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Speaker 1: This is Masters in Business with very Ridholts on Bloomberg

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Speaker 1: Radio this weekend. On the podcast, I have a special guest.

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Speaker 1: His name is Matt Benkendorff, ce IO of Von Toble

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Speaker 1: Quality Growth, which runs about thirty five billion dollars UH

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Speaker 1: in equities. This is really a fascinating conversation about a

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Speaker 1: very specific way to manage equities UH that seems to

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Speaker 1: differ from how a lot of different people approach UH investing.

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Speaker 1: VON the group that Matt works with is specifically an

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Speaker 1: active manager. He oversees six different areas including Asia, Global,

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Speaker 1: European US, and Global means go anywhere, as well as

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Speaker 1: emerging markets. They have a very unique approach. A single

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Speaker 1: team puts money to work in all those areas. A

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Speaker 1: lot of UH firms do not operate that way. They

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Speaker 1: have amassed quite an outstanding track record beating comparable firms

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Speaker 1: and their benchmark for quite a long number of years.

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Speaker 1: And if you're at all interested in how to manage assets,

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Speaker 1: how to run a high conviction UH portfolio, how to

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Speaker 1: think about a process for stock selection and risk management UH,

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Speaker 1: then you're going to find this to be an absolutely

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Speaker 1: fascinating conversation. So with no further ado. My interview of

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Speaker 1: Matt Benkendorf of n Toble Quality Growth. This is Masters

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Speaker 1: in Business with Barry Ridholts on Bloomberg Radio. My special

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Speaker 1: guest this week is Matt Benkendorf. He is the CEO

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Speaker 1: of Untoble Quality Growth, a thirty five billion dollar global

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Speaker 1: growth equity boutique division of investment giant Von Toble out

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Speaker 1: of Switzerland's. Matt joined the firm in He became deputy

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Speaker 1: portfolio manager in two thousand and six, lead portfolio manager

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Speaker 1: of the European Equity Strategy and OH eight and since

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Speaker 1: two thousand and twelve he has been lead portfolio manager

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Speaker 1: for US Equity Strategy. Matt Benkendorff, Welcome to Bloombark. Thanks Barry,

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Speaker 1: thanks for having me. Did I did I get your

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Speaker 1: name right? I feel like I'm mispronouncing It's a tough one,

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Speaker 1: but you got it right. There's been many variations over

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Speaker 1: the years, but you got the best one there, I

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Speaker 1: think so so. Von Tobol has been around since nine

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Speaker 1: eight four. You joined the firm in How was your

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Speaker 1: investment philosophy shaped by those years? That was quite a

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Speaker 1: era of equity investing. Yeah, he could, UH say, I

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Speaker 1: was very much brought up and steeped within Von Tobel.

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Speaker 1: You know. I came to Von Toba lad of undergraduate,

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Speaker 1: which is a little bit rare in this business, you know.

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Speaker 1: And I think if you even take a further step

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Speaker 1: back and look at the longer arc of my life,

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Speaker 1: you know, I'm sitting here today doing what I always

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Speaker 1: wanted to do as a kid. Now, So the journey

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Speaker 1: started a long time ago. I grew up in a

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Speaker 1: family business. I was always interested in business. I always

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Speaker 1: thought in terms of what works in business, what doesn't profitability?

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Speaker 1: And then when I was a kid, I found the

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Speaker 1: stock market to be an interesting outlet for that because

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Speaker 1: so as a kid, you you if I'm guessing your

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Speaker 1: age is right. So you're talking about late seven of

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Speaker 1: these early eighties, So that was the beginning of what

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Speaker 1: ended up being an eighteen year bull market. How did

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Speaker 1: that thousand percent down increase affect uh the way you

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Speaker 1: look at equities. Yeah, it's interesting if you look at

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Speaker 1: my upbringing to uh. You know, my father was a

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Speaker 1: farmer from New Jersey at a landscaping business. We had

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Speaker 1: a garden center, uh in northwestern New Jersey. So I

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Speaker 1: wasn't around the markets at all, you know, it wasn't

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Speaker 1: something we talked about at all at home. I don't

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Speaker 1: know how I found it. I just sort of stumbled

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Speaker 1: upon it once I got into high school. Really and uh,

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Speaker 1: that backdrop you know, of what was going on then,

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Speaker 1: as you described, that wasn't you know, as close to me,

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Speaker 1: which is actually interesting, and that it was more about

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Speaker 1: the process itself. It wasn't the results, you know, it

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Speaker 1: was the It was the item of being able to

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Speaker 1: invest in a business via stock. So I was actually disconnected,

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Speaker 1: which is kind of back to I think what ends

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Speaker 1: up successful today not focusing on that aspect of it,

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Speaker 1: the forward thinking, what the numbers, it's the fundamentals. So

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Speaker 1: it's a very fundamental basis too, so less of a

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Speaker 1: stock market investor, more of a specific company that happens

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Speaker 1: to be public investors. That a fair That's exactly it.

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Speaker 1: You know I I you know I as a kid

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Speaker 1: and even now today, you know, and on my way

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Speaker 1: up here to the studio, I just am wired that

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Speaker 1: way that I'm always looking around at things wondering how

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Speaker 1: they work, and then generally looking at businesses and wondering

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Speaker 1: how they work. And it kind of gets to you

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Speaker 1: asked about the philosophy what we describe as quality quality growth.

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Speaker 1: Today it's always breaking down businesses quantitatively and qualitatively into

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Speaker 1: what makes certain it's great and what makes most businesses

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Speaker 1: quite frankly average. And why would you want to get

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Speaker 1: out of bed in the morning, you know, to sort

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Speaker 1: of engage in something. What's in it for you as

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Speaker 1: an owner of the business. So coming into midtown Manhattan today,

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Speaker 1: it's a lovely September morning. What did you notice what

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Speaker 1: caught your eye that you started thinking of in terms

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Speaker 1: of is this particular business doing well? What what businesses

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Speaker 1: aren't doing well? I've noticed a lot of the retail

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Speaker 1: shops around Manhattan seemed to be closing their doors. Yeah. Yeah,

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Speaker 1: that's the interesting thing when you get into this city

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Speaker 1: and you realize sort of the commoditized nature of most

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Speaker 1: of the businesses here, particularly restaurants. Right, You just wonder

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Speaker 1: you drive up any of the avenues, you wonder how

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Speaker 1: how all these places stay in business? You know, what

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Speaker 1: are the margins on certain areas of their business? What

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Speaker 1: is it about certain locations that make them thrive? So

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Speaker 1: I see a lot of average, you know, businesses that

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Speaker 1: I wonder, you know, what, what why would you be

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Speaker 1: in that business? Not the denigrade the business by any means,

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Speaker 1: but I'm always sort of ranking and contrasting, and I

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Speaker 1: think of it in a lot of ways in terms of,

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Speaker 1: you know, even though my upbringing wasn't a different business,

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Speaker 1: would you want to own this business? I think that's

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Speaker 1: the foundation that people miss a lot in stocks and

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Speaker 1: in stock market investing when they think about purchasing something,

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Speaker 1: you should really think about it in terms of, you know,

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Speaker 1: if I was born or had the good fortune to

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Speaker 1: be in a wealthy family that came from generations of

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Speaker 1: owning a business, is this the one business I would

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Speaker 1: want to own? You know? That would critically achieve the

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Speaker 1: two goals. You're looking for capital preservation over the long

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Speaker 1: term and then an attractive rate of capital compounding. And

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Speaker 1: I think when you scrutinize businesses at that higher level

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Speaker 1: and think about it generationally, that really helps you when

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Speaker 1: you get down to even a short term vehicle like

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Speaker 1: the stock market, because you then really dig down into

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Speaker 1: what it is that, as I said, makes you want

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Speaker 1: to get out of bed in the morning and operate

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Speaker 1: that business. And that gets into basic things that play

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Speaker 1: out in financial analysis, cash flow returns on invested capital,

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Speaker 1: incremental returns invested capital, why you want a strong balance sheet,

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Speaker 1: aspects like that. So how do those actors play And

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Speaker 1: I should really be careful about the word factors, But

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Speaker 1: how do they play into the philosophy of quote quality growth? Yeah,

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Speaker 1: and and and it's interesting, you know, we've been exercising

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Speaker 1: this investment philosophy for twenty years now very consistently, and

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Speaker 1: as I talked about it today, I always have to

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Speaker 1: sort of smile and chuckle because twenty years ago, what

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Speaker 1: we're saying now, quality and growth, they really weren't a

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Speaker 1: style by any means. They weren't a box that now

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Speaker 1: investors are sort of put in a little bit in mimicking,

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Speaker 1: And I think that's important to recognize because you know,

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Speaker 1: one of the important lessons you learn in this business

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Speaker 1: too is financial products are sold and not bought. So

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Speaker 1: a lot of people use that nomenclature now because that's

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Speaker 1: what's worked and it sells well. But I think when

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Speaker 1: you peel back a layer of the onion, you find

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Speaker 1: when talking to a number of managers who describe themselves

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Speaker 1: either as growth or as in now a lot more

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Speaker 1: describing them as quality growth. There's a big differentiation in

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Speaker 1: terms of how people see businesses. What are they attracted to,

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Speaker 1: you know, and an alogy I use a lot as

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Speaker 1: you know, business attraction or investment attraction is a lot

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Speaker 1: like personal attraction, right, individuals, We are attracted to certain

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Speaker 1: other individuals with certain characteristics, and it's very similar I

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Speaker 1: think in the investment world those characteristics you're asking about, right,

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Speaker 1: we tend to have an affinity and and magnetize towards

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Speaker 1: generally less cyclical businesses. Those businesses are just more attractive

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Speaker 1: to us on the margin. Less capital intensity in general

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Speaker 1: is something that sort of we magnate towards, you know,

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Speaker 1: the pre cash flow conversion, the stronger balance sheets, very

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Speaker 1: basic principles, but at high standards. I think that's a

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Speaker 1: differentiation as well. You know, we life is you know,

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Speaker 1: full of as they are, average people and average businesses. Right,

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Speaker 1: that's just the nature. There's a lot of us, and

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Speaker 1: it's a law of numbers. But when you crank up

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Speaker 1: scrutiny to a much smaller subsegment of either highly successful

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Speaker 1: people or highly successful businesses, there's a great divergence and

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Speaker 1: that divergence, quite frankly, in today's world has gotten even wider.

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Speaker 1: Let's talk little bit about your process for selecting stocks.

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Speaker 1: Are you purely bottoms up? Do you think about any

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Speaker 1: other top down sort of stuff? Tell us a little

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Speaker 1: bit about how you approach stock selection. Yeah, I think

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Speaker 1: this is also you know what's a common misnomer, uh

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Speaker 1: in investing, Uh? That you know you have to get

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Speaker 1: the top down right, you know, you have to predict things.

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Speaker 1: I think it's just general human nature, you know. I

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Speaker 1: think one of the greatest advantages in investing is typically

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Speaker 1: behavior management of that's the key of it all. Really.

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Speaker 1: You know, the financial analysis, the investment philosophy we're talking

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Speaker 1: about today and that i'll describe is one piece. But

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Speaker 1: you know, also another powerful analogy I use and explaining

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Speaker 1: it is investing is a lot like dieting. Uh. You

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Speaker 1: know a lot of people know the keys to living

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Speaker 1: typically a longer, healthier, happier life, right, what you should eat,

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Speaker 1: what you shouldn't eat, how you should exercise, and those elements.

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Speaker 1: The key is discipline, right, and investing I think is

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Speaker 1: very similar to that. It comes down to discipline. The

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Speaker 1: roadmap is fairly clear and it's been well haide out

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Speaker 1: by Warren Buffett years ago. Uh In the roadmap really

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Speaker 1: needs to be centered on the business. It's all about

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Speaker 1: the business. How good is the business, How will that

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Speaker 1: business grow? And how is that sustainable? How that business

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Speaker 1: will grow, how will that business endure through economic cycles

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Speaker 1: which you inherently will not be able to predict. So

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Speaker 1: I think ignoring the top down, while is easier said

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Speaker 1: than done, is a key. So we do that. I

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Speaker 1: think we really do when we think about businesses and

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Speaker 1: as I as I mentioned earlier businesses you'd want to own,

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Speaker 1: it sort of forces you we we sort of have

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Speaker 1: a private business owner I would say somewhat private equity mentality,

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Speaker 1: but we happen to be operating in the listed equity sphere,

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Speaker 1: which gives us a liquidity advantage, you know. So it

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Speaker 1: also allows us to own great businesses which we choose

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Speaker 1: bottom up. But we can wake up every day and

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Speaker 1: look at the screens and see what values the market

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Speaker 1: is striking on those businesses and improve the quality of

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Speaker 1: what we own for our investors, which is something as

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Speaker 1: a dynamic a private investor can't do, or a private

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Speaker 1: equity investor can't do. As quickly. So, so let's talk

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Speaker 1: about that bottoms up approach. When you're thinking about stock selection,

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Speaker 1: how does that process begin? Are you screening things based

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Speaker 1: on value? What tell us what what the process is

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Speaker 1: like of ultimately saying we're gonna buy this but not that. Yeah,

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Speaker 1: I think the key as you start quant and you

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Speaker 1: go than heavy qualitative after that, and I think, so

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Speaker 1: what's the plant screen to begin with? The quant piece

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Speaker 1: is key, and that I think first where you should

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Speaker 1: approach quant is first from an elimination standpoint, negative screening.

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Speaker 1: When most people think of quant and screening use the

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Speaker 1: word screening typically it sort of has a connoctation that

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Speaker 1: you're looking for something when actually what you should be

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Speaker 1: doing is eliminating things. First and foremost, you want to

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Speaker 1: really narrow the world down because one, there's only so

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Speaker 1: many hours in a day, there's a much, so much

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Speaker 1: so much firepower you have it or bring to bear

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Speaker 1: in the research process. But also you want to just

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Speaker 1: fishing a riper pond of opportunity because that greatly reduces

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Speaker 1: risk as well over the long run by eliminating as

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Speaker 1: I've described, average or lower quality businesses. So we squat

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Speaker 1: screen to begin with it's not highly complicated. I'd say

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Speaker 1: in terms of variables, you're looking for returns on invested capital,

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Speaker 1: returns on equity, stability and operating margins, strength of balance sheet.

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Speaker 1: I think the basic variables are easy. You then, though,

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Speaker 1: improve it by looking for levels of those variables, so

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Speaker 1: cranking up the scrutiny of the levels of variables you're

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Speaker 1: willing to accept. But also then critically, what's key is

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Speaker 1: the track record, So you want clean track records as well,

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Speaker 1: and I think that's glossed over once again going back

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Speaker 1: to this human element, right, and when you say track record,

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Speaker 1: you're not referring to the stock performance. You're referring specifically

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Speaker 1: to the performance of the underlying business exactly. You want

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Speaker 1: to start with businesses that have been great, that have

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Speaker 1: proven to be great, and are demonstrating that in numbers,

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Speaker 1: and that's what you're looking for. You're eliminating the poor numbers,

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Speaker 1: and you're critically looking for the clean track record of

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Speaker 1: good numbers because that's not a perfect predictor of future SESS,

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Speaker 1: it does get you over a one ft hurdle and

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Speaker 1: points you in the right direction and makes your future

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Speaker 1: looking decision much higher. Probability that Sh'll be right about that.

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Speaker 1: So I think that's that's a big key track record,

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Speaker 1: and that's where I'd say go back to this human

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Speaker 1: element or behavioral aspect. A lot of people don't want

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Speaker 1: to do that because we have a human tendency to

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Speaker 1: try to want to be smart or smarter. Right. We

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Speaker 1: want to try to predict what's going to be great

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Speaker 1: tomorrow that wasn't great yesterday, Right, But we try to

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Speaker 1: start in a good place, things that have been great,

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Speaker 1: and then make an easier, albeit still difficult decision. I

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Speaker 1: can they keep doing it. Let's talk a little bit

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Speaker 1: about high conviction. How does that come into play. You've

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Speaker 1: gone through the negative screen, remove the names you're not

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Speaker 1: interested in. Now you've done the positive work, and you've

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Speaker 1: identified fundamentally what you like. How do you take that

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Speaker 1: somewhat lengthy list I would imagine, and reduce it down

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Speaker 1: to a smaller concentrated high conviction list. Yeah. I think

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Speaker 1: the sort of genesis of that is two things. You know,

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Speaker 1: if I look back at you know, college, I sort

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Speaker 1: of learned two things, one related to your question and

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Speaker 1: one that comes before it. I think one the power

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Speaker 1: of protecting capital and down markets and then being long

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Speaker 1: though consistently through markets to participateate and and really be

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Speaker 1: able to compound capital over the long term. You know,

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Speaker 1: the classic numbers of you don't want to miss out

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Speaker 1: the biggest updates and markets by trying to time the

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Speaker 1: market once again, trying to get away from this top

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Speaker 1: down you know, pitfall that most people fall into. So

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Speaker 1: I learned that very valuable lesson about preservation, but staying

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Speaker 1: long through the market, and you do that. I think

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Speaker 1: through quality you can do that, uh. And I think

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Speaker 1: the second aspect then of it, UH is risk management.

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Speaker 1: You know, you learn to throw out a lot of

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Speaker 1: unfortunately what you learn in college about classic risk management

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Speaker 1: because at the heart of your question about concentration, that's

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Speaker 1: really about risk management, and that flies in the face

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Speaker 1: of classic risk management theory right of owning smaller pieces

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Speaker 1: of more things to be diversifated, diversified to be lower risk. Actually,

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Speaker 1: I think that's completely wrong. What you want to do

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Speaker 1: is more own more of less things, but better things

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Speaker 1: to reduce risk. And that's something we really capitalize on

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Speaker 1: and our portfolios just make sure we are concentrated with

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Speaker 1: capital with much larger positions behind just inherently much better businesses,

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Speaker 1: much more stable, predictable, higher economic return businesses, better cash

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Speaker 1: flow profiles. If you put more money behind them, it

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Speaker 1: is much lower risk than buying smaller slivers of relatively

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Speaker 1: lower quality companies. And then what goes hand in hand

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Speaker 1: with that, as you build that portfolio bottom up, you

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Speaker 1: end up looking what's now called a new term that's

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Speaker 1: been coined more recently benchmark agnostic or benchmarking different. You

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Speaker 1: end up looking a whole lot different than the market

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Speaker 1: by as a byproduct of your concentration and bottom up

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Speaker 1: stock picking, which people are also finding adds a whole

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Speaker 1: lot of value to in terms of delivering outphit and

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Speaker 1: avoiding mistakes. So you have a lot of institutional investors.

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Speaker 1: They're measured by a benchmark, and I would imagine they

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Speaker 1: have pressure to measure you by a benchmark. What are

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Speaker 1: those conversations like when one says, hey, you're either beating

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Speaker 1: or under performing a benchmark, how do you explain, well,

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Speaker 1: we're kind of indifferent to the benchmark. What are those

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Speaker 1: conversations like, Yeah, this is UH. I think there's two

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Speaker 1: keys to this. UH number one. And then since we're

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Speaker 1: in you know, new York City. I'll use the great

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Speaker 1: Billy Joel quote. You know, when we spend a lot

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Speaker 1: of time bringing our investors on board, I say, you know,

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Speaker 1: you might think we're crazy, but we might. We just

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Speaker 1: might be the lunatic you're looking for, as a classic

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Speaker 1: quote goes, because you've got to really see risk as

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Speaker 1: we see it, and it's a binary thing. Some people

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Speaker 1: don't buy into that, you know, they can't wrap their

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Speaker 1: head around it, or they just fundamentally don't believe it.

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Speaker 1: They believe more in the classic risk theory we've talked about.

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Speaker 1: But if you can get people to buy into that

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Speaker 1: and understand it, and it really helps to show them

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Speaker 1: the past success of utilizing a strategy like that, I

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Speaker 1: think that's step one. Step two is your question is

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Speaker 1: right on point. You know, you're managing people who all

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Speaker 1: have constituents, and your constituents have constituents, and that's what's

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Speaker 1: made this business generally more complicated over time, more people watching,

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Speaker 1: with more visibility and more numbers. How do you how

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Speaker 1: do you explain things over the short term where benchmark

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Speaker 1: in different can cause meaningful relative underperformance. Right, But that's

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Speaker 1: the price of admission, you know, that's the price to

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Speaker 1: be paid. For great long term out performance, you have

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Speaker 1: to absolutely underperform in certain certain shorter periods. And the

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Speaker 1: key to that is education and communication, you know. So

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Speaker 1: it's the buying and the client institutional or retail on

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Speaker 1: the onset. So we are that we are the person

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Speaker 1: they're looking for. We are the match because our strategy

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Speaker 1: in terms of what we want to own, what we

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Speaker 1: won't own, and how we view risk resonates with them.

