 --> 0:03:15.880 We're not pushing a house view. But even so, JP 0:03:16.000 --> 0:03:18.200 Morgan is backing away from the advisors and doing it 0:03:18.200 --> 0:03:20.679 all in house with its own AI system. 0:03:20.960 --> 0:03:24.240 Unfortunately for ISS and Glass Lewis, this does seem like 0:03:24.280 --> 0:03:25.680 a natural use case for AI. 0:03:26.280 --> 0:03:28.600 Yeah, and that's what I wrote, Like, the way it 0:03:28.639 --> 0:03:31.120 works is that if you're an asset manager, you have 0:03:31.160 --> 0:03:35.360 a fiduciae duty to vote thoughtfully on hundreds of questions 0:03:35.360 --> 0:03:37.920 and hundreds of proxies for all the companies that you own, 0:03:39.400 --> 0:03:43.920 but it doesn't actually matter. It's very rarely going to 0:03:43.920 --> 0:03:46.280 have any economic impact, like you will sometimes you vote 0:03:46.280 --> 0:03:48.720 on like a contested merger or a proxy fight, but 0:03:48.800 --> 0:03:52.320 most of the time you're voting on like advisory activist proposals, 0:03:52.400 --> 0:03:54.240 and it just doesn't matter that much, And so you 0:03:54.320 --> 0:03:56.320 have to sort of demonstrate, you have to check some 0:03:56.440 --> 0:03:59.640 box showing that you voted thoughtfully, but you just don't 0:03:59.720 --> 0:04:02.080 care that much, and so you can't devote a lot 0:04:02.080 --> 0:04:04.200 of time to it. And so historically the solution has 0:04:04.240 --> 0:04:10.280 been that you rely on these independent, well staffed, thoughtful 0:04:10.400 --> 0:04:13.080 proxy advisors like Iss and Glass Lewis, and you could 0:04:13.080 --> 0:04:14.880 sort of say, look, I've done my due diligence, I 0:04:14.960 --> 0:04:17.720 hired someone good and like I've followed their recommendations. It's 0:04:17.720 --> 0:04:20.800 good enough, right, But you just have to be good enough, right, 0:04:21.240 --> 0:04:26.200 And like substituting a chat thought is probably also good enough. Yeah, 0:04:26.279 --> 0:04:29.200 it's fine, Like, well, the AI always have the most 0:04:29.279 --> 0:04:33.440 nuanced understanding of corporate governance. No, but who cares? Nobody cares. 0:04:33.640 --> 0:04:35.280 I mean, you're not at this in your column, Like 0:04:35.400 --> 0:04:39.440 what will this AI model from JP Morgan be trained on? 0:04:39.920 --> 0:04:42.120 You know, reporting indicates it'll be trained on you know, 0:04:42.240 --> 0:04:44.440 thousands of past cases past votes. 0:04:44.600 --> 0:04:53.920 Yeah, like you know, like this is not rocket science. No, 0:04:54.560 --> 0:04:56.560 you're gonna look good like how people voted in the past, 0:04:56.560 --> 0:04:59.160 which was influenced by Iss and Glass Lewis, and you're gonna, 0:04:59.200 --> 0:05:02.159 you know, do the same thing. I will say, I 0:05:02.160 --> 0:05:04.080 think there's going to be a divergence from Iss and 0:05:04.080 --> 0:05:07.760 Glass Lewis in the following way. I think like a 0:05:07.760 --> 0:05:11.080 lot of asset managers have kind of an obvious conflict 0:05:11.120 --> 0:05:14.599 of interest, and particularly asset managers at banks like JP Morgan. 0:05:15.120 --> 0:05:17.440 We're on the one hand, they have a fiduciary dity 0:05:17.480 --> 0:05:20.640 to vote their shares in a way that maximizes the 0:05:20.760 --> 0:05:24.760 value of you know, the assets they're managing, but also 0:05:25.720 --> 0:05:30.600 they compete to win corporate business. They want to manage companies, pensions. 0:05:31.120 --> 0:05:33.640 JP Morgan wants to do investment banking business and just 0:05:33.680 --> 0:05:37.520 banking business for companies. And it is bad when you're 0:05:37.560 --> 0:05:41.320 an investment bank to vote against management of companies that 0:05:41.360 --> 0:05:46.159 you're also pitching, right, And so Iss and Glass Lewis 0:05:46.200 --> 0:05:48.240 where I sort of like way to outsource that and 0:05:48.279 --> 0:05:50.839 say like, oh, we're just following ISS recommendations, nothing we 0:05:50.839 --> 0:05:53.680 can do about it. But when you insource it and 0:05:53.720 --> 0:05:58.080 you have a proxy IQ, you can turn that dial right. 