1 00:00:02,240 --> 00:00:06,840 Speaker 1: This is Masters in Business with very Ridholts on Bloomberg Radio. 2 00:00:07,360 --> 00:00:10,200 Speaker 1: This week on the podcast, I have an extra special guest. 3 00:00:10,560 --> 00:00:15,360 Speaker 1: Jay Bowen is the manager of, amongst other things, the 4 00:00:15,400 --> 00:00:21,119 Speaker 1: Tampa Firefighters and Police pension funds. His firm has been 5 00:00:21,160 --> 00:00:25,079 Speaker 1: managing that for over forty five years. Their performance numbers 6 00:00:25,440 --> 00:00:29,960 Speaker 1: are are quite spectacular. They approached this in an absolutely 7 00:00:30,200 --> 00:00:33,960 Speaker 1: unique way, UH, in fact, so unique it's become known 8 00:00:34,040 --> 00:00:39,800 Speaker 1: as the Tampa model. No consultants, no third parties, no alternatives, 9 00:00:39,840 --> 00:00:43,080 Speaker 1: just stocks and bonds managed by a single firm at 10 00:00:43,080 --> 00:00:46,640 Speaker 1: a very low cost. UH. They run about a dozen 11 00:00:46,720 --> 00:00:51,120 Speaker 1: other UH pension farms UH in around in and around 12 00:00:51,440 --> 00:00:56,360 Speaker 1: southern Florida as well as elsewhere. This is really a 13 00:00:56,440 --> 00:01:00,400 Speaker 1: master class on how to manage a pension fund, how 14 00:01:00,440 --> 00:01:03,320 Speaker 1: to keep your costs in line, how to avoid the 15 00:01:03,520 --> 00:01:08,720 Speaker 1: usual expense of consultants and third party managers. UH. It's 16 00:01:08,720 --> 00:01:12,360 Speaker 1: really quite fascinating. It's always interesting when you speak with 17 00:01:12,440 --> 00:01:16,560 Speaker 1: someone who's a unique contrarian and approaches the world in 18 00:01:16,600 --> 00:01:21,520 Speaker 1: a different way and has been very successful using that model. 19 00:01:22,280 --> 00:01:27,560 Speaker 1: If you are remotely interested in long term investing, foundations 20 00:01:27,640 --> 00:01:32,480 Speaker 1: and pensions, or just hearing someone who has a unique approach. 21 00:01:32,880 --> 00:01:36,040 Speaker 1: I believe you're gonna find this conversation fascinating. So, with 22 00:01:36,080 --> 00:01:40,759 Speaker 1: no further ado, my conversation with Bowen and Haynes. Jay Bowen, 23 00:01:43,080 --> 00:01:47,640 Speaker 1: this is Masters in Business with Barry Ridholts on Boomberg Radio. 24 00:01:48,480 --> 00:01:52,080 Speaker 1: My special guest today is Jake Bowen. He is the 25 00:01:52,160 --> 00:01:56,440 Speaker 1: CEO and Chief Investment officer of Bowen, Haynes and Company. 26 00:01:57,000 --> 00:02:00,800 Speaker 1: The firm has managed the Tampa fire Fighters and Police 27 00:02:00,800 --> 00:02:06,200 Speaker 1: Officers pension funds for over forty five years, performing consistently 28 00:02:06,400 --> 00:02:10,000 Speaker 1: in the top quartile versus piers. It is one of 29 00:02:10,000 --> 00:02:12,880 Speaker 1: the few pension funds in the United States that is 30 00:02:12,919 --> 00:02:17,079 Speaker 1: effectively fully funded. UH. The total return on the portfolio 31 00:02:17,200 --> 00:02:22,440 Speaker 1: since its inception has been nearly fourteen thousand percent UH. 32 00:02:22,520 --> 00:02:26,600 Speaker 1: The annual return is of the stock portion is fourteen 33 00:02:26,680 --> 00:02:32,160 Speaker 1: point six percent, handily out performing the benchmark. The total 34 00:02:32,200 --> 00:02:37,000 Speaker 1: return has been eleven point nine percent annualized. That beats 35 00:02:37,000 --> 00:02:41,320 Speaker 1: the SMP five hundred UM. Quite impressive for a stock 36 00:02:41,360 --> 00:02:45,200 Speaker 1: and bond portfolio. Jay Bowen, Welcome to Bloomberg. Thank you 37 00:02:45,240 --> 00:02:48,120 Speaker 1: very much. Am I getting your name right? Bowen? Alright, 38 00:02:48,480 --> 00:02:51,520 Speaker 1: so you have really this is a fascinating story that 39 00:02:51,560 --> 00:02:54,280 Speaker 1: I don't know if many people are familiar with your 40 00:02:54,320 --> 00:02:58,400 Speaker 1: father founded Bowen Haines in Company in nineteen seventy two, 41 00:02:59,160 --> 00:03:03,440 Speaker 1: eventually be Humming the person running the Tampa Firefighters and 42 00:03:03,440 --> 00:03:06,680 Speaker 1: and Police Officers pension fund. You took the fund over 43 00:03:06,760 --> 00:03:09,880 Speaker 1: in the early two thousand's, Is that right? I assumed 44 00:03:09,919 --> 00:03:12,480 Speaker 1: day to day responsibility in two thousands, right? Right? Were 45 00:03:12,520 --> 00:03:15,760 Speaker 1: you working for the firm before that? Yes, I came 46 00:03:15,800 --> 00:03:19,360 Speaker 1: on board and actually in nineteen seven. So what was 47 00:03:19,400 --> 00:03:21,680 Speaker 1: your career path? First of all, did you know you 48 00:03:21,720 --> 00:03:24,360 Speaker 1: always wanted to go into finance with the father running 49 00:03:24,360 --> 00:03:27,240 Speaker 1: a pension funds? I did not, But I grew up 50 00:03:27,720 --> 00:03:31,079 Speaker 1: with my father taking monthly trips to Tampa, and I 51 00:03:31,160 --> 00:03:35,320 Speaker 1: knew he was going somewhere on business, and when he 52 00:03:35,320 --> 00:03:37,960 Speaker 1: would come home, he would go down every month in 53 00:03:38,000 --> 00:03:40,720 Speaker 1: the in the seventies and UM he would take me 54 00:03:40,800 --> 00:03:43,360 Speaker 1: down when I had a vacation or had a few 55 00:03:43,440 --> 00:03:46,040 Speaker 1: days off from grammar school, and I became kind of 56 00:03:46,120 --> 00:03:48,240 Speaker 1: enamored with the with the Tampa Bay area. I did. 57 00:03:48,280 --> 00:03:53,480 Speaker 1: I did not know that I was gonna eventually be 58 00:03:53,600 --> 00:03:55,440 Speaker 1: involved in the business. I was very I was an 59 00:03:55,440 --> 00:04:00,000 Speaker 1: English major, very liberal arts oriented. UM, but became fascinating 60 00:04:00,000 --> 00:04:03,560 Speaker 1: it and drawn. Really I wasn't a numbers person, I 61 00:04:03,640 --> 00:04:07,320 Speaker 1: wasn't a math person. I was fascinated and drawn to 62 00:04:07,440 --> 00:04:11,360 Speaker 1: the policy debate UM, the economic policy debate. I really 63 00:04:11,400 --> 00:04:14,520 Speaker 1: became focused on that, and with the top down approach 64 00:04:14,800 --> 00:04:17,479 Speaker 1: that the firm took, I kind of entered it that way. 65 00:04:17,720 --> 00:04:19,480 Speaker 1: What was your what was your first job right out 66 00:04:19,520 --> 00:04:23,760 Speaker 1: of college? I was in sales marketing, oriented, very very 67 00:04:23,800 --> 00:04:26,559 Speaker 1: You didn't jump right into the family business, so to speak. 68 00:04:26,640 --> 00:04:30,520 Speaker 1: I didn't jump right in UM. But what happened was 69 00:04:30,839 --> 00:04:33,880 Speaker 1: in nineteen eighties six I went up to a Washington 70 00:04:33,960 --> 00:04:39,520 Speaker 1: conference policy conference, and I was just so drawn and 71 00:04:39,600 --> 00:04:44,200 Speaker 1: so and I'd always been that way really throughout my life, 72 00:04:44,320 --> 00:04:48,839 Speaker 1: very focused on UH policies and politics and what was 73 00:04:48,880 --> 00:04:50,720 Speaker 1: going on and what it meant and what it might 74 00:04:50,760 --> 00:04:54,120 Speaker 1: mean to the financial markets. And so I really after 75 00:04:54,200 --> 00:04:57,839 Speaker 1: that conference, it just really became inevitable that I wanted 76 00:04:57,880 --> 00:05:01,760 Speaker 1: to get involved. Was your father interested in the sort 77 00:05:01,800 --> 00:05:05,960 Speaker 1: of macro economic analysis as applied to investing or was 78 00:05:06,000 --> 00:05:10,960 Speaker 1: that something that he thought wasn't necessarily relevant. He was 79 00:05:11,120 --> 00:05:13,840 Speaker 1: interested in it and thought, you know, as you know, 80 00:05:13,960 --> 00:05:16,760 Speaker 1: they're all different ways to do this business. There's bottom up, 81 00:05:16,800 --> 00:05:21,440 Speaker 1: there's top down, there's there's mob black boxes, computerized models, 82 00:05:21,440 --> 00:05:25,720 Speaker 1: there are and and phenomenally successful ways. We've just always 83 00:05:25,720 --> 00:05:28,600 Speaker 1: gone about it from a top down perspective, and he 84 00:05:28,680 --> 00:05:31,840 Speaker 1: was top down primarily. I'll tell you why, because when 85 00:05:31,880 --> 00:05:35,560 Speaker 1: he started the firm in the early seventies, I mean, sure, 86 00:05:35,560 --> 00:05:40,120 Speaker 1: it's a great time to focus on inflationary expectations and 87 00:05:40,200 --> 00:05:43,320 Speaker 1: what that might mean a financial market. So multiple recessions, 88 00:05:43,480 --> 00:05:47,120 Speaker 1: big pullbacks in the market. Seventy seventy four was about 89 00:05:47,160 --> 00:05:51,840 Speaker 1: a fifty seven percent drop UH real real bond yields 90 00:05:51,839 --> 00:05:56,320 Speaker 1: were effectively zero with inflation at ten twelve. Yeah. Yeah, 91 00:05:56,360 --> 00:05:59,880 Speaker 1: there's an amazing when you look at it over long periods. 92 00:06:00,040 --> 00:06:02,040 Speaker 1: I mean, there was a period from nineteen sixty eight 93 00:06:02,080 --> 00:06:06,359 Speaker 1: to nineteen eighty two when the market had a negative 94 00:06:06,360 --> 00:06:09,000 Speaker 1: real return, stocks had a negative real return, and that 95 00:06:09,120 --> 00:06:11,000 Speaker 1: was in my view the way we view the world. 96 00:06:11,000 --> 00:06:15,080 Speaker 1: That was because of UM really anti growth policies and 97 00:06:15,160 --> 00:06:19,440 Speaker 1: a very counterproductive Federals erve in terms of from UH 98 00:06:19,480 --> 00:06:26,160 Speaker 1: and then the FED basically funding the the UH, ratifying 99 00:06:26,160 --> 00:06:29,000 Speaker 1: the inflation during the seventies, in the sixties and seventies, 100 00:06:29,120 --> 00:06:31,640 Speaker 1: what are your thoughts on someone like Paul Volker who 101 00:06:31,640 --> 00:06:35,480 Speaker 1: comes in and says, oh, well, let's do this and 102 00:06:35,480 --> 00:06:39,600 Speaker 1: and basically takes the FED funds rate up to double digits. Right. 103 00:06:39,640 --> 00:06:42,800 Speaker 1: That was a really important turning point in terms of 104 00:06:43,240 --> 00:06:44,919 Speaker 1: how we of course I wasn't on board then. This 105 00:06:45,000 --> 00:06:49,359 Speaker 1: was eight actually vocal Candon in seventy nine. Um. But 106 00:06:50,160 --> 00:06:53,279 Speaker 1: there was a triple triple threat that happened in the 107 00:06:53,320 --> 00:06:55,800 Speaker 1: late seventies and early eighties, and it really set the 108 00:06:55,839 --> 00:07:00,680 Speaker 1: stage for a arguably the biggest bullmarket ever UM. And 109 00:07:00,760 --> 00:07:02,800 Speaker 1: that was Paul Voker coming in to break the back 110 00:07:02,839 --> 00:07:06,880 Speaker 1: of inflation, which is so key to financial assets price 111 00:07:06,880 --> 00:07:12,480 Speaker 1: stability um uh, but not inflationary expectations. And then there 112 00:07:12,520 --> 00:07:16,160 Speaker 1: was a deregulation effort that started with Afridkahan at the 113 00:07:16,560 --> 00:07:20,560 Speaker 1: at the airline and trucking deregulation, Airline deregulation seven. And 114 00:07:20,600 --> 00:07:24,280 Speaker 1: then Reagan came in UM with the tax reform UM 115 00:07:24,360 --> 00:07:28,200 Speaker 1: in terms of lower tax rates, higher after tax returns, 116 00:07:28,200 --> 00:07:30,920 Speaker 1: increasing in centers for work, was taking investment capital format 117 00:07:30,920 --> 00:07:34,280 Speaker 1: I mean all those three things together um. And of 118 00:07:34,320 --> 00:07:37,040 Speaker 1: course the DAO was sitting at seven seven fifty eight 119 00:07:37,160 --> 00:07:40,560 Speaker 1: hundred with no real return um going all the way 120 00:07:40,560 --> 00:07:44,520 Speaker 1: back to nineteen and I remember, and uh this is 121 00:07:44,640 --> 00:07:47,440 Speaker 1: I was still focused on policy even though I was 122 00:07:47,440 --> 00:07:50,680 Speaker 1: in college. I remember in eight two the tax cuts 123 00:07:50,680 --> 00:07:53,520 Speaker 1: didn't take effect and there was a they delayed the 124 00:07:53,560 --> 00:07:56,680 Speaker 1: tax cuts. They passed the legislation eighty The tax cuts 125 00:07:56,760 --> 00:08:00,000 Speaker 1: didn't take effect until August of eighty two. Guess when 126 00:08:00,000 --> 00:08:04,760 Speaker 1: the bullmarket story. Let's talk a little bit about the 127 00:08:04,840 --> 00:08:09,680 Speaker 1: Tampa model. Your firm has managed the Tampa firefighters and 128 00:08:09,680 --> 00:08:14,720 Speaker 1: police officers pension funds for over forty five years. That's 129 00:08:14,720 --> 00:08:17,600 Speaker 1: pretty unique in the world, isn't it. It's very unique. 