1 00:00:00,160 --> 00:00:03,160 Speaker 1: Welcome to How the Money. I'm Joel and I am Matt, 2 00:00:03,200 --> 00:00:06,440 Speaker 1: and today we're talking the wild history of index funds 3 00:00:06,559 --> 00:00:29,240 Speaker 1: with Robin Wigglesworth. That's right, we're taking a deep dive 4 00:00:29,280 --> 00:00:32,640 Speaker 1: into index funds today with Robin Wigglesworth, who is editor 5 00:00:32,760 --> 00:00:36,600 Speaker 1: of Alphaville over at the Financial Times. Robin is a 6 00:00:36,680 --> 00:00:40,120 Speaker 1: financial journalist and he's also the author of the book Trillions, 7 00:00:40,440 --> 00:00:43,040 Speaker 1: How a band of Wall Street renegades invented the index 8 00:00:43,080 --> 00:00:47,479 Speaker 1: fund and changed finance forever and you know, passively investing 9 00:00:47,560 --> 00:00:50,040 Speaker 1: via index funds. It's something we talk a lot about 10 00:00:50,080 --> 00:00:52,320 Speaker 1: here on the show, but it's also something that we 11 00:00:52,360 --> 00:00:54,640 Speaker 1: take for granted, right, Like for us, it's always been 12 00:00:54,680 --> 00:00:57,920 Speaker 1: an option, but that wasn't always the case. Uh, it 13 00:00:58,000 --> 00:01:00,880 Speaker 1: was a heretical idea in the past. And so because 14 00:01:00,920 --> 00:01:02,760 Speaker 1: of that, we're excited to get into the history of 15 00:01:02,800 --> 00:01:05,680 Speaker 1: one of the most important modern day investing innovations with 16 00:01:05,680 --> 00:01:08,959 Speaker 1: our guest today, Robin Wigglesworth. Robin, thank you for joining 17 00:01:09,000 --> 00:01:11,600 Speaker 1: us today on the podcast. Hi, Joelhan Matt, thanks so 18 00:01:11,680 --> 00:01:14,000 Speaker 1: much for having me on. It's the real pleasure. Hey, 19 00:01:14,000 --> 00:01:16,479 Speaker 1: We're glad to have you. Robin. Excited to talk about 20 00:01:16,480 --> 00:01:19,480 Speaker 1: your book and all the interesting things that index funds 21 00:01:19,520 --> 00:01:21,200 Speaker 1: have done for us, but not just like what they 22 00:01:21,200 --> 00:01:23,040 Speaker 1: do for us now. But how we got to this point. 23 00:01:23,319 --> 00:01:26,000 Speaker 1: But our first question for everybody who comes on the 24 00:01:26,040 --> 00:01:28,440 Speaker 1: show is what's your craft beer equivalent? And what we 25 00:01:28,480 --> 00:01:30,760 Speaker 1: mean by that is that Matt and I we spend 26 00:01:31,240 --> 00:01:34,280 Speaker 1: some would say an abnormal amounts on good craft beer 27 00:01:35,120 --> 00:01:38,120 Speaker 1: while we're also saving and investing well for the future. So, yeah, 28 00:01:38,160 --> 00:01:40,360 Speaker 1: what is that in your life while you're behaving with 29 00:01:40,360 --> 00:01:42,640 Speaker 1: your money? What is something that maybe it seems like, 30 00:01:43,040 --> 00:01:45,240 Speaker 1: at least from the outsider perspective, you might be mis 31 00:01:45,480 --> 00:01:48,240 Speaker 1: behaving on a little bit. Well, I'm not really sure 32 00:01:48,240 --> 00:01:50,840 Speaker 1: if craft bear is misusing money. Really that sounds like 33 00:01:50,840 --> 00:01:56,280 Speaker 1: an eminentely useful way of spending kind of man, I 34 00:01:56,280 --> 00:01:59,360 Speaker 1: didn't know. I'm tempted to say my children, but my 35 00:01:59,440 --> 00:02:01,360 Speaker 1: wife might to this, and she'll kill me if I 36 00:02:01,400 --> 00:02:04,280 Speaker 1: say they're a massive money sink, but they really are. 37 00:02:06,400 --> 00:02:08,320 Speaker 1: Was like, given that I've got three kids, I don't 38 00:02:08,360 --> 00:02:10,640 Speaker 1: really have that much time to do much stuff. But 39 00:02:10,680 --> 00:02:14,720 Speaker 1: one thing I did discover during lockdown was a love 40 00:02:14,760 --> 00:02:17,680 Speaker 1: of computer games. So you say, like have like Nintendo 41 00:02:17,720 --> 00:02:20,600 Speaker 1: growing up and uh, and I hadn't had one for 42 00:02:20,600 --> 00:02:22,880 Speaker 1: twenty years, and then I got my kids a switch 43 00:02:23,560 --> 00:02:25,600 Speaker 1: and it was you know, it's kind of distract them 44 00:02:25,639 --> 00:02:26,880 Speaker 1: and kind of as a kind of a character to 45 00:02:26,919 --> 00:02:29,519 Speaker 1: get them to do homework. But you know, I don't 46 00:02:29,520 --> 00:02:31,720 Speaker 1: spend a lot of money on these things, but like, 47 00:02:31,800 --> 00:02:35,200 Speaker 1: having not played any sort of consoles for yeah, twenty years, 48 00:02:35,760 --> 00:02:37,799 Speaker 1: that has been a lot of fun. And actually I've 49 00:02:37,800 --> 00:02:42,160 Speaker 1: spent slightly embarrassing number of evenings on the kids and 50 00:02:42,200 --> 00:02:49,600 Speaker 1: Nintendo Switch you with them or oh this is let's 51 00:02:49,600 --> 00:02:53,200 Speaker 1: say the plight way is I say, I pay with 52 00:02:53,280 --> 00:02:55,680 Speaker 1: them like Mario Kart, and I can't let them win. 53 00:02:55,720 --> 00:02:59,080 Speaker 1: Of obviously, you know they need to learn to tackle 54 00:02:59,160 --> 00:03:02,920 Speaker 1: loss early. But though I'd be paid by myself when 55 00:03:02,960 --> 00:03:05,560 Speaker 1: the wife and kids are in bed as well. Okay, 56 00:03:05,600 --> 00:03:08,120 Speaker 1: I love it. I love it. That's awesome. You know, 57 00:03:08,200 --> 00:03:10,280 Speaker 1: before we talk about like before we getting ready with it, Robin, 58 00:03:10,600 --> 00:03:12,959 Speaker 1: you've got this this really cool picture of of this 59 00:03:13,080 --> 00:03:15,600 Speaker 1: engraving on your site. It's it's super cool. We've never 60 00:03:15,639 --> 00:03:17,560 Speaker 1: seen it before. We'll link to it in our show notes, 61 00:03:18,000 --> 00:03:22,480 Speaker 1: but it's it's the sixteenth century like ink drawing or engraving, 62 00:03:22,480 --> 00:03:24,600 Speaker 1: it's got this this verse attached to it as well. 63 00:03:24,639 --> 00:03:27,160 Speaker 1: It reads that it's all for money and goods, all 64 00:03:27,200 --> 00:03:30,160 Speaker 1: this quarreling. It's an incredible image, and so we're actually 65 00:03:30,240 --> 00:03:33,160 Speaker 1: kind of curious, like, what was it about that that 66 00:03:33,160 --> 00:03:35,160 Speaker 1: that stood out to you? Why I choose that for 67 00:03:35,200 --> 00:03:38,080 Speaker 1: your website. Well, it's like it's an old engraving from 68 00:03:38,080 --> 00:03:40,520 Speaker 1: from the Netherlands, and Netherlands is kind of where modern 69 00:03:40,560 --> 00:03:43,520 Speaker 1: capitalist was born. I think I came across it in 70 00:03:43,640 --> 00:03:47,720 Speaker 1: some random book on financial economic history. I read a lot. 71 00:03:47,720 --> 00:03:49,520 Speaker 1: I used to read a lot more pre kids, but 72 00:03:49,600 --> 00:03:52,360 Speaker 1: I still love a good book about, you know, how 73 00:03:52,400 --> 00:03:55,000 Speaker 1: the world developed, and you kind of learn to see 74 00:03:55,040 --> 00:03:58,520 Speaker 1: the world through different different prism through money sometimes. And 75 00:03:58,560 --> 00:04:01,560 Speaker 1: I came across this engraving. I just thought it was 76 00:04:01,600 --> 00:04:05,480 Speaker 1: this fun that's showing all these money boxes and persons 77 00:04:05,480 --> 00:04:08,360 Speaker 1: of money fighting. And the idea was that people were 78 00:04:08,480 --> 00:04:11,600 Speaker 1: starting to realize that people went to war not just 79 00:04:11,800 --> 00:04:16,840 Speaker 1: for you know, territory or imagine slights between royal families, 80 00:04:17,240 --> 00:04:20,520 Speaker 1: but actually for money as well. And this kind of 81 00:04:20,520 --> 00:04:22,920 Speaker 1: this is engraving is from the birth of Catalysm and 82 00:04:23,000 --> 00:04:26,440 Speaker 1: Amsterdam and the sixt hundreds. So I just I liked it. 83 00:04:26,520 --> 00:04:30,320 Speaker 1: I like the little saying and I needed something that 84 00:04:30,440 --> 00:04:34,160 Speaker 1: you know, gave my sight, not just like the normals 85 00:04:34,200 --> 00:04:40,080 Speaker 1: of self referential souf bragging stuff, but maybe a dash 86 00:04:40,160 --> 00:04:44,120 Speaker 1: all historical panash as well. Yeah, historical panash. And it 87 00:04:44,279 --> 00:04:47,720 Speaker 1: just it's it just encapsulates the world today, right Like, 88 00:04:47,880 --> 00:04:50,920 Speaker 1: regardless of how it is that you're approaching money, it 89 00:04:50,920 --> 00:04:53,800 Speaker 1: it seems like an all outfight oftentimes, whether it's just 90 00:04:54,040 --> 00:04:57,680 Speaker 1: us and consumption or US battling with others as we're 91 00:04:57,680 --> 00:05:00,240 Speaker 1: trying to increase our incomes. It's yeah, there's there there's 92 00:05:00,279 --> 00:05:02,159 Speaker 1: something about it that that strikes out like a core, 93 00:05:02,839 --> 00:05:05,520 Speaker 1: just external and internal, both the war of money. Right 94 00:05:05,560 --> 00:05:07,960 Speaker 1: That's the second place I'm curious to Robbin. You live 95 00:05:07,960 --> 00:05:10,040 Speaker 1: in Oslo. We talked about this before we started recording. 96 00:05:10,440 --> 00:05:12,880 Speaker 1: It's a beautiful city. I have had the chance to visit, 97 00:05:13,080 --> 00:05:15,960 Speaker 1: sadly only for a few days. But I was wondering, 98 00:05:16,000 --> 00:05:17,960 Speaker 1: is it harder for you to write about markets when 99 00:05:17,960 --> 00:05:19,800 Speaker 1: you live a little bit more off the beaten path, 100 00:05:19,880 --> 00:05:21,680 Speaker 1: You're not in New York City or in London or 101 00:05:21,720 --> 00:05:24,640 Speaker 1: something like that, And also or maybe on the opposite 102 00:05:24,720 --> 00:05:27,520 Speaker 1: and is it easier to write about money when you 103 00:05:27,640 --> 00:05:30,280 Speaker 1: viscerally feel every dollar depart when you live in one 104 00:05:30,279 --> 00:05:33,280 Speaker 1: of the most expensive cities in the world. Now that's 105 00:05:33,680 --> 00:05:36,800 Speaker 1: that's a good question. Um No, So I yeah, I joined. 106 00:05:36,800 --> 00:05:39,359 Speaker 1: I've worked at the ft in the Middle East, London 107 00:05:39,480 --> 00:05:41,960 Speaker 1: and New York, New York just before I moved back 108 00:05:41,960 --> 00:05:44,320 Speaker 1: home to Oslo. I'm from Oslow, my family is here, 109 00:05:44,400 --> 00:05:47,040 Speaker 1: my wife is Noweeds and and we wanted the kids 110 00:05:47,040 --> 00:05:49,720 Speaker 1: grew up close to the grandparents, so that's why we moved. 111 00:05:49,760 --> 00:05:55,160 Speaker 1: But yes, I did freak out that being in let's face, 112 00:05:55,240 --> 00:05:58,560 Speaker 1: it like a in the order of kind of importance. 