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

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Speaker 1: Blueberg Radio. This week on the podcast, I have an

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Speaker 1: extra extra special guest. It's the return of Jack Brennan.

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Speaker 1: He is the former CEO and chairman of the Vanguard Group.

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Speaker 1: And what can I tell you? This is just a

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Speaker 1: tourtive force about rational investing strategies, behavior psychology. There are

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Speaker 1: a few people in the world who have Brennan's depth

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Speaker 1: of experience and perspective. Not just because he worked with

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Speaker 1: Jack Bogel for dozens of years and was Bogel's handpicked

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Speaker 1: successor to run the Vanguard Group, but he's done a

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Speaker 1: variety of other things. He's on all sorts of other boards.

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Speaker 1: He sees the world of investing and business and finance

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Speaker 1: um from a three D and sixty re perspective. I

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Speaker 1: find him not only just fascinating and intelligent and sincere,

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Speaker 1: but really one of the few people who has that

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Speaker 1: full view of everything. His perspectives, his opinions are very

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Speaker 1: well informed and and really matter a great deal. I

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Speaker 1: found this to be a fascinating conversation and I think

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Speaker 1: you will also so. With no further ado, the former

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Speaker 1: chairman and CEO of the Vanguard Group. Jack Brennan. This

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Speaker 1: is Mesters in Business with Very Renorts on Bluebird Radio.

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Speaker 1: HI extra special guest is Jack Brennan. He was the

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Speaker 1: CEO and chairman of the Vanguard Group from two thousand

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Speaker 1: and eight. He is currently chairman of Notre Dame's Board

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Speaker 1: of Trustees, as well as being on a variety of

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Speaker 1: other boards. He is the author of a new book,

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Speaker 1: More Straight Talk on investing Lessons for a Lifetime. Jack

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Speaker 1: and in Welcome back to Bloomberg, Great Meridi, Very good

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Speaker 1: to have you back. I recall our last conversation was

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Speaker 1: quite fascinating a couple of years ago. But for people

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Speaker 1: who may have missed it, let's let's just spend a

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Speaker 1: few minutes going over your history. You joined Vanguard in

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Speaker 1: serving as the company's president alongside Jack Bogel, the founder

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Speaker 1: and CEO of Vanguard. Tell us a little bit what

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Speaker 1: it was like in the eighties and what it was

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Speaker 1: like working with a legend like Jack Bogel. Well, it

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Speaker 1: was a gift to be hired by Jack Bogel and

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Speaker 1: to join Vanguard when I did. Bangard was a quite

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Speaker 1: small place for point four billion dollars in assets undermanagement.

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Speaker 1: The industry is you might recall back in eighty two

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Speaker 1: was driven mostly by money market funds. You know, at

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Speaker 1: Socks hadn't done much for a long time. Bonds had

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Speaker 1: been terrible because we were in the stagflation. You're coming

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Speaker 1: out of it. But the chance to work side by

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Speaker 1: side with someone like Jack, we've been in the business

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Speaker 1: since the day graduated from Princeton in nineteen fifty one,

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Speaker 1: was extraordinary. You know, we had lunch together nearly every

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Speaker 1: day when I was in town over thirteen plus years.

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Speaker 1: I learned a ton of stuff from him in so

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Speaker 1: many ways, as did the whole team of us that

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Speaker 1: we're part of the early days of the growth phase

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Speaker 1: of Angard from eighty two as the markets turned around

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Speaker 1: and it turned into be a pretty good business today.

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Speaker 1: We had a lot of fun, went through a lots

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Speaker 1: of business challenges, many of which were challenges of success.

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Speaker 1: How do you keep a place together as you grow

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Speaker 1: at a percent some years? Uh, and that you know

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Speaker 1: compounded for all those years we also went through on

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Speaker 1: the personal side. You know, Jack had a lot of

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Speaker 1: health challenges that you know, I tried to be helpful

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Speaker 1: with and obviously lived with him through those. I had

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Speaker 1: some on my family's side, and those kinds of things

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Speaker 1: bond as well, very in a way that's different than

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Speaker 1: a conventional just a business relationship, and was really another

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Speaker 1: shared experience. So you know, you get lucky sometimes, and

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Speaker 1: joining Vanguard and working with Jack and for Jack was tremendous.

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Speaker 1: Were thinking about that the other day. Actually, just a

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Speaker 1: couple of years ago, you know, Jack and Pat Jack

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Speaker 1: passed away and we had a celebration of life form

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Speaker 1: at Vanguard and I was privileged to kick it off

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Speaker 1: and just hit a four things that are lessons actually

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Speaker 1: maybe for your listeners that really, you know, you think

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Speaker 1: about what Vanguard is today, it was not that when

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Speaker 1: Jack launched in n But four things were consistent and

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Speaker 1: hopefully you're very much still part of the company. And

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Speaker 1: one was just the dedication of the mission of Vanguard

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Speaker 1: those who followed Jack. He was continually on point about client,

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Speaker 1: client clients. The second is passion for competitive success. You know,

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Speaker 1: nobody liked to fight more than Jackie picked one now

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Speaker 1: and then UH to try to get publicity for us

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Speaker 1: and UH and things. But that focus on wanting to

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Speaker 1: win hugely, hugely valuable. The third thing that was remarkable,

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Speaker 1: really to watch and learn from the power of communication,

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Speaker 1: and you know, just consist can see and continual continually

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Speaker 1: promoting in a sense what the message for the company

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Speaker 1: was powerful force and the last thing focus. You know,

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Speaker 1: we'd have people come to us very continually saying issue

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Speaker 1: credit cards, do mortgages, do this, and Jack would always

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Speaker 1: come back and say, now we do one thing pretty well.

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Speaker 1: We've managed package products in the form of mutual funds.

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Speaker 1: Let's just go find people to buy them. So, when

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Speaker 1: Vogel finally stepped down, you were as handpicked successor did

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Speaker 1: you feel the weight of that transition or was he

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Speaker 1: still not quite the legend he eventually became, and it

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Speaker 1: didn't have the same gravitas that perhaps it does today.

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Speaker 1: You know, in some ways, not too much. In some ways,

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Speaker 1: certainly you feel the weight of it. In a sense,

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Speaker 1: not so much. Was you know, We've just been handing

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Speaker 1: gloves together for thirteen years. I've been on the board

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Speaker 1: for nine or something like that, the president for seven

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Speaker 1: or eight, and most of the team that led the

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Speaker 1: company I'd either hired or promoted and mentored along the way.

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Speaker 1: So so the internal aspects of change weren't weren't very

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Speaker 1: great and in that sense, and so it was incredibly smooth.

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Speaker 1: H And frankly, when I've been made the president, the

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Speaker 1: board didn't he had announced that I would take his place,

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Speaker 1: which was a little weird, but um, I think probably

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Speaker 1: helpful in some ways, uh, internally in that regard. But

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Speaker 1: the the other part of it is, um, you know,

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Speaker 1: Jack had been the CEO from sin when this was announced,

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Speaker 1: and I'm the new guide as some slice of the constituencies.

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Speaker 1: And you know, in a sense you have to prove

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Speaker 1: yourself to two people who knew Jack as the face

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Speaker 1: of the company, and we're very different, different ideas around

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Speaker 1: that role. But you feel a way to it. And

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Speaker 1: you know, I don't know any CEO who, irrespective of

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Speaker 1: you know, his or her tenure at a company, who

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Speaker 1: the day they become the scene, oh it. Uh, they

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Speaker 1: don't feel the weight of it. It's a different It's

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Speaker 1: different on day one than it was on day minus

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Speaker 1: one when you become CEO. And that was a surprise

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Speaker 1: to me in some lay. I have to say, I

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Speaker 1: didn't expect it and I felt it. And I can't

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Speaker 1: sold low CEOs continually as they're moving into jobs that

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Speaker 1: they will feel it and of the people say you're right,

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Speaker 1: I get that really interesting. I love this quote you

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Speaker 1: had in Business Week where you said, quote, being famous

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Speaker 1: was never on my agenda unquote. And you tell the

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Speaker 1: story You're coaching your son's soccer team and another player's

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Speaker 1: mom comes up to you and says, I didn't realize

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Speaker 1: you were that Jack Brennan. She thought you were a

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Speaker 1: gym teacher. What was that transition like into the public eye.

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Speaker 1: That was the hardest part of it, because it's just

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Speaker 1: not me. I love having tons of responsibility of bandrad

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Speaker 1: and having nobody know my name. I don't think I

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Speaker 1: was a gym teacher when I was coaching, right, And

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Speaker 1: you take the job, you have to make that change.

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Speaker 1: And you know, I'm a big believer that being the

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Speaker 1: leader is notoriety enough, and that any credit for stuff

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Speaker 1: that happens positively in an organization should go to the team.

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Speaker 1: And he blamed that something that goes awry should you

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Speaker 1: should accept that as the leader. And so it was.

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Speaker 1: It was a challenge and an interesting one, particularly because

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Speaker 1: you will recall, you know, the fund industry was kind

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Speaker 1: of on the sidelines in in finance, if you will.

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Speaker 1: When I started out there, and then we were progressively

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Speaker 1: but by we were very prominent part of the business.

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Speaker 1: And so with all of the industry and and and

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Speaker 1: company responsibilities, you really do have to change and adapt.

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Speaker 1: And it's a growth opportunity for anybody who falls into

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Speaker 1: that role. I think particularly challenged for someone like me

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Speaker 1: who is Anonymity is something that is highly prized, uh,

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Speaker 1: which makes me like an and not comment as I

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Speaker 1: do this thing through this interview with you, but it's

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Speaker 1: it's very much real. That was I would say, hands

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Speaker 1: down the hardest change for me as I took over

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Speaker 1: the as the CEO of the company. That's the beauty

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Speaker 1: of radio. Nobody knows what you look like exactly. So

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Speaker 1: two questions about your leadership period at Vanguard. Tell us

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Speaker 1: what you're most proud of from that period and if

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Speaker 1: you had a mulligan, if you can have a do

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Speaker 1: over for one thing, what what would that? Big? Yeah,

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Speaker 1: I get asked what are you most proud of? Question

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Speaker 1: all the time, Verry, and I think the three things

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Speaker 1: that that matter first and foremost is the team that

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Speaker 1: you've helped put together over time and trig in a

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Speaker 1: rapidly grown company where you know the team almost can't

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Speaker 1: grow quickly enough to keep up with the challenges in

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Speaker 1: the company. But you know, from top to bottom, we

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Speaker 1: were able to attract and help build great careers for

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Speaker 1: people who had a sign on to this quirky mission

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Speaker 1: in a quirky place where you're not public company, you're

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Speaker 1: not private, you're owned by your mutual fund shareholders. But

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Speaker 1: maintaining and enhancing the commitment to that, to our mission

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Speaker 1: and the intense competitive edge and deal in the face

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Speaker 1: of you know what, in many ways is UH remarketable success.

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Speaker 1: That that's a thing that I look back and I

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Speaker 1: look today at Vanguard and see it there and really

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Speaker 1: proud of that tangibly the billions and billions and billions

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Speaker 1: of incremental rewards you delivered to the shareholders because of

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Speaker 1: our structure, because our funds performed well critically important part.

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Speaker 1: And that's that's what you're there for. That's why you

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Speaker 1: put your shoes on every day, um, you know. And

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Speaker 1: then probably the last thing that I always like to

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Speaker 1: highlight is the culture, which you would think would get

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Speaker 1: diluted as it grew in by a hundred and then

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Speaker 1: a thousand times would get diluted. I think the culture

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Speaker 1: got stronger progressively and continues to get stronger around again,

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Speaker 1: the singular focus on the client, and then even more

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Speaker 1: important in many ways, always doing it the right way.