130 00:08:18,080 --> 00:08:20,800 Speaker 1: My father for is a relationship in nineteen seventy four. 131 00:08:20,920 --> 00:08:22,800 Speaker 1: We're now in the midst of our forty five year 132 00:08:22,960 --> 00:08:26,160 Speaker 1: as you as you noted, we've managed every penny the 133 00:08:26,360 --> 00:08:29,880 Speaker 1: entire period. It's growing from twelve million to over two billion, 134 00:08:30,040 --> 00:08:32,680 Speaker 1: and they've taken over a billion out so that's three 135 00:08:32,720 --> 00:08:36,160 Speaker 1: billion total cap appreciation to come of over three billion 136 00:08:36,640 --> 00:08:39,040 Speaker 1: from twelve million from twelve and obviously there's been some 137 00:08:39,080 --> 00:08:41,600 Speaker 1: contributions along the way country. Yeah, but the net there's 138 00:08:41,600 --> 00:08:44,200 Speaker 1: been net outflows, which is what you want. That's what 139 00:08:44,240 --> 00:08:50,080 Speaker 1: it's for. That right retirements for these incredibly dedicated public 140 00:08:50,080 --> 00:08:52,920 Speaker 1: safety employees. So it's do it's doing its job right. See, 141 00:08:52,960 --> 00:08:56,240 Speaker 1: I would imagine that you're completely ticket proof in Florida, 142 00:08:56,320 --> 00:08:58,640 Speaker 1: that anybody pulls you over. It's like I'm the guy 143 00:08:58,640 --> 00:09:02,679 Speaker 1: who manages your retirement account and that, oh, of course, 144 00:09:02,880 --> 00:09:05,960 Speaker 1: I have a nice day, Mr Bowen. Yeah, Tampa, Tampa. 145 00:09:06,040 --> 00:09:08,640 Speaker 1: I think my father was pretty safe within the city limits, 146 00:09:08,640 --> 00:09:12,439 Speaker 1: and I hope by him. So you go from twelve 147 00:09:12,520 --> 00:09:16,520 Speaker 1: million to over three billion including outflows to what do 148 00:09:16,559 --> 00:09:20,200 Speaker 1: you credit this? Uh performance? Yeah, it's a it's a 149 00:09:20,240 --> 00:09:23,320 Speaker 1: confluence of events. And by the way, my father four's 150 00:09:23,640 --> 00:09:25,679 Speaker 1: actually was involved with this fund in nineteen in the 151 00:09:25,760 --> 00:09:28,040 Speaker 1: late sixties when he was with another institution when he 152 00:09:28,080 --> 00:09:31,160 Speaker 1: started his firm, UM he helped kind of set the 153 00:09:31,160 --> 00:09:33,560 Speaker 1: fund up and helped with the investent policy statement back then. 154 00:09:33,600 --> 00:09:35,160 Speaker 1: And then when he started his own firm, they were 155 00:09:35,160 --> 00:09:37,800 Speaker 1: dissatisfied and came to him in seventy four. So that's 156 00:09:37,960 --> 00:09:39,920 Speaker 1: and hired him when it was at twelve million. And 157 00:09:39,920 --> 00:09:43,280 Speaker 1: it's really um I tell you what um I think. 158 00:09:44,040 --> 00:09:46,640 Speaker 1: And it's funny. The pension attorney down there coined this 159 00:09:46,760 --> 00:09:48,200 Speaker 1: term and I love it. He said, you know what 160 00:09:48,280 --> 00:09:51,880 Speaker 1: you've got here, and he he sees pension public pension 161 00:09:51,880 --> 00:09:54,880 Speaker 1: funds all over the country. Um, he's involved almost in 162 00:09:54,920 --> 00:09:59,440 Speaker 1: every state, very prominent pension public pension fund attorney. He said, 163 00:09:59,440 --> 00:10:01,400 Speaker 1: you know you in Tampa. He told the board you 164 00:10:01,400 --> 00:10:04,880 Speaker 1: all have a perfect rainbow. And he said perfect rainbow 165 00:10:04,920 --> 00:10:08,640 Speaker 1: because you've got a great city, competent. You know, they're 166 00:10:08,640 --> 00:10:10,560 Speaker 1: all kind of moving parts. That the true the health 167 00:10:10,559 --> 00:10:12,400 Speaker 1: of a pension fund. We're just one component. We're an 168 00:10:12,440 --> 00:10:14,560 Speaker 1: important one, but they're all kind of moving parts. I mean, 169 00:10:14,600 --> 00:10:18,160 Speaker 1: you've got he said, you've got a really competent, strong 170 00:10:19,320 --> 00:10:23,480 Speaker 1: municipal city government, well managed. Well, it's if Tampa were stock, 171 00:10:23,520 --> 00:10:25,880 Speaker 1: I'd be buying it. Can I tell you I visited 172 00:10:25,920 --> 00:10:29,760 Speaker 1: Tampa repeatedly over the past few decades. Tampa is a 173 00:10:29,800 --> 00:10:33,520 Speaker 1: booming city. Twenty thirty years ago that it was kind 174 00:10:33,520 --> 00:10:35,160 Speaker 1: of a mess. You know who else has seen that 175 00:10:35,200 --> 00:10:40,760 Speaker 1: as Jeff Finnick, really Jeff Finnick is he is Misiality Fidelli. 176 00:10:40,840 --> 00:10:45,040 Speaker 1: He is Mr Tampa. Now there he purchased the hockey 177 00:10:45,040 --> 00:10:49,440 Speaker 1: team is involved in a massive development effort on the waterfront. 178 00:10:49,520 --> 00:10:52,040 Speaker 1: So he saw the value there. A few years Ago, 179 00:10:52,280 --> 00:10:54,360 Speaker 1: and he's very involved in Tampa. And as I say, 180 00:10:54,400 --> 00:10:56,240 Speaker 1: if Tampa were a stock, I would be buying it. 181 00:10:56,320 --> 00:11:00,120 Speaker 1: But a competent city government. And here's the important on 182 00:11:00,559 --> 00:11:03,920 Speaker 1: that funds the pension fund. They fund it. They put 183 00:11:03,960 --> 00:11:06,959 Speaker 1: the money in. A lot of these municipalities that are 184 00:11:06,960 --> 00:11:10,559 Speaker 1: in such trouble don't um so Tampa. Actually it's a 185 00:11:10,679 --> 00:11:12,840 Speaker 1: it's I think it's the best run major city in America. 186 00:11:14,480 --> 00:11:17,360 Speaker 1: That's one component. Number Two, they have a board and 187 00:11:17,480 --> 00:11:20,120 Speaker 1: my non member board that is extremely responsible on the 188 00:11:20,120 --> 00:11:22,760 Speaker 1: benefit side. You know, they're not reckless in terms of 189 00:11:23,440 --> 00:11:26,120 Speaker 1: allow the Dallas fire and police, in terms of uh 190 00:11:26,400 --> 00:11:31,040 Speaker 1: promising all these these It's a very very responsible, dedicated board. 191 00:11:31,080 --> 00:11:33,959 Speaker 1: And then number three, the third part of the perfect 192 00:11:34,080 --> 00:11:37,120 Speaker 1: rainbow is that we've had good investment returns. It's so 193 00:11:37,200 --> 00:11:40,800 Speaker 1: easy to make promises that come due decades in the 194 00:11:40,840 --> 00:11:43,720 Speaker 1: future and not to fund it because by the time 195 00:11:44,800 --> 00:11:49,120 Speaker 1: people are pointing fingers, the people responsible along gone. So 196 00:11:49,120 --> 00:11:53,160 Speaker 1: so how to what do you attribute Tampa avoiding what 197 00:11:53,360 --> 00:11:58,160 Speaker 1: is a typical fate of local governments and municipalities, which 198 00:11:58,240 --> 00:11:59,960 Speaker 1: is to just kick the can down the road as 199 00:12:00,040 --> 00:12:02,000 Speaker 1: far as they can. And we see it in the 200 00:12:02,000 --> 00:12:07,120 Speaker 1: pension space with very high expected returns for expensive hedge funds, 201 00:12:07,880 --> 00:12:11,199 Speaker 1: and that ends up being matched with very low actual returns. 202 00:12:11,720 --> 00:12:15,680 Speaker 1: What what's the what's the secret to good city government? Yeah, 203 00:12:15,720 --> 00:12:18,080 Speaker 1: I just think it's they have the board. Of course, 204 00:12:18,080 --> 00:12:20,880 Speaker 1: it's run by the board. Their three firemen, three policemen, 205 00:12:20,880 --> 00:12:24,000 Speaker 1: and three people appointed by the city UM and they've 206 00:12:24,040 --> 00:12:27,600 Speaker 1: just been uh, it's it's it's an extraordinary situation over 207 00:12:27,600 --> 00:12:30,480 Speaker 1: the last forty five years. It's an extremely dedicated board. 208 00:12:30,520 --> 00:12:32,920 Speaker 1: And I think here's one thing that I think has 209 00:12:32,960 --> 00:12:36,000 Speaker 1: missed in this whole debate. And pick your number four 210 00:12:36,040 --> 00:12:40,120 Speaker 1: or five trillion dollar underfunded, underfunded crisis average municipal fund. 211 00:12:40,160 --> 00:12:43,560 Speaker 1: I think the funding ratio is um and you're in 212 00:12:43,600 --> 00:12:47,160 Speaker 1: the nineties. It's I don't know, it's fully it's fully funded. 213 00:12:47,200 --> 00:12:50,800 Speaker 1: But I think what they've done down there is they've 214 00:12:50,800 --> 00:12:53,320 Speaker 1: realized what the they've never lost sight of what the 215 00:12:53,400 --> 00:12:56,920 Speaker 1: core mission of this fund is. It's not to generate 216 00:12:57,000 --> 00:13:01,520 Speaker 1: fees for layers and layers and layers of people. It's 217 00:13:01,559 --> 00:13:05,960 Speaker 1: not to allocate assets to every asset class under the 218 00:13:06,000 --> 00:13:12,120 Speaker 1: sun UM. It's to provide a good, stable retirement for 219 00:13:12,160 --> 00:13:16,679 Speaker 1: these public safety employees. And to do that, um, they've 220 00:13:17,360 --> 00:13:20,120 Speaker 1: and with their focus firmly on that, they've avoided a 221 00:13:20,160 --> 00:13:22,040 Speaker 1: lot of the conflicts of interest. When you look at 222 00:13:22,080 --> 00:13:24,960 Speaker 1: a lot of these funds, there's just enormous conflicts. And 223 00:13:25,000 --> 00:13:27,040 Speaker 1: just to I can give you one small antidote to 224 00:13:27,040 --> 00:13:28,760 Speaker 1: give you an example of how they stayed out of 225 00:13:28,760 --> 00:13:32,319 Speaker 1: trouble back And I wasn't on board, but my father 226 00:13:32,440 --> 00:13:35,079 Speaker 1: used to love to tell the story of the mayor 227 00:13:35,360 --> 00:13:37,599 Speaker 1: down there in the the mayor of Tampa in the 228 00:13:37,640 --> 00:13:40,000 Speaker 1: mid seventies. After he was mayor, he became chairman of 229 00:13:40,040 --> 00:13:44,360 Speaker 1: a major insurance company and he made a presentation to 230 00:13:44,400 --> 00:13:49,680 Speaker 1: the board to put uh quite a large percentage of 231 00:13:49,679 --> 00:13:55,160 Speaker 1: the fund in an insurance products, guaranteed investment contracts, annuities, 232 00:13:55,160 --> 00:13:57,920 Speaker 1: that kind of thing. And he thought he had it 233 00:13:57,920 --> 00:14:00,160 Speaker 1: in the bag. He was, he was the mayor, He 234 00:14:00,200 --> 00:14:04,960 Speaker 1: knew some of the city trustees, and soft the sales 235 00:14:05,000 --> 00:14:07,120 Speaker 1: crew from New York came down in their fancy suits 236 00:14:07,120 --> 00:14:09,720 Speaker 1: and they gave the presentation, and the board vited him 237 00:14:09,760 --> 00:14:13,160 Speaker 1: down and it was just a stunner. Nobody could believe 238 00:14:13,200 --> 00:14:15,560 Speaker 1: that the board. But what I mean, this never happens. 239 00:14:15,600 --> 00:14:17,480 Speaker 1: I mean it usually funds like that are riddled with 240 00:14:17,520 --> 00:14:20,960 Speaker 1: these kind of conflicts. Um. And they have always I 241 00:14:20,960 --> 00:14:23,400 Speaker 1: mean not their exceptions every now and then the board met, 242 00:14:23,480 --> 00:14:27,920 Speaker 1: But for the most part, it's extremely dedicated board that 243 00:14:28,160 --> 00:14:31,320 Speaker 1: they've they've avoided the pitfalls and the conflicts of entry. 244 00:14:31,920 --> 00:14:35,120 Speaker 1: You know, earlier we were discussing some of the pushback 245 00:14:35,160 --> 00:14:39,600 Speaker 1: to your model of not using consultants, not using third 246 00:14:39,640 --> 00:14:44,040 Speaker 1: parties who might add fees, no alternatives like hedge funds 247 00:14:44,120 --> 00:14:48,680 Speaker 1: or private equity. Um. How unusual is that set up 248 00:14:48,840 --> 00:14:54,920 Speaker 1: in the world's defension funds. It's unprecedented, exceedingly unusual. In fact, 249 00:14:55,000 --> 00:14:57,200 Speaker 1: when the trustees go to these conferences, I mean I 250 00:14:57,240 --> 00:14:59,760 Speaker 1: cringe a little bit. They go to these investor conferences. 251 00:14:59,800 --> 00:15:05,160 Speaker 1: They're sponsored by consultants and everybody else, and they they're 252 00:15:05,200 --> 00:15:09,400 Speaker 1: all always at these conferences, national conferences, and they're swarmed, 253 00:15:09,760 --> 00:15:14,600 Speaker 1: of course by various service providers and what you can't 254 00:15:14,600 --> 00:15:18,320 Speaker 1: have one manager that's FIDUCIALI you can't do this, rack Ins. 255 00:15:18,600 --> 00:15:22,320 Speaker 1: And then I'm the former chairman of the board policeman. 