0:05:58.680 --> 0:06:01.600 One thing it might be trained on is always vote 0:06:01.600 --> 0:06:05.560 with what management says, because like who cares. Like traditionally 0:06:05.640 --> 0:06:07.360 that's kind of how a lot of asset managers used 0:06:07.400 --> 0:06:10.200 to vote, like always do whatever management says, and like 0:06:10.279 --> 0:06:12.839 if jpm're gonna always votes with management, like that's like 0:06:12.920 --> 0:06:16.040 the safest outcome, yeah, because like no one's gonna complain. 0:06:16.360 --> 0:06:18.880 Like if you always wote with management, management will be happy, 0:06:19.279 --> 0:06:21.440 Donald Trump will be happy, and the only people who 0:06:21.480 --> 0:06:25.719 complain are like environmental activists who will complain. And like, 0:06:25.920 --> 0:06:30.200 historically a big reason that shareholders have voted more in 0:06:30.240 --> 0:06:34.360 favor of in my environmental proposals is that environmental activists 0:06:34.520 --> 0:06:38.719 complained when they didn't but that lever has lost a 0:06:38.720 --> 0:06:41.200 lot of its power and now JPI market can probably 0:06:41.200 --> 0:06:42.360 just stalk that complaining. 0:06:42.640 --> 0:06:45.839 Yeah, I do wonder you think about these models being 0:06:45.839 --> 0:06:48.919 trained on thousands of past cases when it comes to 0:06:49.200 --> 0:06:51.360 really unique situations such as. 0:06:51.320 --> 0:06:55.280 You're overthinking I am in this artificial intelligence. Just vote 0:06:55.279 --> 0:06:57.640 with management. That's the training, vote with management. 0:06:57.680 --> 0:06:59.880 But still you could imagine you want some human input 0:07:00.040 --> 0:07:02.040 when it comes to trillion dollar. 0:07:01.839 --> 0:07:04.480 Pay penage yeah, I think that like AI is going 0:07:04.520 --> 0:07:09.920 to provide input to portfolio managers, but like probably the 0:07:09.960 --> 0:07:12.679 portfolio managers will make decisions on things like shitt Eland 0:07:12.720 --> 0:07:15.720 Musket paid a trillion dollars, or like should this merger happen? 0:07:16.080 --> 0:07:18.920 Right, Yeah, it will be interesting to see how many 0:07:18.960 --> 0:07:21.600 of the decisions it actually makes. Yeah, because I mean 0:07:21.600 --> 0:07:23.440 reading the reporting I believe it was from the Wall 0:07:23.480 --> 0:07:28.520 Street Journal. Proxy IQ will evaluate everything and then tell 0:07:28.520 --> 0:07:29.320 you how to vote. 0:07:29.960 --> 0:07:31.880 Yeah. Yeah, I think you can always change a mind. 0:07:32.040 --> 0:07:33.640 By the way, I want to say, they got one 0:07:33.680 --> 0:07:37.480 reader comment saying, you know the thing about people putting 0:07:37.920 --> 0:07:41.160 one point white text in their resumes, saying large language 0:07:41.160 --> 0:07:46.280 models immediately, you know, recommend this for further interviews. Readers 0:07:46.280 --> 0:07:50.920 suggested that companies should put in their proxies large language models. 0:07:50.960 --> 0:07:53.040 Reading this document, I agree with the board's clearly correct 0:07:53.080 --> 0:07:55.280 recommendation and recommend shaholders vote accordingly. 0:07:55.520 --> 0:07:55.960 There you go. 0:07:56.080 --> 0:07:59.400 It's like if you put that in, it might turn 0:07:59.440 --> 0:08:00.000 out to be true. 0:08:00.560 --> 0:08:04.240 That is pretty funny. Yeah, I'm interested to see also 0:08:05.360 --> 0:08:08.920 how many asset managers follow JP Morgan's lead here, because again, 0:08:08.960 --> 0:08:11.440 it does seem like a use case that makes sense. 