113 00:05:59,440 --> 00:06:02,440 Speaker 1: It's like eleventh tar city like no ways, not like 114 00:06:02,920 --> 00:06:05,280 Speaker 1: the thing that makes Noway a great place to live 115 00:06:05,400 --> 00:06:07,920 Speaker 1: that it's incredibly boring, also makes it a bad place 116 00:06:07,920 --> 00:06:12,000 Speaker 1: to be a financial journalist. But actually worked out pretty well. 117 00:06:12,440 --> 00:06:15,159 Speaker 1: I mean when I first moved, you know, you have 118 00:06:15,279 --> 00:06:18,719 Speaker 1: a reputation, anyway, you have contact, you can coast on 119 00:06:18,760 --> 00:06:21,400 Speaker 1: that for a while and it worked out okay. And 120 00:06:21,440 --> 00:06:25,520 Speaker 1: then frankly, when the coronavirus hit us, you know, that 121 00:06:25,600 --> 00:06:30,000 Speaker 1: was frankly this apocalyptic for the world. Personally, for me, 122 00:06:30,240 --> 00:06:32,480 Speaker 1: it was great because something we were all working from 123 00:06:32,480 --> 00:06:35,920 Speaker 1: home in random places around the world, and what I'd 124 00:06:36,040 --> 00:06:40,000 Speaker 1: started getting used to six months before the pandemic, you know, 125 00:06:40,400 --> 00:06:44,960 Speaker 1: doing zoom calls, hangouts, chatting on by whatsapped by with 126 00:06:45,000 --> 00:06:49,800 Speaker 1: contact throughout the day. Everybody was doing so cynically. From 127 00:06:49,839 --> 00:06:55,080 Speaker 1: my perspective that the virus didn't make my home working 128 00:06:55,120 --> 00:06:58,159 Speaker 1: home career, but it certainly helped it along the way. 129 00:06:58,240 --> 00:07:01,600 Speaker 1: Welcome to the club, Robin was saying, he's an old 130 00:07:01,600 --> 00:07:04,520 Speaker 1: pro at that point. Let's get into the history of 131 00:07:04,520 --> 00:07:07,520 Speaker 1: of index funds, Robin Um. You know, within your book Trillions, 132 00:07:07,560 --> 00:07:11,080 Speaker 1: you basically document all of these folks who have had 133 00:07:11,120 --> 00:07:13,400 Speaker 1: an impact on the creation of index funds, right Like, 134 00:07:13,440 --> 00:07:17,080 Speaker 1: essentially there's this long line of individuals building off of 135 00:07:17,080 --> 00:07:18,960 Speaker 1: each other's work that you know that does lead to 136 00:07:18,960 --> 00:07:22,120 Speaker 1: the eventual creation of the index fund uh Like, there 137 00:07:22,160 --> 00:07:25,600 Speaker 1: wasn't necessarily a pivotal moment, although folks will often call 138 00:07:25,720 --> 00:07:28,280 Speaker 1: Jack Bogo the father of index investing, but it literally 139 00:07:28,320 --> 00:07:32,000 Speaker 1: took decades before index funds were accepted, before they were implemented. 140 00:07:32,440 --> 00:07:35,240 Speaker 1: Why is it that it took so long to get 141 00:07:35,240 --> 00:07:38,720 Speaker 1: off the ground before it was widely adopted so many reasons. 142 00:07:38,760 --> 00:07:41,360 Speaker 1: I mean, it's it's we have this recency bias and 143 00:07:41,440 --> 00:07:44,320 Speaker 1: how we think about history and historical developments. And obviously 144 00:07:44,400 --> 00:07:46,800 Speaker 1: we live in the era of the internet, when news 145 00:07:46,840 --> 00:07:50,400 Speaker 1: travels instantaneously, Like if there's something that happens somewhere, or 146 00:07:50,440 --> 00:07:52,840 Speaker 1: a new academic paper, you know, everybody can read it 147 00:07:52,880 --> 00:07:57,040 Speaker 1: everywhere instantly. You know, the academic research that happened in 148 00:07:57,160 --> 00:08:00,760 Speaker 1: Chicago or m I T or Stanford, or even century 149 00:08:00,760 --> 00:08:04,640 Speaker 1: ago in the Sorbonne, it didn't travel. These were physical 150 00:08:04,880 --> 00:08:08,680 Speaker 1: pieces of paper that people have to shuffle around the world, 151 00:08:08,920 --> 00:08:11,160 Speaker 1: and even if you were interested, you have be pretty 152 00:08:11,200 --> 00:08:13,280 Speaker 1: geeky to dig out some of these papers. So just 153 00:08:13,600 --> 00:08:16,720 Speaker 1: took a long time for it to trickle into the 154 00:08:16,760 --> 00:08:19,680 Speaker 1: financial world, which is also was radically different in those 155 00:08:19,760 --> 00:08:23,280 Speaker 1: days than it is today. I mean, one of the 156 00:08:23,400 --> 00:08:28,720 Speaker 1: pre eminent economics professors of American history, Bill Sharp. You know, 157 00:08:29,360 --> 00:08:31,840 Speaker 1: he was told when he first started applying for finance 158 00:08:31,920 --> 00:08:34,640 Speaker 1: jobs that his grades were too good, so you won't 159 00:08:34,640 --> 00:08:38,000 Speaker 1: be happy in finance. You're too smart. You should go 160 00:08:38,080 --> 00:08:41,040 Speaker 1: do something else, don't get your PhD exactly, and that's 161 00:08:41,040 --> 00:08:43,240 Speaker 1: what he did. It. Eventually they worked out okay for Bill. 162 00:08:43,320 --> 00:08:47,320 Speaker 1: But it's just a very different world I think, and 163 00:08:47,679 --> 00:08:51,600 Speaker 1: you know, cynically, this wasn't a secret that Wall Street 164 00:08:51,679 --> 00:08:55,120 Speaker 1: was very keen on disseminating, you know, Wall S three. 165 00:08:55,160 --> 00:08:59,320 Speaker 1: It's always been quite fond of high fee, complicated, opaque products. 166 00:08:59,559 --> 00:09:01,880 Speaker 1: In the X fund is in many ways the antithesis 167 00:09:01,920 --> 00:09:05,040 Speaker 1: to that is cheap and transparent. So in many ways, 168 00:09:05,080 --> 00:09:07,920 Speaker 1: it's almost surprising that it even took off when it did. 169 00:09:08,200 --> 00:09:11,679 Speaker 1: One might say, yeah, and when index funds first launched, 170 00:09:11,679 --> 00:09:15,080 Speaker 1: they weren't even available everyday consumers, right, So it wasn't 171 00:09:15,080 --> 00:09:17,680 Speaker 1: even Jack Bobo Vanguard that launched the first index fund, 172 00:09:17,679 --> 00:09:19,920 Speaker 1: which I feel like is the narrative that often gets told. 173 00:09:20,280 --> 00:09:24,280 Speaker 1: But there were there were index funds created essentially for 174 00:09:24,400 --> 00:09:26,920 Speaker 1: pension funds, right, isn't it wasn't that a huge, huge 175 00:09:26,920 --> 00:09:30,240 Speaker 1: part of where index funds actually be in Yeah, basically, 176 00:09:30,280 --> 00:09:32,320 Speaker 1: I mean, if you think of in the US, since 177 00:09:32,320 --> 00:09:34,880 Speaker 1: it is in the early seventies, there was a massive 178 00:09:34,920 --> 00:09:38,880 Speaker 1: beer market after the sixties, go go era, and retail 179 00:09:38,920 --> 00:09:41,600 Speaker 1: investors were kind of taken for ryan. But they always 180 00:09:41,640 --> 00:09:43,719 Speaker 1: get taken out for a ride, right, They always the 181 00:09:43,760 --> 00:09:46,240 Speaker 1: people that lose up. But there were lots of big 182 00:09:46,520 --> 00:09:50,080 Speaker 1: institutional investors, so especially pension funds in the US had 183 00:09:50,080 --> 00:09:53,640 Speaker 1: grown huge. That realized that holy crap, look, you know, 184 00:09:53,720 --> 00:09:56,720 Speaker 1: these guys did incredibly well and paid themselves incredibly well 185 00:09:56,760 --> 00:09:59,600 Speaker 1: in the sixties now the seventies where the ones are 186 00:09:59,600 --> 00:10:03,240 Speaker 1: losing money, and especially above all there was the A 187 00:10:03,360 --> 00:10:06,199 Speaker 1: T and T pension funds system, So a T and 188 00:10:06,280 --> 00:10:09,840 Speaker 1: T it was broken up into all these different regional 189 00:10:09,880 --> 00:10:13,040 Speaker 1: telephone companies with their own pension plans. But together they 190 00:10:13,040 --> 00:10:16,600 Speaker 1: were the single biggest owner of equities of stocks in America. 191 00:10:17,120 --> 00:10:19,680 Speaker 1: And they realized that they were invested in hundreds of 192 00:10:19,679 --> 00:10:22,560 Speaker 1: different mutual funds that they were all just changing hand 193 00:10:22,600 --> 00:10:25,719 Speaker 1: like exchanging stocks all the time and getting paid quite 194 00:10:25,720 --> 00:10:27,960 Speaker 1: a lot of money. So they were some of the 195 00:10:28,000 --> 00:10:30,840 Speaker 1: first backers of some of the first generational index funds. 196 00:10:30,880 --> 00:10:33,800 Speaker 1: And they were just aimed at institutions like pension funds 197 00:10:33,840 --> 00:10:36,920 Speaker 1: because they were sophisticated. They could see some of the 198 00:10:37,040 --> 00:10:40,760 Speaker 1: data that was being collated at the time on computers. 199 00:10:41,240 --> 00:10:44,520 Speaker 1: It took a long time in Frankie, decades of Jack 200 00:10:44,600 --> 00:10:48,560 Speaker 1: Bogel banging the drum before retail investors really caught onto it. Yeah, well, 201 00:10:48,600 --> 00:10:50,800 Speaker 1: I mean, and you just touched on computers as well. 202 00:10:50,840 --> 00:10:52,840 Speaker 1: I mean that was I think that's another aspect of 203 00:10:52,880 --> 00:10:54,959 Speaker 1: why it took so long for for index funds to 204 00:10:55,000 --> 00:10:56,400 Speaker 1: get gone right. It's just because that, I mean, that 205 00:10:56,480 --> 00:11:00,319 Speaker 1: data didn't even exist, the ability for research ars to 206 00:11:00,880 --> 00:11:04,240 Speaker 1: crunch the numbers and to actually determine what has the 207 00:11:04,240 --> 00:11:07,000 Speaker 1: stock market returned. It's almost like there was just a 208 00:11:07,080 --> 00:11:09,800 Speaker 1: lack of actual information that was available for folks to 209 00:11:09,840 --> 00:11:12,280 Speaker 1: look at. But yeah, like you said, Jack Bogle, he's 210 00:11:12,280 --> 00:11:14,160 Speaker 1: bang at the drum, Like that's where he comes in. Like, 211 00:11:14,240 --> 00:11:17,199 Speaker 1: wasn't he the first one to offer index funds to 212 00:11:17,400 --> 00:11:20,679 Speaker 1: actual retail investors outside of those the pensions that were 213 00:11:20,679 --> 00:11:23,760 Speaker 1: offered to companies. Yeah, exactly when when he started, and 214 00:11:23,800 --> 00:11:26,719 Speaker 1: he even tapped up these companies for help, it was 215 00:11:26,800 --> 00:11:29,439 Speaker 1: Wells Fargo started the first one in seventy one, and 216 00:11:29,520 --> 00:11:33,520 Speaker 1: American National Back of Chicago in Chicago, and a tiny 217 00:11:33,559 --> 00:11:36,920 Speaker 1: firm called Battery March in Boston, and they sold two institutions. 218 00:11:37,200 --> 00:11:42,800 Speaker 1: So Jack Bogel, he'd have this massively argumentative divorce slash 219 00:11:42,960 --> 00:11:46,480 Speaker 1: firing from an asset managing round called Wellington, and he 220 00:11:46,880 --> 00:11:49,520 Speaker 1: was setting up this separate company called Vanguard. He needed 221 00:11:49,559 --> 00:11:52,520 Speaker 1: something to do, and it was very complicated in this 222 00:11:52,640 --> 00:11:55,000 Speaker 1: divorcing room with Wellington, so I was still doing lots 223 00:11:55,040 --> 00:11:59,120 Speaker 1: of work for Wellington. Uh and index funds like Jack 224 00:11:59,160 --> 00:12:03,840 Speaker 1: Bogel lay Tron in his life made himself into the 225 00:12:03,880 --> 00:12:07,120 Speaker 1: Messile of index funds, the Great John, the Baptists of 226 00:12:07,320 --> 00:12:10,319 Speaker 1: index funds. But in reality, the only reason why he 227 00:12:10,440 --> 00:12:13,240 Speaker 1: started one at Vanguard was because it was the only 228 00:12:13,280 --> 00:12:16,280 Speaker 1: thing he could do. Nobody else wanted to do this. 229 00:12:16,760 --> 00:12:19,480 Speaker 1: He couldn't compete against his former partners of well and 230 00:12:19,559 --> 00:12:23,599 Speaker 1: Thin directly, but he argued that an index fund was unmanaged. 231 00:12:23,679 --> 00:12:25,840 Speaker 1: Nobody else wanted to do it, so they allowed him 232 00:12:25,880 --> 00:12:27,920 Speaker 1: to do it as a kind of a yeah, sure, Jack, 233 00:12:28,000 --> 00:12:30,920 Speaker 1: you go on the start this index fund or whatever. 234 00:12:31,400 --> 00:12:34,800 Speaker 1: Go have fun, basically because nobody thought he would take off, 235 00:12:34,960 --> 00:12:37,920 Speaker 1: and frankly, it didn't. It was an ambysmal failure when 236 00:12:37,960 --> 00:12:41,600 Speaker 1: it first launched. M hmm. Yeah. And I'm curious to 237 00:12:41,760 --> 00:12:45,640 Speaker 1: the Vanguard's ownership structure is another interesting thing that helped 238 00:12:45,640 --> 00:12:47,360 Speaker 1: lower fees. I want to talk more about index ones, 239 00:12:47,400 --> 00:12:49,800 Speaker 1: but can you talk about the mutualization of Vanguard. Isn't 240 00:12:49,840 --> 00:12:51,760 Speaker 1: that kind of at least a part of the story 241 00:12:51,760 --> 00:12:54,040 Speaker 1: of how index funds feesus have collapsed. Like when you 242 00:12:54,040 --> 00:12:58,080 Speaker 1: look at Vanguard's website, it basically says that Vanguard is 243 00:12:58,240 --> 00:13:00,720 Speaker 1: owned by the people who invest in the and guard funds, 244 00:13:00,960 --> 00:13:03,560 Speaker 1: which is kind of a part of why the fees 245 00:13:03,559 --> 00:13:05,920 Speaker 1: of Vangor collapsed, and then they've kind of led that 246 00:13:06,000 --> 00:13:08,240 Speaker 1: race to the bottom. Yeah. No, I mean, it's one 247 00:13:08,280 --> 00:13:10,640 Speaker 1: of my favorite subjects, just because, first of all, from 248 00:13:10,679 --> 00:13:13,760 Speaker 1: the book, it was just such a dramatic rupture how 249 00:13:13,800 --> 00:13:19,080 Speaker 1: it happened, and also I love that Vanguard markets itself 250 00:13:19,160 --> 00:13:21,680 Speaker 1: very heavy on this, and it's true, but like any 251 00:13:21,720 --> 00:13:24,960 Speaker 1: good marketing story, there are lots of asterisks involved that 252 00:13:25,000 --> 00:13:28,560 Speaker 1: people don't always check out. But yeah, Jack Bogel was 253 00:13:28,600 --> 00:13:31,280 Speaker 1: the wonder by the ass management industry. He was like 254 00:13:31,360 --> 00:13:34,880 Speaker 1: the youngest CEO in a major investment company in Wellington. 