256 00:15:23,040 --> 00:15:24,920 Speaker 1: I used to love it. He would carry around the 257 00:15:24,960 --> 00:15:27,040 Speaker 1: compounding any return his back pocket and he would just 258 00:15:27,040 --> 00:15:29,640 Speaker 1: show it because my returns how you do, and they 259 00:15:29,680 --> 00:15:33,240 Speaker 1: were just going, okay, well we'll see learning. So hey, 260 00:15:33,280 --> 00:15:35,640 Speaker 1: can you keep up with this if you can't always start? 261 00:15:36,080 --> 00:15:38,920 Speaker 1: I recall some time ago there was an article in 262 00:15:38,960 --> 00:15:41,240 Speaker 1: the Wolf Street Journal about I want to say it 263 00:15:41,280 --> 00:15:45,160 Speaker 1: was in Nevada. Somebody is managing a small pension fund 264 00:15:45,600 --> 00:15:48,800 Speaker 1: and effectively he comes into the office each day with 265 00:15:48,840 --> 00:15:53,280 Speaker 1: his crossword puzzle. Everything is in indexes. He doesn't do anything, 266 00:15:53,960 --> 00:15:57,280 Speaker 1: and their core structure is is That's the only other 267 00:15:57,360 --> 00:16:02,840 Speaker 1: example I'm familiar with of somebody approaching single manager, no consultant, 268 00:16:02,880 --> 00:16:06,720 Speaker 1: no third party. But so now that's too Are there 269 00:16:06,720 --> 00:16:11,400 Speaker 1: anybody else who remotely, even at least is thinking or 270 00:16:11,520 --> 00:16:14,280 Speaker 1: looking at this sort of model? You know, it's funny 271 00:16:14,400 --> 00:16:17,600 Speaker 1: because you would think, I mean, we have received a 272 00:16:17,600 --> 00:16:21,400 Speaker 1: lot of national acclaim over the years because of the 273 00:16:21,480 --> 00:16:27,120 Speaker 1: uniqueness and the performance. But the industry, there's the model, 274 00:16:27,480 --> 00:16:30,200 Speaker 1: the consultant driven multimanager model. They have got such a 275 00:16:30,280 --> 00:16:36,480 Speaker 1: stranglehold on the industry that they're really there is they're 276 00:16:36,520 --> 00:16:41,040 Speaker 1: they're going halfway towards indexing. But in terms of of course, 277 00:16:42,600 --> 00:16:44,520 Speaker 1: here's a little bit of indexing, and now let's are 278 00:16:44,560 --> 00:16:47,240 Speaker 1: seeing a move towards that within the municipal arena, but 279 00:16:47,560 --> 00:16:50,800 Speaker 1: a move towards a core, one core, unconstrained manager for 280 00:16:50,840 --> 00:16:54,960 Speaker 1: the Bulkley assets. No, um it's it doesn't matter. The 281 00:16:55,200 --> 00:16:57,400 Speaker 1: evidence can be so overwhelming and so powerful in terms 282 00:16:57,400 --> 00:17:00,720 Speaker 1: of the potential benefits from a return standpoint for with feastandpoint, 283 00:17:00,800 --> 00:17:05,800 Speaker 1: but um it's it's never accepted within that arena. And 284 00:17:06,119 --> 00:17:08,439 Speaker 1: one question I always have, not that we're in this league, 285 00:17:08,600 --> 00:17:12,119 Speaker 1: is that everybody says it's it's reckless and irresponsible and 286 00:17:12,119 --> 00:17:14,320 Speaker 1: how can you do it? And there's one man And 287 00:17:14,359 --> 00:17:16,879 Speaker 1: I'm always thinking in the back of mind, well, you know, 288 00:17:16,920 --> 00:17:19,680 Speaker 1: Warren Buffett and Charlie Munger. There have two of them, 289 00:17:19,760 --> 00:17:22,120 Speaker 1: and they manage but fifties. Not that we're in that league, 290 00:17:22,119 --> 00:17:24,000 Speaker 1: but they manage fifty or sixty billion, and they're just 291 00:17:24,040 --> 00:17:25,640 Speaker 1: two of them. I think it's even more than that. 292 00:17:26,400 --> 00:17:28,720 Speaker 1: And yet and you don't hear the you don't hear 293 00:17:28,760 --> 00:17:30,439 Speaker 1: the you know, we gotta we gotta break it up. 294 00:17:30,720 --> 00:17:32,639 Speaker 1: We've gotta break it up, we gotta put some of that, 295 00:17:32,720 --> 00:17:36,119 Speaker 1: we gotta there. There have been people who have suggested 296 00:17:36,160 --> 00:17:38,840 Speaker 1: that over times, you know, you'll unleash a lot of 297 00:17:38,920 --> 00:17:42,879 Speaker 1: value if we break up Berkshire Hathaway. That that sort 298 00:17:42,920 --> 00:17:46,120 Speaker 1: of anytime there's a big pool of money, people are 299 00:17:46,119 --> 00:17:49,480 Speaker 1: gonna look at it as an opportunity to capture some 300 00:17:49,600 --> 00:17:53,080 Speaker 1: of it. And if we break up Berkshire Hathaway, my 301 00:17:53,200 --> 00:17:56,200 Speaker 1: firm is ready to stand to garner a whole bunch 302 00:17:56,240 --> 00:18:01,919 Speaker 1: of investment banking fees from the process. It's never coming 303 00:18:01,960 --> 00:18:07,119 Speaker 1: out of academia. Objectively speaking, here here's why Berkshire Hathaway 304 00:18:07,160 --> 00:18:10,679 Speaker 1: should be broken up. Um So, but you bring up 305 00:18:10,680 --> 00:18:14,920 Speaker 1: a really valid point, which is the pushback has been 306 00:18:15,200 --> 00:18:19,840 Speaker 1: pretty outrageous. There were accusations about it. They wouldn't go 307 00:18:19,920 --> 00:18:23,280 Speaker 1: so far as to say fraud, but accounting issues and 308 00:18:23,920 --> 00:18:26,919 Speaker 1: why do they change accounting so often I read about this. 309 00:18:27,040 --> 00:18:31,199 Speaker 1: It's you, you're I'll let you defend it. But some 310 00:18:31,359 --> 00:18:34,720 Speaker 1: of the pushback to this has been pretty It's incredible. 311 00:18:34,760 --> 00:18:36,280 Speaker 1: You know, in the in the in the we do 312 00:18:36,359 --> 00:18:38,880 Speaker 1: have a First Amendment and I love it. And we've 313 00:18:38,920 --> 00:18:40,960 Speaker 1: got in the digital age and the you know, the 314 00:18:41,240 --> 00:18:44,360 Speaker 1: free flow of information, the flow of information anybody, particularly 315 00:18:44,400 --> 00:18:47,120 Speaker 1: in the bloggosphere and online. You know, you can say anything. 316 00:18:47,560 --> 00:18:51,960 Speaker 1: It's out there, and it's funny it there's just we 317 00:18:52,160 --> 00:18:57,240 Speaker 1: are the enemy to the to the standard conventional model 318 00:18:57,400 --> 00:19:00,119 Speaker 1: that I think we're a threat. I think we're a it. 319 00:19:00,480 --> 00:19:03,159 Speaker 1: And some of these their fee structured to the overall 320 00:19:03,200 --> 00:19:05,720 Speaker 1: model itself, the model or model I think is a 321 00:19:05,800 --> 00:19:10,120 Speaker 1: threat to the multi manager consultant driven model. And so 322 00:19:10,200 --> 00:19:13,600 Speaker 1: there's been a concerted effort and this listen, we've heard this. 323 00:19:13,760 --> 00:19:15,960 Speaker 1: My dad heard it throughout the seventies and eighties. I 324 00:19:16,000 --> 00:19:18,600 Speaker 1: mean he he listened, He laid the groundwork. I mean, 325 00:19:18,640 --> 00:19:21,240 Speaker 1: I'm the beneficiary of what he did. He he's the 326 00:19:21,280 --> 00:19:23,720 Speaker 1: one that had to get bloody back in the seventies 327 00:19:23,720 --> 00:19:26,000 Speaker 1: and eighties when man, they were coming after that fund, 328 00:19:26,000 --> 00:19:28,080 Speaker 1: even though it wasn't as big, they were coming after 329 00:19:28,080 --> 00:19:31,159 Speaker 1: it like you wouldn't believe. But what happened was the 330 00:19:31,240 --> 00:19:34,520 Speaker 1: results were so good that all of a sudden, the 331 00:19:34,560 --> 00:19:38,080 Speaker 1: city started being on our side because the city. It's 332 00:19:38,119 --> 00:19:42,280 Speaker 1: great for the city. When then they were they were 333 00:19:42,320 --> 00:19:47,200 Speaker 1: able to cut taxes, so they became allies. Let's talk 334 00:19:47,240 --> 00:19:50,160 Speaker 1: a little bit about your investing style and and where 335 00:19:50,160 --> 00:19:53,480 Speaker 1: we are in the market cycle. You describe yourself as 336 00:19:53,520 --> 00:19:58,359 Speaker 1: a top down thematic investor. What what does that mean? Yeah? 337 00:19:58,400 --> 00:20:01,480 Speaker 1: And one important thing to know with this relationship, which 338 00:20:01,520 --> 00:20:04,720 Speaker 1: is a pretty extraordinary being typed down in thematic were 339 00:20:04,720 --> 00:20:07,720 Speaker 1: able to really in the board allows us to focus 340 00:20:07,760 --> 00:20:10,400 Speaker 1: on the real long term and I mean real long term. 341 00:20:10,480 --> 00:20:13,320 Speaker 1: They actually, and I can say this with a straight face, 342 00:20:13,359 --> 00:20:14,840 Speaker 1: and they would tell you with a straight face, they 343 00:20:14,840 --> 00:20:18,120 Speaker 1: take a twenty year investment. They really do, which makes 344 00:20:18,119 --> 00:20:21,480 Speaker 1: sense for a pension fund. Just most don't. The actually yeah, 345 00:20:21,520 --> 00:20:23,960 Speaker 1: and the actuaries love the twenty years because that's the 346 00:20:24,040 --> 00:20:26,040 Speaker 1: kind of the average snapshot of a career of a 347 00:20:26,040 --> 00:20:28,800 Speaker 1: public safety But the reason we take a twenty year 348 00:20:29,119 --> 00:20:31,160 Speaker 1: is that we found that there hadn't been a twenty 349 00:20:31,240 --> 00:20:34,479 Speaker 1: year period that has not included a bull market and 350 00:20:34,560 --> 00:20:37,879 Speaker 1: a bear market, and a recession, and a speculative bubble 351 00:20:37,960 --> 00:20:41,640 Speaker 1: and a war, I mean throughout the financial history. Um, 352 00:20:41,760 --> 00:20:44,560 Speaker 1: we love. I think that's a great time frame to 353 00:20:44,640 --> 00:20:49,000 Speaker 1: measure the competency of a manager in all time periods. 354 00:20:49,040 --> 00:20:51,639 Speaker 1: And we can show now every every October when I 355 00:20:51,640 --> 00:20:53,400 Speaker 1: go down there to the review of the fiscal year, 356 00:20:53,480 --> 00:20:56,320 Speaker 1: which is there on a September physical, we show another 357 00:20:56,320 --> 00:20:59,240 Speaker 1: twenty year rolling setup performance data. And right now we 358 00:20:59,280 --> 00:21:03,080 Speaker 1: can show twenty five sets of twenty year rolling performance 359 00:21:03,080 --> 00:21:06,120 Speaker 1: and you can show really good out performance for each 360 00:21:06,119 --> 00:21:08,960 Speaker 1: of the twenty years segments. So they've allowed us to 361 00:21:08,960 --> 00:21:11,800 Speaker 1: take a twenty year approach and it ties into the 362 00:21:11,800 --> 00:21:14,120 Speaker 1: top down thematic. And just to give you a couple 363 00:21:14,119 --> 00:21:16,240 Speaker 1: of examples, when I say thematic and top down, we're 364 00:21:16,240 --> 00:21:19,480 Speaker 1: looking we're trying to look at a variety of particularly 365 00:21:19,480 --> 00:21:23,760 Speaker 1: on the policy front, tax policy, trade policy, physical policy, 366 00:21:23,800 --> 00:21:28,159 Speaker 1: regulatory policy, international policy, even foreign policy. What does that 367 00:21:28,200 --> 00:21:30,719 Speaker 1: mean to financial assets, what does it mean to stocks, 368 00:21:30,760 --> 00:21:33,080 Speaker 1: what does it mean to bonds? Um. It's funny, as 369 00:21:33,080 --> 00:21:34,879 Speaker 1: I said earlier, they're all kind of different ways to 370 00:21:34,880 --> 00:21:36,960 Speaker 1: do this. I remember Peter Lynch, who I just thought 371 00:21:37,080 --> 00:21:39,600 Speaker 1: was great. I remember him saying, you know, if I 372 00:21:39,640 --> 00:21:42,800 Speaker 1: spend five seconds on economics, it's five seconds too much. 373 00:21:43,200 --> 00:21:45,520 Speaker 1: He was bottom up and he was thinking, you know, 374 00:21:45,520 --> 00:21:48,720 Speaker 1: they're they're people all kind of successful ways to do this. 375 00:21:48,800 --> 00:21:51,760 Speaker 1: We've just always focused on the on the top down. 376 00:21:51,800 --> 00:21:54,600 Speaker 1: I mean, just to give you some examples. In the 377 00:21:54,640 --> 00:21:57,800 Speaker 1: early eighties, Uh, it was really important to focus on 378 00:21:57,800 --> 00:22:00,760 Speaker 1: the monetary and the tax in terms of what that 379 00:22:00,880 --> 00:22:05,000 Speaker 1: might mean for inflationary expectations, for interest rates, um, for 380 00:22:05,200 --> 00:22:08,919 Speaker 1: various industry of sector. In industry categories. For instance, my 381 00:22:09,040 --> 00:22:11,440 Speaker 1: father determined after Valker came in that we were gonna 382 00:22:11,600 --> 00:22:13,440 Speaker 1: that he was going to break the back of inflation. 