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Speaker 1: So I look at that and say, that's a that's

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Speaker 1: a template if somebody said, you'll be around a long

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Speaker 1: time and you'll feel this good about those three things

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Speaker 1: high on my list of things. As to the Mulligan,

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Speaker 1: I might need a roving a few roving. Mulligan's right

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Speaker 1: in some ways the UH. I once said a relatively

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Speaker 1: new person as officer at Vanguard, I think she was

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Speaker 1: trying to insolve me, and I thought she was complimenting me.

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Speaker 1: She said, I I live in a perpetual state of dissatisfaction,

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Speaker 1: and I think it is a compliment. I could give

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Speaker 1: you a really long list, but I'll give you one

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Speaker 1: thing that I look back and say, we we had

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Speaker 1: it right and didn't do it right, if you will,

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Speaker 1: and that is advice and support for the advice community.

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Speaker 1: You know, Vanguard today is a burgeoning advice business delivering

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Speaker 1: a great product at a great price. And we started

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Speaker 1: in the advice business twenty five years ago. But I

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Speaker 1: wasn't aggressive and I wasn't aggressive enough in saying we

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Speaker 1: should really build this out in a form and fashion,

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Speaker 1: and then as a compliment, be even more aggressive in

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Speaker 1: supporting the advisor community. There was a legacy there. We

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Speaker 1: used to be a load fun group. We became no

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Speaker 1: load and so on. But it was clear to us

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Speaker 1: that advice was going to be a crucial part of

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Speaker 1: the investing future, and very importantly so. And if I

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Speaker 1: look back and say, if there's one thing I would

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Speaker 1: have spent a lot more money, put a lot more

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Speaker 1: energy behind, it's that. And I'm really glad to see

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Speaker 1: the companies doing it on both sides of that. By

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Speaker 1: the way, delivering advice and then supporting advice providers, it's

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Speaker 1: a core, very core part of Anger today. I wish

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Speaker 1: we'd been much more advanced during my time leading a company.

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Speaker 1: Really interesting, let's talk a little bit about your new book.

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Speaker 1: By the way, am I reading this right? The first

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Speaker 1: book was straight talk on investing. Correct. It was because

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Speaker 1: I read that one. You know, it's got to be

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Speaker 1: five years ago when we did our person interview, when

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Speaker 1: I plowed through whatever notes I had from that. Is

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Speaker 1: this an update or is this a brand new book.

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Speaker 1: It's a combination. It's one of the great lessons in

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Speaker 1: redoing and doing another book is the core of the

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Speaker 1: book really hasn't changed, actually, And then there's lots of

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Speaker 1: you think about this person one's book published in two

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Speaker 1: thousand two. So you've got the GFC, you've got the

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Speaker 1: last year, you've got twenty years almost to say how

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Speaker 1: it's the aftermath of the dot com bubble of GFC

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Speaker 1: and what we've been through. And you say, because what

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Speaker 1: we've wrote then withstand the test of time. It's actually

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Speaker 1: it's rarities are enhanced by that test of time. And

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Speaker 1: then there's some other new stuff that we can talk

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Speaker 1: about it. But it's the advent of Ridholds Advisors and

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Speaker 1: Vanguard's advisory services. It's radical decline and cost of investing

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Speaker 1: in twenty years it's stunning, and some other stuff that

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Speaker 1: is important. So it's a combination of new and new

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Speaker 1: and reaffirmation of what was in the private book. Well,

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Speaker 1: some of the basics from the other book is pretty timeless. Homework,

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Speaker 1: good habits, no fads, stay, continue to learn. I mean

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Speaker 1: that's pretty straight talk as it gets. So tell us

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Speaker 1: what motivated that approach. I appreciate the term straight talk.

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Speaker 1: I had one of my colleagues at Vanguard the other

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Speaker 1: day asked me do I enjoy being boring? And uh,

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Speaker 1: and the with with this advice, But you know, um,

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Speaker 1: it's what motivates it is this is the time tested

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Speaker 1: way serious money gets invested successfully. And that might be

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Speaker 1: an endowment at a great university, it may be a

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Speaker 1: pension fund. And this is really targeted at people who

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Speaker 1: are their own personal financial entrepreneurs with their own assets,

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Speaker 1: and they can get help from an advisor, they can

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Speaker 1: do it themselves whatever. But if you look back over

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Speaker 1: decades and decades very in some ways simple approach to investing,

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Speaker 1: as you just highlighted around homework, good habits, avoiding fads

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Speaker 1: is the proven strategy and the problem is it's always

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Speaker 1: challenged right by the new news thing. And so you know,

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Speaker 1: we found, we find that it's important to reaffirm these

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Speaker 1: test them, by the way, and there's unlimited amounts of

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Speaker 1: data as you know, to look and and test them.

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Speaker 1: But you come back to these core principles that define

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Speaker 1: success strategies for any of us, whether an institutional investor

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Speaker 1: in individuals. So that's the that's the motivation of it.

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Speaker 1: And you know, for me personally, it's Uh, I had

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Speaker 1: the privilege of knowing Walter or Morgan who found in

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Speaker 1: Wellington Fund. So I've had live tutorial from Mr Morgan. Jack.

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Speaker 1: Now now I'm the old guy and had hired ends

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Speaker 1: of advisors and advisory firms, have observed millions of investors,

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Speaker 1: and you come back to core character traits that defined success,

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Speaker 1: as you know, and in the end, there's two character

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Speaker 1: traits that matter. One is humility and the other's discipline.

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Speaker 1: And then there's some practices that matter. And if you

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Speaker 1: find that package in yourself or in your advisor or

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Speaker 1: in the firm you hired to manage assets for you,

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Speaker 1: you're going to be successful. And if you don't, the

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Speaker 1: odds are you will not, and you will look jealously

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Speaker 1: at people who followed these old school practices and old

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Speaker 1: school behaviors and have won the game. Really interesting, Let's

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Speaker 1: stick with the idea of character such as humility and

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Speaker 1: discipline and just ask a simple question, why are so

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Speaker 1: many investors quote their own worst enemy unquote? Uh, you

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Speaker 1: know one word and its emotions, right, And whether it's

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Speaker 1: fear agreed, whether it's competitive juices that you're sister in

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Speaker 1: law beta killing in some stocks, whether it's over confidence.

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Speaker 1: Whether it's an institution saying I've got a hustle or

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Speaker 1: I'm going to get fired by an institutional client. It's

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Speaker 1: emotion is an incredible headwind of success in building and

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Speaker 1: maintaining financial security and through the markets. The story that's

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Speaker 1: played out again and again and again over time. And

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Speaker 1: you know, so you need to understand that simple. I

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Speaker 1: will be my own worst enemy unless I take emotion

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Speaker 1: out of the equation. Hard to do. It's easier with experience.

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Speaker 1: But that's a simple answer to it. Verry, Let's stick

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Speaker 1: with the idea of emotion as a valid factor. And

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Speaker 1: I have to ask you one of the things you

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Speaker 1: write about people would be more selective about the financial

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Speaker 1: content they consume. Explain what you mean by that, you know,

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Speaker 1: one of the best things that's happened in my career

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Speaker 1: since the early eighties today is the ability for individuals

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Speaker 1: in particular about all of us too uh learn whether

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Speaker 1: in the early days it was Money magazine and today

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Speaker 1: it's just obviously the ubiquity of information on through online media.

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Speaker 1: It's so different than um than it was a long

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Speaker 1: time ago. The downside of that, it's like everything too

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Speaker 1: much of a good things about and so there's too

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Speaker 1: much information, too readily available, too broadly covered. That it's

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Speaker 1: a distraction, and distractions will lead to other emotions very

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Speaker 1: and that that is the that is I think that

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Speaker 1: the core challenge h and why people really need to say.

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Speaker 1: I find certain writers on Bluebird valuable to me, and

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Speaker 1: I'm going to follow them because they provide me with

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Speaker 1: information I find valuable as an investor. But zigging and

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Speaker 1: bagging from this hot topic to that hot topic, or

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Speaker 1: this influencer to that you know prognosticator is just damaging

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Speaker 1: to your financial well being, and always it has proven

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Speaker 1: to be, and I suspect you'll always will be because

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Speaker 1: you know, this isn't a game, and it's not how

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Speaker 1: the Red Sox do last night, right, Hoyla Red Sox

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Speaker 1: did last night actually matters this year to their chances

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Speaker 1: to make the playoffs. But what happened in the markets

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Speaker 1: today matters to almost nobody who you and I know,

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Speaker 1: because they have long term time horizons, right, and they're

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Speaker 1: not traders managing a book at at a Wall Street firm.

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Speaker 1: There are people thinking about ten and twenty and forty

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Speaker 1: years from now. So what happens today is in significance.

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Speaker 1: So let's continue with that thought. Sometimes bear markets come along,

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Speaker 1: and that seems to be what drives a lot of

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Speaker 1: the sort of hair on fire hand waving in a

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Speaker 1: lot of the media. How should people think about bear markets?

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Speaker 1: How should they prepare for one? And how should they

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Speaker 1: behave during a bear market? So actually, in in uh

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Speaker 1: in more straight talk, we have old chapter on bear

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Speaker 1: markets for a reason, and it's because they're an inevitable

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Speaker 1: part of investing if you're investing over a career, in

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Speaker 1: a four ohn K plan or over a lifetime. So

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Speaker 1: when you recognize they're going to happen, and then your

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Speaker 1: question is is spot on? You say, so, what should

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Speaker 1: we do? Well? One, you should you know, on a

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Speaker 1: strategic basis, know what your risk tolerance is and be

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Speaker 1: prepared for. Then test that risk tolerance against your portfolio structure, diversification,

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Speaker 1: your balance to say, am I gonna be able to

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Speaker 1: sleep at night at the ark? It drops fair question

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Speaker 1: and you should know it. And by the way, if

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Speaker 1: you've only been investing in this century, if you've had

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Speaker 1: a chance to test that, how did you think? What

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Speaker 1: did you think about in October of two thousand eight,

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Speaker 1: what did you think about in March of could you

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Speaker 1: not sleep? Etcetera. So you you understand their reality, you

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Speaker 1: prepare structurally in your portfolio and importantly in your mental preparation.

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Speaker 1: Am I going to react or am I going to

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Speaker 1: assume that? In over my time horizon? This is uh

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Speaker 1: in inevitable, an inevitable thing. But it I'm not going

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Speaker 1: to do anything about it. Um And the answer for

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Speaker 1: most people is doing nothing in a bare market. It

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Speaker 1: really is um because most people have a long term

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Speaker 1: time horizon. I was talking to Tim Buckley, who's the

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Speaker 1: CEO Advance Great CEO of Van Guard uh uh, the

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Speaker 1: other day. He said they calculated that by not pay

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Speaker 1: that King, Vanguard investors saved a trillion dollars trillion dollars.

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Speaker 1: And the difference the important thing that gets back to

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Speaker 1: your question on which you consume from an education standpoint

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Speaker 1: or an information standpoint. Fact, when I started at Vanguard,

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Speaker 1: the activity level with small changes in the stocker bond

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Speaker 1: market was frenhetic today, and Vanguard's just a microcosm of

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Speaker 1: the market. More broadly, serious people generally don't panic, and

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Speaker 1: you don't see that at a Vanguard. I assume it's

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Speaker 1: true at a fidelity and the zero price that you

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Speaker 1: don't see panic where before they had a chance to

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Speaker 1: get experience and educated. My generation of baby boomers would react.

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Speaker 1: So do nothing should be your default option during a

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Speaker 1: bearer market. And if you can dollar cost average down

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Speaker 1: even better, but don't pass. It makes a whole lot

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Speaker 1: of sense. So you wrote the first version of the

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Speaker 1: book about twenty years ago? What made you think, Hey,

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Speaker 1: now is the time to update this? Why bringing into

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Speaker 1: the modern era? And who are you hoping actually reads it?

