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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.

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Speaker 2: Hello and welcome to another episode of the Odd Lots Podcast.

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Speaker 3: I'm Joe Wisenthal and I'm Tracy Alloway.

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Speaker 2: Tracy, I know, like everyone is like really into what's

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Speaker 2: the hot stock these days? In video? How do I

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Speaker 2: play the AI boom? It's interesting you can make a

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Speaker 2: lot of money and get the right stocks. I love

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Speaker 2: the general topic though, just like optimal portfolio construction. It

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Speaker 2: seems like a fascinating puzzle to me, how to fit

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Speaker 2: different types of assets together in one coherent thing.

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Speaker 3: It almost felt to me like a study in behavioral science,

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Speaker 3: almost because I think everyone always says, you know, just

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Speaker 3: invest in an index fund and maybe sixty forty, although

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Speaker 3: as we saw in twenty twenty two, that has its

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Speaker 3: own problems and we can talk about that. But I

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Speaker 3: think this is like the one area in people's lives

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Speaker 3: where they actually crave complexity, right, Like it doesn't sound

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Speaker 3: right to be like I just put your money in

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Speaker 3: an index fund and forget about it.

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Speaker 2: I know, it's like the simple It is like the

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Speaker 2: simplest investing strategy is the hardest. Yeah, for people. It's

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Speaker 2: really hard, though, Like when you see people making life

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Speaker 2: changing the amount of money because like, oh, I was

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Speaker 2: in you know, sand disc right, and suddenly everyone wants

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Speaker 2: memory because of AI and they're up five hundred percent

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Speaker 2: in the year. Is like damn, you know, like I'm

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Speaker 2: really happy with my twelve percent year that I've been

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Speaker 2: making Flood.

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Speaker 1: I've really know.

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Speaker 2: It's really hard.

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Speaker 3: I was one hundred percent invested in a leverage doge eta.

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Speaker 2: Yeah, right, Like if you did that and then you

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Speaker 2: retired the next day, I'd be like really annoyed. I'd

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Speaker 2: be like really upset. But it is a fun puzzle.

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Speaker 2: You mentioned twenty twenty two, and we saw what we've

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Speaker 2: seen really since COVID. What we've really seen since the

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Speaker 2: worst inflation in forty years is that some of these

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Speaker 2: portfolio constructions that work very well for a very long time,

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Speaker 2: particularly anything that sort of resembles that sixty forty thing,

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Speaker 2: which just worked so beautifully in the twenty tens, but

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Speaker 2: even before it hasn't worked as well. I think you're

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Speaker 2: still doing fairly well. But yeah, so it gets you

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Speaker 2: the question is like, well, I remember we asked Bill

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Speaker 2: Growth why I even own bonds at a time he

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Speaker 2: was like, well don't Yeah, don't. He's like, I'm in

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Speaker 2: I'm in pipelines, and that's where that's why I'm getting

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Speaker 2: my or I'm in whatever MLPs or whatever, that's where

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Speaker 2: I'm getting my yield. But yeah, I think there's some

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Speaker 2: real question about like why own treasures, why own whatever, etcetera.

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Speaker 3: Well, the other thing is timing. This is the thing

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Speaker 3: that everyone has to consider. Right, So in twenty twenty two,

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Speaker 3: if you were about to take out a big chunk

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Speaker 3: of your portfolio to buy a house, or if you

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Speaker 3: were a retiree and you needed to make some chunky payment,

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Speaker 3: you were really really unlucky. In twenty twenty two if

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Speaker 3: you were if you would take everyone's advice and invested

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Speaker 3: in a sixty forty portfolio. So this is the other thing,

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Speaker 3: Like you can try to smooth out returns, but your

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Speaker 3: own spending is going to go up and down quite

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Speaker 3: a bit.

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Speaker 2: There's one other issue that I think a lot about

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Speaker 2: with the very standard and it sort of relates exactly

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Speaker 2: to this, with this sort of standard advice. So in

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Speaker 2: theory is like we're not supposed to time the market.

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Speaker 2: Buy the highs, you buy the lows, et cetera. Twenty

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Speaker 2: twenty was a great time to buy. Merge twenty twenty

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Speaker 2: would have been a fantastic time to buy. The problem

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Speaker 2: is layoff surge, and there's this sort of phenomenon where

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Speaker 2: often the best times to invest in the market or

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Speaker 2: when you don't have a job and you don't really

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Speaker 2: need money, and actually, yeah, they always say don't sell,

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Speaker 2: don't panic sell at the bottom. There's a good chance

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Speaker 2: that's when you might need to sell. That's maybe when

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Speaker 2: you lose your job or something. The ability to sort

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Speaker 2: of mechanically actually follow the rules setting aside behavioral stuff,

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Speaker 2: just the ability to like have the income or have

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Speaker 2: the ability to like hold through draw downs, buy the dips,

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Speaker 2: et cetera, may not even be possible. Absolutely well, anyway,

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Speaker 2: I'm excited to say, we really do have the perfect guest,

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Speaker 2: someone we've had on the podcast before, also someone we've

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Speaker 2: just known for a very long time. One of the

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Speaker 2: most interesting thinkers in the realms of investing, in portfolio

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Speaker 2: managing and so forth. A voice of sanity, i would say,

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Speaker 2: which is very rare these days. We're gonna be speaking

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Speaker 2: with Colin roch As, the founder of Discipline Funds, and

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Speaker 2: he is the author of a brand new book called

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Speaker 2: Your Perfect Portfolio about exactly this topic. Colin, thank you

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Speaker 2: so much for coming back on the podcast.

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Speaker 4: It's nice to see, nice to be here.

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Speaker 2: Why did you write this book.

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Speaker 4: Well, this is.

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Speaker 5: A problem that I've always run into throughout running my business,

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Speaker 5: is that I think as the portfolio manager and financial advisor,

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Speaker 5: I've run into this issue where I'm trying to construct

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Speaker 5: a model portfolio that is ideal for my business so

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Speaker 5: that I can easily implement something and then kind of

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Speaker 5: just plug and play it into client portfolios. And what

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Speaker 5: I've realized over the course of managing money for you know,

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Speaker 5: hourver long it's been now multiple decades, is that everyone's

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Speaker 5: different and everyone needs their own level of customization, and

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Speaker 5: so it's very hard to just take a model portfolio

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Speaker 5: and then plug and play. And the kind of funny

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Speaker 5: thing with the financial services industry is it's largely built

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Speaker 5: around these ideas that you take a product and then

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Speaker 5: you sell it to the client. And oftentimes what I

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Speaker 5: find is that when you're trying to sell the product

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Speaker 5: to the client, it just doesn't mesh with their needs.

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Speaker 5: And so everyone needs to find their own perfect portfolio.

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Speaker 5: So the book isn't titled The Perfect Portfolio, and the

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Speaker 5: purpose of the book really is to what I do

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Speaker 5: is I go through a number of famous portfolios, and

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Speaker 5: some of them are very boring and some of them

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Speaker 5: are more sophisticated. But the overarching ethos of the book

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Speaker 5: is that you have to understand all these different approaches

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Speaker 5: and then you can plug and play the way that

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Speaker 5: you want to build your own perfect portfolio so that

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Speaker 5: it works for you.

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Speaker 3: One thing I'm curious about because I've never had a

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Speaker 3: professional financial advisor or anything, but how do you actually

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Speaker 3: evaluate your client's needs? It's like, what do those questions

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Speaker 3: look like? I imagine you know, there's probably a lot of

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Speaker 3: finances involved, but are there questions like how do you

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Speaker 3: feel about losing forty percent of your portfolio in a

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Speaker 3: single year?

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Speaker 1: On?

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Speaker 5: That's actually that's my my very favorite question, the question

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Speaker 5: I hate the most because for I don't know, twenty years,

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Speaker 5: I used to print out these phony risk profile questionnaires

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Speaker 5: and I would send them to people and one of

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Speaker 5: the questions as always, you know, how do you respond

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Speaker 5: to a market that falls thirty or forty percent? And

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Speaker 5: literally ninety eight percent of people will answer that question

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Speaker 5: the exact same way because they know the right answer.

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Speaker 4: They'll say, oh, I stay the course, I will buy

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Speaker 4: the dip or whatever.

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Speaker 5: And then COVID happens, and fifty percent of my clients

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Speaker 5: are calling me like, this has never happened before.

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Speaker 4: What the hell do we do now? This is terrifying.

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Speaker 5: We need to sell everything, right, And I'm there even

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Speaker 5: I'm looking at that and I'm kind of like, you know,

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Speaker 5: cause in the throes of it, Yeah, that's the hard

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Speaker 5: part about investing into a bear market, especially when it's

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Speaker 5: actual going on.

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Speaker 4: It all feels right, just justified totally, and you're looking

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Speaker 4: at it.

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Speaker 5: One of my favorite charts in the book is a

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Speaker 5: chart of the Great Depression downturn, and it shows this

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Speaker 5: like horrific eighty percent downturn where the market just went

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Speaker 5: down like every month for basically three or four years,

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Speaker 5: and it goes down a full eighty percent. And when

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Speaker 5: you're in the throes of that sort of thirty or

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Speaker 5: forty percent downturn that we saw, say during the GFC

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Speaker 5: or during COVID, you're thinking to yourself, well, wait a minute,

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Speaker 5: I know that the market has gone down sixty seventy

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Speaker 5: eighty percent in the past, so if we're at forty

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Speaker 5: that means we probably have another you know, forty percent

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Speaker 5: haircutter coming down the line. And so that's the psychology

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Speaker 5: of it when people are actually in the middle of it,

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Speaker 5: and I remember it vividly during COVID, because even people

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Speaker 5: like Buffett and Bill Gates, like some of the most

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Speaker 5: practical thinkers in the world, they're sitting around there saying,

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Speaker 5: this has never happened before, We've never seen this, No

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Speaker 5: one living has seen what is going on right now,

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Speaker 5: and so it all feels rational. And then, you know,

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Speaker 5: so from a risk profiling perspective, it's really difficult because

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Speaker 5: that sort of subjective nature of it all is really

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Speaker 5: sort of irrelevant because when you're actually in it, it

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Speaker 5: all will feel totally rational.

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Speaker 4: Now.

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Speaker 2: I remember thinking that even like obviously April of last year,

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Speaker 2: during the brief but very sharp sell off after liberation. Yeah,

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Speaker 2: and it's like, well, Trunk just changed the rules of capitalism.

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Speaker 2: This is gonna be different. This is really different. Or

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Speaker 2: going back to COVID, like we all say we're gonna

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Speaker 2: just hold through the downturn, but in that moment we're like, oh, no,

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Speaker 2: this isn't really this is well, this is not like

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Speaker 2: the other cell. This is different.

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Speaker 1: This is not like dot.

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Speaker 2: Com or there was just an overvaluation. This is not

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Speaker 2: like nineteen ninety one when we had a fed engineered recession.

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Speaker 2: This is something different. The old rules about buying and

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Speaker 2: holding must not apply this.

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Speaker 5: Yeah, it's funny, you know, I see a lot of

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Speaker 5: people get mocked. A lot of the analysts back then,

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Speaker 5: where you know, they were changing their estimates and they

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Speaker 5: kind of, you know, after the tariffs more or less

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Speaker 5: got scrapped, they then you know, up their estimates for

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Speaker 5: the year end targets, and in retrospect that looks kind

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Speaker 5: of stupid, but in the throes of it, if you remember,

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Speaker 5: like they were saying they were going to replace the

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Speaker 5: income tax. Yeah, like I'm writing, you know, they're doing

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Speaker 5: the math on that, and I'm like, wait a minute,

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Speaker 5: that's a two point five trillion dollar corporate or tax increase.

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Speaker 4: Like that's a.

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Speaker 5: Gigantic number of incredibly frightening number if it's true. And

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Speaker 5: then you know, of course the CEOs of Home Depot

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Speaker 5: and Target and all them walk into the White.

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Speaker 4: House and are like, do not do this.

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Speaker 5: And so they're still doing the tariffs, and they're still impactful,

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Speaker 5: and they're still a corporate tax and whatnot, but they're

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Speaker 5: not nearly the size that you know they were going

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Speaker 5: to be, you know that they were claiming to be.

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Speaker 5: And so that frightening moment where you know, they announced that,

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Speaker 5: you know, got quickly scrapped when they were kind of

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Speaker 5: reversed course on it.

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Speaker 3: I feel like we should note here that we're recording

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Speaker 3: on January eighth, and we are expecting the Supreme Court

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Speaker 3: to make a decision of the tariffs, so the entire

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Speaker 3: game could change again. Now you mentioned the Great Depression,

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Speaker 3: and one thing I thought was really interesting in the

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Speaker 3: book is you talk about how no one really quite

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Speaker 3: knows the origins of the sixty forty portfolio, even though

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Speaker 3: it's become fairly standard in finance, but you trace it

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Speaker 3: back to the Great Depression. So tell us how you

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Speaker 3: did that.