383 00:22:14,000 --> 00:22:16,840 Speaker 1: And I can remember him showing me some charts, Uh, 384 00:22:17,080 --> 00:22:24,240 Speaker 1: Coca Cola, Campbell Suit flatline. They had flat lined for ten, fifteen, 385 00:22:24,400 --> 00:22:27,040 Speaker 1: twenty years. That's because of the inflation. The ravages of 386 00:22:27,080 --> 00:22:33,520 Speaker 1: inflation had really hurt heavily compend they had done nothing, 387 00:22:34,040 --> 00:22:37,520 Speaker 1: and it was his view that this was the time 388 00:22:37,560 --> 00:22:41,920 Speaker 1: to really start shifting our emphasis to the staples area, 389 00:22:42,000 --> 00:22:45,639 Speaker 1: to household product companies into food companies like Coca Cola 390 00:22:45,760 --> 00:22:47,919 Speaker 1: and Campbell Suit propctory game with those kind of companies. 391 00:22:47,960 --> 00:22:51,480 Speaker 1: And so that flowed from the top down viewpoint on 392 00:22:51,720 --> 00:22:54,840 Speaker 1: inflation and then the other side of it what we 393 00:22:54,880 --> 00:22:57,240 Speaker 1: talked about the deregulation, but what was going on on 394 00:22:57,280 --> 00:22:59,960 Speaker 1: the tax front in terms of you had taxed the 395 00:23:00,080 --> 00:23:02,080 Speaker 1: Tax Form Act of nineteen eighty and then you had 396 00:23:02,080 --> 00:23:05,400 Speaker 1: the second round in n six which brought the top 397 00:23:05,440 --> 00:23:08,959 Speaker 1: marsin right down to believe it or not, and you know, 398 00:23:09,000 --> 00:23:11,080 Speaker 1: brought in the base, did away with a lot of 399 00:23:11,119 --> 00:23:14,119 Speaker 1: deductions and credit, made for a much more efficient productive 400 00:23:14,720 --> 00:23:18,960 Speaker 1: um system that raised real growth. We thought with the 401 00:23:18,960 --> 00:23:21,000 Speaker 1: top down analysis that we did, that we were we 402 00:23:21,000 --> 00:23:24,520 Speaker 1: were in for a period of much faster real economic 403 00:23:24,560 --> 00:23:27,159 Speaker 1: growth because of an increase of incentives for work and 404 00:23:27,240 --> 00:23:31,640 Speaker 1: risk taking, an investment capital formation. And so number one, 405 00:23:31,680 --> 00:23:34,920 Speaker 1: we thought the emphasis that you could really start focusing 406 00:23:34,960 --> 00:23:37,800 Speaker 1: on stocks common stocks. Again, as I said from six 407 00:23:38,240 --> 00:23:41,600 Speaker 1: eighty two, the real return on stocks was negative. So 408 00:23:42,040 --> 00:23:44,240 Speaker 1: it was a matter of from a top down standpoint, Okay, 409 00:23:44,240 --> 00:23:47,640 Speaker 1: we like common stocks, and then within the common stock arena, 410 00:23:48,240 --> 00:23:50,920 Speaker 1: which sectors, which industries, which sectors are going to benefit 411 00:23:50,960 --> 00:23:54,080 Speaker 1: from these trends. Um As we moved into the nineties, 412 00:23:54,600 --> 00:23:58,400 Speaker 1: um the top our, top down work indicated that okay, 413 00:23:58,440 --> 00:24:01,679 Speaker 1: here we go, this is really an integrated and related 414 00:24:01,680 --> 00:24:04,359 Speaker 1: global economy. So let's focus on these companies that have 415 00:24:04,440 --> 00:24:06,840 Speaker 1: a strong strategic international business plan. And I can remember 416 00:24:06,840 --> 00:24:09,680 Speaker 1: in nine nine seeing the cover of Fortune magazine. Jack 417 00:24:09,720 --> 00:24:13,320 Speaker 1: Welts was on the cover in that ended up being 418 00:24:13,320 --> 00:24:16,280 Speaker 1: one of our and I remember reading that article and thinking, Wow, 419 00:24:16,800 --> 00:24:20,159 Speaker 1: this guy really has a great business plan. Management was 420 00:24:20,200 --> 00:24:22,760 Speaker 1: really important to us, and I think the stock rose 421 00:24:22,760 --> 00:24:26,159 Speaker 1: four thousand percent during his tenure to two thousand. The 422 00:24:26,200 --> 00:24:30,200 Speaker 1: timing was perfect, so Welch on the industrial side, ruben 423 00:24:30,280 --> 00:24:34,879 Speaker 1: Mark on the consumer side at Colgate Colgate Um late eighties, 424 00:24:34,920 --> 00:24:37,679 Speaker 1: early nineties, just they were better known overseas and they 425 00:24:37,680 --> 00:24:40,359 Speaker 1: were in this country. UH, they were a bigger player 426 00:24:40,359 --> 00:24:42,720 Speaker 1: in Asia that they were in the U. S UM. 427 00:24:42,840 --> 00:24:45,520 Speaker 1: So that ended up being one of our biggest consumer holdings. 428 00:24:45,600 --> 00:24:48,800 Speaker 1: G ended up being one of our biggest UH industrial holdings. 429 00:24:49,119 --> 00:24:51,760 Speaker 1: And that flowed from the top done work we did 430 00:24:51,960 --> 00:24:54,560 Speaker 1: in terms of during the nineties this move towards an 431 00:24:54,560 --> 00:24:58,639 Speaker 1: integrated and related global economy. Late mid to late nineties 432 00:24:58,640 --> 00:25:01,120 Speaker 1: it turned more into a out of hot tech innovation, 433 00:25:01,280 --> 00:25:04,360 Speaker 1: risk taking entrepreneurship. Who was going to benefit from that? 434 00:25:04,440 --> 00:25:06,560 Speaker 1: But I'll tell you what was really important from a 435 00:25:06,560 --> 00:25:10,720 Speaker 1: top down standpoint during the nineties and UM is was 436 00:25:11,240 --> 00:25:15,840 Speaker 1: I remember Greenspan given Humphrey Hawkins testimony. I'm saying that 437 00:25:17,000 --> 00:25:20,520 Speaker 1: we have reached a point of price stability, and we 438 00:25:20,600 --> 00:25:25,400 Speaker 1: think the economy can grow at above trend um at 439 00:25:25,440 --> 00:25:28,240 Speaker 1: price stability, which was a dagger through the Phillips curvers 440 00:25:28,800 --> 00:25:32,520 Speaker 1: um and and the Philips curve has reflected that ever since. 441 00:25:32,680 --> 00:25:36,080 Speaker 1: That was so important. That was a great moment that 442 00:25:36,160 --> 00:25:38,040 Speaker 1: he would let it run, and he did let it run. 443 00:25:38,240 --> 00:25:40,760 Speaker 1: That was from a top down perspective, that was very important. 444 00:25:40,800 --> 00:25:42,680 Speaker 1: Let let me throw some of your own quotes that 445 00:25:42,800 --> 00:25:46,199 Speaker 1: you and and have you, um respond or explain some 446 00:25:46,240 --> 00:25:49,080 Speaker 1: of them, because a few of these are quite fascinating. Quote. 447 00:25:49,560 --> 00:25:51,640 Speaker 1: We could be in the early stages of a move 448 00:25:51,760 --> 00:25:55,919 Speaker 1: by business away from an obsession with financial engineering and 449 00:25:56,040 --> 00:26:00,639 Speaker 1: bottom line earning his growth towards business investment and top 450 00:26:00,720 --> 00:26:04,000 Speaker 1: line growth. Uh, explain what you mean by that? And 451 00:26:04,480 --> 00:26:07,359 Speaker 1: are we seeing any evidence of that yet? Yeah? I 452 00:26:07,400 --> 00:26:09,520 Speaker 1: think we. I think we're in the early stages of 453 00:26:09,600 --> 00:26:12,840 Speaker 1: seeing some evidence. You know, during most of the two thousand's, 454 00:26:12,880 --> 00:26:17,720 Speaker 1: particularly post financial crisis, UM, you had a very sluggish 455 00:26:18,119 --> 00:26:22,199 Speaker 1: economic growth situation, way below trend from a real growth standpoint, 456 00:26:22,480 --> 00:26:25,680 Speaker 1: and you just had there was this obsession, I mean, 457 00:26:25,760 --> 00:26:31,119 Speaker 1: a daily obsession with corporate America, with streamlining, with downsizing, 458 00:26:31,480 --> 00:26:35,360 Speaker 1: with stock buybacks, just ringing, ringing, ringing. The costs. It's 459 00:26:35,400 --> 00:26:38,760 Speaker 1: all on the call side to generate that EPs. Forget 460 00:26:38,800 --> 00:26:40,880 Speaker 1: the top line. You know, we're not gonna worry about 461 00:26:40,880 --> 00:26:43,000 Speaker 1: the top line right now. Well, but we're still seeing 462 00:26:43,040 --> 00:26:45,720 Speaker 1: a ton of stock backs today. You're still seeing a 463 00:26:45,720 --> 00:26:49,440 Speaker 1: lot of that. But my view is that. UM, we're 464 00:26:49,480 --> 00:26:53,879 Speaker 1: on the verge of a pickup in in UM business investment, 465 00:26:53,960 --> 00:26:56,879 Speaker 1: in capital spending and business fixed investment, where the focus 466 00:26:56,920 --> 00:26:58,760 Speaker 1: is going to be more on growing the top line 467 00:26:58,800 --> 00:27:02,160 Speaker 1: because the you have another era here where we're moving into. 468 00:27:02,240 --> 00:27:05,399 Speaker 1: There's a lot of deregulation going on. We've got tax 469 00:27:05,400 --> 00:27:08,000 Speaker 1: reform that's happened on the corporate not so much on 470 00:27:08,040 --> 00:27:10,960 Speaker 1: the individual side, but a big cut on the corporate side. 471 00:27:11,000 --> 00:27:13,119 Speaker 1: They showed on the corporate side, and I think we 472 00:27:13,160 --> 00:27:14,880 Speaker 1: need to give it time. I think people are being 473 00:27:14,880 --> 00:27:17,520 Speaker 1: premature to say, oh, yeah, that and let its having 474 00:27:17,560 --> 00:27:22,040 Speaker 1: results in. I think it's just starting to see inklings, uh, 475 00:27:22,080 --> 00:27:27,199 Speaker 1: particularly the capital spending. And and here's the kicker, we 476 00:27:27,240 --> 00:27:30,000 Speaker 1: could be in for another burst of productivity growth. You 477 00:27:30,040 --> 00:27:34,080 Speaker 1: know we've been it's been woefully under trend for a 478 00:27:34,080 --> 00:27:36,400 Speaker 1: long time. And how much of that is a measurement 479 00:27:36,400 --> 00:27:39,280 Speaker 1: issue and how much of that is genuine lack of 480 00:27:39,400 --> 00:27:43,040 Speaker 1: gains and productivity. There's probably a little bit of both. 481 00:27:43,560 --> 00:27:45,479 Speaker 1: But UM, I mean, just to give you the example, 482 00:27:45,520 --> 00:27:48,840 Speaker 1: business fixed investment UM during the last decade or so, 483 00:27:48,920 --> 00:27:51,240 Speaker 1: it's been about half of the norm. And you know, 484 00:27:51,280 --> 00:27:53,280 Speaker 1: you're just starting to see some pickup. Now say that 485 00:27:53,320 --> 00:27:58,240 Speaker 1: again business fixed and kind of capital spending plant is 486 00:27:58,320 --> 00:28:01,320 Speaker 1: half of normal. Um, wow, it's been the growth has 487 00:28:01,359 --> 00:28:05,520 Speaker 1: been about the growth has been about half of normal. 488 00:28:06,320 --> 00:28:09,240 Speaker 1: But you're just starting to see and productivity has been 489 00:28:09,320 --> 00:28:13,560 Speaker 1: woefully inadequate, under one percent, where the post war War 490 00:28:13,640 --> 00:28:15,680 Speaker 1: two averages closer to two. We had that burst in 491 00:28:15,720 --> 00:28:18,080 Speaker 1: the ninety late nineties it was two point five two 492 00:28:18,080 --> 00:28:21,080 Speaker 1: point eight. First quarter year on year productivity growth was 493 00:28:21,080 --> 00:28:24,359 Speaker 1: two point four. This is about a ten year high. Yeah, 494 00:28:24,400 --> 00:28:26,399 Speaker 1: so I think it's too early to I mean, I 495 00:28:26,480 --> 00:28:28,440 Speaker 1: just we're starting to see someone you want to see 496 00:28:28,440 --> 00:28:31,000 Speaker 1: a trend there that and and that, let me tell 497 00:28:31,040 --> 00:28:33,600 Speaker 1: you that is the silver bullet productivity growth. That's the 498 00:28:33,640 --> 00:28:39,600 Speaker 1: silver bullet for um wage real wage growth, for employment growth, 499 00:28:39,720 --> 00:28:43,120 Speaker 1: for corporate um earnings and active mean, it's it's it's 500 00:28:43,160 --> 00:28:47,360 Speaker 1: so important. It ties into one of our themes top 501 00:28:47,400 --> 00:28:50,520 Speaker 1: down themes currently, which is the Fourth Industrial Revolution. So 502 00:28:50,560 --> 00:28:52,400 Speaker 1: that was literally the next question I was going to 503 00:28:52,480 --> 00:28:57,160 Speaker 1: ask you what is the Fourth Industrial Revolution? How does 504 00:28:57,360 --> 00:28:59,880 Speaker 1: what does it mean? And how would we position our 505 00:29:00,000 --> 00:29:02,120 Speaker 1: cells for that? Well, Yeah, as I say, I mean, 506 00:29:02,120 --> 00:29:04,200 Speaker 1: I think it really could have an impact on economic 507 00:29:04,240 --> 00:29:07,560 Speaker 1: growth and on productivity growth and really UM, I guess 508 00:29:07,600 --> 00:29:09,960 Speaker 1: you could say an kind of an extension of the 509 00:29:09,960 --> 00:29:16,360 Speaker 1: Third Industrial Revolution, which was more focused on information technology computers. Uh. 510 00:29:16,480 --> 00:29:18,800 Speaker 1: The burst of productivity growth in the