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Speaker 1: So with respect to the why now, a few things

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Speaker 1: I've been asked a lot over the years. Would you

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Speaker 1: would you do another version of this? And? Uh, frankly,

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Speaker 1: the environment is what props it? And if you know,

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Speaker 1: if you take out last March, um, we've been eleven

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Speaker 1: year bull markets. The headlines are you read the headlines

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Speaker 1: about investing and and it's uh, speculation is very prominent. Again,

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Speaker 1: Um the headlines or somebody made a lot of money

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Speaker 1: on game stoff? You don't read a lot about those

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Speaker 1: who get killed and so on and so forth. You're

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Speaker 1: trading is the new thing you can Oh, I saw

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Speaker 1: an ad on TV. You can start a trading account

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Speaker 1: at one firm with as little as five dollars, I

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Speaker 1: must fell out of my chair. So it was catalyst

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Speaker 1: to say, you know what, it feels a lot like

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Speaker 1: when I started writing the first book was just after

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Speaker 1: the as back bubble, but lots of lessons to affirm there,

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Speaker 1: and this one felt like it felt like a good

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Speaker 1: time to do it, so I literally started it right

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Speaker 1: around Frankly, when you may quite pressing call that's said

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Speaker 1: don't assumeable market is over because of the pandemic is

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Speaker 1: right around then we started working on this. The other

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Speaker 1: important part of it, frankly is um uh, A bunch

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Speaker 1: of changed. Importantly that's made this to be a fantastic

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Speaker 1: time to be an investor. You know, give you just

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Speaker 1: give you two examples. One, the advent of the variety

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Speaker 1: of advice choices today at different price points is staggering.

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Speaker 1: It's fantastic. You know, you can buy a robo advice,

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Speaker 1: you get a advice from a robo advisor, a robo

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Speaker 1: advisor plus the human being, or you can have of

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Speaker 1: a wealth manager in a family office and everything in between.

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Speaker 1: But it's all much lower cost than it was twenty

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Speaker 1: years ago. And frankly, there's this whole cohort of people

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Speaker 1: baby boomers who really my own view is need to

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Speaker 1: make a conscious decision to do it yourself in retirement

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Speaker 1: or or find an advisor. And today you can do

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Speaker 1: that in the variety of ways. It's a fantastic thing.

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Speaker 1: We provide advice in the book about how to do

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Speaker 1: that best. The second thing is, um, you know, even

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Speaker 1: twenty years ago, Vanguard was a bit of an anomaly

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Speaker 1: around cost and we preached it and it was a

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Speaker 1: very it's a very important part of the culture. But

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Speaker 1: if you look at the cost of investing, total cost

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Speaker 1: of ownership, if you will, for individuals today, and how

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Speaker 1: it's changed in twenty years, it frees you up with

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Speaker 1: lots of different ways you can think about investing. You know,

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Speaker 1: obvious one being uts and how important they are, how

430
00:25:58,400 --> 00:26:03,639
Speaker 1: low cost tax efficients, so lots had changed. The market said, um,

431
00:26:04,640 --> 00:26:08,159
Speaker 1: you know, it's pretty frenzied, and it's not the market necessarily,

432
00:26:08,240 --> 00:26:11,600
Speaker 1: but the chatter around the market. Um. So it felt

433
00:26:11,640 --> 00:26:14,040
Speaker 1: like a good time to do it. First book. I

434
00:26:14,640 --> 00:26:16,879
Speaker 1: wrote in the foreword that I was writing it for

435
00:26:17,000 --> 00:26:20,120
Speaker 1: my kids who were in their late teens early twenties. UM,

436
00:26:20,920 --> 00:26:23,920
Speaker 1: and I hope that they and their cohorts would get

437
00:26:24,000 --> 00:26:27,919
Speaker 1: something from this. Interesting part is how many people now

438
00:26:28,040 --> 00:26:30,760
Speaker 1: my age shoes that this is just what I needed

439
00:26:30,920 --> 00:26:34,920
Speaker 1: because it helps me think about my future in a

440
00:26:35,040 --> 00:26:38,240
Speaker 1: different stage in life. Frank, I hope it's the same

441
00:26:38,400 --> 00:26:41,560
Speaker 1: Calgary that that gets some value out of this book

442
00:26:41,560 --> 00:26:45,160
Speaker 1: as well, people who are emerging investors and then people

443
00:26:45,280 --> 00:26:47,720
Speaker 1: who look and earn a veteran and say, let's go back,

444
00:26:47,800 --> 00:26:50,399
Speaker 1: let me go back and test how I think about

445
00:26:50,520 --> 00:26:54,200
Speaker 1: things against this template. Not saying that this is you know,

446
00:26:54,320 --> 00:26:57,840
Speaker 1: this is true. This is uh, my experience based on

447
00:26:58,000 --> 00:27:02,640
Speaker 1: lots of exposure to people. But I hope it's kind

448
00:27:02,640 --> 00:27:05,520
Speaker 1: of hits both those cohorts. The last book that we

449
00:27:06,080 --> 00:27:08,359
Speaker 1: we still get request from people in other countries to

450
00:27:08,960 --> 00:27:13,000
Speaker 1: translate the first book, and uh so we've deferred them

451
00:27:13,040 --> 00:27:15,840
Speaker 1: a bit and we'll have them, uh and we'll we'll

452
00:27:15,880 --> 00:27:18,600
Speaker 1: get them big translate this one. Let's talk a little

453
00:27:18,600 --> 00:27:21,359
Speaker 1: bit about some of the lessons you've learned as it

454
00:27:21,440 --> 00:27:28,200
Speaker 1: applied to which was clearly a crazy year between the

455
00:27:28,359 --> 00:27:32,600
Speaker 1: rise of robin Hood and Game Stop and all sorts

456
00:27:32,680 --> 00:27:36,000
Speaker 1: of manias. What do you make of the rise of

457
00:27:36,119 --> 00:27:39,639
Speaker 1: the retail investors? Have they learned the wrong lessons in

458
00:27:40,760 --> 00:27:44,280
Speaker 1: or is this just board gambling and when things go

459
00:27:44,359 --> 00:27:49,119
Speaker 1: back to normal, their investment posture will go back to normal.

460
00:27:49,760 --> 00:27:52,320
Speaker 1: So my own view is it's just another cycle. Uh,

461
00:27:52,520 --> 00:27:55,920
Speaker 1: you know that has is no different than you know,

462
00:27:55,960 --> 00:27:58,439
Speaker 1: when discount broke breage came in in the late eighties,

463
00:27:58,480 --> 00:28:00,119
Speaker 1: in the late eighties and the at a and was

464
00:28:00,160 --> 00:28:02,639
Speaker 1: a bowl market and oh boy, I can change trade

465
00:28:02,720 --> 00:28:06,200
Speaker 1: chiefly now right, Um, you know, it was the dot

466
00:28:06,280 --> 00:28:09,119
Speaker 1: com phenomenon. At the end of the twentieth century, it

467
00:28:09,200 --> 00:28:12,800
Speaker 1: was house flipping, right, they were tall and U two

468
00:28:12,880 --> 00:28:16,919
Speaker 1: thousand six seven. So all of these things are high profile.

469
00:28:17,880 --> 00:28:20,840
Speaker 1: I would call them fads, not substantism in terms of

470
00:28:22,400 --> 00:28:26,520
Speaker 1: fundamental changes in the way people should think about or

471
00:28:26,920 --> 00:28:30,280
Speaker 1: you know, will think about once they get to once

472
00:28:30,359 --> 00:28:34,440
Speaker 1: they realize that investing is not a game, Frankie, trading

473
00:28:34,680 --> 00:28:37,399
Speaker 1: is not investing. There there's a business called trading, but

474
00:28:37,520 --> 00:28:39,720
Speaker 1: it has nothing to do with investing in that sense.

475
00:28:39,880 --> 00:28:44,080
Speaker 1: So I think it's cyclical. Um, it makes great headlines.

476
00:28:45,000 --> 00:28:48,280
Speaker 1: It inevitably makes for great hard lessons learned from people.

477
00:28:48,400 --> 00:28:51,520
Speaker 1: And you know, my hope, frankly, is that people aren't

478
00:28:52,040 --> 00:28:55,520
Speaker 1: doing this the headline making stuff with the serious money

479
00:28:55,680 --> 00:28:58,520
Speaker 1: to people, aren't therey I think it's uh, you know,

480
00:28:58,640 --> 00:29:02,840
Speaker 1: somebody wants to play around at the edges, trading stocks,

481
00:29:03,760 --> 00:29:07,000
Speaker 1: trading bitcoin, do whatever they want to do. That's fine, um,

482
00:29:07,880 --> 00:29:11,760
Speaker 1: but serious money needs to be treated seriously and again

483
00:29:13,080 --> 00:29:16,720
Speaker 1: for any loss as individuals, the idea that we're going

484
00:29:16,800 --> 00:29:19,360
Speaker 1: to trade our way to wealth is a fool talent,

485
00:29:20,320 --> 00:29:24,440
Speaker 1: pretty sharp observation. I never imagine for a minute that

486
00:29:24,880 --> 00:29:28,000
Speaker 1: eight dollar trading was some sort of a speed bump,

487
00:29:28,480 --> 00:29:31,360
Speaker 1: but it seems like once these apps went to free,

488
00:29:32,080 --> 00:29:36,680
Speaker 1: suddenly everybody and their brother became a day trader. How

489
00:29:36,840 --> 00:29:40,720
Speaker 1: much of this behavior is caused by free and and

490
00:29:40,960 --> 00:29:43,840
Speaker 1: what does it mean? So the young people who are

491
00:29:44,920 --> 00:29:49,760
Speaker 1: starting out with trading as as entertainment, well that's the

492
00:29:49,840 --> 00:29:54,800
Speaker 1: interesting phraseology. M Is it entertainment or is it invested? Right?

493
00:29:55,600 --> 00:29:58,040
Speaker 1: And as long as you think of it as entertainment,

494
00:29:58,720 --> 00:30:02,400
Speaker 1: you know it's us' is no different than slot machines

495
00:30:02,640 --> 00:30:06,000
Speaker 1: or going to a casino, but it is not investing.

496
00:30:06,240 --> 00:30:09,960
Speaker 1: And again I think the question is how and when

497
00:30:10,000 --> 00:30:14,480
Speaker 1: do you learn that lesson right and free is absolutely

498
00:30:14,760 --> 00:30:19,080
Speaker 1: a is one of the things that invests this no question.

499
00:30:19,760 --> 00:30:23,920
Speaker 1: But listen, um, momentum is another part of it. And

500
00:30:24,920 --> 00:30:27,480
Speaker 1: you know in assent everybody is smart in a momentum

501
00:30:27,520 --> 00:30:30,560
Speaker 1: market if you're in the right sectors. But momentum investing

502
00:30:30,600 --> 00:30:34,320
Speaker 1: has never proven to be a long term viable strategy. Right.

503
00:30:34,400 --> 00:30:39,240
Speaker 1: Substantent value uh is how people make money, So you know,

504
00:30:39,360 --> 00:30:42,080
Speaker 1: I actually don't worry much about it. Um. It's a

505
00:30:42,320 --> 00:30:44,720
Speaker 1: classic place right, tune out the noise, looking at the

506
00:30:44,760 --> 00:30:47,560
Speaker 1: headline and reading it. Uh. And again, I think as

507
00:30:47,640 --> 00:30:51,360
Speaker 1: long as using your tournament's package is entertainment, it's it's

508
00:30:51,960 --> 00:30:56,160
Speaker 1: it is what it is. You certainly hope that people

509
00:30:56,280 --> 00:30:59,120
Speaker 1: won't put trading accounts into four owing K plans where

510
00:30:59,680 --> 00:31:02,920
Speaker 1: most young people will do their first investing, right, as

511
00:31:03,000 --> 00:31:06,880
Speaker 1: long as those plans stay in a sensible mode, I

512
00:31:07,040 --> 00:31:11,240
Speaker 1: think you're going to segregate investment in financial security from

513
00:31:11,920 --> 00:31:17,600
Speaker 1: entertainment and high profile trading. Interesting, So let me um

514
00:31:17,800 --> 00:31:21,080
Speaker 1: wax philosophical with you a moment. One of the chapters

515
00:31:21,120 --> 00:31:26,840
Speaker 1: of the book, you urge investors to define enough for themselves.