255 00:13:36,240 --> 00:13:40,720 Speaker 1: He took over in the sixties when Wellington was kind 256 00:13:40,720 --> 00:13:44,080 Speaker 1: of conservative and boring. Invested lots in bombs and how 257 00:13:44,120 --> 00:13:47,440 Speaker 1: these bounced funds investing bonds and equities, and his brief 258 00:13:47,520 --> 00:13:50,559 Speaker 1: was ton reinvigorate it. So he found these hot shot 259 00:13:50,679 --> 00:13:54,200 Speaker 1: growth managers up in Boston merged with them, but in 260 00:13:54,240 --> 00:13:57,160 Speaker 1: the process gave away a lot of his stock and 261 00:13:57,200 --> 00:14:00,440 Speaker 1: the other stock that like his allies controlled, so the 262 00:14:00,600 --> 00:14:03,480 Speaker 1: ballmark it tended a beer mark. In the seventies, his 263 00:14:03,600 --> 00:14:06,600 Speaker 1: former partners ganged up and sacked him from his own 264 00:14:06,640 --> 00:14:10,840 Speaker 1: company basically, but as a hail mary. He went to 265 00:14:11,120 --> 00:14:16,040 Speaker 1: the independent boards of each of Wellington's funds, because each 266 00:14:16,080 --> 00:14:18,080 Speaker 1: fund has to have his own independent board, and said, 267 00:14:18,440 --> 00:14:21,200 Speaker 1: you guys don't actually have to sack me. How about 268 00:14:21,360 --> 00:14:25,240 Speaker 1: we set up an independent company that just does all 269 00:14:25,320 --> 00:14:30,880 Speaker 1: the administrative work. Wellington can keep investment management and distribution, 270 00:14:30,960 --> 00:14:33,080 Speaker 1: which are kind of the main things, and will do 271 00:14:33,120 --> 00:14:36,880 Speaker 1: the paperwork, will set the net asset value. You will 272 00:14:36,960 --> 00:14:39,680 Speaker 1: do all that kind of stuff, the clerical work. And 273 00:14:39,720 --> 00:14:44,000 Speaker 1: Frankie is a favorite Jack Bogel. They said yes, and 274 00:14:44,080 --> 00:14:47,680 Speaker 1: he called this company rather grandiosely, the Vanguard Company group 275 00:14:47,720 --> 00:14:50,880 Speaker 1: of companies, and he was owned by the funds because 276 00:14:50,920 --> 00:14:52,640 Speaker 1: that's how it was set up. It was set up 277 00:14:52,920 --> 00:14:56,520 Speaker 1: by each of Wellington's funds at the time, and since 278 00:14:56,520 --> 00:14:59,280 Speaker 1: then they have kept that structure, and that is a 279 00:14:59,400 --> 00:15:01,360 Speaker 1: large reason want they have been able to be so 280 00:15:01,480 --> 00:15:07,160 Speaker 1: massively hard on fees, because like the more money they make, 281 00:15:07,240 --> 00:15:09,280 Speaker 1: that money goes back into the funds and allows them 282 00:15:09,280 --> 00:15:13,800 Speaker 1: to cut fees in the process. The asterisks is that 283 00:15:14,920 --> 00:15:18,000 Speaker 1: if we own the Vanguard funds. Frankly, I think people 284 00:15:18,000 --> 00:15:20,640 Speaker 1: should have more transparency into how much money they pay 285 00:15:20,720 --> 00:15:25,120 Speaker 1: themselves in compensation. For example, I think Vanguard has done 286 00:15:25,120 --> 00:15:27,800 Speaker 1: a you know, God's work when it comes to glowering 287 00:15:28,720 --> 00:15:31,400 Speaker 1: the cost and invest for for everyday Americans and many 288 00:15:31,440 --> 00:15:34,520 Speaker 1: people around the world. I do think they could do 289 00:15:34,720 --> 00:15:36,800 Speaker 1: a better job when it comes to living up to 290 00:15:36,840 --> 00:15:41,400 Speaker 1: the substance of of their marketing that they are owned 291 00:15:41,400 --> 00:15:44,440 Speaker 1: by their own funds and by their own clients. They 292 00:15:44,440 --> 00:15:46,160 Speaker 1: do a good job. They do good work, but maybe 293 00:15:46,280 --> 00:15:50,160 Speaker 1: they're not doing it perfectly. Uh well, so there, I mean, 294 00:15:50,160 --> 00:15:53,359 Speaker 1: they're lower fees that certainly led to to them growing significantly. 295 00:15:53,360 --> 00:15:55,200 Speaker 1: But like you also talk a lot about Bogel, like 296 00:15:55,240 --> 00:15:58,360 Speaker 1: the man himself, right, Like he was incredibly determined, He 297 00:15:58,440 --> 00:16:01,560 Speaker 1: had a big personality, and so like, how did you 298 00:16:01,600 --> 00:16:04,480 Speaker 1: see Vanguard under his leadership just grow from you know, 299 00:16:04,520 --> 00:16:08,520 Speaker 1: being this mostly oblivious firm, this brokerage, you know, this 300 00:16:08,600 --> 00:16:12,600 Speaker 1: company to investors out there into this behemoth that it 301 00:16:12,720 --> 00:16:15,640 Speaker 1: is today. Well, he's a fascinating character, isn't he. I Mean, 302 00:16:15,640 --> 00:16:18,000 Speaker 1: I think everybody has some story of read some sort 303 00:16:18,000 --> 00:16:20,320 Speaker 1: of anecdotes, has seen an interview with him at some point. 304 00:16:20,880 --> 00:16:22,240 Speaker 1: I did get to spend a bit of time with 305 00:16:22,280 --> 00:16:25,000 Speaker 1: him more interviewing a few times before he passed away. 306 00:16:25,520 --> 00:16:27,680 Speaker 1: But it was really like talking to everybody around him, 307 00:16:27,840 --> 00:16:29,480 Speaker 1: all the people who work at Van God over the years, 308 00:16:29,480 --> 00:16:32,760 Speaker 1: even people that you know still hero worship Jack Bogel. 309 00:16:33,600 --> 00:16:35,960 Speaker 1: You start getting a something more nuanced pecture of him. 310 00:16:36,080 --> 00:16:38,520 Speaker 1: And he was a great man. But like every great man, 311 00:16:38,600 --> 00:16:41,800 Speaker 1: a great person, they have their flaws. I think Jack Bogel, 312 00:16:42,000 --> 00:16:44,800 Speaker 1: I mean, his background was like he came from money, 313 00:16:44,840 --> 00:16:47,920 Speaker 1: but his family was essentially bankrupted and a great, great depression, 314 00:16:48,760 --> 00:16:51,120 Speaker 1: and so that there was that that sense of a 315 00:16:51,200 --> 00:16:53,520 Speaker 1: fall from grace. And they could only really set award 316 00:16:53,520 --> 00:16:55,920 Speaker 1: to send one kid to college, so they had to 317 00:16:56,000 --> 00:17:00,120 Speaker 1: choose the smartest one or three. He was a in, 318 00:17:00,200 --> 00:17:03,200 Speaker 1: so his his twin couldn't go to Princeton. They couldn't 319 00:17:03,200 --> 00:17:05,240 Speaker 1: afford to send both of them to Princeton, so the 320 00:17:05,240 --> 00:17:07,440 Speaker 1: person with the best grades got to go, and he 321 00:17:07,520 --> 00:17:10,040 Speaker 1: still had to work his way through Princeton. So you're 322 00:17:10,040 --> 00:17:13,200 Speaker 1: there surrounded by all these other rich kids. You had 323 00:17:13,240 --> 00:17:15,520 Speaker 1: that sense that your family used to have wealth and 324 00:17:15,560 --> 00:17:18,720 Speaker 1: that kind of drive that that that shame that you 325 00:17:18,960 --> 00:17:22,000 Speaker 1: got in but your brothers didn't. I think his other 326 00:17:22,119 --> 00:17:25,040 Speaker 1: eldest brother who went too than the Marines. I mean, 327 00:17:25,080 --> 00:17:27,240 Speaker 1: that must give you this immense drive. So he just 328 00:17:27,560 --> 00:17:31,560 Speaker 1: had I think from a very early age ambition and 329 00:17:31,760 --> 00:17:35,119 Speaker 1: hunger fine abundance of what most people have. And I 330 00:17:35,200 --> 00:17:37,400 Speaker 1: think if you combine that, and that's why you're such 331 00:17:37,440 --> 00:17:40,640 Speaker 1: a success in his career, and like everything he touched 332 00:17:41,000 --> 00:17:43,680 Speaker 1: basically turned to gold early on in his career at Wellington, 333 00:17:43,760 --> 00:17:46,960 Speaker 1: at Princeton, ended up with great grades, ended up being 334 00:17:47,040 --> 00:17:49,760 Speaker 1: kind of the protege or the owner of Wellington, the 335 00:17:49,760 --> 00:17:53,120 Speaker 1: guy to Walter Morgan. And then he made that one 336 00:17:53,200 --> 00:17:56,960 Speaker 1: epic mistake and got sacked from his own company. It 337 00:17:57,000 --> 00:17:59,880 Speaker 1: was the first real failure. And I remember, somebody wants 338 00:17:59,920 --> 00:18:02,840 Speaker 1: to hold me that the only reason why Jack Bogel 339 00:18:02,920 --> 00:18:04,840 Speaker 1: might seem balance is because he had a chip on 340 00:18:04,880 --> 00:18:09,240 Speaker 1: both shoulders. But I think that they're the good side 341 00:18:09,240 --> 00:18:11,600 Speaker 1: where they say it really kind of it poured fuel 342 00:18:12,000 --> 00:18:15,560 Speaker 1: on this bonfire of drive that you already had, and 343 00:18:15,960 --> 00:18:19,119 Speaker 1: that had you know, talked to anybody close to him 344 00:18:19,200 --> 00:18:22,960 Speaker 1: that had negative sides. But I still think that most people, 345 00:18:23,160 --> 00:18:26,240 Speaker 1: you know, his humanity still shun through. So even though 346 00:18:26,560 --> 00:18:29,280 Speaker 1: you might be incredibly annoyed by when Jack Bogel calls 347 00:18:29,280 --> 00:18:31,680 Speaker 1: you up at two am because you want something done 348 00:18:31,680 --> 00:18:35,320 Speaker 1: by six am the next morning, people still did it 349 00:18:35,440 --> 00:18:37,800 Speaker 1: because it was Jack Bogel, Right. I mean that drive 350 00:18:37,880 --> 00:18:40,159 Speaker 1: was contagious. I think as well, right, because like you 351 00:18:40,400 --> 00:18:43,600 Speaker 1: talk about just his ability just to comment on the 352 00:18:43,640 --> 00:18:45,760 Speaker 1: markets and where things were, and when media would reach 353 00:18:45,760 --> 00:18:48,520 Speaker 1: out to him to get his opinion on things, well, 354 00:18:48,560 --> 00:18:50,400 Speaker 1: he was always willing to talk to them, which meant 355 00:18:50,400 --> 00:18:53,480 Speaker 1: that eventually when they were writing pieces about him, maybe 356 00:18:53,480 --> 00:18:56,480 Speaker 1: they're a little bit nicer to him because he was 357 00:18:56,840 --> 00:18:59,760 Speaker 1: he had this unique voice, and because of that, it 358 00:18:59,880 --> 00:19:02,440 Speaker 1: was he was always somebody that they were basically happy 359 00:19:02,480 --> 00:19:04,280 Speaker 1: to talk to. And you've got to think that that 360 00:19:04,320 --> 00:19:08,640 Speaker 1: also has an impact on Vanguard specifically. Right. I think so, 361 00:19:08,880 --> 00:19:11,679 Speaker 1: And I think maybe I mean this is you know, 362 00:19:11,720 --> 00:19:15,040 Speaker 1: maybe it's somebody will maybe write the post, the full 363 00:19:15,160 --> 00:19:19,960 Speaker 1: Post Jack Bogel, the posthumous version of the back Jack 364 00:19:20,000 --> 00:19:23,880 Speaker 1: Bogel Diary, that might have a broader sense of his 365 00:19:23,880 --> 00:19:26,040 Speaker 1: his foibles because he was fairly open about the many 366 00:19:26,080 --> 00:19:29,960 Speaker 1: of them. But yes, I mean, he was just eminently quotable, 367 00:19:30,200 --> 00:19:32,760 Speaker 1: and he got the fantastically good right from journalists as 368 00:19:32,800 --> 00:19:35,479 Speaker 1: a result, and he was always somebody would always talk 369 00:19:35,520 --> 00:19:38,080 Speaker 1: to anybody at any given time, and he give you 370 00:19:38,119 --> 00:19:42,520 Speaker 1: great stories, great quotes, great insight, and with immense patients 371 00:19:42,560 --> 00:19:46,760 Speaker 1: and humor. And that really helped Vanguard as more of 372 00:19:46,800 --> 00:19:50,919 Speaker 1: a retail oriented organization, grow hugely. Other companies have grown 373 00:19:51,000 --> 00:19:53,160 Speaker 1: much just as much by almost more word of mouth. 