nineties was more 511 00:29:18,880 --> 00:29:23,040 Speaker 1: computer hardware and software UM oriented. I mean you might 512 00:29:23,080 --> 00:29:28,360 Speaker 1: remember the four horsemen, Microsoft and Cisco and Dell an Intel, UM, 513 00:29:28,440 --> 00:29:32,040 Speaker 1: that was kind of the core there. UM. Now what 514 00:29:32,080 --> 00:29:37,040 Speaker 1: we're seeing is uh some fully important, fascinating new industries 515 00:29:37,040 --> 00:29:40,520 Speaker 1: that could have a big impact on economic growth. Profe 516 00:29:40,680 --> 00:29:49,520 Speaker 1: official intelligence, UM, robotics um UH, information automation, high tech automation, UH, 517 00:29:49,560 --> 00:29:53,840 Speaker 1: information technology, quantum computing, three D printing. You got a 518 00:29:53,920 --> 00:29:57,320 Speaker 1: whole a rate five G the five G UH area 519 00:29:57,560 --> 00:30:02,000 Speaker 1: where it's the fifth generation of wireles networks coming um 520 00:30:02,280 --> 00:30:06,880 Speaker 1: industrial automation. So there's just some areas that uh, we're 521 00:30:06,880 --> 00:30:10,560 Speaker 1: really focusing on companies that are involved in these areas 522 00:30:10,640 --> 00:30:12,920 Speaker 1: because we think some of them some of it has 523 00:30:13,040 --> 00:30:15,040 Speaker 1: already started, but some of it there's probably a few 524 00:30:15,080 --> 00:30:17,200 Speaker 1: years away in terms of coming to fruition. But we 525 00:30:17,320 --> 00:30:19,400 Speaker 1: think that we're poised when you when you when you 526 00:30:19,520 --> 00:30:26,600 Speaker 1: mix these potential new technologies with the backdrop from a 527 00:30:26,680 --> 00:30:30,320 Speaker 1: deregulation and tax standpoint where we've increased in cinemas for 528 00:30:30,480 --> 00:30:33,920 Speaker 1: capital formation and for new business development. I think when 529 00:30:33,920 --> 00:30:36,760 Speaker 1: those two intersect, we could be in for a good 530 00:30:36,760 --> 00:30:39,800 Speaker 1: burst of productivity growth. We have been speaking with j 531 00:30:39,960 --> 00:30:44,040 Speaker 1: Bowen of Bowen, Haines and Company. If you enjoy this conversation, 532 00:30:44,080 --> 00:30:45,880 Speaker 1: we'll be sure and come back and check out the 533 00:30:45,920 --> 00:30:49,200 Speaker 1: podcast extras. Will we keep the tape rolling and continue 534 00:30:49,240 --> 00:30:53,760 Speaker 1: discussing all things pension investing relating UH You can find 535 00:30:53,800 --> 00:31:00,280 Speaker 1: that at iTunes, overcasts, Bloomberg dot com, Stitcher, uh spot five, 536 00:31:00,440 --> 00:31:04,520 Speaker 1: wherever final podcasts are sold. We love your comments, feedback 537 00:31:04,600 --> 00:31:08,800 Speaker 1: and suggestions right to us at m IB podcast at 538 00:31:08,840 --> 00:31:12,640 Speaker 1: Bloomberg dot net. Check out my weekly column on Bloomberg 539 00:31:12,680 --> 00:31:16,960 Speaker 1: dot com. Follow me on Twitter at Ridolts. I'm Barry Ridhults. 540 00:31:17,080 --> 00:31:24,480 Speaker 1: You're listening to Masters and Business on Bloomberg Radio. Welcome 541 00:31:24,520 --> 00:31:27,080 Speaker 1: to the podcast, Jay. Thank you so much for doing this. 542 00:31:27,360 --> 00:31:32,560 Speaker 1: I was quite fascinated by your background and the whole story. 543 00:31:33,120 --> 00:31:38,000 Speaker 1: Just I am clearly confirming my priors because you land 544 00:31:38,080 --> 00:31:41,520 Speaker 1: right in the sweet spot of my pre existing beliefs. 545 00:31:42,080 --> 00:31:47,160 Speaker 1: Most stuff is too expansive. Consultants don't add any value. Um, 546 00:31:47,320 --> 00:31:49,960 Speaker 1: most pension funds would be better off doing a simpler 547 00:31:50,040 --> 00:31:54,640 Speaker 1: stock and bond portfolio as opposed to owning hector acres 548 00:31:54,800 --> 00:31:59,840 Speaker 1: of forest land in Canada and private equity. But that's 549 00:32:00,040 --> 00:32:04,600 Speaker 1: head um. But those wine vineyards in California, well you 550 00:32:04,600 --> 00:32:07,280 Speaker 1: get to go on vacation swing by Hey, I'm one 551 00:32:07,320 --> 00:32:09,600 Speaker 1: of the owners. You get the v I P treatment 552 00:32:10,040 --> 00:32:12,239 Speaker 1: on the backs of whoever the year. We say that 553 00:32:12,280 --> 00:32:17,840 Speaker 1: we are unconventionally conventional. I like that expression, the unconventionally 554 00:32:17,880 --> 00:32:22,479 Speaker 1: conventional pension fund. And you're not in Tampa. You're located 555 00:32:22,520 --> 00:32:25,000 Speaker 1: in Atlanta. You've been there most of your whole life? 556 00:32:25,040 --> 00:32:27,560 Speaker 1: Is that right? Pretty much? We the firm has actually 557 00:32:27,600 --> 00:32:30,080 Speaker 1: started My father started the form in North North Carolina 558 00:32:30,880 --> 00:32:33,000 Speaker 1: in nineteen seventy two. Is that what you grew up? 559 00:32:33,840 --> 00:32:36,640 Speaker 1: Born Atlanta, moved to North Carolina, then moved back to Atlanta, 560 00:32:36,960 --> 00:32:39,440 Speaker 1: relocated the firm back in Atlanta in the late seventies. 561 00:32:39,920 --> 00:32:42,960 Speaker 1: So I've been to Atlanta a number of times, and 562 00:32:43,000 --> 00:32:48,280 Speaker 1: I have to tell you very surprisingly impressive barbecue. But 563 00:32:48,360 --> 00:32:50,440 Speaker 1: I know there's like a little bit of a barbecue 564 00:32:50,440 --> 00:32:54,400 Speaker 1: controversy going on in Atlanta. Now, what's happening there. Well, 565 00:32:54,440 --> 00:32:57,280 Speaker 1: of course, the real controversy is North Carolina. I mean 566 00:32:57,400 --> 00:33:01,000 Speaker 1: that's the core, that's the core rage in debate that 567 00:33:01,080 --> 00:33:05,760 Speaker 1: even gets physical. You know, you've got the three regions, uh, Central, 568 00:33:06,160 --> 00:33:09,200 Speaker 1: Western and Eastern the Eastern, and what is the debate, 569 00:33:09,560 --> 00:33:13,000 Speaker 1: And it's the sauce Do you want or vinegar is 570 00:33:13,000 --> 00:33:18,200 Speaker 1: that vinegar based? Which is the Eastern? Do you want 571 00:33:18,320 --> 00:33:22,800 Speaker 1: mustard base which is or do you want the more 572 00:33:22,840 --> 00:33:29,040 Speaker 1: traditional tomato base that molasses tomato base that's sweet caramelized over. 573 00:33:29,680 --> 00:33:32,640 Speaker 1: But you're right about Atlanta. They've got all of them. 574 00:33:32,680 --> 00:33:35,360 Speaker 1: They've got all three. You can make. You can take 575 00:33:35,400 --> 00:33:39,000 Speaker 1: your choice. So I didn't realize this issue, this controversy 576 00:33:39,200 --> 00:33:41,640 Speaker 1: erupted in North Carolina. I think that's the kind of 577 00:33:41,680 --> 00:33:45,000 Speaker 1: the core. And people have come to blows over particularly 578 00:33:45,000 --> 00:33:47,760 Speaker 1: Eastern versus the Central. You know, see, I'll get in 579 00:33:47,840 --> 00:33:50,360 Speaker 1: a fight over someone over the mustard the vinegar base. 580 00:33:50,680 --> 00:33:54,040 Speaker 1: Those people can get violent the vinegar base. My mother 581 00:33:54,120 --> 00:33:56,520 Speaker 1: was born in Rocky Mountain, North Carolina, and she she 582 00:33:56,560 --> 00:33:58,800 Speaker 1: would even get violent with me if I didn't want 583 00:33:58,800 --> 00:34:00,960 Speaker 1: the Eastern I mean, you know over, yeah, you got it. 584 00:34:01,400 --> 00:34:03,480 Speaker 1: And this is this is really a real thing. This 585 00:34:03,560 --> 00:34:06,520 Speaker 1: is not This is going on still to this day, 586 00:34:06,680 --> 00:34:09,520 Speaker 1: it's all fun and games until somebody loses an it's 587 00:34:09,560 --> 00:34:11,759 Speaker 1: all fun and games still the vinegar sauce comes out, 588 00:34:12,160 --> 00:34:15,759 Speaker 1: then there's real. Uh, there's real trouble. Amazingly, New York 589 00:34:15,800 --> 00:34:20,680 Speaker 1: actually now has decent barbecue, but mostly when people transplant 590 00:34:20,719 --> 00:34:24,359 Speaker 1: here from from Texas or Tennessee or somewhere and will 591 00:34:24,400 --> 00:34:27,160 Speaker 1: open up a not a New York City barbecue, but 592 00:34:27,320 --> 00:34:30,040 Speaker 1: a barbecue joint in New York City. And there are 593 00:34:30,080 --> 00:34:33,799 Speaker 1: a few smokers here. Um. Also in Long Island City 594 00:34:33,840 --> 00:34:36,080 Speaker 1: there's this big you walk three blocks away, you can 595 00:34:36,080 --> 00:34:41,560 Speaker 1: smell brisket. It's really really good. So um, you're back 596 00:34:41,600 --> 00:34:44,960 Speaker 1: and forth to to Tampa. You're managing a number of 597 00:34:44,960 --> 00:34:50,280 Speaker 1: other Florida pension funds. Um. Where else in the world 598 00:34:50,280 --> 00:34:55,279 Speaker 1: are you, um managing money for either pension funds or 599 00:34:55,320 --> 00:34:58,680 Speaker 1: other clients. We're small, we're streamline. We've got about three 600 00:34:58,680 --> 00:35:03,640 Speaker 1: billion under management, about a hundred twenty relationships. We UH foundations, 601 00:35:03,719 --> 00:35:08,120 Speaker 1: endown the funds, UH profit sharing plans, pension plans, municipal funds, 602 00:35:08,360 --> 00:35:13,120 Speaker 1: and family groups. UM. We're not marketing oriented. UM, we're 603 00:35:13,160 --> 00:35:16,879 Speaker 1: not an asset gatherer who allocates the assets to other 604 00:35:17,000 --> 00:35:20,600 Speaker 1: managers to pool funds, and we actually manage each account 605 00:35:20,640 --> 00:35:23,680 Speaker 1: individually and pick the stocks or stocks and bonds if 606 00:35:23,680 --> 00:35:26,960 Speaker 1: it's a balanced account, and the business comes through referrals. 607 00:35:27,000 --> 00:35:29,600 Speaker 1: And we just my father decided a long time ago, 608 00:35:30,480 --> 00:35:33,560 Speaker 1: you know, instead of having an aggressive marketing effort, maybe 609 00:35:33,600 --> 00:35:35,600 Speaker 1: we could have been a lot bigger, we would just 610 00:35:35,840 --> 00:35:38,440 Speaker 1: focus on the investment side and rely on referrals for 611 00:35:38,520 --> 00:35:43,279 Speaker 1: new business. And those are very satisfied relations very satisfying relationship. 612 00:35:44,200 --> 00:35:46,360 Speaker 1: Um and long the our average client has been with 613 00:35:46,440 --> 00:35:50,839 Speaker 1: us years. We've got some four I mean, so when 614 00:35:50,880 --> 00:35:52,799 Speaker 1: somebody comes on board with us, it's from a very 615 00:35:52,840 --> 00:35:55,279 Speaker 1: high level, it's from a referral, and typically they're gonna 616 00:35:55,280 --> 00:35:59,160 Speaker 1: be with us for decades. So do all the portfolios 617 00:35:59,239 --> 00:36:01,560 Speaker 1: look alike when you're buying individual stocks? Do you run 618 00:36:01,560 --> 00:36:05,920 Speaker 1: into an issue where I remember running into a trouble 619 00:36:05,960 --> 00:36:09,200 Speaker 1: with Visa when we were buying it at sixty eight 620 00:36:09,840 --> 00:36:13,080 Speaker 1: and two years later it was two d Do you 621 00:36:13,560 --> 00:36:15,600 Speaker 1: does every portfolio look alike or do you have to 622 00:36:15,640 --> 00:36:19,160 Speaker 1: take into an account, Um, hey, we can't buy stock 623 00:36:19,320 --> 00:36:21,919 Speaker 1: X y Z for this account because it's so much 624 00:36:22,000 --> 00:36:24,439 Speaker 1: pricier than it was when we were buying it. For that, Yeah, 625 00:36:24,440 --> 00:36:26,759 Speaker 1: I mean we do try to justify our holdings all 626 00:36:26,760 --> 00:36:29,040 Speaker 1: the time. We're constantly trying to justify. And what my 627 00:36:29,120 --> 00:36:31,359 Speaker 1: favorite thing to do, particularly when you're taking a twenty 628 00:36:31,400 --> 00:36:34,160 Speaker 1: year approach, and we've done this in Tampa on numerous occasions, 629 00:36:34,280 --> 00:36:37,319 Speaker 1: is to take the cost out of the stock. You know, 630 00:36:37,600 --> 00:36:40,520 Speaker 1: say we bought Visa and our cost in it was 631 00:36:40,560 --> 00:36:44,319 Speaker 1: ten million and now it's worth forty million. I love 632 00:36:44,400 --> 00:36:46,719 Speaker 1: taking the profits and taking the cost out um and 633 00:36:46,760 --> 00:36:49,040 Speaker 1: reducing So in other words, pull ten million, let's a 634 00:36:49,120 --> 00:36:52,000 Speaker 1: thirty million run if it still fits into our top 635 00:36:52,000 --> 00:36:54,360 Speaker 1: down apprecasion, if the numbers still look good. Most of 636 00:36:54,400 --> 00:36:58,080 Speaker 1: our portfolios, I mean