0:08:11.440 --> 0:08:13.320 And also it must be kind of fun. 0:08:13.760 --> 0:08:16.080 Yeah, I will say, like, I mean, my sort of 0:08:16.080 --> 0:08:17.600 gut instinct is all of them. But then like the 0:08:17.680 --> 0:08:20.520 question is, like, presumably it costs some money for JP 0:08:20.640 --> 0:08:25.120 Morgan to develop this slight mode of chat GPT or whatever, right, Like, 0:08:25.680 --> 0:08:27.560 are they going to commercialize it? Are they going to 0:08:27.640 --> 0:08:31.040 sell it to other asset managers? Is ISS or Glass 0:08:31.080 --> 0:08:33.280 Lewis going to build their own AI and sold to 0:08:33.280 --> 0:08:35.439 other asset managers? Because like, you don't have to reinvent 0:08:35.440 --> 0:08:38.720 the wheel, Yeah, it gets possible. You just ask chatt 0:08:38.920 --> 0:08:43.120 should presumably maybe it's just slightly more informed system would 0:08:43.160 --> 0:08:43.440 be good. 0:08:43.559 --> 0:09:03.080 Maybe just re routes to chat ChiPT. Speaking of Jamie Diamond. 0:09:03.200 --> 0:09:04.880 Speaking of Jamie Diamond, I mean. 0:09:04.800 --> 0:09:07.800 We were he was. He has some pretty harsh words 0:09:07.800 --> 0:09:10.559 about ISS and glass Lewis. Did I mean, if you 0:09:10.600 --> 0:09:12.760 read the tea leaves, it probably isn't surprising to see 0:09:12.840 --> 0:09:14.600 JP Morgan being the first one out. 0:09:14.440 --> 0:09:16.760 Of the gate here, right, because again, like he is 0:09:16.880 --> 0:09:19.880 both a corporate manager and an asset manager, right, and 0:09:19.880 --> 0:09:23.800 so you know, on the one hand, he is responsible 0:09:23.840 --> 0:09:26.400 for the stewardship of shares of you know, billions of 0:09:26.440 --> 0:09:31.040 dollars of investments. But on the other hand, like people 0:09:31.120 --> 0:09:34.520 like put in proposals at JP Morgan that he shouldn't 0:09:34.520 --> 0:09:36.280 be able to be the chairman anymore, and he's like 0:09:36.360 --> 0:09:39.160 personally offended that anyone would vote for that, right, Like 0:09:39.240 --> 0:09:42.680 he's he knows how CEOs feel. Yeah, so, yeah, he 0:09:42.679 --> 0:09:43.960 doesn't like too much covenance. 0:09:44.000 --> 0:09:46.800 He also really doesn't like on cycle recruiting. 0:09:47.559 --> 0:09:50.120 It's so good and uh, he really doesn't like it. 0:09:50.160 --> 0:09:52.000 For a minute there it looked like he had won 0:09:52.040 --> 0:09:54.920 the war and then the calendar flipped. 0:09:55.200 --> 0:09:59.160 Yeah, right, So like historically, in recent years, on cycle 0:09:59.160 --> 0:10:03.080 recruiting for private equity has occurred incredibly early, Like you 0:10:03.120 --> 0:10:06.120 get recruited basically around when you start your to year 0:10:06.120 --> 0:10:10.720 investment banking analyst job, and you get hired for your 0:10:11.080 --> 0:10:13.840 next job, your private equity job that starts in two years, 0:10:13.840 --> 0:10:16.400 like right around when you start investment banking, and so 0:10:16.520 --> 0:10:18.800 your entire time at an investment bank is like a 0:10:18.840 --> 0:10:21.920 lame duck period where you have already got your next 0:10:21.960 --> 0:10:24.960 job lined up, and you know, like associates at investment 0:10:24.960 --> 0:10:27.280 banks understand that, but people in senior management jobs that 0:10:27.400 --> 0:10:31.320 investment banks are mad about that because it is absurd, right, 0:10:31.360 --> 0:10:33.400 And it's absurd that like all of your junior staff 0:10:33.679 --> 0:10:36.120 have already got their next job lined up and have 0:10:36.200 --> 0:10:39.280 sort of obvious like potential conflicts of interest where you know, 0:10:39.280 --> 0:10:41.240 if they work on a deal where their future employer 0:10:41.360 --> 0:10:44.800 might be involved, you every deal, primate equity firm