516
00:31:27,360 --> 00:31:31,640
Speaker 1: Explain you're thinking on that, and why do investors need

517
00:31:31,760 --> 00:31:35,840
Speaker 1: to understand the concept of enough. It's such an important

518
00:31:35,880 --> 00:31:40,400
Speaker 1: concept because it will determine how much risk you want

519
00:31:40,480 --> 00:31:45,040
Speaker 1: to or can take in a in a in your

520
00:31:45,120 --> 00:31:53,320
Speaker 1: investment portfolio. And again, not defining enough plays out tragically

521
00:31:53,480 --> 00:31:57,520
Speaker 1: in in so many different ways. Either somebody thinks I've

522
00:31:57,560 --> 00:32:01,240
Speaker 1: done really well, boy, I can do even better, and

523
00:32:01,400 --> 00:32:06,440
Speaker 1: it's at an inappropriate time or inappropriately executed um and

524
00:32:07,560 --> 00:32:10,400
Speaker 1: they wake up saying, boy, if I, if I had

525
00:32:10,480 --> 00:32:14,000
Speaker 1: a million dollars and that's what I needed, perhaps I

526
00:32:14,040 --> 00:32:16,479
Speaker 1: should have been far more conservative. Just take that as

527
00:32:16,520 --> 00:32:19,560
Speaker 1: an example, because a million dollars is going to serve

528
00:32:19,640 --> 00:32:22,120
Speaker 1: me well for the rest of my life, but instead

529
00:32:22,200 --> 00:32:23,760
Speaker 1: you double down and you end up with half a

530
00:32:23,840 --> 00:32:28,480
Speaker 1: million bad decisions. Right. Alternatively, somebody say, I have a

531
00:32:28,560 --> 00:32:32,440
Speaker 1: million dollars, and my time arrives in this perpetual because

532
00:32:32,520 --> 00:32:36,000
Speaker 1: I'm going to my state is going to go to charity.

533
00:32:37,280 --> 00:32:39,760
Speaker 1: You know, you have an up and bucket A bucket

534
00:32:39,840 --> 00:32:42,480
Speaker 1: beak can be a more aggressive portfolio than somebody might

535
00:32:42,520 --> 00:32:46,000
Speaker 1: recommend view in a certain age, you know five iron

536
00:32:46,080 --> 00:32:49,520
Speaker 1: plan accounts or a great example of this, where you

537
00:32:49,640 --> 00:32:52,840
Speaker 1: accumulate money up to a point in time and then

538
00:32:52,880 --> 00:32:56,000
Speaker 1: the glide path takes it down to a very conservative positioning.

539
00:32:56,840 --> 00:32:59,760
Speaker 1: When when the kid turns eighteen, because you know there's

540
00:32:59,760 --> 00:33:02,080
Speaker 1: a time I'm certainly going to need that money. So

541
00:33:02,160 --> 00:33:05,000
Speaker 1: I think that that that's a metaphor for the way

542
00:33:05,280 --> 00:33:07,840
Speaker 1: all of us, whether an institution or an individual, should

543
00:33:07,920 --> 00:33:13,480
Speaker 1: think about assets and how those assets, what those assets

544
00:33:13,560 --> 00:33:16,760
Speaker 1: need to fund for us. And you've seen some universities

545
00:33:16,840 --> 00:33:19,520
Speaker 1: make the mistake of being overly aggressive, even when they

546
00:33:19,560 --> 00:33:22,240
Speaker 1: were particularly well endowed, paying a big price and then

547
00:33:22,560 --> 00:33:25,760
Speaker 1: playing catch up. And that's that's a shame. That's a

548
00:33:25,800 --> 00:33:29,040
Speaker 1: shame because that's real money affecting real students ability to

549
00:33:29,080 --> 00:33:33,240
Speaker 1: go to that university. So I learned this from a wise,

550
00:33:33,320 --> 00:33:37,240
Speaker 1: older gentleman many many years ago, and I continue to

551
00:33:37,320 --> 00:33:40,240
Speaker 1: talk to people about it. Uh. And it's a question

552
00:33:40,320 --> 00:33:43,680
Speaker 1: you should ask yourself regularly because enough may change. It

553
00:33:43,760 --> 00:33:46,240
Speaker 1: may be greater or less than you thought it was

554
00:33:46,280 --> 00:33:49,000
Speaker 1: at a different point in time. But it's the perfect

555
00:33:49,080 --> 00:33:51,680
Speaker 1: time to then reassess your ability to take risk, or

556
00:33:51,680 --> 00:33:54,360
Speaker 1: your willingness to take risk. It's funny because I know

557
00:33:54,560 --> 00:33:57,240
Speaker 1: the book was written last year, but as I was,

558
00:33:57,640 --> 00:34:01,800
Speaker 1: as I was reading that chapter and crossing the headlines

559
00:34:02,200 --> 00:34:07,600
Speaker 1: was the news about the highly leveraged ARCA ghosts hedge fund.

560
00:34:08,000 --> 00:34:11,160
Speaker 1: I'm sure I'm pronouncing that wrong. Archigost arca coach who

561
00:34:11,320 --> 00:34:15,960
Speaker 1: has twenty billion dollars of personal wealth and leverages it

562
00:34:16,080 --> 00:34:18,080
Speaker 1: to the health to the point where they lose that

563
00:34:18,360 --> 00:34:24,080
Speaker 1: it's just an astonishing lesson for people that there has

564
00:34:24,160 --> 00:34:28,000
Speaker 1: to be a line where you say, Okay, I'm good,

565
00:34:28,640 --> 00:34:30,879
Speaker 1: i may play with a little bit of money here,

566
00:34:30,960 --> 00:34:33,719
Speaker 1: but I'm gonna pull this twenty billion dollars off the

567
00:34:33,800 --> 00:34:36,600
Speaker 1: table because it would be horrible if it went to

568
00:34:36,760 --> 00:34:41,160
Speaker 1: zero in two days, which is what happened. It's absolutely true.

569
00:34:41,400 --> 00:34:44,920
Speaker 1: And that's as good an example as you can find.

570
00:34:46,000 --> 00:34:48,279
Speaker 1: And you know somebody will counter with so and so

571
00:34:48,480 --> 00:34:50,759
Speaker 1: double down, and then they had choice as much money.

572
00:34:50,840 --> 00:34:53,759
Speaker 1: But that's a bad risk award trade off, right, And

573
00:34:54,440 --> 00:34:56,359
Speaker 1: but it happens. A lot, happens a lot. You see

574
00:34:56,360 --> 00:34:58,880
Speaker 1: it with You see it with sophisticated pools of capital.

575
00:34:59,239 --> 00:35:04,359
Speaker 1: Who makes some their mistakes in endowed places. And it's

576
00:35:04,400 --> 00:35:06,520
Speaker 1: why again it's a it's a it's a one word

577
00:35:07,400 --> 00:35:11,279
Speaker 1: investment governor, if you will, Is that word enough? And

578
00:35:11,880 --> 00:35:15,839
Speaker 1: again that's that's when you think you have enough, then

579
00:35:15,920 --> 00:35:20,200
Speaker 1: you take it. You make it conscious decision, which fork

580
00:35:20,280 --> 00:35:22,400
Speaker 1: you want to take in the room. Huh. Yeah, the

581
00:35:22,480 --> 00:35:26,920
Speaker 1: regret minimization framework is more important than how much alpha

582
00:35:27,000 --> 00:35:29,480
Speaker 1: you're generating in any given quarter. To say that that

583
00:35:29,640 --> 00:35:32,800
Speaker 1: that's one of the other. Right. There's a chapter in

584
00:35:32,840 --> 00:35:36,680
Speaker 1: the book called I'm in Boca, and the very short

585
00:35:36,719 --> 00:35:39,719
Speaker 1: story is getting Jason's wide from the Wall Street Journal

586
00:35:40,000 --> 00:35:42,479
Speaker 1: was in Boca. Asked a bunch of people whether they're marked,

587
00:35:42,600 --> 00:35:46,200
Speaker 1: whether their investment portfolio said I'll perform the market or not,

588
00:35:46,360 --> 00:35:49,080
Speaker 1: because some said yes, some said no. But the guy

589
00:35:49,160 --> 00:35:51,320
Speaker 1: he remembers most as the guy say why don't what

590
00:35:51,400 --> 00:35:56,800
Speaker 1: do I care? I'm in Boca? Classic, Absolutely classic. That's

591
00:35:56,920 --> 00:35:59,759
Speaker 1: very smart because the only benchmark any one of us

592
00:36:00,040 --> 00:36:03,560
Speaker 1: as is our goals and objectives. Right, how we did

593
00:36:03,560 --> 00:36:05,360
Speaker 1: against the S and P or how we did against

594
00:36:05,480 --> 00:36:08,200
Speaker 1: you know, how Harvard did against Yale and their endowment

595
00:36:08,719 --> 00:36:11,000
Speaker 1: turns into a headline every year, and it's irrelevant. They

596
00:36:11,040 --> 00:36:15,239
Speaker 1: have different financial situations. So what is Harvard's what is

597
00:36:15,280 --> 00:36:18,200
Speaker 1: Harvard's spoke and what is yale spoke? Is much more

598
00:36:18,280 --> 00:36:22,040
Speaker 1: important than how they did against persons each other, And

599
00:36:22,120 --> 00:36:25,400
Speaker 1: that that's the critical part of this. Absolutely true. So

600
00:36:25,880 --> 00:36:28,000
Speaker 1: let's talk a little bit about what's going on in

601
00:36:28,080 --> 00:36:32,000
Speaker 1: the industry today. And I have to begin with some

602
00:36:32,200 --> 00:36:36,840
Speaker 1: of the attacks we've seen recently on index thing that

603
00:36:37,000 --> 00:36:42,040
Speaker 1: it's Marxist, that it's an American, that it's an antitrust violation.

604
00:36:42,560 --> 00:36:45,120
Speaker 1: What do you think of some of these sort of

605
00:36:45,160 --> 00:36:50,960
Speaker 1: wacky esoteric attacks on basic passive investment. Well, first, it's um,

606
00:36:51,360 --> 00:36:53,520
Speaker 1: so you still found it. They just put it that way.

607
00:36:53,640 --> 00:36:56,439
Speaker 1: You know, there's similar Some of them are the same

608
00:36:56,560 --> 00:36:58,920
Speaker 1: as came out when A. T and T ran the

609
00:36:58,960 --> 00:37:02,680
Speaker 1: first index fund and nineteen seventy years sixty nine, or

610
00:37:02,760 --> 00:37:04,919
Speaker 1: when we came out with the first index neutral fund.

611
00:37:05,000 --> 00:37:08,920
Speaker 1: It's not American, it's Marxists, etcetera. So you know the

612
00:37:09,000 --> 00:37:13,080
Speaker 1: data data. Uh, to say that it's anything but a

613
00:37:13,320 --> 00:37:19,799
Speaker 1: highly successful investment strategy is just plain and correct. So uh.

614
00:37:20,000 --> 00:37:22,400
Speaker 1: And then the idea that of now the time to

615
00:37:22,520 --> 00:37:29,600
Speaker 1: be active active, meaning high cost active, is flawed. Um.

616
00:37:30,320 --> 00:37:35,399
Speaker 1: So the sort of investment arguments are just repeating what's

617
00:37:35,440 --> 00:37:39,200
Speaker 1: been repeated continually over half century at the stage. UM.

