Speaker 1: All right, So here we are with the legendary David Ruberstein.
Speaker 1: Thank you for joining us. Yes, you're not familiar with David.
Speaker 1: He is the chair of the board of Trustees of
Speaker 1: Duke University. He is the host of Bloomberg's pay a
Speaker 1: pair of conversations, and he is the co founder and
Speaker 1: co chairman of private equity firm the Carlisle Group, which
Speaker 1: is a global private equity investment firm. How much the
Speaker 1: assets on the management four hundred billion?
Speaker 2: If that number has changed, please correct me for four
Speaker 2: million advantage under management right now, which is amazing.
Speaker 1: Yes, so thank you for joining us.
Speaker 3: Appreciate it, my pleasure. Thank you very much for having me.
Speaker 1: And he's an author too. We'll talk about his book.
Speaker 4: Yes, I'm looking for Yes, very important.
Speaker 1: So all right, so let's get into it. I want
Speaker 1: to start off with, you know, some education for the
Speaker 1: audience private equity. Can you explain what private equity years?
Speaker 1: I feel that people have a good understanding of venture
Speaker 1: capital because that's been the news a lot, and that's
Speaker 1: been very popular the last couple of years. But I
Speaker 1: think that the general public still doesn't have a good understanding,
Speaker 1: or they might not have even heard of private equity?
Speaker 3: Can you explain? Explain?
Speaker 5: In the United States, the phrase private equity means one thing.
Speaker 5: Outside the United States, it means another thing. In the
Speaker 5: United States, private equity more or less means all private investments.
Speaker 3: It could be venture.
Speaker 5: Capital, growth capital, the stress debt, anything where you're buying
Speaker 5: an asset that is something that's going to be held privately.
Speaker 5: It's not going to be public when you own it.
Speaker 5: And the theory behind private equity is that when you
Speaker 5: have something that's not in a public setting, you can
Speaker 5: make changes, you can improve it, you can in send people,
Speaker 5: you can pay them more, and ultimately you'll get a
Speaker 5: better return. So the theory behind private equity is that
Speaker 5: you buy an asset, you make it much better when
Speaker 5: you sell it or you take it public. You're going
Speaker 5: to get a rate of return on your investment that's
Speaker 5: going to be let's say, twenty percent per annum. So
Speaker 5: if you put your money in the bank, you're going
Speaker 5: to get maybe one percent a year. If you put
Speaker 5: your money in stock market, maybe you get on the average
Speaker 5: six percent a year. If you put your money in
Speaker 5: private equity, and it's a good private equity funder or
Speaker 5: or or deal, you might get twenty percent or thirty
Speaker 5: percent a year. Well that's pretty good. So the theory
Speaker 5: is it's a better way to make add value to
Speaker 5: an organization and you can and you can get a
Speaker 5: good rate of return.
Speaker 3: So that's what it is.
Speaker 5: Basically fixing up something in a private setting, making it better,
Speaker 5: and ultimately selling it after three to five years. That
Speaker 5: gets you a return of maybe twenty percent a year.
Speaker 4: Thank you for being here, A huge fan of your show.
Speaker 6: Can you talk to us about the importlance of being
Speaker 6: a controller in the face and conventional wisdom? And are
Speaker 6: there any sexes right now? You think people should take
Speaker 6: a ConTroll and take on in this environment.
Speaker 5: Right, the greatest investors in the world of generally or contrarians.
Speaker 5: If you just went along with the average common sense
Speaker 5: view of what the average person thinks, you would be
Speaker 5: one of the pack and you wouldn't do anything that
Speaker 5: make you stand out. So contrariants take a view that's
Speaker 5: different than the average common sense wisdom.
Speaker 3: Today.
Speaker 5: For example, the common sense wisdom that the average investor
Speaker 5: would have is get out of the stock market, sell
Speaker 5: whatever you have. The economy is going to hell in
Speaker 5: a handbasket, and we're going to be in a recession.
Speaker 5: The smart investors would say, now's the time to come in,
Speaker 5: buy things in a discount, and eventually in the recessions
Speaker 5: always end and eventually in three or four years you
Speaker 5: have bought something at fifty cents on a dollar and
Speaker 5: then two or three years are gonna be worth three
Speaker 5: dollars something like that. So that's what our contraan goes
Speaker 5: against the conventional wisdom.
Speaker 2: Well, our audience is, you know, filled with retail investors.
Speaker 2: We have some institutional investors, I'm sure, but a lot
Speaker 2: of retail investors and obviously they're learning the market, they're understanding,
Speaker 2: they're investing in. What are some habits that you've come
Speaker 2: across in your career that you've noticed that great and
Speaker 2: good investors have, right, so they can have an age.
Speaker 5: Well, people who are great investors generally, this is their life.
Speaker 5: This is what they do full time. They don't kind
Speaker 5: of have a day job and then they're picking stocks
Speaker 5: at night and then they kind of they do Well,
Speaker 5: you have to do this full time. You have to
Speaker 5: be pretty smart, good with numbers. You have to have
Speaker 5: a willingness to read enormous amounts of material. You have
Speaker 5: to admit a mistake when you make it and get
Speaker 5: out of a bad deal, because everybody.