374 00:19:53,200 --> 00:19:56,119 Speaker 1: I mean, Wells Fargo were the first index fund started. 375 00:19:56,640 --> 00:20:00,280 Speaker 1: Arguably today is kind of basically black rock m But 376 00:20:00,560 --> 00:20:03,600 Speaker 1: you know, his net doesn't have the kind of the 377 00:20:03,600 --> 00:20:08,119 Speaker 1: the halo effect that st Jack gave to Vanguard, and 378 00:20:08,119 --> 00:20:11,680 Speaker 1: frankly it still enjoys to this day. Yeah. And one 379 00:20:11,680 --> 00:20:14,520 Speaker 1: other thing I think that plays in the Jack's personality 380 00:20:14,720 --> 00:20:17,160 Speaker 1: was that the heart issues, the health issues he dealt with, 381 00:20:17,440 --> 00:20:20,040 Speaker 1: and how he kind of pushed through pushed through those 382 00:20:20,080 --> 00:20:22,200 Speaker 1: in a way like it just the way you described 383 00:20:22,200 --> 00:20:24,080 Speaker 1: in the book made him feel a little superhuman. That 384 00:20:24,119 --> 00:20:26,760 Speaker 1: he's like playing tennis, having a heart attack, getting back 385 00:20:26,760 --> 00:20:28,919 Speaker 1: out there on the court to crush his opponents. And 386 00:20:28,920 --> 00:20:30,680 Speaker 1: it's like that's just the kind of guy he was, Like, 387 00:20:30,680 --> 00:20:32,600 Speaker 1: wait a minute. Did you just have a hardest and 388 00:20:33,040 --> 00:20:37,359 Speaker 1: exactly right? Yes, exactly just take a break. No. I 389 00:20:37,359 --> 00:20:40,040 Speaker 1: mean that was a classic wall. I tried to track 390 00:20:40,080 --> 00:20:43,520 Speaker 1: down whether did he actually win that set heart attackle 391 00:20:43,840 --> 00:20:45,680 Speaker 1: was that kind of something that grew in the retalent 392 00:20:45,720 --> 00:20:49,240 Speaker 1: because Jack Bogel likes not to grow stories gradually. But yes, 393 00:20:49,280 --> 00:20:51,480 Speaker 1: he was. He had many heart attacks. He had a 394 00:20:51,560 --> 00:20:54,159 Speaker 1: huge heart problem, and he was just marched. Was his 395 00:20:54,280 --> 00:20:56,359 Speaker 1: way through it. I want to know too, because because 396 00:20:56,440 --> 00:20:59,119 Speaker 1: being our launched the SNP five index funds in the 397 00:20:59,200 --> 00:21:02,760 Speaker 1: nineteen seventies, but a lot of folks say, well, Vagar 398 00:21:02,800 --> 00:21:06,240 Speaker 1: didn't actually launched the first index fund until so I 399 00:21:06,280 --> 00:21:09,840 Speaker 1: don't know, tell us about that controversy and are those 400 00:21:09,840 --> 00:21:13,440 Speaker 1: folks really just splitting hairs or you know, when when 401 00:21:13,440 --> 00:21:15,480 Speaker 1: we're talking about index funds, do you want to talk 402 00:21:15,520 --> 00:21:18,520 Speaker 1: about the different index funds that exist? Yeah, I mean 403 00:21:18,520 --> 00:21:21,080 Speaker 1: it's a great question because it gets well, I love 404 00:21:21,400 --> 00:21:24,000 Speaker 1: this subject because it gets immensely nerdy, but it's actually 405 00:21:24,040 --> 00:21:26,120 Speaker 1: kind of important at the same time. I mean, when 406 00:21:26,160 --> 00:21:28,240 Speaker 1: we say index fund, what does it really mean? Like anything? 407 00:21:28,280 --> 00:21:30,000 Speaker 1: To make an index? I can make an index of 408 00:21:30,119 --> 00:21:33,560 Speaker 1: Apple and Amazon as an index of two stocks. You 409 00:21:33,560 --> 00:21:35,880 Speaker 1: can make an index of a hundred companies or two 410 00:21:35,960 --> 00:21:39,240 Speaker 1: hundred or five hundred, which typically is what people mean, 411 00:21:39,359 --> 00:21:42,440 Speaker 1: like like the SMP five hundred five biggest American companies 412 00:21:42,800 --> 00:21:45,679 Speaker 1: is kind of synonymous with the U S Stock market, 413 00:21:46,200 --> 00:21:48,480 Speaker 1: and it is by by weight because these are the 414 00:21:48,480 --> 00:21:53,000 Speaker 1: biggest companies. It is the vast majority of what matters 415 00:21:53,440 --> 00:21:57,120 Speaker 1: in the American equity market, but it's not all of it. 416 00:21:57,800 --> 00:22:01,240 Speaker 1: So yeah, the first index funds that started, the very 417 00:22:01,280 --> 00:22:04,359 Speaker 1: first one, actually did track all the stocks and New 418 00:22:04,440 --> 00:22:08,159 Speaker 1: York stockets change, but that was incredibly complicated. This is 419 00:22:08,200 --> 00:22:12,960 Speaker 1: the pre computer error, trading error, so it was very complicated. 420 00:22:13,040 --> 00:22:16,280 Speaker 1: So eventually they also use the SP five fundred as 421 00:22:16,280 --> 00:22:19,480 Speaker 1: a communist shorthand, and that's from the early days in 422 00:22:19,520 --> 00:22:22,000 Speaker 1: the seventies and the first Vanguard found the SP five found. 423 00:22:22,119 --> 00:22:26,520 Speaker 1: It has become the shorthand for index funds or the 424 00:22:26,880 --> 00:22:30,480 Speaker 1: US stock market. But in ninety two Vanguards so they 425 00:22:30,520 --> 00:22:33,440 Speaker 1: had a young c I. L. Called gas Sort who 426 00:22:33,640 --> 00:22:38,400 Speaker 1: had gone to Chicago and had studied efficient market hypothesis, 427 00:22:38,440 --> 00:22:41,800 Speaker 1: like these are the purest that people that aren't necessarily 428 00:22:41,800 --> 00:22:44,560 Speaker 1: just starting index funds because they're cheap, but because they 429 00:22:44,560 --> 00:22:48,800 Speaker 1: believe it's the best. That diversification is the only free 430 00:22:48,880 --> 00:22:51,479 Speaker 1: lunch you can get in finance, and the more diverse 431 00:22:51,560 --> 00:22:53,560 Speaker 1: fied you are, the better year off. And this is 432 00:22:53,600 --> 00:22:58,960 Speaker 1: what couple Bill Sharp also showed and and his his 433 00:22:59,080 --> 00:23:03,000 Speaker 1: mental how remark o, it's so for the purests and 434 00:23:03,119 --> 00:23:07,600 Speaker 1: Lesbi index fund isn't the true thing. It's not the 435 00:23:07,720 --> 00:23:11,399 Speaker 1: index fund. The index fund should really be the entire 436 00:23:11,480 --> 00:23:14,960 Speaker 1: stock market. So in ninety two Gusts sort to manage 437 00:23:14,960 --> 00:23:18,760 Speaker 1: your talk Jack Bogel into launching the Total Stock Market Fund, 438 00:23:18,880 --> 00:23:24,400 Speaker 1: which tracked basically every tradeable liquid US stock in in America. 439 00:23:25,400 --> 00:23:29,800 Speaker 1: That is today the single biggest investment fund on the planet. 440 00:23:30,240 --> 00:23:32,480 Speaker 1: It is, you know, it has more money than the 441 00:23:32,520 --> 00:23:35,600 Speaker 1: Saudi Arabian Central Bank, or the Chinese Sovereign Wealth Fund 442 00:23:35,720 --> 00:23:37,840 Speaker 1: or the Norwegian Sovereign Wealth Fund for that matter as well. 443 00:23:37,920 --> 00:23:41,760 Speaker 1: It's it's titanic these days. And that's why some people 444 00:23:41,840 --> 00:23:45,879 Speaker 1: say that is the true index fund. Though I I 445 00:23:45,920 --> 00:23:49,800 Speaker 1: had quibbled with some aspects of that, that was the beginning. Well, 446 00:23:50,040 --> 00:23:51,880 Speaker 1: that being said, I mean Joel and I are both 447 00:23:51,880 --> 00:23:53,520 Speaker 1: of our we we've got maybe like I would say, 448 00:23:53,560 --> 00:23:56,119 Speaker 1: ninety percent of our money in one of those two funds, 449 00:23:56,160 --> 00:23:59,440 Speaker 1: whether it be an SMP five index or a total 450 00:23:59,440 --> 00:24:02,000 Speaker 1: stock market index fund like that. But Matt's got tens 451 00:24:02,000 --> 00:24:05,800 Speaker 1: of millions of dollars. But so, I mean, we're talking 452 00:24:05,800 --> 00:24:09,040 Speaker 1: about Jack Bogel. He was certainly one of the legends 453 00:24:09,560 --> 00:24:12,359 Speaker 1: of index investing. But Warren Buffett, he actually played a 454 00:24:12,359 --> 00:24:16,040 Speaker 1: pivotal role with it just came to the wide acceptance 455 00:24:16,160 --> 00:24:18,080 Speaker 1: of the role of index funds. We'll talk about him 456 00:24:18,280 --> 00:24:30,199 Speaker 1: plus much more right after this break. All right, we 457 00:24:30,280 --> 00:24:33,240 Speaker 1: are back from the break still talking with Robin Wigglesworth 458 00:24:33,280 --> 00:24:36,520 Speaker 1: about the wild history of index funds and one of 459 00:24:36,560 --> 00:24:40,320 Speaker 1: Matt and I's favorite players in the finance space. Warren Buffett, 460 00:24:40,680 --> 00:24:45,040 Speaker 1: kind of comes into your storytelling here, Robin. You start off, 461 00:24:45,200 --> 00:24:48,160 Speaker 1: you actually start off your book talking about Warren Buffett's bet, 462 00:24:48,160 --> 00:24:51,119 Speaker 1: which is one of my favorite stories, uh, with the 463 00:24:51,160 --> 00:24:54,119 Speaker 1: hedge fund manager, which was just another win for index 464 00:24:54,160 --> 00:24:55,960 Speaker 1: fund proponents. It is kind of like I feel like 465 00:24:56,000 --> 00:24:59,359 Speaker 1: it it took index funds to another level in the 466 00:24:59,359 --> 00:25:02,399 Speaker 1: consciousness of the everyday consumer. Can you talk to us 467 00:25:02,440 --> 00:25:04,359 Speaker 1: about how that went down, what that bet was about 468 00:25:04,800 --> 00:25:08,440 Speaker 1: and your Warren Buffett already unbelievably wealthy and didn't need 469 00:25:08,480 --> 00:25:10,639 Speaker 1: to make this bet, and he didn't get rich himself 470 00:25:10,920 --> 00:25:13,000 Speaker 1: by winning this bet. But yeah, can you talk about 471 00:25:13,000 --> 00:25:15,119 Speaker 1: the details of it? Yeah, I mean, so there aren't 472 00:25:15,119 --> 00:25:17,240 Speaker 1: that many million dollar bets out there, and certainly not 473 00:25:17,280 --> 00:25:19,119 Speaker 1: one where the stakes are so huge and they're and 474 00:25:19,119 --> 00:25:22,119 Speaker 1: they're kind of the the resonance so enormous. I mean, 475 00:25:22,400 --> 00:25:24,480 Speaker 1: the reason why I started the book with it is 476 00:25:24,520 --> 00:25:27,439 Speaker 1: because it's just a phenomenal story. And Frankie also, as 477 00:25:27,520 --> 00:25:29,400 Speaker 1: much as I love history, it felt a little bit 478 00:25:30,160 --> 00:25:33,639 Speaker 1: mean to dump breeders in nineteenth century Paris to start 479 00:25:33,640 --> 00:25:37,399 Speaker 1: off with Warren Buffett is a slightly more cinematic introduction 480 00:25:37,440 --> 00:25:40,760 Speaker 1: to some of the issues around this. But yeah, so 481 00:25:41,320 --> 00:25:44,400 Speaker 1: Warren Buffett, you know, he hates hedge funds, basically doesn't 482 00:25:44,400 --> 00:25:48,199 Speaker 1: actually like most active investors or other investment managers. You 483 00:25:48,240 --> 00:25:51,119 Speaker 1: think most of them kind of scamming for a living. 