618
00:37:40,080 --> 00:37:42,839
Speaker 1: You know, some of the other academic ish arguments are

619
00:37:42,920 --> 00:37:47,160
Speaker 1: just as ill founded. The antitrust idea, UM, the sense

620
00:37:47,239 --> 00:37:49,640
Speaker 1: that there's too much concentration and voting and so on

621
00:37:49,760 --> 00:37:53,920
Speaker 1: and so forth. Again, I have a strongly held view,

622
00:37:54,920 --> 00:37:58,920
Speaker 1: not having anything to do with my former role of

623
00:37:58,960 --> 00:38:02,600
Speaker 1: van guard, that the day the index fund's own half

624
00:38:02,760 --> 00:38:05,400
Speaker 1: the stock and companies and there'll be more providers who

625
00:38:05,440 --> 00:38:08,360
Speaker 1: are in that half the stock ownership is going to

626
00:38:08,400 --> 00:38:11,000
Speaker 1: be a great day for the markets, because ceo s

627
00:38:11,080 --> 00:38:16,080
Speaker 1: will have and companies will have permanent shareholders who will

628
00:38:16,200 --> 00:38:19,840
Speaker 1: be interested in strategy, not the next two week sales points.

629
00:38:20,880 --> 00:38:23,680
Speaker 1: And I think it will free companies up to think

630
00:38:23,760 --> 00:38:28,040
Speaker 1: long term, in away that they aren't totally able to

631
00:38:28,160 --> 00:38:33,880
Speaker 1: do today right, and so to be somehow promoting a

632
00:38:34,040 --> 00:38:37,680
Speaker 1: myth that indexing is anti competitive, or indexing is bad

633
00:38:37,760 --> 00:38:42,560
Speaker 1: for markets, or indexing is a bad investment strategy is

634
00:38:43,440 --> 00:38:47,080
Speaker 1: just flood logic and wishful thinking. The critics don't say

635
00:38:47,120 --> 00:38:50,520
Speaker 1: it's a bad investing strategy because the data overwhelms them,

636
00:38:50,960 --> 00:38:53,520
Speaker 1: so they're they're forced to fall back to things like

637
00:38:54,320 --> 00:38:57,440
Speaker 1: voting rights or any trust. If it was a bad

638
00:38:57,480 --> 00:39:02,000
Speaker 1: investing strategy, I think the market it would resolve that.

639
00:39:02,320 --> 00:39:06,520
Speaker 1: But I'm kind of intrigued about your point of Are

640
00:39:06,600 --> 00:39:12,560
Speaker 1: you suggesting once half of the ownership of US public

641
00:39:12,640 --> 00:39:17,239
Speaker 1: companies are held by indexes. Company management are then free

642
00:39:17,320 --> 00:39:20,200
Speaker 1: to focus on the long term instead of the next

643
00:39:20,280 --> 00:39:24,680
Speaker 1: quarters earnings. That would be my perspective. Yeah, actually because um,

644
00:39:25,080 --> 00:39:30,279
Speaker 1: you know, uh, Wall Streets it does great research, but

645
00:39:30,560 --> 00:39:34,879
Speaker 1: they get paid for activity. And what you want as

646
00:39:34,960 --> 00:39:38,560
Speaker 1: a owner of if you're a permanent holder of a company,

647
00:39:38,600 --> 00:39:42,440
Speaker 1: as you want companies to build great businesses, not to

648
00:39:42,680 --> 00:39:46,239
Speaker 1: facilitate activity. And so if you can have you know,

649
00:39:46,680 --> 00:39:49,200
Speaker 1: we always be people buying and sowing your stocks, it

650
00:39:49,280 --> 00:39:54,200
Speaker 1: will be plenty of transparency and liquidity and market clearing

651
00:39:54,280 --> 00:39:59,120
Speaker 1: exercises to value the company. But uh, the idea that

652
00:40:00,400 --> 00:40:03,600
Speaker 1: I can talk to seven or eight or nine permanent

653
00:40:03,640 --> 00:40:07,400
Speaker 1: shareholders if you will, about strategic choices, whether it's in

654
00:40:07,480 --> 00:40:10,399
Speaker 1: a crisis like a year ago or it's long term,

655
00:40:11,120 --> 00:40:15,000
Speaker 1: I think we'll give manage the good, the best management

656
00:40:15,200 --> 00:40:19,120
Speaker 1: even more confident. There's confidence to think long term. I

657
00:40:19,160 --> 00:40:21,920
Speaker 1: think it's a very important thing. And you look at

658
00:40:22,560 --> 00:40:25,960
Speaker 1: you know, controlled companies or you look at private equity

659
00:40:26,000 --> 00:40:30,880
Speaker 1: backed companies. You know, depending on the structure and private companies, um,

660
00:40:31,800 --> 00:40:34,719
Speaker 1: you know, they can behave differently and sometimes it's at

661
00:40:34,760 --> 00:40:37,719
Speaker 1: the margin, but sometimes it's core. Strategic choices that they

662
00:40:37,760 --> 00:40:42,920
Speaker 1: can make, and so I believe they will. The markets

663
00:40:42,960 --> 00:40:46,520
Speaker 1: will be advantaged by companies being able to think in

664
00:40:46,600 --> 00:40:50,680
Speaker 1: a way where today there's there's just so much noise

665
00:40:50,719 --> 00:40:53,240
Speaker 1: in the system for them. So let me switch gears

666
00:40:53,760 --> 00:40:59,759
Speaker 1: on you and ask you about the classic portfolio. We're

667
00:40:59,800 --> 00:41:03,360
Speaker 1: now seeing the lowest yield we've ever seen on that

668
00:41:03,600 --> 00:41:06,840
Speaker 1: mix of stocks and bonds. What do you make of that?

669
00:41:07,200 --> 00:41:13,560
Speaker 1: And are there any viable alternatives to traditional fixed income investment?

670
00:41:14,120 --> 00:41:19,000
Speaker 1: So you know, I think is challenged Barry right now

671
00:41:19,160 --> 00:41:23,600
Speaker 1: as a matter of strategy because of going lowgoing and yields.

672
00:41:24,600 --> 00:41:28,400
Speaker 1: What's likely to be at the engineer view positive correlation

673
00:41:28,480 --> 00:41:32,840
Speaker 1: to stocks at these low levels? Right um? And so

674
00:41:34,160 --> 00:41:38,200
Speaker 1: uh I encourage and we encourage people in the book

675
00:41:38,400 --> 00:41:41,719
Speaker 1: to think hard about alternatives that The last chapter in

676
00:41:41,840 --> 00:41:44,680
Speaker 1: this book is called where do my income go? You know,

677
00:41:44,840 --> 00:41:48,880
Speaker 1: your income from short term cash reservices down four or

678
00:41:48,920 --> 00:41:52,839
Speaker 1: five years for intermediate, for ten year treasury attent, sixty year,

679
00:41:52,880 --> 00:41:56,520
Speaker 1: seventy over that same period. And so you come back

680
00:41:56,600 --> 00:41:59,120
Speaker 1: and I think it's important for investors to take a

681
00:41:59,200 --> 00:42:02,240
Speaker 1: step back and a if I've got a time horizon

682
00:42:02,360 --> 00:42:06,600
Speaker 1: of some uh duration, not next week, or next year

683
00:42:06,719 --> 00:42:09,359
Speaker 1: or four or five years from now. You know, there

684
00:42:09,400 --> 00:42:15,480
Speaker 1: are fabulous companies and portfolios of companies that yield the

685
00:42:15,560 --> 00:42:18,800
Speaker 1: same as a tenure treasurer. And am I what I

686
00:42:19,000 --> 00:42:21,960
Speaker 1: should I be willing to take equity more equity risk,

687
00:42:24,000 --> 00:42:28,320
Speaker 1: get the same income with a call option on growth

688
00:42:29,400 --> 00:42:36,680
Speaker 1: by helping my equity exposure today because for the foreseeable future,

689
00:42:37,440 --> 00:42:41,320
Speaker 1: the traditional role of bonds is going to be unlikely

690
00:42:41,440 --> 00:42:44,040
Speaker 1: to play out the way it has over very long

691
00:42:44,120 --> 00:42:46,560
Speaker 1: periods of time. And the question is when do we

692
00:42:46,640 --> 00:42:49,440
Speaker 1: get out of this very low yield period. I don't

693
00:42:49,480 --> 00:42:56,439
Speaker 1: see many very valuable options alternatives to to traditional fixed

694
00:42:56,480 --> 00:43:00,360
Speaker 1: income assets. Frankly, you know it's certainly not how yell bonds,

695
00:43:00,440 --> 00:43:03,319
Speaker 1: which is a misnomer today. You know you've played through.

696
00:43:03,960 --> 00:43:05,839
Speaker 1: You know there are segments of the equity markets, whether

697
00:43:05,920 --> 00:43:08,360
Speaker 1: it's reachs or something else, that offer a good yield.

698
00:43:09,680 --> 00:43:12,279
Speaker 1: But it feels strange to say it's in the midst

699
00:43:12,320 --> 00:43:15,600
Speaker 1: of the long bowl market. But my own sense is

700
00:43:15,680 --> 00:43:18,200
Speaker 1: that people with any kind of time horizon should be

701
00:43:18,239 --> 00:43:21,800
Speaker 1: thinking about income being generated by stocks, because you know,

702
00:43:22,440 --> 00:43:26,160
Speaker 1: over time, the diven end growth of a vertisfied portfolio

703
00:43:26,239 --> 00:43:30,160
Speaker 1: of stocks is far out, how far outplaced outpaced inflation.

704
00:43:31,200 --> 00:43:34,000
Speaker 1: And if all you get is that income growth, you've

705
00:43:34,080 --> 00:43:37,120
Speaker 1: done well. If you get capuality growth to go with it,

706
00:43:37,200 --> 00:43:40,360
Speaker 1: it's it's a good trade to take that incremental equity

707
00:43:40,480 --> 00:43:43,239
Speaker 1: risk today because of the unique period of time or

708
00:43:43,480 --> 00:43:45,359
Speaker 1: really unique you know, if you if you look back,

709
00:43:45,880 --> 00:43:49,200
Speaker 1: it's a seven hundred year bull market and box if

710
00:43:49,200 --> 00:43:51,840
Speaker 1: you look at some charts from England, but that that

711
00:43:52,000 --> 00:43:56,719
Speaker 1: is seventy year bull market in the United States, and so, uh,

712
00:43:57,160 --> 00:44:00,239
Speaker 1: fixed income doesn't look very attractive, right. I think we

713
00:44:00,320 --> 00:44:03,759
Speaker 1: reached the same conclusion you did. If if you're young enough,

714
00:44:03,920 --> 00:44:07,160
Speaker 1: seventy thirty or eighty twenty makes much more sense than

715
00:44:07,280 --> 00:44:11,160
Speaker 1: sixty forty. But the caveat is, hey, if you're in

716
00:44:11,280 --> 00:44:14,759
Speaker 1: your sixties or if you're a few years away from retirement,

717
00:44:15,440 --> 00:44:20,120
Speaker 1: that additional risk isn't worth the additional return because as

718
00:44:20,200 --> 00:44:25,960
Speaker 1: we see all two regularly corrections. You know, those hundred

719
00:44:26,040 --> 00:44:28,800
Speaker 1: year floods come along every ten years. We we probably

720
00:44:28,840 --> 00:44:32,439
Speaker 1: need to rename the hundred year floods. Yeah, it's true,

721
00:44:32,520 --> 00:44:35,840
Speaker 1: but um, the one factor you don't have in that

722
00:44:36,120 --> 00:44:38,839
Speaker 1: in that equation is what are you drawing off your

723
00:44:38,880 --> 00:44:42,200
Speaker 1: assets okay, And so the best thing you can do

724
00:44:42,400 --> 00:44:44,759
Speaker 1: is draw as little as possible from your assets. It

725
00:44:44,800 --> 00:44:47,279
Speaker 1: allows you to take more risk with your assets. Makes sense,

726
00:44:47,640 --> 00:44:50,480
Speaker 1: And so that you know when people ask me my

727
00:44:50,560 --> 00:44:52,719
Speaker 1: best financial advice, I see a little below your means.