Speaker 3: Makes a mistake.
Speaker 5: I think it also takes some humility to be a
Speaker 5: great investor, because you realize you're going to make mistakes,
Speaker 5: and you can't say I'm so brilliant and the market's wrong,
Speaker 5: but I'm right and the market's wrong, and you start
Speaker 5: losing money, and you know, those are things that make
Speaker 5: great investors. The average retail investor who buy stocks in
Speaker 5: the public market, you know, they're probably not great investors.
Speaker 5: They just they haven't done this for a living. You
Speaker 5: have to do something for a living, and you know,
Speaker 5: if you were you were going to a dentist, you
Speaker 5: wouldn't want a dentist who is spending full time picking stocks.
Speaker 5: You want a dentist who's going to actually know how
Speaker 5: to be a dentist. So an average dentist or doctor
Speaker 5: isn't doing this full time, and therefore they're probably not
Speaker 5: going to be that good at it. That's why for
Speaker 5: the average retail investor, the average person who's not a professional,
Speaker 5: they're probably best to go into index funds, which just
Speaker 5: mirror the market very modest fees, and the stock market
Speaker 5: goes up thirteen percent a year, you're going to go
Speaker 5: up thirteen percent a year. Trying to pick stocks and
Speaker 5: become Warren Buffett while you have a day job as
Speaker 5: a as a dentist or doctor is a fool's Errand.
Speaker 1: So let me ask you this, what are your thoughts
Speaker 1: in the handling of the economy by the Fed this year?
Speaker 3: Been my thoughts on what I'm sorry, can you speak up.
Speaker 1: The Fed's handling of the coat?
Speaker 5: Okay, I should disclose that I hired a young man
Speaker 5: that worked for me years ago, and he was at
Speaker 5: our firm for a number of years and he left.
Speaker 3: His name is Jay Powell, so now it's the chever
Speaker 3: in the Federal Reserve.
Speaker 5: But he doesn't give me any insights. The Federal Reserve
Speaker 5: made a terrible mistake. They underestimated how serious the inflation
Speaker 5: was going to be. The United States government injected five
Speaker 5: trillion dollars into our economy to deal with COVID. And
Speaker 5: you put five trillion dollars into an economy that's roughly
Speaker 5: a twenty two trillion dollar economy, you're going to get inflation.
Speaker 5: So we got a lot of inflation. The Fed said
Speaker 5: for a while it's transitory, which means it'll.
Speaker 3: Be gone soon. They were wrong. So now they're going.
Speaker 5: To increase interest rates a fair bit to get inflation
Speaker 5: down now. As you may have seen last week, inflation
Speaker 5: came down a little bit still at seven point seven percent.
Speaker 5: The Fed wants to get inflation down to two percent
Speaker 5: per year. That's what we had for the last twenty
Speaker 5: five years, two percent a year. It wasn't a big factor.
Speaker 5: Getting back to two percent is not easy. I know
Speaker 5: a lot about inflation because I worked in the Carter
Speaker 5: White House when we got inflation to nineteen percent.
Speaker 3: Nobody's ever to do that again, right, so.
Speaker 5: Please, please, So I would say the Fed is now
Speaker 5: serious about fighting inflation. They're going to keep increasing interest
Speaker 5: rates for a while, and I spect in December they
Speaker 5: will have another meeting and they'll increase interest rates by
Speaker 5: another seventy five basis points, or almost one full point.
Speaker 5: So yeah, I think the Fed has probably made a
Speaker 5: mistake in the beginning. Now they're trying to compensate for it,
Speaker 5: and I think they're doing a reasonably good job now.
Speaker 4: In light of the FTX scandal.
Speaker 6: Looking back at the interview that you deal with Sam
Speaker 6: as An investor. Is there anything in hindsight that made
Speaker 6: you say something about him or the strategy of the
Speaker 6: company didn't.
Speaker 5: Feel right, which would about him ftx oh FDx Yes,
Speaker 5: Sam Bankman freed, Well, it was the only interviewer I
Speaker 5: had with a guy showed up in a T shirt,
Speaker 5: shorts and tennis shoes. That's all he had wore, and
Speaker 5: that's apparently that was his normal dress.
Speaker 3: So I was a little It was a little unusual.
Speaker 3: Usually people dress a little bit better for the interviews.
Speaker 5: He's look, you meet a lot of people in this
Speaker 5: world who are brilliant young people, and when you're a
Speaker 5: brilliant young person and you haven't had a failure, you
Speaker 5: think you really are brilliant, and you walk on water.
Speaker 3: So he had never made a mistake.
Speaker 5: Really, he built a business where in at the age
Speaker 5: of thirty, he's worth twenty two billion dollars. So when
Speaker 5: you were thirty years old, you guys look like you're
Speaker 5: maybe a little older than thirty. I don't know, but
Speaker 5: when you were thirty years old, if you were worth
Speaker 5: twenty two billion dollars, you would think.