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Speaker 5: Yeah, well, I don't know if I did do it correctly,

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Speaker 5: but it was kind of a guess. But I found

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Speaker 5: that so fascinating that sixty forty is arguably the most

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Speaker 5: famous portfolio of all the portfolios, and we all probably

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Speaker 5: own something that kind of looks like sixty forty at

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Speaker 5: some point in our lives and It was actually Corey Hofstein,

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Speaker 5: who manages the return Stacking ETFs, that he asked on

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Speaker 5: Twitter one day, where did this thing come from? And

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Speaker 5: there were hundreds of responses, and none of them.

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Speaker 4: Seemed to write.

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Speaker 5: And so I just had so happened to be writing

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Speaker 5: the book at this time, and I'm writing the chapter

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Speaker 5: on sixty forty, and I started digging into it and

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Speaker 5: I found the story about this guy named Walter Morgan

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Speaker 5: who's running a fund called the Wellington Fund. And Wellington Fund, obviously,

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Speaker 5: you know, famous because it turned into a Vanguard fund later,

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Speaker 5: is run by John Bogel, who some people may have

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Speaker 5: heard of. And he's doing this though in a very

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Speaker 5: unusual way back in the depression, where during the Depression,

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Speaker 5: equity investing was kind of the dominant.

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Speaker 4: Way to actually allocate assets.

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Speaker 5: And Morgan had been burned before that, so he goes

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Speaker 5: into the Great Depression. He launches the Wellington Fund right

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Speaker 5: before the depression, but he does something really unusual. He

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Speaker 5: adds a huge chunk of bonds to the portfolio. And

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Speaker 5: the thing gets crushed in the depression, but it gets

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Speaker 5: crushed way less than everything else got crushed. And so

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Speaker 5: then all of these research analysts are starting to look

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Speaker 5: at you know, kind of you know, picking through the

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Speaker 5: dust of the Great Depression and the returns there, and

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Speaker 5: they're noticing that, hey, this fund did really well in

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Speaker 5: a relative sense. So Morgan's fund kind of takes off

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Speaker 5: because of this because the relative performance was so good.

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Speaker 5: And then the story is interesting because then Walter Morgan

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Speaker 5: hires Don Bogel. Bogel runs the Wellington Fund through the

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Speaker 5: fund goes through the World War Two and the boom

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Speaker 5: of the nineteen sixties and then the scary inflation of

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Speaker 5: the nineteen seventies. Bogel actually does something really weird. He

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Speaker 5: turns the fund closer into like an eighty twenty fund

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Speaker 5: kind of chasing performance and which was sort of like

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Speaker 5: antithetical to everything that Bogel ultimately is kind of known for.

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Speaker 5: And then we all know the story from there. The

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Speaker 5: sixty to forty from nineteen eighty to present day has

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Speaker 5: been you know, kind of like one of the best

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Speaker 5: performing portfolios ever. So it's you know, through all of

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Speaker 5: these trials and tribulations, though this portfolio has done incredibly well,

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Speaker 5: and I traced its origin mostly back to the Great

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Speaker 5: Depression in the way that Wellington Fund.

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Speaker 4: Was sort of built as the first real balanced Indeth fund.

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Speaker 2: It's actually a zoom out or back up a little

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Speaker 2: bit and talked theory because you said that many of

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Speaker 2: us or most of us will have some portfolio that

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Speaker 2: is sixty forty ish, but that there's gonna be various

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Speaker 2: modifications and people are gonna want a slug of real

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Speaker 2: estate or commodities whatever. But what are you talking about,

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Speaker 2: maybe from the academic perspective, like what is the sixty

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Speaker 2: forty portfolio really is? And like what is it theoretically

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Speaker 2: achieve that is given it this sort of it's Lindy,

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Speaker 2: this sort of enduring effect that it accomplishes goal. Talk

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Speaker 2: to us about like why from the perspective of a planner,

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Speaker 2: maybe it's not perfect for everyone, but it has certain qualities.

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Speaker 2: This is a good portfolio to me.

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Speaker 4: The sixty forty is like the good enough portfolio.

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Speaker 2: So it just to be just to define it, So

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Speaker 2: a sixty forty portfolio means basically sixty percent equities and

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Speaker 2: forty percent treasuries exactly, Okay, but talk about why it's

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Speaker 2: good enough? What are the properties of it?

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Speaker 5: So it's the portfolio of that by owning sixty percent stocks,

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Speaker 5: you will you'll do well enough, you'll capture enough of

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Speaker 5: an equity market bull market, and also conversely, during a

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Speaker 5: bear market, because of the forty percent bond slice, you

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Speaker 5: typically will buffer the equity volatility in the portfolio just

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Speaker 5: enough that you won't capture all of the downside. And

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Speaker 5: so it's it is balanced in this way that it

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Speaker 5: doesn't capture all of the upside or all of the downside,

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Speaker 5: and kind of can help.

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Speaker 4: You stay the course.

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Speaker 5: I talked specifically in one chapter about something called the

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Speaker 5: global financial asset portfolio, and I really like understanding this portfolio,

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Speaker 5: especially from like a theoretical perspective, because the most interesting

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Speaker 5: thing about it actually is that nobody owns this portfolio

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Speaker 5: because it's mostly uninvestable or you can't fully invest it,

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Speaker 5: and it's actually, you know, I talked to a lot

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Speaker 5: of famous researchers about this topic when I was researching

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Speaker 5: the book, and they all kind of concluded that the

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Speaker 5: screwiest part about actually quantifying that portfolio is that it's

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Speaker 5: actually really controversial how to quantify it because all of

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Speaker 5: the assets in that portfolio are not investible. So for instance,

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Speaker 5: like China A shares are not necessarily investible for foreign investors,

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Speaker 5: and there's lots of assets that are held by you know,

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Speaker 5: the Swiss National Bank owns a lot of assets that

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Speaker 5: make the assets then uninvestable.

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Speaker 4: And so you know, the FED has been buying a

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Speaker 4: lot of treasury bonds.

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Speaker 5: So technically you could say, you know, what happens to

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Speaker 5: the market cap of outstanding bonds when the FED is

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Speaker 5: the owner of a lot of these bonds, And you

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Speaker 5: can start getting into these sort of very academic theoretical

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Speaker 5: debates about well, what is the market portfolio and what's

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Speaker 5: actually investable versus uninvestable. And it's especially interesting from like

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Speaker 5: a theoretical.

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Speaker 2: And in theory that portfolio includes like gas stations in Burma.

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Speaker 5: Right, yeah, well, god, if you go into all of

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Speaker 5: the assets, you know, I did financial assets only, so

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Speaker 5: I kind of excluded all the non financial.

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Speaker 4: Assets so things.

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Speaker 5: Cause then the whole portfolio kind of turns into a

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Speaker 5: real estate portfolio. It's basically everybody's houses is everything that

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Speaker 5: we own. But from a financial asset perspective, it was

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Speaker 5: really interesting because especially when you look at things like

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Speaker 5: the full cap versus the free float, which is basically

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Speaker 5: the actual assets, you can invest in versus the portfolio

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Speaker 5: that is actually the issuance of outstanding financial assets. These

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Speaker 5: portfolios are really different. And like, for instance, in today's environment,

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Speaker 5: the outstanding market cap of stocks versus bonds is roughly

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Speaker 5: sixty five thirty five. And when you look at the sorry,

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Speaker 5: the equity market, when you look at the US versus four,

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Speaker 5: and it's sixty five versus thirty five. But when you

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Speaker 5: look at the actual issuance, the full cap, it's almost

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Speaker 5: the opposite. And so the US is way smaller from

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Speaker 5: a full issuance perspective, but from an actual investible perspective,

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Speaker 5: the US is you know what we call like this

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Speaker 5: extraordinary market, this unusual, huge part of the full market cap,

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Speaker 5: and which is weird to think of because when Vanguard

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Speaker 5: and some of these big index funds create these products,

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Speaker 5: they have to issue what is investable. They can't just

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Speaker 5: say theoretically, like I sometimes will tell my clients, well, hey,

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Speaker 5: if you want to actually own the true market cap

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Speaker 5: portfolio or the market issuance portfolio, you should actually be

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Speaker 5: closer to like forty percent US. You should be underweight

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Speaker 5: the US market versus four and in this environment, because

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Speaker 5: that actually is representative of the full issues, whereas if

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Speaker 5: you're Vanguard and you're running this index and you have

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Speaker 5: to buy what has actually been issued, it's almost the

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Speaker 5: exact opposite and you real way overweight US. So you

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Speaker 5: get into these interesting sort of like theoretical debates about

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Speaker 5: how to even do this.

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Speaker 3: In the first place, I want to talk more about

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Speaker 3: illiquid assets like real estate, because for most people this

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Speaker 3: is their biggest investment, right their actual house. But before

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Speaker 3: I do, you just reminded me gold. So in the

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Speaker 3: book you talk about gold as like one of the

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Speaker 3: true uncorrelated assets, but of course over the course of

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Speaker 3: last year, it looks like a momentum stock, right, how

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Speaker 3: are you judging gold at this moment in time.

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Speaker 5: You know, gold and commodities are really hard to compartmentalize

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Speaker 5: in the portfolio construction process because I typically think of

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Speaker 5: commodities in general as they're just they roughly track inflation

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Speaker 5: because they are just cost inputs, and you know corporate

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Speaker 5: you know costs, and so they should roughly reflect something

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Speaker 5: close historically to the rate of inflation, which is pretty

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Speaker 5: close to what the data shows.

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Speaker 4: Gold is a really screwy.

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Speaker 5: One because gold has this whole other element to it

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Speaker 5: where there's huge swaths of the population that view gold

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Speaker 5: as money, even though you know, in a modern monetary system,

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Speaker 5: you could argue that gold is actually a pretty terrible

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Speaker 5: form of money just because it's impractical to use for

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Speaker 5: the most part, it's got this store of value in

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Speaker 5: this sort of I refer to it as a faith

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Speaker 5: put inside of it where it's price almost gets like

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Speaker 5: a premium because it's not just an input and cost inputs.

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Speaker 5: It is something that people believe in, that people hold

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Speaker 5: and people have demand for because it's got this other

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Speaker 5: strange use, and so it's weird in the context of

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Speaker 5: today's environment.

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Speaker 4: Another concept I.

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Speaker 5: Talk about is I talk a lot about time and

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Speaker 5: the book about how important it is to think about

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Speaker 5: portfolios and asset performance across time horizons. And you know,

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Speaker 5: I do a lot of asset liability matching, and that

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Speaker 5: basically entails working with somebody where I'm quantifying liabilities and

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Speaker 5: expenses over time horizons and I'm matching assets and not

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Speaker 5: just a similar way to like maybe a big pension

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Speaker 5: fund would or banks might operate. And that's all about

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Speaker 5: understanding time and an asset liability mismatch.

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Speaker 4: And if you get that wrong, you end up like

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Speaker 4: Silicon Valley.

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Speaker 3: Bank, and which you talk about in the book.

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Speaker 4: Yeah.

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Speaker 5: And the interesting thing about even like a retail investor,

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Speaker 5: you know, and it took me for, you know, two

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Speaker 5: decades working in the business to realize this that the

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Speaker 5: better way to go through a risk profiling process is

400
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Speaker 5: not to ask people phony questions about this subjective nature

401
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Speaker 5: of how they feel in a bear market.

402
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Speaker 4: Or something like that. It's figuring out it's solving that.

403
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Speaker 5: Asset liability mismatch, because what happens to an investor when

404
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Speaker 5: they go through a bear market is they're realizing that

405
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Speaker 5: they own too much of I refer to equities as

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Speaker 5: long duration instruments. Corporations are very long term entities by design,

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Speaker 5: by function. And when someone owns one hundred percent and

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Speaker 5: stock portfolio and they go through a big bear market,

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Speaker 5: what happens to them is they get scared. They're realizing,

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Speaker 5: I don't have enough safe assets to make me feel

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Speaker 5: comfortable with this. So if they own the forty percent

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Speaker 5: slights like the sixty forty, maybe they feel more comfortable.

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Speaker 5: Or if they own you know, there's a whole chapter

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Speaker 5: on what I call the t bill and chill portfolio,

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Speaker 5: which is like the liquid reserve portfolio.

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Speaker 2: You know, I heard a story I don't know if

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Speaker 2: it's true, speaking of T Bill and Chill. Though I

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Speaker 2: don't know if it's true, because I heard the second hand.

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Speaker 2: Someone was telling me there's like some famous, like very

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Speaker 2: very successful trader like Goldman Sachs. There's like trading commodities,

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Speaker 2: pulling down millions and millions of dollars each year, and

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Speaker 2: he just like had all his money in T Billy.

