1 00:00:00,120 --> 00:00:03,920 Speaker 1: All right, So here we are with the legendary David Ruberstein. 2 00:00:04,480 --> 00:00:08,280 Speaker 1: Thank you for joining us. Yes, you're not familiar with David. 3 00:00:08,360 --> 00:00:10,760 Speaker 1: He is the chair of the board of Trustees of 4 00:00:10,840 --> 00:00:14,120 Speaker 1: Duke University. He is the host of Bloomberg's pay a 5 00:00:14,200 --> 00:00:17,479 Speaker 1: pair of conversations, and he is the co founder and 6 00:00:17,520 --> 00:00:21,599 Speaker 1: co chairman of private equity firm the Carlisle Group, which 7 00:00:21,640 --> 00:00:25,360 Speaker 1: is a global private equity investment firm. How much the 8 00:00:25,480 --> 00:00:27,400 Speaker 1: assets on the management four hundred billion? 9 00:00:27,480 --> 00:00:30,440 Speaker 2: If that number has changed, please correct me for four 10 00:00:30,720 --> 00:00:35,600 Speaker 2: million advantage under management right now, which is amazing. 11 00:00:37,840 --> 00:00:40,559 Speaker 1: Yes, so thank you for joining us. 12 00:00:40,560 --> 00:00:43,400 Speaker 3: Appreciate it, my pleasure. Thank you very much for having me. 13 00:00:43,800 --> 00:00:45,600 Speaker 1: And he's an author too. We'll talk about his book. 14 00:00:45,800 --> 00:00:49,240 Speaker 4: Yes, I'm looking for Yes, very important. 15 00:00:49,520 --> 00:00:52,200 Speaker 1: So all right, so let's get into it. I want 16 00:00:52,200 --> 00:00:54,880 Speaker 1: to start off with, you know, some education for the 17 00:00:54,960 --> 00:01:00,279 Speaker 1: audience private equity. Can you explain what private equity years? 18 00:01:00,320 --> 00:01:04,800 Speaker 1: I feel that people have a good understanding of venture 19 00:01:04,880 --> 00:01:07,400 Speaker 1: capital because that's been the news a lot, and that's 20 00:01:07,400 --> 00:01:11,600 Speaker 1: been very popular the last couple of years. But I 21 00:01:11,600 --> 00:01:15,200 Speaker 1: think that the general public still doesn't have a good understanding, 22 00:01:15,280 --> 00:01:17,440 Speaker 1: or they might not have even heard of private equity? 23 00:01:17,920 --> 00:01:20,440 Speaker 3: Can you explain? Explain? 24 00:01:21,600 --> 00:01:24,560 Speaker 5: In the United States, the phrase private equity means one thing. 25 00:01:24,760 --> 00:01:27,760 Speaker 5: Outside the United States, it means another thing. In the 26 00:01:27,840 --> 00:01:32,320 Speaker 5: United States, private equity more or less means all private investments. 27 00:01:32,360 --> 00:01:33,520 Speaker 3: It could be venture. 28 00:01:33,240 --> 00:01:37,520 Speaker 5: Capital, growth capital, the stress debt, anything where you're buying 29 00:01:37,520 --> 00:01:41,160 Speaker 5: an asset that is something that's going to be held privately. 30 00:01:41,200 --> 00:01:42,880 Speaker 5: It's not going to be public when you own it. 31 00:01:43,440 --> 00:01:46,440 Speaker 5: And the theory behind private equity is that when you 32 00:01:46,520 --> 00:01:49,080 Speaker 5: have something that's not in a public setting, you can 33 00:01:49,120 --> 00:01:51,880 Speaker 5: make changes, you can improve it, you can in send people, 34 00:01:51,920 --> 00:01:54,280 Speaker 5: you can pay them more, and ultimately you'll get a 35 00:01:54,280 --> 00:01:58,080 Speaker 5: better return. So the theory behind private equity is that 36 00:01:58,120 --> 00:02:01,240 Speaker 5: you buy an asset, you make it much better when 37 00:02:01,280 --> 00:02:03,440 Speaker 5: you sell it or you take it public. You're going 38 00:02:03,480 --> 00:02:06,080 Speaker 5: to get a rate of return on your investment that's 39 00:02:06,080 --> 00:02:08,800 Speaker 5: going to be let's say, twenty percent per annum. So 40 00:02:08,880 --> 00:02:10,680 Speaker 5: if you put your money in the bank, you're going 41 00:02:10,760 --> 00:02:13,240 Speaker 5: to get maybe one percent a year. If you put 42 00:02:13,240 --> 00:02:15,440 Speaker 5: your money in stock market, maybe you get on the average 43 00:02:15,400 --> 00:02:17,800 Speaker 5: six percent a year. If you put your money in 44 00:02:18,880 --> 00:02:22,240 Speaker 5: private equity, and it's a good private equity funder or 45 00:02:22,320 --> 00:02:24,840 Speaker 5: or or deal, you might get twenty percent or thirty 46 00:02:24,880 --> 00:02:27,760 Speaker 5: percent a year. Well that's pretty good. So the theory 47 00:02:27,880 --> 00:02:30,960 Speaker 5: is it's a better way to make add value to 48 00:02:31,040 --> 00:02:34,920 Speaker 5: an organization and you can and you can get a 49 00:02:34,919 --> 00:02:35,680 Speaker 5: good rate of return. 50 00:02:35,720 --> 00:02:36,400 Speaker 3: So that's what it is. 51 00:02:36,440 --> 00:02:39,960 Speaker 5: Basically fixing up something in a private setting, making it better, 52 00:02:39,960 --> 00:02:42,720 Speaker 5: and ultimately selling it after three to five years. That 53 00:02:42,840 --> 00:02:45,040 Speaker 5: gets you a return of maybe twenty percent a year. 54 00:02:46,760 --> 00:02:49,040 Speaker 4: Thank you for being here, A huge fan of your show. 55 00:02:49,480 --> 00:02:53,440 Speaker 6: Can you talk to us about the importlance of being 56 00:02:53,440 --> 00:02:55,960 Speaker 6: a controller in the face and conventional wisdom? And are 57 00:02:56,000 --> 00:02:59,160 Speaker 6: there any sexes right now? You think people should take 58 00:02:59,200 --> 00:03:01,560 Speaker 6: a ConTroll and take on in this environment. 59 00:03:01,760 --> 00:03:06,679 Speaker 5: Right, the greatest investors in the world of generally or contrarians. 60 00:03:06,760 --> 00:03:10,239 Speaker 5: If you just went along with the average common sense 61 00:03:10,360 --> 00:03:12,640 Speaker 5: view of what the average person thinks, you would be 62 00:03:13,040 --> 00:03:14,920 Speaker 5: one of the pack and you wouldn't do anything that 63 00:03:15,200 --> 00:03:18,560 Speaker 5: make you stand out. So contrariants take a view that's 64 00:03:18,600 --> 00:03:20,840 Speaker 5: different than the average common sense wisdom. 65 00:03:21,040 --> 00:03:21,440 Speaker 3: Today. 66 00:03:21,480 --> 00:03:25,040 Speaker 5: For example, the common sense wisdom that the average investor 67 00:03:25,080 --> 00:03:27,679 Speaker 5: would have is get out of the stock market, sell 68 00:03:27,720 --> 00:03:29,880 Speaker 5: whatever you have. The economy is going to hell in 69 00:03:29,919 --> 00:03:32,119 Speaker 5: a handbasket, and we're going to be in a recession. 70 00:03:32,600 --> 00:03:35,600 Speaker 5: The smart investors would say, now's the time to come in, 71 00:03:36,000 --> 00:03:39,960 Speaker 5: buy things in a discount, and eventually in the recessions 72 00:03:40,000 --> 00:03:42,760 Speaker 5: always end and eventually in three or four years you 73 00:03:42,920 --> 00:03:45,520 Speaker 5: have bought something at fifty cents on a dollar and 74 00:03:45,560 --> 00:03:47,120 Speaker 5: then two or three years are gonna be worth three 75 00:03:47,160 --> 00:03:50,440 Speaker 5: dollars something like that. So that's what our contraan goes 76 00:03:50,440 --> 00:03:53,200 Speaker 5: against the conventional wisdom. 77 00:03:53,520 --> 00:03:58,160 Speaker 2: Well, our audience is, you know, filled with retail investors. 78 00:03:58,160 --> 00:04:00,400 Speaker 2: We have some institutional investors, I'm sure, but a lot 79 00:04:00,440 --> 00:04:04,760 Speaker 2: of retail investors and obviously they're learning the market, they're understanding, 80 00:04:04,960 --> 00:04:08,200 Speaker 2: they're investing in. What are some habits that you've come 81 00:04:08,240 --> 00:04:11,000 Speaker 2: across in your career that you've noticed that great and 82 00:04:11,040 --> 00:04:13,440 Speaker 2: good investors have, right, so they can have an age. 83 00:04:13,600 --> 00:04:17,719 Speaker 5: Well, people who are great investors generally, this is their life. 84 00:04:17,760 --> 00:04:20,440 Speaker 5: This is what they do full time. They don't kind 85 00:04:20,440 --> 00:04:22,840 Speaker 5: of have a day job and then they're picking stocks 86 00:04:22,839 --> 00:04:24,719 Speaker 5: at night and then they kind of they do Well, 87 00:04:24,760 --> 00:04:26,680 Speaker 5: you have to do this full time. You have to 88 00:04:26,720 --> 00:04:29,680 Speaker 5: be pretty smart, good with numbers. You have to have 89 00:04:29,720 --> 00:04:33,440 Speaker 5: a willingness to read enormous amounts of material. You have 90 00:04:33,480 --> 00:04:35,200 Speaker 5: to admit a mistake when you make it and get 91 00:04:35,240 --> 00:04:36,960 Speaker 5: out of a bad deal, because everybody. 