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Speaker 1: Bloomberg Audio Studios, Podcasts Radio News. This week on the podcast,

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Speaker 1: yet another extra special guest. Wow, what a fascinating career

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Speaker 1: Kate Moore is having. Her background is everything from Morgan

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Speaker 1: Stanley to more Capital to Bank America, Merrill Lynch to

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Speaker 1: JP Morgan to Blackrock. She is now Chief Investment Officer

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Speaker 1: of City Bank's City Wealth, which runs you know, something

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Speaker 1: like a trillion dollars. The breadth and depth of her

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Speaker 1: experience makes her uniquely situated to be a chief investment officer.

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Speaker 1: She's had you know, just about every job on the

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Speaker 1: Byside and South Side, including portfolio manager, consultant to LBOs

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Speaker 1: and m and as. She's just done so much stuff.

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Speaker 1: It's so interesting that she really brings just this union

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Speaker 1: nique set of experiences to City. I thought this conversation

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Speaker 1: was really interesting, and I think you will also with

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Speaker 1: no further ado my conversation with cities Kate.

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Speaker 2: Moore, Thanks so much, Barry. I'm psyched to be having

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Speaker 2: this conversation.

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Speaker 1: Well overdue. We've been like ships in the night. I'm

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Speaker 1: so glad I finally got you here. Let's start a

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Speaker 1: little bit with your academic background, which is kind of

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Speaker 1: surprise me bachelor's and Political and Social Thought from the

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Speaker 1: University of Virginia, a master's in political economy from University

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Speaker 1: of Chicago. What was the original career plan?

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Speaker 2: I mean, I think Barry underlying your question was like, Kate,

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Speaker 2: you sound kind of nerdy, but not as nerdy as

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Speaker 2: some of the folks who have like triple degrees in statistics.

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Speaker 2: But so, where did this political and social thought and

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Speaker 2: political economy stuff come from? So at University of Virginia.

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Speaker 2: This PST program is interdisciplinary, and that was really attractive.

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Speaker 2: You also applied during your sex an year, so you

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Speaker 2: have a chance, to, like sen it kind of sample

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Speaker 2: some different disciplines before you do it. And it's an

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Speaker 2: incredible seminar program, so you're working with some really amazing

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Speaker 2: professors throughout the way. I loved being able to take

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Speaker 2: classes in economics, in politics, in theory, and philosophy. I

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Speaker 2: also took a lot of studio art classes and stuff

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Speaker 2: as an undergrad, but I was able to combine all

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Speaker 2: of this stuff together. So I loved that. And then

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Speaker 2: I worked for a couple of years and I decided,

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Speaker 2: you know, hey, what I really am good at and

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Speaker 2: what I love is academics, and I want to be

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Speaker 2: a professor. This was my idea. I'm going to go

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Speaker 2: back to school and get my PhD and be a professor.

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Speaker 2: I had this whole vision for myself that involved, like,

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Speaker 2: you know, writing books. In this summer, I would be

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Speaker 2: doing cool research. I have a pack of golden retrievers,

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Speaker 2: and you know, I'd like rock climb on the side.

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Speaker 2: This is whole vision of my academic life. So I

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Speaker 2: applied to PhD programs and I went to University of

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Speaker 2: Chicago Political economy, so this intersection of policy and politics,

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Speaker 2: you know, international theory and you know economics. And I

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Speaker 2: found once i was there, honestly that many people in

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Speaker 2: my program are taking eight to ten years to get

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Speaker 2: through their PhD and becoming so specialized in very arcaane topics.

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Speaker 2: And it was like not appealing to me since I

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Speaker 2: had already worked and everything. So I left after my masters.

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Speaker 2: But I did my work on you know, this intersection

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Speaker 2: of economics and policy with a focus on emerging markets

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Speaker 2: and China. So I was ahead of my time.

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Speaker 1: It's so interesting that you talk about how specialized some

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Speaker 1: people become. It's pretty clear, at least historically, many of

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Speaker 1: the greatest investors in history had a very broad set

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Speaker 1: of interests and a broad set of skills. Few of

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Speaker 1: them were an inch wide and a mile deep. They

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Speaker 1: weren't a mile wide and an inch deep, but they

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Speaker 1: were broad enough that they were able to pull in

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Speaker 1: things from other fields that applied to investing. Did you

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Speaker 1: find something similar when you're studying political science and economics

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Speaker 1: to how did that shape your investing philosophy?

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Speaker 2: Absolutely? I think you know, the best macro investors are

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Speaker 2: able to pull in, you know, different inputs from policy

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Speaker 2: and politics. It's also really helpful, I think, to understand

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Speaker 2: human behavior. So if you're taking an interdisciplinary approach to

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Speaker 2: your academics and your investing life, I think you're well

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Speaker 2: set up. So in this I mean I took a

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Speaker 2: bunch of courses on game theory and stuff as in

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Speaker 2: my graduate work, and understanding payoffs and incentives, doing some

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Speaker 2: work on behavioral economics. All of that combines really well.

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Speaker 2: And my experience too was that the best investors that

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Speaker 2: I worked for over the course of my career also

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Speaker 2: took in all of these different inputs. And we're constantly

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Speaker 2: trying to solve a puzzle, right It wasn't just, you know,

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Speaker 2: a two variable puzzle. It was a multi variable puzzle.

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Speaker 2: Understanding that every day you wake up and you have

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Speaker 2: to do it a new.

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Speaker 1: Yeah, no doubt about it. It's so funny you mentioned incentives.

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Speaker 1: Whenever I see a situation that I find completely perplexing

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Speaker 1: and can figure it out, what usually leads to the

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Speaker 1: answer is what are the incentives that led to this situation?

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Speaker 1: And once you get work backwards from that. So let's

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Speaker 1: talk a little bit about the strategy and consulting side

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Speaker 1: you begin your career Mitchell Madison and Silver Oak Partners.

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Speaker 1: Is that right? Those shops tell us a little bit

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Speaker 1: about what you did for them and the sort of

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Speaker 1: work and problem solving you did for those firms.

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Speaker 2: Okay, so both Mitchell Madison Silver Oak no longer exists.

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Speaker 2: For the record, Mitchell Madison was formed out of a

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Speaker 2: spinoff of a bunch of McKinsey Partners, and it was

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Speaker 2: taking kind of a new way or new approach frankly

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Speaker 2: to some of the similar types of clients as McKenzie had,

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Speaker 2: But it had this very entrepreneurial kind of environment because

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Speaker 2: it was a breakoff, but it was still really large

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Speaker 2: and global I did bunch of like strategy consulting projects

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Speaker 2: things you would expect, including some cool stuff in the

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Speaker 2: media space, just at the time where the Internet was

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Speaker 2: becoming popular and some of these websites like Amazon that

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Speaker 2: we take for granted were getting launched. So I learned

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Speaker 2: a lot about media and e commerce in those early

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Speaker 2: stages at Mitchell Madison. But Mitchell Madison, for those of

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Speaker 2: you who may recognize it, went through a merger with

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Speaker 2: us web CCS, which was a technology consulting firm Gaull.

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Speaker 2: The combined Energy got rebranded as March first, which was

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Speaker 2: the date that the deal was inked. Kind Of a

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Speaker 2: weird marketing decision on that part, but you know, the

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Speaker 2: business started to change and a number of the partners

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Speaker 2: like broke off and started Silver Oak, which focused on

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Speaker 2: leverage biot firms. Now here's what was really cool. I

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Speaker 2: wasn't doing work for let's say, the LBO and master Form,

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Speaker 2: but rather like a collection of the companies in the

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Speaker 2: portfolio at the same time trying to find synergies. There

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Speaker 2: were things that are traditional around sourcing, but things that

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Speaker 2: were maybe less traditional around finding strategic combinations. And I

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Speaker 2: had a great opportunity to get exposed to a lot

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Speaker 2: of different industries, you know, from traditional manufacturers to telecom companies,

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Speaker 2: financial services, and everything in between. And I have to say, Barry,

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Speaker 2: that experience, you know, working for these kind of small

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Speaker 2: and mid sized LBO owned companies really set me up

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Speaker 2: well for understanding and investing in a broad array of equities.

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Speaker 1: So let's talk about the investing side. Your next stop

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Speaker 1: is Morgan Stanley, obviously a legendary and giant cell side firm.

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Speaker 1: Tell us your about your experiences at Morgan Stanley.

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Speaker 2: Yeah, so how I got to Morgan Stanley Investment Management

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Speaker 2: is perhaps kind of interesting. So we were just talking

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Speaker 2: about my academic background and I was doing this you know,

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Speaker 2: political economy degree at the University of Chicago, and I

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Speaker 2: had had this sort of moment where I realized I

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Speaker 2: wasn't going to pursue the PhD. So I, you know,

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Speaker 2: made an appointment with my advisor and I said, you know,

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Speaker 2: Professor Herrigel, I'm not sure I want to do the PhD.

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Speaker 2: And he starts laughing. And we're sitting in his office.

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Speaker 2: He said, Kate, I've been waiting for this conversation for

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Speaker 2: six months. Wow, I said, oh, my gosh, like, do

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Speaker 2: you know, do you think I'm screwing up here? He said, no,

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Speaker 2: you're top of the class. What I do recognize, though,

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Speaker 2: is because you've worked before for a number of years

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Speaker 2: before coming into a PhD program, you have a different

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Speaker 2: skill set and you're approaching this differently. He's like, I

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Speaker 2: think you can finish your PhD later and you know,

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Speaker 2: do the masters and whatever. So I had this in

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Speaker 2: my mind, and so I started to put out a

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Speaker 2: couple of feelers, but I wasn't really committed to what

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Speaker 2: I would do post you know, getting my master's.

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Speaker 1: Great, and this is out of Chicago.

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Speaker 2: It's a Chicago. And then a strange thing happened. I

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Speaker 2: was back on the East Coast visiting my parents, and

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Speaker 2: I got a call from the career services people in

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Speaker 2: the University of Chicago. I was still, you know, enrolled

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Speaker 2: in school there, just getting my thesis graded, and uh,

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Speaker 2: they said, hey, we got an incoming call from the

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Speaker 2: chief investment officer of Morgan Stanley Investment Management. This guy's

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Speaker 2: name is Joe Mcalindon. Joe is looking to add to

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Speaker 2: his macro investing team on the by side, and specifically

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Speaker 2: is looking for candidates that are not MBAs. He wanted

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Speaker 2: people who had this understanding of politics and economics and

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Speaker 2: everything in between. And I said, hey, guys, I'm not

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Speaker 2: interested in going back into that form of finance. I'm

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Speaker 2: going to do something different. They said, do us this

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Speaker 2: favor and go on the interview.

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Speaker 1: Just just meet with them.

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Speaker 2: Yeah, like, let's put up a good candidate. You kind

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Speaker 2: of meet the criteria. If it's not your bag, it's

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Speaker 2: not your bag. And I went and met this team

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Speaker 2: at Morgan Stanley Investment Management of people who had economics

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Speaker 2: and history and philosophy degrees but were macro investors. And

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Speaker 2: I was like, okay, a these people are cool and

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Speaker 2: b I love how they're solving the problems. Two weeks later,

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Speaker 2: I accepted an offer I fell into investing Barry.

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Speaker 1: Wow, that's really fascinating. And You've had a breath of

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Speaker 1: experiences beyond Morgan Stanley. You were a more capital a

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Speaker 1: well regarded hedge fund, Bank America, Merrill Lynch, JP Morgan,

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Speaker 1: You spent a lot of time at Blackrock. Tell us

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Speaker 1: what was fun? What did you learn at these other shops.

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Speaker 2: So I've had a really cool career in the sense

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Speaker 2: that I've done a variety of different byside more traditional

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Speaker 2: mutual funds. But even when I was at EMSIM, we

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Speaker 2: launched the first internal hedge fund. This is before Morgan

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Speaker 2: Stanley bought front Point, and I worked at a big

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Speaker 2: macro hedge fund through the financial crisis. As you mentioned,

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Speaker 2: at more Capital, that was an adventure. I did a

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Speaker 2: few years on the cell side at BAA. Merrill as

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Speaker 2: global equity and emerging market strategist, and then I went

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Speaker 2: to JP Morgan managed the discretionary multi asset portfolios for

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Speaker 2: the private bank. Then I spent a long time at Blackrock,

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Speaker 2: most of it as a portfolio manager for global allocation,

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Speaker 2: kind of the flagship multi asset fund. I have to say,

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Speaker 2: I love the fact that I've experienced all sides of

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Speaker 2: the investing business, and it makes me understand what makes

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Speaker 2: investors tick a lot more than people who just stayed

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Speaker 2: in their lane. Like I get the retail side, the

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Speaker 2: institutional side, but fast money does what traders do, what

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Speaker 2: fundamental investors do, and I interpret all this sort of

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Speaker 2: sentiment and flow data as part of my process. As

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Speaker 2: a result of having this exposure to different parts of

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Speaker 2: the investment management business.

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Speaker 1: Huh sounds really really interesting. So from all of these

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Speaker 1: different backgrounds, what finally brought you to city?

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Speaker 2: Yeah? So I was at a bit of an interesting

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Speaker 2: inflection point, I would say in my career. Here I am.

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Speaker 2: I've loved being at Blackrock. I really enjoyed the work,

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Speaker 2: but I also recognized I was kind of ready to

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Speaker 2: take the next big step and I could continue to

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Speaker 2: be a portfolio manager at Blackrock and it's an amazing firm,

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Speaker 2: but I was kind of wondering what it would sort

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Speaker 2: of what I should do to take this next step.

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Speaker 2: And I looked around and said, where are the areas

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Speaker 2: of growth in the business? And traditional mutual funds, we

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Speaker 2: know are not a huge growth area for the business,

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Speaker 2: even if your performance is exceptional, you know, keeping your

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Speaker 2: assets can be a challenge. And I saw wealth as

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Speaker 2: an area of consistent growth. I think most people would

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Speaker 2: agree on that front for sure, and you know there's

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Speaker 2: some growth and alternatives, but it felt like just a

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Speaker 2: different flavor of the stuff I was doing. So I

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Speaker 2: was sort of intrigued by this idea of working in wealth,

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Speaker 2: especially because I've done a lot of asset allocation and

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Speaker 2: the multi asset discipline I come from, and I love

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Speaker 2: the challenge of helping people grow their money over time.

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Speaker 2: But I didn't have like a great idea in my

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Speaker 2: head of what I was going to do. This was

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Speaker 2: just sort of something that was a seed that was

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Speaker 2: planted and not yet out of the soil, if it were.

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Speaker 2: And in August of twenty twenty four, Andy c I'd

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Speaker 2: known in the business for like fifteen years or so,

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Speaker 2: never worked together directly, but you know, we'd met a

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Speaker 2: number of times, been on panels together, had good cordial relationship.

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Speaker 2: He called me and said, Kate, I have an idea

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Speaker 2: for you. And he had been at City for a

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Speaker 2: year then, as you know, CEO of Wealth, and I thought, okay,

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Speaker 2: this is interesting, but I need to turn it over

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Speaker 2: in my head a little bit. Is this going to

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Speaker 2: be the right pivot? And ultimately I got so excited

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Speaker 2: Barry because City was already in this massive transformation. Andy

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Speaker 2: is a really inspirational leader. I'm not just saying that

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Speaker 2: because he's my boss, but I think most people on

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Speaker 2: the street will agree. He has a vision he executes

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Speaker 2: and this was a new challenge for me. I'd be

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Speaker 2: flexing different muscles and I thought to myself, for this

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Speaker 2: next big push, in my career. I want to be

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Speaker 2: someplace where I can be entrepreneurial, where I'm going to

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Speaker 2: be supported by the overall platform, where you know, I

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Speaker 2: can continue to grow out my experience as an investor.