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Speaker 2: So look, look, I make a ton of money. I

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Speaker 2: just like basically want to save it. I don't know

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Speaker 2: if that's even true, but I do wonder. So when

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Speaker 2: you were talking about alternate ways of assessing risk profile,

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Speaker 2: do you think about like try to get a sense

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Speaker 2: of the client's income volatility. So like maybe someone who

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Speaker 2: you know, a federal judge, who is going to have

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Speaker 2: a job for life, et cetera, at a guaranteed pension.

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Speaker 2: Maybe they don't make a ton of money, but you

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Speaker 2: are very confident that you could predict their income for

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Speaker 2: the next fifty years. Maybe we're as somebody who makes

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Speaker 2: a lot of money, but they're like a real estate

435
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Speaker 2: developer in Miami, and the odds of those guys going

436
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Speaker 2: broke every ten years is pretty high, et cetera. Talk

437
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Speaker 2: to us about like sort of that role of calculating

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Speaker 2: expected in yours.

439
00:21:23,240 --> 00:21:26,040
Speaker 5: It's arguably, I would say, the most important part of

440
00:21:26,080 --> 00:21:28,280
Speaker 5: the whole equation, because one of the things I talk

441
00:21:28,320 --> 00:21:31,400
Speaker 5: about in the book is I frame your human capital

442
00:21:31,560 --> 00:21:35,520
Speaker 5: and your income as a literal fixed income allocation. So

443
00:21:35,560 --> 00:21:37,840
Speaker 5: I almost like to think of your income and your

444
00:21:37,920 --> 00:21:40,439
Speaker 5: job as like a bond allocation. And so in the

445
00:21:40,480 --> 00:21:43,159
Speaker 5: context of like, you know, someone like you're talking about,

446
00:21:43,280 --> 00:21:45,760
Speaker 5: or let's use an even simpler example of someone who's

447
00:21:46,000 --> 00:21:48,000
Speaker 5: you know, twenty five and they make a decent amount

448
00:21:48,040 --> 00:21:51,160
Speaker 5: of money. That person not only has a really long

449
00:21:51,200 --> 00:21:53,960
Speaker 5: time horizon, but if they've got a really stable job,

450
00:21:54,200 --> 00:21:57,200
Speaker 5: they've got this embedded fixed income allocation that maybe they

451
00:21:57,200 --> 00:22:00,679
Speaker 5: don't actually quantify it like that on a folio statement,

452
00:22:00,720 --> 00:22:01,000
Speaker 5: but that.

453
00:22:00,960 --> 00:22:02,800
Speaker 2: Has a net present value there exactly.

454
00:22:03,119 --> 00:22:03,320
Speaker 4: You know.

455
00:22:03,359 --> 00:22:06,679
Speaker 5: So if the really simple example is if you make

456
00:22:06,720 --> 00:22:09,080
Speaker 5: one hundred grand a year in you know, you can

457
00:22:09,119 --> 00:22:11,639
Speaker 5: almost think of that as I've got a million dollar

458
00:22:11,720 --> 00:22:15,160
Speaker 5: bond that earns ten percent a year. And what that does,

459
00:22:15,440 --> 00:22:18,720
Speaker 5: especially if it's a very stable fixed income, it frees

460
00:22:18,800 --> 00:22:20,919
Speaker 5: up a huge amount of behavioral bandwidth for you to

461
00:22:20,960 --> 00:22:23,639
Speaker 5: take other risks. And that's one of the arguments why

462
00:22:23,840 --> 00:22:26,879
Speaker 5: if you're twenty five and you've got, you know, forty

463
00:22:26,960 --> 00:22:29,520
Speaker 5: years to retirement or whatever, and you've got a stable,

464
00:22:29,760 --> 00:22:32,080
Speaker 5: you know, solid income, well you can think of your

465
00:22:32,160 --> 00:22:36,040
Speaker 5: income versus your balance sheet as being super stable, which

466
00:22:36,040 --> 00:22:37,679
Speaker 5: allows you to take a lot of risk with your

467
00:22:37,720 --> 00:22:40,000
Speaker 5: balance sheet that you might not otherwise have. And that's

468
00:22:40,359 --> 00:22:42,639
Speaker 5: another thing I talk a lot about retirement planning in

469
00:22:42,680 --> 00:22:45,640
Speaker 5: the book because the thing that I've seen very front and.

470
00:22:45,640 --> 00:22:48,080
Speaker 4: Center is that when people get close.

471
00:22:47,840 --> 00:22:53,800
Speaker 5: To sixty five, that income issue becomes hugely important because

472
00:22:53,840 --> 00:22:57,680
Speaker 5: people start to realize that, oh crap, that fixed income

473
00:22:57,720 --> 00:23:00,240
Speaker 5: allocation that I've had all these years, it's about to

474
00:23:00,320 --> 00:23:02,879
Speaker 5: just disappear overnight, or it's about to shrink down to

475
00:23:02,920 --> 00:23:05,919
Speaker 5: whatever your Social Security income is or whatever. And so

476
00:23:06,160 --> 00:23:10,119
Speaker 5: people go through this sort of psychological mind trip where

477
00:23:10,240 --> 00:23:13,720
Speaker 5: when they near retirement and then enter retirement, they struggle

478
00:23:13,760 --> 00:23:16,960
Speaker 5: with that, you know, adapting to this big, big change

479
00:23:16,960 --> 00:23:20,520
Speaker 5: in their income because they're realizing that, hey, I don't

480
00:23:20,560 --> 00:23:23,119
Speaker 5: have this fixed income that I could fall back on

481
00:23:23,200 --> 00:23:24,480
Speaker 5: for the last forty years.

482
00:23:25,240 --> 00:23:28,720
Speaker 3: Is investing time horizon more important than macro because in

483
00:23:28,760 --> 00:23:31,719
Speaker 3: the book you do talk about the importance of macro.

484
00:23:32,200 --> 00:23:35,040
Speaker 3: But on the other hand, if people are reacting to

485
00:23:35,240 --> 00:23:38,359
Speaker 3: a changing economy all the time, then that looks a

486
00:23:38,359 --> 00:23:41,240
Speaker 3: lot like what you're not supposed to do, right.

487
00:23:42,680 --> 00:23:46,560
Speaker 5: Yeah, I mean, gosh, I generally, in my practice I

488
00:23:46,600 --> 00:23:51,960
Speaker 5: am constantly trying to downplay macro econ and geopolitics and

489
00:23:51,960 --> 00:23:52,560
Speaker 5: things like that.

490
00:23:52,680 --> 00:23:54,119
Speaker 4: I mean, it's funny. You know.

491
00:23:54,200 --> 00:23:56,639
Speaker 5: The reason that I probably even know you guys is

492
00:23:56,680 --> 00:23:59,560
Speaker 5: because I've written so much about macro econ and I'm

493
00:23:59,600 --> 00:24:02,520
Speaker 5: not any economists, but people I think sometimes think of

494
00:24:02,560 --> 00:24:05,320
Speaker 5: me as a macro thinker, in large part because I've

495
00:24:05,359 --> 00:24:09,440
Speaker 5: spent so much of my career fielding bad questions about

496
00:24:09,640 --> 00:24:12,080
Speaker 5: you know, hey, is the US government going bankrupt? Or

497
00:24:12,640 --> 00:24:15,480
Speaker 5: you know, what is going on with China? And I'm

498
00:24:15,480 --> 00:24:18,159
Speaker 5: trying to sort of write about this stuff not because

499
00:24:18,200 --> 00:24:21,960
Speaker 5: it's important in the context of portfolio construction, but because

500
00:24:22,200 --> 00:24:26,560
Speaker 5: it's more so about understanding how these things operate at

501
00:24:26,640 --> 00:24:28,520
Speaker 5: more of a sort of a first principles level, where

502
00:24:28,560 --> 00:24:30,400
Speaker 5: you can look at a bond allocation if you own

503
00:24:30,440 --> 00:24:33,080
Speaker 5: a huge slug of you know, US Treasury bonds, for instance,

504
00:24:33,160 --> 00:24:35,199
Speaker 5: or tea bills. You know, you can look at these

505
00:24:35,200 --> 00:24:37,520
Speaker 5: things when you understand them more mechanically.

506
00:24:37,760 --> 00:24:38,800
Speaker 4: You can look at these things and.

507
00:24:38,720 --> 00:24:42,359
Speaker 5: Say, Okay, well, the odds of the US government actually

508
00:24:42,440 --> 00:24:46,000
Speaker 5: going bankrupt are extraordinarily low because I understand how these

509
00:24:46,000 --> 00:24:48,359
Speaker 5: things function. I understand that the US government is not

510
00:24:48,400 --> 00:24:50,840
Speaker 5: going to run out of money. I understand that, you know,

511
00:24:50,840 --> 00:24:53,880
Speaker 5: maybe bond vigilantes aren't quite as powerful as we've all

512
00:24:53,880 --> 00:24:56,959
Speaker 5: been told. And you can understand these things in the

513
00:24:57,000 --> 00:24:59,840
Speaker 5: context of owning something so that you're more comfortable with

514
00:25:00,119 --> 00:25:02,400
Speaker 5: what you're doing. And that's actually the hardest part about

515
00:25:02,440 --> 00:25:05,359
Speaker 5: all of this is that it's all very complex, and

516
00:25:05,480 --> 00:25:08,639
Speaker 5: it's all very emotional, and if you don't understand what

517
00:25:08,720 --> 00:25:11,280
Speaker 5: you own, then you won't be comfortable with it and

518
00:25:11,320 --> 00:25:12,280
Speaker 5: you won't stick with it.

519
00:25:28,040 --> 00:25:30,359
Speaker 2: Let's talk about real estate. I bought a house at

520
00:25:30,359 --> 00:25:32,439
Speaker 2: twenty sixteen. I think it's done all right, but then

521
00:25:32,600 --> 00:25:34,560
Speaker 2: sometimes I'm like, man, I really wish I just put

522
00:25:34,560 --> 00:25:37,639
Speaker 2: that all into QQQ or something like that. And then

523
00:25:37,680 --> 00:25:40,159
Speaker 2: the other thing with houses that I think is interesting,

524
00:25:40,240 --> 00:25:43,479
Speaker 2: which is like you could look at maybe I'll say,

525
00:25:43,480 --> 00:25:45,480
Speaker 2: you own a house outright and it's like, oh, it's

526
00:25:45,520 --> 00:25:48,080
Speaker 2: worth a million dollars or something like that, you can't

527
00:25:48,080 --> 00:25:50,080
Speaker 2: really sell it because then you have to buy a house,

528
00:25:50,320 --> 00:25:52,159
Speaker 2: and so it's like I'm not even sure, like I

529
00:25:52,160 --> 00:25:55,119
Speaker 2: got to live somewhere and so I don't know, you

530
00:25:55,119 --> 00:25:57,880
Speaker 2: can't monetize that to the same degree you could, you know,

531
00:25:58,040 --> 00:25:59,639
Speaker 2: sell your stock and buy stuff.

532
00:25:59,680 --> 00:26:00,600
Speaker 4: But talk choice.

533
00:26:00,359 --> 00:26:03,280
Speaker 2: About how one should think. Let's start this, how one

534
00:26:03,280 --> 00:26:07,440
Speaker 2: should think about the role of their home in their polio.

535
00:26:07,880 --> 00:26:10,920
Speaker 5: It's the hardest asset to buy, I think, because it

536
00:26:11,000 --> 00:26:15,280
Speaker 5: is it's an instrument that you want to generate a

537
00:26:15,359 --> 00:26:17,920
Speaker 5: return on. So you want to do like some financial

538
00:26:17,960 --> 00:26:20,800
Speaker 5: analysis on it, and you know, try to Nobody wants

539
00:26:20,840 --> 00:26:23,360
Speaker 5: to buy a house in you know, two thousand and

540
00:26:23,400 --> 00:26:26,320
Speaker 5: seven or something and then see it go down thirty percent.

541
00:26:26,400 --> 00:26:29,520
Speaker 4: But also, your house is where you live.

542
00:26:29,640 --> 00:26:31,880
Speaker 5: It's where you're going to raise your kids, and you're

543
00:26:31,880 --> 00:26:33,719
Speaker 5: going to eat most of your meals, and where you're

544
00:26:33,760 --> 00:26:35,800
Speaker 5: gonna do all the little boring things in life that

545
00:26:35,840 --> 00:26:37,679
Speaker 5: are actually really important to you. And so there's this

546
00:26:37,760 --> 00:26:40,719
Speaker 5: really personal part of it that it makes the to

547
00:26:40,720 --> 00:26:44,080
Speaker 5: some degree, it throws all the financial math out the window.