Speaker 3: You walk on water. Absolutely, he may have thought that.
Speaker 5: I would say, it appears that they made a terrible mistake,
Speaker 5: and whether it's criminal or not, I don't know. But
Speaker 5: they were taking customer accounts and putting them into other
Speaker 5: businesses that the customers didn't know about. So let's suppose
Speaker 5: you have an account at Merrill Lynch and you put
Speaker 5: a thousand dollars into it and they told you later,
Speaker 5: guess what. We took that thousand dollars. We lent it
Speaker 5: to something else, and we'll give your dollars back soon. Well,
Speaker 5: before they could give it back to you, it went bankrupt.
Speaker 5: So you're out here thousand dollars. That appears to be
Speaker 5: what they did, and therefore there's a lot of challenges there.
Speaker 5: So he's a smart guy. I've met him on a
Speaker 5: couple occasions. I would say, you know, you have to
Speaker 5: be wary of people who are thirty years old and
Speaker 5: think they walk on water, because it rarely happens.
Speaker 4: Noted.
Speaker 3: So there was there was one thirty three year old
Speaker 3: guy that did walk on water, but that was unusual.
Speaker 3: I had to get a love it walk on water.
Speaker 3: I love it. I love it.
Speaker 2: Obviously one of the greatest investors of our time, obviously
Speaker 2: the Carlo Group. Like we said, four hundred billion managing
Speaker 2: assets prior to even get into finance. I know you
Speaker 2: studied law, So what was that transition like from you
Speaker 2: going into law to find out?
Speaker 5: Well, let's be honest, if you're going to be good
Speaker 5: at something, you have to love it, and I wasn't.
Speaker 5: I didn't love the practice of law, and my clients
Speaker 5: told me I wasn't that good at it. I went
Speaker 5: to law school to make my mother happy because she
Speaker 5: said you'd either be a doctor or a lawyer.
Speaker 3: So I didn't want to go to medical school. So
Speaker 3: I went to law school.
Speaker 5: And I was really interested in politics, and so I
Speaker 5: was really interested in working in government. And I went
Speaker 5: to work for Jimmy Carter at the White House for
Speaker 5: four years when I was in my twenties, and you know,
Speaker 5: we got in place in the nineteen percent and the
Speaker 5: result was we didn't lose.
Speaker 3: We lost the election.
Speaker 5: So I had to go back and practice saw it,
Speaker 5: so I knew but I wasn't that good at it.
Speaker 3: My clients reminded me of that.
Speaker 5: So I decided to do something different and I started
Speaker 5: affirm in Washington nineteen eighty seven that grew to be
Speaker 5: one of the largest private equity.
Speaker 3: Firms in the world. So I got lucky.
Speaker 5: I surrounded myself with really smart people that knew more
Speaker 5: than I did.
Speaker 3: And the key to.
Speaker 5: Really building a great business is surrounding yourself with smarter
Speaker 5: people than you. So that's what happened. I built it
Speaker 5: that's now one of the largest firms in the world
Speaker 5: in this area. But I was attracted to it because
Speaker 5: I thought, if I'm going to be not in government
Speaker 5: and government doesn't want me because I didn't do a
Speaker 5: good job, and I'm going to be in the private sector,
Speaker 5: I might as well make the most amount of money
Speaker 5: I can make.
Speaker 3: And business people.
Speaker 5: And privatecy firms are making a lot more money than lawyers,
Speaker 5: and they ought to actually seem to be more enjoyable.
Speaker 5: So that's why I started, and it worked.
Speaker 1: So let me ask you this. You talked about inflation
Speaker 1: a few times. Last week a report came out and
Speaker 1: they said that they thought that inflation might have peaked
Speaker 1: and that that was good for the market. Do you
Speaker 1: think that inflation has peaked?
Speaker 3: Well, it's it's an interesting question.
Speaker 5: Last week, the numbers came out that said that inflation
Speaker 5: rate from month to month the year to year was
Speaker 5: seven point seven percent Now, if I told you inflation
Speaker 5: was going to be seven point seven percent annualized, you
Speaker 5: would run for the hills.
Speaker 3: But because it was previously.
Speaker 5: Over eight percent, it was eight point six percent, seven
Speaker 5: point seven percent looked wonderful. So yes, it may have peaked.
Speaker 5: I think it probably has. But remember inflation was pretty
Speaker 5: high because we injected so much money in the economy.
Speaker 5: The war or in Ukraine had a very high effect
Speaker 5: on energy prices and the food supply chain, so there
Speaker 5: are many things that produced this high inflation. I think
Speaker 5: it probably has peaked, but nobody really knows for certain. Now,
Speaker 5: I'd say if the war in Ukraine were to end
Speaker 5: in a couple of months, that would be great for inflation.
Speaker 5: And if Ukraine can start producing and shipping wheat again,
Speaker 5: that would be great for inflation. But I'd say it's
Speaker 5: a little premature to say it's peaked because we need
Speaker 5: a couple months of data.