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Speaker 2: And so ultimately I made the tough decision to leave

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Speaker 2: a firm that I loved for a new and exciting challenge.

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Speaker 1: Safe to say that this shift in career was the

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Speaker 1: biggest inflection point.

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Speaker 2: It feels like it's the biggest inflection point in my career,

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Speaker 2: but it also feels cumulative. I don't know if that

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Speaker 2: makes sense, but perfect sense.

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Speaker 1: I understand exactly what you're saying. All of these different

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Speaker 1: elements come together almost like a perfect storm, and suddenly

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Speaker 1: now we're off to the whole other level.

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Speaker 2: Yeah, I've been building up these experiences over the course

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Speaker 2: of my career and kind of setting me up to

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Speaker 2: take on this new challenge. It does feel the largest,

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Speaker 2: in part because I've been so concentrated on being an

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Speaker 2: investor over the course of my career. And this is

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Speaker 2: a combination of strategy and business leadership and investing, and so,

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Speaker 2: as I said, I'm flexing a bunch of different muscles.

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Speaker 1: So let's put some numbers, some flesh on the bone.

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Speaker 1: So the groups you lead, the wealth group at city,

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Speaker 1: what's the assets they're investing? And typically who were the clients?

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Speaker 1: Are they mom and pop investors? Are they institutional? A

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Speaker 1: little of both.

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Speaker 2: Yeah, So I'll give you some numbers as an end

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Speaker 2: of twenty twenty four because everything else, of course, is.

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Speaker 1: In't flex and we know that works.

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Speaker 2: Yeah, I'm in the middle of studying for series sixty five.

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Speaker 2: What will be like my thirty ninth millionth of.

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Speaker 1: Yeah, but that one you could do in your sleep.

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Speaker 1: It's not like the seven which is or the options? Yeah,

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Speaker 1: I forgot which one was the options? That was a

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Speaker 1: giant Like, wait, I need to learn about Gamma one totally.

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Speaker 2: I've taken the options one too.

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Speaker 1: What I will tell you is twenty years ago.

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Speaker 2: The one thing that's a little bit annoying on the

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Speaker 2: economic section of the series sixty five is that you know,

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Speaker 2: I don't always agree.

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Speaker 1: I was gonna say the answers are wrong. Once you

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Speaker 1: have passed that, the test is really easy.

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Speaker 2: For example, was like, you know, are payrolls of leading

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Speaker 2: lagging or coincident indicator?

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Speaker 1: Barry, it's lagging butt lagging, Couse it's two months.

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Speaker 2: Old, totally, and like.

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Speaker 1: Totally, yeah, it's it's just there. I remember having in

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Speaker 1: this is, by the way, thirty something years ago, twenty

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Speaker 1: something years ago, I remember calling up and yelling at

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Speaker 1: somebody like, just so you know, I didn't get any

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Speaker 1: of these answers wrong, and the three you marked wrong,

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Speaker 1: you're wrong. And let me explain why totally. How can payrolls,

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Speaker 1: which are a model that uses one to three month

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Speaker 1: old data, be anything other than a legging.

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Speaker 2: And that get totally restated every two years and then.

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Speaker 1: But the subsequent monthly revisions, I mean, by the time

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Speaker 1: you get to the actual number, it's like half a decade.

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Speaker 1: All it's nonsense.

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Speaker 2: And yet of course the market moves a lot on

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Speaker 2: payrolls days, and we have to pretend that matters in

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Speaker 2: the moment.

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Speaker 1: But you know, we have to pretend.

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Speaker 2: Yeah, we have to pretend. Okay, where were we going before?

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Speaker 1: I have no idea, But I just love the fact

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Speaker 1: that you're studying for the sixty five I know, studying

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Speaker 1: in air quotes.

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Speaker 2: Studying in air quotes, I get to whizz through the

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Speaker 2: equity and hedge fund and everything sort of sections of it.

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Speaker 2: But I have to memorize their answer. Second, if it was.

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Speaker 1: An embarrassing to fail, I would say, you can wing

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Speaker 1: it and you'll do just fine. I think seventy is

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Speaker 1: a passing. You'll get like eighty, just off the top

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Speaker 1: of your head. But no one wants to go on

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Speaker 1: and fail, because.

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Speaker 2: No, very like I've made my career off of being

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Speaker 2: a perfectionist, you know, in my analysis, and you know

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Speaker 2: I do not accept a barely passing grade. I do

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Speaker 2: not expect accept you know, index like performance. I'm always

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Speaker 2: seeking alpha, and I'm doing my best to do that

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Speaker 2: in the most risk adjusted way.

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Speaker 1: Even in an examination that's past foul. And we know

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Speaker 1: objectively logically anything over a seventy one is wasted effort.

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Speaker 2: But but I know exactly where you're coming at night.

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Speaker 2: I can't sleep at night if it's just good enough.

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Speaker 2: And that's also how I want to approach things for

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Speaker 2: my clients. Okay, we're talking about city here, and so

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Speaker 2: city has about a trillion dollar city wealth has a

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Speaker 2: trillion dollars in assets, like six hundred billion of that

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Speaker 2: is in investments, and there's other parts and deposits and

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Speaker 2: loans and things like that. And there are three main segments. Right,

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Speaker 2: there's a traditional kind of private bank ultra high net

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Speaker 2: worth service, there's City Gold, which is mass affluent, and

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Speaker 2: then there is a Wealth at Work which targets like

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Speaker 2: very specific segments like the law firm, population, et cetera.

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Speaker 1: It makes a lot, makes a ton of sense.

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Speaker 2: What I will say is City as a bank has

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Speaker 2: so many global customers and clients and people with long

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Speaker 2: standing relationships that haven't been tapped. You know, there's there

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Speaker 2: is an enormous amount of potential to grow the wealth

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Speaker 2: business just from existing City customers. And I think, as

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Speaker 2: you probably know, half of our business is outside of

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Speaker 2: the US, and it is it is it.

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Speaker 1: Is it fifty, It's fully half. Yeah, that's amazing.

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Speaker 2: Yeah. And the Asia business for us, and particularly our

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Speaker 2: legacy in China and surrounding areas is incredibly strong. And

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Speaker 2: that was something that was also very attractive to me,

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Speaker 2: to be honest with you, as someone who has been

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Speaker 2: an emerging markets investor at times and a student of China.

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Speaker 2: You know, the ability to get really deep into the

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Speaker 2: opportunity to grow wealth in multiple different areas was exciting.

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Speaker 1: Huh, really really fascinating. So before we talk about City,

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Speaker 1: let's start a little bit with your time at Blackrock.

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Speaker 1: You join them almost a decade ago in twenty sixteen,

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Speaker 1: your chief Equity strategist tell us a little bit about

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Speaker 1: your initial role and how that played off of what

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Speaker 1: you had been doing previously.

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Speaker 2: Yeah. So I joined Blackrock to be part of the

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Speaker 2: black Rock Investment Institute, which is kind of the internal

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Speaker 2: macro think tank. And the Institute has a couple of

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Speaker 2: different functions. There is a segment that is client facing,

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Speaker 2: but there's also a big function around bringing together the

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Speaker 2: investors across all the platforms in black Rock and convening

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Speaker 2: for you know, forums and symposiums around specific topics. And

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Speaker 2: although I was called chief Equity Strategist, I actually sat

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Speaker 2: on the equity platform with all the equity pms and

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Speaker 2: my job was to be basically embedded in all of

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Speaker 2: the equity portfolios as the macro. My team was the

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Speaker 2: macro resource for them and it was great, and you know,

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Speaker 2: I always knew that I would do that. For a

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Speaker 2: little while, they basically said can you do this and

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Speaker 2: helped to sort of change some of the equity culture

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Speaker 2: into having some macro inputs and then you can kind

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Speaker 2: of figure out where you want to sit, and ultimately,

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Speaker 2: you know, moving back to a multi asset fund made

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Speaker 2: the most sense for me because here's my joke, Barry, Like,

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Speaker 2: I think of myself as being a macro equity investor,

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Speaker 2: you know, combining macro stuff into equities. But the macro

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Speaker 2: people will say I'm equity, and the equity people will

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Speaker 2: say I'm macro. So a multi asset fund is a

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Speaker 2: good home for me.

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Speaker 1: So twenty nineteen, you start working with the Thematic Strategy

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Speaker 1: and Portfolio Manager group. Yeah, tell us a little bit

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Speaker 1: about thematics that's become sort of an alternative to beta

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Speaker 1: and a lot of shops, Blackrock especially.

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Speaker 2: Yeah. Well, let me say this actually started my career,

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Speaker 2: you know, at Morgan Stanley Investment Management, and the hedge

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Speaker 2: fund that my team launched at MSIM was a global

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Speaker 2: thematic hedge fund. This is way back, like over twenty

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Speaker 2: three years ago at this point, so we were ahead

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Speaker 2: of our times, right. So I've actually had this thematic approach, frankly,

398
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Speaker 2: in my investment approach throughout my entire career, and it's

399
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Speaker 2: just now becoming really popular to call everything at the matic.

400
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Speaker 2: So let me say this. I think there are three

401
00:21:39,760 --> 00:21:44,639
Speaker 2: ways at this time to approach the matics three different flavors,

402
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Speaker 2: if you will. The first is this kind of like

403
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Speaker 2: long duration slow bleed thematic, like, eventually we are going

404
00:21:53,440 --> 00:21:55,879
Speaker 2: to have reduce the amount of plastics in all of

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Speaker 2: our goods, and so we want to lean into companies

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Speaker 2: that are investing in that transition.

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Speaker 1: You don't think microplastics accumulating in your lungs and bloodstream

408
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Speaker 1: is a bad thing.

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Speaker 2: It is definitely a bad thing. I wonder if I'm

410
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Speaker 2: a little bit cooked when it comes to that already.

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Speaker 2: But this is kind of a set it and forget

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Speaker 2: its strategy, right where you identify companies that are making

413
00:22:17,760 --> 00:22:21,080
Speaker 2: these changes or facilitating the changes, and you buy a

414
00:22:21,160 --> 00:22:23,800
Speaker 2: basket of them, and you or an ETF then invest them,

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Speaker 2: and then you just set it. The second type of

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Speaker 2: thematics is what I would call like discontinuous change catalysts

417
00:22:31,240 --> 00:22:35,080
Speaker 2: driven thematics, And these are more tactical, like you know,

418
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Speaker 2: it could be a couple quarters, it could be up

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Speaker 2: to a year or two or even longer. But this

420
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Speaker 2: is kind of a more actively managed way to approach thematics,

421
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Speaker 2: right where so you identify the idea, you identify the catalysts,

422
00:22:47,119 --> 00:22:49,639
Speaker 2: you identify the players, and actually there's more of a

423
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Speaker 2: rotation in the names and the sizing of that expression

424
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Speaker 2: in the thematic. That's really exciting. It's also hard because

425
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Speaker 2: sometimes you look around and say, I don't see a

426
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Speaker 2: ton of catalysts here. There's nothing really jumping out.

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Speaker 1: You got to get the theme right, the asset class right,

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Speaker 1: and the timing right.

429
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Speaker 2: And the sizing you know, within that right. And so

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Speaker 2: that's not like by forty companies that are thinking about microplastics.

431
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Speaker 2: It is like four to eight names, a more concentrated

432
00:23:17,200 --> 00:23:20,800
Speaker 2: expression around a theme. You're taking some idiosyncratic risk and

433
00:23:21,640 --> 00:23:24,960
Speaker 2: you are continuing to invest around that. And then the

434
00:23:25,040 --> 00:23:27,360
Speaker 2: third type of thematic investing, I would say, is really

435
00:23:27,440 --> 00:23:30,200
Speaker 2: business cycle thematic. And a lot of people talk about this,

436
00:23:30,520 --> 00:23:32,760
Speaker 2: you know, today there's a you know, where are we

437
00:23:32,880 --> 00:23:36,520
Speaker 2: in the cycle? What are the companies, sectors or qualities

438
00:23:37,320 --> 00:23:40,240
Speaker 2: that perform well in that part of the cycle. I'm

439
00:23:40,320 --> 00:23:44,520
Speaker 2: thematically investing in inflation beneficiaries, et cetera. And I've always

440
00:23:44,560 --> 00:23:47,040
Speaker 2: liked to do those two kind of number two and

441
00:23:47,119 --> 00:23:51,159
Speaker 2: number three together, which is the catalyst driven and the

442
00:23:51,240 --> 00:23:54,400
Speaker 2: business cycle, and I think that together makes a nice portfolio.

443
00:23:54,640 --> 00:23:56,639
Speaker 1: You know, I recall back in the day when we

444
00:23:56,720 --> 00:24:01,600
Speaker 1: were talking about sort of thematic cycle in business sycle investing,

445
00:24:02,160 --> 00:24:05,560
Speaker 1: it was used to go by the name sector rotation.

446
00:24:05,880 --> 00:24:06,080
Speaker 2: Yeah.

447
00:24:06,160 --> 00:24:08,440
Speaker 1: I don't know if anybody still does that sort of

448
00:24:08,440 --> 00:24:10,240
Speaker 1: stuff anymore, it seems.

449
00:24:10,080 --> 00:24:12,960
Speaker 2: Or the investment clock. Do you remember the investment the clock? Sure,

450
00:24:13,480 --> 00:24:16,199
Speaker 2: everyone had an investment clock, which was like this two

451
00:24:16,280 --> 00:24:20,880
Speaker 2: dimensional representation of which sectors or which maybe style factors.

452
00:24:20,920 --> 00:24:25,119
Speaker 2: Once that became part of our lexicon, performed well in

453
00:24:25,280 --> 00:24:26,880
Speaker 2: different macro environment.

454
00:24:27,000 --> 00:24:29,280
Speaker 1: It was always sort of a sign wave and here's

455
00:24:29,320 --> 00:24:32,280
Speaker 1: where we are and the sector here on the sector there. Yeah,

456
00:24:32,400 --> 00:24:34,240
Speaker 1: if it only were that easy.

457
00:24:34,520 --> 00:24:37,879
Speaker 2: Yeah, you know, I won't call out names, but I

458
00:24:38,000 --> 00:24:40,520
Speaker 2: know some folks that like to chart where we are,

459
00:24:40,760 --> 00:24:44,240
Speaker 2: which quadrant we're in, you know, on a regular basis,

460
00:24:44,720 --> 00:24:48,320
Speaker 2: and instead of this nice round circle or an oval,

461
00:24:48,920 --> 00:24:52,240
Speaker 2: you know, it's very sort of spastic point to point

462
00:24:52,280 --> 00:24:54,720
Speaker 2: to point to point because the macro data is moving

463
00:24:54,800 --> 00:24:58,200
Speaker 2: so quickly and the positioning data, which also indicates you know,

464
00:24:58,320 --> 00:25:02,400
Speaker 2: investor risk appetite change so rapidly that we jump from

465
00:25:02,400 --> 00:25:04,680
Speaker 2: one quadrant to the other, sometimes month to month.

466
00:25:05,359 --> 00:25:10,080
Speaker 1: So you mentioned removing plastic from the food supply or wherever.

467
00:25:10,840 --> 00:25:16,439
Speaker 1: What other trends have you looked at? Deglobalization, decarbonization, AI,

468
00:25:16,640 --> 00:25:18,040
Speaker 1: what gets you excited these days?

469
00:25:18,160 --> 00:25:20,000
Speaker 2: Oh wait, you just said a hot button word for me,

470
00:25:20,040 --> 00:25:22,800
Speaker 2: which is deglobalization. Uh huh, And let me just say,

471
00:25:22,840 --> 00:25:24,280
Speaker 2: I don't believe in deglobalization.

472
00:25:24,440 --> 00:25:26,480
Speaker 1: I'm with you, but I want to hear your reasons.