548
00:26:44,200 --> 00:26:47,760
Speaker 5: But from a basic you know, first of all, going

549
00:26:47,760 --> 00:26:50,240
Speaker 5: back to your twenty sixteen purchase, I would say, you.

550
00:26:50,160 --> 00:26:53,440
Speaker 4: Know, that was unbelievable timing because.

551
00:26:53,160 --> 00:26:56,640
Speaker 2: Oh, thank you, the thank you.

552
00:26:56,640 --> 00:26:59,320
Speaker 5: You could argue that going through COVID, I mean, any

553
00:26:59,359 --> 00:27:02,520
Speaker 5: house that was leveraged, did you have a mortgage? Yeah, yeah,

554
00:27:02,560 --> 00:27:06,080
Speaker 5: So any house that was leveraged was the best inflation hedge, right,

555
00:27:06,520 --> 00:27:10,200
Speaker 5: maybe maybe the best inflation heads trade of the last

556
00:27:10,200 --> 00:27:12,280
Speaker 5: fifty years, you could argue just in terms of just

557
00:27:12,320 --> 00:27:15,040
Speaker 5: providing this stable level of certainty.

558
00:27:15,200 --> 00:27:17,240
Speaker 4: You know, the low mortgage is an inflation hedge.

559
00:27:17,280 --> 00:27:20,359
Speaker 5: The you got fifty percent price appreciation or probably something

560
00:27:20,480 --> 00:27:23,760
Speaker 5: like that. So that's interesting too to think about that

561
00:27:23,840 --> 00:27:25,680
Speaker 5: when you know, kind of going back to the question

562
00:27:25,720 --> 00:27:28,760
Speaker 5: on gold that I didn't fully answer, what happens when an.

563
00:27:28,680 --> 00:27:31,880
Speaker 4: Asset goes up so much in the short term.

564
00:27:31,920 --> 00:27:33,400
Speaker 5: The way I like to think of it, at least

565
00:27:33,440 --> 00:27:36,680
Speaker 5: is that, let's say that housing typically generates a low

566
00:27:36,760 --> 00:27:39,760
Speaker 5: real return, or you know, even historically it hasn't generated

567
00:27:39,760 --> 00:27:41,879
Speaker 5: a real return. The way that I like to think

568
00:27:41,920 --> 00:27:44,200
Speaker 5: about things like that, or environments where you get these

569
00:27:44,240 --> 00:27:46,960
Speaker 5: what I call a price compression, you get a huge

570
00:27:47,000 --> 00:27:50,280
Speaker 5: boom in an asset class and it's almost easier to

571
00:27:50,320 --> 00:27:52,399
Speaker 5: think of this in like a fixed income market, where

572
00:27:52,640 --> 00:27:54,720
Speaker 5: like when the bond market goes down, a lot interest

573
00:27:54,800 --> 00:27:57,280
Speaker 5: rates go up, the math completely changes on all. So

574
00:27:57,280 --> 00:27:59,240
Speaker 5: a lot of people these days are saying, like, bonds

575
00:27:59,240 --> 00:28:01,000
Speaker 5: are dead, and I would say, like, no, bonds are

576
00:28:01,000 --> 00:28:04,760
Speaker 5: actually probably more attractive because mathematically, from a yield perspective,

577
00:28:04,760 --> 00:28:08,159
Speaker 5: relative to the falling price decline, the future returns are

578
00:28:08,240 --> 00:28:11,199
Speaker 5: much more stable now, much more probable. And so what

579
00:28:11,280 --> 00:28:14,080
Speaker 5: happens in an environment where you get a fifty percent

580
00:28:14,119 --> 00:28:16,520
Speaker 5: increase in real estate or you know, what was gold

581
00:28:16,600 --> 00:28:19,080
Speaker 5: up last year sixty five percent? You know, let's say

582
00:28:19,080 --> 00:28:22,080
Speaker 5: that let's just be generous and say gold is going

583
00:28:22,119 --> 00:28:24,280
Speaker 5: to continue to do eight percent per year for the

584
00:28:24,359 --> 00:28:26,960
Speaker 5: next you know, however many years when you get sixty

585
00:28:27,040 --> 00:28:30,080
Speaker 5: five percent of that return all crunched down into one year,

586
00:28:30,480 --> 00:28:33,760
Speaker 5: I think what happens is you create a higher probability

587
00:28:33,800 --> 00:28:37,080
Speaker 5: of what a financial advisor would call sequence of returns risk,

588
00:28:37,119 --> 00:28:39,880
Speaker 5: which means that the probability that the future returns are

589
00:28:39,920 --> 00:28:43,360
Speaker 5: going to be much more volatile becomes much higher. And

590
00:28:43,760 --> 00:28:46,120
Speaker 5: so that's one thing with real estate is that, like,

591
00:28:46,160 --> 00:28:49,360
Speaker 5: I'm not super optimistic about future real estate prices for

592
00:28:49,440 --> 00:28:52,360
Speaker 5: now because we went through this big boom, it creates

593
00:28:52,360 --> 00:28:55,360
Speaker 5: this price compression and you get lots of returns into

594
00:28:55,400 --> 00:28:58,160
Speaker 5: one year, all crammed up, and that means that the

595
00:28:58,320 --> 00:29:01,520
Speaker 5: likelihood of either sideways or you know, not great returns

596
00:29:02,040 --> 00:29:06,200
Speaker 5: is pretty probable. So you know, going forward, you know,

597
00:29:06,400 --> 00:29:08,840
Speaker 5: I think that it's good to think of your house

598
00:29:09,040 --> 00:29:13,400
Speaker 5: as basically a it's a block of commodities on an

599
00:29:13,440 --> 00:29:16,760
Speaker 5: appreciating piece of land. And you know, the thing that's

600
00:29:16,760 --> 00:29:18,720
Speaker 5: important with real estate is I talk about this a

601
00:29:18,720 --> 00:29:20,320
Speaker 5: lot in the book, that you have to think of

602
00:29:20,320 --> 00:29:23,600
Speaker 5: everything in terms of real real returns, and that means

603
00:29:23,600 --> 00:29:25,080
Speaker 5: you have to back out inflation and you have to

604
00:29:25,080 --> 00:29:27,760
Speaker 5: back out all the other costs. And that's the thing

605
00:29:27,840 --> 00:29:31,120
Speaker 5: that you know. I have probably the worst housing story

606
00:29:31,360 --> 00:29:34,400
Speaker 5: in the world because in twenty seventeen I bought a

607
00:29:34,440 --> 00:29:37,320
Speaker 5: house in California that had a small waterway on it

608
00:29:37,640 --> 00:29:40,400
Speaker 5: and without knowing that, which I should have probably known.

609
00:29:40,400 --> 00:29:43,200
Speaker 5: In the state of California, anything with water on it

610
00:29:43,240 --> 00:29:46,000
Speaker 5: in the state of California is basically the biggest permitting

611
00:29:46,080 --> 00:29:49,560
Speaker 5: nightmare that you could possibly imagine. It gets the EPA involved,

612
00:29:49,560 --> 00:29:51,960
Speaker 5: it gets the Coastal Commission involved, It gets the state

613
00:29:52,000 --> 00:29:54,600
Speaker 5: Department Official Wildlife involved, and all of a sudden you

614
00:29:54,600 --> 00:29:56,880
Speaker 5: get an introspective look at you know, how all these

615
00:29:56,880 --> 00:29:58,320
Speaker 5: government agencies work together.

616
00:29:58,440 --> 00:30:00,479
Speaker 3: And now I'm really curious, what were you try to do.

617
00:30:01,200 --> 00:30:03,560
Speaker 4: We were literally just trying to remodel the house, so

618
00:30:03,560 --> 00:30:04,040
Speaker 4: we bought this.

619
00:30:04,000 --> 00:30:05,640
Speaker 3: Old You weren't touching the water at all.

620
00:30:05,920 --> 00:30:08,400
Speaker 5: No, we weren't touching the water at all. And in fact,

621
00:30:08,520 --> 00:30:11,000
Speaker 5: the water is not even I mean San Diego gets

622
00:30:11,120 --> 00:30:13,960
Speaker 5: ten inches of rain a year, so you know, that's

623
00:30:14,360 --> 00:30:17,640
Speaker 5: very very little rain, and so this water away we

624
00:30:17,680 --> 00:30:20,480
Speaker 5: call it is really it only has water in it,

625
00:30:20,960 --> 00:30:23,720
Speaker 5: I mean ten days a year something.

626
00:30:23,800 --> 00:30:26,480
Speaker 4: It's crazy. It's dry. It's not like it's a lagoon

627
00:30:26,600 --> 00:30:26,880
Speaker 4: or something.

628
00:30:27,000 --> 00:30:28,520
Speaker 2: So why is it how you're a libertarian?

629
00:30:28,680 --> 00:30:28,840
Speaker 4: Arc?

630
00:30:29,080 --> 00:30:32,240
Speaker 5: Yeah, Well, it's really funny because my wife is very,

631
00:30:32,320 --> 00:30:34,960
Speaker 5: very liberal, and we were going through the permitting process

632
00:30:35,080 --> 00:30:36,920
Speaker 5: and she was like, these people are.

633
00:30:36,800 --> 00:30:39,600
Speaker 4: Trying to turn me into a libertarian. I get it.

634
00:30:39,720 --> 00:30:41,840
Speaker 3: Oh, Actually, since you've brought up your wife, I got

635
00:30:41,880 --> 00:30:43,480
Speaker 3: to ask. There's a bit in the book where you

636
00:30:43,520 --> 00:30:45,840
Speaker 3: talk about marrying a portfolio, and then you have a

637
00:30:45,880 --> 00:30:49,080
Speaker 3: tiny footnote that says apologies to my wife, and then

638
00:30:49,120 --> 00:30:51,720
Speaker 3: it says, I'm just testing if my wife actually reads this.

639
00:30:52,760 --> 00:30:53,440
Speaker 3: Did she read it?

640
00:30:53,560 --> 00:30:54,120
Speaker 4: She caught it.

641
00:30:54,160 --> 00:30:56,880
Speaker 5: She actually was the first editor of the books, so

642
00:30:56,920 --> 00:30:59,360
Speaker 5: she and she did go through it, and she caught it.

643
00:30:59,400 --> 00:31:01,680
Speaker 5: She didn't just am it all through GPT, which she

644
00:31:01,800 --> 00:31:03,200
Speaker 5: kept trying to convince me to do.

645
00:31:03,800 --> 00:31:05,200
Speaker 4: But no, it's funny.

646
00:31:05,200 --> 00:31:07,760
Speaker 5: There's another footnote about my mother in law there that

647
00:31:08,400 --> 00:31:09,480
Speaker 5: she has not caught yet.

648
00:31:09,600 --> 00:31:12,200
Speaker 3: Oh what's that one? I didn't see that one.

649
00:31:12,320 --> 00:31:14,960
Speaker 5: So she got trapped with us during COVID, and I

650
00:31:15,040 --> 00:31:17,280
Speaker 5: make the joke that I had just had my first

651
00:31:17,360 --> 00:31:21,000
Speaker 5: daughter right after COVID, and you know, the shutdown happens,

652
00:31:21,000 --> 00:31:24,120
Speaker 5: the international travel shutdown happens. She lives in France, so

653
00:31:24,160 --> 00:31:26,440
Speaker 5: she was just happened to be visiting us for the

654
00:31:26,440 --> 00:31:29,320
Speaker 5: baby's arrival, and she gets trapped with us for six months.

655
00:31:29,360 --> 00:31:31,080
Speaker 5: And I'd make this joke about how I was crying

656
00:31:31,160 --> 00:31:33,520
Speaker 5: in the shower every morning, not because.

657
00:31:33,280 --> 00:31:36,280
Speaker 3: Of the baby, screaming into a sock. I think he said,

658
00:31:36,600 --> 00:31:38,520
Speaker 3: just going back to bonds for a second, it is

659
00:31:38,640 --> 00:31:42,840
Speaker 3: true that you know, you see investors behave in exactly

660
00:31:42,880 --> 00:31:45,160
Speaker 3: the opposite way that they should be behaving when it

661
00:31:45,200 --> 00:31:47,160
Speaker 3: comes to bonds. If you like bonds at a two

662
00:31:47,160 --> 00:31:49,880
Speaker 3: percent yield, you should love them at like a seven

663
00:31:49,920 --> 00:31:54,200
Speaker 3: percent yearld. Talk a little bit more about you know,

664
00:31:54,240 --> 00:31:56,320
Speaker 3: what you're talking about just now with gold and real

665
00:31:56,440 --> 00:32:00,600
Speaker 3: estate is a momentum factor, right, and momentum seems to

666
00:32:00,600 --> 00:32:04,680
Speaker 3: have done very very well over the past few years.