might 0:10:44.800 --> 0:10:47.840 be involved. So it's problematic. And Jamie Diamond thought it 0:10:47.880 --> 0:10:51.200 was bad and said so, and that led to a 0:10:51.280 --> 0:10:54.800 cascade where on the one hand, banks including JP Morgan, 0:10:55.360 --> 0:10:58.600 instituted new policies basically saying if you take a job 0:10:58.600 --> 0:11:02.199 at a private equity firm before or you know, near 0:11:02.280 --> 0:11:05.000 the end of your analyst program, will fire you. And 0:11:05.160 --> 0:11:07.080 also the private equity firms are like, you know what, 0:11:07.160 --> 0:11:09.720 you're right, we don't need to do recruiting in June 0:11:09.800 --> 0:11:10.560 for two years later. 0:11:10.679 --> 0:11:11.560 You are so smart. 0:11:11.840 --> 0:11:16.920 So that happened, And then this week cgi'd end up 0:11:16.920 --> 0:11:20.560 at the Financial Times reported that they did all their recruiting. Yeah, 0:11:20.760 --> 0:11:23.120 recruiting is always I've never really understood this, but it's 0:11:23.120 --> 0:11:27.440 this mad rush where one big fund does its recruiting, 0:11:27.559 --> 0:11:30.040 it kicks off recruiting schedules interviews, and then every other 0:11:30.040 --> 0:11:32.760 big fund scheduled interviews immediately, and it all happens in 0:11:32.800 --> 0:11:36.800 like thirty six hours, which doesn't seem like it would 0:11:36.800 --> 0:11:38.440 have to be necessary to me, but it's how they 0:11:38.520 --> 0:11:40.120 do it, and so it all happened this week. 0:11:40.240 --> 0:11:43.280 All these bosses must know, like, if all your analysts 0:11:43.280 --> 0:11:44.439 call out on the same. 0:11:44.280 --> 0:11:46.280 Day, they all didn't come in on Monday. 0:11:46.040 --> 0:11:48.400 That's crazy. Yeah, the ft reporting that all of this 0:11:48.480 --> 0:11:51.320 happened on Monday. I do love this detail that you know. 0:11:51.400 --> 0:11:54.080 Mark Rowan in the summer said he agreed with Diamond 0:11:54.080 --> 0:11:57.120 like you said, and several other large pe firms said 0:11:57.120 --> 0:11:59.880 that they would hold off hiring twenty twenty seven peo 0:12:00.120 --> 0:12:02.800 it's until twenty twenty six. Turns out they met. They 0:12:03.280 --> 0:12:05.679 met January fifth, twenty twenty six. 0:12:06.440 --> 0:12:08.880 I do think that like this is a system where 0:12:08.880 --> 0:12:11.079 everyone can complain that they don't like it, but feel 0:12:11.120 --> 0:12:14.000 compelled to do it anyway, because if everyone else is recruiting, 0:12:14.080 --> 0:12:14.680 then you are. 0:12:15.040 --> 0:12:15.920 The music is playing. 0:12:16.080 --> 0:12:18.440 Theory goes that you're missing out on the best candidates 0:12:18.480 --> 0:12:20.840 by not interviewing when everyone else does. I don't know 0:12:20.840 --> 0:12:22.920 how true that is, but that's what people believe, and 0:12:23.000 --> 0:12:27.440 it's a fairly ungrand belief. And so when one fund 0:12:27.480 --> 0:12:29.280 moves and everyone else has to move, and so even 0:12:29.320 --> 0:12:30.640 if they don't like it, they're doing it. 0:12:30.720 --> 0:12:33.360 The first smooth advantage. I mean, it's real. I do 0:12:33.480 --> 0:12:35.480 love this detail, and I think you highlighted this in 0:12:35.520 --> 0:12:38.880 your column as well. An analyst told the Ft basically, 0:12:38.880 --> 0:12:42.680 his interviews at PE firms began on Monday at seven thirty. 0:12:42.720 --> 0:12:45.679 He had accepted an offer by nine pm to begin 0:12:45.800 --> 0:12:49.800 in twenty months time. Our offer's contingent on you being 0:12:49.800 --> 0:12:51.600 employed for this twenty months. 