92 00:04:36,640 --> 00:04:37,320 Speaker 3: Makes a mistake. 93 00:04:37,680 --> 00:04:39,599 Speaker 5: I think it also takes some humility to be a 94 00:04:39,600 --> 00:04:41,760 Speaker 5: great investor, because you realize you're going to make mistakes, 95 00:04:41,800 --> 00:04:44,720 Speaker 5: and you can't say I'm so brilliant and the market's wrong, 96 00:04:44,760 --> 00:04:46,640 Speaker 5: but I'm right and the market's wrong, and you start 97 00:04:46,720 --> 00:04:49,840 Speaker 5: losing money, and you know, those are things that make 98 00:04:49,880 --> 00:04:55,039 Speaker 5: great investors. The average retail investor who buy stocks in 99 00:04:55,080 --> 00:04:58,320 Speaker 5: the public market, you know, they're probably not great investors. 100 00:04:58,360 --> 00:05:00,240 Speaker 5: They just they haven't done this for a living. You 101 00:05:00,320 --> 00:05:02,840 Speaker 5: have to do something for a living, and you know, 102 00:05:02,880 --> 00:05:05,320 Speaker 5: if you were you were going to a dentist, you 103 00:05:05,320 --> 00:05:10,360 Speaker 5: wouldn't want a dentist who is spending full time picking stocks. 104 00:05:10,720 --> 00:05:12,520 Speaker 5: You want a dentist who's going to actually know how 105 00:05:12,520 --> 00:05:15,000 Speaker 5: to be a dentist. So an average dentist or doctor 106 00:05:15,120 --> 00:05:17,919 Speaker 5: isn't doing this full time, and therefore they're probably not 107 00:05:17,960 --> 00:05:19,320 Speaker 5: going to be that good at it. That's why for 108 00:05:19,400 --> 00:05:23,280 Speaker 5: the average retail investor, the average person who's not a professional, 109 00:05:23,600 --> 00:05:26,120 Speaker 5: they're probably best to go into index funds, which just 110 00:05:26,240 --> 00:05:29,719 Speaker 5: mirror the market very modest fees, and the stock market 111 00:05:29,720 --> 00:05:31,479 Speaker 5: goes up thirteen percent a year, you're going to go 112 00:05:31,520 --> 00:05:33,960 Speaker 5: up thirteen percent a year. Trying to pick stocks and 113 00:05:34,000 --> 00:05:36,680 Speaker 5: become Warren Buffett while you have a day job as 114 00:05:36,720 --> 00:05:39,800 Speaker 5: a as a dentist or doctor is a fool's Errand. 115 00:05:41,200 --> 00:05:44,200 Speaker 1: So let me ask you this, what are your thoughts 116 00:05:44,240 --> 00:05:46,960 Speaker 1: in the handling of the economy by the Fed this year? 117 00:05:47,160 --> 00:05:49,880 Speaker 3: Been my thoughts on what I'm sorry, can you speak up. 118 00:05:50,080 --> 00:05:52,200 Speaker 1: The Fed's handling of the coat? 119 00:05:52,480 --> 00:05:55,400 Speaker 5: Okay, I should disclose that I hired a young man 120 00:05:55,480 --> 00:05:57,920 Speaker 5: that worked for me years ago, and he was at 121 00:05:57,960 --> 00:05:59,520 Speaker 5: our firm for a number of years and he left. 122 00:05:59,640 --> 00:06:02,000 Speaker 3: His name is Jay Powell, so now it's the chever 123 00:06:02,040 --> 00:06:02,719 Speaker 3: in the Federal Reserve. 124 00:06:03,200 --> 00:06:05,760 Speaker 5: But he doesn't give me any insights. The Federal Reserve 125 00:06:05,839 --> 00:06:09,880 Speaker 5: made a terrible mistake. They underestimated how serious the inflation 126 00:06:10,040 --> 00:06:13,240 Speaker 5: was going to be. The United States government injected five 127 00:06:13,360 --> 00:06:17,720 Speaker 5: trillion dollars into our economy to deal with COVID. And 128 00:06:17,800 --> 00:06:20,839 Speaker 5: you put five trillion dollars into an economy that's roughly 129 00:06:20,839 --> 00:06:23,440 Speaker 5: a twenty two trillion dollar economy, you're going to get inflation. 130 00:06:23,839 --> 00:06:26,600 Speaker 5: So we got a lot of inflation. The Fed said 131 00:06:26,600 --> 00:06:29,160 Speaker 5: for a while it's transitory, which means it'll. 132 00:06:28,920 --> 00:06:31,600 Speaker 3: Be gone soon. They were wrong. So now they're going. 133 00:06:31,560 --> 00:06:34,640 Speaker 5: To increase interest rates a fair bit to get inflation 134 00:06:34,880 --> 00:06:37,600 Speaker 5: down now. As you may have seen last week, inflation 135 00:06:37,720 --> 00:06:40,800 Speaker 5: came down a little bit still at seven point seven percent. 136 00:06:41,240 --> 00:06:43,520 Speaker 5: The Fed wants to get inflation down to two percent 137 00:06:43,600 --> 00:06:45,839 Speaker 5: per year. That's what we had for the last twenty 138 00:06:45,839 --> 00:06:48,160 Speaker 5: five years, two percent a year. It wasn't a big factor. 139 00:06:48,520 --> 00:06:51,560 Speaker 5: Getting back to two percent is not easy. I know 140 00:06:51,640 --> 00:06:53,520 Speaker 5: a lot about inflation because I worked in the Carter 141 00:06:53,600 --> 00:06:56,080 Speaker 5: White House when we got inflation to nineteen percent. 142 00:06:56,320 --> 00:06:59,280 Speaker 3: Nobody's ever to do that again, right, so. 143 00:07:00,880 --> 00:07:05,279 Speaker 5: Please, please, So I would say the Fed is now 144 00:07:05,320 --> 00:07:08,719 Speaker 5: serious about fighting inflation. They're going to keep increasing interest 145 00:07:08,800 --> 00:07:12,440 Speaker 5: rates for a while, and I spect in December they 146 00:07:12,480 --> 00:07:14,640 Speaker 5: will have another meeting and they'll increase interest rates by 147 00:07:14,680 --> 00:07:18,080 Speaker 5: another seventy five basis points, or almost one full point. 148 00:07:18,440 --> 00:07:21,920 Speaker 5: So yeah, I think the Fed has probably made a 149 00:07:21,960 --> 00:07:24,200 Speaker 5: mistake in the beginning. Now they're trying to compensate for it, 150 00:07:24,200 --> 00:07:26,000 Speaker 5: and I think they're doing a reasonably good job now. 151 00:07:27,600 --> 00:07:29,160 Speaker 4: In light of the FTX scandal. 152 00:07:29,520 --> 00:07:31,560 Speaker 6: Looking back at the interview that you deal with Sam 153 00:07:32,000 --> 00:07:34,920 Speaker 6: as An investor. Is there anything in hindsight that made 154 00:07:35,000 --> 00:07:39,080 Speaker 6: you say something about him or the strategy of the 155 00:07:39,080 --> 00:07:39,920 Speaker 6: company didn't. 156 00:07:39,680 --> 00:07:45,960 Speaker 5: Feel right, which would about him ftx oh FDx Yes, 157 00:07:46,920 --> 00:07:50,160 Speaker 5: Sam Bankman freed, Well, it was the only interviewer I 158 00:07:50,160 --> 00:07:51,880 Speaker 5: had with a guy showed up in a T shirt, 159 00:07:52,200 --> 00:07:54,960 Speaker 5: shorts and tennis shoes. That's all he had wore, and 160 00:07:54,960 --> 00:07:56,600 Speaker 5: that's apparently that was his normal dress. 161 00:07:56,640 --> 00:07:59,240 Speaker 3: So I was a little It was a little unusual. 162 00:07:59,320 --> 00:08:02,000 Speaker 3: Usually people dress a little bit better for the interviews. 163 00:08:03,160 --> 00:08:05,440 Speaker 5: He's look, you meet a lot of people in this 164 00:08:05,520 --> 00:08:09,320 Speaker 5: world who are brilliant young people, and when you're a 165 00:08:09,400 --> 00:08:12,200 Speaker 5: brilliant young person and you haven't had a failure, you 166 00:08:12,240 --> 00:08:14,960 Speaker 5: think you really are brilliant, and you walk on water. 167 00:08:15,280 --> 00:08:16,760 Speaker 3: So he had never made a mistake. 168 00:08:16,960 --> 00:08:19,520 Speaker 5: Really, he built a business where in at the age 169 00:08:19,560 --> 00:08:23,160 Speaker 5: of thirty, he's worth twenty two billion dollars. So when 170 00:08:23,160 --> 00:08:25,480 Speaker 5: you were thirty years old, you guys look like you're 171 00:08:26,280 --> 00:08:28,360 Speaker 5: maybe a little older than thirty. I don't know, but 172 00:08:28,880 --> 00:08:30,480 Speaker 5: when you were thirty years old, if you were worth 173 00:08:30,520 --> 00:08:32,160 Speaker 5: twenty two billion dollars, you would think. 