Speaker 6: Just one month isn't probably enough. I'm looking forward to
Speaker 6: reading your book. Can you share with us what's one
Speaker 6: lesson you learned from maybe Jim Simmons, Ken Griffin and
Speaker 6: maybe John Paulson around how they invest in A very
Speaker 6: impactful lesson that will help audience tonight.
Speaker 3: Well.
Speaker 5: Ken Griffin is a guy that built one of the
Speaker 5: most successful hedge funds of all time. He's also got
Speaker 5: a separate company called Citadel Securities, and he's extremely wealthy.
Speaker 5: He basically believes in analyzing data very carefully. He surrounds
Speaker 5: himself with really really smart people and he tries very
Speaker 5: hard to get the best people in the country who
Speaker 5: are really good with numbers. He tries to steal people
Speaker 5: from Google, not steal, but recruit people from Google, Facebook, Microsoft, Apple.
Speaker 5: Get really smart people and have no numbers, and they
Speaker 5: really analyze these things carefully. John Paulson made one bet.
Speaker 5: It was a bet that the mortgage market would collapse,
Speaker 5: and at the time people didn't think it would be
Speaker 5: quite as bad as it turned out to be. So
Speaker 5: he made on one investment twenty billion dollars twenty billion,
Speaker 5: so you don't have to do anything the rest of
Speaker 5: your life.
Speaker 3: You're make.
Speaker 5: Good trade, like say, it was the greatest trade of
Speaker 5: all time, and so he did pretty well.
Speaker 3: But basically he analyzed.
Speaker 5: The fact that mortgage market was probably over inflated, and
Speaker 5: he correctly bet on that.
Speaker 2: Yeah, most people say no risk, no reward, obviously in
Speaker 2: your space when you're managing people's money that you know
Speaker 2: may not be true.
Speaker 3: Maybe it is.
Speaker 2: Can you talk about the importance of risk management when
Speaker 2: you're talking about private equity, So I.
Speaker 3: Think in private equity, I'm sorry.
Speaker 4: Risk management the important.
Speaker 5: Well, you know, risk management is a way of managing
Speaker 5: your money where you're basically in effect hedging. You're trying
Speaker 5: not to get the highest rate of return, but you're
Speaker 5: trying to protect against the downside.
Speaker 3: Private equity is different than that.
Speaker 5: Private equity is basically saying we're going to fix a company,
Speaker 5: make it better. We're not trying to hedge against it.
Speaker 5: So it's different. I would say, depends on what somebody
Speaker 5: really wants out of life. If you're seventy five years
Speaker 5: old and you're living on the retirement income and you
Speaker 5: don't have a lot of money coming in, you don't
Speaker 5: want to take a big risk. You probably have a
Speaker 5: more a risk management kind of approach, which is to
Speaker 5: say you're protecting the downside. If you're twenty five years
Speaker 5: old and you can take a lot of risk because
Speaker 5: if you make the mistakes, you can go make money again,
Speaker 5: probably private equity might be better for you because you're
Speaker 5: willing to take the upside and you don't need to
Speaker 5: protect the downside so much.
Speaker 3: It depends on your situation.
Speaker 5: How much money can you afford to lose, for example cryptocurrencies.
Speaker 5: I always told people, don't put more in than you
Speaker 5: can afford to lose, and some people did.
Speaker 3: People did.
Speaker 1: Is what's your economic outlook for twenty twenty three?
Speaker 5: I would say for twenty twenty three, I suspect the
Speaker 5: United States will probably go into a recession. That's a
Speaker 5: very common view, and that's because if you go back
Speaker 5: from to nineteen sixty, almost every time the Federal Reserve
Speaker 5: has increased interest rates dramatically, the result has been a
Speaker 5: so called hard landing or a recession. So it's unlikely
Speaker 5: we're going to be able to avoid it this time,
Speaker 5: but it'll probably be very modest. I don't expect it
Speaker 5: to be a serious inflatient of the type we had
Speaker 5: in the serious procession, of the type we had in
Speaker 5: the Great Recession of two thousands.
Speaker 4: Ernest, what's up?
Speaker 7: You have a walk into a small business and everything
Speaker 7: just works like the checkout is fast, there are seats
Speaker 7: of digital tipping is a breeze, and you're out the
Speaker 7: door before the line even builds odds are they're using Square.
Speaker 7: We love supporting businesses that run on Square because it
Speaker 7: just feels seamless. Whether it's a local coffee shop, a
Speaker 7: vendor at a pop up market, or even one of
Speaker 7: our merch partners, Square makes it easy for them to
Speaker 7: take payments, manage inventory, and run their business with confidence,
Speaker 7: all from one simple system. If you're a business owner
Speaker 7: or even just thinking about launching something soon, Square is
Speaker 7: hands down one of the best tools out there to
Speaker 7: help you start, run, and grow. It's not just about payments,
Speaker 7: it's about giving you time back so you can focus.
Speaker 2: On what matters most ready.