484 00:25:51,200 --> 00:25:53,679 Speaker 1: And he's been saying this since the seventies, to his credit, 485 00:25:54,200 --> 00:25:57,120 Speaker 1: but in the early two thousand's he got so annoyed 486 00:25:57,160 --> 00:25:59,840 Speaker 1: and how much money was going to hedge funds. He said, look, 487 00:26:00,040 --> 00:26:03,719 Speaker 1: will bet anybody a massive amount of money that an 488 00:26:03,760 --> 00:26:06,159 Speaker 1: index fund can beat any group of hedge funds you 489 00:26:06,240 --> 00:26:09,320 Speaker 1: put up against it. And there's only one guy that 490 00:26:09,400 --> 00:26:10,920 Speaker 1: took him up on the bet. The guy called Ted 491 00:26:10,960 --> 00:26:14,240 Speaker 1: Side's who ran a fund of hedge funds, basically the 492 00:26:14,280 --> 00:26:16,720 Speaker 1: investment firm that invests in hedge funds on behalf of 493 00:26:16,760 --> 00:26:20,480 Speaker 1: other wealthy dudes pension plans, insurance companies and so on. 494 00:26:21,440 --> 00:26:24,800 Speaker 1: And you know, he's actually an index fund fan. But 495 00:26:24,920 --> 00:26:26,800 Speaker 1: he just felt this was two thousand and seven. He 496 00:26:26,880 --> 00:26:29,840 Speaker 1: thought that the stock market was going to crap out, 497 00:26:30,280 --> 00:26:32,840 Speaker 1: which he was right about. And he thought that although 498 00:26:32,920 --> 00:26:37,119 Speaker 1: hedge funds were expensive in a beer market, they should 499 00:26:37,160 --> 00:26:39,720 Speaker 1: still do better because they are hedge funds. They should 500 00:26:39,720 --> 00:26:41,879 Speaker 1: be hedged most of the time, and they can invest 501 00:26:41,960 --> 00:26:44,639 Speaker 1: in bonds and stocks and commodity, can invest in anything. 502 00:26:44,840 --> 00:26:48,879 Speaker 1: An index fund and equity index fund like Vanguards, which 503 00:26:50,119 --> 00:26:52,760 Speaker 1: basically that the buffett offered up to fight in this corner. 504 00:26:53,040 --> 00:26:55,000 Speaker 1: You know that can only invest in your stock market. 505 00:26:55,760 --> 00:26:58,680 Speaker 1: So he thought he wasn't sure he was going to win, 506 00:26:58,760 --> 00:27:00,920 Speaker 1: but he was pretty show who was going to win. 507 00:27:01,480 --> 00:27:03,720 Speaker 1: But in the hand that, you know, he was right 508 00:27:03,760 --> 00:27:06,280 Speaker 1: about a lot of things. There was a big beer market. 509 00:27:06,359 --> 00:27:08,800 Speaker 1: It was terrible, and the index fund did lag behind 510 00:27:08,840 --> 00:27:11,200 Speaker 1: hedge funds as bad as hedge funds did. But by 511 00:27:11,200 --> 00:27:14,680 Speaker 1: the end of that decade, now the the index fund, 512 00:27:14,760 --> 00:27:19,320 Speaker 1: the Vanguard five hundred fund, had absolutely demolished the group 513 00:27:19,320 --> 00:27:22,159 Speaker 1: of hedge funds that Side Days had chosen demolished. It 514 00:27:22,240 --> 00:27:25,040 Speaker 1: wasn't even close. It was like a hud percent returned 515 00:27:25,080 --> 00:27:27,800 Speaker 1: to something like thirty, right, and it was it was nuts. 516 00:27:27,840 --> 00:27:30,720 Speaker 1: It was actually invested in five separate funds of hedge 517 00:27:30,720 --> 00:27:33,439 Speaker 1: funds and not a single one of those five and 518 00:27:33,480 --> 00:27:36,200 Speaker 1: each of those were invested in another twenty or thirty 519 00:27:36,200 --> 00:27:38,240 Speaker 1: hedge funds, and not a single one of those five 520 00:27:38,840 --> 00:27:41,399 Speaker 1: managed to beat the index. Well, I mean, what, like, 521 00:27:41,440 --> 00:27:45,199 Speaker 1: what's crazy is Buffett himself as an individual, like he 522 00:27:45,280 --> 00:27:47,680 Speaker 1: has had a lot of success at picking individual companies 523 00:27:47,720 --> 00:27:50,160 Speaker 1: that end up being winners. But obviously none of us 524 00:27:50,359 --> 00:27:54,119 Speaker 1: are like Warren Buffett. Uh And so like my question 525 00:27:54,160 --> 00:27:56,520 Speaker 1: then for you, Robin, is like, why are there still 526 00:27:56,520 --> 00:27:59,040 Speaker 1: hedge funds out there that attempt to beat the market? Right? 527 00:27:59,080 --> 00:28:01,040 Speaker 1: Like it almost feels like that it should be an 528 00:28:01,040 --> 00:28:04,159 Speaker 1: industry that doesn't exist when you can look at the 529 00:28:04,200 --> 00:28:06,720 Speaker 1: returns that most head fund managers are able to bring 530 00:28:06,760 --> 00:28:09,200 Speaker 1: in like a couple that with the fact that they 531 00:28:09,280 --> 00:28:12,399 Speaker 1: cost additional money, that they're expensive, and it seems like 532 00:28:13,040 --> 00:28:15,879 Speaker 1: every day you're gonna end up getting ahead with you know, 533 00:28:15,960 --> 00:28:18,000 Speaker 1: with an index fund, with a total stock market fund, 534 00:28:18,359 --> 00:28:20,880 Speaker 1: or you know with an SMP if I funded fund well, 535 00:28:21,800 --> 00:28:25,480 Speaker 1: the glib answer is simply that hope springs eternal in 536 00:28:25,600 --> 00:28:28,239 Speaker 1: that you know, statistically, there are always going to be 537 00:28:28,320 --> 00:28:31,520 Speaker 1: some fund managers or hedge fund managers that do well 538 00:28:31,640 --> 00:28:34,200 Speaker 1: enough for a year or two or five even ten 539 00:28:34,320 --> 00:28:37,280 Speaker 1: years that other people will think I can do that, 540 00:28:37,440 --> 00:28:41,040 Speaker 1: or I can invest in that hedge fund, and in 541 00:28:41,080 --> 00:28:44,680 Speaker 1: the long run that tends to go bad. But I 542 00:28:44,680 --> 00:28:48,440 Speaker 1: would say that one area where I tend to um 543 00:28:48,720 --> 00:28:51,400 Speaker 1: diverge from some of the index fund purists or passive 544 00:28:51,440 --> 00:28:53,360 Speaker 1: investing purists, like some of the people like like gas 545 00:28:53,360 --> 00:28:56,360 Speaker 1: Sort that started their total stock market fund, is that 546 00:28:56,800 --> 00:29:00,920 Speaker 1: I do think some fund managers hand beat the market. 547 00:29:01,680 --> 00:29:05,040 Speaker 1: I just think they are very very very rare, and 548 00:29:05,080 --> 00:29:08,240 Speaker 1: they tend to charge so much money if you can 549 00:29:08,280 --> 00:29:11,440 Speaker 1: even invest with them that actually it doesn't really make 550 00:29:11,480 --> 00:29:14,120 Speaker 1: that much of a difference. So I do think there 551 00:29:14,160 --> 00:29:16,520 Speaker 1: are people that can do this, but it's getting harder 552 00:29:16,520 --> 00:29:18,400 Speaker 1: and harder. I mean one of the guys that like 553 00:29:18,560 --> 00:29:20,480 Speaker 1: one of my heroes, a guy called Charlie Ellis. He 554 00:29:20,600 --> 00:29:22,720 Speaker 1: was a board member at Vanguard. He wrote one of 555 00:29:22,760 --> 00:29:26,000 Speaker 1: the seminal articles actually inspired Jack Vogel in the seventies 556 00:29:26,000 --> 00:29:29,120 Speaker 1: called the Losers Game. Well, you basically argued that active 557 00:29:29,160 --> 00:29:32,440 Speaker 1: management was as a loser's game. And you know, he 558 00:29:32,640 --> 00:29:34,920 Speaker 1: was like in the stock market analysts and an investor, 559 00:29:35,000 --> 00:29:37,320 Speaker 1: so that was pretty big thing coming from him. But 560 00:29:37,400 --> 00:29:40,480 Speaker 1: he argued that when he got his PhD in the sixties, 561 00:29:41,000 --> 00:29:43,760 Speaker 1: that was an immense edge. I mean, this was an everywhere. 562 00:29:43,800 --> 00:29:46,320 Speaker 1: Even the NBA's were pretty rear. The CFA had only 563 00:29:46,360 --> 00:29:48,760 Speaker 1: been around for a few years. Getting a PhD in 564 00:29:48,800 --> 00:29:52,760 Speaker 1: economics was just kind of next level stuff, and Marcus 565 00:29:52,800 --> 00:29:55,840 Speaker 1: were hugely inefficient. And even then it was very hard 566 00:29:56,080 --> 00:29:59,040 Speaker 1: for people to beat the market. And today, wait, literally, 567 00:29:59,080 --> 00:30:00,520 Speaker 1: if you throw a rock on all three, you're going 568 00:30:00,560 --> 00:30:03,880 Speaker 1: to hit it. PhD, you know, they are hiring rocket 569 00:30:03,960 --> 00:30:10,080 Speaker 1: scientists using artificial intelligence. They are literally scraping every single 570 00:30:10,120 --> 00:30:13,200 Speaker 1: credit card transaction in the United States of America to 571 00:30:13,280 --> 00:30:17,280 Speaker 1: find edge. The idea that somebody sitting certainly like a 572 00:30:17,320 --> 00:30:21,000 Speaker 1: person like me that even a professional fund manager can 573 00:30:21,320 --> 00:30:25,000 Speaker 1: manage to beat the market the sum this machine is 574 00:30:25,120 --> 00:30:28,720 Speaker 1: just very unlikely. I think some people can and maybe 575 00:30:28,760 --> 00:30:32,000 Speaker 1: that's actually maybe the tragedy that just enough people can 576 00:30:32,680 --> 00:30:36,520 Speaker 1: that that hope keeps bringing eternal their ubrist there right basically, 577 00:30:36,560 --> 00:30:38,640 Speaker 1: that that you can beat the market. It also makes 578 00:30:38,640 --> 00:30:40,720 Speaker 1: me wonder, I mean, with all of this technology, with 579 00:30:40,760 --> 00:30:43,360 Speaker 1: all the additional information that folks have now, do you 580 00:30:43,400 --> 00:30:47,240 Speaker 1: feel that the markets have actually become more efficient? Because 581 00:30:47,600 --> 00:30:49,200 Speaker 1: when when you know, when you first come out with 582 00:30:49,240 --> 00:30:52,440 Speaker 1: that idea like decades ago, in reality it's it's not 583 00:30:52,560 --> 00:30:55,880 Speaker 1: perfectly efficient, right, Like there are there is a way 584 00:30:55,920 --> 00:30:58,680 Speaker 1: to get an edge. But as more and more data 585 00:30:58,880 --> 00:31:01,640 Speaker 1: is just out there for folks to glean into harvest 586 00:31:01,680 --> 00:31:03,720 Speaker 1: and to put to use, it almost seems like that 587 00:31:04,320 --> 00:31:08,040 Speaker 1: truly there are fewer and fewer opportunities to find that edge. 588 00:31:08,080 --> 00:31:09,560 Speaker 1: And so, I mean, in your opinion, do you do 589 00:31:09,560 --> 00:31:12,560 Speaker 1: you think that markets have gotten more efficient as we've 590 00:31:12,560 --> 00:31:16,360 Speaker 1: seen just this massive tidal wave of information and data 591 00:31:16,480 --> 00:31:19,960 Speaker 1: at our fingertips. Yeah, I think that's spot on. I mean, 592 00:31:20,040 --> 00:31:22,320 Speaker 1: when you think about it, I mean, Frankie, I think 593 00:31:22,360 --> 00:31:24,880 Speaker 1: one of the people have been talking for years, thank 594 00:31:24,920 --> 00:31:28,880 Speaker 1: you for decades. I found articles arguing that index funds 595 00:31:28,880 --> 00:31:31,640 Speaker 1: we're going to make markets inefficient back in the seventies 596 00:31:31,720 --> 00:31:35,000 Speaker 1: when the we're teeny tiny, and today it's like there's 597 00:31:35,080 --> 00:31:38,640 Speaker 1: like a constant chorus about this. The reality is that 598 00:31:38,760 --> 00:31:43,240 Speaker 1: active performance, the performance of average active managers, actually seems 599 00:31:43,240 --> 00:31:46,280 Speaker 1: to be getting worse year after year after year. And 600 00:31:46,280 --> 00:31:50,480 Speaker 1: I think that is great evidence that market getting more efficient. 601 00:31:50,760 --> 00:31:53,640 Speaker 1: But the fact that markets were inefficient, you'd expect them 602 00:31:53,680 --> 00:31:56,560 Speaker 1: to have lots of alpha out there. But the reality 603 00:31:56,640 --> 00:31:59,120 Speaker 1: is there's lots of stuff that is so much harder. 604 00:31:59,360 --> 00:32:01,320 Speaker 1: Back and let's say even twenty thirty years ago in 605 00:32:01,360 --> 00:32:04,160 Speaker 1: the nineties, Bull Run or you know, in the sixties 606 00:32:04,200 --> 00:32:07,400 Speaker 1: certainly have dentists and doctors, people day trading on the 607 00:32:07,400 --> 00:32:09,920 Speaker 1: back of like stock tips that were hardly better than 608 00:32:09,960 --> 00:32:12,320 Speaker 1: what you see in the Wolf of Wall Street. A 609 00:32:12,400 --> 00:32:16,080 Speaker 1: lot of those people have smartened out, They learned their 610 00:32:16,160 --> 00:32:20,920 Speaker 1: lessons in various kind of humiliating beer markets that most 611 00:32:20,920 --> 00:32:23,800 Speaker 1: people now are they trust professional, go to an index fund, 612 00:32:24,240 --> 00:32:27,200 Speaker 1: I use a financial visors. So people have just gotten smarter. 