174 00:08:32,040 --> 00:08:36,000 Speaker 3: You walk on water. Absolutely, he may have thought that. 175 00:08:36,760 --> 00:08:40,400 Speaker 5: I would say, it appears that they made a terrible mistake, 176 00:08:40,440 --> 00:08:42,720 Speaker 5: and whether it's criminal or not, I don't know. But 177 00:08:42,800 --> 00:08:47,240 Speaker 5: they were taking customer accounts and putting them into other 178 00:08:47,480 --> 00:08:50,280 Speaker 5: businesses that the customers didn't know about. So let's suppose 179 00:08:50,320 --> 00:08:52,400 Speaker 5: you have an account at Merrill Lynch and you put 180 00:08:52,440 --> 00:08:55,600 Speaker 5: a thousand dollars into it and they told you later, 181 00:08:55,960 --> 00:08:58,040 Speaker 5: guess what. We took that thousand dollars. We lent it 182 00:08:58,040 --> 00:09:01,640 Speaker 5: to something else, and we'll give your dollars back soon. Well, 183 00:09:01,679 --> 00:09:04,119 Speaker 5: before they could give it back to you, it went bankrupt. 184 00:09:04,320 --> 00:09:06,640 Speaker 5: So you're out here thousand dollars. That appears to be 185 00:09:06,679 --> 00:09:09,800 Speaker 5: what they did, and therefore there's a lot of challenges there. 186 00:09:09,880 --> 00:09:11,920 Speaker 5: So he's a smart guy. I've met him on a 187 00:09:11,960 --> 00:09:15,840 Speaker 5: couple occasions. I would say, you know, you have to 188 00:09:15,880 --> 00:09:17,880 Speaker 5: be wary of people who are thirty years old and 189 00:09:17,920 --> 00:09:20,280 Speaker 5: think they walk on water, because it rarely happens. 190 00:09:22,000 --> 00:09:22,320 Speaker 4: Noted. 191 00:09:23,280 --> 00:09:25,440 Speaker 3: So there was there was one thirty three year old 192 00:09:25,480 --> 00:09:27,560 Speaker 3: guy that did walk on water, but that was unusual. 193 00:09:29,960 --> 00:09:32,240 Speaker 3: I had to get a love it walk on water. 194 00:09:32,400 --> 00:09:33,400 Speaker 3: I love it. I love it. 195 00:09:34,720 --> 00:09:38,640 Speaker 2: Obviously one of the greatest investors of our time, obviously 196 00:09:38,720 --> 00:09:42,040 Speaker 2: the Carlo Group. Like we said, four hundred billion managing 197 00:09:42,120 --> 00:09:45,320 Speaker 2: assets prior to even get into finance. I know you 198 00:09:45,320 --> 00:09:48,240 Speaker 2: studied law, So what was that transition like from you 199 00:09:48,320 --> 00:09:49,800 Speaker 2: going into law to find out? 200 00:09:50,600 --> 00:09:52,839 Speaker 5: Well, let's be honest, if you're going to be good 201 00:09:52,840 --> 00:09:55,280 Speaker 5: at something, you have to love it, and I wasn't. 202 00:09:55,360 --> 00:09:57,480 Speaker 5: I didn't love the practice of law, and my clients 203 00:09:57,760 --> 00:10:01,839 Speaker 5: told me I wasn't that good at it. I went 204 00:10:01,880 --> 00:10:03,839 Speaker 5: to law school to make my mother happy because she 205 00:10:03,920 --> 00:10:05,800 Speaker 5: said you'd either be a doctor or a lawyer. 206 00:10:06,120 --> 00:10:07,760 Speaker 3: So I didn't want to go to medical school. So 207 00:10:07,800 --> 00:10:08,680 Speaker 3: I went to law school. 208 00:10:09,000 --> 00:10:11,360 Speaker 5: And I was really interested in politics, and so I 209 00:10:11,400 --> 00:10:13,600 Speaker 5: was really interested in working in government. And I went 210 00:10:13,640 --> 00:10:15,480 Speaker 5: to work for Jimmy Carter at the White House for 211 00:10:15,520 --> 00:10:19,000 Speaker 5: four years when I was in my twenties, and you know, 212 00:10:19,040 --> 00:10:20,880 Speaker 5: we got in place in the nineteen percent and the 213 00:10:20,920 --> 00:10:22,080 Speaker 5: result was we didn't lose. 214 00:10:22,120 --> 00:10:22,880 Speaker 3: We lost the election. 215 00:10:23,520 --> 00:10:25,400 Speaker 5: So I had to go back and practice saw it, 216 00:10:25,440 --> 00:10:27,160 Speaker 5: so I knew but I wasn't that good at it. 217 00:10:27,280 --> 00:10:28,600 Speaker 3: My clients reminded me of that. 218 00:10:28,880 --> 00:10:31,400 Speaker 5: So I decided to do something different and I started 219 00:10:31,440 --> 00:10:33,960 Speaker 5: affirm in Washington nineteen eighty seven that grew to be 220 00:10:34,000 --> 00:10:35,479 Speaker 5: one of the largest private equity. 221 00:10:35,200 --> 00:10:36,959 Speaker 3: Firms in the world. So I got lucky. 222 00:10:37,000 --> 00:10:39,600 Speaker 5: I surrounded myself with really smart people that knew more 223 00:10:39,600 --> 00:10:40,120 Speaker 5: than I did. 224 00:10:40,520 --> 00:10:41,240 Speaker 3: And the key to. 225 00:10:41,240 --> 00:10:43,880 Speaker 5: Really building a great business is surrounding yourself with smarter 226 00:10:43,960 --> 00:10:47,240 Speaker 5: people than you. So that's what happened. I built it 227 00:10:47,280 --> 00:10:49,400 Speaker 5: that's now one of the largest firms in the world 228 00:10:49,480 --> 00:10:53,360 Speaker 5: in this area. But I was attracted to it because 229 00:10:53,400 --> 00:10:56,120 Speaker 5: I thought, if I'm going to be not in government 230 00:10:56,160 --> 00:10:58,000 Speaker 5: and government doesn't want me because I didn't do a 231 00:10:58,000 --> 00:11:00,240 Speaker 5: good job, and I'm going to be in the private sector, 232 00:11:00,840 --> 00:11:02,440 Speaker 5: I might as well make the most amount of money 233 00:11:02,480 --> 00:11:02,920 Speaker 5: I can make. 234 00:11:02,960 --> 00:11:04,400 Speaker 3: And business people. 235 00:11:04,360 --> 00:11:07,080 Speaker 5: And privatecy firms are making a lot more money than lawyers, 236 00:11:07,480 --> 00:11:09,640 Speaker 5: and they ought to actually seem to be more enjoyable. 237 00:11:09,640 --> 00:11:11,760 Speaker 5: So that's why I started, and it worked. 238 00:11:12,920 --> 00:11:15,200 Speaker 1: So let me ask you this. You talked about inflation 239 00:11:15,280 --> 00:11:18,280 Speaker 1: a few times. Last week a report came out and 240 00:11:18,280 --> 00:11:20,960 Speaker 1: they said that they thought that inflation might have peaked 241 00:11:21,400 --> 00:11:23,640 Speaker 1: and that that was good for the market. Do you 242 00:11:24,120 --> 00:11:25,520 Speaker 1: think that inflation has peaked? 243 00:11:27,000 --> 00:11:29,880 Speaker 3: Well, it's it's an interesting question. 244 00:11:31,320 --> 00:11:34,840 Speaker 5: Last week, the numbers came out that said that inflation 245 00:11:35,000 --> 00:11:37,640 Speaker 5: rate from month to month the year to year was 246 00:11:37,800 --> 00:11:41,120 Speaker 5: seven point seven percent Now, if I told you inflation 247 00:11:41,280 --> 00:11:43,880 Speaker 5: was going to be seven point seven percent annualized, you 248 00:11:43,920 --> 00:11:45,000 Speaker 5: would run for the hills. 249 00:11:45,320 --> 00:11:47,080 Speaker 3: But because it was previously. 250 00:11:46,679 --> 00:11:49,200 Speaker 5: Over eight percent, it was eight point six percent, seven 251 00:11:49,280 --> 00:11:52,640 Speaker 5: point seven percent looked wonderful. So yes, it may have peaked. 252 00:11:52,679 --> 00:11:57,120 Speaker 5: I think it probably has. But remember inflation was pretty 253 00:11:57,160 --> 00:11:59,400 Speaker 5: high because we injected so much money in the economy. 254 00:11:59,640 --> 00:12:02,120 Speaker 5: The war or in Ukraine had a very high effect 255 00:12:02,160 --> 00:12:06,360 Speaker 5: on energy prices and the food supply chain, so there 256 00:12:06,360 --> 00:12:09,400 Speaker 5: are many things that produced this high inflation. I think 257 00:12:09,400 --> 00:12:13,520 Speaker 5: it probably has peaked, but nobody really knows for certain. Now, 258 00:12:13,840 --> 00:12:16,280 Speaker 5: I'd say if the war in Ukraine were to end 259 00:12:16,320 --> 00:12:18,600 Speaker 5: in a couple of months, that would be great for inflation. 