Speaker 7: To see how Square can transform your business, visit Square
Speaker 7: dot com backslash go backslash eyl to learn more that
Speaker 7: Square dot com backslash, go backslash eyl. Don't wait, don't hesitate.
Speaker 7: Let's Square handle the back end so you can keep
Speaker 7: pushing your vision forward. This episode is brought to you
Speaker 7: by P and C Bank. A lot of people think
Speaker 7: podcasts about work are boring, and sure, they definitely can be,
Speaker 7: but understanding a professional's routine shows us how they achieve
Speaker 7: their success little by little, day after day. It's like
Speaker 7: banking with P and C Bank. It might seem boring
Speaker 7: to safe plan and make calculated decisions with your bank,
Speaker 7: but keeping your money boring is what helps you live
Speaker 7: or more happily fulfilled life. P and C Bank Brilliantly
Speaker 7: Boring since eighteen sixty five. Brilliantly Boring since eighteen sixty
Speaker 7: five is a service mark of the PNC Financial Service Group, Inc.
Speaker 7: P and C Bank National Association Member FDIC.
Speaker 3: Seven eight nine.
Speaker 5: I suspect it to be a two quarter recession, and
Speaker 5: you know, two quarters is not that serious, So I
Speaker 5: think the economy will probably slip a bit in that
Speaker 5: period of time, but I think inflation will come down,
Speaker 5: the unemployment rate will go up. I suspect the unemployment
Speaker 5: rate will probably go up to about four four and
Speaker 5: a half percent next year or something like that. Congress
Speaker 5: is not going to do anything, not that anybody will
Speaker 5: notice or want Congress to do anything. Congress isn't going
Speaker 5: to spend much money because they're just not a lot
Speaker 5: of money left to spend. We have thirty trillion dollars
Speaker 5: of debt in this country. This country, You and I
Speaker 5: owe other people thirty trillion dollars. That's a lot of money,
Speaker 5: and we can't afford to borrow much more.
Speaker 6: If you would get into private equity in twenty twenty three,
Speaker 6: what would be the differences in your strategy in twenty
Speaker 6: twenty three versus when you began in your career.
Speaker 5: Well, when I was starting, inflation was not a factor
Speaker 5: and certain things were not available then today, I would
Speaker 5: say a good thing in twenty twenty three would buy
Speaker 5: distress debt. Distress debt is when you're buying debt that
Speaker 5: our company that's not doing that well, and you buy it,
Speaker 5: you know, fifty cents on a dollar, and probably we'll
Speaker 5: come back to a dollar if you know what you're
Speaker 5: doing and it's a good deal. So I would buy
Speaker 5: a lot of distress debt. I would look at things
Speaker 5: that are going to be important certain areas of the future.
Speaker 5: One of them would be things like quantum computing. Another
Speaker 5: thing would be computational biology. Another on things would be crisper,
Speaker 5: which is gene splitting. Another kind of area that I
Speaker 5: think you would be good to be healthy food. Food
Speaker 5: that's healthy for you. That's going to be a big
Speaker 5: trend as well. So I look for things that in
Speaker 5: the future that are going to be good trends that
Speaker 5: people want to buy things into and you get there
Speaker 5: ahead of them.
Speaker 3: Yeah.
Speaker 2: So for obviously for twenty twenty three, you said the
Speaker 2: outlook is a recession. But in these type of environments
Speaker 2: you mentioned some set are there other sectors that retail
Speaker 2: investors definitely should be looking at. I know you said
Speaker 2: maybe indexes we should start, but other sectors.
Speaker 3: That's one on the retail side that we should be
Speaker 3: looking at. Well.
Speaker 5: Yes, for example, healthcare. When I worked in the White
Speaker 5: House before you were born, were any of you born
Speaker 5: in nineteen seventy seven, any of you alive then?
Speaker 3: No?
Speaker 5: No, no, right, So I was working for President Carter
Speaker 5: in the White House. At that time, the GDP of
Speaker 5: the United States was seven percent in the healthcare area
Speaker 5: seven percent. Today it's about twenty two percent. So that
Speaker 5: means we are spending much more money on healthcare because
Speaker 5: people are wealthier and they want to live longer, and
Speaker 5: so what they do is they spend money on healthcare, telemedicine,
Speaker 5: all kinds of pharmaceutical things you can buy. So I
Speaker 5: think healthcare is going to be one of the great
Speaker 5: continuous growth sectors in our country. But people outside the
Speaker 5: United States they want to live long time too. So
Speaker 5: as people get wealthier outside the United States, they want
Speaker 5: to spend more money on medical treatment, healthcare, and so
Speaker 5: that's going to be one of the great growth areas
Speaker 5: I think in our country and around the world.
Speaker 1: So the name of your new book is how to
Speaker 1: Invest Masses of the Craft. So along the lines of that,
Speaker 1: I definitely want you to talk about the book. But
Speaker 1: what are some keys to becoming a great investor?