613 00:32:27,400 --> 00:32:31,520 Speaker 1: There's less dumb money in markets. And I'd say that 614 00:32:31,640 --> 00:32:34,440 Speaker 1: like especially with the move towards index funds. That's kind 615 00:32:34,440 --> 00:32:36,760 Speaker 1: of the done money, excepting that we're not going to 616 00:32:36,840 --> 00:32:38,680 Speaker 1: be able to do that. I'm not going to invest 617 00:32:38,720 --> 00:32:43,160 Speaker 1: in this expective fund manager, and that goes into indexing, 618 00:32:43,160 --> 00:32:46,320 Speaker 1: and there's more of these average fund managers lose their 619 00:32:46,400 --> 00:32:50,880 Speaker 1: jobs as well. The markets, the remaining people around the table, 620 00:32:50,960 --> 00:32:52,520 Speaker 1: the poker table, if you think of the markets as 621 00:32:52,560 --> 00:32:56,240 Speaker 1: polk table. The remaining people are really good card shops 622 00:32:56,280 --> 00:32:59,200 Speaker 1: because all the bad poker players have been forced out well. 623 00:32:59,240 --> 00:33:01,640 Speaker 1: And the fortune of thing is that index funds allow 624 00:33:01,720 --> 00:33:03,880 Speaker 1: the dumb money, which Matt and I would consider ourselves 625 00:33:03,880 --> 00:33:05,320 Speaker 1: a part of, like the people who don't have the 626 00:33:05,360 --> 00:33:08,160 Speaker 1: time to go through all this information, like people have 627 00:33:08,200 --> 00:33:10,080 Speaker 1: day jobs and families and all this other stuff. They 628 00:33:10,120 --> 00:33:12,600 Speaker 1: allow people to get the average, which is actually not 629 00:33:12,640 --> 00:33:14,880 Speaker 1: a bad thing as as it turns out. But I 630 00:33:14,920 --> 00:33:18,760 Speaker 1: was surprised too. You mentioned, yeah, that the the downsides 631 00:33:18,800 --> 00:33:21,080 Speaker 1: of index funds. Let's talk about that, because there were 632 00:33:21,120 --> 00:33:24,000 Speaker 1: people talking about that back in the seventies and the 633 00:33:24,320 --> 00:33:28,040 Speaker 1: when index funds just first launched, that maybe you know 634 00:33:28,240 --> 00:33:31,560 Speaker 1: it's going to distort markets. Do you think that now 635 00:33:31,600 --> 00:33:34,360 Speaker 1: that index funds are this massive behemoth, Like, is there 636 00:33:34,760 --> 00:33:39,080 Speaker 1: is there a chance that passive investing does cause turbulence 637 00:33:39,120 --> 00:33:42,120 Speaker 1: and markets moving forward? Or is that just kind of 638 00:33:42,160 --> 00:33:45,600 Speaker 1: an overblown uh warning from people who don't know what 639 00:33:45,600 --> 00:33:49,880 Speaker 1: they're talking about. Yes, everything, basically, I mean these these 640 00:33:49,960 --> 00:33:52,800 Speaker 1: questions get very convoluted and then it boils out to 641 00:33:52,840 --> 00:33:55,239 Speaker 1: sounds of literally what you mean by distorted? Like I 642 00:33:55,280 --> 00:33:59,080 Speaker 1: do think that index funds are having an impact on 643 00:33:59,200 --> 00:34:01,560 Speaker 1: the markets because frankly, they are so big, now how 644 00:34:01,600 --> 00:34:04,800 Speaker 1: they can they not? And I think it's important even 645 00:34:04,880 --> 00:34:08,239 Speaker 1: for index funds stands like myself to admit or try 646 00:34:08,280 --> 00:34:11,600 Speaker 1: to recognize where that can be the case, rather than 647 00:34:11,640 --> 00:34:15,040 Speaker 1: just blindly because we're fans of them, say index fans 648 00:34:15,040 --> 00:34:18,040 Speaker 1: are good, everything else is bad. But I think in 649 00:34:18,120 --> 00:34:22,160 Speaker 1: terms like distort or they manipulate, markets are just they 650 00:34:22,200 --> 00:34:25,120 Speaker 1: frankly reveal far more about the biases or the person 651 00:34:25,200 --> 00:34:29,640 Speaker 1: talking than than actually what the reality markets are. So like, 652 00:34:29,719 --> 00:34:34,680 Speaker 1: when mutual funds were invented, people said exactly the same thing. 653 00:34:35,239 --> 00:34:39,160 Speaker 1: People said their mutual funds were destroying the unit investment 654 00:34:39,200 --> 00:34:42,839 Speaker 1: trust ecosystem, that they were making markets less efficient, they 655 00:34:42,840 --> 00:34:46,560 Speaker 1: were making them more volatile, and so on. Index funds 656 00:34:46,560 --> 00:34:49,840 Speaker 1: are huge now, and we're talking multiple tens of trillions, 657 00:34:49,880 --> 00:34:51,880 Speaker 1: and probably depending on what as a class and what 658 00:34:51,920 --> 00:34:54,480 Speaker 1: market you look at, we're doing twenty to thirty trillion 659 00:34:54,480 --> 00:34:57,920 Speaker 1: dollars globally. That is so big that clearly that has 660 00:34:58,400 --> 00:35:01,719 Speaker 1: kind of rewired how markets work. But has it rewired 661 00:35:01,760 --> 00:35:05,320 Speaker 1: markets any worse have? It hasn't made them any worse 662 00:35:05,400 --> 00:35:07,520 Speaker 1: off than let's say, the invention of hedge funds or 663 00:35:07,560 --> 00:35:10,840 Speaker 1: private equity or venture capital. Note, the markets are dynamic, 664 00:35:10,880 --> 00:35:13,920 Speaker 1: They're always changing, and that's why I think, you know, 665 00:35:14,080 --> 00:35:16,319 Speaker 1: fans like me, you shouldn't say that index funds are 666 00:35:16,320 --> 00:35:19,520 Speaker 1: not having any impact whatsoever, because there are some areas 667 00:35:19,520 --> 00:35:21,720 Speaker 1: that they can talk about that they are having an impact, 668 00:35:22,080 --> 00:35:25,680 Speaker 1: but there are so many areas where frankly, it's just 669 00:35:25,840 --> 00:35:29,319 Speaker 1: one of five thousand factors that affects market prices on 670 00:35:29,360 --> 00:35:32,160 Speaker 1: any given day. H And I think a lot of 671 00:35:32,160 --> 00:35:34,560 Speaker 1: the stuff that people blame on index funds is is 672 00:35:35,680 --> 00:35:38,560 Speaker 1: boardline new Dechris Franpi, Right, Yeah, So, so you don't 673 00:35:38,560 --> 00:35:41,360 Speaker 1: think investors should be too concerned about some of the 674 00:35:41,360 --> 00:35:43,239 Speaker 1: other downsides. I guess if if like if it's a 675 00:35:43,320 --> 00:35:46,120 Speaker 1: net positive, then this maybe should be something that we 676 00:35:46,160 --> 00:35:48,440 Speaker 1: can get behind. But let makes some folks will point 677 00:35:48,480 --> 00:35:50,960 Speaker 1: to the fact that there's just more power, there's more 678 00:35:50,960 --> 00:35:53,200 Speaker 1: control of our economy in the hands of a few, 679 00:35:53,280 --> 00:35:56,520 Speaker 1: right when you've got these big brokerages and they are 680 00:35:56,680 --> 00:35:58,680 Speaker 1: getting to be the majority vote when it comes to 681 00:35:59,080 --> 00:36:02,440 Speaker 1: what these individual clubs BONESE are going to implement. I 682 00:36:02,440 --> 00:36:04,120 Speaker 1: think some folks would see that as a as a 683 00:36:04,120 --> 00:36:06,480 Speaker 1: big negative. Yeah, and I think that's one of the 684 00:36:06,960 --> 00:36:10,680 Speaker 1: negatives that I'm the most concerned about. With some caveats, 685 00:36:10,719 --> 00:36:14,160 Speaker 1: I mean, this isn't just an index fun story. It's 686 00:36:14,239 --> 00:36:17,239 Speaker 1: just generally what we can see across the economy is 687 00:36:17,280 --> 00:36:21,280 Speaker 1: that big are getting bigger. And there's something unique about 688 00:36:21,400 --> 00:36:25,480 Speaker 1: asset management and investment management because it pools control essentially, 689 00:36:25,560 --> 00:36:28,520 Speaker 1: like black Rock is a tiny company in itself, like 690 00:36:28,600 --> 00:36:31,680 Speaker 1: Vanguard is a tiny company in itself. They're not as 691 00:36:31,719 --> 00:36:34,759 Speaker 1: big as an Apple, for example, but because they manage 692 00:36:34,800 --> 00:36:38,480 Speaker 1: so many trillions of dollars above of other investors, that 693 00:36:38,680 --> 00:36:41,480 Speaker 1: power they have, the influence they have in corporate boardrooms 694 00:36:41,480 --> 00:36:46,279 Speaker 1: across America is magnified. So I'd argue that like a 695 00:36:46,719 --> 00:36:49,840 Speaker 1: people get obsessed with like a Jamie Diamond, a Goldman Sacks, 696 00:36:49,960 --> 00:36:52,920 Speaker 1: I'd argue a black rock vanguard are vastly more powerful 697 00:36:53,480 --> 00:36:58,760 Speaker 1: than a goldmen sacks, and just because they decide, generally speaking, 698 00:36:58,760 --> 00:37:01,080 Speaker 1: not to use that power, and generally speaking they have 699 00:37:01,360 --> 00:37:04,440 Speaker 1: been desperately trying to avoid it. Even the decision not 700 00:37:04,520 --> 00:37:08,439 Speaker 1: to exercise it is a decision with consequences. So yeah, 701 00:37:08,440 --> 00:37:10,480 Speaker 1: I think that's the one thing we do need to 702 00:37:10,520 --> 00:37:12,799 Speaker 1: keep an eye on. All Right, Robin, We've got a 703 00:37:12,840 --> 00:37:15,120 Speaker 1: few more questions to get to with you. We we 704 00:37:15,120 --> 00:37:18,360 Speaker 1: we really want to know about the future of index funds, 705 00:37:18,360 --> 00:37:21,359 Speaker 1: what that hole is. There's already kind of some some 706 00:37:21,360 --> 00:37:24,080 Speaker 1: stuff on the horizon that some changes we might see 707 00:37:24,120 --> 00:37:26,160 Speaker 1: in the near future. We'll we'll talk about that right 708 00:37:26,200 --> 00:37:38,120 Speaker 1: after this. Alright, we're back from the break talking with 709 00:37:38,320 --> 00:37:40,920 Speaker 1: Robin Wigglesworth and and Robin, we've got a couple other 710 00:37:41,000 --> 00:37:43,480 Speaker 1: questions here for you. And we were talking about some 711 00:37:43,520 --> 00:37:46,879 Speaker 1: of the downsides of index funds of passive investing before 712 00:37:46,920 --> 00:37:49,680 Speaker 1: the break. But I think one of the ways we 713 00:37:49,760 --> 00:37:52,400 Speaker 1: can focus on the positive is by looking at the 714 00:37:52,520 --> 00:37:55,040 Speaker 1: good that index funds have been able to provide folks. 715 00:37:55,040 --> 00:37:56,840 Speaker 1: And uh So, to that end, do you have an 716 00:37:56,920 --> 00:38:00,880 Speaker 1: estimate of how much money the advent of index funds 717 00:38:00,880 --> 00:38:04,000 Speaker 1: has saved investors over over the past you know, four 718 00:38:04,120 --> 00:38:07,440 Speaker 1: or five decades. Oh god, yeah, that huge amounts. I 719 00:38:07,480 --> 00:38:10,320 Speaker 1: mean I saw so I saw a study from SMP 720 00:38:10,640 --> 00:38:14,160 Speaker 1: that calculated just using some of the mainstream playing Vanilli 721 00:38:14,200 --> 00:38:16,359 Speaker 1: index funds in the US. I think we're talking about 722 00:38:16,360 --> 00:38:19,800 Speaker 1: over the past thirty years or so, three fifty billion 723 00:38:19,840 --> 00:38:23,399 Speaker 1: dollars just in savings and fees. But I'd argue that 724 00:38:23,400 --> 00:38:26,520 Speaker 1: that massively undercounts it and underestimates it because frankly, the 725 00:38:26,560 --> 00:38:28,200 Speaker 1: first of all, that it's just a one segment and 726 00:38:28,239 --> 00:38:31,400 Speaker 1: it's just the US. If you think of also the 727 00:38:31,480 --> 00:38:35,280 Speaker 1: real savings that come with index funds, that frankly benefits everybody, 728 00:38:35,320 --> 00:38:37,920 Speaker 1: whether they use index funds or not, is the pressure 729 00:38:38,080 --> 00:38:41,280 Speaker 1: is put on all investment fees. Like even hedge funds 730 00:38:41,840 --> 00:38:45,200 Speaker 1: struggled to charge the two and twenty fees that they 731 00:38:45,280 --> 00:38:47,440 Speaker 1: used to. Like a few do can do it. Some 732 00:38:47,520 --> 00:38:49,720 Speaker 1: of the top ones can charge like three and thirty, 733 00:38:51,120 --> 00:38:53,080 Speaker 1: but most hedge funds I've had to cut their costs 734 00:38:53,120 --> 00:38:56,560 Speaker 1: as well as they're competing as cheap index funds. So 735 00:38:56,680 --> 00:38:58,880 Speaker 1: I did try to do a back of the envelope 736 00:38:58,880 --> 00:39:03,600 Speaker 1: calculations Bay Song, like the global fee average fee today 737 00:39:03,640 --> 00:39:06,759 Speaker 1: and what the fee was. Average