667
00:32:04,880 --> 00:32:08,200
Speaker 3: I mean, this is why we say flows before pros, right,

668
00:32:08,920 --> 00:32:11,400
Speaker 3: Can we just follow what everyone else is doing? That

669
00:32:11,440 --> 00:32:14,160
Speaker 3: seems to be the way now, yeah, I.

670
00:32:14,920 --> 00:32:18,400
Speaker 5: Gosh, I mean there's there's momentum. There's the momentum factor

671
00:32:18,440 --> 00:32:21,360
Speaker 5: and the momentum factor. And this is the more academic

672
00:32:21,560 --> 00:32:25,800
Speaker 5: version of your portfolio construction where in the factor investing

673
00:32:25,880 --> 00:32:28,480
Speaker 5: chapter I talk very specifically about you know, it's called

674
00:32:28,520 --> 00:32:32,600
Speaker 5: cross sectional momentum basically, and this is basically picking the

675
00:32:32,640 --> 00:32:35,280
Speaker 5: stocks that have performed well in the past with the

676
00:32:35,360 --> 00:32:37,960
Speaker 5: expectation that they continue to perform well in the future,

677
00:32:37,960 --> 00:32:40,360
Speaker 5: and they weirdly, the data actually shows that that is

678
00:32:40,400 --> 00:32:45,000
Speaker 5: a thing, and so it frustrates people like Gene Fauma

679
00:32:45,080 --> 00:32:48,440
Speaker 5: of the efficient market hypothesis. But it's interesting because in

680
00:32:48,480 --> 00:32:52,800
Speaker 5: the context of today's world, that momentum factor is basically

681
00:32:52,920 --> 00:32:55,840
Speaker 5: just everything tech, everything that's performed the best, and so

682
00:32:55,960 --> 00:32:59,400
Speaker 5: you're which has you know, weirdly continued to work and

683
00:32:59,440 --> 00:33:01,000
Speaker 5: work and work throughout the years, and.

684
00:33:00,960 --> 00:33:03,600
Speaker 3: So you get this like self reinforcing cycle, right.

685
00:33:03,840 --> 00:33:04,120
Speaker 1: Yeah.

686
00:33:04,160 --> 00:33:06,520
Speaker 5: And there's also you know, the one chapter that I

687
00:33:06,600 --> 00:33:09,920
Speaker 5: actually thought was almost even more interesting than the momentum

688
00:33:09,960 --> 00:33:12,520
Speaker 5: one is one that's related, which is called the trend

689
00:33:12,520 --> 00:33:16,120
Speaker 5: following chapter, and that is very different in the sense

690
00:33:16,160 --> 00:33:19,920
Speaker 5: that these guys, these traders are they're not necessarily just

691
00:33:20,040 --> 00:33:22,760
Speaker 5: looking at the past and trying to you know, they're

692
00:33:22,760 --> 00:33:26,280
Speaker 5: not picking stocks necessarily and then extrapolating it into the future.

693
00:33:26,560 --> 00:33:29,280
Speaker 5: These guys are just trying to find trends and they're

694
00:33:29,320 --> 00:33:31,920
Speaker 5: looking maybe they're looking at you know, chart data or whatever,

695
00:33:32,400 --> 00:33:35,400
Speaker 5: and they're it's a go anywhere strategy. So one of

696
00:33:35,440 --> 00:33:38,240
Speaker 5: the most interesting things about this strategy is that it

697
00:33:38,320 --> 00:33:42,880
Speaker 5: is one of the truly fully uncorrelated strategies to everything else,

698
00:33:42,920 --> 00:33:46,400
Speaker 5: and it's had this sort of big resurgence in the

699
00:33:46,480 --> 00:33:49,560
Speaker 5: last It became very popular after the GFC because it

700
00:33:50,160 --> 00:33:53,239
Speaker 5: beat the pants off of everything and was uncorrelated, had

701
00:33:53,240 --> 00:33:56,280
Speaker 5: these huge asymmetric returns, and then went through this period

702
00:33:56,320 --> 00:33:58,320
Speaker 5: of like a ten year lag, and it had kind

703
00:33:58,320 --> 00:34:00,120
Speaker 5: of like what I was referring to earlier, where you

704
00:34:00,160 --> 00:34:02,480
Speaker 5: had this like you had that price compression. The trend

705
00:34:02,520 --> 00:34:05,640
Speaker 5: following things all went up, all these CTA funds go up,

706
00:34:05,680 --> 00:34:07,840
Speaker 5: you know, fifty one hundred percent, and then.

707
00:34:07,680 --> 00:34:10,480
Speaker 4: They all lag and they lagged for a long time.

708
00:34:10,560 --> 00:34:13,640
Speaker 5: And that's the thing about finding uncorrelated assets that that

709
00:34:13,800 --> 00:34:18,360
Speaker 5: sometimes these uncorrelated instruments, they're not like cash flow generating

710
00:34:18,400 --> 00:34:23,120
Speaker 5: instruments like stocks and bonds necessarily, so the trend followers, though,

711
00:34:23,239 --> 00:34:26,120
Speaker 5: they go through this ten year period of lagging, which

712
00:34:26,719 --> 00:34:29,120
Speaker 5: exposes people to all these behavioral biases.

713
00:34:30,600 --> 00:34:34,160
Speaker 3: I remember, CTAs also became a really convenient scapegoat for

714
00:34:34,239 --> 00:34:37,040
Speaker 3: anything that was happening in the market. They were like

715
00:34:37,120 --> 00:34:38,040
Speaker 3: the multistrats.

716
00:34:38,160 --> 00:34:39,520
Speaker 1: Yeah today, right, I.

717
00:34:39,480 --> 00:34:41,719
Speaker 2: Forgot how much we used to talk about Ctyes in

718
00:34:41,719 --> 00:34:44,319
Speaker 2: the early twenty tens. Is an important driver. Actually, can

719
00:34:44,320 --> 00:34:46,600
Speaker 2: we talk a little bit about tech talks for a second,

720
00:34:46,640 --> 00:34:50,520
Speaker 2: because this strikes me is very important and I think

721
00:34:50,560 --> 00:34:53,319
Speaker 2: about this all the time. You know, you see these

722
00:34:53,360 --> 00:34:56,400
Speaker 2: surveys that Bank of America does of fund managers, like

723
00:34:56,440 --> 00:34:58,000
Speaker 2: what's the most crowded trade in the world?

724
00:34:58,200 --> 00:34:58,439
Speaker 3: Tech?

725
00:34:58,800 --> 00:35:01,360
Speaker 2: They've been saying that since like thirteen, you know, and

726
00:35:01,400 --> 00:35:03,600
Speaker 2: it still just performs and all these other there are

727
00:35:03,600 --> 00:35:05,240
Speaker 2: all kinds of other knock on things.

728
00:35:05,320 --> 00:35:05,520
Speaker 4: You know.

729
00:35:05,600 --> 00:35:09,440
Speaker 2: It's like people talk about US versus international exposure, but

730
00:35:09,480 --> 00:35:10,799
Speaker 2: at the end of the day, this is just a

731
00:35:10,800 --> 00:35:12,920
Speaker 2: bet on tech when we're talking about the US and

732
00:35:12,920 --> 00:35:14,880
Speaker 2: the other thing I think about tech a lot is

733
00:35:14,920 --> 00:35:18,680
Speaker 2: that setting aside sort of theories of portfolio construction, these

734
00:35:18,680 --> 00:35:20,759
Speaker 2: companies make gobs of money, and they make more and

735
00:35:20,800 --> 00:35:22,959
Speaker 2: more and more and more each year.

736
00:35:23,040 --> 00:35:23,239
Speaker 4: You know.

737
00:35:23,280 --> 00:35:26,080
Speaker 2: We recently did an episode and Ben Snyder, the top

738
00:35:26,080 --> 00:35:29,200
Speaker 2: equity strategist of Goldman, was on. He's like, well, the

739
00:35:29,200 --> 00:35:31,239
Speaker 2: big tech company is just like thirty three percent of

740
00:35:31,320 --> 00:35:33,600
Speaker 2: S and P five hundred or NAX. And I listen

741
00:35:33,640 --> 00:35:35,520
Speaker 2: to that. I was like, well, that's another sixty seven

742
00:35:35,560 --> 00:35:38,600
Speaker 2: percent of so learnings for them to gobble up. But

743
00:35:38,680 --> 00:35:40,600
Speaker 2: it strikes me that, like, can you just talk like

744
00:35:40,719 --> 00:35:44,000
Speaker 2: it must drive portfolio managers crazy that there's this one

745
00:35:44,080 --> 00:35:47,759
Speaker 2: sector and you know, this is a novelty, right because

746
00:35:47,800 --> 00:35:49,880
Speaker 2: these are big companies that are growing faster than it's

747
00:35:49,960 --> 00:35:53,240
Speaker 2: almost anyone else, which is not the case in many environments.

748
00:35:53,239 --> 00:35:56,200
Speaker 2: When we associate big companies with maturity and slow growth.

749
00:35:56,239 --> 00:35:59,240
Speaker 2: So like, there is this thing going on for years

750
00:35:59,280 --> 00:36:01,400
Speaker 2: and years in US that just sort of feels to

751
00:36:01,920 --> 00:36:04,640
Speaker 2: bust every other strategy. And if you're not overweight tech,

752
00:36:04,680 --> 00:36:05,839
Speaker 2: you're probably underperforming.

753
00:36:06,160 --> 00:36:08,680
Speaker 5: Yeah, and it's really frustrated the hell out of people,

754
00:36:08,800 --> 00:36:12,200
Speaker 5: especially the factor investors who haven't been in the momentum trade,

755
00:36:12,239 --> 00:36:15,520
Speaker 5: who have been more value oriented, or you know, the

756
00:36:15,560 --> 00:36:19,000
Speaker 5: people who know that small has outperformed large in the

757
00:36:19,040 --> 00:36:20,919
Speaker 5: long run, Like it's all been flipped on its head.

758
00:36:21,000 --> 00:36:24,680
Speaker 4: Yeah. So I again going back to the time horizon thing.

759
00:36:24,719 --> 00:36:26,720
Speaker 5: The way that at least I try to think about

760
00:36:26,760 --> 00:36:29,840
Speaker 5: this is tech and growth is really interesting in the

761
00:36:29,880 --> 00:36:32,760
Speaker 5: current environment because in going back to the Nasdaq bubble,

762
00:36:32,800 --> 00:36:34,520
Speaker 5: you can actually, you know a lot of people make

763
00:36:34,560 --> 00:36:35,279
Speaker 5: that corollary.

764
00:36:35,360 --> 00:36:36,279
Speaker 4: And the interesting thing.

765
00:36:36,200 --> 00:36:38,520
Speaker 5: About the Nasdaq bubble is that if you bought the

766
00:36:38,680 --> 00:36:41,000
Speaker 5: very tippy top of the Nasdaq bubble and held on

767
00:36:41,080 --> 00:36:43,440
Speaker 5: to today, you've made like eight percent per year. It

768
00:36:43,520 --> 00:36:45,960
Speaker 5: is great, you've done really, really well, which is crazy,

769
00:36:46,120 --> 00:36:48,600
Speaker 5: but you had this crazy sequence of returns risk because

770
00:36:48,920 --> 00:36:51,640
Speaker 5: especially in real terms, you went through this traumatic, like

771
00:36:51,719 --> 00:36:55,319
Speaker 5: fifteen year downturn over that period. So the interesting thing

772
00:36:55,719 --> 00:36:57,600
Speaker 5: you know compared to then, is that, like you said,

773
00:36:57,920 --> 00:37:01,080
Speaker 5: these entities are completely different. Like every was expecting the

774
00:37:01,080 --> 00:37:03,279
Speaker 5: Internet to be a big thing, and it was, and

775
00:37:03,360 --> 00:37:05,840
Speaker 5: everybody expects AI to be a big thing, and I

776
00:37:05,880 --> 00:37:08,960
Speaker 5: think it will be. But the interesting difference between that

777
00:37:09,080 --> 00:37:12,279
Speaker 5: environment and this environment is that these companies are they

778
00:37:12,320 --> 00:37:16,360
Speaker 5: make more money than any entities have ever in human existence.

779
00:37:16,680 --> 00:37:19,920
Speaker 4: So this is completely different than an analyst.