Speaker 5: One do reasonably well in school. Two keep reading, Always
Speaker 5: read stuff you never know when's going to be helpful. Three,
Speaker 5: be willing to go against the conventional wisdom. Four surround
Speaker 5: yourself with smart people. Next, maintain some humility. Next, make
Speaker 5: sure when you make a mistake and own up to it,
Speaker 5: share the credit and be willing to take the blame.
Speaker 5: And also I think in the end, if you make
Speaker 5: a fair amount of money, be philanthropic.
Speaker 3: I think it's very helpful.
Speaker 6: You've done incredibly well in your career. Like what drives
Speaker 6: you to continue going and how many hours a day
Speaker 6: are you putting into massing your craft?
Speaker 5: I am old now, I'm seventy three years old. So
Speaker 5: when Ronald Reagan was sixty nine and running for election
Speaker 5: against Jimmy Carter. I told Carter, look, Reagan is so
Speaker 5: old he can't get into bed in the morning. He's
Speaker 5: sixty nine years old. Now I'm seventy three, so you know,
Speaker 5: I'm old. But what motivates me is I want to
Speaker 5: you know, I came from very, very modest circumstances. My
Speaker 5: parents didn't graduate from high school. I was the only child.
Speaker 5: My father made seven thousand dollars a year. So I
Speaker 5: wanted to work hard and get somewhere and make something
Speaker 5: up myself and make my parents proud of what they
Speaker 5: had produced. So I worked hard, and you know, a
Speaker 5: hard work generally pays off, and I got lucky, a
Speaker 5: lot of luck. So what motivates me now is to
Speaker 5: kind of be a role model for other people, but
Speaker 5: also my own children. I have free children, and I
Speaker 5: don't want them to think that their old man is
Speaker 5: basically slopping off and not doing anything and doing you know,
Speaker 5: I want them to think I'm doing something productive for
Speaker 5: the country.
Speaker 3: And so that's what motivates me.
Speaker 2: In your book, How to Invest, you got you got
Speaker 2: the opportunity to interview some of the greatest investors in
Speaker 2: the history of the United States of America. A lot
Speaker 2: of success stories were told, but I'm interested in seeing
Speaker 2: what was some of the mistakes as some of these
Speaker 2: investors need right because we hear the glory stories, but
Speaker 2: obviously they had to go through some trials and tribulations
Speaker 2: to get to that point. What are some of some
Speaker 2: of the mistakes that you can share.
Speaker 5: Well, they all made mistakes. Everybody's made mistakes. Ken Griffin
Speaker 5: now one of the greatest investors, now, very wealthy guy.
Speaker 5: His company almost went bankrupt. His company almost went bankrupt
Speaker 5: and in great recession. The guy that runs the biggest
Speaker 5: henche fun of all time and the most successful head
Speaker 5: fund of all time is Ray Dalyo. He invested one
Speaker 5: way when he was early out of business school and
Speaker 5: he lost all his money.
Speaker 3: He had to go to his father to borrow four
Speaker 3: thousand dollars. He was broke.
Speaker 5: So you know, he also made a mistake of punching
Speaker 5: his boss in the face one time. That's become a
Speaker 5: good idea. So people always make mistakes. Warren Buffett made mistakes.
Speaker 5: They all make mistakes. You just have to pick yourself
Speaker 5: up off the ground and learn from your mistakes. That's
Speaker 5: the key. If you find somebody that never made a mistake.
Speaker 5: You've got to be careful because that person has too
Speaker 5: big an ego and telling people how great you are
Speaker 5: is not a good thing.
Speaker 3: You know.
Speaker 5: There may be some people are presidents of the United
Speaker 5: States who tell people how great they are, but generally,
Speaker 5: I don't think that's a good idea.
Speaker 3: You know.
Speaker 5: Can you imagine Abraham Lincoln saying I won the Civil
Speaker 5: War by myself?
Speaker 3: No, it wouldn't happen.
Speaker 5: You want somebody that's humble and great investors have a
Speaker 5: certain amount of humility. They've made mistakes, but they've learned
Speaker 5: from it. So you guys seem like you're in sports
Speaker 5: as well. You got these those tennis shoes behind you.
Speaker 5: Are you great athletes?
Speaker 3: Also?
Speaker 2: Now that's subjective, definitely love sports. The memorabillion in your
Speaker 2: background as well.
Speaker 5: Well, I'm a terrible athlete. But I'll show you this.
Speaker 5: This is from Coach K. We won the national championship
Speaker 5: when I was the chairman of the board of Duke.
Speaker 5: I was sending him plays from him by hand signals.
Speaker 5: He said, that was the key, is those hand signal plays.
Speaker 5: That's how we won.
Speaker 4: Yes, Coach K.
Speaker 1: The legend of so let me ask you this, ninety
Speaker 1: eight point five percent of asset management firms, which includes
Speaker 1: private equity VC and investment management firms, ninety eight point
Speaker 1: five percent are run by white men. Obviously, a lack
Speaker 1: of diversity is understatement. Do you do you have a
Speaker 1: problem with that? What's your thoughts on that?