260 00:12:19,200 --> 00:12:23,240 Speaker 5: And if Ukraine can start producing and shipping wheat again, 261 00:12:23,280 --> 00:12:25,840 Speaker 5: that would be great for inflation. But I'd say it's 262 00:12:25,880 --> 00:12:28,959 Speaker 5: a little premature to say it's peaked because we need 263 00:12:29,000 --> 00:12:30,200 Speaker 5: a couple months of data. 264 00:12:30,240 --> 00:12:34,280 Speaker 6: Just one month isn't probably enough. I'm looking forward to 265 00:12:34,280 --> 00:12:37,360 Speaker 6: reading your book. Can you share with us what's one 266 00:12:37,440 --> 00:12:41,920 Speaker 6: lesson you learned from maybe Jim Simmons, Ken Griffin and 267 00:12:42,000 --> 00:12:46,920 Speaker 6: maybe John Paulson around how they invest in A very 268 00:12:46,920 --> 00:12:48,880 Speaker 6: impactful lesson that will help audience tonight. 269 00:12:49,960 --> 00:12:50,280 Speaker 3: Well. 270 00:12:50,440 --> 00:12:52,839 Speaker 5: Ken Griffin is a guy that built one of the 271 00:12:52,880 --> 00:12:55,520 Speaker 5: most successful hedge funds of all time. He's also got 272 00:12:55,520 --> 00:12:59,720 Speaker 5: a separate company called Citadel Securities, and he's extremely wealthy. 273 00:13:00,080 --> 00:13:04,480 Speaker 5: He basically believes in analyzing data very carefully. He surrounds 274 00:13:04,559 --> 00:13:07,600 Speaker 5: himself with really really smart people and he tries very 275 00:13:07,679 --> 00:13:09,600 Speaker 5: hard to get the best people in the country who 276 00:13:09,600 --> 00:13:12,520 Speaker 5: are really good with numbers. He tries to steal people 277 00:13:12,520 --> 00:13:17,520 Speaker 5: from Google, not steal, but recruit people from Google, Facebook, Microsoft, Apple. 278 00:13:17,600 --> 00:13:19,920 Speaker 5: Get really smart people and have no numbers, and they 279 00:13:20,040 --> 00:13:24,599 Speaker 5: really analyze these things carefully. John Paulson made one bet. 280 00:13:24,840 --> 00:13:27,200 Speaker 5: It was a bet that the mortgage market would collapse, 281 00:13:27,520 --> 00:13:29,280 Speaker 5: and at the time people didn't think it would be 282 00:13:29,360 --> 00:13:30,760 Speaker 5: quite as bad as it turned out to be. So 283 00:13:30,800 --> 00:13:35,720 Speaker 5: he made on one investment twenty billion dollars twenty billion, 284 00:13:36,280 --> 00:13:37,719 Speaker 5: so you don't have to do anything the rest of 285 00:13:37,760 --> 00:13:38,040 Speaker 5: your life. 286 00:13:38,120 --> 00:13:38,400 Speaker 3: You're make. 287 00:13:40,240 --> 00:13:43,080 Speaker 5: Good trade, like say, it was the greatest trade of 288 00:13:43,080 --> 00:13:45,000 Speaker 5: all time, and so he did pretty well. 289 00:13:45,160 --> 00:13:46,959 Speaker 3: But basically he analyzed. 290 00:13:46,480 --> 00:13:49,960 Speaker 5: The fact that mortgage market was probably over inflated, and 291 00:13:50,200 --> 00:13:51,679 Speaker 5: he correctly bet on that. 292 00:13:53,160 --> 00:13:56,200 Speaker 2: Yeah, most people say no risk, no reward, obviously in 293 00:13:56,240 --> 00:13:59,960 Speaker 2: your space when you're managing people's money that you know 294 00:14:00,120 --> 00:14:00,720 Speaker 2: may not be true. 295 00:14:00,800 --> 00:14:01,320 Speaker 3: Maybe it is. 296 00:14:01,360 --> 00:14:03,880 Speaker 2: Can you talk about the importance of risk management when 297 00:14:03,880 --> 00:14:06,040 Speaker 2: you're talking about private equity, So I. 298 00:14:06,040 --> 00:14:08,560 Speaker 3: Think in private equity, I'm sorry. 299 00:14:08,080 --> 00:14:10,120 Speaker 4: Risk management the important. 300 00:14:10,440 --> 00:14:16,400 Speaker 5: Well, you know, risk management is a way of managing 301 00:14:16,400 --> 00:14:20,840 Speaker 5: your money where you're basically in effect hedging. You're trying 302 00:14:20,880 --> 00:14:23,160 Speaker 5: not to get the highest rate of return, but you're 303 00:14:23,160 --> 00:14:25,040 Speaker 5: trying to protect against the downside. 304 00:14:25,400 --> 00:14:26,800 Speaker 3: Private equity is different than that. 305 00:14:26,840 --> 00:14:29,120 Speaker 5: Private equity is basically saying we're going to fix a company, 306 00:14:29,160 --> 00:14:31,720 Speaker 5: make it better. We're not trying to hedge against it. 307 00:14:31,880 --> 00:14:34,760 Speaker 5: So it's different. I would say, depends on what somebody 308 00:14:34,880 --> 00:14:38,840 Speaker 5: really wants out of life. If you're seventy five years 309 00:14:38,880 --> 00:14:42,360 Speaker 5: old and you're living on the retirement income and you 310 00:14:42,360 --> 00:14:44,240 Speaker 5: don't have a lot of money coming in, you don't 311 00:14:44,240 --> 00:14:46,200 Speaker 5: want to take a big risk. You probably have a 312 00:14:46,280 --> 00:14:48,880 Speaker 5: more a risk management kind of approach, which is to 313 00:14:48,880 --> 00:14:52,440 Speaker 5: say you're protecting the downside. If you're twenty five years 314 00:14:52,480 --> 00:14:55,320 Speaker 5: old and you can take a lot of risk because 315 00:14:55,360 --> 00:14:57,360 Speaker 5: if you make the mistakes, you can go make money again, 316 00:14:57,600 --> 00:15:00,000 Speaker 5: probably private equity might be better for you because you're 317 00:15:00,080 --> 00:15:01,920 Speaker 5: willing to take the upside and you don't need to 318 00:15:01,920 --> 00:15:03,160 Speaker 5: protect the downside so much. 319 00:15:03,240 --> 00:15:04,400 Speaker 3: It depends on your situation. 320 00:15:04,600 --> 00:15:07,960 Speaker 5: How much money can you afford to lose, for example cryptocurrencies. 321 00:15:08,240 --> 00:15:10,120 Speaker 5: I always told people, don't put more in than you 322 00:15:10,120 --> 00:15:13,680 Speaker 5: can afford to lose, and some people did. 323 00:15:14,400 --> 00:15:14,960 Speaker 3: People did. 324 00:15:16,920 --> 00:15:19,880 Speaker 1: Is what's your economic outlook for twenty twenty three? 325 00:15:22,160 --> 00:15:24,760 Speaker 5: I would say for twenty twenty three, I suspect the 326 00:15:24,840 --> 00:15:28,040 Speaker 5: United States will probably go into a recession. That's a 327 00:15:28,120 --> 00:15:31,360 Speaker 5: very common view, and that's because if you go back 328 00:15:31,400 --> 00:15:34,520 Speaker 5: from to nineteen sixty, almost every time the Federal Reserve 329 00:15:34,520 --> 00:15:37,560 Speaker 5: has increased interest rates dramatically, the result has been a 330 00:15:37,560 --> 00:15:40,560 Speaker 5: so called hard landing or a recession. So it's unlikely 331 00:15:40,600 --> 00:15:42,320 Speaker 5: we're going to be able to avoid it this time, 332 00:15:42,440 --> 00:15:44,680 Speaker 5: but it'll probably be very modest. I don't expect it 333 00:15:44,680 --> 00:15:47,320 Speaker 5: to be a serious inflatient of the type we had 334 00:15:47,520 --> 00:15:50,480 Speaker 5: in the serious procession, of the type we had in 335 00:15:50,560 --> 00:15:52,560 Speaker 5: the Great Recession of two thousands. 336 00:15:53,640 --> 00:15:54,320 Speaker 4: Ernest, what's up? 337 00:15:54,400 --> 00:15:56,520 Speaker 7: You have a walk into a small business and everything 338 00:15:56,760 --> 00:15:59,640 Speaker 7: just works like the checkout is fast, there are seats 339 00:15:59,640 --> 00:16:03,160 Speaker 7: of digital tipping is a breeze, and you're out the 340 00:16:03,200 --> 00:16:07,320 Speaker 7: door before the line even builds odds are they're using Square. 341 00:16:07,800 --> 00:16:10,400 Speaker 7: We love supporting businesses that run on Square because it 342 00:16:10,480 --> 00:16:13,440 Speaker 7: just feels seamless. 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It's not just about payments, 350 00:16:36,800 --> 00:16:39,840 Speaker 7: it's about giving you time back so you can focus. 351 00:16:39,480 --> 00:16:41,080 Speaker 2: On what matters most ready. 352 00:16:41,080 --> 00:16:44,480 Speaker 7: To see how Square can transform your business, visit Square 353 00:16:44,560 --> 00:16:49,080 Speaker 7: dot com backslash go backslash eyl to learn more that 354 00:16:49,280 --> 00:16:54,720 Speaker 7: Square dot com backslash, go backslash eyl. Don't wait, don't hesitate. 