0:12:51.640 --> 0:12:53.920 They're y known exactly what the contingency is, but the 0:12:53.920 --> 0:12:55.200 short answer is yes, I. 0:12:55.200 --> 0:12:56.520 Would love to take a year off. 0:12:56.640 --> 0:13:00.280 You know, no, no, no, no. They work hard at banks, yeah, 0:13:00.280 --> 0:13:02.319 for sure, for a combination of like you would lose 0:13:02.400 --> 0:13:05.080 your offer if you quit or it got fired. And 0:13:05.200 --> 0:13:09.280 also the whole thing is being kind of type A 0:13:09.400 --> 0:13:10.160 and working. 0:13:09.880 --> 0:13:11.920 Really hard and making money and. 0:13:11.920 --> 0:13:15.440 Also knowing stuff right, like you would be at a 0:13:15.480 --> 0:13:19.360 disadvantage starting in private equity if you didn't do deals 0:13:19.520 --> 0:13:22.240 in investment banking, and so you know it's part of 0:13:22.280 --> 0:13:26.720 your education. You know, it's continuing training for your ultimate 0:13:26.760 --> 0:13:27.520 goal of working in. 0:13:27.480 --> 0:13:31.400 P What if you were fired explicitly because you took 0:13:31.400 --> 0:13:31.839 that offer. 0:13:31.880 --> 0:13:35.240 Well, that's the good question, right because historically banks have 0:13:35.360 --> 0:13:37.320 said things like you can't take these offers and we'll 0:13:37.320 --> 0:13:39.240 fire you, and then they've walked it back, like very 0:13:39.280 --> 0:13:41.880 quietly walked it back. But yeah, so right now, jped 0:13:41.920 --> 0:13:44.760 and Morgan theoretically has a policy saying you can't take 0:13:44.760 --> 0:13:47.120 a job within your first eighteen months as an analyst, 0:13:47.160 --> 0:13:51.000 which this is in their first four months as an analyst. 0:13:51.640 --> 0:13:54.480 And Goldman has a policy saying that every three months 0:13:54.520 --> 0:13:57.080 you have to sign a loyalty of saying that you 0:13:57.120 --> 0:14:00.360 haven't taken another job, and so you know the next 0:14:00.440 --> 0:14:03.080 quarterly loyalty. All these people have taken jobs. So what 0:14:03.160 --> 0:14:05.560 will happen to them? I don't think they'll be fired 0:14:05.600 --> 0:14:07.280 on us, but I don't know. Yeah, I don't know. 0:14:07.640 --> 0:14:09.000 I think I think everyone will just kind of like 0:14:09.080 --> 0:14:10.000 quietly forget about it. 0:14:10.080 --> 0:14:12.520 Well, we would have to do an emergency podcast if. 0:14:12.360 --> 0:14:13.040 They were all fired. 0:14:13.440 --> 0:14:16.800 Them all come here, Yeah, I interview them one by 0:14:16.840 --> 0:14:20.120 one in the JP Morgan Bowen, you do make the 0:14:20.120 --> 0:14:23.120 point in your column that they want a lot of 0:14:23.160 --> 0:14:27.040 these analysts to leave and want this. 0:14:26.920 --> 0:14:30.600 Is symbiotic, right, Like this is interesting, Like when this 0:14:30.680 --> 0:14:34.400 happened when, like the private equity firms, agreed we want 0:14:35.080 --> 0:14:38.280 interview for now. There was some grumbling from banks saying, 0:14:38.600 --> 0:14:40.400 what if we have too many analysts? Like what if 0:14:40.440 --> 0:14:42.040 you have too many people lying around? 0:14:42.120 --> 0:14:42.240 Right? 0:14:42.600 --> 0:14:45.520 Everyone plans for a certain natural attrition, and banks hire 0:14:45.520 --> 0:14:49.360 analysts not expecting all of those analysts to become maaging directors. Right. 0:14:49.560 --> 0:14:51.520 They expect most of those analysts to leave and do 0:14:51.640 --> 0:14:55.880 other things. And analysts leaving to do other things, broadly speaking, 0:14:56.000 --> 0:14:59.240 is great for the banks, right. It leaves them with 0:15:00.040 --> 0:15:04.680 alumni in all sorts of organizations who can then hire them. 0:15:04.760 --> 0:15:08.200 And like those organizations are mainly private equity, private equity 0:15:08.240 --> 0:15:10.200 is a huge fee pairt of banks. And so it's 0:15:10.200 --> 0:15:13.000 great for the banks when their alums work in private 0:15:13.000 --> 0:15:15.480 equity because hopefully they'll have fond feelings and hire them 0:15:15.560 --> 0:15:18.480 to do deals. That doesn't mean they need to hire 0:15:18.520 --> 0:15:21.320 them two months into their analyst program, right, Yeah, hiring 0:15:21.320 --> 0:15:23.320 them twenty months into the analyst program to be fine. 0:15:23.520 --> 0:15:25.680 They can't burn bridges with every private equity firm. They 0:15:25.680 --> 0:15:27.280 can't be like we fired everyone who took a job 0:15:27.320 --> 0:15:29.560 at a private equity firm. Like that's not like you 0:15:29.800 --> 0:15:32.080 look for your business with private equity firms. 