728
00:44:52,840 --> 00:44:55,600
Speaker 1: They want something sophisticated. That's what I give them. And

729
00:44:56,000 --> 00:44:59,239
Speaker 1: I think it's very important today to say you know

730
00:44:59,360 --> 00:45:05,040
Speaker 1: that for five draw is too much likely from retirement portfolio.

731
00:45:05,160 --> 00:45:07,040
Speaker 1: Can you live on three? And if you can't live

732
00:45:07,120 --> 00:45:12,279
Speaker 1: on three, you can probably take some more capital risk, uh,

733
00:45:12,440 --> 00:45:15,600
Speaker 1: to to make those assets grow and endure in real

734
00:45:15,840 --> 00:45:20,719
Speaker 1: terms for the longer term, especially given longer lifespans. That's

735
00:45:20,719 --> 00:45:24,480
Speaker 1: another fact I think I have. I'll be sixty seven

736
00:45:24,520 --> 00:45:25,640
Speaker 1: and a couple of months, I think I have a

737
00:45:25,680 --> 00:45:29,880
Speaker 1: third year time harress. Well, that's family's life legacy is

738
00:45:29,920 --> 00:45:32,960
Speaker 1: pretty good, long longevity. But that's the way I think

739
00:45:32,960 --> 00:45:35,680
Speaker 1: about things. And I think most people at sixty seven

740
00:45:35,719 --> 00:45:37,960
Speaker 1: should be thinking twenty years. It's that's a long time,

741
00:45:38,120 --> 00:45:41,919
Speaker 1: that's long term. But gets you're spending, get the spend.

742
00:45:42,000 --> 00:45:44,680
Speaker 1: The outgo part of this correct is a critical part

743
00:45:44,760 --> 00:45:48,520
Speaker 1: for individuals. It's also critical part for institutions, critical parts

744
00:45:48,520 --> 00:45:52,359
Speaker 1: for institutions, lower your expectations and then live within those.

745
00:45:52,680 --> 00:45:55,799
Speaker 1: Hey man, so we're talking about yield, let's look at

746
00:45:55,840 --> 00:45:57,840
Speaker 1: the flip side of that. What do you make of

747
00:45:57,880 --> 00:46:01,319
Speaker 1: all the inflation chatter these days? Do you think that's

748
00:46:01,360 --> 00:46:05,040
Speaker 1: a viable risk to portfolios? And and how much of

749
00:46:05,120 --> 00:46:08,960
Speaker 1: this is just transitory noise? So I have to say

750
00:46:09,000 --> 00:46:11,360
Speaker 1: I am a child of inflation. Of the video, I

751
00:46:11,440 --> 00:46:13,600
Speaker 1: came out of college in nineteen seventy six sin stag

752
00:46:13,600 --> 00:46:17,359
Speaker 1: inflation lived through the next five or six years before

753
00:46:17,480 --> 00:46:21,760
Speaker 1: Chairman Bulker, you know, took it on. So I actually

754
00:46:21,840 --> 00:46:25,440
Speaker 1: have a sort of inherent worry about it, and I

755
00:46:25,520 --> 00:46:27,839
Speaker 1: do think it's real. I think, you know, I don't

756
00:46:27,880 --> 00:46:32,759
Speaker 1: believe in modern monetary theory. I think the question of

757
00:46:33,120 --> 00:46:37,360
Speaker 1: how much money you can pump into the system is

758
00:46:37,400 --> 00:46:40,319
Speaker 1: a really important one. And I don't think we're going

759
00:46:40,440 --> 00:46:42,880
Speaker 1: back to the late sixties, early at the late seventies

760
00:46:42,920 --> 00:46:47,680
Speaker 1: early eighties from an inflation standpoint. But we've had thirty

761
00:46:47,760 --> 00:46:51,200
Speaker 1: years of minimal inflation, and I think the noise for

762
00:46:51,320 --> 00:46:54,479
Speaker 1: me is valuable because even if it's proved to be wrong,

763
00:46:54,680 --> 00:46:58,359
Speaker 1: it educates people to think about it. But I talked

764
00:46:58,440 --> 00:47:02,839
Speaker 1: I counsel people to fact or some inflation into their

765
00:47:02,880 --> 00:47:05,480
Speaker 1: own financial planning in a way that we have experienced

766
00:47:05,480 --> 00:47:08,319
Speaker 1: in thirty years. I hope I'm wrong. I hope I'm wrong,

767
00:47:08,400 --> 00:47:15,279
Speaker 1: But my economics training tells me, UH, be wary of

768
00:47:15,760 --> 00:47:20,200
Speaker 1: too much liquidity in a system and UH and the

769
00:47:20,920 --> 00:47:24,040
Speaker 1: pressure on prices and whether globalization can offset it again

770
00:47:24,160 --> 00:47:26,560
Speaker 1: like it has in the past, whether technology can offset

771
00:47:26,600 --> 00:47:30,520
Speaker 1: it fair question, but I would worry more about it

772
00:47:30,600 --> 00:47:33,520
Speaker 1: for the next fifteen years than it than it's been

773
00:47:33,560 --> 00:47:37,839
Speaker 1: relevant in the prior fifteen years. Quite interesting. Let's talk

774
00:47:37,880 --> 00:47:39,880
Speaker 1: a little bit about what's going on in the industry

775
00:47:39,960 --> 00:47:45,560
Speaker 1: in general. We saw a massive purchase pretty recently Schwab

776
00:47:45,640 --> 00:47:48,799
Speaker 1: took over t DU merit Trade. That's had a big

777
00:47:48,920 --> 00:47:52,839
Speaker 1: impact on the industry. We've seen a variety of other

778
00:47:54,320 --> 00:47:58,120
Speaker 1: mergers and acquisitions between big companies and smaller fin techs

779
00:47:58,719 --> 00:48:02,200
Speaker 1: between other big Panese What are your thoughts on on these,

780
00:48:03,040 --> 00:48:08,640
Speaker 1: especially given Vanguard's history of not really playing in those waters.

781
00:48:10,680 --> 00:48:13,880
Speaker 1: So it's one of the great assets to the investing

782
00:48:14,000 --> 00:48:17,600
Speaker 1: public in my view, is the tremendous sense of competition

783
00:48:17,680 --> 00:48:22,520
Speaker 1: for all segments of our business. Right um, and if

784
00:48:22,560 --> 00:48:26,560
Speaker 1: you just look over time, whether it's the active management business,

785
00:48:26,640 --> 00:48:31,759
Speaker 1: the brokerage business, the advice business, UM. The inherent entrepreneurism

786
00:48:31,920 --> 00:48:34,520
Speaker 1: creates new competitors, whether they're fin techs or whether it's

787
00:48:34,520 --> 00:48:37,640
Speaker 1: your firm. Seven years ago in the advice space, UM,

788
00:48:38,920 --> 00:48:42,120
Speaker 1: you know, Swab and America came together, big impact on

789
00:48:42,160 --> 00:48:46,040
Speaker 1: the financial advisor community. Scale for the for the firm UM.

790
00:48:46,800 --> 00:48:49,040
Speaker 1: But you know, in the grand scheme of thing, none

791
00:48:49,120 --> 00:48:51,960
Speaker 1: of us is that big a player, interestingly when you

792
00:48:52,040 --> 00:48:55,320
Speaker 1: think about it. So I think we'll continue to watch.

793
00:48:55,560 --> 00:48:58,239
Speaker 1: We'll see certain areas where scale really matters a lot.

794
00:48:59,320 --> 00:49:02,400
Speaker 1: You know, index on management very important in that regard.

795
00:49:02,800 --> 00:49:07,360
Speaker 1: But there'll be continual growth in boutique advisory firms, boutique

796
00:49:07,400 --> 00:49:10,360
Speaker 1: investment management firms. And I think that's one of the

797
00:49:10,440 --> 00:49:13,040
Speaker 1: great parts of the business is the dynamism of the

798
00:49:13,200 --> 00:49:19,719
Speaker 1: business just forces every firm in a trench position to

799
00:49:19,800 --> 00:49:23,960
Speaker 1: get better. And so whenever I see deals like this happened,

800
00:49:24,480 --> 00:49:26,520
Speaker 1: I think it's good for the investing public. At the

801
00:49:26,600 --> 00:49:31,080
Speaker 1: end of the day, I do think that, Uh, you know,

802
00:49:31,400 --> 00:49:34,960
Speaker 1: obviously I'm a huge fan of agard. Organic growth is

803
00:49:34,960 --> 00:49:37,680
Speaker 1: always better than an or growth and because you do

804
00:49:37,760 --> 00:49:40,200
Speaker 1: it culturally you don't have integration challenges. And so to

805
00:49:40,280 --> 00:49:43,320
Speaker 1: see what Vanguard has accomplished, I think it's attributed in

806
00:49:43,360 --> 00:49:47,920
Speaker 1: the market says we like that that strategy mean something

807
00:49:48,040 --> 00:49:52,320
Speaker 1: appropriate couldn't be bolted onto the firm. But you know,

808
00:49:52,920 --> 00:49:56,319
Speaker 1: so there will be different ways of building businesses UH

809
00:49:57,040 --> 00:50:01,719
Speaker 1: in the business. But sort of directly, my own view

810
00:50:01,880 --> 00:50:05,960
Speaker 1: is it's all good because nobody in this space should

811
00:50:05,960 --> 00:50:08,520
Speaker 1: be worried about monopoly power because it's just not there

812
00:50:08,600 --> 00:50:13,279
Speaker 1: is anybody with enough in this relatively fragmented business to

813
00:50:13,400 --> 00:50:18,080
Speaker 1: create monopoly power. So it just enhances competition. So let's

814
00:50:18,120 --> 00:50:20,600
Speaker 1: talk about one of the small boutiques that are out there.

815
00:50:20,880 --> 00:50:25,279
Speaker 1: You join the board of Rockefeller Capital Management, even though

816
00:50:25,520 --> 00:50:30,120
Speaker 1: the company itself has been around a while, obviously a

817
00:50:30,400 --> 00:50:35,640
Speaker 1: very different animal than the giant Vanguard Group. What motivated

818
00:50:35,719 --> 00:50:38,520
Speaker 1: you to work with a smaller firm and what's that

819
00:50:38,640 --> 00:50:43,600
Speaker 1: experience like compared to you know, the behemoth that's Vanguard Group. Well,

820
00:50:43,960 --> 00:50:46,320
Speaker 1: and it's it's been a great experience. Let me just

821
00:50:46,360 --> 00:50:48,279
Speaker 1: say that right off. The bad Rock Start family has

822
00:50:48,320 --> 00:50:53,480
Speaker 1: been tremendous part of this three years journey, the UH

823
00:50:54,040 --> 00:50:57,160
Speaker 1: back biking, the backing firm has, but Greg Flemming has

824
00:50:57,160 --> 00:51:02,719
Speaker 1: put together a tremendous leadership team deeply focused on providing

825
00:51:03,200 --> 00:51:09,360
Speaker 1: advice to high network families and very much and in

826
00:51:09,560 --> 00:51:12,200
Speaker 1: that complementary in some ways to the wave of Angerant

827
00:51:12,200 --> 00:51:16,239
Speaker 1: does its business UM and so they're very focused on

828
00:51:17,000 --> 00:51:20,320
Speaker 1: in a sense, doing one thing while providing advice. Rocktal

829
00:51:20,400 --> 00:51:24,160
Speaker 1: Asset Management provides is a niche specialist in UH E

830
00:51:24,360 --> 00:51:27,600
Speaker 1: s G investing and the family office and the private

831
00:51:27,640 --> 00:51:32,120
Speaker 1: wealth management businesses at Rockefeller are deeply focused on their

832
00:51:32,440 --> 00:51:36,080
Speaker 1: in a sense small niches, but they want to be

833
00:51:36,560 --> 00:51:39,680
Speaker 1: as deep as anyone is expert as anyone in those

834
00:51:39,960 --> 00:51:42,440
Speaker 1: uh in those channels, and so it's about a lot

835
00:51:42,480 --> 00:51:47,160
Speaker 1: of fun, been tremendous to watch UH great lead this

836
00:51:47,440 --> 00:51:51,000
Speaker 1: business and kind of peoplely suttract the clients who have

837
00:51:51,880 --> 00:51:58,160
Speaker 1: UH less generally much larger brokerage house based advisory business

838
00:51:58,280 --> 00:52:02,480
Speaker 1: to come to Rockefeller Capital. And so far it's been

839
00:52:02,920 --> 00:52:07,160
Speaker 1: a terrific success story. UH thoroughly enjoyed it, UH frankly

840
00:52:07,239 --> 00:52:10,200
Speaker 1: because it's very different than where I spent my professional

841
00:52:10,320 --> 00:52:14,840
Speaker 1: life at Vanguard prior to that. So it's fun to

842
00:52:14,880 --> 00:52:17,560
Speaker 1: watch and more to come. And let's talk about another board.