355 00:16:54,840 --> 00:16:57,200 Speaker 7: Let's Square handle the back end so you can keep 356 00:16:57,240 --> 00:17:03,320 Speaker 7: pushing your vision forward. This episode is brought to you 357 00:17:03,360 --> 00:17:05,640 Speaker 7: by P and C Bank. A lot of people think 358 00:17:05,680 --> 00:17:09,560 Speaker 7: podcasts about work are boring, and sure, they definitely can be, 359 00:17:10,080 --> 00:17:13,320 Speaker 7: but understanding a professional's routine shows us how they achieve 360 00:17:13,400 --> 00:17:17,600 Speaker 7: their success little by little, day after day. It's like 361 00:17:17,680 --> 00:17:20,480 Speaker 7: banking with P and C Bank. It might seem boring 362 00:17:20,480 --> 00:17:23,320 Speaker 7: to safe plan and make calculated decisions with your bank, 363 00:17:23,800 --> 00:17:26,240 Speaker 7: but keeping your money boring is what helps you live 364 00:17:26,400 --> 00:17:30,399 Speaker 7: or more happily fulfilled life. P and C Bank Brilliantly 365 00:17:30,480 --> 00:17:35,040 Speaker 7: Boring since eighteen sixty five. Brilliantly Boring since eighteen sixty 366 00:17:35,040 --> 00:17:38,359 Speaker 7: five is a service mark of the PNC Financial Service Group, Inc. 367 00:17:38,800 --> 00:17:42,640 Speaker 7: P and C Bank National Association Member FDIC. 368 00:17:43,960 --> 00:17:44,919 Speaker 3: Seven eight nine. 369 00:17:45,080 --> 00:17:47,480 Speaker 5: I suspect it to be a two quarter recession, and 370 00:17:47,800 --> 00:17:50,399 Speaker 5: you know, two quarters is not that serious, So I 371 00:17:50,440 --> 00:17:54,040 Speaker 5: think the economy will probably slip a bit in that 372 00:17:54,080 --> 00:17:56,280 Speaker 5: period of time, but I think inflation will come down, 373 00:17:56,600 --> 00:17:59,280 Speaker 5: the unemployment rate will go up. I suspect the unemployment 374 00:17:59,320 --> 00:18:00,800 Speaker 5: rate will probably go up to about four four and 375 00:18:00,840 --> 00:18:04,480 Speaker 5: a half percent next year or something like that. Congress 376 00:18:04,520 --> 00:18:06,360 Speaker 5: is not going to do anything, not that anybody will 377 00:18:06,359 --> 00:18:10,600 Speaker 5: notice or want Congress to do anything. Congress isn't going 378 00:18:10,640 --> 00:18:13,080 Speaker 5: to spend much money because they're just not a lot 379 00:18:13,119 --> 00:18:16,680 Speaker 5: of money left to spend. We have thirty trillion dollars 380 00:18:16,680 --> 00:18:19,600 Speaker 5: of debt in this country. This country, You and I 381 00:18:19,600 --> 00:18:23,480 Speaker 5: owe other people thirty trillion dollars. That's a lot of money, 382 00:18:23,880 --> 00:18:25,560 Speaker 5: and we can't afford to borrow much more. 383 00:18:26,480 --> 00:18:29,160 Speaker 6: If you would get into private equity in twenty twenty three, 384 00:18:29,880 --> 00:18:32,800 Speaker 6: what would be the differences in your strategy in twenty 385 00:18:32,840 --> 00:18:35,000 Speaker 6: twenty three versus when you began in your career. 386 00:18:35,440 --> 00:18:37,840 Speaker 5: Well, when I was starting, inflation was not a factor 387 00:18:38,520 --> 00:18:41,520 Speaker 5: and certain things were not available then today, I would 388 00:18:41,520 --> 00:18:43,560 Speaker 5: say a good thing in twenty twenty three would buy 389 00:18:43,600 --> 00:18:47,080 Speaker 5: distress debt. Distress debt is when you're buying debt that 390 00:18:47,320 --> 00:18:49,440 Speaker 5: our company that's not doing that well, and you buy it, 391 00:18:49,720 --> 00:18:51,679 Speaker 5: you know, fifty cents on a dollar, and probably we'll 392 00:18:51,720 --> 00:18:53,200 Speaker 5: come back to a dollar if you know what you're 393 00:18:53,200 --> 00:18:55,120 Speaker 5: doing and it's a good deal. So I would buy 394 00:18:55,200 --> 00:18:57,840 Speaker 5: a lot of distress debt. I would look at things 395 00:18:57,880 --> 00:19:01,160 Speaker 5: that are going to be important certain areas of the future. 396 00:19:01,440 --> 00:19:05,439 Speaker 5: One of them would be things like quantum computing. Another 397 00:19:05,480 --> 00:19:09,400 Speaker 5: thing would be computational biology. Another on things would be crisper, 398 00:19:09,600 --> 00:19:13,439 Speaker 5: which is gene splitting. Another kind of area that I 399 00:19:13,440 --> 00:19:16,520 Speaker 5: think you would be good to be healthy food. Food 400 00:19:16,560 --> 00:19:18,320 Speaker 5: that's healthy for you. That's going to be a big 401 00:19:18,359 --> 00:19:20,240 Speaker 5: trend as well. So I look for things that in 402 00:19:20,280 --> 00:19:22,119 Speaker 5: the future that are going to be good trends that 403 00:19:22,160 --> 00:19:24,640 Speaker 5: people want to buy things into and you get there 404 00:19:24,680 --> 00:19:26,480 Speaker 5: ahead of them. 405 00:19:26,800 --> 00:19:27,040 Speaker 3: Yeah. 406 00:19:27,080 --> 00:19:29,200 Speaker 2: So for obviously for twenty twenty three, you said the 407 00:19:29,240 --> 00:19:31,880 Speaker 2: outlook is a recession. But in these type of environments 408 00:19:32,359 --> 00:19:35,120 Speaker 2: you mentioned some set are there other sectors that retail 409 00:19:35,119 --> 00:19:36,880 Speaker 2: investors definitely should be looking at. I know you said 410 00:19:36,960 --> 00:19:39,960 Speaker 2: maybe indexes we should start, but other sectors. 411 00:19:39,840 --> 00:19:41,240 Speaker 3: That's one on the retail side that we should be 412 00:19:41,280 --> 00:19:41,880 Speaker 3: looking at. Well. 413 00:19:41,960 --> 00:19:46,160 Speaker 5: Yes, for example, healthcare. When I worked in the White 414 00:19:46,200 --> 00:19:48,280 Speaker 5: House before you were born, were any of you born 415 00:19:48,400 --> 00:19:51,960 Speaker 5: in nineteen seventy seven, any of you alive then? 416 00:19:52,400 --> 00:19:53,120 Speaker 3: No? 417 00:19:52,680 --> 00:19:55,640 Speaker 5: No, no, right, So I was working for President Carter 418 00:19:55,680 --> 00:19:58,320 Speaker 5: in the White House. At that time, the GDP of 419 00:19:58,320 --> 00:20:00,879 Speaker 5: the United States was seven percent in the healthcare area 420 00:20:01,000 --> 00:20:04,560 Speaker 5: seven percent. Today it's about twenty two percent. So that 421 00:20:04,600 --> 00:20:07,520 Speaker 5: means we are spending much more money on healthcare because 422 00:20:07,560 --> 00:20:10,280 Speaker 5: people are wealthier and they want to live longer, and 423 00:20:10,359 --> 00:20:12,800 Speaker 5: so what they do is they spend money on healthcare, telemedicine, 424 00:20:12,840 --> 00:20:15,679 Speaker 5: all kinds of pharmaceutical things you can buy. So I 425 00:20:15,680 --> 00:20:17,639 Speaker 5: think healthcare is going to be one of the great 426 00:20:17,720 --> 00:20:21,119 Speaker 5: continuous growth sectors in our country. But people outside the 427 00:20:21,240 --> 00:20:23,399 Speaker 5: United States they want to live long time too. So 428 00:20:23,480 --> 00:20:26,400 Speaker 5: as people get wealthier outside the United States, they want 429 00:20:26,440 --> 00:20:28,720 Speaker 5: to spend more money on medical treatment, healthcare, and so 430 00:20:28,800 --> 00:20:30,520 Speaker 5: that's going to be one of the great growth areas 431 00:20:30,560 --> 00:20:33,359 Speaker 5: I think in our country and around the world. 432 00:20:33,840 --> 00:20:35,919 Speaker 1: So the name of your new book is how to 433 00:20:36,040 --> 00:20:40,040 Speaker 1: Invest Masses of the Craft. So along the lines of that, 434 00:20:40,240 --> 00:20:42,000 Speaker 1: I definitely want you to talk about the book. But 435 00:20:43,160 --> 00:20:45,160 Speaker 1: what are some keys to becoming a great investor? 436 00:20:46,200 --> 00:20:51,359 Speaker 5: One do reasonably well in school. Two keep reading, Always 437 00:20:51,400 --> 00:20:54,000 Speaker 5: read stuff you never know when's going to be helpful. Three, 438 00:20:54,600 --> 00:20:58,320 Speaker 5: be willing to go against the conventional wisdom. Four surround 439 00:20:58,359 --> 00:21:03,480 Speaker 5: yourself with smart people. Next, maintain some humility. Next, make 440 00:21:03,720 --> 00:21:05,960 Speaker 5: sure when you make a mistake and own up to it, 441 00:21:06,240 --> 00:21:09,800 Speaker 5: share the credit and be willing to take the blame. 