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Speaker 1: And then once they are on board, you know, I

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Speaker 1: also say there's two pieces of the job from an

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Speaker 1: investing standpoint. One is to deliver the returns on paper,

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Speaker 1: which is important, but the second aspect, which is equally

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Speaker 1: as important, is getting the client to realize those returns

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Speaker 1: by staying on board with you for that journey. And

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Speaker 1: that's why the client journey is very important to us.

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Speaker 1: And you manage that through a lot of transparency, a

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Speaker 1: lot of open communication, a lot of hand holding. That's

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Speaker 1: that's half of your job as an investment manager, you know,

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Speaker 1: not just to put the returns on the paper, but

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Speaker 1: to keep the person on the bus over that journey.

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Speaker 1: And the key to that is less volatility. Typically, you know,

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Speaker 1: it's good it's by products of equality growth style, whereby

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Speaker 1: your downside capture protection is high, right, you preserve capital

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Speaker 1: much better when things fall apart recession comes about. And

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Speaker 1: then also your overall volatility is dampened over time because

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Speaker 1: your businesses are just better and they're not subject to

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Speaker 1: wild swings of volatility. So if you can keep the

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Speaker 1: ride less bumpy, you definitely have a much better chance

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Speaker 1: of keeping your investor in their seat over the ride,

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Speaker 1: and then you can accomplish the two key features the

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Speaker 1: returns and having the client there at the end point.

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Speaker 1: So so let's address that concept of client journey, because

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Speaker 1: I find that very fascinating. There have been a number

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Speaker 1: of del Bar studies and other studies that look at

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Speaker 1: investor behavior here, and the most common takeaway seems to

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Speaker 1: be investors underperform their own investments, meaning they'll join the

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Speaker 1: bus at the top of the hill and they'll jump

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Speaker 1: out at the first move down, but it might just

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Speaker 1: be a little dip and then we're back heading up

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Speaker 1: the hill. Meaning they buy high, they sell low. They

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Speaker 1: don't write it out for a full cycle. They don't

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Speaker 1: give a manager an opportunity to demonstrate, hey, if you

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Speaker 1: bind the philosophy, here's where you should end up over

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Speaker 1: five or ten years. How do you deal with that

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Speaker 1: client journey aspect. Is it just education and communication from

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Speaker 1: the beginning or is that an ongoing issue that requires

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Speaker 1: regular reinforcement. I think it's two things. It's one the

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Speaker 1: piece you just mentioned, the ladder, the communication. But one

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Speaker 1: it's via this investment philosophy and style that's critical. And

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Speaker 1: I'll explain that because at the heart of it is

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Speaker 1: what you mentioned. You know this these old studies, and

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Speaker 1: I actually haven't seen the study in a while, but

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Speaker 1: I'm sure that the numbers are quite similar those classic

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Speaker 1: studies of US mutual fund investors. As you pointed out,

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Speaker 1: the returns of look great over the long term on paper,

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Speaker 1: but most investors have never achieved those returns because of

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Speaker 1: the dynamic you're talking about. And quite frankly, for average

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Speaker 1: or lower quality businesses, and often a benchmark, you might

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Speaker 1: need to have a higher timing element because those businesses

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Speaker 1: can be mean reverting. If you have a portfolio of

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Speaker 1: lower quality businesses, whether benchmark or an active manager with

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Speaker 1: just lower quality businesses, your timing is very important. Right

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Speaker 1: The businesses themselves are going to be mean reverting in

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Speaker 1: their economics. If you're in the energy space or bastion

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Speaker 1: materials ships, those are commodity industries and those commodity prices

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Speaker 1: are going to fluctuate, so you better buy low and

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Speaker 1: sell high to make your money. What we want to

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Speaker 1: do alongside the communication is with higher quality businesses that

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Speaker 1: have these elements we've talked about, lesstality, more durability, a

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Speaker 1: real long tail or runway of growth not just one year,

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Speaker 1: but five, seven, ten, fifty. When you have those types

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Speaker 1: of businesses, you really can hold through downturns. It's a

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Speaker 1: it's a it's a slight nuanced to understand. Right, it's

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Speaker 1: a fallacy to hold a really great business when when

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Speaker 1: a cycle turns, because it is going to mean reverting.

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Speaker 1: So the buy and hold strategy actually, as it's sort

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Speaker 1: of taught and sold. If you have the wrong businesses,

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Speaker 1: it shouldn't be aplical. Actually you're you're following the wrong approach.

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Speaker 1: But if you have great businesses where you can put

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Speaker 1: your head on your pillow at night and no, look,

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Speaker 1: not only are they not going out of business even

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Speaker 1: in this recession for reasons of A, B and C,

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Speaker 1: they're going to continue to grow their underlying earnings power.

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Speaker 1: Those type businesses one you can hold onto and sleep well,

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Speaker 1: but two you should add to them because the market

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Speaker 1: is starting to give you a gift there. But in

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Speaker 1: the mean reverting business that we're with, most businesses that

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Speaker 1: most investors hold by nature their average and you better

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Speaker 1: buy low and sell high to make a return. You know,

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Speaker 1: what we're trying to capture is long term earnings compounding.

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Speaker 1: You know, stock returns and earnings growth are correlated over

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Speaker 1: the long term. Interestingly enough, stock returns and GDP growth

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Speaker 1: aren't very correlated over the long term. But if you

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Speaker 1: get the business right and the earnings compounding right, and

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Speaker 1: you own a portfolio and aggregate that has a collective

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Speaker 1: weighted average rate of earnings compounding, that's attractive. That's what

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Speaker 1: your investment returns will be, and that's real add value.

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Speaker 1: Let's talk a little bit about the investment industry. It's

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Speaker 1: been going through a lot of changes. Your firm has

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Speaker 1: been around since nine four, uh. Let's let's discuss some

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Speaker 1: of these changes. We'll start with active management. It's been

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Speaker 1: a rough couple of years. What has for active as

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Speaker 1: a lot of the money flows have gone towards passive indexing.

430
00:22:37,200 --> 00:22:39,880
Speaker 1: What's your experience been like over the past, let's call

431
00:22:39,920 --> 00:22:42,760
Speaker 1: a decade. Yeah, I think, as first, our investment experience

432
00:22:42,800 --> 00:22:45,000
Speaker 1: has been very good, you know, owning great businesses that

433
00:22:45,040 --> 00:22:48,080
Speaker 1: grow faster than the benchmark, that are durable and predictable,

434
00:22:48,200 --> 00:22:50,200
Speaker 1: you know, has worked and will continue to work. We're

435
00:22:50,280 --> 00:22:54,200
Speaker 1: highly confident of that. The industry though, Look, I think

436
00:22:54,359 --> 00:22:57,160
Speaker 1: one I always have a sort of split personality on

437
00:22:57,160 --> 00:23:00,399
Speaker 1: on this in that you know, I hunt, and I

438
00:23:00,400 --> 00:23:03,800
Speaker 1: don't think I should defend most active managers, right because

439
00:23:03,800 --> 00:23:05,160
Speaker 1: I think the numbers are what they are. I think

440
00:23:05,160 --> 00:23:07,600
Speaker 1: a lot of active managers and most don't add value

441
00:23:07,680 --> 00:23:10,240
Speaker 1: quite frankly. So the carnage that goes on and what

442
00:23:10,320 --> 00:23:14,359
Speaker 1: should be a meritocracy of an industry is absolutely proper

443
00:23:14,400 --> 00:23:17,720
Speaker 1: and corrective carnage. The word carnage. Yeah, Look, it's it's

444
00:23:17,760 --> 00:23:19,840
Speaker 1: an industry that's probably had, like a lot of other

445
00:23:19,920 --> 00:23:23,720
Speaker 1: industries along come up and right we've seen you know,

446
00:23:24,800 --> 00:23:27,120
Speaker 1: all the other classic industries hollowed out by either tech

447
00:23:27,480 --> 00:23:30,399
Speaker 1: or new iterations. Right, but this industry, it took a

448
00:23:30,400 --> 00:23:32,080
Speaker 1: while to get to it. You know, there's a lot

449
00:23:32,119 --> 00:23:33,840
Speaker 1: of honey there and it took a while to people

450
00:23:33,840 --> 00:23:36,000
Speaker 1: to focus in on and start squeezing, but it's there

451
00:23:36,080 --> 00:23:40,280
Speaker 1: a lot of complacency for decades, absolutely, so that's coming.

452
00:23:40,320 --> 00:23:43,320
Speaker 1: And if you are you know, average or lower quality

453
00:23:43,440 --> 00:23:45,520
Speaker 1: like the businesses we look at, you just you shouldn't

454
00:23:45,520 --> 00:23:47,560
Speaker 1: be on the playing field, right, So that part I

455
00:23:47,560 --> 00:23:49,479
Speaker 1: think is do and proper and there is no defense

456
00:23:49,480 --> 00:23:51,000
Speaker 1: for that, right you have to add value. And the

457
00:23:51,040 --> 00:23:53,960
Speaker 1: great thing about this this is a performance oriented business,

458
00:23:54,000 --> 00:23:56,480
Speaker 1: just like sports, but unlike sports. Actually we play the

459
00:23:56,480 --> 00:23:59,600
Speaker 1: game every day and our score is there every day

460
00:23:59,640 --> 00:24:02,280
Speaker 1: and the long term. So if you can't deliver, you

461
00:24:02,280 --> 00:24:05,439
Speaker 1: shouldn't be there. That's one part. But to the passive side,

462
00:24:05,920 --> 00:24:08,760
Speaker 1: you know, there's there's two elements that that are driving

463
00:24:08,800 --> 00:24:10,840
Speaker 1: it and one I think is a little more questionable.

464
00:24:10,840 --> 00:24:12,960
Speaker 1: One lower cost and technology certain has helped right e

465
00:24:13,000 --> 00:24:16,159
Speaker 1: t s different vehicles. There's been good innovation there, you know,

466
00:24:16,280 --> 00:24:19,240
Speaker 1: as uh Volker said, you know, the best innovation the

467
00:24:19,240 --> 00:24:21,879
Speaker 1: financial industry has been the A t M. Only probably

468
00:24:21,920 --> 00:24:25,159
Speaker 1: technology has really helped would investment products too. For a

469
00:24:25,240 --> 00:24:27,880
Speaker 1: vehicle to get passive even cheaper, that's good. I think.

470
00:24:27,920 --> 00:24:29,640
Speaker 1: The other thing though, people need to be a little

471
00:24:29,680 --> 00:24:32,280
Speaker 1: bit cautious about when they look at this huge swing

472
00:24:32,359 --> 00:24:35,239
Speaker 1: we've had to passive over the last decade, roughly has

473
00:24:35,280 --> 00:24:38,560
Speaker 1: been monetary policy. Right? If I always ask it, and

474
00:24:38,600 --> 00:24:40,800
Speaker 1: when we look at a business, even I I often

475
00:24:40,840 --> 00:24:43,080
Speaker 1: ask either my members of my team or or I

476
00:24:43,119 --> 00:24:47,480
Speaker 1: asked myself with this business through all your analysis, if

477
00:24:47,520 --> 00:24:49,879
Speaker 1: I could ask you or give you access to, just

478
00:24:49,960 --> 00:24:53,119
Speaker 1: the answer to one question that would really help you

479
00:24:53,160 --> 00:24:55,520
Speaker 1: with this business when you look forward, what would it be?

480
00:24:55,560 --> 00:24:58,480
Speaker 1: Try to synthesize and boil things down into a list

481
00:24:58,520 --> 00:25:00,720
Speaker 1: of things you would like to know but maybe can't

482
00:25:00,720 --> 00:25:03,520
Speaker 1: because they're unpredictable. But try to get to the crux

483
00:25:03,560 --> 00:25:06,280
Speaker 1: of the matter. What's the most important issue that will

484
00:25:06,320 --> 00:25:08,920
Speaker 1: help this business or drive its future growth or success.

485
00:25:09,320 --> 00:25:12,320
Speaker 1: I think when you look at the overall investing landscape,

486
00:25:12,480 --> 00:25:15,639
Speaker 1: you can ask yourself that similar question about monetary policy. Right.

487
00:25:15,680 --> 00:25:17,720
Speaker 1: If I was going to give you the access to

488
00:25:17,760 --> 00:25:20,399
Speaker 1: a magic lamp with just one wish, right, and it

489
00:25:20,440 --> 00:25:23,480
Speaker 1: would help you to to set the landscape investing wise

490
00:25:23,480 --> 00:25:25,919
Speaker 1: for the next decade. You know, if I had that

491
00:25:25,920 --> 00:25:28,440
Speaker 1: crystal ball, I'd probably ask the genie, you know, what's

492
00:25:28,480 --> 00:25:33,760
Speaker 1: monetary policy for the That's a pretty powerful variable you

493
00:25:33,800 --> 00:25:37,080
Speaker 1: can compound and build a whole lot of decisions around. Right,

494
00:25:37,520 --> 00:25:39,520
Speaker 1: and look at the backdrop we've had. We had a

495
00:25:39,520 --> 00:25:43,040
Speaker 1: FED policy that was at zero, with absolute visibility and

496
00:25:43,119 --> 00:25:47,000
Speaker 1: certainty of where it wasn't going for so long. That's

497
00:25:47,000 --> 00:25:49,480
Speaker 1: a pretty good backdrop for passive. I think you know

498
00:25:50,240 --> 00:25:53,280
Speaker 1: now that we've had some at least uncertainty and volatility

499
00:25:53,280 --> 00:25:55,959
Speaker 1: and what I would call normalcy back in monetary policy.

500
00:25:56,119 --> 00:25:58,120
Speaker 1: Some people might differ with that opinion, but I think

501
00:25:58,119 --> 00:26:00,000
Speaker 1: this is actually what should be normal. Is it going

502
00:26:00,240 --> 00:26:03,760
Speaker 1: towards well? I think people think I'm normal. I think

503
00:26:03,800 --> 00:26:05,440
Speaker 1: I have to be careful in two terms, normal terms

504
00:26:05,480 --> 00:26:07,160
Speaker 1: of where the rate should be, but I'm talking about

505
00:26:07,200 --> 00:26:09,680
Speaker 1: normal more in terms of you just shouldn't know exactly

506
00:26:09,680 --> 00:26:11,720
Speaker 1: where it's going. There should be a little bit of uncertainty,

507
00:26:11,800 --> 00:26:14,560
Speaker 1: is it going up down? Staying the same? A little

508
00:26:14,560 --> 00:26:17,920
Speaker 1: bit of uncertainty, not probability, Right, I think that's kind

509
00:26:17,920 --> 00:26:20,320
Speaker 1: of normal. That That goes back to Bernanke during the

510
00:26:20,359 --> 00:26:23,960
Speaker 1: financial crisis saying the way we'll stabilize this is to

511
00:26:24,160 --> 00:26:28,240
Speaker 1: give people enough guidance that they become comfortable that there's

512
00:26:28,280 --> 00:26:32,919
Speaker 1: a liquidly backstop. However, that certainty seems to have carried

513
00:26:32,960 --> 00:26:38,400
Speaker 1: forward far beyond the crisis. I totally agree with the concept. Hey,

514
00:26:38,440 --> 00:26:41,520
Speaker 1: a little uncertainty is not a bad thing when it

515
00:26:41,560 --> 00:26:44,159
Speaker 1: comes to monetary policy. Yeah, I think and and I

516
00:26:44,200 --> 00:26:46,719
Speaker 1: think good for us. Would we kind of agree on that.

517
00:26:46,760 --> 00:26:48,840
Speaker 1: You're starting to hear some murmurs of that of people

518
00:26:48,920 --> 00:26:51,639
Speaker 1: kind of talk about this. You know, it is maybe

519
00:26:51,920 --> 00:26:54,600
Speaker 1: the FED talking a little bit too much, right that

520
00:26:54,600 --> 00:26:56,040
Speaker 1: that I think that should be a part of the

521
00:26:56,040 --> 00:26:57,960
Speaker 1: conversation now a little bit. You know, they went to

522
00:26:58,080 --> 00:27:01,000
Speaker 1: this strategy you know, a while ago of more transparency

523
00:27:01,040 --> 00:27:04,159
Speaker 1: and maybe less transparency is a little bit healthier for

524
00:27:04,320 --> 00:27:06,919
Speaker 1: risk and risk in the markets. I actually, you know,

525
00:27:06,960 --> 00:27:09,840
Speaker 1: I I differ on this maybe generally with with my

526
00:27:09,880 --> 00:27:11,680
Speaker 1: opinion too. And Paul, you know, I think Pal is

527
00:27:11,680 --> 00:27:13,879
Speaker 1: doing a great job. Quite frankly, I think there's a

528
00:27:13,880 --> 00:27:16,360
Speaker 1: lot of criticism of him, but if you step back,

529
00:27:16,359 --> 00:27:18,560
Speaker 1: he's probably the right guy at the right point in

530
00:27:18,600 --> 00:27:20,760
Speaker 1: time for the job. In terms of his background, we

531
00:27:20,800 --> 00:27:24,720
Speaker 1: always wanted this sort of pragmatic, business oriented guy sort

532
00:27:24,720 --> 00:27:28,560
Speaker 1: of clamored for it versus non economists. And then it's

533
00:27:28,600 --> 00:27:30,080
Speaker 1: like life, you know, then you finally get what you

534
00:27:30,080 --> 00:27:32,080
Speaker 1: want and everybody change their mind. I'll take it a

535
00:27:32,080 --> 00:27:34,800
Speaker 1: step further. I think you can make the argument that

536
00:27:34,960 --> 00:27:38,719
Speaker 1: this could very well be the single best appointment from

537
00:27:38,760 --> 00:27:41,040
Speaker 1: the Trump administration. Yeah, I think I think there's a

538
00:27:41,040 --> 00:27:43,680
Speaker 1: lot of credibility in that, you know, definitely, I think Paul,

539
00:27:44,000 --> 00:27:45,920
Speaker 1: you know, as the other quote I'd like to share,

540
00:27:45,920 --> 00:27:48,280
Speaker 1: I think he's trying to do the impossible for the ungrateful, right.

541
00:27:48,280 --> 00:27:50,000
Speaker 1: I mean, you're gonna he's gonna get a whole lot

542
00:27:50,000 --> 00:27:52,040
Speaker 1: of criticism no matter what. He doesn't matter what. But

543
00:27:52,160 --> 00:27:55,360
Speaker 1: I I respect, you know, the steadfastness he's he's falling through,

544
00:27:55,520 --> 00:27:57,639
Speaker 1: he's doing what he said. Maybe he could die by communication,

545
00:27:57,640 --> 00:28:00,080
Speaker 1: but I'm not here to micro manage. But I and

546
00:28:00,160 --> 00:28:02,800
Speaker 1: he's he's doing the best to get us back to normalcy,

547
00:28:02,840 --> 00:28:05,399
Speaker 1: which is very hard, right, I mean, getting off that

548
00:28:05,440 --> 00:28:09,000
Speaker 1: emergency footing is it's taken much longer than anyone could

549
00:28:09,000 --> 00:28:11,680
Speaker 1: have expected. And it's not just monetary policy, right. I think.

550
00:28:11,720 --> 00:28:13,320
Speaker 1: I think the world we live in today, as much

551
00:28:13,359 --> 00:28:15,679
Speaker 1: as you know, the hypersensitivity of the news cycle and

552
00:28:15,720 --> 00:28:18,600
Speaker 1: the mediums of delivering news have made it, I actually

553
00:28:18,680 --> 00:28:21,000
Speaker 1: think what we are in is a normal world, right,

554
00:28:21,040 --> 00:28:23,439
Speaker 1: now right, the world is supposed to be uncertain. We're

555
00:28:23,480 --> 00:28:27,080
Speaker 1: supposed to be have geopolitical issues, even physical conflict, right,

556
00:28:27,200 --> 00:28:32,040
Speaker 1: monetary policy uncertainty, difficulty for businesses. That's what the world's

557
00:28:32,160 --> 00:28:34,720
Speaker 1: largely been like for a long period of time. We're

558
00:28:34,760 --> 00:28:38,240
Speaker 1: just adjusting and adapting out of an abnormal period, which

559
00:28:38,280 --> 00:28:40,440
Speaker 1: is why people are kicking and screaming a little bit

560
00:28:40,480 --> 00:28:43,120
Speaker 1: more so here, let me bring this back to the

561
00:28:43,160 --> 00:28:47,480
Speaker 1: active versus passive question. The thing that I find astonishing

562
00:28:47,600 --> 00:28:52,320
Speaker 1: over the past decade is there are a whole slew

563
00:28:53,080 --> 00:28:56,040
Speaker 1: of funds I can think of one of two fidelity

564
00:28:56,080 --> 00:28:59,240
Speaker 1: I could think of without naming fund names or managers

565
00:28:59,280 --> 00:29:01,600
Speaker 1: or whatever. There is a run of funds that I

566
00:29:01,600 --> 00:29:05,720
Speaker 1: have watched shoot the lights out for a decade and

567
00:29:05,760 --> 00:29:10,040
Speaker 1: they're still seeing outflows. That's sort of hard to reconcile. Yeah,

568
00:29:10,080 --> 00:29:12,360
Speaker 1: I think, you know, that's the one part that I think,

569
00:29:12,520 --> 00:29:14,760
Speaker 1: uh As I mentioned, you know, technology is gonna bring

570
00:29:14,760 --> 00:29:18,400
Speaker 1: about cheaper vehicles as there's been a tremendously difficult asset

571
00:29:18,440 --> 00:29:21,560
Speaker 1: allocation questions people have had to, you know, answer as well.