843
00:52:17,680 --> 00:52:21,279
Speaker 1: You're you're the chairman of Notre Dame's Board of trustees.

844
00:52:21,480 --> 00:52:25,120
Speaker 1: What's that experience like and how involved are you with

845
00:52:25,320 --> 00:52:29,440
Speaker 1: the Notre Dame endowment? So when I first came on

846
00:52:29,520 --> 00:52:31,200
Speaker 1: the board, I went on the investment committee, as you

847
00:52:31,280 --> 00:52:34,600
Speaker 1: might imagine, And we've had a tremendously successful endowment management

848
00:52:34,960 --> 00:52:39,720
Speaker 1: uh operation there man named Scott Malpass letter for thirty

849
00:52:39,800 --> 00:52:43,640
Speaker 1: issue years. Might Donovan now once it today, I would say,

850
00:52:43,920 --> 00:52:49,040
Speaker 1: and the record has been outstanding um over time because

851
00:52:49,160 --> 00:52:52,400
Speaker 1: they followed the principles of patients and research and and

852
00:52:52,600 --> 00:52:55,279
Speaker 1: and and so on. So that was a gratifying way

853
00:52:55,320 --> 00:52:58,440
Speaker 1: to get to know Notre Dame. Being the board chair

854
00:52:58,440 --> 00:53:03,080
Speaker 1: as a tremendous honor. They have a standing leadership team

855
00:53:03,680 --> 00:53:07,600
Speaker 1: top to bottom through you know, lots of challenging times.

856
00:53:07,680 --> 00:53:09,520
Speaker 1: You know, the pandemic. This has been as big as

857
00:53:10,000 --> 00:53:15,959
Speaker 1: challenge for higher education as anything in a century really

858
00:53:16,000 --> 00:53:20,040
Speaker 1: in many ways, and you know, uh, we decided to

859
00:53:20,360 --> 00:53:25,160
Speaker 1: be open within person classes. We decided last May, made

860
00:53:25,200 --> 00:53:28,120
Speaker 1: it happen, delivered eighty five percent of our classes in person,

861
00:53:28,200 --> 00:53:31,080
Speaker 1: invited all the students back to campus for both semesters.

862
00:53:31,960 --> 00:53:34,120
Speaker 1: So it's been tremendously gratifying. You know, my kids are

863
00:53:34,120 --> 00:53:36,360
Speaker 1: all noted name grats, so it's it's a privilege to

864
00:53:36,760 --> 00:53:41,040
Speaker 1: serve the place that affected our family so positively. But

865
00:53:41,160 --> 00:53:43,360
Speaker 1: it's been a great experience frankly to learn another business

866
00:53:43,400 --> 00:53:47,000
Speaker 1: as well, try to bring some capabilities, as does our board.

867
00:53:47,080 --> 00:53:50,680
Speaker 1: We have a wonderful board of trustees with diverse backgrounds

868
00:53:50,719 --> 00:53:53,840
Speaker 1: and diverse experiences, so you see the value of that

869
00:53:53,960 --> 00:53:57,360
Speaker 1: outside and view look from from a board of trustees,

870
00:53:58,120 --> 00:54:01,040
Speaker 1: but at the board chair you're more deeply involved and

871
00:54:01,160 --> 00:54:04,200
Speaker 1: learning a lot about what is a critically important business

872
00:54:04,239 --> 00:54:07,520
Speaker 1: of this country and a very successful entering in that

873
00:54:07,680 --> 00:54:10,120
Speaker 1: business and Notre Dame. So it's been one of the

874
00:54:10,400 --> 00:54:14,640
Speaker 1: highlights of my professional career frankly. Quite interesting. I know

875
00:54:14,800 --> 00:54:17,000
Speaker 1: we only had we made we made the football playoffs,

876
00:54:17,040 --> 00:54:18,759
Speaker 1: which is always a good thing, that's right, And they

877
00:54:18,760 --> 00:54:23,600
Speaker 1: actually did a pretty good job of maintaining a healthy

878
00:54:23,840 --> 00:54:27,120
Speaker 1: team and staff in a in a period where a

879
00:54:27,200 --> 00:54:30,880
Speaker 1: lot of colleges were having a hard time not having

880
00:54:31,280 --> 00:54:36,040
Speaker 1: half the team catch COVID. Well, you see these student

881
00:54:36,080 --> 00:54:40,399
Speaker 1: athletes and cross the board, um and we could very

882
00:54:40,440 --> 00:54:42,160
Speaker 1: good results. But it tells you a lot about the

883
00:54:42,239 --> 00:54:44,760
Speaker 1: character of the kids and coaches, and our our coaches

884
00:54:44,800 --> 00:54:46,960
Speaker 1: that notre dame. They will tell you first and foremost

885
00:54:46,960 --> 00:54:50,160
Speaker 1: their educators. They want to win on the field for

886
00:54:50,160 --> 00:54:54,200
Speaker 1: their educators, and they have tried to build strong cultures

887
00:54:54,320 --> 00:54:57,640
Speaker 1: in their programs and from the top down. Or athletic

888
00:54:57,760 --> 00:55:02,480
Speaker 1: director Jack Schaubert is a big proponent of culture. And

889
00:55:02,520 --> 00:55:04,600
Speaker 1: to watch these kids what they sacrificed. You know, they

890
00:55:04,680 --> 00:55:07,120
Speaker 1: sacrifice being a college kid at some level right to

891
00:55:07,200 --> 00:55:10,799
Speaker 1: avoid getting COVID and across the board with our teams,

892
00:55:10,840 --> 00:55:13,680
Speaker 1: it's been a great outcome. So I never been proud

893
00:55:13,719 --> 00:55:16,040
Speaker 1: of the student athletes, the coaches, and the people involved

894
00:55:16,080 --> 00:55:18,960
Speaker 1: in athletics, but the student body broadly as well. Uh

895
00:55:19,360 --> 00:55:23,719
Speaker 1: the way they've handled adversity. You know, sometimes college kids

896
00:55:23,800 --> 00:55:26,200
Speaker 1: get a bad rap. They don't deserve it. They're tremendous

897
00:55:26,239 --> 00:55:28,640
Speaker 1: young people and you're just proud to be able to

898
00:55:28,640 --> 00:55:30,160
Speaker 1: try to help them a little bit in a role

899
00:55:30,400 --> 00:55:32,920
Speaker 1: like being a TRUSTe or of board chair. So I

900
00:55:33,040 --> 00:55:35,040
Speaker 1: only have you for a few more minutes. Let me

901
00:55:35,200 --> 00:55:37,640
Speaker 1: jump to my favorite questions that I ask all of

902
00:55:37,719 --> 00:55:41,160
Speaker 1: my guests, starting with what are you streaming these days?

903
00:55:41,280 --> 00:55:44,640
Speaker 1: Give us your favorite Netflix or Amazon prime shows or

904
00:55:44,719 --> 00:55:47,080
Speaker 1: what podcasts you're listening to. But we seem to have

905
00:55:47,200 --> 00:55:51,439
Speaker 1: become my wife and I seem to become tremendous fans

906
00:55:51,480 --> 00:55:54,400
Speaker 1: of British cops shows. You know, things like d c

907
00:55:54,600 --> 00:55:58,960
Speaker 1: I Banks are endeavor prime suspects. So that's if you

908
00:55:59,040 --> 00:56:02,160
Speaker 1: looked at our Amazon on her Netflix accounts, you'd see

909
00:56:02,160 --> 00:56:07,719
Speaker 1: a lot of those um uh podcasts. No kidding and

910
00:56:07,760 --> 00:56:11,120
Speaker 1: apologize for this. Masters and Business is one that's a

911
00:56:11,239 --> 00:56:13,800
Speaker 1: regular weekly listen. I have to say thank you for

912
00:56:13,920 --> 00:56:17,840
Speaker 1: doing it. Freakingomics is another one I find very interesting

913
00:56:17,920 --> 00:56:21,239
Speaker 1: that gives you a different point of view and and

914
00:56:21,320 --> 00:56:23,279
Speaker 1: you can't live without Wait Weight don't tell me, which

915
00:56:23,360 --> 00:56:25,399
Speaker 1: is not as good without the audience, but it's still

916
00:56:25,440 --> 00:56:28,719
Speaker 1: a great way to spend a Usually I listened to

917
00:56:28,760 --> 00:56:31,040
Speaker 1: it Sunday after Saturday afternoon after it's on the radio

918
00:56:31,080 --> 00:56:33,840
Speaker 1: on Saturday morning where I am. But I've been a

919
00:56:33,880 --> 00:56:36,640
Speaker 1: lot of a lot more TV watching Turn the Pandemic

920
00:56:36,719 --> 00:56:38,520
Speaker 1: than there has been in the prior forty years of

921
00:56:38,560 --> 00:56:40,920
Speaker 1: our marriage. I can assure you, I'm glad to hear

922
00:56:40,960 --> 00:56:45,040
Speaker 1: I'm not the only one suffering through an excess of television.

923
00:56:45,520 --> 00:56:48,160
Speaker 1: And thank you for the kind words about about the show.