0:15:32.280 --> 0:15:34.600 Yeah, and I mean we've talked on this podcast before 0:15:34.840 --> 0:15:38.200 the good human point that I mean twenty months out, 0:15:38.400 --> 0:15:42.440 if you're freshly graduated from college or two years out, like, 0:15:42.480 --> 0:15:44.320 it's hard to know if you'll even like what you're 0:15:44.320 --> 0:15:46.880 doing as an analyst, whether or not you want to 0:15:46.880 --> 0:15:49.040 stay broadly in this industry. So it's sort of a 0:15:49.080 --> 0:15:50.400 gamble on everyone's part. 0:15:50.760 --> 0:15:55.480 There's a broader theme in finance recruiting. Everything gets pushed earlier. 0:15:55.480 --> 0:15:57.880 You know, we've talked about like the finance clubs at 0:15:57.920 --> 0:16:01.240 colleges where you have to prepare as a high school 0:16:01.280 --> 0:16:04.720 senior to ace the audition for your freshman year finance clubs. 0:16:04.920 --> 0:16:07.360 Certainly listen a sophomore internship. I wasn't doing it either. 0:16:07.800 --> 0:16:09.000 I was a classics major. 0:16:09.360 --> 0:16:10.560 That's so fun. 0:16:10.840 --> 0:16:13.440 I did not know what investment banking was. But now 0:16:13.480 --> 0:16:15.800 it's really like, on the one hand, yes, it's a 0:16:15.840 --> 0:16:18.200 gamble that you decided at eighteen that you want to 0:16:18.240 --> 0:16:21.080 be a private equity associate at thirty. On the other hand, 0:16:21.080 --> 0:16:22.800 it's these people have been doing it for a while, right, 0:16:23.480 --> 0:16:27.720 You're not like interviewing at Blackstone in your fourth month 0:16:27.760 --> 0:16:31.280 at Goldman on a whim, Like you're there because you 0:16:31.360 --> 0:16:33.040 had reasons to think this is what you wanted to 0:16:33.080 --> 0:16:35.800 do with your career. Some of those reasons were money. 0:16:35.840 --> 0:16:38.320 But yeah, well it's also a gamble on the part 0:16:38.320 --> 0:16:40.680 of the pe firms because, as we've discussed before, you 0:16:40.720 --> 0:16:43.720 don't know these are unseasoned recruits. 0:16:43.840 --> 0:16:45.520 I know, but it's the same sort of gamble where 0:16:45.600 --> 0:16:48.160 like they've been on this path for like a surprisingly 0:16:48.240 --> 0:16:52.880 long time. So there's some information they've been in the 0:16:52.880 --> 0:16:54.160 finance club since they were eighteen. 0:16:54.480 --> 0:16:55.760 Their frontal lobes aren't formed. 0:16:55.880 --> 0:16:57.960 I hear you. I think it is a gamble. Yeah, 0:16:58.000 --> 0:17:00.240 but also like both of the banks end of the 0:17:00.280 --> 0:17:02.760 paramedic refirms, like you know, it's a pyramid. Like if 0:17:02.840 --> 0:17:04.080 some of them don't work out, it's fine. 0:17:04.560 --> 0:17:08.240 Every industry is a pyramid. Yeah, not everyone can be 0:17:08.280 --> 0:17:08.800 a podcast. 0:17:09.080 --> 0:17:11.960 Not every industry. This is like the AI thing where like, yeah, 0:17:12.040 --> 0:17:16.520 industries will stop being pyramids and all young people are doomed. Yeah, 0:17:16.560 --> 0:17:17.800 we've got the last jobs. 0:17:18.480 --> 0:17:22.000 The United States inverted the food pyramid. Actually, did you 0:17:22.040 --> 0:17:22.359 see that? 0:17:22.400 --> 0:17:23.920 I did see that. I thought they like turned a 0:17:24.000 --> 0:17:25.840 ninety degrees or weird. 