572
00:29:21,640 --> 00:29:23,480
Speaker 1: As you have an aging population and you have to

573
00:29:23,480 --> 00:29:26,480
Speaker 1: shift towards fixed income, you have actually the wrong time.

574
00:29:26,520 --> 00:29:28,680
Speaker 1: You want those sorts of coupons and yields and fixed

575
00:29:28,680 --> 00:29:31,040
Speaker 1: income as the assets are shifting that way. So I

576
00:29:31,040 --> 00:29:33,040
Speaker 1: think that's that's a bit of the element I think

577
00:29:33,040 --> 00:29:36,000
Speaker 1: you're you're seeing explaining there in that even if you've

578
00:29:36,040 --> 00:29:38,200
Speaker 1: done a good job, you're still seeing outflows because there

579
00:29:38,280 --> 00:29:41,040
Speaker 1: is great at your asset allocation equation going on outside

580
00:29:41,080 --> 00:29:43,840
Speaker 1: of us. But I don't mean equity to fixed income.

581
00:29:44,000 --> 00:29:48,320
Speaker 1: You're seeing outflows from outperforming equity net of fees, even

582
00:29:48,440 --> 00:29:52,320
Speaker 1: after fees towards passive. I'm kind of perplexed by that. Yeah,

583
00:29:52,400 --> 00:29:54,880
Speaker 1: it's a baby with the bathwater sort of them. Yeah,

584
00:29:55,160 --> 00:29:56,880
Speaker 1: you know, I think there's there's probably a little bit

585
00:29:56,920 --> 00:29:58,480
Speaker 1: of element of that. I think, you know, they also

586
00:29:58,520 --> 00:30:01,280
Speaker 1: maybe slightly underappreciated thing to that. You know, I also

587
00:30:01,360 --> 00:30:04,160
Speaker 1: have to remind myself and point out to people sometimes

588
00:30:04,160 --> 00:30:06,840
Speaker 1: as if we actually do our job for our clients,

589
00:30:07,200 --> 00:30:09,200
Speaker 1: they're going to take all their money because that's the job.

590
00:30:09,480 --> 00:30:11,320
Speaker 1: Our job is to take their money from point A

591
00:30:11,440 --> 00:30:13,800
Speaker 1: to point B and then they take it all from you. Right,

592
00:30:14,040 --> 00:30:15,840
Speaker 1: But they don't do it because you didn't do your

593
00:30:15,960 --> 00:30:17,800
Speaker 1: your job, or they're unhappy with you. It's because you

594
00:30:17,840 --> 00:30:20,640
Speaker 1: actually accomplished the goal and there you actually should take

595
00:30:20,640 --> 00:30:23,200
Speaker 1: some great satisfaction. You know, we've had some clients like that, particularly,

596
00:30:23,240 --> 00:30:25,120
Speaker 1: you know in the last couple of years where they've

597
00:30:25,160 --> 00:30:27,320
Speaker 1: made now they've reached their goals in terms of their

598
00:30:27,360 --> 00:30:31,160
Speaker 1: pension fund you know, uh, targeted returns, and now they

599
00:30:31,160 --> 00:30:33,400
Speaker 1: need to shift and ask allocation to a different mode

600
00:30:33,480 --> 00:30:37,120
Speaker 1: or a different time horizon or fitting their liability Matt,

601
00:30:37,480 --> 00:30:39,880
Speaker 1: you know, match now and we've just done our jobs.

602
00:30:39,920 --> 00:30:42,120
Speaker 1: So thank you very much. We've we've delivered what we

603
00:30:42,160 --> 00:30:44,000
Speaker 1: had to do. So you you you're gonna always get

604
00:30:44,000 --> 00:30:45,880
Speaker 1: a constant ooment of that too, even with great managers,

605
00:30:45,920 --> 00:30:48,280
Speaker 1: I think losing money. So along those lines, I know

606
00:30:48,400 --> 00:30:53,840
Speaker 1: some people are focused on demographics as an input into markets.

607
00:30:54,040 --> 00:30:56,320
Speaker 1: I don't know if I've been especially persuaded by it,

608
00:30:56,640 --> 00:30:59,920
Speaker 1: but some people really buy into that thesis. Do you

609
00:31:00,280 --> 00:31:05,520
Speaker 1: think this generational shift into retirement from equities to fixed

610
00:31:05,520 --> 00:31:07,840
Speaker 1: income is going to have an impact on the market

611
00:31:07,880 --> 00:31:11,040
Speaker 1: overall or is it just all built in and people

612
00:31:11,080 --> 00:31:15,240
Speaker 1: are are stressing over that shift generational shift way too much. Yeah,

613
00:31:15,400 --> 00:31:17,160
Speaker 1: I think it's people were a little bit hyper sensitive

614
00:31:17,280 --> 00:31:19,240
Speaker 1: into near term issues. You know, I think sort of

615
00:31:19,280 --> 00:31:20,840
Speaker 1: the more things changed, the more they stay the same

616
00:31:20,880 --> 00:31:23,200
Speaker 1: in the long run, you know. So I'm not hypersentive

617
00:31:23,240 --> 00:31:25,240
Speaker 1: to you shift there, and in fact, even if you

618
00:31:25,240 --> 00:31:27,200
Speaker 1: look at your options, I think as an investor, and

619
00:31:27,400 --> 00:31:29,080
Speaker 1: here maybe i'll sound a little bit biased as an

620
00:31:29,080 --> 00:31:32,160
Speaker 1: equity guy, I'm actually happy I'm an equity investor and

621
00:31:32,200 --> 00:31:34,360
Speaker 1: not a fixed income investor right now, because I think

622
00:31:34,360 --> 00:31:37,480
Speaker 1: that's a hard job. Seven percent is an appealing that's

623
00:31:37,760 --> 00:31:39,960
Speaker 1: very hard job. So call me lazy, but I just

624
00:31:40,000 --> 00:31:41,479
Speaker 1: think I have an easier job right now as an

625
00:31:41,480 --> 00:31:44,520
Speaker 1: equity investor versus fixed income. To be fair, they've had

626
00:31:44,520 --> 00:31:47,840
Speaker 1: a really easy thirty years and now that seems to

627
00:31:47,880 --> 00:31:51,200
Speaker 1: be coming to its end um, whereas equity investors have

628
00:31:51,280 --> 00:31:54,680
Speaker 1: had a little more challenging couple of decades with between

629
00:31:54,680 --> 00:31:57,920
Speaker 1: the dot com and the financial crisis. I would say

630
00:31:57,960 --> 00:32:00,880
Speaker 1: the roles are now starting to reve No, I agree,

631
00:32:00,920 --> 00:32:02,760
Speaker 1: So that's you know, that's that So maybe yes, now

632
00:32:02,760 --> 00:32:04,160
Speaker 1: it's time for them to pay a little bit of

633
00:32:04,200 --> 00:32:05,720
Speaker 1: a price of admission, right and us to have a

634
00:32:05,760 --> 00:32:08,240
Speaker 1: little easier time. But if you look at the two

635
00:32:08,520 --> 00:32:10,880
Speaker 1: against each other, to your question of whether people will

636
00:32:10,960 --> 00:32:13,040
Speaker 1: or should continue to shift out of equities. I mean,

637
00:32:13,040 --> 00:32:15,240
Speaker 1: if you look at the prospect in the right equity strategy,

638
00:32:15,360 --> 00:32:18,120
Speaker 1: still the yield even you're getting there on a coupon.

639
00:32:18,160 --> 00:32:20,240
Speaker 1: If you have real cash flow and real access cash

640
00:32:20,240 --> 00:32:22,960
Speaker 1: flow to distribute to your owners of the business, your shareholders,

641
00:32:23,240 --> 00:32:25,200
Speaker 1: you know, you can get growth which gives you some

642
00:32:25,240 --> 00:32:28,160
Speaker 1: inflation protection plus a coupon. You know. I think equities

643
00:32:28,160 --> 00:32:30,640
Speaker 1: are still very compelling, and that's why. Actually, you know,

644
00:32:30,640 --> 00:32:33,600
Speaker 1: when people ask me about the market now recently, my

645
00:32:33,600 --> 00:32:35,480
Speaker 1: my word for the market, you know, where I was

646
00:32:35,520 --> 00:32:37,080
Speaker 1: a bit more concerned at the beginning of the years.

647
00:32:37,120 --> 00:32:39,840
Speaker 1: I think this market has potential. And I use that

648
00:32:39,880 --> 00:32:42,920
Speaker 1: word very carefully because it is the word deliberately. I

649
00:32:42,960 --> 00:32:45,080
Speaker 1: think you used to describe often a bad sports team

650
00:32:45,160 --> 00:32:48,120
Speaker 1: or an unruly child. Right, here's all these bad things

651
00:32:48,160 --> 00:32:50,800
Speaker 1: you see, But hey, this kid's got potential, right. I

652
00:32:50,840 --> 00:32:52,880
Speaker 1: think the markets a little bit like that. In a

653
00:32:52,880 --> 00:32:56,520
Speaker 1: lot of the issues are correctable that we're concerned about

654
00:32:56,600 --> 00:33:00,360
Speaker 1: or weighing down economics or geopolitics or you know, in

655
00:33:00,400 --> 00:33:03,000
Speaker 1: the way of monetary policy. So people should be a

656
00:33:03,040 --> 00:33:05,600
Speaker 1: little bit careful on the equity side to not swing

657
00:33:05,680 --> 00:33:08,720
Speaker 1: too far in sentiment particularly too far negative, because this

658
00:33:08,840 --> 00:33:10,520
Speaker 1: market could have a lot of potential when you look

659
00:33:10,520 --> 00:33:12,120
Speaker 1: at what you can buy, what you pay, and what

660
00:33:12,240 --> 00:33:14,440
Speaker 1: you get still when you pay for it in terms

661
00:33:14,480 --> 00:33:17,120
Speaker 1: of a coupon and growth, it's still quite attractive. And

662
00:33:17,160 --> 00:33:18,920
Speaker 1: then particularly when you start to look at some of

663
00:33:18,920 --> 00:33:22,600
Speaker 1: your alternatives for your capital. Let's talk about markets today

664
00:33:22,640 --> 00:33:27,400
Speaker 1: a little bit. Um. You mentioned earlier equities have potential.

665
00:33:28,000 --> 00:33:30,760
Speaker 1: Where do you think we are in the overall equity

666
00:33:30,800 --> 00:33:35,880
Speaker 1: cycle and does that impact the way you construct a portfolio? Yeah?

667
00:33:35,920 --> 00:33:37,680
Speaker 1: I think, uh, you know, now we're digging into the

668
00:33:37,680 --> 00:33:41,160
Speaker 1: trillion dollar question right right where is the world going? Uh?

669
00:33:41,200 --> 00:33:43,760
Speaker 1: You know, and and not to dodge it in classic faction,

670
00:33:44,160 --> 00:33:46,400
Speaker 1: but you know, we want to build a portfolio where

671
00:33:46,400 --> 00:33:48,120
Speaker 1: I don't need to know the answer to the question

672
00:33:48,160 --> 00:33:50,400
Speaker 1: number one. I think that's the key to investment success,

673
00:33:50,560 --> 00:33:54,400
Speaker 1: not having to answer these trillion dollar questions. And you can,

674
00:33:54,880 --> 00:33:57,560
Speaker 1: remarkably you can invest that way without having to need

675
00:33:57,600 --> 00:33:59,800
Speaker 1: to know that answer. But putting that aside, and just

676
00:34:00,480 --> 00:34:04,200
Speaker 1: which by the way, is arguably unknowable. Yeah, exactly, you know,

677
00:34:04,480 --> 00:34:07,840
Speaker 1: the the the unknown owns or however the Rumsfeld and

678
00:34:08,160 --> 00:34:10,600
Speaker 1: you know quote goes Uh, but if I think if

679
00:34:10,600 --> 00:34:12,520
Speaker 1: you step back, you know, honestly, in terms of looking

680
00:34:12,520 --> 00:34:14,920
Speaker 1: at the data and the facts, you know, uh, the

681
00:34:14,960 --> 00:34:18,320
Speaker 1: economic cycle you know has still good underpinnings if you

682
00:34:18,320 --> 00:34:20,040
Speaker 1: look at the fundamentals of the U. S economy. But

683
00:34:20,040 --> 00:34:22,239
Speaker 1: we gotta say we're later stage at an earlier stage, right,

684
00:34:22,239 --> 00:34:24,520
Speaker 1: I mean, I think just having some context of where

685
00:34:24,560 --> 00:34:26,160
Speaker 1: you are is the only thing you can kind of

686
00:34:26,200 --> 00:34:28,160
Speaker 1: get down to if you are top down. And I

687
00:34:28,160 --> 00:34:29,880
Speaker 1: think even that can help though as well. And that

688
00:34:30,200 --> 00:34:32,520
Speaker 1: I say that too in that you know, you've seen

689
00:34:32,600 --> 00:34:35,160
Speaker 1: this little fits and start around the market and in

690
00:34:35,239 --> 00:34:37,319
Speaker 1: this concern of well people shift out of growth to

691
00:34:37,400 --> 00:34:39,439
Speaker 1: value again. You know, we've also we've talked a little

692
00:34:39,440 --> 00:34:42,319
Speaker 1: about fixed income equity and passive active, but there's also

693
00:34:42,400 --> 00:34:45,440
Speaker 1: been this other battle going on or raging between styles

694
00:34:45,480 --> 00:34:47,879
Speaker 1: and growth and value. And value had had a long

695
00:34:47,920 --> 00:34:49,600
Speaker 1: period of success and then has now been in the

696
00:34:49,680 --> 00:34:52,759
Speaker 1: dulgrums and people are just waiting with bated breath for

697
00:34:52,800 --> 00:34:54,799
Speaker 1: this big rotation back. And the problem there I have

698
00:34:54,960 --> 00:34:56,440
Speaker 1: to your you know, sort of where are we in

699
00:34:56,440 --> 00:34:59,440
Speaker 1: the cycle question is the only place where you find

700
00:34:59,480 --> 00:35:01,719
Speaker 1: a bit of rel to cheapness comes with a lot

701
00:35:01,760 --> 00:35:04,560
Speaker 1: more commisure at risk in terms of cyclicality. So if

702
00:35:04,600 --> 00:35:07,200
Speaker 1: you want to wade into those waters here, you better

703
00:35:07,239 --> 00:35:09,880
Speaker 1: know the answer to the question you're asking me, because

704
00:35:09,920 --> 00:35:11,840
Speaker 1: that's the danger in investing when you look at a

705
00:35:11,880 --> 00:35:15,239
Speaker 1: p that might look relatively cheaper, but the E disappears.

706
00:35:15,480 --> 00:35:17,839
Speaker 1: So actually you thought you underpaid, but you ended up

707
00:35:17,920 --> 00:35:21,160
Speaker 1: overpaying because your E wasn't predictable and disappeared, which is

708
00:35:21,200 --> 00:35:23,000
Speaker 1: also a big piece of the risk you want to

709
00:35:23,000 --> 00:35:25,680
Speaker 1: mitigate with better quality businesses as a starting point, as

710
00:35:25,680 --> 00:35:27,640
Speaker 1: long as you know where the E is or should

711
00:35:27,760 --> 00:35:30,920
Speaker 1: roughly be, you can actually can start to strike a

712
00:35:30,960 --> 00:35:34,000
Speaker 1: more appropriate approximation of what that business is worth. But

713
00:35:34,280 --> 00:35:36,680
Speaker 1: when the E is uncertain, you've got to know where

714
00:35:36,680 --> 00:35:38,680
Speaker 1: you are in the cycle. And as I said in context,

715
00:35:38,719 --> 00:35:41,640
Speaker 1: you have to think we're later rather than earlier. So

716
00:35:41,840 --> 00:35:46,880
Speaker 1: if you can identify a company with a predictable, reliable E,

717
00:35:47,239 --> 00:35:51,720
Speaker 1: a reliable earning stream, does that company demands a premium

718
00:35:51,760 --> 00:35:54,239
Speaker 1: as an investor? Is it a higher valuation for that

719
00:35:54,760 --> 00:35:57,319
Speaker 1: earning stream? Yeah? I think that's you know, the other

720
00:35:57,640 --> 00:36:00,960
Speaker 1: human nature element. You know, we capitalize on, and I

721
00:36:00,960 --> 00:36:04,239
Speaker 1: think people need to capitalize on right we're, as people were,

722
00:36:04,239 --> 00:36:06,399
Speaker 1: sort of generally a bit cheap. Right. We're always looking

723
00:36:06,440 --> 00:36:09,040
Speaker 1: for a deal. Right. That's why sales work, signs work,

724
00:36:09,080 --> 00:36:12,319
Speaker 1: advertising works. Deal deal, deal x per cent off. It's

725
00:36:12,360 --> 00:36:15,319
Speaker 1: like a magnet, right, we are attracted to that. That's

726
00:36:15,440 --> 00:36:18,040
Speaker 1: human nature and what you miss and that when you

727
00:36:18,120 --> 00:36:21,640
Speaker 1: take that behavior aspect to the finance world into investing

728
00:36:21,800 --> 00:36:24,160
Speaker 1: is the reality that you get what you pay for

729
00:36:24,200 --> 00:36:27,479
Speaker 1: in life, very much so in investing. So to your question, yes,

730
00:36:27,520 --> 00:36:30,840
Speaker 1: you should pay more for a better business with a

731
00:36:30,920 --> 00:36:34,200
Speaker 1: longer tale of earnings growth. Because also one problem we

732
00:36:34,239 --> 00:36:36,839
Speaker 1: have in investing in the finance world is we're as

733
00:36:36,920 --> 00:36:39,960
Speaker 1: many smart people are in this industry and as sophisticated

734
00:36:39,960 --> 00:36:43,040
Speaker 1: as the industry is, it's actually still pretty rudimentary when

735
00:36:43,040 --> 00:36:45,640
Speaker 1: we look at important things like valuation. Right, people often

736
00:36:45,640 --> 00:36:49,160
Speaker 1: are looking at pe simplistically pe one or f y

737
00:36:49,280 --> 00:36:51,680
Speaker 1: one p out one year. There's a real lack of

738
00:36:51,719 --> 00:36:54,799
Speaker 1: imagination right in that in that analysis, right, because the

739
00:36:54,840 --> 00:36:57,600
Speaker 1: earnings where they are in five years should be what

740
00:36:57,640 --> 00:36:59,719
Speaker 1: really matters. Where they are in ten years should be

741
00:36:59,760 --> 00:37:03,280
Speaker 1: where what really matters. Right, So, if you're myopically stuck

742
00:37:03,440 --> 00:37:05,719
Speaker 1: in this world where you're looking at current p or

743
00:37:05,760 --> 00:37:07,960
Speaker 1: even just f y one or f y two p E,

744
00:37:08,520 --> 00:37:10,880
Speaker 1: you're really missing the forest for the trees there. You

745
00:37:10,920 --> 00:37:13,719
Speaker 1: need that E five and ten years out. And that's

746
00:37:13,719 --> 00:37:16,919
Speaker 1: where quote unquote paying up for it or paying more

747
00:37:17,040 --> 00:37:20,000
Speaker 1: for it today actually is delivering you a lot of

748
00:37:20,000 --> 00:37:23,319
Speaker 1: inherent investment value because that embedded value is out in

749
00:37:23,360 --> 00:37:25,400
Speaker 1: the tail, the tail of the growth of the business

750
00:37:25,400 --> 00:37:28,400
Speaker 1: and the sustainability of the business. That so, in other words,

751
00:37:28,600 --> 00:37:31,399
Speaker 1: you're a long term investor, is what you're saying here.