473
00:25:26,520 --> 00:25:30,760
Speaker 2: Why. Yeah, I don't believe in deglobalization because even if,

474
00:25:31,359 --> 00:25:34,040
Speaker 2: let's say, hypothetically, the US and China continue to separate,

475
00:25:34,520 --> 00:25:37,399
Speaker 2: And by hypothetical, I was making a joke for all

476
00:25:37,440 --> 00:25:39,480
Speaker 2: the listeners. Of course, the US and China are going

477
00:25:39,560 --> 00:25:42,679
Speaker 2: to continue to separate. That doesn't mean the relationships between

478
00:25:42,760 --> 00:25:46,440
Speaker 2: each of these countries and other trading partners or allies

479
00:25:46,560 --> 00:25:50,440
Speaker 2: is not going to deepen. Maybe we call it reglobalization

480
00:25:50,640 --> 00:25:54,640
Speaker 2: instead of deglobalization, but a shifting of some other relationships.

481
00:25:55,040 --> 00:25:57,240
Speaker 2: But I have spent a lot of my time, like

482
00:25:57,280 --> 00:26:00,359
Speaker 2: a lot of folks, frankly, looking at themes in and

483
00:26:00,440 --> 00:26:03,200
Speaker 2: around technology. I mentioned the microplastics, It's actually not a

484
00:26:03,280 --> 00:26:05,960
Speaker 2: theme I've invested in the only couple companies I've really

485
00:26:05,960 --> 00:26:08,960
Speaker 2: seen who are here towards that are private and so

486
00:26:09,040 --> 00:26:12,920
Speaker 2: it's harder to access. But around technology, you know, a

487
00:26:13,040 --> 00:26:15,960
Speaker 2: few areas I've been pretty excited about for a good

488
00:26:16,040 --> 00:26:19,439
Speaker 2: considerable amount of time has been you know, have been

489
00:26:19,640 --> 00:26:23,280
Speaker 2: in software, and one of those areas is cybersecurity. This

490
00:26:23,440 --> 00:26:26,520
Speaker 2: was a major theme for me in the portfolio at

491
00:26:26,520 --> 00:26:30,280
Speaker 2: Global Allocation at black Rock, and basically every time I

492
00:26:30,440 --> 00:26:33,119
Speaker 2: was thinking that I want to either shift out of

493
00:26:33,200 --> 00:26:36,680
Speaker 2: the theme or reduce it, there was another event on

494
00:26:36,800 --> 00:26:39,879
Speaker 2: the horizon or something happening that led to increased spend

495
00:26:39,920 --> 00:26:42,560
Speaker 2: in this space. I've now come to believe that investment

496
00:26:42,640 --> 00:26:47,280
Speaker 2: in security software is existential for companies right and while

497
00:26:47,280 --> 00:26:51,240
Speaker 2: there's room to rotate you know, names, based on capabilities,

498
00:26:51,320 --> 00:26:55,160
Speaker 2: et cetera, I believe it's a core part of a portfolio.

499
00:26:55,160 --> 00:26:57,640
Speaker 1: Long standing secular trend that's going to be ongoing.

500
00:26:57,760 --> 00:27:00,720
Speaker 2: Absolutely. But I first put on this investment in January

501
00:27:00,800 --> 00:27:03,159
Speaker 2: of twenty twenty, okay, when I was at Blackrock, and

502
00:27:03,640 --> 00:27:07,879
Speaker 2: that was before the pandemic, and it was basically based

503
00:27:07,880 --> 00:27:11,640
Speaker 2: on geopolitical risk, and of course the pandemic that increased

504
00:27:11,680 --> 00:27:15,560
Speaker 2: the risk from all this data for many different companies.

505
00:27:15,560 --> 00:27:17,800
Speaker 2: So we saw a big uptick and span as they said,

506
00:27:17,800 --> 00:27:20,560
Speaker 2: it's been a rolling series of catalysts over the last

507
00:27:20,600 --> 00:27:22,000
Speaker 2: five and a half years and makes it more of

508
00:27:22,040 --> 00:27:25,440
Speaker 2: a secular theme than a shorter term catalyst driven theme.

509
00:27:25,520 --> 00:27:27,800
Speaker 1: So let's drill down a little bit to your core

510
00:27:27,960 --> 00:27:33,399
Speaker 1: investment philosophy. You've mentioned thematics, you've mentioned pursuing alpha tell us.

511
00:27:34,280 --> 00:27:36,879
Speaker 1: What is Kate Moore's investment philosophy.

512
00:27:37,600 --> 00:27:41,960
Speaker 2: Yeah, I think it's really important to have three pillars

513
00:27:42,200 --> 00:27:45,320
Speaker 2: to your decision making and one pillar that's off to

514
00:27:45,400 --> 00:27:48,680
Speaker 2: the side that's controversial. So I think you have to

515
00:27:48,760 --> 00:27:51,440
Speaker 2: start with a macro view. I think you need to

516
00:27:51,560 --> 00:27:55,879
Speaker 2: understand politics, policy, the major economic data. You need to

517
00:27:55,960 --> 00:27:59,280
Speaker 2: understand government behaviors because so much of that dictates the

518
00:27:59,600 --> 00:28:02,480
Speaker 2: environment for different industries, and some people just sort of

519
00:28:02,520 --> 00:28:04,840
Speaker 2: brush it off. By the way, I love my equity

520
00:28:05,000 --> 00:28:07,920
Speaker 2: colleagues and friends, but nothing makes the hair on the

521
00:28:07,920 --> 00:28:09,440
Speaker 2: back of my neck go up more and kind of

522
00:28:09,480 --> 00:28:12,159
Speaker 2: me bristle than to hear I don't pay attention to

523
00:28:12,280 --> 00:28:14,840
Speaker 2: macro because I just pick good companies. Well good, you'll

524
00:28:14,840 --> 00:28:18,240
Speaker 2: be out of business. You don't have a choice in

525
00:28:18,320 --> 00:28:20,320
Speaker 2: this environment. You can't set it and forget it for

526
00:28:20,359 --> 00:28:22,879
Speaker 2: the next three years. And not focus on what's happening

527
00:28:22,960 --> 00:28:25,959
Speaker 2: in the business cycle and policy and how that may

528
00:28:26,119 --> 00:28:29,399
Speaker 2: impact the interest and desire to own your asset class.

529
00:28:29,600 --> 00:28:32,720
Speaker 2: So I think macro is critical and a good starting point.

530
00:28:33,160 --> 00:28:35,720
Speaker 2: I also like to get into the fundamentals of things,

531
00:28:35,880 --> 00:28:40,920
Speaker 2: right like where are the fundamental thematically like who's growing,

532
00:28:41,280 --> 00:28:43,960
Speaker 2: what technology has come out? Where do we think about,

533
00:28:45,400 --> 00:28:49,840
Speaker 2: you know, changes in consumer behavior, changes in supply chains,

534
00:28:50,280 --> 00:28:52,320
Speaker 2: and where are the real kind of fundamental opportunities. What

535
00:28:52,360 --> 00:28:54,800
Speaker 2: are the companies doing well. I think that's not controversial either.

536
00:28:55,440 --> 00:28:57,560
Speaker 2: But the third stage, and it's really important to me.

537
00:28:57,640 --> 00:28:59,520
Speaker 2: I mean it's grown in importance over the course of

538
00:28:59,560 --> 00:29:03,880
Speaker 2: my career is the positioning, sentiment and technicals. And this

539
00:29:04,040 --> 00:29:08,480
Speaker 2: has become really, really, really important for defining your entry

540
00:29:08,520 --> 00:29:11,960
Speaker 2: and exit points, even if you are a long term investor,

541
00:29:12,960 --> 00:29:16,280
Speaker 2: because markets move really quickly and you need to be

542
00:29:16,360 --> 00:29:19,560
Speaker 2: really thoughtful about how you enter an exit. So I

543
00:29:19,640 --> 00:29:23,960
Speaker 2: pay attention to flows, hedge fund mutual fund, positioning, introduction

544
00:29:24,080 --> 00:29:28,320
Speaker 2: of new instruments, you know, a million things we kind

545
00:29:28,360 --> 00:29:31,280
Speaker 2: of look at at our dashboard, and then this is

546
00:29:31,320 --> 00:29:33,000
Speaker 2: the one I was saying, the pillar off to the side.

547
00:29:33,360 --> 00:29:35,920
Speaker 2: Valuation is a nice to know, but it is not

548
00:29:36,040 --> 00:29:39,320
Speaker 2: a driving force of my investment process. And people might

549
00:29:39,400 --> 00:29:40,480
Speaker 2: kind of cringe when I say that.

550
00:29:40,840 --> 00:29:43,600
Speaker 1: You know, let me jump in here, and I won't

551
00:29:43,680 --> 00:29:47,080
Speaker 1: explore that because I don't disagree with any of that.

552
00:29:47,800 --> 00:29:52,640
Speaker 1: People kind of forget that bull markets that run ten

553
00:29:52,800 --> 00:29:56,440
Speaker 1: twenty years. Valuations tend to start on the lower end

554
00:29:56,520 --> 00:29:59,040
Speaker 1: and they tend to end on the higher ends. But

555
00:29:59,200 --> 00:30:02,640
Speaker 1: if you decide, oh, we're above the average valuation of

556
00:30:02,720 --> 00:30:05,960
Speaker 1: the past cycle, you're missing a lot upside, aren't.

557
00:30:05,760 --> 00:30:08,440
Speaker 2: You a ton of upside? Well, there's also this assumption

558
00:30:09,040 --> 00:30:11,840
Speaker 2: that underpins this view on valuations that there is some

559
00:30:11,960 --> 00:30:13,920
Speaker 2: sort of mean reversion right tomorrow.

560
00:30:14,000 --> 00:30:16,160
Speaker 1: We're gonna snap back. Look at the CAPE as my

561
00:30:16,320 --> 00:30:21,200
Speaker 1: favorite example. Yeah, the Schiller cyclically adjusted PE ratio. You

562
00:30:21,240 --> 00:30:24,920
Speaker 1: would have been out like since nineteen ninety one hundred.

563
00:30:24,960 --> 00:30:26,600
Speaker 1: You followed that. It's it's kind of wild.

564
00:30:26,920 --> 00:30:31,520
Speaker 2: Yeah, for sure, you would absolutely have not taken advantage

565
00:30:31,720 --> 00:30:34,840
Speaker 2: of an incredible run in equities. Like, just to make

566
00:30:34,880 --> 00:30:37,960
Speaker 2: this point and underscore it, I say, evaluation is a

567
00:30:38,040 --> 00:30:40,680
Speaker 2: starting point for your investment decision, what you're screening for

568
00:30:40,840 --> 00:30:43,680
Speaker 2: and entry exit points. You would never own US Tech

569
00:30:43,760 --> 00:30:47,240
Speaker 2: and you would be long Russia, you know, and anyone

570
00:30:47,280 --> 00:30:49,280
Speaker 2: who wants to take that trade, God bless, but you'll

571
00:30:49,320 --> 00:30:50,000
Speaker 2: be out of business.

572
00:30:50,440 --> 00:30:54,040
Speaker 1: Right, Russia's been cheap. But some stocks are cheap for

573
00:30:54,120 --> 00:30:54,480
Speaker 1: a reason.

574
00:30:54,600 --> 00:30:59,680
Speaker 2: They are European banks cheap for reason, and we know

575
00:31:00,200 --> 00:31:02,520
Speaker 2: that kind of over the medium term, this I'll define

576
00:31:02,520 --> 00:31:06,000
Speaker 2: as kind of three years. You know, stocks can stay

577
00:31:06,400 --> 00:31:09,280
Speaker 2: quote unquote expensive, or the way I like to say it,

578
00:31:10,440 --> 00:31:13,000
Speaker 2: be valued at a higher end of the market range

579
00:31:13,720 --> 00:31:16,720
Speaker 2: because they are superior businesses, and they can stay at

580
00:31:16,760 --> 00:31:20,120
Speaker 2: those levels for multiple years, sometimes much longer and continue

581
00:31:20,160 --> 00:31:23,280
Speaker 2: to re rate, and stuff can look like it's a

582
00:31:23,360 --> 00:31:26,320
Speaker 2: discount to the rest of the market, but be structurally

583
00:31:26,360 --> 00:31:30,040
Speaker 2: impaired and therefore deserve the discount. The other problem I

584
00:31:30,120 --> 00:31:32,520
Speaker 2: have when people do these kind of like mean reversion,

585
00:31:33,200 --> 00:31:36,160
Speaker 2: you know, valuation trades, as they say, like, oh, we

586
00:31:36,240 --> 00:31:39,560
Speaker 2: need to go back to some historical period where S

587
00:31:39,640 --> 00:31:43,720
Speaker 2: and P was at fourteen times why. I mean, the

588
00:31:43,840 --> 00:31:48,040
Speaker 2: market composition from a sector perspective completely different, the balance

589
00:31:48,080 --> 00:31:51,720
Speaker 2: sheets of these companies completely different, the cash profiles and

590
00:31:51,800 --> 00:31:55,520
Speaker 2: free cash generation of these companies completely different. The regulatory environment,

591
00:31:55,600 --> 00:31:58,560
Speaker 2: the politics, the behavior, the market technicals. I can go

592
00:31:58,640 --> 00:32:01,480
Speaker 2: on and on and on. It is literally the laziest

593
00:32:01,520 --> 00:32:04,160
Speaker 2: piece of analysis I have ever seen.

594
00:32:04,960 --> 00:32:09,160
Speaker 1: When you look at last century companies like US Steel

595
00:32:09,320 --> 00:32:12,560
Speaker 1: or even General Motors, you know, the expression was men

596
00:32:12,640 --> 00:32:17,600
Speaker 1: in material they need tons of capital, giant factories. Today,

597
00:32:18,000 --> 00:32:22,560
Speaker 1: two people with a laptop and Amazon web servers, you

598
00:32:23,160 --> 00:32:26,400
Speaker 1: could do as much business as any startup from any

599
00:32:26,520 --> 00:32:27,520
Speaker 1: decade previously.

600
00:32:27,880 --> 00:32:30,600
Speaker 2: Totally. I mean. Another example I like to use, like

601
00:32:30,720 --> 00:32:32,440
Speaker 2: near and dear to our hearts in terms of the

602
00:32:32,520 --> 00:32:35,600
Speaker 2: investment landscape, is you know, how many analysts do I

603
00:32:35,680 --> 00:32:38,440
Speaker 2: really need to cover all different sorts of sectors, you know,

604
00:32:38,560 --> 00:32:40,640
Speaker 2: And there was a time where I needed everyone to

605
00:32:40,720 --> 00:32:43,080
Speaker 2: be an expert on a different industry or a different sector,

606
00:32:44,080 --> 00:32:48,400
Speaker 2: and to be very siloed and deeply specialized. But right

607
00:32:48,480 --> 00:32:50,600
Speaker 2: now I can be in a meeting, sitting across the

608
00:32:50,680 --> 00:32:53,640
Speaker 2: table from a CEO or CFO, and they may be

609
00:32:53,800 --> 00:32:56,960
Speaker 2: talking about a business that I only know fifty percent about.

610
00:32:57,480 --> 00:33:01,240
Speaker 2: Right and in real time, I can use my AI tools.

611
00:33:01,680 --> 00:33:03,720
Speaker 2: I can pull up what their competitors have said in

612
00:33:03,800 --> 00:33:07,080
Speaker 2: recent earnings calls or you know, in the social media.

613
00:33:07,560 --> 00:33:10,520
Speaker 2: I can look up terminology, I can pull up data.