they're individually managed, so they're gonna 637 00:36:58,080 --> 00:37:00,200 Speaker 1: look a little different. Could just as you say, from 638 00:37:00,200 --> 00:37:02,920 Speaker 1: a timing standpoint, ESA might look good one day and 639 00:37:03,040 --> 00:37:07,840 Speaker 1: not five years later from evaluation standpoint. But the vast 640 00:37:07,840 --> 00:37:11,840 Speaker 1: majority of our clients are very philosophically compatible, high quality, 641 00:37:11,880 --> 00:37:14,520 Speaker 1: long term oriented. Some of them maybe a little more 642 00:37:14,560 --> 00:37:16,880 Speaker 1: income oriented. Some of them are balanced. They want to 643 00:37:16,920 --> 00:37:19,000 Speaker 1: balance a prodech. They're gonna look a little different. But 644 00:37:19,040 --> 00:37:24,400 Speaker 1: the typical institutional portfolio is gonna look very similar. Um. 645 00:37:24,440 --> 00:37:28,279 Speaker 1: So we mentioned um spending, you spend a lot of 646 00:37:28,280 --> 00:37:31,600 Speaker 1: time thinking about FED policy as part of the top 647 00:37:31,640 --> 00:37:36,799 Speaker 1: down approach. Um, we're recording this literally on the day 648 00:37:36,840 --> 00:37:38,799 Speaker 1: that there's a FED meeting. What what do you think 649 00:37:38,840 --> 00:37:42,360 Speaker 1: about this pressure on the FED to lower rates? Should 650 00:37:42,400 --> 00:37:46,880 Speaker 1: the FED really be a fully independent entity? Or should 651 00:37:46,920 --> 00:37:50,680 Speaker 1: they you know, respond to the political pressures, Um, both 652 00:37:50,719 --> 00:37:55,320 Speaker 1: from Congress and the White House. They should certainly be independent. Um. 653 00:37:55,320 --> 00:37:57,520 Speaker 1: What would keep me up at night would be if 654 00:37:57,560 --> 00:38:02,000 Speaker 1: Congressional committee chairs were deciding FED policy. Would that would 655 00:38:02,000 --> 00:38:04,680 Speaker 1: not be a good a good model. I do think 656 00:38:04,760 --> 00:38:09,040 Speaker 1: the FED really needs to be uh shaped, shaking up 657 00:38:09,520 --> 00:38:13,239 Speaker 1: we need. I just think the models are flawed. Um. 658 00:38:13,280 --> 00:38:16,520 Speaker 1: If you go back to nineteen thirteen, UM, I think 659 00:38:16,719 --> 00:38:23,279 Speaker 1: that there august reputation belies their record. Okay, well aren't 660 00:38:23,360 --> 00:38:25,440 Speaker 1: especially good. It ain't pretty. I mean you're at the 661 00:38:25,520 --> 00:38:28,520 Speaker 1: nineteen thirteen and they presided over a double of doubling 662 00:38:28,560 --> 00:38:31,279 Speaker 1: of prices during World War One. If you believe in 663 00:38:31,400 --> 00:38:35,400 Speaker 1: Freedman Schwartz monetary theory, which I do, the definitive history, 664 00:38:35,440 --> 00:38:38,560 Speaker 1: they were the most responsible for the Great Depression. They 665 00:38:38,719 --> 00:38:41,080 Speaker 1: presided over the doubling of prices during World War Two, 666 00:38:41,200 --> 00:38:44,680 Speaker 1: they financing in place of the seventies. UM. I just 667 00:38:45,760 --> 00:38:48,280 Speaker 1: I think they need some new models, some new thinking, 668 00:38:48,360 --> 00:38:51,520 Speaker 1: and I'm very encouraged that they're on it. They are 669 00:38:51,560 --> 00:38:54,640 Speaker 1: on it. They're looking at you got particularly Williams and 670 00:38:54,640 --> 00:38:57,680 Speaker 1: and Pal. Also. I think that Pal has said more 671 00:38:57,719 --> 00:39:01,359 Speaker 1: than once that he is convinced that the Phillips curve 672 00:39:01,440 --> 00:39:03,840 Speaker 1: is dead. UM. He gave a very important speech in 673 00:39:03,920 --> 00:39:07,480 Speaker 1: Jackson Whole last year, last August, where he addressed that issue. 674 00:39:07,960 --> 00:39:10,200 Speaker 1: You're you're you're you're having. I mean, you got Williams 675 00:39:10,280 --> 00:39:14,040 Speaker 1: with the flexible inflation, flexible targeting, You've got there there, 676 00:39:14,080 --> 00:39:17,920 Speaker 1: there's talk about price rule, there's talk about nominal g 677 00:39:18,000 --> 00:39:20,719 Speaker 1: D P P growth targets. I just think it's time 678 00:39:20,760 --> 00:39:22,160 Speaker 1: to shake it up. Now. What I would like to 679 00:39:22,200 --> 00:39:24,120 Speaker 1: see him do, and which is why I think they 680 00:39:24,120 --> 00:39:27,200 Speaker 1: should lower rates. I really would like them to focus 681 00:39:27,239 --> 00:39:31,040 Speaker 1: on price stability UH and and a stable dollar, stabilizing 682 00:39:31,040 --> 00:39:32,920 Speaker 1: the dollar. And if you look at these forward looking 683 00:39:32,960 --> 00:39:36,520 Speaker 1: price signals, and I'm talking about the yield curve and 684 00:39:36,560 --> 00:39:39,759 Speaker 1: I'm talking about commodity prices UM, and I'm talking about 685 00:39:39,760 --> 00:39:41,760 Speaker 1: the far and exchange value of the dollar. They're all 686 00:39:41,800 --> 00:39:44,200 Speaker 1: saying the FETE is too tight, right. The yield curve, 687 00:39:44,280 --> 00:39:46,600 Speaker 1: if you look at the five year and the three months, 688 00:39:46,600 --> 00:39:49,319 Speaker 1: it's been inverted for a full quarter, and the ten 689 00:39:49,400 --> 00:39:53,720 Speaker 1: year briefly inverted, and more or less it's not especially steep. 690 00:39:53,760 --> 00:39:56,200 Speaker 1: And I don't know if by the time people are 691 00:39:56,239 --> 00:39:59,160 Speaker 1: listening to this, the ten year versus the three month 692 00:39:59,239 --> 00:40:03,000 Speaker 1: is inverted, but it's certainly sending a warning signal it is. 693 00:40:03,120 --> 00:40:06,920 Speaker 1: And listen, I know that's not a secret. That's pretty 694 00:40:06,960 --> 00:40:09,359 Speaker 1: well publicized, the inverted YOL curve. But it's only given 695 00:40:09,400 --> 00:40:11,560 Speaker 1: one false signal in post war in the post War 696 00:40:11,600 --> 00:40:14,680 Speaker 1: two era. And the thing is that the lash can 697 00:40:14,719 --> 00:40:16,680 Speaker 1: be very long and variable in terms of terms of 698 00:40:16,680 --> 00:40:19,720 Speaker 1: what it means, but we're focused on that. I think 699 00:40:19,760 --> 00:40:22,880 Speaker 1: that they can engineer a soft landing. I do. Uh. 700 00:40:22,920 --> 00:40:25,400 Speaker 1: The question right now is is this gonna look like 701 00:40:25,520 --> 00:40:29,839 Speaker 1: nine where they raised rates They almost inverted the curve. 702 00:40:29,840 --> 00:40:32,520 Speaker 1: They raised rates in February, then they cut rates in July. 703 00:40:32,680 --> 00:40:35,480 Speaker 1: I believe the curve was about invert and then we 704 00:40:35,480 --> 00:40:38,320 Speaker 1: were off to the races. They did not invert the curve. 705 00:40:38,480 --> 00:40:40,200 Speaker 1: Is it gonna look like that, or is it gonna 706 00:40:40,200 --> 00:40:42,360 Speaker 1: look like two thousand seven where they just sat idly 707 00:40:42,440 --> 00:40:44,640 Speaker 1: by when the curve was inverted. They waited, waited, waited, 708 00:40:45,040 --> 00:40:47,840 Speaker 1: or worse than that seventy four where you had an 709 00:40:47,880 --> 00:40:50,839 Speaker 1: inverted YOL curve and they kept raising rates. I don't 710 00:40:50,880 --> 00:40:53,560 Speaker 1: think we're in for that because the inflationary expectations are 711 00:40:53,600 --> 00:40:58,080 Speaker 1: so benign. UM. I do think they need to cut UM. 712 00:40:58,200 --> 00:41:01,400 Speaker 1: I think they will. It would be our preference again 713 00:41:01,440 --> 00:41:04,360 Speaker 1: for them to focus on forward looking price signals, stable 714 00:41:04,400 --> 00:41:07,480 Speaker 1: dollar UM. I would prefer them to be aggressive on 715 00:41:07,520 --> 00:41:10,840 Speaker 1: the front end UM, so they can be hawkish on 716 00:41:10,880 --> 00:41:13,160 Speaker 1: the back end UM. I'd like to see him move 717 00:41:13,200 --> 00:41:17,480 Speaker 1: fifty at this next meeting UM, because I think if 718 00:41:17,480 --> 00:41:20,560 Speaker 1: they don't, if they go too slow, they're gonna still 719 00:41:20,600 --> 00:41:22,239 Speaker 1: be behind the curve. I mean, if you look at 720 00:41:22,280 --> 00:41:25,000 Speaker 1: the natural it's it's almost like the natural rate that 721 00:41:25,200 --> 00:41:27,279 Speaker 1: you know you hear about the Wicksillian natural rate is 722 00:41:27,600 --> 00:41:30,359 Speaker 1: moving down, is trending down faster than the policy rate 723 00:41:30,440 --> 00:41:32,920 Speaker 1: is training down. So for them to catch up, they 724 00:41:32,960 --> 00:41:35,239 Speaker 1: need to get get ahead of that. How do you 725 00:41:35,280 --> 00:41:39,640 Speaker 1: reconcile the different signals from the stock market, which keeps 726 00:41:39,680 --> 00:41:43,239 Speaker 1: making new all time eyes and the bond market, which 727 00:41:43,320 --> 00:41:46,239 Speaker 1: is saying, hey, an economic slowing is coming. Yeah. I 728 00:41:46,280 --> 00:41:49,640 Speaker 1: think the stock market is discounting a soft landing. There's 729 00:41:49,640 --> 00:41:51,960 Speaker 1: no question. I mean, earnings, earnings have been flat this year, 730 00:41:52,000 --> 00:41:55,480 Speaker 1: and the market is mean surprising, right, it's um And 731 00:41:55,520 --> 00:41:58,000 Speaker 1: then the bond market is complete as you know, I mean, 732 00:41:58,000 --> 00:42:01,319 Speaker 1: it's completely rolled over. I think no growth expectations have 733 00:42:01,440 --> 00:42:04,680 Speaker 1: really trended down. Real rates have trended down. Uh, it's 734 00:42:04,800 --> 00:42:10,600 Speaker 1: just signaling a reduction in the Wixillian natural rate of interest, reduction, 735 00:42:10,600 --> 00:42:14,719 Speaker 1: a nominal growth expectations. There's just it's just no question 736 00:42:14,800 --> 00:42:18,080 Speaker 1: there's been a slowing and the FED needs to acknowledge 737 00:42:18,120 --> 00:42:20,160 Speaker 1: that and get out ahead of this thing. Is this 738 00:42:20,360 --> 00:42:24,000 Speaker 1: a global slowing that's affecting the United States trade war 739 00:42:24,120 --> 00:42:27,960 Speaker 1: or whatever, or is this just a natural deceleration of 740 00:42:28,000 --> 00:42:32,040 Speaker 1: the U s economy following the expansion since well, you 741 00:42:32,080 --> 00:42:33,719 Speaker 1: know what, I think the Fed made a mistake in 742 00:42:33,760 --> 00:42:37,040 Speaker 1: twenty particularly in eighteen. They were just too tight. You've 743 00:42:37,080 --> 00:42:40,120 Speaker 1: had nine rate increases, um, you've had they took with 744 00:42:40,280 --> 00:42:42,320 Speaker 1: quantitative of tightening, they took about southern billion out of 745 00:42:42,320 --> 00:42:45,400 Speaker 1: the system. They're just it was just that combination, because 746 00:42:45,400 --> 00:42:47,560 Speaker 1: you can't we can't say rates are too are very 747 00:42:47,840 --> 00:42:49,520 Speaker 1: now they're not. And but you know what, a lot 748 00:42:49,600 --> 00:42:51,759 Speaker 1: of people look at it just from an absolute standpoint 749 00:42:51,840 --> 00:42:53,640 Speaker 1: and think, oh, well, race stuff, But you know it's 750 00:42:53,640 --> 00:42:56,040 Speaker 1: always relative. It's all relative. It's where they came from. 751 00:42:56,440 --> 00:42:59,480 Speaker 1: I just think they moved too far, too fast. But 752 00:42:59,520 --> 00:43:01,600 Speaker 1: I have to say I think that's the main reason. 753 00:43:01,680 --> 00:43:04,360 Speaker 1: Then you've got this this trade disputes a big overhang 754 00:43:04,719 --> 00:43:07,280 Speaker 1: that needs to be sorted out. UM from a global 755 00:43:07,320 --> 00:43:10,160 Speaker 1: economic growth standpoint, I've got to give Pal a lot 756 00:43:10,200 --> 00:43:13,160 Speaker 1: of credit. Though this has been overshadowed by the policy 757 00:43:13,200 --> 00:43:17,400 Speaker 1: rate debate. He acknowledged back in May that the QT 758 00:43:18,160 --> 00:43:20,800 Speaker 1: that it was too much and they're gonna they're really 759 00:43:20,880 --> 00:43:24,400 Speaker 1: ratcheting that back now, the QT. So the liquidity situation 760 00:43:24,520 --> 00:43:26,600 Speaker 1: is just starting to improve. Prove if you look at 761 00:43:26,600 --> 00:43:29,359 Speaker 1: the numbers I saw on M two growth on reel 762 00:43:29,440 --> 00:43:32,600 Speaker 1: and one growth, the aggregates, the monetary aggregates are starting 763 00:43:32,600 --> 00:43:35,880 Speaker 1: to stabilize and even trend up now. So people haven't 764 00:43:35,880 --> 00:43:40,040 Speaker 1: really a lot of UM policy wants are focusing on 765 00:43:40,080 --> 00:43:43,880 Speaker 1: the rates. They're not focusing on quantitative Titan exactly exactly 766 00:43:44,280 --> 00:43:46,680 Speaker 1: you think that's as significant as the rates. I do. 767 00:43:46,840 --> 00:43:49,719 Speaker 1: I do, and I think Pal deserves credit. I think 768 00:43:49,760 --> 00:43:52,319 Speaker 1: Pal is kind of an unsung hero in a way. 769 00:43:52,360 --> 00:43:55,320 Speaker 1: I mean, Number one, that speech he gave at Jackson 770 00:43:55,320 --> 00:43:58,319 Speaker 1: Hole last August, where he basically said that fits the 771 00:43:58,320 --> 00:44:00,640 Speaker 1: Phillips curves. It's done, it's done. I think that's a 772 00:44:00,719 --> 00:44:03,680 Speaker 1: huge stride. It's a big admission for the FED anyway. Yeah, 773 00:44:03,760 --> 00:44:07,839 Speaker 1: and then uh, you know Poal is pragmatic. He's pragmatic. 