780
00:37:19,719 --> 00:37:22,520
Speaker 5: But it's crazy and they're growing crazy, crazy fast, so

781
00:37:22,560 --> 00:37:25,319
Speaker 5: it's almost unbelievable. But the thing is kind of going

782
00:37:25,360 --> 00:37:27,840
Speaker 5: back to that whole idea of like price compression and

783
00:37:27,880 --> 00:37:31,080
Speaker 5: thinking about time horizons. The way I think about it

784
00:37:31,120 --> 00:37:34,400
Speaker 5: is that, and I write about this specifically, and probably

785
00:37:34,400 --> 00:37:36,759
Speaker 5: my favorite chapter to write in this book was an

786
00:37:36,760 --> 00:37:39,640
Speaker 5: original strategy that I call the forward cap portfolio. And

787
00:37:39,880 --> 00:37:42,920
Speaker 5: what I did was I took five huge macroeconomic trends

788
00:37:43,600 --> 00:37:45,719
Speaker 5: and I distilled them all down, and I try to

789
00:37:45,760 --> 00:37:48,000
Speaker 5: extrapolate data out into the future. And one of the

790
00:37:48,000 --> 00:37:50,400
Speaker 5: big ones is tech, where I look at something like

791
00:37:50,520 --> 00:37:54,000
Speaker 5: e commerce retail sales and I say, you know, this

792
00:37:54,160 --> 00:37:58,040
Speaker 5: is currently whatever, it is twenty five percent of all

793
00:37:58,200 --> 00:38:01,960
Speaker 5: e commerce retail sales, a percentage of total retail sales,

794
00:38:02,000 --> 00:38:05,239
Speaker 5: it's twenty five percent, and that number, you know, is

795
00:38:05,280 --> 00:38:08,000
Speaker 5: probably going to go to fifty or sixty or seventy

796
00:38:08,040 --> 00:38:09,480
Speaker 5: percent at some point in the future.

797
00:38:09,640 --> 00:38:11,080
Speaker 4: All retail sales will just.

798
00:38:11,040 --> 00:38:13,520
Speaker 5: Turn into e commerce sales at some point, like you said,

799
00:38:13,560 --> 00:38:16,000
Speaker 5: like you know this is there's seventy five percent more

800
00:38:16,080 --> 00:38:17,360
Speaker 5: for e commerce to novel up.

801
00:38:17,400 --> 00:38:18,040
Speaker 1: I believe that.

802
00:38:18,400 --> 00:38:20,840
Speaker 5: And so if you believe that and you want to

803
00:38:20,840 --> 00:38:23,239
Speaker 5: buy technology, well what should you own? Should you own

804
00:38:23,320 --> 00:38:26,480
Speaker 5: the market cap weighting of thirty five percent like it

805
00:38:26,520 --> 00:38:28,239
Speaker 5: is now in the s and P five hundred, or

806
00:38:28,560 --> 00:38:31,360
Speaker 5: should you go to like fifty or sixty percent. And

807
00:38:31,400 --> 00:38:32,959
Speaker 5: the way I kind of frame it in the book

808
00:38:33,040 --> 00:38:35,800
Speaker 5: is it's skating to where the puck maybe is going,

809
00:38:35,880 --> 00:38:38,680
Speaker 5: rather than when you buy a market cap weighted index fund,

810
00:38:38,760 --> 00:38:41,120
Speaker 5: what you're doing is you're basically skating with the puck,

811
00:38:41,160 --> 00:38:43,960
Speaker 5: which is it's a good strategy, it works really well,

812
00:38:44,040 --> 00:38:45,840
Speaker 5: but you're not necessarily trying to skate to where the

813
00:38:45,880 --> 00:38:46,640
Speaker 5: puck is going.

814
00:38:47,239 --> 00:38:49,200
Speaker 4: And so I'm doing a lot of guesswork.

815
00:38:49,239 --> 00:38:52,399
Speaker 5: It's obviously very active, and you know, there's a lot

816
00:38:52,400 --> 00:38:54,520
Speaker 5: of there's a lot of estimates that are involved in

817
00:38:54,560 --> 00:38:56,800
Speaker 5: all of this, But if you think forward, like I

818
00:38:56,800 --> 00:39:00,279
Speaker 5: don't think it's unreasonable to say that in for to

819
00:39:00,320 --> 00:39:03,400
Speaker 5: your fifty years, the market cap of technology in the

820
00:39:03,480 --> 00:39:07,160
Speaker 5: S and P five hundred might be fifty sixty seventy percent.

821
00:39:07,239 --> 00:39:11,000
Speaker 5: Who knows, like everything's probably turning into a tech two years.

822
00:39:11,320 --> 00:39:14,560
Speaker 5: But the tricky part about that is that when, especially

823
00:39:14,560 --> 00:39:18,880
Speaker 5: when valuations are really high. I talk about how valuations

824
00:39:18,960 --> 00:39:22,440
Speaker 5: are the equivalent of high expectations, and when expectations are

825
00:39:22,440 --> 00:39:26,120
Speaker 5: really high, it doesn't take much to disappoint. So your

826
00:39:26,120 --> 00:39:28,920
Speaker 5: margin for error when expectations are really high is just

827
00:39:29,000 --> 00:39:32,200
Speaker 5: really low. So what that does is it causes this

828
00:39:32,239 --> 00:39:35,239
Speaker 5: potential where you have higher sequence of returns risk in

829
00:39:35,280 --> 00:39:37,239
Speaker 5: the short term, where you know, I would say, if

830
00:39:37,280 --> 00:39:39,760
Speaker 5: I'm talking to, you know, a twenty year old who's

831
00:39:39,800 --> 00:39:41,560
Speaker 5: coming out of college, he just got a great job

832
00:39:41,600 --> 00:39:44,000
Speaker 5: on Wall Street or something, I might tell him, well, hey,

833
00:39:44,040 --> 00:39:46,400
Speaker 5: your time horizon is so long and you could be

834
00:39:46,440 --> 00:39:49,000
Speaker 5: so aggressive. You should maybe just go buy a growth

835
00:39:49,000 --> 00:39:51,680
Speaker 5: fund and just you know, lose the password to your

836
00:39:51,680 --> 00:39:54,520
Speaker 5: brokerage account for like forty years, yeah, and open it

837
00:39:54,600 --> 00:39:56,719
Speaker 5: up and you'll probably have done really well. But if

838
00:39:56,719 --> 00:39:59,319
Speaker 5: you look at that thing in five years, it might

839
00:39:59,320 --> 00:40:01,759
Speaker 5: be down fifty percent. You don't know. And so that's

840
00:40:01,800 --> 00:40:03,200
Speaker 5: the way I kind of frame it. And so if

841
00:40:03,239 --> 00:40:06,719
Speaker 5: you're if you're very time sensitive, I would say, you know,

842
00:40:06,800 --> 00:40:10,719
Speaker 5: the retiree who is retiring next year and they're loaded.

843
00:40:10,440 --> 00:40:12,960
Speaker 4: To the gills with Nvidia and Google.

844
00:40:12,560 --> 00:40:15,800
Speaker 5: And Microsoft, that person has a totally different risk exposure

845
00:40:15,840 --> 00:40:17,040
Speaker 5: than that twenty year old does.

846
00:40:17,600 --> 00:40:21,240
Speaker 3: How do you think about the index providers in this equation,

847
00:40:21,440 --> 00:40:24,160
Speaker 3: because you know, there's this perception you put your money

848
00:40:24,160 --> 00:40:27,280
Speaker 3: in an index fund, it's a passive investment, but actually

849
00:40:27,400 --> 00:40:30,760
Speaker 3: it's kind of active because the index provider is making

850
00:40:30,800 --> 00:40:34,000
Speaker 3: decisions about what to do. And I know the index

851
00:40:34,040 --> 00:40:36,319
Speaker 3: providers always say they're just holding up a mirror to

852
00:40:36,360 --> 00:40:39,319
Speaker 3: the market, but you know, some of that seems very

853
00:40:39,360 --> 00:40:41,600
Speaker 3: subjective to me, like whether or not you're going to

854
00:40:41,600 --> 00:40:45,319
Speaker 3: add Chinese bonds into a debt index and things like that.

855
00:40:45,920 --> 00:40:50,680
Speaker 3: Are we just outsourcing our investment decisions to the indexes to.

856
00:40:50,680 --> 00:40:51,560
Speaker 4: A large degree? Yeah.

857
00:40:51,560 --> 00:40:53,799
Speaker 5: I mean I talk about how there is no such

858
00:40:53,840 --> 00:40:56,800
Speaker 5: thing as passive investing a lot more than I should,

859
00:40:57,200 --> 00:40:58,680
Speaker 5: because it annoys a lot of people.

860
00:40:58,960 --> 00:41:00,399
Speaker 4: But there's a lot of people who.

861
00:41:00,320 --> 00:41:04,080
Speaker 5: Demonize passive investing, I think for kind of phony reasons,

862
00:41:04,320 --> 00:41:07,000
Speaker 5: and a big part of that is this fact that

863
00:41:07,480 --> 00:41:09,360
Speaker 5: you know, the reason I talk about and try to

864
00:41:09,400 --> 00:41:12,080
Speaker 5: quantify the global financial Asset portfolio is because I was

865
00:41:12,120 --> 00:41:14,680
Speaker 5: trying to create a benchmark for if we were going

866
00:41:14,760 --> 00:41:18,319
Speaker 5: to define something as passive, as truly passive to me

867
00:41:18,440 --> 00:41:21,440
Speaker 5: is you're buying the full market portfolio. You're not deviating

868
00:41:21,480 --> 00:41:23,959
Speaker 5: at all, You're not making any active decisions at all.

869
00:41:24,280 --> 00:41:27,960
Speaker 5: And so when you quantify the GFAP, you can actually

870
00:41:28,000 --> 00:41:30,480
Speaker 5: create a benchmark there where you understand, Okay, well, this

871
00:41:30,560 --> 00:41:33,320
Speaker 5: is the only if you were truly, fully one hundred

872
00:41:33,320 --> 00:41:35,600
Speaker 5: percent passive, this is the only thing you would own.

873
00:41:35,920 --> 00:41:38,319
Speaker 5: And the funny thing is nobody can buy this thing,

874
00:41:38,360 --> 00:41:40,600
Speaker 5: and nobody does buy this thing because even at a

875
00:41:40,640 --> 00:41:43,400
Speaker 5: stock bond waiting, the stock versus bond waiting right now

876
00:41:43,480 --> 00:41:45,799
Speaker 5: is something like forty five fifty five, so you're you're

877
00:41:45,840 --> 00:41:48,520
Speaker 5: inherently underweight stock. So it's not even that close to

878
00:41:48,600 --> 00:41:52,360
Speaker 5: even like the sixty forty portfolio. And so everybody deviates

879
00:41:52,360 --> 00:41:55,920
Speaker 5: from this, and I write about how that's totally fine.

880
00:41:55,960 --> 00:41:59,080
Speaker 5: There's nothing wrong with deviating. There's nothing wrong with being

881
00:41:59,120 --> 00:42:01,760
Speaker 5: a little bit active. And so even from the indexing

882
00:42:01,800 --> 00:42:03,920
Speaker 5: perspective though, like I laugh at like the you know,

883
00:42:03,920 --> 00:42:05,760
Speaker 5: the way the S and P five hundred is constructed.

884
00:42:05,840 --> 00:42:08,120
Speaker 5: It's a committee of people that are constantly picking and

885
00:42:08,200 --> 00:42:12,280
Speaker 5: choosing which firms to introduce, and it's very methodical, it's

886
00:42:12,480 --> 00:42:15,640
Speaker 5: you know, very data dependent, so it's a very systematic

887
00:42:15,719 --> 00:42:17,319
Speaker 5: sort of process. But at the end of the day,

888
00:42:17,680 --> 00:42:20,400
Speaker 5: they're choosing the five hundred companies that go into that

889
00:42:20,480 --> 00:42:22,520
Speaker 5: index in the first place. And so you know, in

890
00:42:22,560 --> 00:42:24,960
Speaker 5: the context of the global equity market, it's even more

891
00:42:25,000 --> 00:42:28,719
Speaker 5: interesting because they're excluding you know, thousands of other entities

892
00:42:28,800 --> 00:42:32,480
Speaker 5: just you know, by their own volition. So everyone's active,

893
00:42:32,560 --> 00:42:35,200
Speaker 5: and you know, there's very smart ways to be active,

894
00:42:35,200 --> 00:42:35,600
Speaker 5: and there's.

895
00:42:35,560 --> 00:42:38,120
Speaker 4: Very stupid ways to be active. And I would say that,

896
00:42:38,480 --> 00:42:39,480
Speaker 4: you know, a lot of the things.

897
00:42:39,520 --> 00:42:41,719
Speaker 5: The most sort of disconcerting thing that I see going

898
00:42:41,719 --> 00:42:43,520
Speaker 5: on these days is that I see the issuance of

899
00:42:43,520 --> 00:42:46,920
Speaker 5: a lot of strategies, and especially with the rise of crypto,

900
00:42:46,960 --> 00:42:48,640
Speaker 5: there's a lot of things going on that I would

901
00:42:48,680 --> 00:42:52,080
Speaker 5: describe as stupid active where people are more having like

902
00:42:52,120 --> 00:42:55,000
Speaker 5: a gambling mentality approaching all of this than anything else.