614
00:33:11,200 --> 00:33:14,160
Speaker 2: I am one hundred times more informed. I don't need

615
00:33:14,320 --> 00:33:16,480
Speaker 2: to be brief for three hours from an analyst before

616
00:33:16,520 --> 00:33:19,840
Speaker 2: I walk into that meeting. You know, just by understanding

617
00:33:19,880 --> 00:33:22,680
Speaker 2: the types of questions to ask and having this data

618
00:33:22,720 --> 00:33:25,600
Speaker 2: at my fingertips, I'm a faster and better investor.

619
00:33:26,000 --> 00:33:28,440
Speaker 1: So here's the challenge. And we could talk about AI

620
00:33:28,560 --> 00:33:31,600
Speaker 1: as a theme and a little bit, but the challenge

621
00:33:31,760 --> 00:33:35,080
Speaker 1: is you've gone through that whole process over the past

622
00:33:35,200 --> 00:33:39,560
Speaker 1: ten twenty years, where you've you know, done the reps,

623
00:33:39,640 --> 00:33:42,640
Speaker 1: put in the heavy lifting. Yeah, how is the next

624
00:33:42,760 --> 00:33:47,400
Speaker 1: generation going to become the Kate Moore in twenty five

625
00:33:47,560 --> 00:33:50,400
Speaker 1: years if they don't get to go through that process?

626
00:33:50,480 --> 00:33:53,520
Speaker 1: And AI seems to the phrase I heard recently was

627
00:33:54,160 --> 00:33:56,960
Speaker 1: removing the bottom rung on the career ladder? Is this

628
00:33:57,240 --> 00:33:58,640
Speaker 1: Is this a genuine concern?

629
00:33:59,480 --> 00:34:01,400
Speaker 2: It is somhat of a concern, And I think it's

630
00:34:01,440 --> 00:34:04,280
Speaker 2: more of a concern for kids who are going through

631
00:34:04,360 --> 00:34:09,640
Speaker 2: school and are incredibly specialized about what they're studying, and

632
00:34:09,760 --> 00:34:11,799
Speaker 2: this is kind of a flag. Frankly, I would say

633
00:34:11,840 --> 00:34:15,400
Speaker 2: to people, you don't want to just take courses in

634
00:34:15,520 --> 00:34:19,040
Speaker 2: one discipline your job as an undergrad. And I would

635
00:34:19,040 --> 00:34:21,600
Speaker 2: also argue, even in grad school, even in an MBA

636
00:34:21,719 --> 00:34:24,960
Speaker 2: program is to learn how to think and learn how

637
00:34:25,000 --> 00:34:27,600
Speaker 2: to ask questions, to get exposed to as many different

638
00:34:28,080 --> 00:34:31,239
Speaker 2: disciplines as possible. So I tell like young folks like

639
00:34:31,520 --> 00:34:33,960
Speaker 2: you got to study philosophy, you should also study things

640
00:34:34,000 --> 00:34:36,920
Speaker 2: like art history because there's context behind it. You should

641
00:34:36,920 --> 00:34:41,759
Speaker 2: study things like you know, hard sciences because you know

642
00:34:41,880 --> 00:34:43,520
Speaker 2: it gives you a discipline in terms of the way

643
00:34:43,560 --> 00:34:46,560
Speaker 2: that you're thinking. You should take a music theory class.

644
00:34:46,760 --> 00:34:49,040
Speaker 2: I mean, do all of this. You want your brain

645
00:34:49,160 --> 00:34:51,879
Speaker 2: to be flexible and pliant. You want to be able

646
00:34:51,960 --> 00:34:56,040
Speaker 2: to approach the problem by using these tools in unique ways.

647
00:34:56,640 --> 00:34:59,279
Speaker 2: And people who are only point and shoot, only have

648
00:34:59,360 --> 00:35:02,799
Speaker 2: one specific the way of approaching an investment problem are

649
00:35:03,040 --> 00:35:03,680
Speaker 2: often wrong.

650
00:35:04,480 --> 00:35:09,800
Speaker 1: Huh really really interesting. So you're brought to city specifically

651
00:35:10,600 --> 00:35:15,080
Speaker 1: to focus on the wealth business there, what's your strategy

652
00:35:15,200 --> 00:35:17,520
Speaker 1: for breathing life into that space?

653
00:35:18,440 --> 00:35:19,920
Speaker 2: So I think there are a couple of things. We

654
00:35:19,960 --> 00:35:23,400
Speaker 2: have a lot of amazing raw material at city in

655
00:35:23,520 --> 00:35:27,600
Speaker 2: terms of human capital and of course our clients. But

656
00:35:27,880 --> 00:35:32,000
Speaker 2: thinking about how to invest in a different way than

657
00:35:32,040 --> 00:35:36,440
Speaker 2: perhaps my other wealth competitors invest is one of the

658
00:35:36,480 --> 00:35:39,160
Speaker 2: greatest challenges and opportunities and here's what I will say.

659
00:35:39,680 --> 00:35:43,640
Speaker 2: You know, I want to examine the way that we're

660
00:35:43,680 --> 00:35:50,560
Speaker 2: approaching discretionary multi asset class act allocation products. Right, just

661
00:35:50,640 --> 00:35:53,920
Speaker 2: to sort of set it and forget it, here's your stocks, bonds, cash.

662
00:35:54,600 --> 00:35:56,520
Speaker 2: I'm not sure is going to be the right path

663
00:35:56,640 --> 00:35:59,600
Speaker 2: moving forward. I mean, we want to think about what

664
00:35:59,880 --> 00:36:03,720
Speaker 2: is the right combination of both asset class and factor

665
00:36:03,800 --> 00:36:08,400
Speaker 2: exposures for clients and different risk profiles, and how do

666
00:36:08,520 --> 00:36:12,200
Speaker 2: we implement in an interesting way in that space. So

667
00:36:12,280 --> 00:36:15,040
Speaker 2: it's not just like, hey, we have a you know,

668
00:36:15,200 --> 00:36:18,120
Speaker 2: large cap stock fund and we have a you know,

669
00:36:19,120 --> 00:36:22,160
Speaker 2: mid duration bond fund, and this is what we're kind

670
00:36:22,200 --> 00:36:26,440
Speaker 2: of combining together. This is really about, you know, what

671
00:36:26,560 --> 00:36:28,719
Speaker 2: are the best expressions of each of those things. How

672
00:36:28,800 --> 00:36:30,279
Speaker 2: much of it should be beta, how much of it

673
00:36:30,320 --> 00:36:33,320
Speaker 2: should be alpha seeking, whether it's you know, sector specific

674
00:36:33,440 --> 00:36:36,840
Speaker 2: or thematic, what is the best implementation and alternatives, And

675
00:36:36,920 --> 00:36:40,120
Speaker 2: particularly as we get more liquid alternatives available, you know,

676
00:36:40,400 --> 00:36:45,000
Speaker 2: that sort of diversification in a portfolio is going to

677
00:36:45,080 --> 00:36:47,279
Speaker 2: be kind of democratized, and we're going to see more

678
00:36:47,360 --> 00:36:50,080
Speaker 2: and more of our clients across risk spectrum be able

679
00:36:50,120 --> 00:36:50,640
Speaker 2: to access that.

680
00:36:50,960 --> 00:36:54,280
Speaker 1: So let's talk about the opportunities in the wealth business.

681
00:36:54,960 --> 00:36:58,720
Speaker 1: What's driving the growth here? Is it just the amount

682
00:36:58,800 --> 00:37:03,000
Speaker 1: of capital that's slash around? How big are demographics, the

683
00:37:03,200 --> 00:37:06,839
Speaker 1: move towards alternatives. There's so many different cross currents going

684
00:37:06,920 --> 00:37:10,520
Speaker 1: on that make that space so attractive. What do you

685
00:37:10,560 --> 00:37:11,720
Speaker 1: see as the key drivers?

686
00:37:12,280 --> 00:37:14,640
Speaker 2: Yeah, there's a bunch of different drivers, Berry, I'd say,

687
00:37:14,760 --> 00:37:17,960
Speaker 2: you know, first of all, there's been an enormous amount

688
00:37:17,960 --> 00:37:20,279
Speaker 2: of wealth created. We know over the last you know,

689
00:37:20,480 --> 00:37:22,759
Speaker 2: ten years. It's longer than that, but let's just say

690
00:37:22,800 --> 00:37:23,280
Speaker 2: in the last.

691
00:37:23,160 --> 00:37:25,240
Speaker 1: Ten years post financial crisis, post.

692
00:37:25,120 --> 00:37:31,680
Speaker 2: Financial Crist run absolutely and big concentrations of wealth. And frankly,

693
00:37:31,920 --> 00:37:35,000
Speaker 2: a lot of very wealthy families have held a lot

694
00:37:35,120 --> 00:37:38,040
Speaker 2: of these this wealth in cash, you know, or in

695
00:37:38,160 --> 00:37:41,040
Speaker 2: cash equivalents, or have reinvested in their business. I think

696
00:37:41,080 --> 00:37:43,480
Speaker 2: there's now an understanding that they want to diversify, so

697
00:37:43,600 --> 00:37:48,200
Speaker 2: the investment opportunity sat for all this wealth creation is huge.

698
00:37:48,840 --> 00:37:51,040
Speaker 2: I'd say there's another trend, and I'm sure people have

699
00:37:51,160 --> 00:37:53,000
Speaker 2: talked about this before with you, which is like the

700
00:37:53,080 --> 00:37:56,040
Speaker 2: transfer of wealth that's going to happen from the boomer

701
00:37:56,160 --> 00:37:59,880
Speaker 2: generation to my generation and then ultimately to our you know,

702
00:38:00,239 --> 00:38:04,160
Speaker 2: younger generation, and the values and the interests on the

703
00:38:04,239 --> 00:38:08,440
Speaker 2: investing side change from generation to generation. You know, the

704
00:38:08,600 --> 00:38:12,440
Speaker 2: types of risk clients want to take, the types of

705
00:38:12,560 --> 00:38:15,640
Speaker 2: like bespoke opportunities and private stuff that they want to do.

706
00:38:16,320 --> 00:38:20,400
Speaker 2: Maybe it's around you know, environmental social governance stuff. Maybe

707
00:38:20,480 --> 00:38:24,839
Speaker 2: it's around specific geographies, mission aligned. I mean, I think

708
00:38:24,920 --> 00:38:28,399
Speaker 2: that the flavor of investing is changing, which also makes

709
00:38:28,480 --> 00:38:31,480
Speaker 2: us super exciting. And then finally I would say, can

710
00:38:31,480 --> 00:38:34,160
Speaker 2: you know the breadth of investment instruments that are available

711
00:38:34,239 --> 00:38:39,479
Speaker 2: to individual investors and into wealthy families is actually really

712
00:38:39,560 --> 00:38:42,000
Speaker 2: exciting because you can do cooler things than just a

713
00:38:42,040 --> 00:38:44,680
Speaker 2: sixty forty portfolio, which was kind of the way wealth

714
00:38:44,719 --> 00:38:45,799
Speaker 2: businesses ran in the past.

715
00:38:46,840 --> 00:38:50,160
Speaker 1: So you had mentioned the role of behavioral finance in

716
00:38:50,360 --> 00:38:54,480
Speaker 1: some of your education and background. You were at University

717
00:38:54,480 --> 00:38:58,240
Speaker 1: of Chicago, which has become a hotbed of behavioral finance.

718
00:38:58,280 --> 00:39:02,080
Speaker 1: Stick sailor yeahs and recipient into of the Nobel tell us,

719
00:39:02,200 --> 00:39:05,919
Speaker 1: how you think about behavioral economics in your day job?

720
00:39:06,320 --> 00:39:10,440
Speaker 1: How do you help clients steer through some of this

721
00:39:10,640 --> 00:39:13,600
Speaker 1: year is a perfect example. A lot of volatility, a

722
00:39:13,680 --> 00:39:16,680
Speaker 1: lot of storm and drang and here we are above

723
00:39:17,360 --> 00:39:20,880
Speaker 1: where we were before Liberation Day? How do you guide

724
00:39:20,920 --> 00:39:21,560
Speaker 1: people through that?

725
00:39:22,000 --> 00:39:24,840
Speaker 2: Yeah, this is such a tough one, Barry, because you know,

726
00:39:25,520 --> 00:39:28,320
Speaker 2: this is where understanding kind of the positioning, the technicals

727
00:39:28,360 --> 00:39:32,439
Speaker 2: and the biases really differentiate a good investor from maybe

728
00:39:32,440 --> 00:39:35,600
Speaker 2: a less good investor. One of the things I try

729
00:39:35,600 --> 00:39:38,759
Speaker 2: and pay close attention to are all of these sentiment indicators,

730
00:39:38,880 --> 00:39:42,640
Speaker 2: and like you know, the dashboard for sentiment indicators continues

731
00:39:42,719 --> 00:39:47,840
Speaker 2: to change. Right. Sometimes we look at, you know, historic filings,

732
00:39:48,040 --> 00:39:51,200
Speaker 2: but we know that mutual funds and hedge funds change

733
00:39:51,200 --> 00:39:53,840
Speaker 2: their positions really quickly. Sometimes we look at the volume

734
00:39:53,920 --> 00:39:56,520
Speaker 2: and the flow. I like to pay attention to more

735
00:39:56,640 --> 00:40:00,680
Speaker 2: kind of third party and you know, coincident, like what's

736
00:40:00,760 --> 00:40:07,320
Speaker 2: being discussed and different social media or on different message

737
00:40:07,320 --> 00:40:11,759
Speaker 2: boards or whatever, and to just try and understand what's

738
00:40:11,840 --> 00:40:16,360
Speaker 2: capturing the attention and energy from different client segments. But

739
00:40:16,440 --> 00:40:20,120
Speaker 2: I also pay really close attention to, frankly, how the

740
00:40:20,200 --> 00:40:23,520
Speaker 2: market responds to different types of news, and that gives

741
00:40:23,560 --> 00:40:25,000
Speaker 2: you a good sounse. You gotta have your finger on

742
00:40:25,120 --> 00:40:30,239
Speaker 2: that pulse, you know. I learned this from someone named

743
00:40:30,280 --> 00:40:33,799
Speaker 2: Ben Hunt, who you may be familiar with you Asolon theory.

744
00:40:33,840 --> 00:40:37,200
Speaker 2: So I learned this from Ben years ago, but he said,

745
00:40:37,520 --> 00:40:40,040
Speaker 2: you know, number one, the first order to getting things

746
00:40:40,120 --> 00:40:41,920
Speaker 2: right is like having a good forecast.

747
00:40:42,160 --> 00:40:42,279
Speaker 1: Right.

748
00:40:42,719 --> 00:40:45,240
Speaker 2: Let's just say you have a forecast for stock earnings.

749
00:40:45,719 --> 00:40:50,520
Speaker 2: The second order is to understand what consensus thinks, right

750
00:40:50,680 --> 00:40:53,719
Speaker 2: and comparing your number against that. But to get it

751
00:40:53,840 --> 00:40:56,520
Speaker 2: really right in the market, you need to understand what

752
00:40:56,680 --> 00:40:57,720
Speaker 2: consensus thinks.

753
00:40:57,880 --> 00:41:02,280
Speaker 1: Consensus thinks it's a Cain's beauty contest.

754
00:41:02,080 --> 00:41:08,080
Speaker 2: Absolutely, but kind of instilling that in my team is

755
00:41:08,200 --> 00:41:10,960
Speaker 2: really important because it's like, great, I'm so glad you

756
00:41:11,040 --> 00:41:12,719
Speaker 2: think we're going to have two hundred and sixty three

757
00:41:12,760 --> 00:41:16,040
Speaker 2: dollars of S and B earnings this year. If consensus

758
00:41:16,120 --> 00:41:19,839
Speaker 2: actually thinks it's to sixty seven, we should know that too.