442 00:21:10,520 --> 00:21:12,520 Speaker 5: And also I think in the end, if you make 443 00:21:12,560 --> 00:21:14,520 Speaker 5: a fair amount of money, be philanthropic. 444 00:21:14,640 --> 00:21:15,680 Speaker 3: I think it's very helpful. 445 00:21:17,119 --> 00:21:19,840 Speaker 6: You've done incredibly well in your career. Like what drives 446 00:21:19,880 --> 00:21:22,280 Speaker 6: you to continue going and how many hours a day 447 00:21:22,320 --> 00:21:25,320 Speaker 6: are you putting into massing your craft? 448 00:21:26,240 --> 00:21:29,960 Speaker 5: I am old now, I'm seventy three years old. So 449 00:21:30,000 --> 00:21:33,040 Speaker 5: when Ronald Reagan was sixty nine and running for election 450 00:21:33,119 --> 00:21:36,520 Speaker 5: against Jimmy Carter. I told Carter, look, Reagan is so 451 00:21:36,600 --> 00:21:38,040 Speaker 5: old he can't get into bed in the morning. He's 452 00:21:38,040 --> 00:21:41,199 Speaker 5: sixty nine years old. Now I'm seventy three, so you know, 453 00:21:41,240 --> 00:21:44,280 Speaker 5: I'm old. But what motivates me is I want to 454 00:21:44,440 --> 00:21:47,760 Speaker 5: you know, I came from very, very modest circumstances. My 455 00:21:47,880 --> 00:21:51,240 Speaker 5: parents didn't graduate from high school. I was the only child. 456 00:21:51,280 --> 00:21:54,280 Speaker 5: My father made seven thousand dollars a year. So I 457 00:21:54,320 --> 00:21:56,440 Speaker 5: wanted to work hard and get somewhere and make something 458 00:21:56,480 --> 00:21:59,120 Speaker 5: up myself and make my parents proud of what they 459 00:21:59,119 --> 00:22:02,879 Speaker 5: had produced. So I worked hard, and you know, a 460 00:22:03,040 --> 00:22:05,320 Speaker 5: hard work generally pays off, and I got lucky, a 461 00:22:05,320 --> 00:22:07,960 Speaker 5: lot of luck. So what motivates me now is to 462 00:22:08,040 --> 00:22:10,560 Speaker 5: kind of be a role model for other people, but 463 00:22:10,600 --> 00:22:12,840 Speaker 5: also my own children. I have free children, and I 464 00:22:12,840 --> 00:22:14,840 Speaker 5: don't want them to think that their old man is 465 00:22:14,880 --> 00:22:17,720 Speaker 5: basically slopping off and not doing anything and doing you know, 466 00:22:17,760 --> 00:22:19,600 Speaker 5: I want them to think I'm doing something productive for 467 00:22:19,680 --> 00:22:20,119 Speaker 5: the country. 468 00:22:20,119 --> 00:22:21,919 Speaker 3: And so that's what motivates me. 469 00:22:22,720 --> 00:22:24,800 Speaker 2: In your book, How to Invest, you got you got 470 00:22:24,840 --> 00:22:28,480 Speaker 2: the opportunity to interview some of the greatest investors in 471 00:22:28,840 --> 00:22:32,760 Speaker 2: the history of the United States of America. A lot 472 00:22:32,760 --> 00:22:36,000 Speaker 2: of success stories were told, but I'm interested in seeing 473 00:22:36,320 --> 00:22:37,880 Speaker 2: what was some of the mistakes as some of these 474 00:22:37,920 --> 00:22:40,520 Speaker 2: investors need right because we hear the glory stories, but 475 00:22:40,520 --> 00:22:42,679 Speaker 2: obviously they had to go through some trials and tribulations 476 00:22:42,720 --> 00:22:44,439 Speaker 2: to get to that point. What are some of some 477 00:22:44,520 --> 00:22:45,680 Speaker 2: of the mistakes that you can share. 478 00:22:46,840 --> 00:22:50,880 Speaker 5: Well, they all made mistakes. Everybody's made mistakes. Ken Griffin 479 00:22:50,960 --> 00:22:53,480 Speaker 5: now one of the greatest investors, now, very wealthy guy. 480 00:22:54,000 --> 00:22:57,080 Speaker 5: His company almost went bankrupt. His company almost went bankrupt 481 00:22:57,119 --> 00:22:59,760 Speaker 5: and in great recession. The guy that runs the biggest 482 00:22:59,760 --> 00:23:02,040 Speaker 5: henche fun of all time and the most successful head 483 00:23:02,119 --> 00:23:06,800 Speaker 5: fund of all time is Ray Dalyo. He invested one 484 00:23:06,840 --> 00:23:08,720 Speaker 5: way when he was early out of business school and 485 00:23:08,760 --> 00:23:09,720 Speaker 5: he lost all his money. 486 00:23:09,800 --> 00:23:11,400 Speaker 3: He had to go to his father to borrow four 487 00:23:11,480 --> 00:23:13,000 Speaker 3: thousand dollars. He was broke. 488 00:23:13,680 --> 00:23:16,200 Speaker 5: So you know, he also made a mistake of punching 489 00:23:16,240 --> 00:23:18,560 Speaker 5: his boss in the face one time. That's become a 490 00:23:18,560 --> 00:23:24,680 Speaker 5: good idea. So people always make mistakes. Warren Buffett made mistakes. 491 00:23:24,920 --> 00:23:27,199 Speaker 5: They all make mistakes. You just have to pick yourself 492 00:23:27,280 --> 00:23:30,160 Speaker 5: up off the ground and learn from your mistakes. That's 493 00:23:30,200 --> 00:23:33,000 Speaker 5: the key. If you find somebody that never made a mistake. 494 00:23:33,200 --> 00:23:35,000 Speaker 5: You've got to be careful because that person has too 495 00:23:35,000 --> 00:23:38,720 Speaker 5: big an ego and telling people how great you are 496 00:23:38,760 --> 00:23:39,480 Speaker 5: is not a good thing. 497 00:23:40,040 --> 00:23:40,280 Speaker 3: You know. 498 00:23:40,320 --> 00:23:42,200 Speaker 5: There may be some people are presidents of the United 499 00:23:42,200 --> 00:23:44,240 Speaker 5: States who tell people how great they are, but generally, 500 00:23:44,240 --> 00:23:45,399 Speaker 5: I don't think that's a good idea. 501 00:23:46,400 --> 00:23:46,600 Speaker 3: You know. 502 00:23:46,640 --> 00:23:49,040 Speaker 5: Can you imagine Abraham Lincoln saying I won the Civil 503 00:23:49,080 --> 00:23:50,000 Speaker 5: War by myself? 504 00:23:50,840 --> 00:23:52,240 Speaker 3: No, it wouldn't happen. 505 00:23:52,240 --> 00:23:54,920 Speaker 5: You want somebody that's humble and great investors have a 506 00:23:54,960 --> 00:23:57,720 Speaker 5: certain amount of humility. They've made mistakes, but they've learned 507 00:23:57,720 --> 00:24:03,120 Speaker 5: from it. So you guys seem like you're in sports 508 00:24:03,160 --> 00:24:05,520 Speaker 5: as well. You got these those tennis shoes behind you. 509 00:24:05,560 --> 00:24:06,920 Speaker 5: Are you great athletes? 510 00:24:06,960 --> 00:24:07,240 Speaker 3: Also? 511 00:24:07,880 --> 00:24:13,359 Speaker 2: Now that's subjective, definitely love sports. The memorabillion in your 512 00:24:13,359 --> 00:24:14,160 Speaker 2: background as well. 513 00:24:15,080 --> 00:24:20,800 Speaker 5: Well, I'm a terrible athlete. But I'll show you this. 514 00:24:20,800 --> 00:24:24,800 Speaker 5: This is from Coach K. We won the national championship 515 00:24:24,800 --> 00:24:27,320 Speaker 5: when I was the chairman of the board of Duke. 516 00:24:27,840 --> 00:24:30,440 Speaker 5: I was sending him plays from him by hand signals. 517 00:24:31,760 --> 00:24:34,240 Speaker 5: He said, that was the key, is those hand signal plays. 