903
00:42:55,440 --> 00:42:57,799
Speaker 2: If we had like another hour. Actually, I would love

904
00:42:58,160 --> 00:43:01,920
Speaker 2: to just pick your brain about the investment advisory business,

905
00:43:01,960 --> 00:43:04,600
Speaker 2: like less the portfolio construction, per se, and just how

906
00:43:04,600 --> 00:43:07,560
Speaker 2: this world works, because I have so many questions about that.

907
00:43:07,760 --> 00:43:09,960
Speaker 2: But I've won, and you know, we've seen you. We

908
00:43:10,080 --> 00:43:11,600
Speaker 2: run into every once in a while down at the

909
00:43:11,640 --> 00:43:15,319
Speaker 2: future Proof conference in southern California, you know. Or there's

910
00:43:15,360 --> 00:43:17,080
Speaker 2: a lot of advisors and then there's a lot of

911
00:43:17,160 --> 00:43:19,799
Speaker 2: vendors and they're selling various products, and one of the

912
00:43:19,840 --> 00:43:23,759
Speaker 2: hot things that we know that they're trying to get

913
00:43:23,800 --> 00:43:29,319
Speaker 2: people excited about owning private assets or so various alternatives,

914
00:43:29,320 --> 00:43:34,320
Speaker 2: et cetera, non vanilla things. In your perspective for most

915
00:43:34,400 --> 00:43:38,440
Speaker 2: clients that you see, is there like a compelling reason

916
00:43:38,640 --> 00:43:41,040
Speaker 2: for some of these novel products or for some of

917
00:43:41,120 --> 00:43:45,400
Speaker 2: it to include, like yeah, private credit, private assets, private,

918
00:43:45,520 --> 00:43:49,800
Speaker 2: whatever it is. Do these solve problems for the portfolio manager,

919
00:43:49,960 --> 00:43:54,440
Speaker 2: for the investment advisor that the existing publicly liquid assets

920
00:43:54,480 --> 00:43:55,480
Speaker 2: don't provide.

921
00:43:55,680 --> 00:43:59,440
Speaker 5: Yeah, twenty twenty two messed a lot of people up

922
00:43:59,560 --> 00:44:02,960
Speaker 5: because when stocks and bonds become highly correlated and you

923
00:44:03,040 --> 00:44:05,960
Speaker 5: own that sixty forty portfolio that you know, the bonds

924
00:44:06,000 --> 00:44:08,560
Speaker 5: go down fifteen percent or whatever, and the stocks also

925
00:44:08,600 --> 00:44:10,759
Speaker 5: go down twenty five percent. Well, then you look at

926
00:44:10,800 --> 00:44:12,440
Speaker 5: your portfolio at the end of the year and you say,

927
00:44:12,840 --> 00:44:15,560
Speaker 5: I don't I'm not actually diversified. If you were that retiree,

928
00:44:15,560 --> 00:44:18,239
Speaker 5: then you mentioned Tracy that is retiring that year, you

929
00:44:18,280 --> 00:44:20,840
Speaker 5: feel like you made a bad decision, even though the

930
00:44:20,880 --> 00:44:23,680
Speaker 5: sixty forty portfolio, for the most part, is a pretty

931
00:44:23,719 --> 00:44:24,640
Speaker 5: good portfolio.

932
00:44:25,000 --> 00:44:25,920
Speaker 4: There is an.

933
00:44:25,760 --> 00:44:30,439
Speaker 5: Increasingly compelling argument in that context for things like alternatives.

934
00:44:30,560 --> 00:44:33,920
Speaker 5: I me, personally, I tend to just default towards simple

935
00:44:34,040 --> 00:44:36,480
Speaker 5: is better because I think that this whole process can

936
00:44:36,520 --> 00:44:39,880
Speaker 5: get so complex so quickly that the little things you

937
00:44:39,880 --> 00:44:44,319
Speaker 5: can do to create organization and structure, to simplify it

938
00:44:44,360 --> 00:44:47,439
Speaker 5: as best as possible, is going to result in a

939
00:44:47,480 --> 00:44:49,279
Speaker 5: better process, a better outcome in.

940
00:44:49,239 --> 00:44:49,799
Speaker 4: The long run.

941
00:44:49,880 --> 00:44:52,319
Speaker 5: So you know, little things like I mean, god, I

942
00:44:52,360 --> 00:44:54,400
Speaker 5: woke up ten years ago and I looked at me

943
00:44:54,440 --> 00:44:56,560
Speaker 5: and my wife's financial accounts and I was like, oh

944
00:44:56,560 --> 00:44:59,239
Speaker 5: my god, we've got I've got a an old Merril

945
00:44:59,320 --> 00:45:02,600
Speaker 5: Lynch for one and I've got you've got old Fidelity

946
00:45:02,640 --> 00:45:04,839
Speaker 5: for one k's and you've got you know, a bank

947
00:45:04,880 --> 00:45:05,719
Speaker 5: account over there.

948
00:45:05,880 --> 00:45:07,239
Speaker 4: I have a bank account over here.

949
00:45:07,280 --> 00:45:10,440
Speaker 5: We've got three brokerage accounts at Charles Schwab and you know,

950
00:45:10,480 --> 00:45:13,759
Speaker 5: different custodians, TD Ameritrade or whatever it might be. And

951
00:45:13,800 --> 00:45:15,680
Speaker 5: I was like, this is I can't manage all this.

952
00:45:15,800 --> 00:45:18,800
Speaker 5: I've actually forgotten the password to some of these accounts

953
00:45:18,840 --> 00:45:22,360
Speaker 5: or something. And so collapsing all this down and consolidating

954
00:45:22,400 --> 00:45:25,640
Speaker 5: it and simplifying it and trying to own, you know,

955
00:45:25,719 --> 00:45:28,600
Speaker 5: something that is very very simple. One of the portfolios

956
00:45:28,640 --> 00:45:30,880
Speaker 5: I talk about is the bogo Head three fund portfolio

957
00:45:31,160 --> 00:45:32,920
Speaker 5: in the book. And I think one of the reasons

958
00:45:32,920 --> 00:45:36,400
Speaker 5: that so many people love that and those the followers

959
00:45:36,400 --> 00:45:39,799
Speaker 5: of that portfolio or they're very almost militant about it,

960
00:45:40,120 --> 00:45:43,560
Speaker 5: and I think in part because it is so simple

961
00:45:43,960 --> 00:45:48,960
Speaker 5: that it is. It's just beautifully elegant in its simplicity.

962
00:45:49,280 --> 00:45:52,240
Speaker 4: But then you could get into debates about is it simple?

963
00:45:52,320 --> 00:45:53,560
Speaker 2: What head three?

964
00:45:54,000 --> 00:45:55,120
Speaker 4: It's basically the.

965
00:45:55,000 --> 00:45:58,000
Speaker 5: Bond aggregate and then and you can mix this up,

966
00:45:58,160 --> 00:45:59,880
Speaker 5: you know, in different slices based on your risk of

967
00:46:00,160 --> 00:46:02,160
Speaker 5: but it's three funds. It's a domestic equity fund, a

968
00:46:02,200 --> 00:46:05,320
Speaker 5: foreign equity fund, and a bond aggregate. And these investors

969
00:46:05,320 --> 00:46:07,319
Speaker 5: will buy this and they'll buy it for you know,

970
00:46:07,320 --> 00:46:09,640
Speaker 5: it costs like three basis points or something in total,

971
00:46:09,960 --> 00:46:11,960
Speaker 5: and so it follows like all the sort of like

972
00:46:12,040 --> 00:46:14,319
Speaker 5: Taylor Larimore was the founder of it, and Taylor was

973
00:46:14,360 --> 00:46:16,040
Speaker 5: He's someone I interviewed in the book, and he's not

974
00:46:16,520 --> 00:46:19,960
Speaker 5: He wasn't really in the financial advisory business. But he

975
00:46:20,040 --> 00:46:22,600
Speaker 5: became great friends with Bogel over the years because he

976
00:46:22,680 --> 00:46:25,120
Speaker 5: was just emailing with him. He had actually a funny

977
00:46:25,120 --> 00:46:28,719
Speaker 5: backstory where he comes back from World War Two and

978
00:46:28,960 --> 00:46:30,560
Speaker 5: he fought in the Battle of the Bulge and jumped

979
00:46:30,560 --> 00:46:32,719
Speaker 5: out of airplanes and had all these cool stories about it.

980
00:46:32,800 --> 00:46:35,680
Speaker 5: He comes back and I guess he married like the

981
00:46:35,680 --> 00:46:38,520
Speaker 5: hottest woman in Miami or something, and she was a

982
00:46:38,560 --> 00:46:42,200
Speaker 5: model and she's making crazy, crazy amounts of money modeling.

983
00:46:42,440 --> 00:46:44,440
Speaker 5: And so he comes into all this money and he

984
00:46:44,480 --> 00:46:46,160
Speaker 5: doesn't know what to do with it, and he hires

985
00:46:46,200 --> 00:46:50,640
Speaker 5: a financial advisor who hoses him and he starts emailing

986
00:46:50,719 --> 00:46:54,200
Speaker 5: John Bogel, and Bogel then starts telling him like, nah,

987
00:46:54,239 --> 00:46:56,280
Speaker 5: you should be doing this, this, and this. They become great,

988
00:46:56,320 --> 00:47:00,239
Speaker 5: great friends. Bogel ultimately crowns him the King of the

989
00:47:00,239 --> 00:47:02,960
Speaker 5: Bogel Heads later in love and so he's kind of

990
00:47:03,000 --> 00:47:05,279
Speaker 5: like the most famous of all the Bogel heads now,

991
00:47:05,600 --> 00:47:09,200
Speaker 5: and but he distilled all of Bogel's thought processes down

992
00:47:09,239 --> 00:47:12,920
Speaker 5: into like the simplest of all possible portfolios, which is

993
00:47:13,000 --> 00:47:16,960
Speaker 5: this famous three fund portfolio. But it's arguably I am

994
00:47:17,040 --> 00:47:19,960
Speaker 5: minorly critical of it, because I would say that to

995
00:47:20,040 --> 00:47:22,800
Speaker 5: some degree, there is such a thing as too simple.

996
00:47:22,840 --> 00:47:25,279
Speaker 5: Also where for instance, like if you own the three

997
00:47:25,320 --> 00:47:28,480
Speaker 5: fund portfolio in twenty twenty two, you probably wish you

998
00:47:28,560 --> 00:47:31,279
Speaker 5: owned some of the t Bill and Chill portfolio, or

999
00:47:31,320 --> 00:47:34,640
Speaker 5: maybe you wish you owned, you know, something completely uncorrelated,

1000
00:47:34,680 --> 00:47:37,359
Speaker 5: like the trend following portfolio, or something you know.

1001
00:47:37,280 --> 00:47:38,359
Speaker 4: That added a little bit.

1002
00:47:38,280 --> 00:47:41,279
Speaker 5: Of diversification that kept you, you know, helped you stay

1003
00:47:41,360 --> 00:47:41,719
Speaker 5: the course.

1004
00:47:41,760 --> 00:47:42,840
Speaker 4: As Bogel would say.

1005
00:47:43,120 --> 00:47:47,000
Speaker 3: I've really enjoyed the Warren Buffett portfolio chapter in part

1006
00:47:47,040 --> 00:47:50,839
Speaker 3: because it demonstrates how people get decision paralysis around all

1007
00:47:50,880 --> 00:47:53,600
Speaker 3: of this. So even if you're trying to replicate Warren

1008
00:47:53,640 --> 00:47:57,560
Speaker 3: Buffett's investment style, you come up with three different ways

1009
00:47:57,600 --> 00:47:59,920
Speaker 3: to do it right, So it just seems like an

1010
00:48:00,080 --> 00:48:02,880
Speaker 3: infinite way to invest. But the thing I want to

1011
00:48:02,880 --> 00:48:04,920
Speaker 3: ask you is you also say that you wrote to

1012
00:48:05,000 --> 00:48:07,680
Speaker 3: Warren Buffett and you actually got a response. What did

1013
00:48:07,680 --> 00:48:10,480
Speaker 3: he say? This was like before you wrote the book

1014
00:48:10,520 --> 00:48:11,600
Speaker 3: early in your Oh, this was.

1015
00:48:11,640 --> 00:48:14,520
Speaker 5: In my early twenties when I was too poor to

1016
00:48:14,600 --> 00:48:17,759
Speaker 5: own a share of Berkshire. So in order to go

1017
00:48:17,800 --> 00:48:20,080
Speaker 5: to the shareholder meeting, you had to be a shareholder,

1018
00:48:20,480 --> 00:48:22,400
Speaker 5: and I was too poor to own a share of

1019
00:48:22,480 --> 00:48:23,279
Speaker 5: Berkshire back then.