759
00:41:20,400 --> 00:41:22,320
Speaker 2: But if the printed number is to sixty seven, but

760
00:41:22,360 --> 00:41:24,640
Speaker 2: everyone's just dragging their feet on cutting the numbers and

761
00:41:24,640 --> 00:41:27,640
Speaker 2: they're actually a two fifty five, that makes a difference

762
00:41:27,680 --> 00:41:29,520
Speaker 2: in terms of how people take risk and respond to

763
00:41:29,560 --> 00:41:33,440
Speaker 2: different news. And so, you know, kind of putting all

764
00:41:33,480 --> 00:41:37,520
Speaker 2: these pieces together, doing the work understanding what like written

765
00:41:37,640 --> 00:41:40,400
Speaker 2: or published consensus is, and then getting all these kind

766
00:41:40,400 --> 00:41:44,480
Speaker 2: of sentiment inputs to really evaluate what is the whisper

767
00:41:44,520 --> 00:41:46,760
Speaker 2: a real number versus what's published.

768
00:41:47,000 --> 00:41:50,840
Speaker 1: So let me push back slightly on sentiment because I

769
00:41:50,920 --> 00:41:53,960
Speaker 1: want to get your take on this. So my experience

770
00:41:54,040 --> 00:41:57,480
Speaker 1: generally has been most day to day sentiment is kind

771
00:41:57,520 --> 00:41:59,840
Speaker 1: of noisy, and it really matters when it hits an extreme.

772
00:42:00,200 --> 00:42:04,000
Speaker 1: Least that's a trader's perspective. But the thing I really

773
00:42:04,120 --> 00:42:07,360
Speaker 1: want to push back on has been the University of

774
00:42:07,440 --> 00:42:11,480
Speaker 1: Michigan consumer sentiment data, which over the past couple of years,

775
00:42:12,040 --> 00:42:15,680
Speaker 1: it's been worse in the financial crisis, worse than the

776
00:42:15,760 --> 00:42:20,200
Speaker 1: beginning of the pandemic, worse than the two thousand and

777
00:42:20,360 --> 00:42:24,839
Speaker 1: one September eleventh attacks or the dot com implosion, worse

778
00:42:24,880 --> 00:42:28,120
Speaker 1: than the eighty seven crash. How do we figure out

779
00:42:28,719 --> 00:42:30,960
Speaker 1: what's going on in sentiment where it seems to have

780
00:42:31,239 --> 00:42:36,840
Speaker 1: just detached from consumer behavior. Hey, everything is terrible, but

781
00:42:37,000 --> 00:42:38,480
Speaker 1: we're going out and spend it totally.

782
00:42:38,600 --> 00:42:40,520
Speaker 2: We're still going out to restaurants even though we think

783
00:42:40,520 --> 00:42:43,520
Speaker 2: the world is ending. Yeah, you're absolutely right. So any

784
00:42:43,840 --> 00:42:47,719
Speaker 2: single sentiment indicator or survey needs to be discounted, right,

785
00:42:47,760 --> 00:42:49,799
Speaker 2: We need to combine all these things and look at

786
00:42:49,840 --> 00:42:51,399
Speaker 2: it kind of on a moving average of a number

787
00:42:51,400 --> 00:42:53,320
Speaker 2: of prints. Another one that kind of flagged for me

788
00:42:53,520 --> 00:42:57,240
Speaker 2: was the Conference board confidence, which hit the lowest levels

789
00:42:57,400 --> 00:43:01,480
Speaker 2: from like September of twenty eleven last month. And that

790
00:43:01,640 --> 00:43:05,719
Speaker 2: was a crazy number, right because September of twenty eleven,

791
00:43:05,840 --> 00:43:08,319
Speaker 2: we had just gone through this debt fiasco, we were

792
00:43:08,400 --> 00:43:09,800
Speaker 2: going to Operation Twist.

793
00:43:10,000 --> 00:43:13,239
Speaker 1: You know, there was like post flash crash, it had

794
00:43:13,280 --> 00:43:14,120
Speaker 1: gotten even crazy.

795
00:43:14,160 --> 00:43:17,680
Speaker 2: Absolutely, so you know that that seemed really disconnected from reality.

796
00:43:17,760 --> 00:43:20,919
Speaker 2: So sometimes you have to discount all of these things,

797
00:43:21,000 --> 00:43:23,200
Speaker 2: but your point is well taken. There has been a

798
00:43:23,400 --> 00:43:27,520
Speaker 2: generalized sentiment deterioration. Another one I look at is that

799
00:43:28,480 --> 00:43:30,680
Speaker 2: what is now the Richmond FED but historically had been

800
00:43:30,719 --> 00:43:34,759
Speaker 2: the Duke Fuqua CFO Survey. And you've seen over the

801
00:43:34,800 --> 00:43:38,480
Speaker 2: past couple of years this massive decoupling between expectations for

802
00:43:38,600 --> 00:43:41,400
Speaker 2: own company over the next six months, where the CFOs

803
00:43:41,400 --> 00:43:44,360
Speaker 2: are going like things are pretty good actually, and expectations

804
00:43:44,360 --> 00:43:46,560
Speaker 2: for the economy where they're like economies in trouble.

805
00:43:46,880 --> 00:43:49,080
Speaker 1: That's so funny you bring that up, because well, first

806
00:43:49,120 --> 00:43:51,080
Speaker 1: I had Tom Barkin and not too long ago. But

807
00:43:51,280 --> 00:43:55,719
Speaker 1: second we see that everywhere. My congressman's okay, but the

808
00:43:55,840 --> 00:43:59,600
Speaker 1: rest of Congress thinks my financial circumstances seemed to be

809
00:43:59,680 --> 00:44:02,520
Speaker 1: pretty good, but we think the economy is going lower.

810
00:44:02,719 --> 00:44:07,200
Speaker 1: Like that exact sort of sentiment split, What do you

811
00:44:07,360 --> 00:44:11,440
Speaker 1: imagine as driving people to think, Hey, things aren't that

812
00:44:11,560 --> 00:44:13,640
Speaker 1: bad for me, but everywhere else it stinks.

813
00:44:14,200 --> 00:44:19,440
Speaker 2: Yeah, I this is tough one, but I honestly think

814
00:44:19,480 --> 00:44:24,759
Speaker 2: the news flow, how media portrays recent events, the echo

815
00:44:24,880 --> 00:44:27,800
Speaker 2: chamber on social media, the fact that people are not

816
00:44:27,960 --> 00:44:30,040
Speaker 2: getting a broad based view. Do you see all these

817
00:44:30,160 --> 00:44:32,560
Speaker 2: you know, traditional news programs now that are trying to

818
00:44:32,560 --> 00:44:34,440
Speaker 2: dedicate one night a week or whatever the heck it

819
00:44:34,560 --> 00:44:37,200
Speaker 2: is to the good news, right, true?

820
00:44:37,280 --> 00:44:38,920
Speaker 1: That's yeah, It's like, that's funny.

821
00:44:39,080 --> 00:44:41,600
Speaker 2: There's a there's a local channel I've watched that will

822
00:44:41,640 --> 00:44:44,640
Speaker 2: do one good story after they've just reported a bunch

823
00:44:44,719 --> 00:44:47,880
Speaker 2: of like murders and you know, everything for the previous

824
00:44:47,960 --> 00:44:50,560
Speaker 2: twenty five minutes. The last story is like they're trying

825
00:44:50,560 --> 00:44:53,200
Speaker 2: to leave you on a positive note. I'm thinking, okay,

826
00:44:53,360 --> 00:44:55,800
Speaker 2: but the skew is definitely really negative.

827
00:44:55,880 --> 00:44:58,720
Speaker 1: If it bleeds, it leads, that's always been the news.

828
00:44:58,600 --> 00:45:01,000
Speaker 2: Then yeah, really, but now people are consuming more of that.

829
00:45:01,480 --> 00:45:04,040
Speaker 1: I think you're definitely onto something.

830
00:45:04,200 --> 00:45:06,320
Speaker 2: But so we do maybe need to za score the

831
00:45:06,400 --> 00:45:08,520
Speaker 2: sentiment right now, let's just put it that way. We

832
00:45:08,600 --> 00:45:12,120
Speaker 2: have to adjust for this declining overall sentiment. But when

833
00:45:12,160 --> 00:45:14,320
Speaker 2: I'm talking about sentiment, I also like I'm trying to

834
00:45:14,360 --> 00:45:18,600
Speaker 2: infer sentiment from price reactions to different news, right, And

835
00:45:18,680 --> 00:45:20,319
Speaker 2: that might be a better gauge in some of these

836
00:45:20,400 --> 00:45:23,080
Speaker 2: surveys where people can say, you know, the sky is falling,

837
00:45:23,280 --> 00:45:25,680
Speaker 2: but then just book a carnival cruise, right, like you

838
00:45:25,800 --> 00:45:29,040
Speaker 2: know the and you know, if a stock puts up

839
00:45:29,080 --> 00:45:32,759
Speaker 2: pretty good numbers in terms of earnings but doesn't beat

840
00:45:32,840 --> 00:45:36,640
Speaker 2: by huge margin and follows fifteen percent, you can tell

841
00:45:36,760 --> 00:45:38,759
Speaker 2: that like people are at the edge, right, And so

842
00:45:39,400 --> 00:45:41,560
Speaker 2: you know, you have to kind of correct your own

843
00:45:42,160 --> 00:45:45,440
Speaker 2: equity exposure for that type of behavior. But your point's

844
00:45:45,440 --> 00:45:48,440
Speaker 2: well taken. On you mish and on you know, all

845
00:45:48,480 --> 00:45:51,440
Speaker 2: of these other surveys. There's been a generalized decline. We

846
00:45:51,520 --> 00:45:52,400
Speaker 2: have to correct for that.

847
00:45:52,680 --> 00:45:55,439
Speaker 1: Huh. Really interesting. So let's talk a little bit about

848
00:45:55,480 --> 00:45:59,680
Speaker 1: today's market environment. Twenty twenty five has been kind of

849
00:45:59,800 --> 00:46:04,239
Speaker 1: a volatile, wacky year. What's your current macro view on

850
00:46:05,120 --> 00:46:09,040
Speaker 1: the global economy, What's going on in markets? The FED,

851
00:46:09,560 --> 00:46:13,520
Speaker 1: yield inflation, tariffs, it all seems to be kind of

852
00:46:13,680 --> 00:46:14,919
Speaker 1: tumbling together at once.

853
00:46:15,560 --> 00:46:17,560
Speaker 2: Yeah, I have to say twenty twenty five has been

854
00:46:17,840 --> 00:46:21,400
Speaker 2: a tough year for anyone, and it's also been a

855
00:46:21,440 --> 00:46:23,520
Speaker 2: tough year candidly for me to start a new job.

856
00:46:24,560 --> 00:46:26,920
Speaker 2: I like to say that every time I start a

857
00:46:26,960 --> 00:46:29,719
Speaker 2: new job there's some big volatility event. This one might

858
00:46:29,760 --> 00:46:33,680
Speaker 2: be the biggest and frankly totally self induced as opposed

859
00:46:33,680 --> 00:46:37,000
Speaker 2: to some kind of exogenous or external shock. So it's

860
00:46:37,040 --> 00:46:41,879
Speaker 2: been really difficult to navigate through this market. And yet,

861
00:46:42,400 --> 00:46:44,320
Speaker 2: you know, there are some things we can still anchor to,

862
00:46:45,400 --> 00:46:48,120
Speaker 2: paying attention to what companies are saying about their businesses,

863
00:46:48,200 --> 00:46:49,960
Speaker 2: this kind of sort of sentiment stuff we were talking

864
00:46:49,960 --> 00:46:53,000
Speaker 2: about a moment ago. Looking at the long term trends,

865
00:46:53,080 --> 00:46:54,799
Speaker 2: this all leads us to say, like, Okay, we can

866
00:46:54,880 --> 00:46:58,680
Speaker 2: still be invested, but I am deeply worried, barry about

867
00:46:58,760 --> 00:47:02,320
Speaker 2: what's going to happen to them over the summer and

868
00:47:02,400 --> 00:47:06,080
Speaker 2: into the beginning of twenty twenty six. We know that

869
00:47:06,160 --> 00:47:09,719
Speaker 2: companies have been operating more or less bau business as

870
00:47:09,800 --> 00:47:13,760
Speaker 2: usual despite all of the shocks on headlines around tariffs

871
00:47:14,239 --> 00:47:17,359
Speaker 2: and consumers may have pulled forward some demand, but they're

872
00:47:17,360 --> 00:47:20,959
Speaker 2: also kind of operating BAU. For the most part, there's

873
00:47:21,000 --> 00:47:24,719
Speaker 2: not been a significant change, and yet we know that

874
00:47:24,920 --> 00:47:30,200
Speaker 2: the introduction of these tariffs and the risk aversion that's

875
00:47:30,239 --> 00:47:32,840
Speaker 2: a result of these tariffs and changes in policy and

876
00:47:33,000 --> 00:47:36,560
Speaker 2: changes in expectations for global supply chains is going to

877
00:47:36,719 --> 00:47:39,520
Speaker 2: lead to some weakness and activity. The thing I just

878
00:47:39,560 --> 00:47:41,319
Speaker 2: want to point out is, like going into the end

879
00:47:41,360 --> 00:47:43,200
Speaker 2: of twenty twenty four, in the beginning of twenty five,

880
00:47:43,600 --> 00:47:46,160
Speaker 2: I was also like a little worried frankly that the

881
00:47:46,239 --> 00:47:50,440
Speaker 2: economy was slowing, not catastrophically, not recession style, but there

882
00:47:50,480 --> 00:47:53,839
Speaker 2: were enough cracks across the consumer and enough indications from

883
00:47:53,880 --> 00:47:57,200
Speaker 2: companies to basically suggest like this was not going to

884
00:47:57,239 --> 00:48:00,600
Speaker 2: be an accelerating year, even before these polices, the shocks,

885
00:48:01,239 --> 00:48:05,080
Speaker 2: and now I think despite some adjustments, you know, immediately

886
00:48:05,200 --> 00:48:08,480
Speaker 2: after the terrorf announcements, companies don't have an incentive to

887
00:48:08,520 --> 00:48:11,560
Speaker 2: do a bunch of different things, and that is engaged

888
00:48:12,000 --> 00:48:15,279
Speaker 2: in real capex. They'll spend what they need to to

889
00:48:15,480 --> 00:48:18,799
Speaker 2: stay in business or to maintain or things that are

890
00:48:18,880 --> 00:48:23,120
Speaker 2: absolutely necessary, but they're going to prioritize expansionary capex and

891
00:48:23,280 --> 00:48:27,279
Speaker 2: acquisitions I think are off the table. Number two on

892
00:48:27,360 --> 00:48:29,239
Speaker 2: the labor market. We've heard a lot of people talk

893
00:48:29,280 --> 00:48:32,680
Speaker 2: about it being frozen. Yes, there's still some hiring, but

894
00:48:32,800 --> 00:48:35,000
Speaker 2: when you look at kind of the composition of the hiring,

895
00:48:35,080 --> 00:48:37,080
Speaker 2: it's not as exciting as it might have otherwise been

896
00:48:37,920 --> 00:48:43,160
Speaker 2: in a policy risk free economy. And I think companies

897
00:48:43,239 --> 00:48:45,319
Speaker 2: have an incentive to kind of keep their labor force

898
00:48:45,360 --> 00:48:48,040
Speaker 2: where it is without really expanding because they don't know

899
00:48:48,120 --> 00:48:50,000
Speaker 2: if that's going to make sense for margins and stuff

900
00:48:50,040 --> 00:48:52,800
Speaker 2: going forward. And then the third thing I would say is,

901
00:48:53,480 --> 00:48:57,279
Speaker 2: you know, companies need to ask themselves what should my

902
00:48:57,440 --> 00:49:02,520
Speaker 2: supply chain, what should my corporate relations look like over

903
00:49:02,600 --> 00:49:05,640
Speaker 2: the course of the next couple of years, because the

904
00:49:05,719 --> 00:49:09,239
Speaker 2: truth of the matter is if they have to realign them,

905
00:49:09,280 --> 00:49:11,040
Speaker 2: it will be a significant cost. It will take a

906
00:49:11,120 --> 00:49:13,200
Speaker 2: ton of time and take a ton of energy. And

907
00:49:13,280 --> 00:49:15,160
Speaker 2: yet if there might be a policy shift, either at

908
00:49:15,200 --> 00:49:19,279
Speaker 2: the midterms or under a new administration, the incentive to

909
00:49:19,360 --> 00:49:22,160
Speaker 2: make these multi year investments is low. So I get

910
00:49:22,200 --> 00:49:24,960
Speaker 2: this sort of paralysis that's playing out in terms of

911
00:49:25,040 --> 00:49:28,799
Speaker 2: the market, in terms of corporate behavior, and so I'm

912
00:49:28,840 --> 00:49:32,040
Speaker 2: a little I wouldn't say worried about a recession, but

913
00:49:32,480 --> 00:49:35,200
Speaker 2: concerned about much slower activity in the second half of

914
00:49:35,200 --> 00:49:35,480
Speaker 2: the year.