752
00:37:31,520 --> 00:37:33,600
Speaker 1: It's one of the only advantages you can have, right,

753
00:37:33,600 --> 00:37:35,760
Speaker 1: it's the basics. And when we stick to the basics,

754
00:37:35,760 --> 00:37:38,439
Speaker 1: and look, you know, call us you know, or say

755
00:37:38,560 --> 00:37:41,080
Speaker 1: maybe we have a lack of imagination because like all

756
00:37:41,160 --> 00:37:43,839
Speaker 1: great things, often great business is great fortunes. Right, we

757
00:37:43,840 --> 00:37:46,080
Speaker 1: we stole it from someone else. We we took it

758
00:37:46,120 --> 00:37:48,640
Speaker 1: from Warren Buffett. Right, we took the playbook and we

759
00:37:48,760 --> 00:37:51,680
Speaker 1: just try to apply discipline with a great team and

760
00:37:51,719 --> 00:37:53,600
Speaker 1: a stable team to that. I think that's where you

761
00:37:53,600 --> 00:37:56,799
Speaker 1: add a lot of value to and continuity knowledge is cumulative.

762
00:37:56,960 --> 00:37:59,279
Speaker 1: Having a great team intact for a long period of time.

763
00:38:00,040 --> 00:38:03,920
Speaker 1: All buying in buying into the investment religion being disciplined.

764
00:38:04,200 --> 00:38:06,319
Speaker 1: You have to be long term to your question, it's

765
00:38:06,440 --> 00:38:10,719
Speaker 1: it's the one basic advantage you need to exercise. Yet

766
00:38:10,840 --> 00:38:13,359
Speaker 1: we live in a world in an investment construct where

767
00:38:13,400 --> 00:38:16,400
Speaker 1: everything is happening to fight that right, Everything is trying

768
00:38:16,400 --> 00:38:20,120
Speaker 1: to break you down from the long term right. And

769
00:38:20,160 --> 00:38:22,759
Speaker 1: that's also why when people look about you're talking about

770
00:38:22,760 --> 00:38:25,120
Speaker 1: investing today, you know, has it gotten harder, easier? Actually,

771
00:38:25,160 --> 00:38:28,000
Speaker 1: you know, the dynamics are are quite similar. Once again,

772
00:38:28,000 --> 00:38:29,439
Speaker 1: you know, the more they change, the more they stay

773
00:38:29,480 --> 00:38:31,960
Speaker 1: the same. The environment has probably gotten more volatile and

774
00:38:32,000 --> 00:38:35,480
Speaker 1: more violent. So the advantage of buying hold or patience

775
00:38:35,600 --> 00:38:37,840
Speaker 1: is as prevalent, I think as it ever was. I

776
00:38:37,880 --> 00:38:40,680
Speaker 1: think the distractions are greater today and faster today than

777
00:38:40,680 --> 00:38:43,200
Speaker 1: ever before. But I have to ask you a question,

778
00:38:43,520 --> 00:38:50,000
Speaker 1: Um that you alluded to with um predictions. And I'm

779
00:38:50,000 --> 00:38:52,279
Speaker 1: not asking you to make a prediction. I'm asking you,

780
00:38:52,760 --> 00:38:56,680
Speaker 1: how do you, as a portfolio manager deal with what

781
00:38:56,960 --> 00:39:02,400
Speaker 1: seems like a never ending stream of geopolitical events occurring

782
00:39:02,920 --> 00:39:05,920
Speaker 1: in real time. So earlier in the fall, we had

783
00:39:05,920 --> 00:39:09,120
Speaker 1: the impeachment inquiry begin in the House of Representatives, you

784
00:39:09,239 --> 00:39:16,319
Speaker 1: had the Brexit slash. Um UK Supreme Court eleven two. Oh, repudiate,

785
00:39:16,800 --> 00:39:21,720
Speaker 1: Boris Johnson. You've been a global investor, a European investor,

786
00:39:21,800 --> 00:39:25,240
Speaker 1: now a US investor. Do you look at or even

787
00:39:25,280 --> 00:39:28,719
Speaker 1: think about these geopolitical events or are they just background

788
00:39:28,800 --> 00:39:33,200
Speaker 1: noise that do not affect the E five years out?

789
00:39:34,000 --> 00:39:36,799
Speaker 1: I think there's two pieces, you know. One, you really do,

790
00:39:36,920 --> 00:39:38,600
Speaker 1: as we've talked a lot about, have to be just

791
00:39:38,760 --> 00:39:41,279
Speaker 1: focused on the business, business, business. But on the other hand,

792
00:39:41,680 --> 00:39:43,400
Speaker 1: you do have to have a pulse, a finger on

793
00:39:43,440 --> 00:39:45,200
Speaker 1: the pulse you know, of the market where they're at,

794
00:39:45,200 --> 00:39:48,800
Speaker 1: because that's what can bring you greater opportunity, right understanding

795
00:39:49,400 --> 00:39:51,960
Speaker 1: what the general feeling and sentiment is and where that's

796
00:39:52,280 --> 00:39:55,960
Speaker 1: detached from real long term reality. So you do as

797
00:39:55,960 --> 00:39:57,719
Speaker 1: a portfolio manager and as investor. I think I have

798
00:39:57,800 --> 00:40:00,440
Speaker 1: to have your hand in both of those buckets, right,

799
00:40:00,480 --> 00:40:02,720
Speaker 1: the most important one though, still being get the business

800
00:40:02,800 --> 00:40:05,440
Speaker 1: right and the key to managing as you've said, and

801
00:40:05,480 --> 00:40:08,520
Speaker 1: we've done it quite successfully fortunately, all this as I

802
00:40:08,560 --> 00:40:11,200
Speaker 1: called it earlier, to this return to normalcy and volatility,

803
00:40:11,239 --> 00:40:14,920
Speaker 1: uncertainty with tariffs and trades and and and and political shifts.

804
00:40:15,160 --> 00:40:17,120
Speaker 1: You know, the best way we've been prepared for that

805
00:40:17,320 --> 00:40:20,600
Speaker 1: is having businesses that wouldn't be largely affected by that,

806
00:40:20,680 --> 00:40:22,640
Speaker 1: and that sort of shocked people sometimes, Yeah, you can

807
00:40:22,680 --> 00:40:25,240
Speaker 1: do that. Actually, you know, you you can have businesses

808
00:40:25,280 --> 00:40:27,560
Speaker 1: that are much less affected by the macro, much less

809
00:40:27,560 --> 00:40:30,960
Speaker 1: affected by the geopolitics, you know, much better, less affected

810
00:40:30,960 --> 00:40:34,799
Speaker 1: by shifts in disruption in certain industries. That's been your

811
00:40:34,840 --> 00:40:37,160
Speaker 1: best game plan over the last couple of years versus

812
00:40:37,160 --> 00:40:40,120
Speaker 1: trying to predict the next tweet and where tariffs are

813
00:40:40,160 --> 00:40:43,279
Speaker 1: going or the next outcome of the next election. Right,

814
00:40:43,480 --> 00:40:46,400
Speaker 1: that has been your road to success. But having your

815
00:40:46,440 --> 00:40:48,799
Speaker 1: finger on the pulse, as I mentioned though, does help

816
00:40:49,080 --> 00:40:51,440
Speaker 1: when you realize people are getting a bit mannic about it.

817
00:40:51,480 --> 00:40:53,480
Speaker 1: You know, we are we are people, and we get

818
00:40:53,480 --> 00:40:56,080
Speaker 1: frenzied and we get manic. So if you do follow this,

819
00:40:56,160 --> 00:40:58,319
Speaker 1: and we do, you know you follow closely. I read

820
00:40:58,360 --> 00:41:00,440
Speaker 1: three newspapers a day. I think you you have to

821
00:41:00,520 --> 00:41:03,520
Speaker 1: keep keep your finger in the flow of how public

822
00:41:03,560 --> 00:41:06,880
Speaker 1: sentiment is moving because you can use that to your advantage.

823
00:41:06,880 --> 00:41:09,120
Speaker 1: Back in the investment world, even with quality companies taking

824
00:41:09,120 --> 00:41:12,600
Speaker 1: advantage of excessive pestimism or optimism. What about something that

825
00:41:13,040 --> 00:41:16,080
Speaker 1: UH started regionally and now is looking like it might

826
00:41:16,120 --> 00:41:19,759
Speaker 1: become global something like negative interest rates. Japan has had

827
00:41:19,760 --> 00:41:21,880
Speaker 1: them for a while, they seem to be now expanding.

828
00:41:22,280 --> 00:41:25,960
Speaker 1: In Europe they are literally trillions of dollars with a

829
00:41:26,040 --> 00:41:29,839
Speaker 1: negative coupon. Can this come to the United States? Do

830
00:41:29,920 --> 00:41:32,560
Speaker 1: you worry about whether or not this will have an

831
00:41:32,600 --> 00:41:36,640
Speaker 1: impact on your portfolio? Yeah? I'm much more worried longer

832
00:41:36,760 --> 00:41:39,160
Speaker 1: term about binary events, you know, than I need to

833
00:41:39,239 --> 00:41:41,840
Speaker 1: because of our style of day to day or cyclical events.

834
00:41:42,320 --> 00:41:45,120
Speaker 1: And there's two I worry about one. I think, you know,

835
00:41:45,280 --> 00:41:47,000
Speaker 1: there is no such thing as a free lunch in

836
00:41:47,040 --> 00:41:51,840
Speaker 1: this this this these experiments and exaggeration and extremism and

837
00:41:51,880 --> 00:41:55,680
Speaker 1: monetary policy, they have a payback, right, and we all

838
00:41:55,840 --> 00:41:57,080
Speaker 1: we all kind of have an idea of what it

839
00:41:57,080 --> 00:41:59,680
Speaker 1: could be, but we won't guess it exactly and will

840
00:41:59,719 --> 00:42:02,520
Speaker 1: probably miss out on the magnitude of it. But there

841
00:42:02,560 --> 00:42:05,640
Speaker 1: will be a payback for the negative interest rate environment, right.

842
00:42:05,680 --> 00:42:08,160
Speaker 1: There is no free lunch on that. So that going

843
00:42:08,239 --> 00:42:10,160
Speaker 1: to be you know, I think in the bond market

844
00:42:10,200 --> 00:42:12,200
Speaker 1: it's going to be very difficult because you know, this

845
00:42:12,280 --> 00:42:14,400
Speaker 1: is often where we don't sort of see around the corner, right,

846
00:42:14,440 --> 00:42:17,560
Speaker 1: We're focused on the near term goals. You know, a

847
00:42:17,640 --> 00:42:20,600
Speaker 1: major central banking goal, right is to spur inflation, right,

848
00:42:20,640 --> 00:42:23,840
Speaker 1: and let's you know, if if God forbid, they're successful

849
00:42:23,880 --> 00:42:26,560
Speaker 1: in that, you're going to decimate coupon investors, right. So

850
00:42:26,840 --> 00:42:28,880
Speaker 1: it's in order to achieve their goal, they're actually going

851
00:42:28,960 --> 00:42:30,919
Speaker 1: to cause the great damage at the end of the day.

852
00:42:31,280 --> 00:42:33,960
Speaker 1: So I think that is clearly still the problem. You know,

853
00:42:34,000 --> 00:42:35,880
Speaker 1: there is this tendency, and I know it's sort of

854
00:42:35,880 --> 00:42:38,520
Speaker 1: been like the you know, screaming fire in a crowded

855
00:42:38,560 --> 00:42:40,400
Speaker 1: movie theater for a while. You know, fear of inflation,

856
00:42:40,440 --> 00:42:42,839
Speaker 1: fear of inflation, fear of inflation. I can't tell you

857
00:42:43,040 --> 00:42:44,520
Speaker 1: when it's going to happen, but I can tell you

858
00:42:44,520 --> 00:42:47,200
Speaker 1: there's great effort to do it, and there are tools

859
00:42:47,239 --> 00:42:48,799
Speaker 1: to really do it if you want to go to

860
00:42:48,840 --> 00:42:52,040
Speaker 1: extreme end. So that will end up in a poor payback,

861
00:42:52,239 --> 00:42:55,520
Speaker 1: I think for investors who are in negative yielding security,

862
00:42:55,600 --> 00:42:58,399
Speaker 1: and I think that's a problem. The other issue I think,

863
00:42:58,480 --> 00:43:01,200
Speaker 1: aside from that in the Interest rate Act drop is

864
00:43:01,200 --> 00:43:02,960
Speaker 1: what we're facing in terms of I call it this

865
00:43:03,000 --> 00:43:05,560
Speaker 1: sort of Balkanization of the world. You know, what we

866
00:43:05,640 --> 00:43:09,320
Speaker 1: see and playing out in geopolitics is not about terrorists

867
00:43:09,400 --> 00:43:11,879
Speaker 1: it's not about a current account deficit, you know, has

868
00:43:11,920 --> 00:43:15,640
Speaker 1: wider framifications. If we continue, we're sort of pushing this world.

869
00:43:15,719 --> 00:43:17,640
Speaker 1: And I'm not saying continue in terms of a political

870
00:43:17,640 --> 00:43:19,680
Speaker 1: sense of being right or wrong, but just the path

871
00:43:19,719 --> 00:43:22,160
Speaker 1: we're on generally speaking, which I think doesn't have to

872
00:43:22,200 --> 00:43:25,400
Speaker 1: do with just one present or one admits, meaning deglobalization

873
00:43:25,680 --> 00:43:29,279
Speaker 1: or something more special, not necessarily a total deglobalization. But

874
00:43:29,360 --> 00:43:31,440
Speaker 1: you you split the world into two spheres, you know,

875
00:43:31,480 --> 00:43:33,279
Speaker 1: they'll be the US Western sphere, and then they'll be

876
00:43:33,360 --> 00:43:35,719
Speaker 1: the Chinese sphere, right, and they'll be people who have

877
00:43:35,760 --> 00:43:37,120
Speaker 1: to make a choice or countries that have to make

878
00:43:37,120 --> 00:43:39,200
Speaker 1: a choice of which sandbox you want to play in? Right,

879
00:43:39,239 --> 00:43:40,480
Speaker 1: the rules are going to be different in the two

880
00:43:40,520 --> 00:43:42,920
Speaker 1: different sandboxes, which is where the tension is today. Right,

881
00:43:43,000 --> 00:43:46,080
Speaker 1: the the US and the Lightheisers are saying, look, you're

882
00:43:46,080 --> 00:43:49,040
Speaker 1: in our sandbox. There's rules to playing in our sandbox,

883
00:43:49,360 --> 00:43:50,960
Speaker 1: and you haven't been following the rules. You know, we

884
00:43:51,080 --> 00:43:52,960
Speaker 1: let you go for a while, but now you need

885
00:43:53,040 --> 00:43:54,480
Speaker 1: to follow the rules or you gotta get out of

886
00:43:54,480 --> 00:43:57,920
Speaker 1: the sandbox. As the extreme sort of outcome, and the outcome,

887
00:43:58,040 --> 00:44:00,960
Speaker 1: as I said, the extreme result could be a balkanization

888
00:44:01,000 --> 00:44:02,680
Speaker 1: where they say, look, we'll get out of your sandbox.

889
00:44:02,680 --> 00:44:05,240
Speaker 1: Who wants to come in our sandbox? You know? And

890
00:44:05,239 --> 00:44:07,759
Speaker 1: and then you have this whole ecosystem around Asia, word

891
00:44:07,800 --> 00:44:10,319
Speaker 1: becomes a bigger shoe. Like Taiwan. They're in a pickle, right,

892
00:44:10,320 --> 00:44:13,719
Speaker 1: which sandbox are you in there? South Korea? Which sandbox

893
00:44:13,760 --> 00:44:16,840
Speaker 1: are you in there? That's alongside interest rates, that's a

894
00:44:16,960 --> 00:44:19,400
Speaker 1: These are both longer term issues, clearly, but those are

895
00:44:19,520 --> 00:44:23,640
Speaker 1: longer term binary issues that if anything, worry me a

896
00:44:23,640 --> 00:44:26,279
Speaker 1: little bit, right. It makes the world a bit more complicated.

897
00:44:26,320 --> 00:44:29,279
Speaker 1: It makes the success or collective success a lot of

898
00:44:29,360 --> 00:44:32,480
Speaker 1: us could have had a lot harder to achieve. Uh,

899
00:44:32,520 --> 00:44:36,120
Speaker 1: it's very disruptive and and and in the downside, as

900
00:44:36,120 --> 00:44:37,880
Speaker 1: I said, mostly is we just miss out on what

901
00:44:37,920 --> 00:44:39,759
Speaker 1: we could have had, you know, in a collective world.

902
00:44:39,800 --> 00:44:41,360
Speaker 1: But it look at it's life. It is what it is.

903
00:44:41,360 --> 00:44:43,439
Speaker 1: I in a passing judgment whether it's good or about

904
00:44:43,440 --> 00:44:45,520
Speaker 1: it either, you know, I think it's just the reality.

905
00:44:45,680 --> 00:44:47,560
Speaker 1: And that's investing what we have to deal with reality,

906
00:44:47,600 --> 00:44:50,080
Speaker 1: not hopes and dreams. Hope isn't a strategy, as they say,

907
00:44:50,080 --> 00:44:52,160
Speaker 1: We've got to deal with reality and the reality is

908
00:44:52,160 --> 00:44:55,200
Speaker 1: we're fracturing. So so let's talk about strategies. Since you

909
00:44:55,280 --> 00:45:00,239
Speaker 1: mentioned that Von Tobel has six broad investment strategies, what

910
00:45:00,400 --> 00:45:04,000
Speaker 1: areas do you focus on within those six and how

911
00:45:04,080 --> 00:45:08,080
Speaker 1: much of this is global, European, Asian and US or

912
00:45:08,200 --> 00:45:13,440
Speaker 1: more specifically different approaches by style. This is where we're

913
00:45:13,480 --> 00:45:16,480
Speaker 1: actually a little bit unique. You know, it's hard to

914
00:45:16,480 --> 00:45:18,680
Speaker 1: say you're unique and different in the asset management industry.

915
00:45:18,840 --> 00:45:23,000
Speaker 1: Poor fully managers analysts products. It seems pretty homogeneous, right,

916
00:45:23,040 --> 00:45:25,560
Speaker 1: But our team is is sort of rare and unique

917
00:45:25,560 --> 00:45:28,440
Speaker 1: in that the same team manage manages those six strategies,

918
00:45:28,480 --> 00:45:30,200
Speaker 1: you know, not just myself sitting at the head of it.

919
00:45:30,239 --> 00:45:33,080
Speaker 1: I have a collective group of really talented individuals who

920
00:45:33,239 --> 00:45:37,279
Speaker 1: support all these products simultaneously and as analysts. And there's

921
00:45:37,280 --> 00:45:39,640
Speaker 1: a lot of investment value in that having the same

922
00:45:39,680 --> 00:45:42,200
Speaker 1: analyst work on a US equity fund and an emerging

923
00:45:42,239 --> 00:45:44,239
Speaker 1: market's equity fund. And it's the way we've been doing

924
00:45:44,239 --> 00:45:46,840
Speaker 1: it for two decades. Same skill sets can apply anywhere

925
00:45:46,840 --> 00:45:48,880
Speaker 1: in the world, and the world in the businesses compete

926
00:45:48,880 --> 00:45:52,800
Speaker 1: across geography surprise surprise, right, and and analyzing a fundamental

927
00:45:52,840 --> 00:45:54,800
Speaker 1: business of whether it's a great business and average or

928
00:45:54,800 --> 00:45:58,120
Speaker 1: a poor quality business. Perspective is the key to that, right.

929
00:45:58,200 --> 00:46:01,279
Speaker 1: Life is all about perspective, and invest things about perspective too,

930
00:46:01,719 --> 00:46:04,080
Speaker 1: you know, as the old saying goes, Also, you know,

931
00:46:04,160 --> 00:46:06,040
Speaker 1: to a man with a hammer, everything looks like a nail.