774 00:44:07,920 --> 00:44:10,279 Speaker 1: You know, he's he's a business, he's he's and this 775 00:44:11,040 --> 00:44:14,000 Speaker 1: on the QT. I think that's important that they're doing that. 776 00:44:14,080 --> 00:44:16,839 Speaker 1: I think the FED has some great innovative thinkers now 777 00:44:16,840 --> 00:44:18,960 Speaker 1: and I'm encouraged that they're looking at these new models 778 00:44:19,680 --> 00:44:21,799 Speaker 1: that they're open to that that the I think they 779 00:44:21,800 --> 00:44:24,080 Speaker 1: realized that some of these models are backward looking and 780 00:44:24,160 --> 00:44:28,240 Speaker 1: not particularly effective. So I'm encouraged that it's on the table, 781 00:44:28,280 --> 00:44:30,000 Speaker 1: and I hope they'll move to more of a rules 782 00:44:30,000 --> 00:44:32,680 Speaker 1: based approach, either a price rule, which is what we 783 00:44:32,760 --> 00:44:34,680 Speaker 1: had we kind of had to de factor price rule 784 00:44:34,719 --> 00:44:37,480 Speaker 1: back in the eighties Wayne Angel and man Mannie Johnson. 785 00:44:37,920 --> 00:44:40,040 Speaker 1: It was kind of a commodity price rule, and then 786 00:44:40,320 --> 00:44:43,680 Speaker 1: with Greenspan, who was very good on the Phillips curve. Um, 787 00:44:44,600 --> 00:44:47,680 Speaker 1: I've I've warmed to a nominal DDP growth target. Maybe 788 00:44:47,719 --> 00:44:50,360 Speaker 1: that kind of thing. But the important thing is they're open, 789 00:44:50,760 --> 00:44:54,200 Speaker 1: and they're looking, and they're examining, and they're exploring maybe 790 00:44:54,200 --> 00:44:56,560 Speaker 1: some new models. I think that's important. I'm curious as 791 00:44:56,600 --> 00:45:02,040 Speaker 1: to your thoughts about something. I was given President Trump's 792 00:45:02,320 --> 00:45:06,520 Speaker 1: um desire for low interest rates, and he said this repeatedly, 793 00:45:06,800 --> 00:45:09,720 Speaker 1: at least since he's been elected. Previously he was against 794 00:45:09,719 --> 00:45:12,239 Speaker 1: low interest rates, but once he took the office, Hey, 795 00:45:12,280 --> 00:45:15,360 Speaker 1: everybody likes low interest rates. I was very surprised that 796 00:45:15,440 --> 00:45:21,200 Speaker 1: both Powell and Clarada, were two well known inflation hawks, 797 00:45:21,719 --> 00:45:24,400 Speaker 1: were appointed his chair and vice chair. What what are 798 00:45:24,400 --> 00:45:28,280 Speaker 1: your thoughts on that? And how have they adopted two 799 00:45:28,320 --> 00:45:31,680 Speaker 1: adapted to the current situation. I've you know what I've got. 800 00:45:31,880 --> 00:45:33,879 Speaker 1: I've got a lot of faith in both those guys. 801 00:45:33,960 --> 00:45:37,240 Speaker 1: I mean, Claradas he's got a great background this aside, 802 00:45:37,600 --> 00:45:41,120 Speaker 1: and on the academic side, he's just not a academic. No, 803 00:45:41,239 --> 00:45:47,080 Speaker 1: he's a rock star world deal um and Pal's very pragmatic. Two, So, 804 00:45:47,800 --> 00:45:51,120 Speaker 1: I you know, I don't know who's pulling the strings 805 00:45:51,160 --> 00:45:54,840 Speaker 1: on these fat appointments exactly. But I like the idea 806 00:45:54,840 --> 00:45:56,960 Speaker 1: of shaking it up, shaking the institution up. I know 807 00:45:57,080 --> 00:45:59,200 Speaker 1: the Steve warm and Kane didn't work out well. Those 808 00:45:59,239 --> 00:46:03,480 Speaker 1: were kind of real outlier, But the Judy Shelton and 809 00:46:03,560 --> 00:46:05,960 Speaker 1: the St. Louis. Isn't she a hard money? Is a 810 00:46:06,000 --> 00:46:10,359 Speaker 1: gold Bug traditionally has been. But if you but if 811 00:46:10,400 --> 00:46:14,359 Speaker 1: you listen to her recent interviews and testimony, and I'll 812 00:46:14,400 --> 00:46:16,680 Speaker 1: be looking forward to the testimony. I mean, I think 813 00:46:16,760 --> 00:46:19,400 Speaker 1: she's on it in terms of these pod look at 814 00:46:19,440 --> 00:46:22,279 Speaker 1: these price signals and what they I just I like 815 00:46:22,400 --> 00:46:25,120 Speaker 1: the idea of shaking the institution. I really do, even 816 00:46:25,160 --> 00:46:27,319 Speaker 1: with the gold Bug. And by the way, by the way, 817 00:46:27,560 --> 00:46:29,800 Speaker 1: when it's all said and done, Trump will have appointed 818 00:46:29,960 --> 00:46:34,200 Speaker 1: six out of seven. That's that's it's it's fed for 819 00:46:34,280 --> 00:46:37,799 Speaker 1: better or worse, snow getting away with that. I'm like you, 820 00:46:38,000 --> 00:46:42,279 Speaker 1: I'm impressed with pal. I'm very impressed with Clarada. The 821 00:46:42,400 --> 00:46:46,880 Speaker 1: leadership is is important, and I think they may be 822 00:46:47,120 --> 00:46:50,719 Speaker 1: his two best appoint across across the board. So I 823 00:46:50,800 --> 00:46:54,840 Speaker 1: have two specific portfolio questions I don't want to before 824 00:46:54,840 --> 00:46:57,279 Speaker 1: we get to our favorite questions. In our speed round. 825 00:46:57,280 --> 00:47:00,359 Speaker 1: I don't want to pass these two by. The first is, 826 00:47:01,080 --> 00:47:04,880 Speaker 1: given your your focus on stocks and bonds, how do 827 00:47:04,920 --> 00:47:09,120 Speaker 1: you think about position sizing? How significant is that, How 828 00:47:09,200 --> 00:47:12,960 Speaker 1: concentrated are you? Um? Typically, how many holdings do you have? 829 00:47:13,040 --> 00:47:15,960 Speaker 1: And when you add a position or add to a position, 830 00:47:16,320 --> 00:47:19,640 Speaker 1: how big or small does that? Usually get yeah and ten. 831 00:47:19,800 --> 00:47:23,800 Speaker 1: The Tampa model typically typically will have about fifties sixty 832 00:47:23,880 --> 00:47:27,640 Speaker 1: conk stocks with the balance and bonds. And importantly on 833 00:47:27,680 --> 00:47:29,680 Speaker 1: the bond side of the portfolio, we haven't talked about it, 834 00:47:29,719 --> 00:47:32,640 Speaker 1: but it's strictly there for income in stability. It's a 835 00:47:32,680 --> 00:47:36,680 Speaker 1: timing strategy based on interest rate anticipation, where uh, it's 836 00:47:36,680 --> 00:47:39,800 Speaker 1: a very conservative bond portfolio. They have to be securities 837 00:47:39,840 --> 00:47:42,880 Speaker 1: have to be readed a or better, which keeps them 838 00:47:42,880 --> 00:47:45,799 Speaker 1: out of a lot of trouble. So treasury corporates and 839 00:47:46,080 --> 00:47:51,560 Speaker 1: very plain boring COG quality, pure interest rate anticipation strategy, 840 00:47:51,600 --> 00:47:54,040 Speaker 1: buy and hold. We're not trading a lot of people 841 00:47:54,040 --> 00:47:57,040 Speaker 1: in the business. I see they don't realize how much 842 00:47:57,040 --> 00:47:58,960 Speaker 1: money can be lost on the bond side. I mean 843 00:47:58,960 --> 00:48:01,719 Speaker 1: it can be very very risky. So the bonds we're 844 00:48:01,719 --> 00:48:04,439 Speaker 1: taking enough risk on the stock side, which we don't 845 00:48:04,440 --> 00:48:06,160 Speaker 1: need to do anything on the bond side. It's that 846 00:48:06,320 --> 00:48:10,440 Speaker 1: very very boring and quality oriented. The stock side typically 847 00:48:10,440 --> 00:48:13,400 Speaker 1: fifty to sixty. Uh, nobody will accuses of being a 848 00:48:13,440 --> 00:48:18,680 Speaker 1: closet indexer. And our smaller accounts usually thirty common stocks 849 00:48:18,719 --> 00:48:21,240 Speaker 1: and Tampa is bigger, so it's really more fifty to sixty. 850 00:48:21,320 --> 00:48:24,839 Speaker 1: How big can anyone position get? And typically we'll let 851 00:48:24,880 --> 00:48:28,440 Speaker 1: them run and love to take the cost out um. Certainly, 852 00:48:28,480 --> 00:48:31,040 Speaker 1: if it gets to a point where it's representing, you know, 853 00:48:32,000 --> 00:48:36,080 Speaker 1: three four of the total equity portfolio, it really alerts 854 00:48:36,160 --> 00:48:38,520 Speaker 1: us to thinking that we need to scale back some. 855 00:48:39,360 --> 00:48:41,800 Speaker 1: But as long as the as long as the fundamentals 856 00:48:42,000 --> 00:48:45,919 Speaker 1: remain in place in the we're enthusiastic about the long 857 00:48:46,040 --> 00:48:48,719 Speaker 1: term value, then we have We never just sell it 858 00:48:48,800 --> 00:48:51,920 Speaker 1: just because it's doubled, tripled, you know, it's always hopefully 859 00:48:51,920 --> 00:48:56,000 Speaker 1: it's in perpetuity, that's what. And there's still some remnants 860 00:48:56,040 --> 00:48:59,239 Speaker 1: in that portfolio from nineteen seventy four. But you have 861 00:48:59,320 --> 00:49:02,080 Speaker 1: holdings that you're dad porches. You still have insult there. 862 00:49:02,120 --> 00:49:04,719 Speaker 1: I mean there's not a lot, but there's there's some 863 00:49:05,080 --> 00:49:08,520 Speaker 1: Coca Cola. The guests and Proctor, proct and Gamble. You know, 864 00:49:08,760 --> 00:49:12,440 Speaker 1: Gillette was a big holding and Proctor bought Gilette. I mean, 865 00:49:12,480 --> 00:49:15,359 Speaker 1: my father always he always joked again, not that we're 866 00:49:15,360 --> 00:49:17,319 Speaker 1: in this league, but he said, you know, we were 867 00:49:17,360 --> 00:49:20,160 Speaker 1: on Coca Cola and Gillette four or five years before 868 00:49:20,160 --> 00:49:22,839 Speaker 1: Warren Buffett was well, you can thank him for help 869 00:49:22,920 --> 00:49:26,520 Speaker 1: driving me the appreciation of and and my last of 870 00:49:26,560 --> 00:49:31,320 Speaker 1: these questions, So the past decade is seeing huge inflows 871 00:49:31,320 --> 00:49:35,200 Speaker 1: to passive indexing. Um, how do you think about this 872 00:49:35,360 --> 00:49:39,640 Speaker 1: impacting what you do? Does it help your process? Does 873 00:49:39,680 --> 00:49:42,360 Speaker 1: it heard it? Does it create more opportunities? How do 874 00:49:42,400 --> 00:49:46,480 Speaker 1: you look at the passive index with a twenty year 875 00:49:46,480 --> 00:49:50,239 Speaker 1: approach that gives us time to re establish an equilibrium. 876 00:49:50,239 --> 00:49:53,960 Speaker 1: I think over a short term it concerns me in 877 00:49:54,040 --> 00:49:57,439 Speaker 1: terms of the increased volatility. And I think that over 878 00:49:58,560 --> 00:50:01,440 Speaker 1: I saw some data was a hazing high frequency trading 879 00:50:01,480 --> 00:50:03,279 Speaker 1: now accounts forever half the volume on the New Mark 880 00:50:03,320 --> 00:50:06,960 Speaker 1: stock Exchange. I mean, I think there's some unintended consequences 881 00:50:06,960 --> 00:50:09,880 Speaker 1: that are gonna occur when we have the next bear market. Um, 882 00:50:09,920 --> 00:50:12,600 Speaker 1: I mean there's a potential toxic and when does that start? 