915
00:49:36,080 --> 00:49:39,520
Speaker 1: So that raises so many different issues. We keep hearing

916
00:49:39,680 --> 00:49:44,200
Speaker 1: from CFO CEOs about the lack of clarity. If you

917
00:49:44,239 --> 00:49:47,080
Speaker 1: don't know what the policy is going to be, how

918
00:49:47,160 --> 00:49:50,960
Speaker 1: do you relocate manufacturing plan a headquarter, how do you

919
00:49:51,040 --> 00:49:54,560
Speaker 1: plan to do any sort of expansionary hiring. So I'm

920
00:49:54,640 --> 00:49:58,560
Speaker 1: completely with you that, Hey, this seems to be this

921
00:49:58,760 --> 00:50:04,640
Speaker 1: self inflicted wound that's preventing the economy from accelerating. And

922
00:50:04,800 --> 00:50:08,040
Speaker 1: yet despite all that, the economy seems to be incredibly

923
00:50:08,239 --> 00:50:13,040
Speaker 1: resilient and not taking too big of a hit from

924
00:50:13,239 --> 00:50:17,640
Speaker 1: all of these on again, off again tariffs. Does that

925
00:50:17,920 --> 00:50:21,800
Speaker 1: just mean that this administration inherited a really robust economy.

926
00:50:23,280 --> 00:50:25,840
Speaker 2: Yes, And I think there's another element to it. I

927
00:50:25,920 --> 00:50:30,360
Speaker 2: do think this administration inherited a resilient economy, one that

928
00:50:30,600 --> 00:50:35,160
Speaker 2: was perhaps underappreciated over the last couple of years because

929
00:50:35,239 --> 00:50:37,719
Speaker 2: not everyone was feeling that resilience in the same way,

930
00:50:37,960 --> 00:50:43,560
Speaker 2: or wealth creation wasn't as broad as some would have liked. Okay,

931
00:50:44,280 --> 00:50:47,239
Speaker 2: but I think there's another element to this too, And

932
00:50:47,680 --> 00:50:50,640
Speaker 2: this goes a little bit into kind of corporate behavior

933
00:50:50,840 --> 00:50:55,080
Speaker 2: and how investors react to corporate decisions, which is, you know,

934
00:50:55,200 --> 00:50:58,479
Speaker 2: if a company pulls back prematurely. Let's say they shed

935
00:50:58,480 --> 00:51:01,040
Speaker 2: a bunch of work for so they a lot of CAPEX,

936
00:51:01,080 --> 00:51:03,800
Speaker 2: and they really hunker down for a bad economic environment

937
00:51:04,320 --> 00:51:08,120
Speaker 2: and that doesn't actually show up for multiple quarters, and they.

938
00:51:08,520 --> 00:51:11,000
Speaker 1: Kind of, like the past few years, have prety forecasting

939
00:51:11,040 --> 00:51:12,640
Speaker 1: recessions that never came, and.

940
00:51:12,719 --> 00:51:15,560
Speaker 2: They lag their peer group and they look weak relative

941
00:51:15,640 --> 00:51:19,279
Speaker 2: to the rest of the industry. Wow, that makes people

942
00:51:19,360 --> 00:51:22,600
Speaker 2: lose confidence in that management team. So there's almost an

943
00:51:22,640 --> 00:51:27,600
Speaker 2: incentive for management teams to maybe have contingency plans, to

944
00:51:27,680 --> 00:51:29,440
Speaker 2: talk about that with their board and the rest of

945
00:51:29,440 --> 00:51:32,680
Speaker 2: their leadership, but not necessarily communicate that with the investment

946
00:51:32,719 --> 00:51:37,880
Speaker 2: community and keep operating with only a tiny bit of

947
00:51:37,920 --> 00:51:41,000
Speaker 2: defensive action because there's going to be a penalty on

948
00:51:41,080 --> 00:51:43,360
Speaker 2: their stock price, and frankly in the confidence people have

949
00:51:43,440 --> 00:51:45,839
Speaker 2: in the management team if it looks like they're being

950
00:51:46,280 --> 00:51:48,120
Speaker 2: too emotional and reactionary.

951
00:51:48,280 --> 00:51:50,400
Speaker 1: This sounds like the game theory work you did at

952
00:51:50,520 --> 00:51:52,120
Speaker 1: UFC is coming.

953
00:51:51,960 --> 00:51:56,719
Speaker 2: Into one hundred percent. It plays a huge part in

954
00:51:56,800 --> 00:51:58,960
Speaker 2: the way I think about this. So, you know, no

955
00:51:59,120 --> 00:52:01,400
Speaker 2: company has an incent to talk about how concerned. They

956
00:52:01,400 --> 00:52:04,000
Speaker 2: actually are publicly because the first one that does it

957
00:52:04,080 --> 00:52:04,920
Speaker 2: will be penalized.

958
00:52:05,400 --> 00:52:09,400
Speaker 1: That's interesting. And and since you work at a giant bank,

959
00:52:10,239 --> 00:52:15,080
Speaker 1: we've seen bank earnings that are pretty strong across the board. Yeah,

960
00:52:15,600 --> 00:52:18,480
Speaker 1: that's kind of unexpected. Tell us a little bit about

961
00:52:18,760 --> 00:52:23,480
Speaker 1: what does that mean in light of this environment relatively

962
00:52:23,640 --> 00:52:27,600
Speaker 1: high rates really just more normalize than what we've seen

963
00:52:27,640 --> 00:52:30,239
Speaker 1: in the prior two decades. What's going on in the

964
00:52:30,320 --> 00:52:31,080
Speaker 1: banking sector.

965
00:52:31,360 --> 00:52:32,959
Speaker 2: Yeah, well, I can talk a little bit about City

966
00:52:33,080 --> 00:52:36,920
Speaker 2: because we've had some pretty awesome operating performance and there

967
00:52:36,960 --> 00:52:38,719
Speaker 2: are a couple of things really driving that. Of course,

968
00:52:38,800 --> 00:52:40,960
Speaker 2: you know, there's been a real focus in terms of

969
00:52:41,040 --> 00:52:43,960
Speaker 2: cost and expense. This is not just City, this is

970
00:52:44,000 --> 00:52:47,720
Speaker 2: across the board at major financial institutions, and frankly, investment

971
00:52:47,880 --> 00:52:51,160
Speaker 2: investors really love this. They want to see that discipline continue.

972
00:52:52,360 --> 00:52:55,880
Speaker 2: Number two, like the mixshift has actually contributed to earnings,

973
00:52:56,400 --> 00:52:59,879
Speaker 2: and I think, as you well know, you know well,

974
00:53:00,160 --> 00:53:03,440
Speaker 2: has been a huge driver for many of the diversified

975
00:53:03,480 --> 00:53:06,640
Speaker 2: financial services companies. I expect it will continue and I'm

976
00:53:06,640 --> 00:53:08,759
Speaker 2: looking forward to wealth being an even bigger driver for

977
00:53:08,880 --> 00:53:11,400
Speaker 2: City over the next couple of years. And then I

978
00:53:11,440 --> 00:53:13,440
Speaker 2: think there's a you know, another element to which is

979
00:53:13,480 --> 00:53:17,840
Speaker 2: that the speed and sort of the facility that management

980
00:53:18,000 --> 00:53:21,080
Speaker 2: has in toggling between different types of business for different

981
00:53:21,120 --> 00:53:24,600
Speaker 2: parts of the cycle has significantly improved relative to how

982
00:53:24,640 --> 00:53:27,160
Speaker 2: people think about banks fifteen years ago. So we were

983
00:53:27,160 --> 00:53:30,560
Speaker 2: talking about valuations earlier, and you know, financial services and

984
00:53:30,600 --> 00:53:34,080
Speaker 2: kind of banks more specifically kind of dragged down overall

985
00:53:34,280 --> 00:53:36,360
Speaker 2: market multiples when they were a huge part of the

986
00:53:36,480 --> 00:53:39,320
Speaker 2: market cap for the US large cap indencies in the past.

987
00:53:39,840 --> 00:53:42,560
Speaker 1: So let's talk a little bit about soft data. It's

988
00:53:42,880 --> 00:53:46,160
Speaker 1: kind of been negative when we're talking about sentiment and

989
00:53:46,239 --> 00:53:51,759
Speaker 1: things like that. This really hasn't translated into the hard

990
00:53:51,840 --> 00:53:54,200
Speaker 1: data yet. Tell us what you're looking at in that space.

991
00:53:54,480 --> 00:53:56,799
Speaker 2: Yeah, of course, I mean I'm shaking my head as

992
00:53:56,840 --> 00:53:59,359
Speaker 2: you say that, because it's absolutely right. The soft data

993
00:53:59,480 --> 00:54:03,439
Speaker 2: into hard data in a normal period, you know, gets

994
00:54:03,520 --> 00:54:06,920
Speaker 2: translated over inconsistent time period. So if there's not like

995
00:54:07,000 --> 00:54:09,279
Speaker 2: a map that says like, hey, the soft data does X,

996
00:54:09,719 --> 00:54:12,840
Speaker 2: and then three quarters later or one month later, it

997
00:54:12,960 --> 00:54:15,399
Speaker 2: translates into something in the market or some other hard

998
00:54:15,480 --> 00:54:18,040
Speaker 2: data and economic activity. So it's always a bit of

999
00:54:18,080 --> 00:54:20,479
Speaker 2: an art interpreting the soft data into the hard data,

1000
00:54:20,760 --> 00:54:24,520
Speaker 2: and yet it's really important to pay attention because it

1001
00:54:24,719 --> 00:54:28,919
Speaker 2: may impact the marginal decision. Right now, the soft data

1002
00:54:29,120 --> 00:54:32,560
Speaker 2: has went from catastrophic posts the April second to Tarif

1003
00:54:32,640 --> 00:54:38,040
Speaker 2: announcements to really awful to maybe a hair better but

1004
00:54:38,200 --> 00:54:40,880
Speaker 2: still pretty bombed out. And as we've talked about, the

1005
00:54:40,920 --> 00:54:45,520
Speaker 2: economic data has stayed somewhat resilient. That doesn't mean that

1006
00:54:45,800 --> 00:54:49,359
Speaker 2: the economic data will never show weakness. And again, I'm

1007
00:54:49,560 --> 00:54:52,719
Speaker 2: expecting some soft pockets throughout the second half of the year,

1008
00:54:53,280 --> 00:54:57,160
Speaker 2: not recessionary, but kind of like sub two percent, sub

1009
00:54:57,200 --> 00:54:59,520
Speaker 2: one and a half percent growth. I think we should

1010
00:54:59,520 --> 00:55:03,240
Speaker 2: buckle down for and that's where I expect more durable

1011
00:55:03,280 --> 00:55:06,480
Speaker 2: earning stories, secular growth stories will outperform the rest of

1012
00:55:06,520 --> 00:55:06,879
Speaker 2: the market.

1013
00:55:07,080 --> 00:55:09,320
Speaker 1: So it sounds like there are a couple of catalysts

1014
00:55:09,400 --> 00:55:12,439
Speaker 1: in the pipeline and you're just waiting to see which

1015
00:55:12,560 --> 00:55:14,960
Speaker 1: direction the majority of these go. Tell us a little

1016
00:55:15,000 --> 00:55:18,440
Speaker 1: bit about what you see as upside and downsize catalysts.

1017
00:55:18,640 --> 00:55:22,239
Speaker 2: Okay, so around tariffs, any given day that we'd be

1018
00:55:22,320 --> 00:55:25,799
Speaker 2: having this discussion, there's a new set of news. One

1019
00:55:25,840 --> 00:55:27,280
Speaker 2: thing I do know is that we have a series

1020
00:55:27,360 --> 00:55:29,799
Speaker 2: of deadlines over the course of the summer where people

1021
00:55:29,800 --> 00:55:32,359
Speaker 2: are hoping for some level of resolution. And the way

1022
00:55:32,440 --> 00:55:34,360
Speaker 2: I say talk about this, Barry is this is that

1023
00:55:34,840 --> 00:55:37,759
Speaker 2: we may be past peak tariff shock, but we are

1024
00:55:37,960 --> 00:55:42,960
Speaker 2: nowhere close to peak tariff pain. We don't really know

1025
00:55:44,000 --> 00:55:46,600
Speaker 2: how bad it's going to be quite yet. And this

1026
00:55:46,719 --> 00:55:49,320
Speaker 2: is why of horse companies have been reluctant to significantly

1027
00:55:49,400 --> 00:55:51,919
Speaker 2: change their guidance and their earnings revision ratios have looked

1028
00:55:52,480 --> 00:55:55,839
Speaker 2: better than some people expected. Here's what I will say.

1029
00:55:56,960 --> 00:56:00,239
Speaker 2: Even if the reciprocal tariffs don't hold up and they

1030
00:56:00,320 --> 00:56:02,360
Speaker 2: end up going to the Supreme Court, and that's a decision,

1031
00:56:03,120 --> 00:56:06,520
Speaker 2: the sectoral tariffs, which take longer to implement, are much

1032
00:56:06,600 --> 00:56:09,719
Speaker 2: stickier and frankly, have much longer, larger.

1033
00:56:09,560 --> 00:56:13,000
Speaker 1: When you say sectoral, like North America, Canada, No like

1034
00:56:13,160 --> 00:56:15,040
Speaker 1: semis oh, okay.

1035
00:56:14,800 --> 00:56:20,080
Speaker 2: Gotcha, Urma copper steel. All of these sectoral tariffs are

1036
00:56:20,200 --> 00:56:24,400
Speaker 2: much stickier and have much greater potential impact than the

1037
00:56:24,840 --> 00:56:28,080
Speaker 2: country to country bilateral reciprocal tariffs.

1038
00:56:28,520 --> 00:56:31,920
Speaker 1: It's so interesting you mentioned that someone was from a

1039
00:56:32,000 --> 00:56:35,800
Speaker 1: biomedical device company was having a conversation with me, so

1040
00:56:35,840 --> 00:56:39,280
Speaker 1: I don't understand an iPhone is exempt from China tariffs.

1041
00:56:39,760 --> 00:56:43,960
Speaker 1: But the pacemakers we make that save people's lives are

1042
00:56:44,080 --> 00:56:47,720
Speaker 1: not And if we have to relocate this to wherever,

1043
00:56:48,000 --> 00:56:53,440
Speaker 1: to Taiwan, to Vietnam, to Canada, the FDA process starts

1044
00:56:53,480 --> 00:56:56,480
Speaker 1: over and it'll be eight years. So for about half

1045
00:56:56,560 --> 00:57:02,560
Speaker 1: a decade or so, as the Chinese manufacturered pacemakers sell off,

1046
00:57:03,080 --> 00:57:06,120
Speaker 1: but before the new ones come online, there's not going

1047
00:57:06,200 --> 00:57:07,920
Speaker 1: to be enough pacemakers right there.