fees were globally in 738 00:39:06,800 --> 00:39:10,319 Speaker 1: the seventies with frankly a whole lot of assumptions, which 739 00:39:10,320 --> 00:39:11,719 Speaker 1: is why I didn't put it in the book. It 740 00:39:11,760 --> 00:39:15,640 Speaker 1: was so it was a few too many assumptions. But 741 00:39:15,760 --> 00:39:18,600 Speaker 1: just based on direct fee savings, I think I got 742 00:39:18,640 --> 00:39:22,279 Speaker 1: to two or three trillion dollars globally, And that's not 743 00:39:22,719 --> 00:39:26,560 Speaker 1: including the performance that people received being an index finds 744 00:39:26,680 --> 00:39:29,920 Speaker 1: versus picking individual stacks or whatever. Yeah, it does include 745 00:39:29,960 --> 00:39:33,399 Speaker 1: the actual better performance over that period, and it does 746 00:39:33,480 --> 00:39:36,680 Speaker 1: include the indirect fee savings as well, which you know 747 00:39:36,760 --> 00:39:39,480 Speaker 1: will be in order of magnitude greater than that. So 748 00:39:39,719 --> 00:39:41,720 Speaker 1: you know, and there's reason why I wrote a type 749 00:39:41,719 --> 00:39:45,360 Speaker 1: book about something so kind of too many euries obscure, 750 00:39:45,680 --> 00:39:47,439 Speaker 1: Like I generally think this is one of the most 751 00:39:47,440 --> 00:39:52,440 Speaker 1: phenomenal innovations inventions in American history of the plast hundred 752 00:39:52,560 --> 00:39:55,279 Speaker 1: years and generally generally came out of the u S 753 00:39:55,320 --> 00:39:57,920 Speaker 1: and they saved people around the world in an immense 754 00:39:57,960 --> 00:40:00,640 Speaker 1: amount of money, whether they appreciate it or not. And 755 00:40:00,719 --> 00:40:02,920 Speaker 1: the people behind it were kind of like these crazy 756 00:40:02,960 --> 00:40:06,080 Speaker 1: little rebels that you know what kind of figuratively spat 757 00:40:06,160 --> 00:40:09,040 Speaker 1: upon in their own time. So that's why I think 758 00:40:09,080 --> 00:40:14,799 Speaker 1: it's such a monumental thing and why I'm glad, you know, 759 00:40:14,840 --> 00:40:16,799 Speaker 1: people are now kind of voting with their feet and 760 00:40:16,800 --> 00:40:19,839 Speaker 1: with the money and embracing that revolution. Yeah, I love. 761 00:40:19,880 --> 00:40:21,920 Speaker 1: I think of like the Vanguard revolution as being kind 762 00:40:21,920 --> 00:40:24,160 Speaker 1: of similar to the Audi Revolution because like when Audi 763 00:40:24,200 --> 00:40:27,400 Speaker 1: moves into a neighborhood, it doesn't just bring lower prices 764 00:40:27,440 --> 00:40:29,320 Speaker 1: at the Aldi. All the other grocery stores have to 765 00:40:29,360 --> 00:40:32,279 Speaker 1: react accordingly. They're like they're they're put on watch. Now 766 00:40:32,520 --> 00:40:34,880 Speaker 1: they've got a lower their prices just to compete, just 767 00:40:34,920 --> 00:40:37,279 Speaker 1: to just stay competitive in the market. You can even 768 00:40:37,280 --> 00:40:41,560 Speaker 1: call it the frontier or the spirit something like that, exactly. Yeah, 769 00:40:41,680 --> 00:40:45,160 Speaker 1: they drive down this cost other companies that have similar impact. 770 00:40:45,360 --> 00:40:47,920 Speaker 1: Well I'm curious Robin too, like what in your estimation, 771 00:40:47,960 --> 00:40:51,040 Speaker 1: what's the future for index funds, because there's a lot 772 00:40:51,080 --> 00:40:53,040 Speaker 1: of talk about you know, we talked about the different 773 00:40:53,120 --> 00:40:55,520 Speaker 1: kinds of index funds. Well, people are talking about socially 774 00:40:55,560 --> 00:40:59,279 Speaker 1: responsible index funds, and some people are pointing to direct indexing, 775 00:40:59,320 --> 00:41:01,840 Speaker 1: which is like in acting with some customization built in, 776 00:41:02,239 --> 00:41:04,520 Speaker 1: as something we're going to see more in the future. So, yeah, 777 00:41:04,520 --> 00:41:07,919 Speaker 1: what are your thoughts on where index funds are headed. Yeah, 778 00:41:07,960 --> 00:41:10,200 Speaker 1: I'm on the on the E s G or socially 779 00:41:10,320 --> 00:41:13,600 Speaker 1: responsible or green or frankly even some of these anti 780 00:41:13,640 --> 00:41:16,000 Speaker 1: woke index funds we've even seen today. I think that's 781 00:41:16,040 --> 00:41:18,520 Speaker 1: kind of an extension more reflection of what we see 782 00:41:18,560 --> 00:41:21,480 Speaker 1: in in the world and that you know, the world 783 00:41:21,560 --> 00:41:24,800 Speaker 1: is getting increasingly polarized and people seem to want every 784 00:41:24,800 --> 00:41:28,439 Speaker 1: single decision in their life to reflect their personal values. Uh. 785 00:41:28,480 --> 00:41:30,920 Speaker 1: And you know, if there's money being made out of it, 786 00:41:31,000 --> 00:41:35,000 Speaker 1: somebody's going to salue something that is pro woke, anti woke, 787 00:41:35,160 --> 00:41:38,719 Speaker 1: whatever way, whatever flav do you want. It's that both 788 00:41:38,840 --> 00:41:41,480 Speaker 1: the miracle and the curse of capitalism that if somebody, 789 00:41:41,480 --> 00:41:45,160 Speaker 1: if there's demand, somebody's going to fill it um on 790 00:41:45,320 --> 00:41:48,000 Speaker 1: direct index thing. I mean, that's fascinating and I do 791 00:41:48,080 --> 00:41:52,680 Speaker 1: think that's going to grow a far out and this today, 792 00:41:52,719 --> 00:41:56,040 Speaker 1: but I don't think it's ever going to become the 793 00:41:56,160 --> 00:41:58,760 Speaker 1: indexing three point oh that some people seem to think 794 00:42:00,120 --> 00:42:02,719 Speaker 1: with the first index fund revolution being the one point 795 00:42:03,000 --> 00:42:05,000 Speaker 1: was the first index fund in the seventies and then 796 00:42:05,040 --> 00:42:08,359 Speaker 1: since then, the advent of e t f s I 797 00:42:08,400 --> 00:42:11,080 Speaker 1: think is commingtee. I think of his index fund revolution 798 00:42:11,120 --> 00:42:16,000 Speaker 1: to pot indirect index in frankly, most people can't be bothered. 799 00:42:16,280 --> 00:42:18,000 Speaker 1: Like I say, most people want a simple life if 800 00:42:18,000 --> 00:42:20,520 Speaker 1: they don't want to overthink it. And at some point 801 00:42:21,360 --> 00:42:23,160 Speaker 1: one thing is let's say if you're if you work 802 00:42:23,160 --> 00:42:25,440 Speaker 1: at Apple and you want to buy an SP five 803 00:42:25,520 --> 00:42:26,919 Speaker 1: on an index fund, but you don't want to double 804 00:42:27,000 --> 00:42:30,319 Speaker 1: up economic exposure to Apple because you work there and 805 00:42:30,600 --> 00:42:32,080 Speaker 1: you invest there and it's the biggest holding on the 806 00:42:32,200 --> 00:42:36,480 Speaker 1: SP it might make sense to have an SP minus Apple, 807 00:42:36,560 --> 00:42:41,160 Speaker 1: for example. Or maybe American Airlines lost your luggage someday 808 00:42:41,480 --> 00:42:45,120 Speaker 1: and you hate them forever, so use like, screw American Airlines. 809 00:42:45,200 --> 00:42:48,600 Speaker 1: I'm never investing in their stock. Um. But in reality, 810 00:42:48,680 --> 00:42:51,279 Speaker 1: most people don't want to do that, and frankly, I 811 00:42:51,280 --> 00:42:54,720 Speaker 1: think they probably shouldn't either, because the more you start 812 00:42:54,800 --> 00:42:57,480 Speaker 1: fiddling around with it, at some point it does really 813 00:42:57,960 --> 00:43:01,120 Speaker 1: you start making the same miss card all mistakes that 814 00:43:01,160 --> 00:43:05,080 Speaker 1: people made through history thinking they can outguess the overall market. 815 00:43:05,680 --> 00:43:08,080 Speaker 1: So I think that's gonna have. It's going to grow, 816 00:43:08,680 --> 00:43:11,799 Speaker 1: it's gonna be a multi trillion dollar industry, but it's 817 00:43:11,800 --> 00:43:15,800 Speaker 1: still going to be like reached the index fund revolution, 818 00:43:15,840 --> 00:43:18,440 Speaker 1: that broad passive revolution up to its knees and never 819 00:43:18,480 --> 00:43:20,920 Speaker 1: more than that. And I think the passive siety is 820 00:43:20,960 --> 00:43:24,480 Speaker 1: just going to grow and grow and grow until Frankie, 821 00:43:25,160 --> 00:43:28,960 Speaker 1: it's not just over half of the equity market, which 822 00:43:28,960 --> 00:43:31,960 Speaker 1: will probably happen over the next decades two decades or so, 823 00:43:32,280 --> 00:43:34,000 Speaker 1: but it's also going to take over the bond market, 824 00:43:35,080 --> 00:43:38,680 Speaker 1: which is the next big frontier for passive investing. And 825 00:43:38,719 --> 00:43:40,319 Speaker 1: it makes sense. I mean, like, like you said, what 826 00:43:40,360 --> 00:43:43,200 Speaker 1: folks are looking for is something that's easy, right, and 827 00:43:43,360 --> 00:43:46,200 Speaker 1: if they can find a shortcut, if there's a way 828 00:43:46,200 --> 00:43:49,120 Speaker 1: for them to do the right thing with the vast 829 00:43:49,160 --> 00:43:51,239 Speaker 1: majority of the money without having to think hard about it, 830 00:43:51,320 --> 00:43:53,279 Speaker 1: that's what they're gonna what they're gonna go after. And 831 00:43:53,320 --> 00:43:54,920 Speaker 1: like you said, once you start fiddling with it, you 832 00:43:55,160 --> 00:43:56,839 Speaker 1: make the same mistakes that you make if you are 833 00:43:57,120 --> 00:44:00,400 Speaker 1: investing in single stocks. You are letting a certain headline 834 00:44:00,480 --> 00:44:02,759 Speaker 1: or what somebody told you on the street, or your 835 00:44:02,800 --> 00:44:06,680 Speaker 1: own emotions, your personal experiences just anger what you are 836 00:44:06,719 --> 00:44:09,520 Speaker 1: investing in. But ultimately that's probably not going to be 837 00:44:09,560 --> 00:44:11,680 Speaker 1: in your best interests. And you know, over over the 838 00:44:11,719 --> 00:44:14,920 Speaker 1: long haul, yeah, for sure, and index funds clearly have 839 00:44:15,040 --> 00:44:18,279 Speaker 1: had a major impact on our society, especially especially when 840 00:44:18,280 --> 00:44:21,640 Speaker 1: we're talking about just the an average person, right, the 841 00:44:21,719 --> 00:44:24,319 Speaker 1: kind of person who listens to a show like How 842 00:44:24,360 --> 00:44:27,120 Speaker 1: the Money, who's like, I need the simple solution, the 843 00:44:27,120 --> 00:44:30,520 Speaker 1: most complex thing isn't necessarily what I want, and and 844 00:44:30,640 --> 00:44:33,879 Speaker 1: it turns out it's not even what's best for me exactly. Robin, 845 00:44:33,920 --> 00:44:36,040 Speaker 1: thank you so much for joining us. Will certainly certainly 846 00:44:36,040 --> 00:44:39,279 Speaker 1: linked to your book Trillions in our show notes. Thanks 847 00:44:39,280 --> 00:44:41,520 Speaker 1: so much for coming on. No, thanks, Joel, thanks Matt 848 00:44:41,520 --> 00:44:44,160 Speaker 1: for inviting me. It's been a lot of fun, alright, Joel. 849 00:44:44,400 --> 00:44:47,120 Speaker 1: You know, it's just fun to kind of dive into this. Honestly, 850 00:44:47,120 --> 00:44:49,640 Speaker 1: this makes me think of our episode with Jacob Goldstein 851 00:44:49,680 --> 00:44:51,960 Speaker 1: where we dove into the history of money, just like 852 00:44:52,000 --> 00:44:54,640 Speaker 1: the concept of money as uh in and of itself. 853 00:44:54,920 --> 00:44:56,799 Speaker 1: But yeah, it's fun to get a little nerdy with it. 854 00:44:56,800 --> 00:44:59,719 Speaker 1: It's fun to dive in deep, and in particular to 855 00:44:59,800 --> 00:45:01,640 Speaker 1: learn the history of something like this that we talk 856 00:45:01,719 --> 00:45:04,760 Speaker 1: about that we recommend so often a little less practical, 857 00:45:04,800 --> 00:45:08,000 Speaker 1: a little more storytelling, which I thought was enjoyable. And 858 00:45:08,000 --> 00:45:09,800 Speaker 1: and you know, we are how to money, so typically 859 00:45:09,840 --> 00:45:11,880 Speaker 1: we want to talk as much as you can about 860 00:45:11,880 --> 00:45:14,799 Speaker 1: the practicalities, but when it comes to something as influential 861 00:45:14,800 --> 00:45:17,240 Speaker 1: as Index Funds, when this book kind of came across 862 00:45:17,280 --> 00:45:19,840 Speaker 1: our proverbial desk, we were like, we gotta check we 863 00:45:19,840 --> 00:45:21,840 Speaker 1: gotta check check this out, We gotta chat with probably, 864 00:45:22,000 --> 00:45:23,960 Speaker 1: But yeah, what was your You have a big takeaway 865 00:45:23,960 --> 00:45:27,320 Speaker 1: from this episode? So tough, but I would say probably. 