932
00:46:06,120 --> 00:46:08,359
Speaker 1: So you don't want to pigeonhole people, right. You need

933
00:46:08,440 --> 00:46:10,440
Speaker 1: them to see a lot of nails. You need to

934
00:46:10,480 --> 00:46:14,160
Speaker 1: see broad perspective. So being global and structure as analysts

935
00:46:14,640 --> 00:46:18,120
Speaker 1: really helps the scrutinization of what's a great business because

936
00:46:18,120 --> 00:46:20,160
Speaker 1: we can look at one in Indonesia, and we can

937
00:46:20,160 --> 00:46:22,560
Speaker 1: look at one in Ohio and try to figure out

938
00:46:22,600 --> 00:46:24,920
Speaker 1: what are the nuts and bolts that make these great businesses,

939
00:46:24,960 --> 00:46:27,880
Speaker 1: And then we're totally agnostic to where it is because

940
00:46:27,880 --> 00:46:30,319
Speaker 1: we have a group of portfolios where that name will

941
00:46:30,320 --> 00:46:33,080
Speaker 1: then try to compete to get entrance into and all

942
00:46:33,120 --> 00:46:36,560
Speaker 1: of our portfolios from a regional basis, our competitions for

943
00:46:36,640 --> 00:46:40,520
Speaker 1: capital our universe eliminates. It creates a smaller pond. Out

944
00:46:40,520 --> 00:46:43,399
Speaker 1: of the pond comes a smaller subsegment of names. Out

945
00:46:43,400 --> 00:46:46,040
Speaker 1: of those names, we build regional portfolios. The best of

946
00:46:46,120 --> 00:46:49,560
Speaker 1: those investment opportunities compete up the pyramid up to the

947
00:46:49,560 --> 00:46:52,000
Speaker 1: top to our global portfolio. So it's not just an

948
00:46:52,000 --> 00:46:55,600
Speaker 1: amalgamation of the geographic portfolios, but it's the best of

949
00:46:55,640 --> 00:46:58,359
Speaker 1: the best of those names competing for each other and

950
00:46:58,480 --> 00:47:01,319
Speaker 1: having the proper you know, risk diversification alongside of it.

951
00:47:01,360 --> 00:47:03,000
Speaker 1: What the businesses do where they do it, so the

952
00:47:03,040 --> 00:47:07,279
Speaker 1: fundamental risk is contained and managed. That that's absolutely fascinating.

953
00:47:07,760 --> 00:47:11,239
Speaker 1: The one question I have to ask about that are

954
00:47:11,239 --> 00:47:15,960
Speaker 1: there any particular geographic regions around the world that you

955
00:47:16,120 --> 00:47:21,560
Speaker 1: find are either misunderstood by investors or for reasons that

956
00:47:21,640 --> 00:47:27,480
Speaker 1: aren't especially clear, significantly underinvested. When you look around the world,

957
00:47:28,000 --> 00:47:31,200
Speaker 1: I think the emerging markets is the class quite frankly,

958
00:47:31,520 --> 00:47:34,080
Speaker 1: and uh, you know, I've been actually talking to some

959
00:47:34,120 --> 00:47:36,120
Speaker 1: clients recently about this. I'm gonna bring up a name

960
00:47:36,160 --> 00:47:38,120
Speaker 1: you might know, the name Elmer Wheeler, right, I don't

961
00:47:38,120 --> 00:47:39,960
Speaker 1: know if you've ever familiar. You know, he was around

962
00:47:40,000 --> 00:47:42,040
Speaker 1: in the nineteen thirties and the depression. He was a

963
00:47:42,040 --> 00:47:44,319
Speaker 1: newspaper reporter in a near and dear to your heart,

964
00:47:44,560 --> 00:47:46,880
Speaker 1: and he was fired in the depression as a newspaper

965
00:47:46,880 --> 00:47:49,160
Speaker 1: reporter because his boss said, I don't need any reporters.

966
00:47:49,160 --> 00:47:52,200
Speaker 1: Amore I needs salespeople, and Elmer Wheeler, you know, as

967
00:47:52,239 --> 00:47:53,920
Speaker 1: a pragmatic guy, said all right, I'm gonna be a

968
00:47:53,960 --> 00:47:57,160
Speaker 1: great salesperson, and he coined the term that sort of

969
00:47:57,200 --> 00:47:58,760
Speaker 1: a lot of us know today is an old fashioned

970
00:47:58,760 --> 00:48:02,680
Speaker 1: marketing term. Don't sell the stake, sell the sizzle, right,

971
00:48:02,760 --> 00:48:04,600
Speaker 1: And it's sort of a classic you think about how

972
00:48:04,760 --> 00:48:07,399
Speaker 1: marketing has evolved, a classic thought, right, don't sell the stake,

973
00:48:07,719 --> 00:48:10,480
Speaker 1: sell the sizzle. And I think the misunderstanding to your

974
00:48:10,560 --> 00:48:13,480
Speaker 1: question on emerging markets is largely because there's been a

975
00:48:13,480 --> 00:48:16,239
Speaker 1: lot of sizzle sold. You know, emerging markets has a

976
00:48:16,280 --> 00:48:19,080
Speaker 1: great sizzle story. You know, people consume less of this

977
00:48:19,160 --> 00:48:21,319
Speaker 1: and they'll consume more of that. You know, they're they're

978
00:48:21,360 --> 00:48:24,120
Speaker 1: these poor people, they'll get richer, you know, all these elements.

979
00:48:24,160 --> 00:48:27,080
Speaker 1: It's a great sizzle right on top of everything else.

980
00:48:27,520 --> 00:48:30,359
Speaker 1: The new expensive world. It plays right into it. And

981
00:48:30,520 --> 00:48:33,880
Speaker 1: I think that's been fundamentally wrong in that not that

982
00:48:33,920 --> 00:48:37,239
Speaker 1: emerging markets aren't attractive, but it should be about the

983
00:48:37,320 --> 00:48:39,759
Speaker 1: stake of emerging markets, and that you should go to

984
00:48:39,840 --> 00:48:42,439
Speaker 1: emerging markets, and you really should because there are great

985
00:48:42,480 --> 00:48:46,080
Speaker 1: businesses there. I forget the sizzle story. And and let's

986
00:48:46,120 --> 00:48:49,000
Speaker 1: also take the fact into consideration that if you bought

987
00:48:49,040 --> 00:48:51,880
Speaker 1: the sizzle story, which if you sort of play that

988
00:48:51,920 --> 00:48:54,800
Speaker 1: out in a number in GDP growth, right, the emerging

989
00:48:54,840 --> 00:48:57,480
Speaker 1: markets take out China and India over the last two decades,

990
00:48:57,520 --> 00:49:01,080
Speaker 1: basically their composition or percentage of GDP has been flat.

991
00:49:01,120 --> 00:49:03,520
Speaker 1: So you haven't seen the sizzle sizzle, sizzle story outside

992
00:49:03,520 --> 00:49:05,520
Speaker 1: of India and China. So if you bought the sizzle,

993
00:49:05,560 --> 00:49:07,719
Speaker 1: you've been disappointed. Good news, as I mentioned earlier, as

994
00:49:07,760 --> 00:49:10,640
Speaker 1: GDP growth isn't necessarily correlated with stock returns. So if

995
00:49:10,680 --> 00:49:13,200
Speaker 1: you've got the steak right, if you've got the great

996
00:49:13,239 --> 00:49:17,280
Speaker 1: businesses right, and what's unique and misunderstood about emerging markets

997
00:49:17,280 --> 00:49:19,520
Speaker 1: I think is there's actually steak there you can't get

998
00:49:19,520 --> 00:49:22,440
Speaker 1: in the developed markets. There's actually businesses and business models

999
00:49:22,840 --> 00:49:25,600
Speaker 1: you can't get back in the developed markets, And that

1000
00:49:25,719 --> 00:49:28,320
Speaker 1: to me is why you should be in emerging markets.

1001
00:49:28,360 --> 00:49:30,640
Speaker 1: It should be about the businesses, as all investing I

1002
00:49:30,680 --> 00:49:33,279
Speaker 1: think should be, as we've talked about today. So go

1003
00:49:33,400 --> 00:49:36,319
Speaker 1: to emerging markets for the steak, not the sizzle. Go

1004
00:49:36,400 --> 00:49:38,960
Speaker 1: there because there's great businesses you can't get in the

1005
00:49:39,000 --> 00:49:41,600
Speaker 1: SMP five hundred, or you can't get elsewhere. I think

1006
00:49:41,600 --> 00:49:44,839
Speaker 1: that's a big misunderstanding, stiff, quite fascinating. Can you stick

1007
00:49:44,880 --> 00:49:46,400
Speaker 1: around a little bit. I have a few more questions

1008
00:49:46,400 --> 00:49:49,800
Speaker 1: for you. Absolutely, we have been speaking with Matt Benkendorf,

1009
00:49:50,000 --> 00:49:54,319
Speaker 1: ce IO of Untomble Quality Growth. If you enjoy this conversation,

1010
00:49:54,440 --> 00:49:56,959
Speaker 1: be sure and come back for the podcast extras, where

1011
00:49:56,960 --> 00:50:00,160
Speaker 1: we keep the tape rolling and continue discussing all all

1012
00:50:00,200 --> 00:50:04,000
Speaker 1: things quality growth. You can find that at Apple iTunes,

1013
00:50:04,040 --> 00:50:08,840
Speaker 1: Google podcast stitchers, Spotify, wherever your final podcasts are sold.

1014
00:50:09,280 --> 00:50:12,960
Speaker 1: We love your comments, feedback and suggestions right to us

1015
00:50:13,120 --> 00:50:16,839
Speaker 1: at m IB podcast at Bloomberg dot net. Be sure

1016
00:50:16,840 --> 00:50:19,600
Speaker 1: to give us a review on Apple iTunes. You can

1017
00:50:19,680 --> 00:50:23,520
Speaker 1: check out my weekly column on Bloomberg dot com. Sign

1018
00:50:23,600 --> 00:50:26,480
Speaker 1: up from my daily reads at Rid Halts dot com.

1019
00:50:26,480 --> 00:50:29,560
Speaker 1: Follow me on Twitter at Rid Halts. I'm Barry Ritolts.

1020
00:50:29,760 --> 00:50:33,000
Speaker 1: You are listening to Masters in Business on Bloomberg Radio.

1021
00:50:35,440 --> 00:50:37,680
Speaker 1: Welcome to the podcast, Matt. Thank you so much for

1022
00:50:37,760 --> 00:50:41,640
Speaker 1: doing this. I have to tell you, I find your

1023
00:50:41,680 --> 00:50:46,120
Speaker 1: approach and what Untable Quality Growth does to be kind

1024
00:50:46,160 --> 00:50:49,640
Speaker 1: of unique and interesting. I know everybody thinks they're unique,

1025
00:50:49,880 --> 00:50:53,920
Speaker 1: but really, the the approach you guys take especially with

1026
00:50:54,000 --> 00:50:57,840
Speaker 1: a single investment committee investing all around the world Europe, Asia,

1027
00:50:57,880 --> 00:51:02,600
Speaker 1: Global and US that it's kind of rare. How has

1028
00:51:02,719 --> 00:51:06,480
Speaker 1: this structure worked out in terms of your your various

1029
00:51:06,560 --> 00:51:10,320
Speaker 1: UM funds performances? Yeah, I think you know, two keys

1030
00:51:10,320 --> 00:51:12,839
Speaker 1: there were quite proud of our results, right, and we're

1031
00:51:12,880 --> 00:51:15,200
Speaker 1: quite proud one and what we've achieved in terms of

1032
00:51:15,239 --> 00:51:18,080
Speaker 1: annualized out performance of a couple hundred basis points across

1033
00:51:18,160 --> 00:51:21,600
Speaker 1: different geographies, so that the style and philosophy has achieved

1034
00:51:21,600 --> 00:51:25,160
Speaker 1: alpha generation in places like Europe and the US and

1035
00:51:25,400 --> 00:51:30,000
Speaker 1: emerging markets and global equity simultaneously. That's you've maybe surprising, right,

1036
00:51:30,480 --> 00:51:32,560
Speaker 1: one mouse trap does work. Actually, you don't need a

1037
00:51:32,560 --> 00:51:34,719
Speaker 1: different emerging markets mouse trap, which is also I think

1038
00:51:34,719 --> 00:51:36,360
Speaker 1: a bit of a fallacy. Sometimes you don't need a

1039
00:51:36,360 --> 00:51:38,919
Speaker 1: different mouse trap for this market. You need one good

1040
00:51:38,920 --> 00:51:41,600
Speaker 1: style approach. You just need discipline then in a good team.

1041
00:51:41,680 --> 00:51:45,840
Speaker 1: How how rare is that approach where one team is

1042
00:51:45,880 --> 00:51:48,680
Speaker 1: doing US and the same team is doing emerging market

1043
00:51:49,040 --> 00:51:52,759
Speaker 1: and Asia and Europe and global investing from the same

1044
00:51:52,760 --> 00:51:55,719
Speaker 1: group of analysts. I think it was extremely rare. Two

1045
00:51:55,760 --> 00:51:59,279
Speaker 1: decades ago, I think more of started to move that

1046
00:51:59,320 --> 00:52:01,600
Speaker 1: way A little it in more recent years, probably the

1047
00:52:01,719 --> 00:52:03,960
Speaker 1: last five or seven years, just because businesses have launched

1048
00:52:04,000 --> 00:52:06,160
Speaker 1: and then they've launched simultaneous products, so they've just sort

1049
00:52:06,160 --> 00:52:09,239
Speaker 1: of had technology has to admit it easier to sit

1050
00:52:09,280 --> 00:52:11,319
Speaker 1: in the US and be global as opposed to the

1051
00:52:11,320 --> 00:52:14,799
Speaker 1: old days where boots on the ground were required. Yeah. Absolutely,

1052
00:52:14,840 --> 00:52:17,200
Speaker 1: And as you know, businesses have developed now, and those

1053
00:52:17,200 --> 00:52:20,280
Speaker 1: analysts found this false wall between you know, the Asian

1054
00:52:20,280 --> 00:52:22,360
Speaker 1: tech analysts and the US tech analysts to be a

1055
00:52:22,440 --> 00:52:25,200
Speaker 1: little bit, you know, lower than the wall used to seem.

1056
00:52:25,239 --> 00:52:27,279
Speaker 1: I think that's led people towards our model, but I

1057
00:52:27,320 --> 00:52:30,400
Speaker 1: think I still think the model is more rare. I

1058
00:52:30,440 --> 00:52:32,560
Speaker 1: think it does add a lot of value for investors

1059
00:52:32,600 --> 00:52:34,680
Speaker 1: at the end of the day, particularly as I always

1060
00:52:34,719 --> 00:52:36,920
Speaker 1: have to be careful with our investment philosophy, you know.

1061
00:52:36,960 --> 00:52:40,640
Speaker 1: I think that's something people often misunderstood. You misunderstand rather,

1062
00:52:40,920 --> 00:52:42,920
Speaker 1: you know, they can find something that works, but certain

1063
00:52:42,960 --> 00:52:46,040
Speaker 1: things that work work in the right situation, right and

1064
00:52:46,040 --> 00:52:48,120
Speaker 1: and people often try to take that what works and

1065
00:52:48,160 --> 00:52:49,879
Speaker 1: put it in the wrong situation and they wonder why

1066
00:52:49,920 --> 00:52:53,560
Speaker 1: it failed. So when you are very narrow and restrictive

1067
00:52:53,560 --> 00:52:55,560
Speaker 1: in what you're trying to look at and what you're

1068
00:52:55,600 --> 00:52:57,640
Speaker 1: only willing to ever buy. You know, when you think

1069
00:52:57,640 --> 00:52:59,840
Speaker 1: about risk the way we think about it, when you

1070
00:53:00,000 --> 00:53:02,600
Speaker 1: think knowledge is cumulative, when you have longer term holding periods,

1071
00:53:02,600 --> 00:53:06,000
Speaker 1: when you have lower turnover, right, you can really then

1072
00:53:06,160 --> 00:53:09,319
Speaker 1: do this successfully with one team. You know, we have

1073
00:53:09,440 --> 00:53:11,960
Speaker 1: across all of our portfolios, you know, a hundred and

1074
00:53:12,000 --> 00:53:15,400
Speaker 1: sixty odd names right in the turnover of names annually

1075
00:53:15,480 --> 00:53:19,640
Speaker 1: is maybe so with a team of twenty one, you

1076
00:53:19,680 --> 00:53:22,000
Speaker 1: don't need a whole lot of new idea generation. We

1077
00:53:22,040 --> 00:53:24,960
Speaker 1: do have good new idea generation. You do have to

1078
00:53:24,960 --> 00:53:27,719
Speaker 1: sell in harvest names. We have evaluation sensitivity and a

1079
00:53:27,760 --> 00:53:30,200
Speaker 1: strict valuation approach, so you do have to replace names

1080
00:53:30,200 --> 00:53:33,560
Speaker 1: that do reach fair value. But the process and the

1081
00:53:33,560 --> 00:53:35,920
Speaker 1: philosophy is what enables us to have success on a

1082
00:53:35,960 --> 00:53:37,880
Speaker 1: global basis with the structure. I don't know if that

1083
00:53:37,960 --> 00:53:40,880
Speaker 1: necessarily would work for people who are more benchmark oriented,

1084
00:53:40,960 --> 00:53:42,160
Speaker 1: right they just want to plus or mind us the

1085
00:53:42,200 --> 00:53:44,440
Speaker 1: benchmark wade in country and sector. They might need a

1086
00:53:44,440 --> 00:53:45,719
Speaker 1: whole lot more people, and they might need to be

1087
00:53:45,719 --> 00:53:49,000
Speaker 1: a little more focused from a strategic standpoint of certain products.

1088
00:53:49,040 --> 00:53:51,560
Speaker 1: I don't know, it's not it's not my you know approach,

1089
00:53:51,640 --> 00:53:53,480
Speaker 1: but I think for us it works very well. So

1090
00:53:53,480 --> 00:53:57,720
Speaker 1: so a hundred and sixty names, constantly servicing new names,

1091
00:53:58,040 --> 00:54:01,920
Speaker 1: how do you make the determination? And so we went earlier,

1092
00:54:01,960 --> 00:54:04,360
Speaker 1: we went over negative screen, get rid of stuff you

1093
00:54:04,400 --> 00:54:07,800
Speaker 1: don't want to look at, a handful of fundamental bottoms

1094
00:54:07,880 --> 00:54:12,160
Speaker 1: up approach to narrow your list. And and I'm assuming

1095
00:54:12,200 --> 00:54:15,360
Speaker 1: that the top of that list is still a pretty

1096
00:54:15,480 --> 00:54:19,600
Speaker 1: big grouping how do you make the determination? This is

1097
00:54:19,719 --> 00:54:23,239
Speaker 1: the best idea of that group because it feels like

1098
00:54:23,360 --> 00:54:26,120
Speaker 1: some of that is quantitative, but a lot of it

1099
00:54:26,200 --> 00:54:30,080
Speaker 1: is subjective and a little squishy. Yeah, there's two elements.

1100
00:54:30,120 --> 00:54:33,479
Speaker 1: I think. One that's often underappreciated when people think about

1101
00:54:33,520 --> 00:54:35,759
Speaker 1: what you buy, and they often think of it very

1102
00:54:35,840 --> 00:54:39,400
Speaker 1: much in a clean slate approach, right. But one is

1103
00:54:39,680 --> 00:54:43,839
Speaker 1: perspective once again in that we have a live portfolio,

1104
00:54:44,000 --> 00:54:47,239
Speaker 1: and that live portfolio isn't sort of an organic organism, right,

1105
00:54:47,280 --> 00:54:50,680
Speaker 1: It's an accumulation of thousands of decisions already that have

1106
00:54:50,760 --> 00:54:52,920
Speaker 1: been built upon each other. Why we own what we

1107
00:54:52,960 --> 00:54:57,160
Speaker 1: own today and what size is a consequence of millions

1108
00:54:57,200 --> 00:55:00,040
Speaker 1: of interacting things. So that I think is im and

1109
00:55:00,239 --> 00:55:03,400
Speaker 1: to understand as your litmus tests or starting point be

1110
00:55:03,480 --> 00:55:07,200
Speaker 1: meaning the new new idea has to be a fit relative.

1111
00:55:07,440 --> 00:55:12,120
Speaker 1: You don't want excess concentration geographically, sector, whatever, or how

1112
00:55:12,200 --> 00:55:16,400
Speaker 1: does the existing portfolio help decide what the next idea

1113
00:55:16,440 --> 00:55:19,120
Speaker 1: that comes in is. That's what you mentioned is the

1114
00:55:19,200 --> 00:55:22,880
Speaker 1: latter I would mention before that, though, the key determinant

1115
00:55:22,960 --> 00:55:26,960
Speaker 1: is this new idea or business, how is it better

1116
00:55:27,000 --> 00:55:30,080
Speaker 1: than what we already own? That's the first litmus test.

1117
00:55:30,280 --> 00:55:34,839
Speaker 1: We've accumulated over time via several decisions, this group of

1118
00:55:34,840 --> 00:55:37,880
Speaker 1: concentration of these businesses that we like for these reasons.

1119
00:55:37,880 --> 00:55:41,040
Speaker 1: So now when we evaluate this next business there, how

1120
00:55:41,440 --> 00:55:43,880
Speaker 1: is it better than the weaker links in the current

1121
00:55:43,920 --> 00:55:46,920
Speaker 1: portfolio in terms of their relative lower quality versus the

1122
00:55:47,000 --> 00:55:50,320
Speaker 1: highest quality names in the portfolio? That is a litmus

1123
00:55:50,320 --> 00:55:52,800
Speaker 1: test is very important to the long term investment journey,

1124
00:55:52,840 --> 00:55:55,719
Speaker 1: you know, holding yourself to get over that hurdle over time.