1048
00:57:08,080 --> 00:57:10,960
Speaker 2: We have a real risk of some of these important

1049
00:57:11,040 --> 00:57:13,920
Speaker 2: raw materials and these important consumer goods and these important

1050
00:57:13,960 --> 00:57:19,800
Speaker 2: medical goods, you know, not being adequately supplied, and so

1051
00:57:19,920 --> 00:57:21,760
Speaker 2: we have to really watch this. So so I will

1052
00:57:21,760 --> 00:57:24,640
Speaker 2: say this that the tariff side is not going to

1053
00:57:24,680 --> 00:57:26,720
Speaker 2: be resolved over the course of the summer, and because

1054
00:57:27,120 --> 00:57:29,400
Speaker 2: it's going to bleed out for longer, we may have

1055
00:57:29,880 --> 00:57:33,760
Speaker 2: slower growth but not catastrophic, but eventually we'll have some

1056
00:57:33,960 --> 00:57:36,760
Speaker 2: really big sectoral consumer and business impacts.

1057
00:57:37,120 --> 00:57:40,480
Speaker 1: Huh, really really interesting. You mentioned some of the news

1058
00:57:40,560 --> 00:57:45,440
Speaker 1: stories and how things are affecting sentiment. How do you

1059
00:57:45,560 --> 00:57:49,640
Speaker 1: see the role of narratives driving market responses. It seems

1060
00:57:49,760 --> 00:57:53,600
Speaker 1: like there are different stories for different asset classes every

1061
00:57:53,640 --> 00:57:54,080
Speaker 1: other week.

1062
00:57:54,360 --> 00:57:57,960
Speaker 2: Absolutely the narrative changes. It's sometimes it feels like on

1063
00:57:58,080 --> 00:58:00,800
Speaker 2: thirty minute increments you used to be you'd have a

1064
00:58:00,840 --> 00:58:04,320
Speaker 2: couple weeks of a narrative taking hold. I know many

1065
00:58:04,360 --> 00:58:07,480
Speaker 2: people think about this, but the market can really only

1066
00:58:07,560 --> 00:58:11,520
Speaker 2: focus on one thing at a time, one major narrative

1067
00:58:11,680 --> 00:58:13,680
Speaker 2: at a time, you know, and that's where you end

1068
00:58:13,760 --> 00:58:15,960
Speaker 2: up seeing the bulk of the price movement. For example,

1069
00:58:16,160 --> 00:58:19,280
Speaker 2: is it around tariffs? Is it around inflation data? Is

1070
00:58:19,320 --> 00:58:22,960
Speaker 2: it around FEDE expectations? Is it around the technology conflict

1071
00:58:22,960 --> 00:58:26,160
Speaker 2: between the US and China? Is it around some geopolitical shock.

1072
00:58:26,200 --> 00:58:27,920
Speaker 2: You know, it's but it's not going to be all

1073
00:58:28,000 --> 00:58:30,440
Speaker 2: those things at once, even though I would argue all

1074
00:58:30,520 --> 00:58:35,440
Speaker 2: of those things are happening concurrently, and I think the

1075
00:58:35,560 --> 00:58:38,120
Speaker 2: market has become even more short attention span if we can,

1076
00:58:38,560 --> 00:58:42,800
Speaker 2: you know, personified here, and as a result, the narratives

1077
00:58:42,800 --> 00:58:45,960
Speaker 2: are shifting very quickly. This is why it's really important

1078
00:58:46,080 --> 00:58:48,640
Speaker 2: that when you're thinking about portfolio construction, to anchor on

1079
00:58:48,720 --> 00:58:51,200
Speaker 2: the right acid class in factor exposures, to layer it

1080
00:58:51,480 --> 00:58:56,800
Speaker 2: with more medium term thematic alpha generating ideas, and then

1081
00:58:57,080 --> 00:58:59,880
Speaker 2: offer some ballots to the portfolio, either in less core

1082
00:59:00,000 --> 00:59:03,520
Speaker 2: releated assets or in expressions of the asset class or

1083
00:59:04,920 --> 00:59:07,560
Speaker 2: factor that has a different duration.

1084
00:59:08,160 --> 00:59:10,960
Speaker 1: So let's talk about some of the quote unquote less

1085
00:59:11,000 --> 00:59:16,640
Speaker 1: correlated asset classes. There has been a giant move into alternatives,

1086
00:59:16,800 --> 00:59:21,400
Speaker 1: most especially private credit, private equity. What do you see

1087
00:59:21,680 --> 00:59:24,000
Speaker 1: in that space? How is that evolving over the next

1088
00:59:24,040 --> 00:59:25,000
Speaker 1: five to ten years.

1089
00:59:25,400 --> 00:59:28,040
Speaker 2: Yeah, let me answer that second part first. I think

1090
00:59:28,080 --> 00:59:32,480
Speaker 2: the evolution of this broad bucket of alternatives is going

1091
00:59:32,520 --> 00:59:34,280
Speaker 2: to be towards more liquid expressions.

1092
00:59:34,640 --> 00:59:37,040
Speaker 1: More liquid, yes, or at.

1093
00:59:37,040 --> 00:59:42,600
Speaker 2: Least more vehicles that allow for individual investors and you know,

1094
00:59:42,680 --> 00:59:46,120
Speaker 2: family offices and things like that to invest in these

1095
00:59:46,360 --> 00:59:48,480
Speaker 2: types of vehicles. Right, you don't have to set it

1096
00:59:48,480 --> 00:59:51,439
Speaker 2: and forget it for like ten years. I think there's

1097
00:59:51,440 --> 00:59:52,680
Speaker 2: going to be a lot of demand. Just as we've

1098
00:59:52,720 --> 00:59:56,920
Speaker 2: seen say traditional mutual fund transfer into ETFs active ETFs,

1099
00:59:57,120 --> 01:00:00,200
Speaker 2: the'll be more kind of combined vehicles. The challenge, I

1100
01:00:00,240 --> 01:00:02,360
Speaker 2: think is that there's been so much money and we

1101
01:00:03,240 --> 01:00:05,840
Speaker 2: know this, We've got great data around this chasing this

1102
01:00:06,200 --> 01:00:09,479
Speaker 2: like a small number of deals, and it has become

1103
01:00:09,600 --> 01:00:13,000
Speaker 2: so popular to think about alternatives as an asset class

1104
01:00:13,640 --> 01:00:17,600
Speaker 2: that the returns that some of these strategies have been

1105
01:00:17,600 --> 01:00:19,440
Speaker 2: able to achieve in the past. I think are much

1106
01:00:19,560 --> 01:00:21,720
Speaker 2: more challenged in the future.

1107
01:00:22,120 --> 01:00:25,040
Speaker 1: Haven't we seen that in sort of venture capital land

1108
01:00:25,200 --> 01:00:28,480
Speaker 1: Back in the eighties and nineties, VC numbers were spectacular

1109
01:00:29,160 --> 01:00:32,240
Speaker 1: and post dot com implosion, yeah, not only you have

1110
01:00:32,400 --> 01:00:35,920
Speaker 1: more companies staying private for longer. It just seems like

1111
01:00:36,040 --> 01:00:38,480
Speaker 1: a ton of low hanging fruit were picked, you know,

1112
01:00:38,640 --> 01:00:39,320
Speaker 1: decades ago.

1113
01:00:39,560 --> 01:00:41,919
Speaker 2: Yeah. The narrative is like eighty five percent of US

1114
01:00:42,000 --> 01:00:45,600
Speaker 2: companies are actually still private, and so it's really important

1115
01:00:45,600 --> 01:00:47,480
Speaker 2: to have all these vehicles to access them on the

1116
01:00:47,480 --> 01:00:50,640
Speaker 2: equity on the credit side, I hear that, But there

1117
01:00:50,640 --> 01:00:53,920
Speaker 2: are certain major differences. Of course, if you're a private company,

1118
01:00:54,280 --> 01:00:57,240
Speaker 2: you may continue to need different types of funding. You

1119
01:00:57,320 --> 01:01:01,520
Speaker 2: don't have to disclose to your shareholders on a regular basis.

1120
01:01:02,040 --> 01:01:03,640
Speaker 2: Of course, that you don't have to deal with the

1121
01:01:03,920 --> 01:01:07,160
Speaker 2: stock price fluctuation and all of that. What that might

1122
01:01:07,240 --> 01:01:11,600
Speaker 2: mean for your employees, your paid and shares, But it

1123
01:01:11,800 --> 01:01:16,120
Speaker 2: also creates a complicated environment where when you don't have

1124
01:01:16,280 --> 01:01:19,840
Speaker 2: to disclose, when you don't have to report, you know,

1125
01:01:19,960 --> 01:01:22,160
Speaker 2: you may make a different set of decisions. Some of

1126
01:01:22,200 --> 01:01:23,760
Speaker 2: that might be good for the long term, and some

1127
01:01:23,880 --> 01:01:26,360
Speaker 2: of it may be just like a poor allocation of capital,

1128
01:01:26,360 --> 01:01:28,120
Speaker 2: because no one's calling you out on it because the

1129
01:01:28,160 --> 01:01:31,040
Speaker 2: capital is already locked in. So it's I would say

1130
01:01:31,080 --> 01:01:33,240
Speaker 2: this eighty five percent of companies that are still private

1131
01:01:33,480 --> 01:01:36,080
Speaker 2: that the alternative managers are exciting about about giving you

1132
01:01:36,160 --> 01:01:39,480
Speaker 2: exposure to, not all of them are the same quality

1133
01:01:40,040 --> 01:01:45,120
Speaker 2: as the you know, publicly available, you know, large cap

1134
01:01:45,200 --> 01:01:46,080
Speaker 2: megacap companies.

1135
01:01:46,320 --> 01:01:48,280
Speaker 1: It makes a lot of sense. I want to get

1136
01:01:48,400 --> 01:01:51,320
Speaker 1: to my favorite questions, but before I do that, I

1137
01:01:51,400 --> 01:01:54,080
Speaker 1: got to throw you at least one curve ball. You're

1138
01:01:54,160 --> 01:01:58,160
Speaker 1: on the Resource Council for the Grand Teton National Park Foundation.

1139
01:01:58,520 --> 01:02:00,640
Speaker 2: Yeah, tell us about that. That sound random, do you there?

1140
01:02:00,720 --> 01:02:03,360
Speaker 1: Yeah, it sounds totally rare. I know you're a former

1141
01:02:03,880 --> 01:02:07,440
Speaker 1: a ski bomb I am, so maybe there's some relationship

1142
01:02:07,480 --> 01:02:07,640
Speaker 1: with that.

1143
01:02:07,880 --> 01:02:09,960
Speaker 2: Yeah. I actually split my time between New York City

1144
01:02:10,000 --> 01:02:12,800
Speaker 2: and Jackson Hole, so I spend a lot of time

1145
01:02:12,880 --> 01:02:16,920
Speaker 2: in the Jackson community. I'm super passionate about the conservation

1146
01:02:17,120 --> 01:02:20,200
Speaker 2: and nature programs at Granteeton National Park and I've been

1147
01:02:20,280 --> 01:02:23,680
Speaker 2: on the Resource Council now for about three years. It

1148
01:02:23,840 --> 01:02:26,360
Speaker 2: is a kind of sub board of the board of

1149
01:02:26,400 --> 01:02:29,800
Speaker 2: a Granteeton National Park Foundation, and we do some really

1150
01:02:29,840 --> 01:02:32,840
Speaker 2: amazing things. One of the things I'm most passionate about

1151
01:02:32,920 --> 01:02:35,600
Speaker 2: are some of these wildlife programs and the money that

1152
01:02:35,680 --> 01:02:39,160
Speaker 2: we raise specifically for research that benefits some of the

1153
01:02:39,200 --> 01:02:43,960
Speaker 2: biologists in the park and also that you know, all

1154
01:02:44,040 --> 01:02:47,000
Speaker 2: of the visitors the park can take advantage of. My

1155
01:02:47,200 --> 01:02:50,160
Speaker 2: favorite thing to do every summer, Barry is the wolf Watch,

1156
01:02:50,680 --> 01:02:54,760
Speaker 2: which we do some days during August. We'll go up

1157
01:02:54,800 --> 01:02:57,400
Speaker 2: with a biologist to this bluff and we will watch

1158
01:02:57,760 --> 01:03:00,520
Speaker 2: a pack that lives in Grantee Down Nash Park and

1159
01:03:00,640 --> 01:03:04,400
Speaker 2: learn all about wolf habitats, behaviors, and changes in their pattern.

1160
01:03:04,880 --> 01:03:08,480
Speaker 1: So this is part of the national park system, but

1161
01:03:08,720 --> 01:03:11,920
Speaker 1: yet there's a private foundation that helps raise assets and

1162
01:03:12,040 --> 01:03:13,920
Speaker 1: manage resources for the park.

1163
01:03:14,040 --> 01:03:16,320
Speaker 2: To tell us a little bit, almost all the national

1164
01:03:16,400 --> 01:03:19,800
Speaker 2: parks have friends groups, and this granteed Don National Park

1165
01:03:19,840 --> 01:03:23,200
Speaker 2: Foundation is the friends group for Grantee Don National Park.

1166
01:03:23,800 --> 01:03:26,280
Speaker 2: We are a very large and successful one and we've

1167
01:03:26,800 --> 01:03:29,240
Speaker 2: really helped a partner with the park on everything from

1168
01:03:29,320 --> 01:03:34,040
Speaker 2: like visitors centers to you know, accessible options to the drivers,

1169
01:03:34,160 --> 01:03:36,920
Speaker 2: to redoing the trail system, to sponsoring some of the biologists,

1170
01:03:36,920 --> 01:03:39,560
Speaker 2: et cetera. The park is run by the park, but

1171
01:03:40,080 --> 01:03:43,040
Speaker 2: the superintendent and the CEO Grantee Don National Park Foundation

1172
01:03:43,160 --> 01:03:46,200
Speaker 2: are close partners, and I like to think, Yeah, we're

1173
01:03:46,200 --> 01:03:47,400
Speaker 2: the best friends group out there.

1174
01:03:47,920 --> 01:03:52,120
Speaker 1: Huh really really quite fascinating. Let's jump to our favorite

1175
01:03:52,200 --> 01:03:54,560
Speaker 1: questions because I only I know, I only have you

1176
01:03:55,200 --> 01:03:57,960
Speaker 1: for a few more moments. We'll make this our speed round,

1177
01:03:58,600 --> 01:04:01,440
Speaker 1: starting with what's keeping entertain these days? What are you

1178
01:04:01,640 --> 01:04:02,920
Speaker 1: watching or listening to?

1179
01:04:03,280 --> 01:04:07,360
Speaker 2: Okay, so I don't watch television at all, very infrequently.

1180
01:04:07,560 --> 01:04:10,560
Speaker 1: No Netflix, no Prime, no Apple TV, none of that.

1181
01:04:10,720 --> 01:04:11,760
Speaker 2: It's not really my jam.

1182
01:04:12,040 --> 01:04:13,360
Speaker 1: Wow, that's really interesting.

1183
01:04:13,520 --> 01:04:15,400
Speaker 2: Yeah, it's not really my jam. I do watch like

1184
01:04:15,520 --> 01:04:18,760
Speaker 2: things sometimes, a news magazine or whatever, but for the

1185
01:04:18,840 --> 01:04:20,880
Speaker 2: most part, I am just an avid reader.