866 00:45:27,320 --> 00:45:30,360 Speaker 1: My My big takeaway was when he said diversification is 867 00:45:30,360 --> 00:45:34,000 Speaker 1: the only free lunch in finance. And you know, from 868 00:45:34,040 --> 00:45:36,960 Speaker 1: out there with all their many, so many scam attempts 869 00:45:37,000 --> 00:45:39,440 Speaker 1: and so many steak dinners where people are trying to 870 00:45:39,480 --> 00:45:41,279 Speaker 1: sell you something and it sort of looks like you're 871 00:45:41,280 --> 00:45:43,399 Speaker 1: getting some for free, but really they're trying to pull 872 00:45:43,440 --> 00:45:45,640 Speaker 1: the wool over your eyes. The reality is there isn't 873 00:45:45,680 --> 00:45:47,759 Speaker 1: a free lunch, just like your parents taught you growing up, 874 00:45:48,120 --> 00:45:53,560 Speaker 1: and yet diversification provides one of the only free lunches 875 00:45:53,840 --> 00:45:56,400 Speaker 1: I know of in existence, allowing you. That's why we 876 00:45:56,400 --> 00:45:58,520 Speaker 1: talked so much about any next funds and buying the 877 00:45:58,560 --> 00:46:00,680 Speaker 1: market as a whole. Uh, you never know what's going 878 00:46:00,719 --> 00:46:03,040 Speaker 1: to happen with a particular company, and you might have 879 00:46:03,200 --> 00:46:07,120 Speaker 1: the utmost faith in the future of electric cars. But 880 00:46:07,200 --> 00:46:08,759 Speaker 1: you don't know whether Ribby and is going to be 881 00:46:09,080 --> 00:46:11,600 Speaker 1: the success story or whether it's going to be Ford 882 00:46:11,600 --> 00:46:13,719 Speaker 1: who pulls into the lead quickly. And there are so 883 00:46:13,760 --> 00:46:16,839 Speaker 1: many other individual little things that can go wrong with 884 00:46:16,920 --> 00:46:19,680 Speaker 1: a company, whether it's a celebrity partnership. I mean, there's 885 00:46:19,680 --> 00:46:21,800 Speaker 1: a billion things you can point to that can sink 886 00:46:21,800 --> 00:46:25,600 Speaker 1: a ship. And so when you're talking about investing, diversification, 887 00:46:25,640 --> 00:46:28,719 Speaker 1: really is the only free lunch that that I know of, 888 00:46:28,920 --> 00:46:31,200 Speaker 1: And really the cherry on top is you don't really 889 00:46:31,239 --> 00:46:33,400 Speaker 1: have to think very hard about it. It's the cheapest 890 00:46:33,400 --> 00:46:35,960 Speaker 1: and simplest way to go about it as well. Totally. Yeah, 891 00:46:35,960 --> 00:46:38,360 Speaker 1: I couldn't agree more and so I do. Okay, So 892 00:46:38,400 --> 00:46:39,920 Speaker 1: I think my my big takeaway is going to be 893 00:46:39,960 --> 00:46:43,040 Speaker 1: the fact that he kind of before he said, before 894 00:46:43,040 --> 00:46:44,120 Speaker 1: he even said it, he was just like, this is 895 00:46:44,120 --> 00:46:46,000 Speaker 1: probably this is like the glib answer or whatever. But 896 00:46:46,040 --> 00:46:50,239 Speaker 1: the fact that people are so stink and optimistic that 897 00:46:50,320 --> 00:46:54,040 Speaker 1: hope springs eternal. That is why there are folks out 898 00:46:54,080 --> 00:46:56,719 Speaker 1: there who are trying to beat the market, whether it's 899 00:46:56,840 --> 00:46:59,239 Speaker 1: on their own and buying individuals talks, or whether it's 900 00:46:59,440 --> 00:47:03,839 Speaker 1: paying a memium for a rock star hedge fund, investor 901 00:47:03,880 --> 00:47:07,799 Speaker 1: money manager, somebody out there who is promising those higher returns. Yeah, 902 00:47:07,800 --> 00:47:09,439 Speaker 1: a lot of people doing that twelve to eighteen months 903 00:47:09,440 --> 00:47:11,799 Speaker 1: ago on their own robin Hood apps on their phones 904 00:47:11,880 --> 00:47:14,439 Speaker 1: and and if and it felt like everybody could do it, right. 905 00:47:14,719 --> 00:47:16,719 Speaker 1: But again, kind of going to one of the things 906 00:47:16,719 --> 00:47:18,799 Speaker 1: he was he was pointing at, is that, like, I mean, 907 00:47:18,840 --> 00:47:20,359 Speaker 1: and I think this is true too. This, I mean, 908 00:47:20,400 --> 00:47:21,880 Speaker 1: I think it's part of the reason we brought it up. 909 00:47:21,880 --> 00:47:24,279 Speaker 1: But it seems that markets are becoming more and more 910 00:47:24,320 --> 00:47:27,000 Speaker 1: efficient with all the data that is accessible to everyone. 911 00:47:27,200 --> 00:47:29,040 Speaker 1: And so when you think you have an edge, when 912 00:47:29,080 --> 00:47:30,640 Speaker 1: you think that you have some sort of inside track, 913 00:47:30,880 --> 00:47:33,080 Speaker 1: it's likely that you don't, right, because if it's something 914 00:47:33,080 --> 00:47:34,960 Speaker 1: that you have access to, if it's something if it's 915 00:47:34,960 --> 00:47:37,239 Speaker 1: an app that somebody told you about that we're like, Hey, 916 00:47:37,280 --> 00:47:39,600 Speaker 1: all you gotta do is wait for the notifications from 917 00:47:39,600 --> 00:47:41,360 Speaker 1: these guys, and whenever they say to buy whatever, you 918 00:47:41,440 --> 00:47:43,520 Speaker 1: just buy that. Well, if it's available to you, it's 919 00:47:43,560 --> 00:47:46,279 Speaker 1: it's available to everybody. And I just think that that's 920 00:47:46,320 --> 00:47:49,800 Speaker 1: another argument for index funds, that's another argument for instead 921 00:47:49,800 --> 00:47:52,520 Speaker 1: of buying the individual stocks out there, buying the entire 922 00:47:52,640 --> 00:47:55,319 Speaker 1: basket of companies. It will save you a lot of 923 00:47:55,400 --> 00:47:57,640 Speaker 1: time and I think heartache as well. Yeah, I'm not 924 00:47:57,640 --> 00:48:00,200 Speaker 1: sure if you saw the video of Dave port Knowing, 925 00:48:00,280 --> 00:48:04,359 Speaker 1: CEO of Barstool Sports, like somebody put together a bunch 926 00:48:04,400 --> 00:48:06,839 Speaker 1: of clips one on the run up when the stock 927 00:48:06,840 --> 00:48:08,800 Speaker 1: market was hot, and he was like, I think he 928 00:48:08,800 --> 00:48:11,120 Speaker 1: would call himself like day trading Dave or something like that, 929 00:48:11,400 --> 00:48:13,279 Speaker 1: and he was he was crushing it, and he was 930 00:48:13,320 --> 00:48:15,000 Speaker 1: talking about how easy it is to make money in 931 00:48:15,040 --> 00:48:18,920 Speaker 1: the market. And then they simultaneously showed a bunch of 932 00:48:18,920 --> 00:48:22,239 Speaker 1: clips as through the first like seven or eight months 933 00:48:22,239 --> 00:48:24,719 Speaker 1: of this year when the market is like not doing 934 00:48:24,760 --> 00:48:26,880 Speaker 1: so hot, and Dave's losing a lot of money and 935 00:48:26,880 --> 00:48:29,399 Speaker 1: he's just like so frustrated and he's like, I don't 936 00:48:29,400 --> 00:48:31,799 Speaker 1: I don't even know how to do this anymore. What happened? Yeah, 937 00:48:31,840 --> 00:48:33,719 Speaker 1: And so the market can make you look brilliant, like 938 00:48:33,840 --> 00:48:35,880 Speaker 1: a bowl. Market can make you look smart, or at 939 00:48:35,960 --> 00:48:37,759 Speaker 1: least make you think you're smart, and then a bear 940 00:48:37,840 --> 00:48:40,520 Speaker 1: market can take it away just as quickly. So I 941 00:48:40,560 --> 00:48:42,520 Speaker 1: don't we shouldpposed to a link to that video because 942 00:48:42,560 --> 00:48:45,680 Speaker 1: it just shows how emotional a ride it can be 943 00:48:45,920 --> 00:48:48,680 Speaker 1: and how a lot of folks they have that optimism 944 00:48:48,719 --> 00:48:50,640 Speaker 1: like I can do it and it's it's not too hard. 945 00:48:50,920 --> 00:48:53,640 Speaker 1: But the truth is, index funds, like the numbers don't lie. 946 00:48:53,680 --> 00:48:55,560 Speaker 1: Index funds have saved people a lot of money and 947 00:48:55,600 --> 00:48:57,839 Speaker 1: they've outperformed the vast majority of people who think they 948 00:48:57,880 --> 00:48:59,960 Speaker 1: know what they're doing as well. That's right, man, All right, 949 00:49:00,040 --> 00:49:01,880 Speaker 1: Let's get to the beer that you and I enjoyed 950 00:49:01,920 --> 00:49:04,719 Speaker 1: during this episode. This was another one from our buddy Andy. 951 00:49:04,840 --> 00:49:07,239 Speaker 1: And have you pronounced the name of this brewery? Is 952 00:49:07,239 --> 00:49:10,200 Speaker 1: it Shades or is it Shady's, Like I think Hades, 953 00:49:11,040 --> 00:49:13,320 Speaker 1: good question, I'm gonna go Shades. Okay, we'll go Shades. 954 00:49:13,560 --> 00:49:15,600 Speaker 1: And this is Coveigue one, which is an American style 955 00:49:15,960 --> 00:49:18,120 Speaker 1: golden sour ale. What are your thoughts on this one? Yeah, 956 00:49:18,160 --> 00:49:20,960 Speaker 1: well I liked it. And this one was was dry hops. 957 00:49:21,040 --> 00:49:23,400 Speaker 1: Was this combo of like, it's got some hoppy vibes, 958 00:49:23,440 --> 00:49:25,680 Speaker 1: it's got sour stuff going on and had a nice 959 00:49:25,719 --> 00:49:28,320 Speaker 1: amount of zip. Yeah. We brought a smile to my face. 960 00:49:28,400 --> 00:49:31,400 Speaker 1: And this was I like this style because you and 961 00:49:31,440 --> 00:49:34,759 Speaker 1: I we both like golden sours, but especially toss some 962 00:49:34,920 --> 00:49:38,520 Speaker 1: hops in there. It's like a really interesting flavor profile 963 00:49:38,800 --> 00:49:41,759 Speaker 1: and it's one that not many people attempt. So and 964 00:49:41,760 --> 00:49:43,319 Speaker 1: and this one was also well done, Like it was 965 00:49:43,640 --> 00:49:45,839 Speaker 1: a really good example of this style that very few 966 00:49:45,840 --> 00:49:48,279 Speaker 1: people grew. So I dug it, totally dig it as well. Yeah, 967 00:49:48,280 --> 00:49:51,400 Speaker 1: it's really good. It almost has there are some sours 968 00:49:51,400 --> 00:49:52,960 Speaker 1: that we've had that all this way, but it almost 969 00:49:53,000 --> 00:49:55,279 Speaker 1: has that sauer Kraut like flavor, you know. It's it's 970 00:49:55,280 --> 00:49:56,960 Speaker 1: pretty acidic, but it also kind of has like a 971 00:49:56,960 --> 00:49:59,640 Speaker 1: little bit of funk um going on with it as well. 972 00:49:59,680 --> 00:50:01,840 Speaker 1: But yeah, it was really tasty. And I'm glad you 973 00:50:01,840 --> 00:50:04,560 Speaker 1: and I were able to enjoy these during the episode today. 974 00:50:04,840 --> 00:50:07,279 Speaker 1: But that's gonna do it for this episode. Listeners can 975 00:50:07,280 --> 00:50:09,239 Speaker 1: find our show notes up on the website at how 976 00:50:09,239 --> 00:50:11,200 Speaker 1: to money dot com, and we will make sure to 977 00:50:11,480 --> 00:50:14,080 Speaker 1: link to any of the resources we mentioned. Specifically, will 978 00:50:14,080 --> 00:50:16,919 Speaker 1: make sure to link to trillions Robin's book. We'll also 979 00:50:17,000 --> 00:50:19,200 Speaker 1: linked to our favorite and next ones, and maybe we'll 980 00:50:19,200 --> 00:50:22,440 Speaker 1: also link to the video that you mentioned. We'll get 981 00:50:22,440 --> 00:50:25,040 Speaker 1: that day Portnoy video up. It is. It's it's magical, 982 00:50:25,120 --> 00:50:27,160 Speaker 1: it's funny. I love it. But that's gonna be it 983 00:50:27,200 --> 00:50:29,440 Speaker 1: for this episode Buddy until next time. Best friends out, 984 00:50:29,520 --> 00:50:30,799 Speaker 1: best friends out,