1125
00:55:55,719 --> 00:55:58,560
Speaker 1: I think that's one piece first, and then the other

1126
00:55:58,640 --> 00:56:01,759
Speaker 1: pieces you point out then is okay, if you hold

1127
00:56:01,760 --> 00:56:04,000
Speaker 1: that first hard crew test there where you've got to

1128
00:56:04,040 --> 00:56:06,719
Speaker 1: replace a name if it's going to gain entrance, right,

1129
00:56:07,400 --> 00:56:11,160
Speaker 1: Maybe sometimes it isn't about replacement. This business is equally

1130
00:56:11,200 --> 00:56:14,720
Speaker 1: as good as a name we already owned, but it

1131
00:56:14,840 --> 00:56:17,719
Speaker 1: offers something else from a risk dynamic, which is nice.

1132
00:56:17,760 --> 00:56:20,520
Speaker 1: And that's where we think about risk very fundamentally. I

1133
00:56:20,560 --> 00:56:22,920
Speaker 1: think there's way too much focus on the Greek letters

1134
00:56:23,000 --> 00:56:24,640
Speaker 1: as I as I call them the bait as, the

1135
00:56:24,680 --> 00:56:27,400
Speaker 1: standard deviations, et cetera. I think they're a byproduct or

1136
00:56:27,440 --> 00:56:30,880
Speaker 1: they fall out of a good risk management process and approach.

1137
00:56:30,920 --> 00:56:33,800
Speaker 1: They're not the starting point. The starting point of a

1138
00:56:33,800 --> 00:56:37,800
Speaker 1: good rich management appross is fundamental, good old fashioned risk management.

1139
00:56:38,040 --> 00:56:40,920
Speaker 1: What is the business, What drives the business? What are

1140
00:56:40,920 --> 00:56:43,279
Speaker 1: the economics of the business, what does it do? Where

1141
00:56:43,360 --> 00:56:47,040
Speaker 1: does it do it? Forget the statistics first that and

1142
00:56:47,080 --> 00:56:51,320
Speaker 1: then the accumulation of several businesses together as you own them,

1143
00:56:51,360 --> 00:56:55,200
Speaker 1: having if you can get there, some idiosyncratic drivers, right,

1144
00:56:55,239 --> 00:56:58,760
Speaker 1: equally good businesses. But what drives this horse is different

1145
00:56:58,760 --> 00:57:01,919
Speaker 1: from what drives this horse over here. That's great risk

1146
00:57:02,000 --> 00:57:04,000
Speaker 1: management if you can achieve that over time. So in

1147
00:57:04,120 --> 00:57:06,640
Speaker 1: your question, you know the decision to get into the portfolios,

1148
00:57:06,640 --> 00:57:08,440
Speaker 1: you need to upgrade the quality of the portfolio if

1149
00:57:08,480 --> 00:57:10,759
Speaker 1: you do it, or to hand in hand with that,

1150
00:57:11,120 --> 00:57:14,120
Speaker 1: how do you improve the fundamental risk dynamics the portfolio

1151
00:57:14,160 --> 00:57:16,560
Speaker 1: by giving your investors a collective group of business which

1152
00:57:16,600 --> 00:57:20,400
Speaker 1: is still growing attractively, still durable and predictable, but maybe

1153
00:57:20,400 --> 00:57:23,520
Speaker 1: has a slightly different of syncratic driver, whereby you do

1154
00:57:23,640 --> 00:57:26,400
Speaker 1: have some diversification benefits. So I'm gonna ask you a question.

1155
00:57:26,440 --> 00:57:29,000
Speaker 1: I suspect I know the answer, but I'm compelled to

1156
00:57:29,040 --> 00:57:35,000
Speaker 1: ask it. Anyway, Most investors have a tendency to swap

1157
00:57:35,040 --> 00:57:39,680
Speaker 1: out something that is just suffering a temporary price setback,

1158
00:57:39,840 --> 00:57:44,880
Speaker 1: not necessarily a decrease in business quality, for whatever the

1159
00:57:45,040 --> 00:57:48,080
Speaker 1: shiny new thing of the day happens to be. How

1160
00:57:48,120 --> 00:57:52,720
Speaker 1: do you avoid that sort of process where something maybe

1161
00:57:52,880 --> 00:57:55,280
Speaker 1: is just you know, under performing for a quarter or two,

1162
00:57:56,080 --> 00:57:59,400
Speaker 1: but there's nothing along with the fundamental business, and yet

1163
00:57:59,480 --> 00:58:01,640
Speaker 1: here comes is the pretty new thing. How do you

1164
00:58:02,360 --> 00:58:07,280
Speaker 1: avoid that temptation? Yeah? I think one element is certainly

1165
00:58:08,040 --> 00:58:10,400
Speaker 1: human temperament, right, I think that's the skill that you

1166
00:58:10,480 --> 00:58:12,840
Speaker 1: add as a portfolio manager, on top of being a

1167
00:58:12,840 --> 00:58:15,640
Speaker 1: good analyst over time. It's temperament. Temperament comes with experience,

1168
00:58:15,680 --> 00:58:18,959
Speaker 1: but temperament is somewhat chemically wired in you as a being.

1169
00:58:19,000 --> 00:58:20,720
Speaker 1: As you said, you know that tendency to not jump

1170
00:58:20,720 --> 00:58:24,160
Speaker 1: for the next shiny object. You you have to have

1171
00:58:24,200 --> 00:58:26,080
Speaker 1: a temperament for that, or at least develop a good

1172
00:58:26,080 --> 00:58:29,960
Speaker 1: temperament for that. And I think, as you describe properly,

1173
00:58:30,400 --> 00:58:33,720
Speaker 1: a lot of times, particularly with great businesses, you need

1174
00:58:33,760 --> 00:58:36,120
Speaker 1: a little bit of patients rights. Even the greatest businesses

1175
00:58:36,120 --> 00:58:38,880
Speaker 1: with even as Buffett has described them, the widest moats,

1176
00:58:39,320 --> 00:58:42,000
Speaker 1: face threats. There's people always trying to sack the castle,

1177
00:58:42,280 --> 00:58:44,360
Speaker 1: you know, and cross the moat of the best businesses

1178
00:58:44,360 --> 00:58:47,040
Speaker 1: with the biggest moats, and you can't be too hyper

1179
00:58:47,080 --> 00:58:49,600
Speaker 1: sensitive to that. Over time, you have to realize that

1180
00:58:49,720 --> 00:58:52,280
Speaker 1: what seems like a crack on the wall of your castle,

1181
00:58:52,360 --> 00:58:54,600
Speaker 1: when you get a cloth and start to wipe it,

1182
00:58:54,600 --> 00:58:57,320
Speaker 1: it's just a blemish, right, and it wipes away. So

1183
00:58:57,600 --> 00:58:59,960
Speaker 1: I think you do need to balance great sound decision

1184
00:59:00,040 --> 00:59:03,680
Speaker 1: making with good temperament and patients perspective, experience and also

1185
00:59:03,760 --> 00:59:07,240
Speaker 1: some innate chemical composition helps so that. But the other

1186
00:59:07,280 --> 00:59:10,640
Speaker 1: piece then you have to appreciate is your own limitations too,

1187
00:59:10,800 --> 00:59:13,160
Speaker 1: right and where you can fall into these classic pitfalls.

1188
00:59:13,160 --> 00:59:15,640
Speaker 1: So you do have to know yourself too as an investor,

1189
00:59:15,680 --> 00:59:18,240
Speaker 1: and they're one element that also makes us different a

1190
00:59:18,240 --> 00:59:21,080
Speaker 1: little bit as a team and as a firm, we know,

1191
00:59:21,160 --> 00:59:23,360
Speaker 1: with all these good things I've just talked about, the

1192
00:59:23,440 --> 00:59:27,640
Speaker 1: single biggest risk with our style over time is complacency

1193
00:59:27,720 --> 00:59:32,480
Speaker 1: with patients. Patients can easily be synonymous with complacency sometimes also,

1194
00:59:32,840 --> 00:59:36,720
Speaker 1: so what we've done very successfully to combat complacency, which

1195
00:59:36,800 --> 00:59:40,520
Speaker 1: is the single biggest investment risk with great businesses complacency

1196
00:59:40,680 --> 00:59:42,600
Speaker 1: is we have three members of our twenty one member

1197
00:59:42,640 --> 00:59:46,360
Speaker 1: investment team that are former investigative journalists. They're not classic

1198
00:59:46,920 --> 00:59:49,840
Speaker 1: investment analysts. They're not your classic NBA's or come out

1199
00:59:49,880 --> 00:59:53,160
Speaker 1: of consultancy or business. They don't have sector coverage, they

1200
00:59:53,160 --> 00:59:56,000
Speaker 1: don't have stock responsibility, they don't pick stocks, value stocks.

1201
00:59:56,480 --> 01:00:00,440
Speaker 1: They're there to fight complacency. They're there as former instigative

1202
01:00:00,480 --> 01:00:04,040
Speaker 1: journalists from you know, from New York. We it's like

1203
01:00:04,200 --> 01:00:06,040
Speaker 1: I always use the analogy here too. It's like if

1204
01:00:06,080 --> 01:00:08,680
Speaker 1: you're getting married and you you wanted the dossier on

1205
01:00:08,720 --> 01:00:10,720
Speaker 1: your spouse before you got married. You want to know

1206
01:00:10,800 --> 01:00:13,560
Speaker 1: everything just you want to face it, accept it, you know.

1207
01:00:13,680 --> 01:00:15,240
Speaker 1: Kind of That's kind of where we want to be

1208
01:00:15,280 --> 01:00:17,680
Speaker 1: as investors, right. We want to know everything bad about

1209
01:00:17,760 --> 01:00:20,680
Speaker 1: the business, large or small, and then The success in

1210
01:00:20,680 --> 01:00:24,640
Speaker 1: investing then ultimately comes with calibrating the sensitivity to those

1211
01:00:24,720 --> 01:00:28,320
Speaker 1: large and small negative aspects. But every business, like every person,

1212
01:00:28,840 --> 01:00:31,920
Speaker 1: has some negative things to be learned or gleamed. The

1213
01:00:32,000 --> 01:00:34,240
Speaker 1: key as an investors just to make sure you know them,

1214
01:00:34,480 --> 01:00:37,560
Speaker 1: make sure you know all available information. So you have

1215
01:00:37,720 --> 01:00:41,880
Speaker 1: you have three people looking at all the individual names

1216
01:00:41,880 --> 01:00:45,120
Speaker 1: in the portfolio or the possible adds to the portfolio.

1217
01:00:45,160 --> 01:00:50,080
Speaker 1: Were both constantly challenging from a devil's advocacy position, weaknesses

1218
01:00:50,080 --> 01:00:53,440
Speaker 1: in our businesses when anything new comes up, digging deeper

1219
01:00:53,520 --> 01:00:56,800
Speaker 1: and into those issues and ferreting out the real facts

1220
01:00:56,800 --> 01:00:59,480
Speaker 1: of the matter so we can accumulate at least determine

1221
01:00:59,520 --> 01:01:02,800
Speaker 1: our own, you know, our own view of the issue,

1222
01:01:02,880 --> 01:01:04,520
Speaker 1: rather than just read the headline of the issue which

1223
01:01:04,520 --> 01:01:08,280
Speaker 1: someone else built upon their own facts. So they're fact finders,

1224
01:01:08,640 --> 01:01:11,520
Speaker 1: their devil's advocates. They're there to challenge us day to day.

1225
01:01:11,520 --> 01:01:14,200
Speaker 1: They're there to challenge even great businesses over the long term,

1226
01:01:14,480 --> 01:01:16,680
Speaker 1: and then very specifically where they've also been able to

1227
01:01:16,720 --> 01:01:19,920
Speaker 1: help us. A lot is looking into narrower issues with

1228
01:01:20,040 --> 01:01:22,800
Speaker 1: the business which might not be negative, could be positive,

1229
01:01:23,040 --> 01:01:26,200
Speaker 1: but a fundamental analyst maybe when they prioritize their time.

1230
01:01:26,560 --> 01:01:29,360
Speaker 1: It could be smaller yet important. But we can dedicate

1231
01:01:29,360 --> 01:01:32,400
Speaker 1: a journalist to dig deeper on a singular issue rather

1232
01:01:32,440 --> 01:01:34,640
Speaker 1: than the analyst, you know, get Meyer down in the

1233
01:01:34,680 --> 01:01:36,960
Speaker 1: fog of war in this one small issue, while they

1234
01:01:37,000 --> 01:01:40,320
Speaker 1: accumulate the bigger, broader picture of the underlying company. That's

1235
01:01:40,320 --> 01:01:42,200
Speaker 1: where they can add a lot of value too. So

1236
01:01:42,480 --> 01:01:45,479
Speaker 1: here's the question, and really it's how do you deal

1237
01:01:45,520 --> 01:01:49,919
Speaker 1: with this? It's very tempting to get sucked in by

1238
01:01:50,040 --> 01:01:53,400
Speaker 1: some of the negative narratives. They seem to be much

1239
01:01:53,440 --> 01:01:59,560
Speaker 1: more resonant emotionally. It's what sells right, they're compelling. You know,

1240
01:02:00,280 --> 01:02:02,640
Speaker 1: someone wrote a piece sometime ago, and I don't want

1241
01:02:02,640 --> 01:02:05,640
Speaker 1: to quote the wrong author, about when when the Right

1242
01:02:05,720 --> 01:02:09,000
Speaker 1: brothers did their first flight, there was no newspaper story,

1243
01:02:09,040 --> 01:02:11,960
Speaker 1: No one paid attention. You guys have going around with flight.

1244
01:02:12,400 --> 01:02:15,120
Speaker 1: What is this gonna become some real industry? It was

1245
01:02:15,760 --> 01:02:19,520
Speaker 1: like a ten years before anyone really took notice. Positive

1246
01:02:19,560 --> 01:02:23,080
Speaker 1: stories sort of fall by the wayside because it requires

1247
01:02:23,080 --> 01:02:28,160
Speaker 1: some imagination. Here's how this could change the world. Negative stories,

1248
01:02:28,680 --> 01:02:32,080
Speaker 1: it's a genuine existential threat to yourself. It's a risk

1249
01:02:32,240 --> 01:02:36,160
Speaker 1: we're wired to respond to negative threats in a much

1250
01:02:36,200 --> 01:02:40,920
Speaker 1: more robust manner than we are to um respond to

1251
01:02:41,640 --> 01:02:45,080
Speaker 1: positive incentives, or so it seems sometimes, how do you

1252
01:02:45,120 --> 01:02:48,960
Speaker 1: avoid that? Hey, all this negative stuff is so easily

1253
01:02:49,440 --> 01:02:52,600
Speaker 1: emotionally compelling. Let's just get rid of this joke. Yeah,

1254
01:02:52,680 --> 01:02:56,080
Speaker 1: I think experience, you know, experience working in this way

1255
01:02:56,160 --> 01:02:58,360
Speaker 1: with the structure of a team with these individuals has

1256
01:02:58,360 --> 01:03:00,560
Speaker 1: been very important. It's been a learning curve from the beginning.

1257
01:03:00,680 --> 01:03:02,600
Speaker 1: So it was an idea at the beginning of how

1258
01:03:02,640 --> 01:03:05,200
Speaker 1: they could fit really well with how we invest and

1259
01:03:05,240 --> 01:03:08,240
Speaker 1: the idea was very simple, right one. Given that period

1260
01:03:08,280 --> 01:03:10,000
Speaker 1: you go back, you know, ten fifteen years ago, the

1261
01:03:10,040 --> 01:03:12,280
Speaker 1: carnage and the news industry had already started. You had

1262
01:03:12,320 --> 01:03:15,600
Speaker 1: read a great smart people there where the industry was

1263
01:03:15,640 --> 01:03:18,880
Speaker 1: being affected by technology, and they were now available, so

1264
01:03:18,920 --> 01:03:22,200
Speaker 1: to speak. Number one. Number two, what reporters clearly do

1265
01:03:22,400 --> 01:03:25,880
Speaker 1: very well, uh in their job is find a subject

1266
01:03:25,960 --> 01:03:28,960
Speaker 1: they often maybe know nothing about, and figure it out,

1267
01:03:29,000 --> 01:03:31,760
Speaker 1: you know, start the building blocks of what makes it tick,

1268
01:03:32,040 --> 01:03:34,640
Speaker 1: to figure out whether to you know, not to skip

1269
01:03:34,680 --> 01:03:36,160
Speaker 1: head to your end point, whether story is good or bad,

1270
01:03:36,240 --> 01:03:38,600
Speaker 1: or just what the story is. Number one. So that

1271
01:03:38,720 --> 01:03:41,960
Speaker 1: was a great analytical skill, and the other one that's

1272
01:03:42,080 --> 01:03:45,440
Speaker 1: most underappreciated. I think where you actually find a differentiation

1273
01:03:45,480 --> 01:03:49,320
Speaker 1: between good or bad or better or worse analysts is

1274
01:03:49,760 --> 01:03:52,760
Speaker 1: everybody can be smart. Everybody can find facts. Everybody can

1275
01:03:52,800 --> 01:03:55,400
Speaker 1: then maybe even put the story together. But can you

1276
01:03:55,400 --> 01:03:58,000
Speaker 1: actually then spit it out and regurgitate it so someone

1277
01:03:58,040 --> 01:04:00,680
Speaker 1: can do something with the information. And that's I think

1278
01:04:00,960 --> 01:04:03,720
Speaker 1: something that investors struggle with two and really smart people

1279
01:04:03,760 --> 01:04:06,000
Speaker 1: sometimes struggle with. Right, they just know so much and

1280
01:04:06,040 --> 01:04:07,640
Speaker 1: they can put it together in their own mind, but

1281
01:04:08,120 --> 01:04:09,960
Speaker 1: they either aren't in the position to make a decision

1282
01:04:10,000 --> 01:04:11,640
Speaker 1: or they can't make a decision because they just can't

1283
01:04:11,680 --> 01:04:14,160
Speaker 1: spit it out. And newspaper reporters obviously that's their job,

1284
01:04:14,240 --> 01:04:17,040
Speaker 1: right they need to put it into a sellable fashion,

1285
01:04:17,320 --> 01:04:20,400
Speaker 1: which means it's articulate, and you need the articulation to

1286
01:04:20,400 --> 01:04:21,800
Speaker 1: be able to make a decision and know what you're

1287
01:04:21,840 --> 01:04:24,520
Speaker 1: dealing with. So I know of a couple of hedge

1288
01:04:24,520 --> 01:04:30,680
Speaker 1: funds that do something very similar. Describe um Vannabelle's structure.

1289
01:04:30,760 --> 01:04:33,600
Speaker 1: How are you form investors? Are they s m A s?

1290
01:04:33,640 --> 01:04:36,880
Speaker 1: Are they funds? How are they putting dollars to work with?

1291
01:04:36,880 --> 01:04:39,760
Speaker 1: With your firm. Our business is roughly a mix I

1292
01:04:39,800 --> 01:04:42,960
Speaker 1: would say of half half, you know, between more institutional

1293
01:04:42,960 --> 01:04:46,680
Speaker 1: oriented investors and then more retail and oriented investors. And

1294
01:04:46,680 --> 01:04:50,400
Speaker 1: in that world, we're a manufacturer of an investment product

1295
01:04:50,400 --> 01:04:53,160
Speaker 1: where a style approach of discipline, we deliver an investment product.

1296
01:04:53,440 --> 01:04:55,160
Speaker 1: And then our partner, who in the u S is

1297
01:04:55,240 --> 01:04:58,120
Speaker 1: Vertus Investment Advisors. They're the distributor of the product to

1298
01:04:58,160 --> 01:05:00,280
Speaker 1: the end retail investors. So we're removed from them, but

1299
01:05:00,320 --> 01:05:02,920
Speaker 1: we help hold them along a journey. So the retail

1300
01:05:02,920 --> 01:05:05,960
Speaker 1: investor they buying s m A separately managed accounts, are

1301
01:05:05,960 --> 01:05:08,680
Speaker 1: they buying mutual funds? They're generally buying mutual funds. You know,

1302
01:05:08,760 --> 01:05:10,440
Speaker 1: we have a we actually as a firm and a

1303
01:05:10,440 --> 01:05:12,800
Speaker 1: well developed firm. We have the whole suite of structures

1304
01:05:13,000 --> 01:05:16,360
Speaker 1: products for our end investors. So we can manage subadvised accounts,

1305
01:05:16,440 --> 01:05:19,160
Speaker 1: we can subadvise mutual funds, we can manage mutual funds.