1186
01:04:21,240 --> 01:04:21,600
Speaker 1: Uh huh.

1187
01:04:21,680 --> 01:04:23,920
Speaker 2: And I like to spend my time when I'm not

1188
01:04:24,080 --> 01:04:29,280
Speaker 2: working reading, playing sports, listening to music. And I'm an

1189
01:04:29,280 --> 01:04:33,000
Speaker 2: amateur artist, so I've been watching screens after being in

1190
01:04:33,040 --> 01:04:35,800
Speaker 2: front of screens all day long is unappealing to me.

1191
01:04:35,840 --> 01:04:38,880
Speaker 1: Can I tell you that sounds shockingly healthy?

1192
01:04:39,160 --> 01:04:41,320
Speaker 2: Yeah? I try to be shockingly healthy. I also try

1193
01:04:41,360 --> 01:04:43,240
Speaker 2: to put my devices down and be focused on other

1194
01:04:43,320 --> 01:04:46,600
Speaker 2: things because I get enough screen time during the day.

1195
01:04:46,760 --> 01:04:49,600
Speaker 1: I totally get it. Tell us about your mentors who

1196
01:04:49,720 --> 01:04:51,160
Speaker 1: helped shape your career.

1197
01:04:52,200 --> 01:04:54,200
Speaker 2: I don't know that I had a lot of official mentors.

1198
01:04:54,320 --> 01:04:57,480
Speaker 2: I will tell you I had more peer mentors, if

1199
01:04:57,520 --> 01:04:59,840
Speaker 2: that makes sense. You know, growing up in the business,

1200
01:05:00,400 --> 01:05:02,280
Speaker 2: I was often the only woman in the room or

1201
01:05:02,320 --> 01:05:06,400
Speaker 2: the only woman on the investment committee, and I built

1202
01:05:06,480 --> 01:05:10,800
Speaker 2: really strong peer relationships with other investors of similar levels

1203
01:05:11,000 --> 01:05:13,200
Speaker 2: around the street. And there are a lot of people

1204
01:05:13,240 --> 01:05:16,240
Speaker 2: who have helped to influence my way of thinking or

1205
01:05:16,440 --> 01:05:20,320
Speaker 2: have challenged me. But yeah, I mean, I try and

1206
01:05:20,400 --> 01:05:23,000
Speaker 2: be a mentor to as many, especially young women as

1207
01:05:23,040 --> 01:05:24,600
Speaker 2: I can in the business, since I didn't have that

1208
01:05:24,680 --> 01:05:27,280
Speaker 2: available to me at the time. But I wish I

1209
01:05:27,320 --> 01:05:29,360
Speaker 2: had a long list of mentors. But I would say

1210
01:05:29,760 --> 01:05:32,840
Speaker 2: it's more my peer group that I've really linked arms

1211
01:05:32,880 --> 01:05:35,520
Speaker 2: with and grown with that I think of as kind

1212
01:05:35,560 --> 01:05:37,360
Speaker 2: of playing that role for me in my career.

1213
01:05:38,160 --> 01:05:41,280
Speaker 1: Interesting, So you mentioned you read a lot. Let's talk

1214
01:05:41,360 --> 01:05:43,800
Speaker 1: about books. Yeah, what are some of your favorites? What

1215
01:05:43,840 --> 01:05:44,760
Speaker 1: are you reading right now?

1216
01:05:44,880 --> 01:05:47,320
Speaker 2: Okay, I'm a giant sci fi and fantasy.

1217
01:05:47,680 --> 01:05:49,680
Speaker 1: Oh boy, were you talking to the right person?

1218
01:05:49,800 --> 01:05:53,920
Speaker 2: I mean, so on this theme of not watching screens

1219
01:05:54,080 --> 01:05:57,240
Speaker 2: after I work, I like to really escape, like deep

1220
01:05:57,320 --> 01:06:00,200
Speaker 2: in escape after a long day of Star Dar, I

1221
01:06:00,240 --> 01:06:04,120
Speaker 2: get numbers and analyzing, you know, economics. So here's what

1222
01:06:04,240 --> 01:06:08,440
Speaker 2: I will say. I'm in an amazing series right now,

1223
01:06:08,640 --> 01:06:11,920
Speaker 2: the Murder Bot series by Martha Wells. I know it's

1224
01:06:11,920 --> 01:06:13,640
Speaker 2: been made into a series. I will not watch it

1225
01:06:13,800 --> 01:06:15,280
Speaker 2: because it will ruin the entise.

1226
01:06:16,360 --> 01:06:19,680
Speaker 1: It's gotten mixed reviews so far so far, but I

1227
01:06:20,440 --> 01:06:22,400
Speaker 1: have that in my cue. The first murder book.

1228
01:06:22,480 --> 01:06:25,880
Speaker 2: Oh, it's so good. It's amazing, and you know, thinking

1229
01:06:25,960 --> 01:06:30,080
Speaker 2: about this intersection between bots and AI and the future,

1230
01:06:30,560 --> 01:06:32,680
Speaker 2: and there's a lot of inner dialogue in there that

1231
01:06:32,720 --> 01:06:34,960
Speaker 2: I don't think will translate well into a series, but anyway,

1232
01:06:35,360 --> 01:06:37,360
Speaker 2: neither here nor there. So I love to read that.

1233
01:06:37,960 --> 01:06:41,960
Speaker 2: Before I I'm on book six now. Before I started that,

1234
01:06:42,080 --> 01:06:44,800
Speaker 2: I read the latest from ton of French, which is

1235
01:06:44,840 --> 01:06:49,360
Speaker 2: called The Searcher uh and and the Hunters and two

1236
01:06:49,440 --> 01:06:51,720
Speaker 2: books together. It takes place in Ireland. She's one of

1237
01:06:51,800 --> 01:06:54,680
Speaker 2: my favorite contemporary fiction authors. It's like these are mysteries

1238
01:06:55,240 --> 01:06:58,760
Speaker 2: and so I love that. And yeah, I pretty much

1239
01:06:58,800 --> 01:07:01,320
Speaker 2: gobble up anything that will make it onto the Hugo

1240
01:07:01,440 --> 01:07:04,960
Speaker 2: or Nebula shortlists and try and geek out as much

1241
01:07:04,960 --> 01:07:05,520
Speaker 2: as possible.

1242
01:07:05,680 --> 01:07:07,960
Speaker 1: I had no idea you were a geek. Any nonfiction

1243
01:07:08,160 --> 01:07:10,360
Speaker 1: that crosses your transom.

1244
01:07:10,760 --> 01:07:12,880
Speaker 2: Well, the one that's really kind of stood out to

1245
01:07:12,960 --> 01:07:15,080
Speaker 2: me and it was recommended by a former colleague of

1246
01:07:15,120 --> 01:07:17,560
Speaker 2: mine from Black Rock is four thousand weeks.

1247
01:07:17,560 --> 01:07:18,880
Speaker 1: So good, so good.

1248
01:07:19,440 --> 01:07:22,720
Speaker 2: And as someone who's tried to optimize my life many

1249
01:07:22,800 --> 01:07:25,240
Speaker 2: times in the past but have had a couple of

1250
01:07:25,680 --> 01:07:28,240
Speaker 2: health setbacks and things like that, this was a great

1251
01:07:28,280 --> 01:07:31,080
Speaker 2: reminder that getting through the to do list is not the.

1252
01:07:31,120 --> 01:07:35,520
Speaker 1: Goal, right Oliver Burke something like that. Yeah, the line

1253
01:07:35,600 --> 01:07:39,480
Speaker 1: that I remember from that book was four thousand weeks

1254
01:07:39,600 --> 01:07:43,040
Speaker 1: is about eighty years? Is human Life's man? Yeah, human

1255
01:07:43,160 --> 01:07:48,040
Speaker 1: life is insultingly brief, And that phrase just stood out.

1256
01:07:48,560 --> 01:07:52,280
Speaker 2: Yeah, and this idea that we are all every day

1257
01:07:52,360 --> 01:07:58,480
Speaker 2: approaching our death is actually empowering instead of discouraging. If

1258
01:07:58,560 --> 01:08:01,120
Speaker 2: you know that you don't have infan time, you make

1259
01:08:01,200 --> 01:08:01,920
Speaker 2: better decisions.

1260
01:08:01,960 --> 01:08:05,280
Speaker 1: Frankly, scarcity is an important economic.

1261
01:08:04,920 --> 01:08:07,440
Speaker 2: Thesis, absolutely, but you cut out the stuff that's not

1262
01:08:07,600 --> 01:08:10,560
Speaker 2: important and you focus on the things and the people

1263
01:08:10,680 --> 01:08:14,919
Speaker 2: and the experiences that are. And anyway, I love this book.

1264
01:08:15,240 --> 01:08:18,680
Speaker 1: Yeah, No, I totally agree. Final two questions, Yeah, what

1265
01:08:18,880 --> 01:08:21,280
Speaker 1: sort of advice would you give to a recent college

1266
01:08:21,360 --> 01:08:25,479
Speaker 1: grad interested in a career of Normally I would say

1267
01:08:25,600 --> 01:08:30,360
Speaker 1: whatever the person's specific specialty is. But you've done so

1268
01:08:30,520 --> 01:08:35,439
Speaker 1: much across consulting and strategy and buyside and sell side

1269
01:08:35,479 --> 01:08:39,519
Speaker 1: and hedge funds and portfolio management, and now a chief

1270
01:08:39,560 --> 01:08:44,440
Speaker 1: investment strategy. Someone interested in just finance or wealth management.

1271
01:08:44,360 --> 01:08:46,439
Speaker 2: Yeah, I would say the most important thing is to

1272
01:08:46,520 --> 01:08:48,960
Speaker 2: keep an open mind. One of the most frustrating things,

1273
01:08:49,160 --> 01:08:52,880
Speaker 2: you know young graduates and even young graduates from business

1274
01:08:52,880 --> 01:08:55,400
Speaker 2: school or other graduate programs, is that they have like

1275
01:08:55,439 --> 01:08:58,280
Speaker 2: a path in mind. You know in three or five years,

1276
01:08:58,320 --> 01:09:00,360
Speaker 2: I expect to be here in ten years. And I

1277
01:09:00,439 --> 01:09:03,599
Speaker 2: say keep an open mind because there's so much disruption

1278
01:09:03,800 --> 01:09:07,160
Speaker 2: and so much change across these industries. You can't have

1279
01:09:07,640 --> 01:09:10,920
Speaker 2: a mapped out plan. Your goal is to be a

1280
01:09:10,960 --> 01:09:13,240
Speaker 2: sponge and to learn and learn and learn, and also

1281
01:09:13,320 --> 01:09:15,320
Speaker 2: to be patient. Honestly, Barry, I'd say this a lot,

1282
01:09:15,479 --> 01:09:18,200
Speaker 2: because you know, you get some like really smart twenty three,

1283
01:09:18,320 --> 01:09:21,800
Speaker 2: twenty four, twenty eight year old who you know wants

1284
01:09:21,840 --> 01:09:23,560
Speaker 2: to find out what's over the next hill, and I

1285
01:09:23,640 --> 01:09:26,240
Speaker 2: want to remind them. You know, if the actuary tables

1286
01:09:26,280 --> 01:09:29,000
Speaker 2: are even somewhat right, they have seventy more years of

1287
01:09:29,080 --> 01:09:31,920
Speaker 2: life ahead of them, right, and they don't need to rush.

1288
01:09:32,040 --> 01:09:34,839
Speaker 2: They can enjoy the moment of learning, enjoy the experience,

1289
01:09:34,920 --> 01:09:38,000
Speaker 2: and understanding that not just they'll have the opportunity to pivot,

1290
01:09:38,040 --> 01:09:41,240
Speaker 2: they'll have the mandate to pivot. As you know, industries

1291
01:09:41,280 --> 01:09:43,000
Speaker 2: get disrupted and technology evolves.

1292
01:09:43,680 --> 01:09:46,680
Speaker 1: Fascinating and our final question, Yeah, what is it that

1293
01:09:46,800 --> 01:09:49,679
Speaker 1: you know about the world of investing today? You wish

1294
01:09:49,760 --> 01:09:52,559
Speaker 1: you knew twenty five thirty years ago when you were

1295
01:09:52,600 --> 01:09:53,719
Speaker 1: first getting started.

1296
01:09:54,640 --> 01:09:56,920
Speaker 2: I thought there was a more systematic way to approach

1297
01:09:57,000 --> 01:09:59,760
Speaker 2: investing when I first started, you know, close to three

1298
01:09:59,840 --> 01:10:03,960
Speaker 2: day gates ago, And now I understand that true investing

1299
01:10:04,040 --> 01:10:07,200
Speaker 2: is both art and science. Maybe that's the reason why

1300
01:10:07,240 --> 01:10:08,760
Speaker 2: I think I'll stay in this business for the rest

1301
01:10:08,800 --> 01:10:12,880
Speaker 2: of my life, because I'm constantly intellectually challenged to not

1302
01:10:12,960 --> 01:10:15,280
Speaker 2: get frustrated if a model doesn't work out. In fact,

1303
01:10:15,520 --> 01:10:19,080
Speaker 2: sometimes the process of going through creating a model or

1304
01:10:19,120 --> 01:10:21,479
Speaker 2: a piece of analysis, or going down a rabbit hole

1305
01:10:21,520 --> 01:10:25,320
Speaker 2: and research that doesn't yield anything this year may actually

1306
01:10:25,360 --> 01:10:27,559
Speaker 2: be really helpful for me in three years, or help

1307
01:10:27,640 --> 01:10:31,200
Speaker 2: to reframe my thought process so understanding that it's not

1308
01:10:31,439 --> 01:10:33,280
Speaker 2: perfect and that it's art and science.

1309
01:10:33,680 --> 01:10:37,479
Speaker 1: Huh, really really interesting. Thanks Kate for being so generous

1310
01:10:37,520 --> 01:10:40,960
Speaker 1: with your time. We have been speaking with Kate Moore.

1311
01:10:41,160 --> 01:10:44,479
Speaker 1: She is the chief investment Officer at City Wealth, helping

1312
01:10:44,600 --> 01:10:50,080
Speaker 1: to oversee over trillion dollars in assets. If you enjoy

1313
01:10:50,200 --> 01:10:53,120
Speaker 1: this conversation, well check out any of the five hundred

1314
01:10:53,120 --> 01:10:56,920
Speaker 1: and forty or so we've done over the past eleven years.

1315
01:10:57,439 --> 01:11:02,040
Speaker 1: You can find those at iTunes, Spotify, Bloomberg YouTube, wherever

1316
01:11:02,200 --> 01:11:05,519
Speaker 1: you find your favorite podcasts, and be sure and check

1317
01:11:05,560 --> 01:11:09,480
Speaker 1: out my new book, How Not to Invest The ideas,

1318
01:11:09,760 --> 01:11:13,960
Speaker 1: numbers and behaviors that destroy wealth and how to avoid

1319
01:11:14,040 --> 01:11:18,519
Speaker 1: them How Not to Invest wherever you find your favorite books.

1320
01:11:19,160 --> 01:11:20,800
Speaker 1: I would be remiss if I did not thank the

1321
01:11:20,880 --> 01:11:24,439
Speaker 1: Cracked team that helps put these conversations together each week.

1322
01:11:25,040 --> 01:11:28,800
Speaker 1: Steve Gonzalez is my audio engineer. Anna Luke is my producer.

1323
01:11:29,080 --> 01:11:32,840
Speaker 1: Sean Russo is my researcher. Sage Bauman is the head

1324
01:11:32,840 --> 01:11:36,880
Speaker 1: of podcasts here at Bloomberg. I'm Barry Rittolts. You've been

1325
01:11:37,000 --> 01:11:40,960
Speaker 1: listening to Masters in Business on Bloomberg Radio