518 00:24:34,280 --> 00:24:34,920 Speaker 5: That's how we won. 519 00:24:35,200 --> 00:24:37,520 Speaker 4: Yes, Coach K. 520 00:24:37,760 --> 00:24:42,840 Speaker 1: The legend of so let me ask you this, ninety 521 00:24:43,040 --> 00:24:48,440 Speaker 1: eight point five percent of asset management firms, which includes 522 00:24:48,520 --> 00:24:53,440 Speaker 1: private equity VC and investment management firms, ninety eight point 523 00:24:53,480 --> 00:24:58,320 Speaker 1: five percent are run by white men. Obviously, a lack 524 00:24:58,359 --> 00:25:01,399 Speaker 1: of diversity is understatement. Do you do you have a 525 00:25:01,440 --> 00:25:03,440 Speaker 1: problem with that? What's your thoughts on that? 526 00:25:04,520 --> 00:25:06,640 Speaker 5: Well, if you read my book, it wasn't ninety eight 527 00:25:06,680 --> 00:25:08,600 Speaker 5: point five percent of the people in that book were 528 00:25:08,680 --> 00:25:11,359 Speaker 5: white men. So I had a fair number of people 529 00:25:11,359 --> 00:25:14,600 Speaker 5: who were women and minorities because I thought it was 530 00:25:14,640 --> 00:25:17,800 Speaker 5: important to show that while there has been a bias 531 00:25:17,800 --> 00:25:20,879 Speaker 5: towards white men and it's been a white male society, 532 00:25:21,840 --> 00:25:23,800 Speaker 5: it's it's it's changing a bit. 533 00:25:24,840 --> 00:25:25,000 Speaker 3: You know. 534 00:25:25,000 --> 00:25:27,240 Speaker 5: I don't think it's a great situation. You have a 535 00:25:28,080 --> 00:25:31,040 Speaker 5: this country is going to be a minority white country 536 00:25:31,520 --> 00:25:35,600 Speaker 5: in my lifetime. Right now, probably the country is about 537 00:25:35,600 --> 00:25:39,679 Speaker 5: sixty fifty eight percent white, but I suspect if I 538 00:25:39,720 --> 00:25:42,000 Speaker 5: live long enough, it's going to be less than fifty percent, 539 00:25:42,400 --> 00:25:45,240 Speaker 5: and that should be reflected in the investment management and 540 00:25:45,280 --> 00:25:48,840 Speaker 5: other things. So I put a number of African American 541 00:25:48,920 --> 00:25:52,280 Speaker 5: leaders in the book in the investment world, and I've 542 00:25:52,280 --> 00:25:54,600 Speaker 5: interviewed it many others as well. One in the book 543 00:25:54,680 --> 00:25:57,439 Speaker 5: is a guy named John Rogers. John Rogers built the 544 00:25:57,720 --> 00:26:01,960 Speaker 5: Aerial Capital when is the largest Africa American owned investment 545 00:26:02,040 --> 00:26:04,560 Speaker 5: firms in the in the country. I've interviewed on my 546 00:26:04,600 --> 00:26:07,800 Speaker 5: TV show Melody Hobson, who you may know. Melody Hobson 547 00:26:07,880 --> 00:26:11,000 Speaker 5: is married to George Lucas, but in her own right, 548 00:26:11,320 --> 00:26:15,639 Speaker 5: she's built with Ariel Capitol into a really successful investment career. 549 00:26:16,080 --> 00:26:19,399 Speaker 5: So I think it's if it's ninety eight point five percent, 550 00:26:19,440 --> 00:26:21,880 Speaker 5: I wouldn't I wouldn't dispute your number, but I would 551 00:26:21,880 --> 00:26:22,680 Speaker 5: say it's changing. 552 00:26:24,760 --> 00:26:27,119 Speaker 6: I have a quick quote, a two parter, what does 553 00:26:27,160 --> 00:26:29,880 Speaker 6: your day to day schedule look like? And who has 554 00:26:29,960 --> 00:26:32,000 Speaker 6: been your favorite guest on the show of the last 555 00:26:32,040 --> 00:26:34,600 Speaker 6: few years and what was the biggest lesson you learned 556 00:26:34,600 --> 00:26:35,000 Speaker 6: from them? 557 00:26:36,000 --> 00:26:38,520 Speaker 3: My favorite guest was like asking which of my children 558 00:26:38,640 --> 00:26:39,280 Speaker 3: is my favorite? 559 00:26:39,280 --> 00:26:41,879 Speaker 5: I don't ever tell people, but I would say a 560 00:26:42,000 --> 00:26:45,120 Speaker 5: guest that I thought was really good was Jeff Bezos, 561 00:26:45,359 --> 00:26:48,760 Speaker 5: because what makes a guest work well is he has 562 00:26:48,800 --> 00:26:51,840 Speaker 5: a sense of humor, sense of humility, plays along with 563 00:26:51,880 --> 00:26:54,200 Speaker 5: some jokes I might give, and he also it's good 564 00:26:54,240 --> 00:26:56,439 Speaker 5: to do this in front of a live audience, because 565 00:26:56,440 --> 00:26:59,040 Speaker 5: if you have a live audience that it makes it 566 00:26:59,119 --> 00:27:02,600 Speaker 5: makes the interviewee uh plant to the audience a little 567 00:27:02,600 --> 00:27:04,880 Speaker 5: bit and makes it more interesting. If you're just doing 568 00:27:04,880 --> 00:27:07,400 Speaker 5: it with nobody in the audience, it's sometimes can fall 569 00:27:07,520 --> 00:27:10,680 Speaker 5: Platt not be as interesting. Jeff Bezos was great. Oprah 570 00:27:10,720 --> 00:27:13,679 Speaker 5: Winfrey was one of the best. Bill Clinton and George 571 00:27:13,680 --> 00:27:18,040 Speaker 5: Bush together were really great. I just interviewed uh not 572 00:27:18,160 --> 00:27:23,159 Speaker 5: long ago. Uh, Sam Bankman freed and that was we 573 00:27:23,280 --> 00:27:27,320 Speaker 5: discussed a little unusual. I am scheduled interviewing soon. I 574 00:27:27,359 --> 00:27:30,920 Speaker 5: hope to be interviewing very soon. Uh, Mike Tyson and 575 00:27:31,000 --> 00:27:37,080 Speaker 5: Alex Rodriguez. I'm gonna see whether Mike Tyson, you know, 576 00:27:37,160 --> 00:27:39,080 Speaker 5: can beat me in an arm wrestling masterss. 577 00:27:42,520 --> 00:27:45,719 Speaker 2: You mentioned uh, your children, your three children, uh, and 578 00:27:45,720 --> 00:27:48,280 Speaker 2: obviously you mentioned him as you know, being great guests. 579 00:27:48,480 --> 00:27:52,639 Speaker 2: I wonder did they take an interest in your career 580 00:27:52,680 --> 00:27:54,280 Speaker 2: path as well. I know you wanted to do low 581 00:27:54,359 --> 00:27:56,800 Speaker 2: because of what your parents said. Well, what was the 582 00:27:56,800 --> 00:27:58,879 Speaker 2: interest in your kids as as you were going through 583 00:27:58,960 --> 00:27:59,439 Speaker 2: your career. 584 00:28:00,040 --> 00:28:02,359 Speaker 5: Well, when I was building my firm, I was running 585 00:28:02,400 --> 00:28:05,840 Speaker 5: around the world raising money and doing stuff, so they 586 00:28:05,840 --> 00:28:07,720 Speaker 5: didn't probably know what I was doing when they were younger. 587 00:28:07,800 --> 00:28:09,000 Speaker 3: They just had no clue. 588 00:28:09,240 --> 00:28:12,000 Speaker 5: It now turns out that all three of my children 589 00:28:12,080 --> 00:28:14,240 Speaker 5: are in private equity and they have their own funds. 590 00:28:15,880 --> 00:28:17,439 Speaker 5: So now they call me up and asked me if 591 00:28:17,480 --> 00:28:19,880 Speaker 5: I can introduce them to an investor or, I can 592 00:28:19,920 --> 00:28:21,320 Speaker 5: help them and analyze the deal. 593 00:28:21,400 --> 00:28:22,720 Speaker 3: So in that way, it's good. 594 00:28:22,760 --> 00:28:25,280 Speaker 5: But my kids all were well educated, they went to 595 00:28:25,320 --> 00:28:28,600 Speaker 5: really good schools, But I didn't push them to do 596 00:28:29,400 --> 00:28:31,680 Speaker 5: any of these things. They kind of came to it eventually. 597 00:28:31,720 --> 00:28:32,760 Speaker 5: I don't know why, but they did. 598 00:28:33,880 --> 00:28:36,000 Speaker 1: Yeah, before we leave, I wanted to ask you this question. 599 00:28:36,119 --> 00:28:38,400 Speaker 1: What do you personally look for in investments? It could 600 00:28:38,400 --> 00:28:40,480 Speaker 1: be an investment in a company, investment in stocks, Like 601 00:28:40,920 --> 00:28:44,160 Speaker 1: what's important to you to say, Okay, I feel comfortable making. 602 00:28:44,080 --> 00:28:46,680 Speaker 5: Out When we're looking at an investment in a private company, 603 00:28:46,680 --> 00:28:51,000 Speaker 5: we're looking for a management team that's pretty strong, committed 604 00:28:51,040 --> 00:28:51,320 Speaker 5: to it. 605 00:28:51,520 --> 00:28:53,400 Speaker 3: They've got a lot of their own networth tied up 606 00:28:53,400 --> 00:28:53,840 Speaker 3: into it. 607 00:28:54,040 --> 00:28:56,920 Speaker 5: You want to make sure the company has the ability 608 00:28:56,920 --> 00:29:02,240 Speaker 5: to survive downturns, make sure the capital structure works, make 609 00:29:02,280 --> 00:29:04,440 Speaker 5: sure it's a product that is likely to be popular 610 00:29:04,440 --> 00:29:05,360 Speaker 5: in the future. 611 00:29:05,080 --> 00:29:07,800 Speaker 3: Not just now, but in the end, you're looking for 612 00:29:07,800 --> 00:29:08,440 Speaker 3: the right price. 613 00:29:08,640 --> 00:29:10,400 Speaker 5: You know, you can have the greatest company in the world, 614 00:29:10,480 --> 00:29:11,880 Speaker 5: but if you pay too much for it, it's not 615 00:29:11,880 --> 00:29:14,040 Speaker 5: gonna work. So you've got to pay at the right 616 00:29:14,080 --> 00:29:17,240 Speaker 5: price and make sure that you're not overpaying for these things. 