1306
01:05:19,160 --> 01:05:21,240
Speaker 1: And we have basically half half our business. And then

1307
01:05:21,240 --> 01:05:23,840
Speaker 1: also i'd cut our business also again another half half

1308
01:05:24,200 --> 01:05:26,760
Speaker 1: North America, US focused and international. We have quite a

1309
01:05:26,760 --> 01:05:31,040
Speaker 1: global business, right the parent company Switzerland based, is that right?

1310
01:05:31,320 --> 01:05:34,360
Speaker 1: And they've been around quite a long time. My assumption

1311
01:05:34,480 --> 01:05:38,400
Speaker 1: is institutions tend to be direct investments, not through a

1312
01:05:38,640 --> 01:05:41,200
Speaker 1: fund vehicles that accurate. Yeah, Typically they want to be

1313
01:05:41,280 --> 01:05:44,560
Speaker 1: registered locally, uh and and and they want to an

1314
01:05:44,560 --> 01:05:47,760
Speaker 1: account that maybe sometimes has some customization that they may need.

1315
01:05:47,880 --> 01:05:50,520
Speaker 1: We don't and won't accept a lot of customization. We

1316
01:05:50,520 --> 01:05:52,360
Speaker 1: need to be able to do what we promised we

1317
01:05:52,400 --> 01:05:55,240
Speaker 1: could deliver. You know, I think this business is about integrity.

1318
01:05:55,280 --> 01:05:57,480
Speaker 1: It's saying saying what you're going to do and sticking

1319
01:05:57,480 --> 01:06:00,160
Speaker 1: to it, you know, saying doing what you mean you

1320
01:06:00,200 --> 01:06:02,280
Speaker 1: mean to set out upon. I think integrity is very

1321
01:06:02,360 --> 01:06:04,160
Speaker 1: very important. So our clients, we need to make sure

1322
01:06:04,240 --> 01:06:07,000
Speaker 1: we can deliver with integrity the philosophy process that they

1323
01:06:07,000 --> 01:06:09,560
Speaker 1: bought into, they saw the results for. But sometimes at

1324
01:06:09,560 --> 01:06:12,000
Speaker 1: the institutional level, maybe there's a nuance where there's a

1325
01:06:12,040 --> 01:06:14,920
Speaker 1: market they can't be in for an institutional reason, et cetera.

1326
01:06:15,160 --> 01:06:18,560
Speaker 1: Sometimes we can we can allow that. Quite quite interesting.

1327
01:06:18,640 --> 01:06:21,480
Speaker 1: I want to get to my favorite questions, sort of

1328
01:06:21,480 --> 01:06:24,800
Speaker 1: our speed round that we ask all of our guests.

1329
01:06:24,840 --> 01:06:28,240
Speaker 1: Feel free to uh answer these as as long or

1330
01:06:28,280 --> 01:06:31,280
Speaker 1: as short as you like. Tell us the first car

1331
01:06:31,320 --> 01:06:34,240
Speaker 1: you ever owned, year, make and model. Yeah. As I said,

1332
01:06:34,280 --> 01:06:37,480
Speaker 1: I grew up from a farming family and a landscaping business.

1333
01:06:37,520 --> 01:06:40,440
Speaker 1: So my first car, not surprisingly, was a Chevy pickup truck.

1334
01:06:41,240 --> 01:06:43,640
Speaker 1: I got my license in New Jersey at fifteen because

1335
01:06:43,640 --> 01:06:45,640
Speaker 1: I got a farmer's license because you know, we had

1336
01:06:45,680 --> 01:06:48,680
Speaker 1: a farm, so to speak. And I drove around town

1337
01:06:48,720 --> 01:06:51,120
Speaker 1: with the name of our business and phone number plastered

1338
01:06:51,120 --> 01:06:52,919
Speaker 1: on the side, which could be a good or bad

1339
01:06:52,920 --> 01:06:56,320
Speaker 1: thing depending on how you're driving or where you're driving. What.

1340
01:06:56,320 --> 01:07:04,760
Speaker 1: What's the most important thing that people don't know about you? Uh? Boy? Uh? Look, Uh,

1341
01:07:05,280 --> 01:07:08,680
Speaker 1: I'm I'm a person who cares a lot about other people.

1342
01:07:08,800 --> 01:07:10,240
Speaker 1: You know, I think the other the other half of

1343
01:07:10,280 --> 01:07:12,280
Speaker 1: my job has been managing money, and half of my

1344
01:07:12,480 --> 01:07:16,480
Speaker 1: job has been managing people. And I really do care

1345
01:07:16,520 --> 01:07:19,600
Speaker 1: about the success of my people. Uh it would, And

1346
01:07:19,920 --> 01:07:23,280
Speaker 1: I'm not saying that sort of a way to promote myself.

1347
01:07:23,360 --> 01:07:25,919
Speaker 1: It's admittedly what makes me feel good. You know, people

1348
01:07:25,960 --> 01:07:28,880
Speaker 1: do things for self motivation, and I really do take

1349
01:07:28,920 --> 01:07:33,040
Speaker 1: a tremendous amount of personal satisfaction in the success and others.

1350
01:07:33,080 --> 01:07:35,600
Speaker 1: I've taken great lengths over the last three to four

1351
01:07:35,680 --> 01:07:38,680
Speaker 1: years to build a deeper broader team to build real

1352
01:07:38,840 --> 01:07:41,360
Speaker 1: lead capable portfolio managers. I think we should have a

1353
01:07:41,400 --> 01:07:44,439
Speaker 1: team for our investors where we're all redundant. I think

1354
01:07:44,440 --> 01:07:47,760
Speaker 1: that's a better situation for our investors. So I think

1355
01:07:47,760 --> 01:07:51,120
Speaker 1: maybe not a star system that is one person in

1356
01:07:51,160 --> 01:07:54,480
Speaker 1: the headlines, everybody else is, uh working behind the scene.

1357
01:07:54,480 --> 01:07:56,600
Speaker 1: And I think it's suboptimal for your clients, you know,

1358
01:07:56,640 --> 01:07:59,360
Speaker 1: And I think it's suboptimal for retaining great people longer term,

1359
01:07:59,400 --> 01:08:01,480
Speaker 1: because why do most of us change jobs is because

1360
01:08:01,520 --> 01:08:04,360
Speaker 1: we need opportunity, you know it. Financial is important, right,

1361
01:08:04,400 --> 01:08:07,440
Speaker 1: but people are people and they want self you know, achievement.

1362
01:08:07,800 --> 01:08:10,320
Speaker 1: And I take a lot of satisfaction and that half

1363
01:08:10,320 --> 01:08:12,960
Speaker 1: of my job of really I really smile and I

1364
01:08:13,000 --> 01:08:15,440
Speaker 1: really feel good when I see the accomplishment and achievement

1365
01:08:15,440 --> 01:08:16,800
Speaker 1: of others. And I'm saying that, like I said, not

1366
01:08:16,840 --> 01:08:19,160
Speaker 1: in a self promotional way, in a selfish way. It's

1367
01:08:19,200 --> 01:08:22,440
Speaker 1: what makes me feel good. Uh, let's talk about mentors.

1368
01:08:22,479 --> 01:08:27,720
Speaker 1: Who were your mentors who helped guide your career in law? Yeah, look,

1369
01:08:27,720 --> 01:08:29,960
Speaker 1: there's been several. I think, Uh, you know, you have

1370
01:08:30,000 --> 01:08:32,080
Speaker 1: to go back to your childhood clearly, you know, as

1371
01:08:32,080 --> 01:08:34,000
Speaker 1: most people do their parents. You know, I grew up

1372
01:08:34,479 --> 01:08:36,120
Speaker 1: in one of the traits I try to push once

1373
01:08:36,160 --> 01:08:38,599
Speaker 1: again today is just the the idea of hard work.

1374
01:08:38,680 --> 01:08:40,240
Speaker 1: You know, As I said, we had a small business.

1375
01:08:40,280 --> 01:08:41,760
Speaker 1: We had a business where we dug our hands in

1376
01:08:41,760 --> 01:08:45,120
Speaker 1: the dirt. We worked seven days a week. Uh, work

1377
01:08:45,160 --> 01:08:47,880
Speaker 1: ethic is extremely important to me. And my father in

1378
01:08:47,920 --> 01:08:50,040
Speaker 1: that way and my mother were very important, you know,

1379
01:08:50,040 --> 01:08:51,600
Speaker 1: And we worked when we were out of school. I

1380
01:08:51,640 --> 01:08:54,240
Speaker 1: was at work after school, and we're at work on

1381
01:08:54,280 --> 01:08:57,160
Speaker 1: the weekend, Saturday and Sunday. And I think hard work,

1382
01:08:57,240 --> 01:09:00,439
Speaker 1: that old puritanical work ethic, you know, is very important

1383
01:09:00,640 --> 01:09:03,040
Speaker 1: to me. So from a mentorship, definitely my father instilling

1384
01:09:03,040 --> 01:09:05,280
Speaker 1: that in me, and then from the investment side, which

1385
01:09:05,320 --> 01:09:07,479
Speaker 1: is key you know, to where I am today after

1386
01:09:07,560 --> 01:09:10,080
Speaker 1: that or subsequent to that. You know, there's been a

1387
01:09:10,120 --> 01:09:12,360
Speaker 1: litany of people. I think a lot of it has

1388
01:09:12,400 --> 01:09:14,240
Speaker 1: been read. To start with two. You know. One of

1389
01:09:14,280 --> 01:09:16,640
Speaker 1: the great piece of advice my co manager on our

1390
01:09:16,720 --> 01:09:18,600
Speaker 1: US equity product, did Walls, that gave me earlier in

1391
01:09:18,640 --> 01:09:19,960
Speaker 1: my career, was to read a lot of these money

1392
01:09:19,960 --> 01:09:22,519
Speaker 1: master's books, right, even if it wasn't just equities, Read

1393
01:09:22,560 --> 01:09:24,840
Speaker 1: how other people invest, how they make money. You know

1394
01:09:24,840 --> 01:09:28,080
Speaker 1: whether and fixed income, whether commodities, whether equities, because also

1395
01:09:28,120 --> 01:09:30,639
Speaker 1: the key to long term successful investing is finding something

1396
01:09:30,640 --> 01:09:32,960
Speaker 1: that fits for you. And maybe maybe then equities, maybe

1397
01:09:32,960 --> 01:09:35,639
Speaker 1: it's ficting Tom. Maybe in equities it's value, it's not growth.

1398
01:09:35,960 --> 01:09:38,719
Speaker 1: But a key to success is finding what fits for you.

1399
01:09:39,120 --> 01:09:42,960
Speaker 1: So reading a lot about how other people invest, how

1400
01:09:43,000 --> 01:09:45,320
Speaker 1: they think. Probably you know the nature of what your

1401
01:09:45,360 --> 01:09:48,759
Speaker 1: podcast audience is. I think that's all that's very important

1402
01:09:48,960 --> 01:09:51,519
Speaker 1: that where you can drive mentorship from in a lot

1403
01:09:51,520 --> 01:09:54,080
Speaker 1: of ways, you know how reading and learning from how

1404
01:09:54,120 --> 01:09:56,840
Speaker 1: they think. But then you know, the obvious key instruments

1405
01:09:56,840 --> 01:09:58,679
Speaker 1: in my life have been a lot of the investment

1406
01:09:58,720 --> 01:10:00,720
Speaker 1: professionals around me at the um. You know, it's my

1407
01:10:00,760 --> 01:10:03,479
Speaker 1: team and colleagues today, it's the d Walls as you know,

1408
01:10:03,680 --> 01:10:06,160
Speaker 1: the Henry Schlegel's who's a founding, you know, father of

1409
01:10:06,200 --> 01:10:08,360
Speaker 1: our firm. It's our former colleague, Regieve Jane. It's a

1410
01:10:08,439 --> 01:10:10,679
Speaker 1: number of people at our firm that have helped build

1411
01:10:10,720 --> 01:10:12,600
Speaker 1: me from this kid who came out of you know,

1412
01:10:12,720 --> 01:10:16,000
Speaker 1: university in and has has built his way, you know,

1413
01:10:16,080 --> 01:10:18,799
Speaker 1: like Michael J. Fox did in Secret to my success

1414
01:10:18,840 --> 01:10:20,519
Speaker 1: from the mail room to the top you know, I

1415
01:10:20,560 --> 01:10:23,960
Speaker 1: literally started at the bottom. I started trade processing and settlement,

1416
01:10:24,280 --> 01:10:26,439
Speaker 1: and I worked my way through the organization and along

1417
01:10:26,439 --> 01:10:28,920
Speaker 1: that journey. To your question, there's been people at every

1418
01:10:29,000 --> 01:10:31,760
Speaker 1: stage that have helped me, you know, that have really

1419
01:10:31,760 --> 01:10:33,639
Speaker 1: helped me in certain aspects that i've you know, now

1420
01:10:33,760 --> 01:10:36,760
Speaker 1: put together. You mentioned reading. Tell us some of your

1421
01:10:36,800 --> 01:10:41,040
Speaker 1: favorite books, be they investing related, nonfiction fiction. What do

1422
01:10:41,080 --> 01:10:44,519
Speaker 1: you like to read? You know, I'm boring in a

1423
01:10:44,560 --> 01:10:47,280
Speaker 1: way and that I like to read nonfiction. I like

1424
01:10:47,439 --> 01:10:51,200
Speaker 1: history a lot, you know, some sci fi like I liked.

1425
01:10:51,280 --> 01:10:52,920
Speaker 1: And it's funny the books you end up with, you know,

1426
01:10:53,000 --> 01:10:55,479
Speaker 1: sometimes you wonder how you ended up there. But the

1427
01:10:55,520 --> 01:10:57,799
Speaker 1: current book I'm reading is a biography of f DR

1428
01:10:58,479 --> 01:11:01,519
Speaker 1: from Gene Smith, and it's a really good piece of

1429
01:11:01,520 --> 01:11:04,839
Speaker 1: perspective as you read about that time period and related

1430
01:11:04,880 --> 01:11:06,760
Speaker 1: to the time period today, because I think a lot

1431
01:11:06,760 --> 01:11:09,920
Speaker 1: of investment success also, and why I read history is

1432
01:11:09,960 --> 01:11:12,479
Speaker 1: this element of perspective, getting out of the frenzy and

1433
01:11:12,520 --> 01:11:16,240
Speaker 1: flurry and and and feeling of this is also different

1434
01:11:16,280 --> 01:11:19,120
Speaker 1: and also wild of today to looking back at the

1435
01:11:19,120 --> 01:11:22,120
Speaker 1: way things have been and were, And I think FDRs

1436
01:11:22,160 --> 01:11:24,519
Speaker 1: period is actually quite interesting, right, I mean, you look

1437
01:11:24,520 --> 01:11:26,559
Speaker 1: at what was going on at geopolitical stage, you look

1438
01:11:26,600 --> 01:11:29,639
Speaker 1: at geopolitical missteps. You mentioned it earlier in terms of Powell,

1439
01:11:29,720 --> 01:11:33,000
Speaker 1: in terms of a cabinet committee nomination by Trump, but

1440
01:11:33,160 --> 01:11:35,280
Speaker 1: you know, look what past cabinets were filled with, right,

1441
01:11:35,320 --> 01:11:37,920
Speaker 1: the chrony ism and the lack of experience and capability

1442
01:11:38,000 --> 01:11:42,000
Speaker 1: or poor capability. Have some perspective that over time. You know,

1443
01:11:42,160 --> 01:11:44,960
Speaker 1: I'm not making indictment on a on a political you know,

1444
01:11:45,080 --> 01:11:48,200
Speaker 1: a party or group, but it's pervasive everywhere. Right, So

1445
01:11:48,320 --> 01:11:51,559
Speaker 1: just have that perspective of how decisions in history have

1446
01:11:51,720 --> 01:11:54,680
Speaker 1: played out. Maybe in the short term seemingly difficult or

1447
01:11:54,760 --> 01:11:57,880
Speaker 1: scary or risky. But as Buffett also pointed out to

1448
01:11:58,040 --> 01:12:01,120
Speaker 1: from that period, you know, as he's first investing in

1449
01:12:01,160 --> 01:12:03,479
Speaker 1: the forties, right, who would have ever invested in the

1450
01:12:03,520 --> 01:12:05,400
Speaker 1: environment in the face of you know, carnage in the

1451
01:12:05,400 --> 01:12:08,640
Speaker 1: South Pacific with World War Two? Right, But it was

1452
01:12:08,680 --> 01:12:12,080
Speaker 1: the time to invest. It's for the Yeah, for the

1453
01:12:12,120 --> 01:12:14,640
Speaker 1: long term, it's always a good time to invest. But

1454
01:12:14,720 --> 01:12:17,360
Speaker 1: you've got to have perspective then and sent and and

1455
01:12:17,360 --> 01:12:20,960
Speaker 1: sort of dampen your sensitivity through experience that this stuff

1456
01:12:21,000 --> 01:12:23,479
Speaker 1: we all see and read and hear about today. It

1457
01:12:23,520 --> 01:12:26,519
Speaker 1: has a lot of rhythm to what happened even you know,

1458
01:12:26,560 --> 01:12:28,640
Speaker 1: in the thirties and forties, for one example. So I

1459
01:12:28,640 --> 01:12:30,760
Speaker 1: read a lot of biographies like the FDR is one,

1460
01:12:30,800 --> 01:12:33,360
Speaker 1: give us another book or biography? Look the other one

1461
01:12:33,439 --> 01:12:35,880
Speaker 1: you know that I liked. Unfortunately. You know, this is

1462
01:12:35,920 --> 01:12:37,760
Speaker 1: like you know when you like sports teams and they

1463
01:12:37,760 --> 01:12:40,160
Speaker 1: were unpopular then become popular, right, you know, the the

1464
01:12:40,240 --> 01:12:43,680
Speaker 1: turn off. Hamilton's biography was awesome, Right, But Hamilton's now

1465
01:12:43,720 --> 01:12:47,120
Speaker 1: this global sensation because of the deserved success, right of

1466
01:12:47,120 --> 01:12:49,680
Speaker 1: the play. But Hamilton's, you know, was a character that I,

1467
01:12:49,840 --> 01:12:51,560
Speaker 1: long before all this recent success, had a lot of

1468
01:12:51,600 --> 01:12:54,599
Speaker 1: admiration for in his contribution to our country, which people

1469
01:12:54,600 --> 01:12:57,120
Speaker 1: now I'm proud and I'm glad they broadly learned more about.

1470
01:12:57,120 --> 01:12:58,960
Speaker 1: But that's obviously a great biography. I try to lead

1471
01:12:59,280 --> 01:13:01,080
Speaker 1: a lot of president, you know, sort of presidence. I

1472
01:13:01,120 --> 01:13:03,200
Speaker 1: think you learn a lot about it before you move

1473
01:13:03,240 --> 01:13:05,200
Speaker 1: off of Hamilton's. I have to say, there aren't a

1474
01:13:05,240 --> 01:13:08,400
Speaker 1: lot of authors that you could say, yeah, just grib

1475
01:13:08,520 --> 01:13:11,400
Speaker 1: Any chron out book, it'll be great. He's one of

1476
01:13:11,439 --> 01:13:16,120
Speaker 1: those authors that anything he's written is just spectacular. Fantastic too, right.

1477
01:13:16,200 --> 01:13:18,479
Speaker 1: You know the Jobs book was great, right, Isaacson too.

1478
01:13:18,479 --> 01:13:20,679
Speaker 1: So you get there's certain authors, right what they they

1479
01:13:21,080 --> 01:13:23,000
Speaker 1: what they write is just always great. But I tend

1480
01:13:23,080 --> 01:13:26,320
Speaker 1: to read about people in history and in periods too,

1481
01:13:26,320 --> 01:13:28,360
Speaker 1: so it's not just always people. You know, I've finished

1482
01:13:28,400 --> 01:13:30,439
Speaker 1: a book on the Crusades, you know, certain periods of history.

1483
01:13:30,479 --> 01:13:33,439
Speaker 1: What's the name of the book? Uh? That ish gosh,

1484
01:13:33,479 --> 01:13:35,240
Speaker 1: Now I can't remember the name of that one. Now,

1485
01:13:35,280 --> 01:13:38,200
Speaker 1: you got me? Because so I read a book email

1486
01:13:38,240 --> 01:13:43,280
Speaker 1: to me. I'll make the book I had um Jim

1487
01:13:43,320 --> 01:13:47,400
Speaker 1: Chanos recommended was a World Lit Only by Fire, which

1488
01:13:47,479 --> 01:13:51,479
Speaker 1: covers that sort of Crusades Enlightenment era. And it's just

1489
01:13:51,880 --> 01:13:54,200
Speaker 1: mind and I think visually, and I can picture the

1490
01:13:54,200 --> 01:13:56,800
Speaker 1: book now on my table and sitting there after I

1491
01:13:56,840 --> 01:13:58,280
Speaker 1: finished it. I'll have to come back to you with

1492
01:13:58,320 --> 01:14:00,200
Speaker 1: the name of it. But it wasn't that specific one.