924
00:56:48,640 --> 00:56:52,000
Speaker 1: Let's talk a little bit about mentors who helped shape

925
00:56:52,080 --> 00:56:56,919
Speaker 1: your career. Talking about Jack, obviously, that was a great

926
00:56:56,960 --> 00:57:00,040
Speaker 1: privilege to to uh to work with him and and

927
00:57:00,160 --> 00:57:03,000
Speaker 1: a ton from him. I had the great fortune of

928
00:57:03,120 --> 00:57:06,760
Speaker 1: having a father who was one of these great American

929
00:57:06,840 --> 00:57:09,560
Speaker 1: success stories. You know. His father was a ditch digger

930
00:57:09,600 --> 00:57:12,640
Speaker 1: and then got a good job as a janitor and

931
00:57:13,719 --> 00:57:16,440
Speaker 1: he ended up as the chairman CEO and built a

932
00:57:16,520 --> 00:57:19,600
Speaker 1: great bank in Boston and started as a mutual savings bank,

933
00:57:19,640 --> 00:57:22,760
Speaker 1: became a public company, and you know snow days, you

934
00:57:22,840 --> 00:57:24,600
Speaker 1: get the day off. He'd said, come on getting the car,

935
00:57:24,720 --> 00:57:27,200
Speaker 1: we're going to the office. But I grew up in

936
00:57:27,240 --> 00:57:29,840
Speaker 1: Boston and he would stand at the front door and

937
00:57:29,920 --> 00:57:31,960
Speaker 1: greet everybody who made it in on a snow day

938
00:57:32,000 --> 00:57:35,560
Speaker 1: to the bank and thank them for coming. It's those

939
00:57:35,680 --> 00:57:38,840
Speaker 1: kind of lessons that you can't make up. And so

940
00:57:39,480 --> 00:57:43,040
Speaker 1: um that that was a sixties something, I guess, a

941
00:57:43,240 --> 00:57:47,520
Speaker 1: fifty something year mentorship that was tremendous and one of

942
00:57:47,640 --> 00:57:49,200
Speaker 1: what I just call out. You know, my first boss

943
00:57:49,200 --> 00:57:51,400
Speaker 1: out of college, guy Nam Bill McKenna, then Eric Bank

944
00:57:51,480 --> 00:57:57,400
Speaker 1: for Savings a similar story. Actually, um, very blue collar background,

945
00:57:57,520 --> 00:58:00,560
Speaker 1: the president of a bank, and he probably it was

946
00:58:00,600 --> 00:58:02,560
Speaker 1: like to be a businessman at twenty one years old,

947
00:58:03,000 --> 00:58:08,160
Speaker 1: you know, and he hard feedback, great feedback. I still

948
00:58:08,200 --> 00:58:10,960
Speaker 1: consider him a great friend forty five years later, So

949
00:58:11,520 --> 00:58:13,280
Speaker 1: how good is that? And there's tons of others, but

950
00:58:13,360 --> 00:58:17,320
Speaker 1: those three when I always think about how they affected

951
00:58:17,400 --> 00:58:20,520
Speaker 1: my life, you know, in from different periods of time.

952
00:58:20,720 --> 00:58:23,960
Speaker 1: But what a gift, right and you do it. I

953
00:58:24,080 --> 00:58:26,040
Speaker 1: hope I've been able to try to pay it back

954
00:58:26,040 --> 00:58:28,920
Speaker 1: a little bit by mentoring some other people. And you

955
00:58:29,040 --> 00:58:31,880
Speaker 1: hope somebody names you somewhere along the way. Tell us

956
00:58:31,880 --> 00:58:34,400
Speaker 1: about some of your favorite books. What are you reading

957
00:58:34,520 --> 00:58:37,520
Speaker 1: right now? Well? I love historical biographies. He's funny. My

958
00:58:37,560 --> 00:58:39,640
Speaker 1: wife reads fiction all the time that I have read

959
00:58:39,680 --> 00:58:44,360
Speaker 1: a fiction book in twenty years. So I love historical biographies.

960
00:58:44,360 --> 00:58:46,040
Speaker 1: I feel like it stills in the gaps of what

961
00:58:46,160 --> 00:58:49,000
Speaker 1: I didn't learn. Uh, I didn't learn in high school

962
00:58:49,120 --> 00:58:52,400
Speaker 1: or college, you know. So you know, always loved and

963
00:58:52,520 --> 00:58:56,400
Speaker 1: I love leaders, interesting leaders, you know. Doris Current's good

964
00:58:56,480 --> 00:59:00,320
Speaker 1: with Current Scotland's book Bully Pulpit about Teddy Roosevelt. Uh,

965
00:59:00,720 --> 00:59:05,080
Speaker 1: The Splendor and the Vine about about Churchill. Right now,

966
00:59:05,280 --> 00:59:11,720
Speaker 1: I'm reading long biography by Andrew Roberts about Napoleon and

967
00:59:11,880 --> 00:59:16,480
Speaker 1: learning a ton what an unbelievable what an what an

968
00:59:16,560 --> 00:59:20,440
Speaker 1: unbelievable life? That is that much more so than I

969
00:59:20,480 --> 00:59:22,800
Speaker 1: ever knew. So I find those as two firs. You

970
00:59:22,880 --> 00:59:25,280
Speaker 1: learned about an interesting person. You also learn about the history,

971
00:59:26,160 --> 00:59:27,800
Speaker 1: but you've got to pepper up with some other things.

972
00:59:27,880 --> 00:59:30,800
Speaker 1: One of the ones I've read recently that's great is

973
00:59:31,280 --> 00:59:34,880
Speaker 1: uh it's called The World Beneath Our Feet, and it's

974
00:59:34,920 --> 00:59:37,720
Speaker 1: about the race to climb out effort, and you learn

975
00:59:37,800 --> 00:59:42,720
Speaker 1: about geopolitical issues that So I probably don't read enough

976
00:59:42,760 --> 00:59:44,720
Speaker 1: for fun. I read to try to fill in the

977
00:59:44,800 --> 00:59:48,760
Speaker 1: holes in my knowledge base more than anything. But there's

978
00:59:48,800 --> 00:59:50,640
Speaker 1: nothing better than sitting down for two hours with a

979
00:59:50,680 --> 00:59:53,360
Speaker 1: great book, is there? No, not at all. What sort

980
00:59:53,360 --> 00:59:55,960
Speaker 1: of advice would you give to a recent college grad

981
00:59:56,080 --> 01:00:01,040
Speaker 1: who was interested in a career in investment management or

982
01:00:01,920 --> 01:00:06,920
Speaker 1: investment advisory? Do it? It's a great profession. It's it's

983
01:00:07,040 --> 01:00:09,480
Speaker 1: it really is a great profession. You're you know, our

984
01:00:09,600 --> 01:00:12,760
Speaker 1: business is one that's so interesting because it changes every minute,

985
01:00:13,000 --> 01:00:16,000
Speaker 1: every hour, every day. There's something in the newspaper that's

986
01:00:16,040 --> 01:00:20,200
Speaker 1: going to affect your business and your clients. So for me,

987
01:00:22,160 --> 01:00:26,240
Speaker 1: I don't think enough people go into investment advisory frankly,

988
01:00:26,480 --> 01:00:29,080
Speaker 1: and I hope more and more will because there is

989
01:00:30,320 --> 01:00:34,560
Speaker 1: a big demand for it. It's very gratifying. Uh, it's

990
01:00:34,880 --> 01:00:40,440
Speaker 1: constantly changing. As I said, Uh, and you can you

991
01:00:40,640 --> 01:00:44,560
Speaker 1: can really do well for yourself while doing good for

992
01:00:44,680 --> 01:00:47,680
Speaker 1: your clients. That's a great combo. Last piece, I always

993
01:00:47,680 --> 01:00:50,000
Speaker 1: tell people find a great firm, find a great firm,

994
01:00:50,080 --> 01:00:52,600
Speaker 1: and if you're lucky enough, find a great mentor and

995
01:00:52,680 --> 01:00:57,600
Speaker 1: a great firm to help you accelerate your learning as

996
01:00:57,680 --> 01:01:02,240
Speaker 1: you move along. So I'm very bullish on the industry

997
01:01:02,320 --> 01:01:05,040
Speaker 1: I was in, very bullish and the industry you're in.

998
01:01:05,400 --> 01:01:11,000
Speaker 1: I think they each have tremendous psychic gratifications as well

999
01:01:11,080 --> 01:01:15,040
Speaker 1: as financial awards for people. So I'm pitching them all

1000
01:01:15,080 --> 01:01:18,920
Speaker 1: the time to people. Really interesting and our final question,

1001
01:01:19,600 --> 01:01:22,080
Speaker 1: what do you know about the world of investing today

1002
01:01:22,200 --> 01:01:25,160
Speaker 1: that you wish you knew thirty or forty years ago

1003
01:01:25,280 --> 01:01:28,360
Speaker 1: when you were first getting started? You know, in a sense,

1004
01:01:28,440 --> 01:01:32,760
Speaker 1: I think I knew that to produce differentiative results, you

1005
01:01:32,880 --> 01:01:36,040
Speaker 1: really had to be very different from the market. Um.

1006
01:01:37,280 --> 01:01:40,200
Speaker 1: But I obviously know that a lot more soundly today

1007
01:01:40,440 --> 01:01:45,640
Speaker 1: the statistics, but more more valuably the experience. Um. You know,

1008
01:01:45,720 --> 01:01:48,880
Speaker 1: one of my sons runs a long only investment firm,

1009
01:01:49,120 --> 01:01:53,200
Speaker 1: and his diversified fund has fourteen stocks and his non

1010
01:01:53,280 --> 01:01:57,680
Speaker 1: diverse fund has not has fund as nine. Wow. And

1011
01:01:57,800 --> 01:02:00,520
Speaker 1: I wouldn't have him invest not that he asked me,

1012
01:02:00,560 --> 01:02:02,960
Speaker 1: but I wouldn't have him invest in any other way

1013
01:02:04,040 --> 01:02:06,400
Speaker 1: because otherwise, if he's going to give you a beta

1014
01:02:07,720 --> 01:02:12,840
Speaker 1: in our square by our total stock market fund, right,

1015
01:02:13,040 --> 01:02:17,360
Speaker 1: And and the differentiation between being willing to be wrong

1016
01:02:18,360 --> 01:02:20,840
Speaker 1: and take risk is the only way you're going to

1017
01:02:20,960 --> 01:02:27,640
Speaker 1: deliver results that are differentiated and valuable to people, because

1018
01:02:27,680 --> 01:02:31,040
Speaker 1: the alternative is not hypothetical any longer. The alternative you

1019
01:02:31,120 --> 01:02:33,920
Speaker 1: can invest any way you want in an indexed portfolio,

1020
01:02:34,800 --> 01:02:38,080
Speaker 1: So that that that it's an affirmation of what I

1021
01:02:38,200 --> 01:02:43,320
Speaker 1: learned early in my career from some tremendously successful portfolio managers.

1022
01:02:43,960 --> 01:02:46,000
Speaker 1: But I wish I was as sure of that thirty

1023
01:02:46,080 --> 01:02:49,960
Speaker 1: years ago him today. Quite fascinating. Jack, thank you for

1024
01:02:50,080 --> 01:02:53,680
Speaker 1: being so generous with your time. We have been speaking

1025
01:02:54,040 --> 01:02:58,000
Speaker 1: to Jack Brennan. He is the former CEO and chairman

1026
01:02:58,680 --> 01:03:02,919
Speaker 1: of Investing John and the Vanguard Group If you enjoy

1027
01:03:03,000 --> 01:03:06,080
Speaker 1: this conversation, well, be sure and check out any of

1028
01:03:06,160 --> 01:03:10,240
Speaker 1: our previous four hundred such discussions. You could find those

1029
01:03:10,320 --> 01:03:14,960
Speaker 1: at iTunes, Spotify, wherever you feed your podcast fix. We

1030
01:03:15,120 --> 01:03:18,960
Speaker 1: love your comments, feedback and suggestions right to us at

1031
01:03:19,720 --> 01:03:23,080
Speaker 1: m IB podcast at Bloomberg dot net. Sign up for

1032
01:03:23,200 --> 01:03:26,760
Speaker 1: my daily reads at Rid Halts dot com. Check out

1033
01:03:26,840 --> 01:03:30,080
Speaker 1: my weekly column at Bloomberg dot com slash Opinion. You

1034
01:03:30,160 --> 01:03:33,000
Speaker 1: can follow me on Twitter at Rid Halts. I would

1035
01:03:33,040 --> 01:03:35,280
Speaker 1: be remiss if I did not thank our crack team

1036
01:03:35,680 --> 01:03:40,400
Speaker 1: that helps put this conversation together each week. Tim Harrow

1037
01:03:40,560 --> 01:03:44,480
Speaker 1: is my audio engineer. Attica val Bron is my project manager.

1038
01:03:45,040 --> 01:03:48,520
Speaker 1: Michael Boyle is my producer. Michael Batnick is my head

1039
01:03:48,560 --> 01:03:53,040
Speaker 1: of research. I'm Barry Hults. You've been listening to Master's

1040
01:03:53,080 --> 01:03:55,360
Speaker 1: in Business on Bloomberg Radio.