617 00:29:18,160 --> 00:29:20,600 Speaker 6: One of the biggest things that I find men have 618 00:29:20,680 --> 00:29:24,280 Speaker 6: a struggle with is balance. You have any advice for 619 00:29:24,400 --> 00:29:26,840 Speaker 6: men that are running businesses but are also trying to 620 00:29:27,240 --> 00:29:29,760 Speaker 6: have a good healthy work life balance or do you 621 00:29:29,760 --> 00:29:31,000 Speaker 6: think that's a fallacy? 622 00:29:32,960 --> 00:29:34,760 Speaker 3: Well, that's the great conundrum in the world. 623 00:29:34,840 --> 00:29:36,600 Speaker 5: I mean, can you really build a great business and 624 00:29:36,600 --> 00:29:40,000 Speaker 5: have a healthy personal life and have a good balance 625 00:29:40,000 --> 00:29:42,840 Speaker 5: of life. Some people figure it out. You know, obviously 626 00:29:42,840 --> 00:29:44,920 Speaker 5: it's not it's not perfect. It's not easy to do. 627 00:29:46,200 --> 00:29:48,560 Speaker 5: You know, some of the wealthiest people in the world 628 00:29:48,600 --> 00:29:52,280 Speaker 5: that you've read about recently, they've they've become the divorced. 629 00:29:52,800 --> 00:29:55,080 Speaker 5: So you know, you could say that's, you know, maybe 630 00:29:55,120 --> 00:29:57,800 Speaker 5: because they work so hard. Who knows, I'm divorced because 631 00:29:57,880 --> 00:30:00,800 Speaker 5: maybe I work so hard. But Jeff Bezo skill gates 632 00:30:01,560 --> 00:30:05,640 Speaker 5: a lot of entrepreneurs, maybe they put too much time 633 00:30:05,680 --> 00:30:11,160 Speaker 5: into their business. So a healthy life work balance is 634 00:30:11,200 --> 00:30:13,160 Speaker 5: not as easy to talk about it's hard to do, 635 00:30:13,800 --> 00:30:16,360 Speaker 5: very hard to do because you're driven. If you're a 636 00:30:16,440 --> 00:30:19,440 Speaker 5: driven person, you want to make your company work so well, 637 00:30:19,840 --> 00:30:23,000 Speaker 5: and you measure your companies and success every day by 638 00:30:23,320 --> 00:30:26,360 Speaker 5: various metrics. You don't measure how good you're doing your 639 00:30:26,440 --> 00:30:28,959 Speaker 5: job as a husband, or as a wife, or as 640 00:30:29,000 --> 00:30:32,240 Speaker 5: a parent every day, so you can you can slough 641 00:30:32,280 --> 00:30:34,360 Speaker 5: off that because you don't have a metric every day. 642 00:30:34,760 --> 00:30:37,800 Speaker 5: But I think it's not as easy to do as 643 00:30:38,120 --> 00:30:38,640 Speaker 5: talk about. 644 00:30:38,760 --> 00:30:40,840 Speaker 4: For sure, if you can do it again, would you 645 00:30:40,880 --> 00:30:41,720 Speaker 4: do anything differently? 646 00:30:43,000 --> 00:30:45,080 Speaker 5: I had to do anything differently, what I would do 647 00:30:45,200 --> 00:30:46,560 Speaker 5: is I wouldn't have gone to Las. 648 00:30:46,840 --> 00:30:48,840 Speaker 3: Probably I would have gone to business school. That would 649 00:30:48,840 --> 00:30:49,280 Speaker 3: have been good. 650 00:30:49,840 --> 00:30:51,680 Speaker 5: Secondly, I wouldn't have spent four years in the Carter 651 00:30:51,760 --> 00:30:53,800 Speaker 5: White House because I you know, maybe I would have 652 00:30:53,800 --> 00:30:55,800 Speaker 5: been better for the country. I didn't do that, and 653 00:30:55,880 --> 00:30:58,040 Speaker 5: I came out and practiced law for five years after 654 00:30:58,040 --> 00:30:58,800 Speaker 5: I left the White House. 655 00:30:58,880 --> 00:30:59,960 Speaker 3: That was a waste of my time. 656 00:31:01,240 --> 00:31:03,200 Speaker 5: But in the end, I probably would have given away 657 00:31:03,240 --> 00:31:07,000 Speaker 5: more money by earlier. I've given away, you know, well 658 00:31:07,000 --> 00:31:10,040 Speaker 5: over a billion dollars in cash to are lots of 659 00:31:10,080 --> 00:31:13,120 Speaker 5: things around the country. And I probably wish I had 660 00:31:13,280 --> 00:31:15,719 Speaker 5: worked harder, made more money, and given away more and 661 00:31:15,760 --> 00:31:19,840 Speaker 5: started earlier. But on the whole, you know, I'm seventy three. 662 00:31:19,840 --> 00:31:22,280 Speaker 5: When you're seventy three, you read the obituary pages every 663 00:31:22,360 --> 00:31:25,120 Speaker 5: day to see who your age is dead. 664 00:31:25,760 --> 00:31:27,040 Speaker 3: And you guys are too young. 665 00:31:27,080 --> 00:31:29,760 Speaker 5: You don't read the obituary I'm sure, but no doubt 666 00:31:29,800 --> 00:31:32,200 Speaker 5: you must have known somebody in your life who died 667 00:31:32,280 --> 00:31:34,520 Speaker 5: when you thought it was earlier than they should have died. 668 00:31:34,880 --> 00:31:37,400 Speaker 5: So I'm always, you know, thankful I'm still alive and 669 00:31:37,440 --> 00:31:39,560 Speaker 5: trying to do things that make sure I don't, you know, 670 00:31:39,640 --> 00:31:40,560 Speaker 5: die prematurely. 671 00:31:41,760 --> 00:31:43,720 Speaker 2: Well, you talked about the things that you're looking for 672 00:31:43,960 --> 00:31:47,280 Speaker 2: when you're analyzing the company. I wonder if from on 673 00:31:47,320 --> 00:31:50,400 Speaker 2: a daily basis the deal flow, how often are you 674 00:31:50,560 --> 00:31:53,320 Speaker 2: involved or is it a process before it even gets 675 00:31:53,360 --> 00:31:53,560 Speaker 2: to you? 676 00:31:54,400 --> 00:31:56,640 Speaker 3: Okay, Carlisle. 677 00:31:57,800 --> 00:32:00,800 Speaker 5: Is probably investing ten billion to twelve billion dollars of 678 00:32:00,840 --> 00:32:04,480 Speaker 5: equity every year, and we're probably doing around the world. 679 00:32:04,640 --> 00:32:07,840 Speaker 5: I don't know, fifty seventy deals a year. I sit 680 00:32:07,920 --> 00:32:09,840 Speaker 5: on the investment committees of many of these things, but 681 00:32:09,880 --> 00:32:11,920 Speaker 5: I am not doing the deals. So I read the 682 00:32:11,960 --> 00:32:14,600 Speaker 5: investment committee memos, I give them my thoughts. They generally 683 00:32:14,600 --> 00:32:17,120 Speaker 5: ignore them when I give them my thoughts the farm 684 00:32:17,280 --> 00:32:20,800 Speaker 5: or not. I have a family office and they do. 685 00:32:21,280 --> 00:32:23,120 Speaker 5: My family office does a lot of investments that are 686 00:32:23,160 --> 00:32:26,280 Speaker 5: smaller than Carlisle's, and you know, I look at what 687 00:32:26,320 --> 00:32:29,360 Speaker 5: they're doing, but I generally I don't really have the 688 00:32:29,440 --> 00:32:30,560 Speaker 5: time to dig into any. 689 00:32:30,440 --> 00:32:31,480 Speaker 3: One deal that much. 690 00:32:31,960 --> 00:32:34,760 Speaker 5: So I just hire good people and hopefully they don't 691 00:32:34,800 --> 00:32:37,200 Speaker 5: come up with good recommendations. You know, if you keep 692 00:32:37,240 --> 00:32:39,520 Speaker 5: turning down the recommendations the people you hired, they're going 693 00:32:39,560 --> 00:32:41,560 Speaker 5: to quit. So you have to trust them a bit. 694 00:32:41,840 --> 00:32:44,600 Speaker 5: So I generally trust people and generally don't turn down 695 00:32:44,600 --> 00:32:48,800 Speaker 5: the recommendations. So I've made mistakes. I turned down Facebook personally, 696 00:32:49,160 --> 00:32:52,160 Speaker 5: and when Mark was in college, I turned down in 697 00:32:52,240 --> 00:32:56,080 Speaker 5: effect Amazon when when Jeff was just starting the company. 698 00:32:56,400 --> 00:32:58,680 Speaker 5: So I make a lot of mistakes. 699 00:32:59,200 --> 00:33:01,560 Speaker 1: Well, mister team, has been a pleasure. Before we leave, 700 00:33:01,600 --> 00:33:03,400 Speaker 1: anything that you would like to say. 701 00:33:03,200 --> 00:33:07,200 Speaker 5: Look, thank you, thank you all for inviting me, and uh, 702 00:33:07,720 --> 00:33:09,520 Speaker 5: you know, I appreciate it. 703 00:33:09,640 --> 00:33:12,920 Speaker 3: Good day, all right, take care, thank you so much, 704 00:33:13,080 --> 00:33:15,360 Speaker 3: A good one. Bye. 705 00:33:16,720 --> 00:33:21,800 Speaker 7: My graduates from my school being forced back drop bag 706 00:33:21,880 --> 00:33:25,360 Speaker 7: drop my drop back drop drop