1493
01:14:00,240 --> 01:14:03,120
Speaker 1: But also, you know, I'm not looking for carnage when

1494
01:14:03,160 --> 01:14:05,120
Speaker 1: I read about it the thirties and forties and in

1495
01:14:05,200 --> 01:14:08,320
Speaker 1: the Crusades. But there are lessons to be tremendous lessons

1496
01:14:08,360 --> 01:14:10,240
Speaker 1: to be learned longer term, and that's why I think

1497
01:14:10,280 --> 01:14:12,680
Speaker 1: reading is important. You know unfortunately. I think you know,

1498
01:14:12,720 --> 01:14:14,760
Speaker 1: first of all, radio versus TV isn't important as a

1499
01:14:14,800 --> 01:14:17,360
Speaker 1: medium because you have more time to be thoughtful and

1500
01:14:17,439 --> 01:14:19,800
Speaker 1: reading is time to be thoughtful, and we all need

1501
01:14:19,800 --> 01:14:21,120
Speaker 1: a little bit more of that than a hundred and

1502
01:14:21,160 --> 01:14:26,280
Speaker 1: thirty characters or whatever. We're um. If you ever get

1503
01:14:26,320 --> 01:14:30,640
Speaker 1: a chance to see Walter Isaacson speak in public, I

1504
01:14:30,680 --> 01:14:33,719
Speaker 1: believe it was the t D event their annual conference

1505
01:14:33,720 --> 01:14:38,160
Speaker 1: in June. They had Isaacson speak and I read the

1506
01:14:38,240 --> 01:14:42,080
Speaker 1: Jobs Book and I have UM I forgot what his

1507
01:14:42,120 --> 01:14:46,560
Speaker 1: most recent book was on UM innovators or inventors or

1508
01:14:46,560 --> 01:14:49,000
Speaker 1: whatever it was. I haven't gotten to it yet, but

1509
01:14:49,800 --> 01:14:54,640
Speaker 1: he is a fascinating person doing exactly what you're describing,

1510
01:14:55,320 --> 01:14:59,559
Speaker 1: taking the biography of people from today and using history

1511
01:14:59,600 --> 01:15:03,559
Speaker 1: as a context to show. I think you said this early.

1512
01:15:03,640 --> 01:15:05,800
Speaker 1: The more things change, the more it remains the same.

1513
01:15:06,439 --> 01:15:08,800
Speaker 1: That's the crucial lesson we all need to hold on to,

1514
01:15:09,040 --> 01:15:11,559
Speaker 1: you know, through all the turmoil we see every day

1515
01:15:11,560 --> 01:15:14,320
Speaker 1: on the news, right, that's why? And why is that

1516
01:15:14,439 --> 01:15:17,200
Speaker 1: because we're people right Where people we talked about certain

1517
01:15:17,200 --> 01:15:19,960
Speaker 1: elements where people were animals. We have animalists animalistic nature

1518
01:15:19,960 --> 01:15:22,320
Speaker 1: in certain ways to we really like the negative and

1519
01:15:22,320 --> 01:15:24,720
Speaker 1: and and we just need to step back and appreciate that.

1520
01:15:24,800 --> 01:15:26,080
Speaker 1: I think at the end of the day, and then

1521
01:15:26,160 --> 01:15:27,800
Speaker 1: I like to read also, as you can pick up

1522
01:15:27,800 --> 01:15:30,680
Speaker 1: in my books, leadership right, which is also something we

1523
01:15:30,720 --> 01:15:33,640
Speaker 1: wonder about the world today. Right, we need collective leadership

1524
01:15:33,840 --> 01:15:36,120
Speaker 1: rightly where maybe in a vacuum here where we're looking

1525
01:15:36,160 --> 01:15:39,920
Speaker 1: for real clear leadership, because historically there are times where

1526
01:15:40,160 --> 01:15:42,639
Speaker 1: leadership mattered a lot, you know, so I think reading

1527
01:15:42,680 --> 01:15:45,200
Speaker 1: about that's interesting. Tell us about a time you failed

1528
01:15:45,240 --> 01:15:49,360
Speaker 1: and what you learn from the experience. Yeah, you know, uh,

1529
01:15:49,439 --> 01:15:51,880
Speaker 1: when it comes to failure, I I have obviously all

1530
01:15:51,880 --> 01:15:54,719
Speaker 1: the classic pitfalls and investing. You know, we we all

1531
01:15:54,720 --> 01:15:57,040
Speaker 1: sell too early, even great businesses. We do it because

1532
01:15:57,040 --> 01:15:59,800
Speaker 1: we have some valuation sensitivity on top of that, you know,

1533
01:15:59,800 --> 01:16:01,760
Speaker 1: on the other side of the coin, you often hold

1534
01:16:01,800 --> 01:16:03,400
Speaker 1: on too long. But you know, I think my greater

1535
01:16:03,439 --> 01:16:06,559
Speaker 1: failures I hone in on our more personal failures, you know,

1536
01:16:06,720 --> 01:16:10,080
Speaker 1: not you know, not in interpersonal relationship speaking up or

1537
01:16:10,560 --> 01:16:13,120
Speaker 1: or stepping up you know, both in family or friends

1538
01:16:13,200 --> 01:16:15,400
Speaker 1: or things like that. You know, not to get too specific,

1539
01:16:15,439 --> 01:16:17,760
Speaker 1: but those are the failures that I think you hold

1540
01:16:17,800 --> 01:16:20,320
Speaker 1: a little bit closer. Uh, And those are ones that

1541
01:16:20,360 --> 01:16:22,479
Speaker 1: are more important to learn from, because I think the

1542
01:16:22,520 --> 01:16:24,639
Speaker 1: investment ones, they are critical and you do learn from

1543
01:16:24,720 --> 01:16:27,040
Speaker 1: what they are. The obvious ones. I think the real

1544
01:16:27,040 --> 01:16:28,840
Speaker 1: failures we all need to focus on, and I do

1545
01:16:28,880 --> 01:16:31,960
Speaker 1: are are ones where you've fallen short personally and we

1546
01:16:32,040 --> 01:16:34,800
Speaker 1: all we all need to do a better job. What

1547
01:16:34,840 --> 01:16:36,160
Speaker 1: do you do for fun? What do you do when

1548
01:16:36,200 --> 01:16:40,520
Speaker 1: you're not reading biographies or are in the office. Yeah,

1549
01:16:40,560 --> 01:16:43,200
Speaker 1: you know, I um a University of Denver alumni, So

1550
01:16:43,320 --> 01:16:45,680
Speaker 1: I ski. You know. I like to ski, certainly. I

1551
01:16:45,680 --> 01:16:47,439
Speaker 1: love the mountains. I'm a mountain person, even though I

1552
01:16:47,439 --> 01:16:50,160
Speaker 1: live in Fort Lauderdale, Florida, which is a little bit funny.

1553
01:16:50,160 --> 01:16:51,600
Speaker 1: But I got a little best best of both the

1554
01:16:51,600 --> 01:16:53,240
Speaker 1: worlds are in that way, I can live in in

1555
01:16:53,280 --> 01:16:56,439
Speaker 1: the worm and go skiing, and I can wander skiing.

1556
01:16:56,479 --> 01:16:57,720
Speaker 1: I guess that's one way to get it out of

1557
01:16:57,720 --> 01:17:01,000
Speaker 1: my system. The hills are a little lower there. Uh,

1558
01:17:01,040 --> 01:17:02,720
Speaker 1: So I do like to ski. Look, I'm a I'm

1559
01:17:02,760 --> 01:17:05,280
Speaker 1: a family person, you know, so I have two young kids.

1560
01:17:05,840 --> 01:17:08,080
Speaker 1: Quality of life is important for me too. We work hard,

1561
01:17:08,080 --> 01:17:09,680
Speaker 1: we work seven days a week. But I think you

1562
01:17:09,680 --> 01:17:11,880
Speaker 1: need to balance at and keep you know, faith and

1563
01:17:11,960 --> 01:17:15,240
Speaker 1: family and all those elements very very close to your life.

1564
01:17:15,240 --> 01:17:19,080
Speaker 1: They're important, is important. So let's talk about the industry.

1565
01:17:19,080 --> 01:17:21,599
Speaker 1: What are you most optimistic about? What are you most

1566
01:17:21,600 --> 01:17:25,439
Speaker 1: pessimistic about? In the investing industry, I think you've got

1567
01:17:25,439 --> 01:17:28,639
Speaker 1: to be optimistic that, you know, despite all the noise

1568
01:17:28,680 --> 01:17:31,160
Speaker 1: and change, you know, success and investing still comes back

1569
01:17:31,200 --> 01:17:32,960
Speaker 1: to the same playbook, you know, and if you can

1570
01:17:33,000 --> 01:17:35,360
Speaker 1: be disciplined around it. So that excites me, right, where

1571
01:17:35,560 --> 01:17:38,880
Speaker 1: other industries have gotten hollowed out, and they are fundamentally different. Right,

1572
01:17:38,920 --> 01:17:41,000
Speaker 1: if you're a taxi driver and your compete against Uber,

1573
01:17:41,040 --> 01:17:44,040
Speaker 1: your business is different. Right. If you're a restaurant and

1574
01:17:44,080 --> 01:17:46,599
Speaker 1: delivery has come in and delivery apps, your business is different.

1575
01:17:46,920 --> 01:17:49,599
Speaker 1: Our business has had a lot of technological change and influence,

1576
01:17:49,600 --> 01:17:51,320
Speaker 1: and people talk about AI and the snap. But I'm

1577
01:17:51,320 --> 01:17:53,840
Speaker 1: actually quite excited in that we have a we have

1578
01:17:53,920 --> 01:17:57,559
Speaker 1: an employable skill still here. That's kind of nice, right,

1579
01:17:57,600 --> 01:17:59,720
Speaker 1: We still have some value added to bring even as

1580
01:17:59,760 --> 01:18:02,400
Speaker 1: much as things have changed. So I'm really quite excited

1581
01:18:02,439 --> 01:18:05,120
Speaker 1: about that, you know, I'm I'm sort of you know,

1582
01:18:05,160 --> 01:18:07,640
Speaker 1: if I get in negative at all and downtrodden it

1583
01:18:07,760 --> 01:18:10,520
Speaker 1: is sort of around these sort of you know, fissures

1584
01:18:10,560 --> 01:18:13,280
Speaker 1: you know where and as I mentioned very briefly there,

1585
01:18:13,320 --> 01:18:15,840
Speaker 1: you know, community is important to me. We were supposedly

1586
01:18:15,880 --> 01:18:19,200
Speaker 1: living in an age where technology was enhancing community and

1587
01:18:19,439 --> 01:18:21,760
Speaker 1: creating a greater community. But in fact, I think what

1588
01:18:21,800 --> 01:18:24,519
Speaker 1: people are hopefully and seeing and recognizing as we're actually

1589
01:18:24,520 --> 01:18:27,519
Speaker 1: seeing a fracturing of community, you know, because of maybe

1590
01:18:27,520 --> 01:18:31,360
Speaker 1: technology perversely social media and all that. So that scares me, right,

1591
01:18:31,400 --> 01:18:34,840
Speaker 1: because you know, politics are politics, economics are economics, but

1592
01:18:35,000 --> 01:18:38,120
Speaker 1: you know, strong community is very important and locally and

1593
01:18:38,200 --> 01:18:41,439
Speaker 1: on a political stage as well. So I'm a bit

1594
01:18:41,479 --> 01:18:44,080
Speaker 1: negative on that, you know. I know though over the

1595
01:18:44,080 --> 01:18:46,120
Speaker 1: long term, as we said, it's never you know, paid

1596
01:18:46,160 --> 01:18:48,840
Speaker 1: to be a pessimist, as as Buffett also said, I believe,

1597
01:18:48,840 --> 01:18:51,040
Speaker 1: you know, investing is an optimist game and you have

1598
01:18:51,120 --> 01:18:52,960
Speaker 1: to be that and it's been the right way to be.

1599
01:18:53,040 --> 01:18:55,120
Speaker 1: So you don't want to be too near term pessimistic.

1600
01:18:55,520 --> 01:18:56,640
Speaker 1: But you know, a near term me, you get a

1601
01:18:56,680 --> 01:18:58,800
Speaker 1: little bit down. And as you see this, you know,

1602
01:18:58,920 --> 01:19:02,320
Speaker 1: this key element of life fracturing a bit interesting. So

1603
01:19:02,360 --> 01:19:04,719
Speaker 1: a recent college graduate comes to you and is looking

1604
01:19:04,720 --> 01:19:07,920
Speaker 1: for advice about a career in finance. What would you

1605
01:19:07,960 --> 01:19:11,120
Speaker 1: tell them, Yeah, I'd say a lot of things we've

1606
01:19:11,120 --> 01:19:12,759
Speaker 1: talked about. To say, I'll have to point them towards

1607
01:19:12,760 --> 01:19:14,200
Speaker 1: the podcast. But you know, I think you need to

1608
01:19:14,200 --> 01:19:17,000
Speaker 1: find the investment philosophy that works for you number one,

1609
01:19:17,120 --> 01:19:19,559
Speaker 1: because there are a million roads to heaven. You gotta

1610
01:19:19,560 --> 01:19:21,320
Speaker 1: pick the right one for you in the investing world,

1611
01:19:21,720 --> 01:19:23,559
Speaker 1: you know, I I have a mouse trap that works

1612
01:19:23,600 --> 01:19:26,040
Speaker 1: for me and my team and our firm and our

1613
01:19:26,080 --> 01:19:29,400
Speaker 1: temperament and our skill set and our investors. Critically, so

1614
01:19:29,439 --> 01:19:31,439
Speaker 1: you've got to find the right path for you. I

1615
01:19:31,479 --> 01:19:34,879
Speaker 1: think reading and perspective is critical. Being a little less sensitive,

1616
01:19:34,880 --> 01:19:36,960
Speaker 1: being a little bit patient. I think those are the

1617
01:19:36,960 --> 01:19:38,680
Speaker 1: basic things you tell them to work on, you know,

1618
01:19:38,760 --> 01:19:41,280
Speaker 1: be a voracious reader. Uh. And that you know, as

1619
01:19:41,320 --> 01:19:42,920
Speaker 1: we've talked about, there is a good future. You still

1620
01:19:42,920 --> 01:19:45,720
Speaker 1: have an employable skill set, you know. I think the

1621
01:19:45,840 --> 01:19:48,479
Speaker 1: human element is going to continue to create opportunity, continue

1622
01:19:48,520 --> 01:19:50,479
Speaker 1: to drive most people to make mistakes. That's just the

1623
01:19:50,560 --> 01:19:52,800
Speaker 1: law of numbers. And you can stand there ready to

1624
01:19:52,840 --> 01:19:55,879
Speaker 1: capitalize upon them and and and make money. But critically

1625
01:19:56,360 --> 01:20:00,680
Speaker 1: preserve capital, you know, preserve one compound Number two and

1626
01:20:00,760 --> 01:20:03,200
Speaker 1: our final question, what do you know about the world

1627
01:20:03,200 --> 01:20:06,760
Speaker 1: of investing today that you wish you knew twenty years

1628
01:20:06,760 --> 01:20:11,599
Speaker 1: ago or so when you were first starting out. Yeah,

1629
01:20:11,600 --> 01:20:13,519
Speaker 1: that's a good one. What would I have wanted to

1630
01:20:13,560 --> 01:20:17,400
Speaker 1: know twenty years ago today? Uh, you know, aside from

1631
01:20:17,439 --> 01:20:20,439
Speaker 1: the generic things that would leave to two general investment success,

1632
01:20:21,000 --> 01:20:26,000
Speaker 1: you know, you'd want to know how complicated the businesses

1633
01:20:26,120 --> 01:20:28,800
Speaker 1: outside of just the you know, the investing aspect, in

1634
01:20:28,840 --> 01:20:31,120
Speaker 1: the analytical aspect, right. I think it's why it's important

1635
01:20:31,160 --> 01:20:33,320
Speaker 1: for people, and it was helpful in my own background,

1636
01:20:33,800 --> 01:20:37,840
Speaker 1: as I mentioned my past, to know how the plumbing works, right,

1637
01:20:37,960 --> 01:20:40,760
Speaker 1: the plumbing is becoming even more important. You know how

1638
01:20:40,960 --> 01:20:44,040
Speaker 1: markets trade, how trades to element works, how that those

1639
01:20:44,080 --> 01:20:47,960
Speaker 1: elements work. I think that's twenty years ago. That was

1640
01:20:48,000 --> 01:20:49,800
Speaker 1: something that wasn't paris not taught in school. You know,

1641
01:20:49,800 --> 01:20:51,280
Speaker 1: you don't learn about the plumbing. You try to get

1642
01:20:51,320 --> 01:20:52,760
Speaker 1: a job, go to graduate school and come out and

1643
01:20:52,800 --> 01:20:54,559
Speaker 1: be an analyst or be a successful investor. You sort

1644
01:20:54,560 --> 01:20:56,680
Speaker 1: of skip ahead, you know. So I think that's an

1645
01:20:56,720 --> 01:20:59,559
Speaker 1: important aspect. Do you want to really know with investing

1646
01:20:59,640 --> 01:21:03,280
Speaker 1: or any thing, have that foundation of how things work first?

1647
01:21:03,680 --> 01:21:05,920
Speaker 1: Where generally people have a tendency to want to jump

1648
01:21:05,920 --> 01:21:08,160
Speaker 1: ahead and solve the problems, you know, or so go

1649
01:21:08,240 --> 01:21:11,120
Speaker 1: to the headline of the issue without backing down and

1650
01:21:11,240 --> 01:21:13,200
Speaker 1: understanding the plumbing. So I think that's the that's the

1651
01:21:13,200 --> 01:21:15,080
Speaker 1: advice I would have known. I want to know more

1652
01:21:15,160 --> 01:21:17,240
Speaker 1: of the plumbing, and I think I think we've done

1653
01:21:17,240 --> 01:21:19,160
Speaker 1: a decent job preparing for that, and I think we're

1654
01:21:19,240 --> 01:21:21,800
Speaker 1: ahead of that certainly where we are today, because that's

1655
01:21:21,840 --> 01:21:23,920
Speaker 1: another key element we didn't even get into today, you know,

1656
01:21:23,960 --> 01:21:25,840
Speaker 1: the mechanics and plumbing of the markets, and where we

1657
01:21:25,880 --> 01:21:27,519
Speaker 1: are now versus where we used to be in that

1658
01:21:27,640 --> 01:21:31,479
Speaker 1: interaction with investing is going to be more important, quite

1659
01:21:31,600 --> 01:21:34,360
Speaker 1: quite interesting. Matt, thank you for being so generous with

1660
01:21:34,479 --> 01:21:37,880
Speaker 1: your time. We have been speaking with Matt Benkendorff, ce

1661
01:21:38,000 --> 01:21:41,880
Speaker 1: IO of on Tobol Quality Growth. UH. If you enjoy

1662
01:21:41,960 --> 01:21:44,160
Speaker 1: this conversation, well be sure and look up an Inch

1663
01:21:44,240 --> 01:21:46,800
Speaker 1: or down an Inch on Apple iTunes and you could

1664
01:21:46,800 --> 01:21:49,960
Speaker 1: see any of the previous two hundred and sixty or

1665
01:21:50,000 --> 01:21:53,880
Speaker 1: so of these we've had over the past five plus years. UH.

1666
01:21:53,920 --> 01:21:58,280
Speaker 1: We love your comments, feedback and suggestions right to us

1667
01:21:58,439 --> 01:22:01,960
Speaker 1: at m IB podcast at Bloomberg dot net. Be sure

1668
01:22:01,960 --> 01:22:05,360
Speaker 1: and give us a review on Apple iTunes. I would

1669
01:22:05,360 --> 01:22:07,679
Speaker 1: be remiss if I did not thank the Crack staff

1670
01:22:07,720 --> 01:22:11,880
Speaker 1: that helps put these conversations together each week. Karen O'Brien

1671
01:22:12,080 --> 01:22:15,720
Speaker 1: is my audio engineer. Michael Batnick is my head of research.

1672
01:22:16,439 --> 01:22:20,120
Speaker 1: I'm Barry Hults. You've been listening to Masters in Business

1673
01:22:20,160 --> 01:22:21,280
Speaker 1: on Bloomberg Radio