1020
00:48:23,360 --> 00:48:25,640
Speaker 4: So I wrote him a letter and I.

1021
00:48:25,600 --> 00:48:29,280
Speaker 5: Said, hey, could I come to the conference even though

1022
00:48:29,400 --> 00:48:31,680
Speaker 5: I'm this poor schmuck who can't even.

1023
00:48:31,560 --> 00:48:32,680
Speaker 4: Afford to buy your shares?

1024
00:48:33,120 --> 00:48:36,719
Speaker 5: And I get a typewritten letter on it comes in

1025
00:48:36,840 --> 00:48:40,400
Speaker 5: like a you know, probably a five by six little

1026
00:48:40,520 --> 00:48:44,720
Speaker 5: piece of paper and it's typewritten and it was from

1027
00:48:44,760 --> 00:48:46,439
Speaker 5: his assistant on behalf of him.

1028
00:48:46,560 --> 00:48:48,720
Speaker 4: But he wrote and invited.

1029
00:48:48,280 --> 00:48:49,480
Speaker 2: Me, and that's really cool.

1030
00:48:49,800 --> 00:48:50,360
Speaker 4: It was awesome.

1031
00:48:50,400 --> 00:48:53,120
Speaker 5: I had a family event I ended up not going,

1032
00:48:53,440 --> 00:48:54,480
Speaker 5: which was have you ever been?

1033
00:48:54,800 --> 00:48:56,840
Speaker 4: I've never been so terrible decision.

1034
00:48:56,920 --> 00:49:00,600
Speaker 2: But I went once and it was a fantastic experience.

1035
00:49:00,920 --> 00:49:04,320
Speaker 3: It was extremely cool. Yeah, we should do an all thoughts.

1036
00:49:04,960 --> 00:49:05,560
Speaker 1: Well he's done.

1037
00:49:06,320 --> 00:49:08,359
Speaker 2: Yeah, there's not gonna be I mean, I guess there'll

1038
00:49:08,360 --> 00:49:09,879
Speaker 2: probably still be one, but it's not gonna be the same.

1039
00:49:10,120 --> 00:49:10,920
Speaker 4: You guys, should definitely do.

1040
00:49:11,680 --> 00:49:15,640
Speaker 3: Yeah, yeah, can you introduce us since your corresponding?

1041
00:49:15,800 --> 00:49:18,000
Speaker 4: Remember is that do you have a typewriter?

1042
00:49:18,719 --> 00:49:19,920
Speaker 3: No, but I can find.

1043
00:49:19,719 --> 00:49:23,720
Speaker 2: One, Colin Roche really fun. Thanks for coming in studio,

1044
00:49:23,840 --> 00:49:26,040
Speaker 2: Congrats on the new book. Let's stay in touch and

1045
00:49:26,360 --> 00:49:27,280
Speaker 2: really enjoyed chatting.

1046
00:49:27,440 --> 00:49:30,040
Speaker 4: Thanks for Talking's absolutely.

1047
00:49:42,040 --> 00:49:43,960
Speaker 2: That was a lot of fun, Tracy. Have you ever

1048
00:49:44,160 --> 00:49:46,520
Speaker 2: have you heard of the fintech startup Acorn.

1049
00:49:47,480 --> 00:49:50,640
Speaker 3: Yeah, that's the one where you like invest tiny bits

1050
00:49:50,800 --> 00:49:52,720
Speaker 3: of like years a change.

1051
00:49:52,800 --> 00:49:56,680
Speaker 2: Yeah, yeah, so years ago, like I think I actually

1052
00:49:56,760 --> 00:49:58,520
Speaker 2: probably about ten years ago or nine years ago or

1053
00:49:58,560 --> 00:49:59,840
Speaker 2: something like that. I read about it. I was like,

1054
00:49:59,840 --> 00:50:01,440
Speaker 2: I it was like curious how it worked. So I

1055
00:50:01,480 --> 00:50:04,120
Speaker 2: like fignd it for an account and it takes this

1056
00:50:04,280 --> 00:50:08,000
Speaker 2: like small amount and also the app at least I'm

1057
00:50:08,040 --> 00:50:09,960
Speaker 2: not trying to slag them. It doesn't work very well

1058
00:50:09,960 --> 00:50:12,920
Speaker 2: and my password is always getting reseat. But every like

1059
00:50:13,480 --> 00:50:16,160
Speaker 2: year and a half, I remember that exists. That has

1060
00:50:16,239 --> 00:50:20,200
Speaker 2: outperformed every other investment because it's like the one thing

1061
00:50:20,239 --> 00:50:24,080
Speaker 2: that I've lost my password to and I can't access them. Seriously, Yeah,

1062
00:50:24,080 --> 00:50:24,680
Speaker 2: it's done great.

1063
00:50:24,880 --> 00:50:26,080
Speaker 3: What did you actually invest in?

1064
00:50:26,400 --> 00:50:29,400
Speaker 2: Just yeah, it's like their growth whatever, their growth fund

1065
00:50:29,480 --> 00:50:32,000
Speaker 2: is it's not very much, but God, like that one

1066
00:50:32,040 --> 00:50:33,720
Speaker 2: thing where it's just like the one I think about

1067
00:50:33,719 --> 00:50:35,799
Speaker 2: and look at absolutely the least because I could never

1068
00:50:35,920 --> 00:50:37,800
Speaker 2: open the app and everyone in a while I go

1069
00:50:37,880 --> 00:50:41,360
Speaker 2: through the effort to reset the password. It's done very well.

1070
00:50:41,560 --> 00:50:43,840
Speaker 3: But this is like, this is the entire irony.

1071
00:50:43,960 --> 00:50:44,080
Speaker 1: Right.

1072
00:50:44,120 --> 00:50:46,680
Speaker 3: We talk about how there's no such thing as passive investing,

1073
00:50:46,840 --> 00:50:49,239
Speaker 3: but actually if you just forget the password to your

1074
00:50:49,239 --> 00:50:51,440
Speaker 3: account and never look at it, you tend to out

1075
00:50:51,560 --> 00:50:52,120
Speaker 3: come close.

1076
00:50:52,360 --> 00:50:55,279
Speaker 2: Yeah, I really I just find this to be such

1077
00:50:55,320 --> 00:50:57,719
Speaker 2: a fascinating topic. It does feel like again, it feels

1078
00:50:57,719 --> 00:51:00,360
Speaker 2: a little un sexy because people are so in interested

1079
00:51:00,360 --> 00:51:02,879
Speaker 2: in the incredible amounts of money that people have made

1080
00:51:02,880 --> 00:51:06,920
Speaker 2: in crypto and AI, et cetera. But like the puzzle

1081
00:51:07,600 --> 00:51:10,120
Speaker 2: of like putting it all together and how you find

1082
00:51:10,160 --> 00:51:13,799
Speaker 2: assets that make money across cycles but are sufficiently uncorrelated,

1083
00:51:13,800 --> 00:51:16,640
Speaker 2: et cetera. It's like an interesting intellectual exercise, right.

1084
00:51:16,680 --> 00:51:19,360
Speaker 3: And you also have this entire industry that's built on

1085
00:51:19,400 --> 00:51:22,880
Speaker 3: the promise of outperformance. Yeah, mostly, and it feels really

1086
00:51:22,920 --> 00:51:29,040
Speaker 3: difficult to resist. I guess the mostly masculine urge to outperform.

1087
00:51:29,440 --> 00:51:31,960
Speaker 2: I liked your question in the beginning because it's something

1088
00:51:32,000 --> 00:51:35,320
Speaker 2: I've always thought of, like about actually assessing risk profile,

1089
00:51:35,440 --> 00:51:38,799
Speaker 2: because as Colin put it, everyone knows the right answer. Oh,

1090
00:51:38,840 --> 00:51:41,279
Speaker 2: I'd buy and hold, But I just I've always been

1091
00:51:41,320 --> 00:51:45,080
Speaker 2: skeptical that anyone is a good judge of their own

1092
00:51:45,160 --> 00:51:47,600
Speaker 2: risk profile. So to hear them talk about now, let's

1093
00:51:47,640 --> 00:51:49,200
Speaker 2: not talk about it like that. Let's math that out.

1094
00:51:49,239 --> 00:51:52,720
Speaker 2: Let's talk about asset liabilities. Let's talk about the predictability

1095
00:51:52,760 --> 00:51:55,560
Speaker 2: of your income stream. How that is a de facto

1096
00:51:55,600 --> 00:51:58,319
Speaker 2: fixed income asset strikes me as a much more sort

1097
00:51:58,320 --> 00:52:00,520
Speaker 2: of sound way to think about it than to sort

1098
00:52:00,560 --> 00:52:03,960
Speaker 2: of try to imagine how you're going to behave the

1099
00:52:04,000 --> 00:52:05,000
Speaker 2: next time a pandemic.

1100
00:52:05,000 --> 00:52:06,640
Speaker 3: Well, it also gets back to what we were talking

1101
00:52:06,640 --> 00:52:09,160
Speaker 3: about in the intro, right, which is you can say

1102
00:52:09,320 --> 00:52:11,480
Speaker 3: I'm gonna buy the dip if there's a forty percent

1103
00:52:11,560 --> 00:52:14,479
Speaker 3: draw down, but chances are a forty percent draw down

1104
00:52:14,560 --> 00:52:17,359
Speaker 3: is happening in a very bad economy. Ye, my master job,

1105
00:52:17,400 --> 00:52:19,880
Speaker 3: I may not have that much to actually buy stuff with. No.

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00:52:20,080 --> 00:52:22,799
Speaker 2: Like March twenty twenty, it felt like the world was ending.

1107
00:52:22,800 --> 00:52:23,560
Speaker 1: Who wants to buy it?

1108
00:52:23,600 --> 00:52:23,719
Speaker 3: Like?

1109
00:52:24,000 --> 00:52:24,600
Speaker 4: The is it?

1110
00:52:24,719 --> 00:52:27,520
Speaker 2: Colin used the word rational, which is I think exactly right,

1111
00:52:27,560 --> 00:52:30,440
Speaker 2: Like it feels rational all the time. Everyone should be

1112
00:52:30,440 --> 00:52:33,560
Speaker 2: a selling at this time. It's very hard, very hard

1113
00:52:33,600 --> 00:52:36,400
Speaker 2: to actually adhere to like simple rules.

1114
00:52:36,520 --> 00:52:38,520
Speaker 3: Yeah, shall we leave it there, Let's leave it there,

1115
00:52:38,600 --> 00:52:40,680
Speaker 3: all right. This has been another episode of the aud

1116
00:52:40,719 --> 00:52:43,680
Speaker 3: Thoughts podcast. I'm Tracy Alloway. You can follow me at

1117
00:52:43,760 --> 00:52:44,600
Speaker 3: Tracy Alloway.

1118
00:52:44,880 --> 00:52:47,680
Speaker 2: I'm Joe Wisenthal. You can follow me at the Stalwart.

1119
00:52:47,760 --> 00:52:50,600
Speaker 2: Follow our guest Colin Roche. He's at Colin Roche and

1120
00:52:50,600 --> 00:52:53,839
Speaker 2: of course check out his new book, Your Perfect Portfolio.

1121
00:52:54,200 --> 00:52:57,319
Speaker 2: Follow our producers Kerman Rodriguez at Kerman Armann, dash Ol

1122
00:52:57,320 --> 00:53:00,359
Speaker 2: Bennett at Dashbot and kel Brooks at Keil Brooks. From

1123
00:53:00,360 --> 00:53:03,120
Speaker 2: our Oddlaws content, go to Bloomberg dot com slash odd

1124
00:53:03,160 --> 00:53:05,920
Speaker 2: lots we're the daily newsletter and all of our episodes

1125
00:53:06,080 --> 00:53:08,200
Speaker 2: and you can chat about all of these topics twenty

1126
00:53:08,239 --> 00:53:11,880
Speaker 2: four to seven in our discord Discord dot gg slash

1127
00:53:11,880 --> 00:53:12,600
Speaker 2: odd lots.

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00:53:12,719 --> 00:53:15,200
Speaker 3: And if you enjoyed this conversation, if you like it

1129
00:53:15,239 --> 00:53:18,399
Speaker 3: when we talk about building your perfect portfolio, then please

1130
00:53:18,480 --> 00:53:21,759
Speaker 3: leave us a positive review on your favorite podcast platform.

1131
00:53:22,040 --> 00:53:24,839
Speaker 3: And remember, if you are a Bloomberg subscriber, you can

1132
00:53:24,920 --> 00:53:28,399
Speaker 3: listen to all of our episodes absolutely ad free. All

1133
00:53:28,440 --> 00:53:30,520
Speaker 3: you need to do is find the Bloomberg channel on

1134
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Speaker 3: Apple Podcasts and follow the instructions there. Thanks for listening, Ey,