Speaker 5: Well, if you read my book, it wasn't ninety eight
Speaker 5: point five percent of the people in that book were
Speaker 5: white men. So I had a fair number of people
Speaker 5: who were women and minorities because I thought it was
Speaker 5: important to show that while there has been a bias
Speaker 5: towards white men and it's been a white male society,
Speaker 5: it's it's it's changing a bit.
Speaker 3: You know.
Speaker 5: I don't think it's a great situation. You have a
Speaker 5: this country is going to be a minority white country
Speaker 5: in my lifetime. Right now, probably the country is about
Speaker 5: sixty fifty eight percent white, but I suspect if I
Speaker 5: live long enough, it's going to be less than fifty percent,
Speaker 5: and that should be reflected in the investment management and
Speaker 5: other things. So I put a number of African American
Speaker 5: leaders in the book in the investment world, and I've
Speaker 5: interviewed it many others as well. One in the book
Speaker 5: is a guy named John Rogers. John Rogers built the
Speaker 5: Aerial Capital when is the largest Africa American owned investment
Speaker 5: firms in the in the country. I've interviewed on my
Speaker 5: TV show Melody Hobson, who you may know. Melody Hobson
Speaker 5: is married to George Lucas, but in her own right,
Speaker 5: she's built with Ariel Capitol into a really successful investment career.
Speaker 5: So I think it's if it's ninety eight point five percent,
Speaker 5: I wouldn't I wouldn't dispute your number, but I would
Speaker 5: say it's changing.
Speaker 6: I have a quick quote, a two parter, what does
Speaker 6: your day to day schedule look like? And who has
Speaker 6: been your favorite guest on the show of the last
Speaker 6: few years and what was the biggest lesson you learned
Speaker 6: from them?
Speaker 3: My favorite guest was like asking which of my children
Speaker 3: is my favorite?
Speaker 5: I don't ever tell people, but I would say a
Speaker 5: guest that I thought was really good was Jeff Bezos,
Speaker 5: because what makes a guest work well is he has
Speaker 5: a sense of humor, sense of humility, plays along with
Speaker 5: some jokes I might give, and he also it's good
Speaker 5: to do this in front of a live audience, because
Speaker 5: if you have a live audience that it makes it
Speaker 5: makes the interviewee uh plant to the audience a little
Speaker 5: bit and makes it more interesting. If you're just doing
Speaker 5: it with nobody in the audience, it's sometimes can fall
Speaker 5: Platt not be as interesting. Jeff Bezos was great. Oprah
Speaker 5: Winfrey was one of the best. Bill Clinton and George
Speaker 5: Bush together were really great. I just interviewed uh not
Speaker 5: long ago. Uh, Sam Bankman freed and that was we
Speaker 5: discussed a little unusual. I am scheduled interviewing soon. I
Speaker 5: hope to be interviewing very soon. Uh, Mike Tyson and
Speaker 5: Alex Rodriguez. I'm gonna see whether Mike Tyson, you know,
Speaker 5: can beat me in an arm wrestling masterss.
Speaker 2: You mentioned uh, your children, your three children, uh, and
Speaker 2: obviously you mentioned him as you know, being great guests.
Speaker 2: I wonder did they take an interest in your career
Speaker 2: path as well. I know you wanted to do low
Speaker 2: because of what your parents said. Well, what was the
Speaker 2: interest in your kids as as you were going through
Speaker 2: your career.
Speaker 5: Well, when I was building my firm, I was running
Speaker 5: around the world raising money and doing stuff, so they
Speaker 5: didn't probably know what I was doing when they were younger.
Speaker 3: They just had no clue.
Speaker 5: It now turns out that all three of my children
Speaker 5: are in private equity and they have their own funds.
Speaker 5: So now they call me up and asked me if
Speaker 5: I can introduce them to an investor or, I can
Speaker 5: help them and analyze the deal.
Speaker 3: So in that way, it's good.
Speaker 5: But my kids all were well educated, they went to
Speaker 5: really good schools, But I didn't push them to do
Speaker 5: any of these things. They kind of came to it eventually.
Speaker 5: I don't know why, but they did.
Speaker 1: Yeah, before we leave, I wanted to ask you this question.
Speaker 1: What do you personally look for in investments? It could
Speaker 1: be an investment in a company, investment in stocks, Like
Speaker 1: what's important to you to say, Okay, I feel comfortable making.
Speaker 5: Out When we're looking at an investment in a private company,
Speaker 5: we're looking for a management team that's pretty strong, committed
Speaker 5: to it.
Speaker 3: They've got a lot of their own networth tied up
Speaker 3: into it.
Speaker 5: You want to make sure the company has the ability
Speaker 5: to survive downturns, make sure the capital structure works, make
Speaker 5: sure it's a product that is likely to be popular
Speaker 5: in the future.
Speaker 3: Not just now, but in the end, you're looking for
Speaker 3: the right price.
Speaker 5: You know, you can have the greatest company in the world,
Speaker 5: but if you pay too much for it, it's not
Speaker 5: gonna work. So you've got to pay at the right
Speaker 5: price and make sure that you're not overpaying for these things.