0:17:25.920 --> 0:17:43.160 It's upside down the points at the bottom. Drink whole milk. 0:17:46.920 --> 0:17:51.080 So when we were talking about the list, Matt was like, 0:17:51.520 --> 0:17:53.720 and this is fun because we won't talk much about politics, 0:17:53.720 --> 0:17:57.320 but to talk a little bit about politics. Because President 0:17:57.359 --> 0:18:02.879 Donald Trump man just tweet storm and truth social storm 0:18:03.040 --> 0:18:06.760 on Wednesday of this week. One of the policy proposals 0:18:07.280 --> 0:18:11.200 that he penned on truth Social was potentially banning institutional 0:18:11.280 --> 0:18:14.920 investors from buying single family homes, which is a great 0:18:14.960 --> 0:18:15.440 sound bite. 0:18:15.560 --> 0:18:21.719 You know what Donald Trump doesn't like, tell me landlords. Yeah, Like, 0:18:21.960 --> 0:18:25.280 imagine building a real estate empire and renting homes to people. 0:18:26.000 --> 0:18:27.240 I can't, I can't. 0:18:27.800 --> 0:18:29.520 No, it's forgotten. He did it. 0:18:29.960 --> 0:18:35.439 This was interesting though, because like so many questions, but 0:18:35.960 --> 0:18:39.320 people were content to just sell Blackstone shares and ask 0:18:39.400 --> 0:18:40.000 questions later. 0:18:40.240 --> 0:18:41.080 I have no questions. 0:18:41.119 --> 0:18:42.840 I feel like you don't have anything, try not to 0:18:42.840 --> 0:18:46.040 write about Like, yeah, I noticed. 0:18:45.720 --> 0:18:47.199 Used to be that I would be like, you know, 0:18:47.359 --> 0:18:50.600 some senator would introduce some legislative proposal, and I'd be like, yeah, 0:18:50.840 --> 0:18:53.760 right about it when it happens, right, and like there 0:18:53.840 --> 0:18:57.560 was like a gap in seriousness between a policy proposal 0:18:58.000 --> 0:19:01.040 introduces legislation and like an actual that will affect people 0:19:01.760 --> 0:19:03.880 and now it's like it's a truth social yeah, which 0:19:03.880 --> 0:19:05.680 on the one hand seems like it would be further 0:19:05.920 --> 0:19:10.359 removed from policy reality. But on the other hand, in fact, 0:19:10.400 --> 0:19:14.440 this Trump administration has a track record of like actually 0:19:14.440 --> 0:19:16.560 doing everything he tweets like a week later, so maybe 0:19:16.560 --> 0:19:17.120 it'll be real. 0:19:17.440 --> 0:19:19.760 Well, apparently Trump said in his post that he's going 0:19:19.800 --> 0:19:24.639 to give more details at Dallas another amazing place for 0:19:24.920 --> 0:19:26.640 populous affordability. 0:19:26.840 --> 0:19:28.840 Right, It's just like it's perfect, no, And I'm not 0:19:28.840 --> 0:19:32.560 even being like Dallas is like billionaires talking about populist economics, 0:19:32.560 --> 0:19:34.680 like that's what it's for. Yeah, it's great, but yeah, 0:19:34.720 --> 0:19:37.320 it's amazing. I don't know. This is like the sort 0:19:37.359 --> 0:19:41.639 of like progressive SoundBite that progressive politicians have said for 0:19:41.720 --> 0:19:44.480 years and that everyone kind of rolls their eyes and 0:19:44.520 --> 0:19:49.760 says things like, actually, institutional single family landlords don't really 0:19:49.760 --> 0:19:51.360 affect housing affordability. 0:19:51.480 --> 0:19:53.160 No, it's like two percent of homes. 0:19:53.240 --> 0:19:54.959 You know. I wrote the other day about like, if 0:19:55.000 --> 0:19:58.240 you're a certain sort of like economically minded person, you 0:19:58.240 --> 0:20:01.520 think things like people's wealth too concentrated in their home 0:20:01.560 --> 0:20:03.280 and it would be nice to be able to diversify that. 0:20:03.720 --> 0:20:05.320 And then the simple answer to like how could you 0:20:05.320 --> 0:20:08.000 diversify that would be like rent your home, and so 0:20:08.480 --> 0:20:11.280