Speaker 6: One of the biggest things that I find men have
Speaker 6: a struggle with is balance. You have any advice for
Speaker 6: men that are running businesses but are also trying to
Speaker 6: have a good healthy work life balance or do you
Speaker 6: think that's a fallacy?
Speaker 3: Well, that's the great conundrum in the world.
Speaker 5: I mean, can you really build a great business and
Speaker 5: have a healthy personal life and have a good balance
Speaker 5: of life. Some people figure it out. You know, obviously
Speaker 5: it's not it's not perfect. It's not easy to do.
Speaker 5: You know, some of the wealthiest people in the world
Speaker 5: that you've read about recently, they've they've become the divorced.
Speaker 5: So you know, you could say that's, you know, maybe
Speaker 5: because they work so hard. Who knows, I'm divorced because
Speaker 5: maybe I work so hard. But Jeff Bezo skill gates
Speaker 5: a lot of entrepreneurs, maybe they put too much time
Speaker 5: into their business. So a healthy life work balance is
Speaker 5: not as easy to talk about it's hard to do,
Speaker 5: very hard to do because you're driven. If you're a
Speaker 5: driven person, you want to make your company work so well,
Speaker 5: and you measure your companies and success every day by
Speaker 5: various metrics. You don't measure how good you're doing your
Speaker 5: job as a husband, or as a wife, or as
Speaker 5: a parent every day, so you can you can slough
Speaker 5: off that because you don't have a metric every day.
Speaker 5: But I think it's not as easy to do as
Speaker 5: talk about.
Speaker 4: For sure, if you can do it again, would you
Speaker 4: do anything differently?
Speaker 5: I had to do anything differently, what I would do
Speaker 5: is I wouldn't have gone to Las.
Speaker 3: Probably I would have gone to business school. That would
Speaker 3: have been good.
Speaker 5: Secondly, I wouldn't have spent four years in the Carter
Speaker 5: White House because I you know, maybe I would have
Speaker 5: been better for the country. I didn't do that, and
Speaker 5: I came out and practiced law for five years after
Speaker 5: I left the White House.
Speaker 3: That was a waste of my time.
Speaker 5: But in the end, I probably would have given away
Speaker 5: more money by earlier. I've given away, you know, well
Speaker 5: over a billion dollars in cash to are lots of
Speaker 5: things around the country. And I probably wish I had
Speaker 5: worked harder, made more money, and given away more and
Speaker 5: started earlier. But on the whole, you know, I'm seventy three.
Speaker 5: When you're seventy three, you read the obituary pages every
Speaker 5: day to see who your age is dead.
Speaker 3: And you guys are too young.
Speaker 5: You don't read the obituary I'm sure, but no doubt
Speaker 5: you must have known somebody in your life who died
Speaker 5: when you thought it was earlier than they should have died.
Speaker 5: So I'm always, you know, thankful I'm still alive and
Speaker 5: trying to do things that make sure I don't, you know,
Speaker 5: die prematurely.
Speaker 2: Well, you talked about the things that you're looking for
Speaker 2: when you're analyzing the company. I wonder if from on
Speaker 2: a daily basis the deal flow, how often are you
Speaker 2: involved or is it a process before it even gets
Speaker 2: to you?
Speaker 3: Okay, Carlisle.
Speaker 5: Is probably investing ten billion to twelve billion dollars of
Speaker 5: equity every year, and we're probably doing around the world.
Speaker 5: I don't know, fifty seventy deals a year. I sit
Speaker 5: on the investment committees of many of these things, but
Speaker 5: I am not doing the deals. So I read the
Speaker 5: investment committee memos, I give them my thoughts. They generally
Speaker 5: ignore them when I give them my thoughts the farm
Speaker 5: or not. I have a family office and they do.
Speaker 5: My family office does a lot of investments that are
Speaker 5: smaller than Carlisle's, and you know, I look at what
Speaker 5: they're doing, but I generally I don't really have the
Speaker 5: time to dig into any.
Speaker 3: One deal that much.
Speaker 5: So I just hire good people and hopefully they don't
Speaker 5: come up with good recommendations. You know, if you keep
Speaker 5: turning down the recommendations the people you hired, they're going
Speaker 5: to quit. So you have to trust them a bit.
Speaker 5: So I generally trust people and generally don't turn down
Speaker 5: the recommendations. So I've made mistakes. I turned down Facebook personally,
Speaker 5: and when Mark was in college, I turned down in
Speaker 5: effect Amazon when when Jeff was just starting the company.
Speaker 5: So I make a lot of mistakes.
Speaker 1: Well, mister team, has been a pleasure. Before we leave,
Speaker 1: anything that you would like to say.
Speaker 5: Look, thank you, thank you all for inviting me, and uh,
Speaker 5: you know, I appreciate it.
Speaker 3: Good day, all right, take care, thank you so much,
Speaker 3: A good one. Bye.
Speaker 7: My graduates from my school being forced back drop bag
Speaker 7: drop my drop back drop drop