883 00:50:13,600 --> 00:50:18,080 Speaker 1: You know, the FED can engineer that soft landing. I 884 00:50:18,120 --> 00:50:20,960 Speaker 1: think we're mid cycle, so so, in other words, this 885 00:50:21,040 --> 00:50:25,920 Speaker 1: could be a really extended economic cycle. Of about that 886 00:50:26,440 --> 00:50:29,120 Speaker 1: Washington seminar I went to in nineteen eighty six. One 887 00:50:29,120 --> 00:50:31,960 Speaker 1: of the speakers was Beryl Sprinkle, and he was Reagan's 888 00:50:32,080 --> 00:50:34,520 Speaker 1: count Chairman of the Council of Economic Advisors. He said 889 00:50:34,600 --> 00:50:38,000 Speaker 1: something that I've never forgotten, and you hear it a 890 00:50:38,000 --> 00:50:39,600 Speaker 1: lot now, but back then it was the first time 891 00:50:39,640 --> 00:50:41,600 Speaker 1: I had heard it. He said, you know, economic expansions 892 00:50:41,600 --> 00:50:44,640 Speaker 1: don't die of old age. They dive in apt policies 893 00:50:45,160 --> 00:50:48,359 Speaker 1: and typically it's emanating from the Fed. Um. So just 894 00:50:48,440 --> 00:50:53,120 Speaker 1: because we're level overtightening and on the market side, investor 895 00:50:53,160 --> 00:50:57,120 Speaker 1: classic since World War Two when the curves inverted eighty 896 00:50:57,120 --> 00:50:59,080 Speaker 1: five percent of the time we have a recession at 897 00:50:59,000 --> 00:51:01,440 Speaker 1: a beer market. I mean, that's just the deal. You know, 898 00:51:01,560 --> 00:51:06,239 Speaker 1: stop start, stop start um. But it's not age, and 899 00:51:06,280 --> 00:51:08,759 Speaker 1: we're we just started the eleventh year this expansion. There's 900 00:51:08,800 --> 00:51:11,840 Speaker 1: no reason we can't be midside, mid cycle if we 901 00:51:11,960 --> 00:51:17,640 Speaker 1: handle the policy side correctly. Um so what Australia's just counting, 902 00:51:17,920 --> 00:51:22,000 Speaker 1: that's right, But the quantum, the passive, it concerns me 903 00:51:22,920 --> 00:51:27,319 Speaker 1: that so much now is computerized and technical. Um as 904 00:51:27,360 --> 00:51:31,560 Speaker 1: somebody said, um to to harness the wisdom of crowds, 905 00:51:31,600 --> 00:51:35,839 Speaker 1: you actually need a crowd, you know, the price discovery UM, 906 00:51:36,440 --> 00:51:40,160 Speaker 1: the fundamental valuation analysis. It's just it's not it's so 907 00:51:40,280 --> 00:51:44,480 Speaker 1: much of it is automatic, the combination of the past investing, 908 00:51:44,520 --> 00:51:48,279 Speaker 1: the e t f s, the index funds. If the 909 00:51:48,320 --> 00:51:52,560 Speaker 1: algorithms have a predisposed notion to buy, they can also 910 00:51:52,640 --> 00:51:54,640 Speaker 1: it can also be on the sell side. And so 911 00:51:54,680 --> 00:51:58,600 Speaker 1: when you have you could really have some outside, outside 912 00:51:59,000 --> 00:52:02,120 Speaker 1: sized moves on the upside and the downside. I just 913 00:52:02,200 --> 00:52:05,520 Speaker 1: suspect they're going to be some unintended consequences of this 914 00:52:05,760 --> 00:52:10,440 Speaker 1: massive move into passive into algorithms that I think during 915 00:52:10,480 --> 00:52:13,160 Speaker 1: the next bearer market could really be somewhat disconcerting. Now, 916 00:52:14,040 --> 00:52:16,800 Speaker 1: over the long term, I don't think it matters, because 917 00:52:16,840 --> 00:52:20,439 Speaker 1: there'll be a equilibrium re established and it'll it'll sort 918 00:52:20,480 --> 00:52:23,280 Speaker 1: itself out. Go too high, it'll go too low. But eventually, 919 00:52:24,000 --> 00:52:26,240 Speaker 1: I tell you, I really feel for the individual investor, 920 00:52:26,280 --> 00:52:29,200 Speaker 1: and I think it's one of the reasons individual investors underinvested. 921 00:52:29,280 --> 00:52:33,279 Speaker 1: This volatility is just can keep you up at night. 922 00:52:33,360 --> 00:52:35,960 Speaker 1: I mean, it's just incredible in terms of what it 923 00:52:36,000 --> 00:52:40,359 Speaker 1: means just uh psychologically to watch this volatility that can 924 00:52:40,480 --> 00:52:42,640 Speaker 1: and a lot of it's because of passive I mean 925 00:52:42,640 --> 00:52:46,040 Speaker 1: you can see it on the tape when when when okay, 926 00:52:46,080 --> 00:52:48,360 Speaker 1: we're gonna sell this bang. You know, it just depends 927 00:52:48,400 --> 00:52:50,840 Speaker 1: on the so and it comes out of nowhere. The 928 00:52:50,840 --> 00:52:54,560 Speaker 1: fourth quarter of really was a wake up call for 929 00:52:54,600 --> 00:52:58,000 Speaker 1: a lot of people, right um there. One interesting point 930 00:52:58,040 --> 00:53:00,960 Speaker 1: I'll make is that the piece for Barons on the 931 00:53:00,960 --> 00:53:03,920 Speaker 1: twentyear Investment Approach and somebody answered online and said, you 932 00:53:03,960 --> 00:53:08,120 Speaker 1: know their Fideli broker said the best account he ever 933 00:53:08,200 --> 00:53:11,600 Speaker 1: had with somebody that forgot he had the e I've heard, 934 00:53:11,640 --> 00:53:14,400 Speaker 1: I've heard jokes like that, and it's it's absolutely true. 935 00:53:14,640 --> 00:53:17,000 Speaker 1: So let me jump to my favorite questions. In our 936 00:53:17,040 --> 00:53:19,520 Speaker 1: our speed rounds, we ask all our guests this and 937 00:53:19,520 --> 00:53:23,799 Speaker 1: we always get some pretty interesting um answers. What was 938 00:53:23,840 --> 00:53:27,360 Speaker 1: the first car you ever owned? Year making model? First 939 00:53:27,400 --> 00:53:33,120 Speaker 1: car was a nineteen sixty nine sable brown oz Babile 940 00:53:33,400 --> 00:53:37,720 Speaker 1: Delta AD, a two door with a rocket four fifty engine. 941 00:53:37,800 --> 00:53:40,200 Speaker 1: That was a lanyard, wasn't that? That was a giant 942 00:53:41,160 --> 00:53:46,120 Speaker 1: I remember the very heavy but a strong engine it 943 00:53:46,200 --> 00:53:49,759 Speaker 1: had it had it had a vinyl top, and on 944 00:53:49,760 --> 00:53:52,480 Speaker 1: one road tip the wind got up under the top, 945 00:53:53,120 --> 00:53:56,759 Speaker 1: off the whole thing. Another fine General Motors product. UM 946 00:53:57,200 --> 00:53:59,840 Speaker 1: tell us the most important thing we don't know about 947 00:54:00,080 --> 00:54:04,840 Speaker 1: Jay Bowen Gosh, I would say that my very first 948 00:54:04,920 --> 00:54:09,960 Speaker 1: job was selling vibrating pillows. I don't know how, I 949 00:54:10,000 --> 00:54:12,840 Speaker 1: don't know how many people know that vibrating pillars. Vibrating 950 00:54:13,400 --> 00:54:16,520 Speaker 1: What is the purpose of a vibrating pill college summer job. 951 00:54:17,320 --> 00:54:19,680 Speaker 1: It was a size of a throat pillow with batteries 952 00:54:19,680 --> 00:54:22,080 Speaker 1: in the back, and it relieved. People put it behind 953 00:54:22,120 --> 00:54:24,879 Speaker 1: their back, They put their feet on it, they put 954 00:54:24,920 --> 00:54:28,640 Speaker 1: their neck on it. It was a tension reliever. And um, 955 00:54:28,680 --> 00:54:32,200 Speaker 1: I answered an ad that said two hundred dollars a 956 00:54:32,200 --> 00:54:35,080 Speaker 1: week guaranteed, and then in small print it set if 957 00:54:35,080 --> 00:54:39,200 Speaker 1: you sell for a day. Um, I answered yourself. I 958 00:54:39,239 --> 00:54:43,600 Speaker 1: answered the ad and I became the top salesman nationwide. Yeah, 959 00:54:43,840 --> 00:54:46,960 Speaker 1: so that was that was my first job, vibrating pillars. Well, 960 00:54:47,280 --> 00:54:49,160 Speaker 1: who are some of your early mentors? And I have 961 00:54:49,239 --> 00:54:52,440 Speaker 1: to assume your father is gonna uh loom large in 962 00:54:52,480 --> 00:54:55,880 Speaker 1: that that list. On the investment side, there's just no question. 963 00:54:56,000 --> 00:54:58,800 Speaker 1: I mean when you work with somebody for thirty two years, 964 00:54:58,880 --> 00:55:01,560 Speaker 1: day in and day out, shoulder to shoulder. On the 965 00:55:01,560 --> 00:55:04,759 Speaker 1: investment side, I mean it's just and for most of 966 00:55:04,760 --> 00:55:07,200 Speaker 1: the day you're talking about investments in the stock market. 967 00:55:07,239 --> 00:55:09,840 Speaker 1: I mean, you know you're not exclusively, but it's just 968 00:55:10,000 --> 00:55:14,960 Speaker 1: was so just the intensity UM on financial markets, just 969 00:55:15,120 --> 00:55:17,400 Speaker 1: day in and day out. I mean that he's just 970 00:55:17,680 --> 00:55:20,279 Speaker 1: it's not not even close. UM. On the On the 971 00:55:20,320 --> 00:55:25,000 Speaker 1: economic side, UM, Arthur Laugher UM is somebody I met 972 00:55:25,160 --> 00:55:28,520 Speaker 1: in the mid eighties, UM who had a big influence. 973 00:55:28,600 --> 00:55:31,759 Speaker 1: He would have the particularly when I really started to 974 00:55:31,800 --> 00:55:37,200 Speaker 1: focus on monetary policy, UM, trade policy, physical policy, tax policy. 975 00:55:37,320 --> 00:55:40,680 Speaker 1: He would have these very high profile Washington conferences where 976 00:55:40,719 --> 00:55:44,080 Speaker 1: you were able to meet UM, very high level of 977 00:55:44,160 --> 00:55:48,440 Speaker 1: people UM in the Treasury, uh AT, O, mb UH, 978 00:55:48,560 --> 00:55:54,239 Speaker 1: Council of Economic Advisors, the FED, um Cato Institute. UM. 979 00:55:54,520 --> 00:55:59,759 Speaker 1: In turn, their interest in uh N spent and was 980 00:55:59,840 --> 00:56:03,880 Speaker 1: a will to spend time with just some extraordinary people. 981 00:56:03,880 --> 00:56:07,920 Speaker 1: On the policy side, I mean you had people like UM, 982 00:56:08,040 --> 00:56:12,719 Speaker 1: Milton Friedman and and Vernon Smith, and James Buchanan and F. A. 983 00:56:12,880 --> 00:56:18,800 Speaker 1: Hyattk I mean Nobel laureates who were around. You had conferences. UM, 984 00:56:18,880 --> 00:56:22,920 Speaker 1: particularly the Annual Monetary Conference, got a very high profile 985 00:56:22,960 --> 00:56:28,279 Speaker 1: Annual Monetary Conference that Jim dorn Ruyns, where UM was 986 00:56:28,480 --> 00:56:31,400 Speaker 1: really able to start focusing on the on these issues 987 00:56:31,640 --> 00:56:35,600 Speaker 1: and and the and and just being in that environment 988 00:56:36,040 --> 00:56:38,479 Speaker 1: allowed me to really focus on from a top down 989 00:56:38,480 --> 00:56:41,320 Speaker 1: standpoint some of these key policy issues. That very interesting. 990 00:56:41,520 --> 00:56:44,160 Speaker 1: I've done a number of shows with the Art Laugher 991 00:56:44,200 --> 00:56:48,120 Speaker 1: over the years, and my takeaway from him is always 992 00:56:48,520 --> 00:56:51,160 Speaker 1: he's a really nice guy. And I don't know how 993 00:56:51,280 --> 00:56:53,919 Speaker 1: much people always arguing with him on a policy base, 994 00:56:54,719 --> 00:56:56,840 Speaker 1: hold the policy aside. He just happens to be a 995 00:56:57,000 --> 00:56:59,680 Speaker 1: genuinely nice but just the best of the best. Yeah, 996 00:57:00,040 --> 00:57:04,760 Speaker 1: he's really really great. So what investors influenced your approach 997 00:57:04,800 --> 00:57:08,720 Speaker 1: to looking at the market and looking at stocks again? 998 00:57:08,719 --> 00:57:11,359 Speaker 1: My father is it's just so overwhelming. I mean, it's 999 00:57:11,400 --> 00:57:15,640 Speaker 1: so overwhelming in terms of being molded, uh, in terms 1000 00:57:15,640 --> 00:57:19,080 Speaker 1: of taking a long term approach, taking a high quality approach, 1001 00:57:19,480 --> 00:57:22,600 Speaker 1: and the investment decision making process, you know, being topped 1002 00:57:22,600 --> 00:57:26,080 Speaker 1: down from a thematic standpoint, but then being bottom up 1003 00:57:26,200 --> 00:57:28,920 Speaker 1: when you get this, when you get the candidates, the candidates. 1004 00:57:28,920 --> 00:57:32,600 Speaker 1: I remember him coming in during the late days and saying, okay, 1005 00:57:32,800 --> 00:57:35,720 Speaker 1: we've got mid late eighties. I want you to look 1006 00:57:35,760 --> 00:57:39,320 Speaker 1: at Colgate and Gillette and Campbell's Soup and Procter and 1007 00:57:39,360 --> 00:57:42,440 Speaker 1: Gamble and tell me what looks the best from a 1008 00:57:43,200 --> 00:57:46,440 Speaker 1: uh free cash flow standpoint, free cash flow yield, the 1009 00:57:46,440 --> 00:57:50,560 Speaker 1: dividend history, the management, the sales per share, the balance sheet. 1010 00:57:50,800 --> 00:57:54,120 Speaker 1: You know, do really helped me kind of formalize the 1011 00:57:54,160 --> 00:57:59,120 Speaker 1: process in terms of deciding UM, not only top down work, 1012 00:57:59,240 --> 00:58:03,920 Speaker 1: but then selecting the individual security. Quite interesting. Tell us 1013 00:58:03,960 --> 00:58:06,720 Speaker 1: about some of your favorite books, be they fiction, non fiction, 1014 00:58:06,800 --> 00:58:10,320 Speaker 1: investing related or others. What what do you like to read? Yeah, 1015 00:58:10,520 --> 00:58:13,680 Speaker 1: you know, outside I read so much finance and economics 1016 00:58:13,760 --> 00:58:16,160 Speaker 1: during the day. I try to get away from that. UM. 1017 00:58:16,200 --> 00:58:20,480 Speaker 1: I really like biographies. I really like historical biographies. UM 1018 00:58:20,480 --> 00:58:23,520 Speaker 1: it's a few examples. Well, there's there's a couple now 1019 00:58:23,680 --> 00:58:29,040 Speaker 1: that that I'm reading. UM one UM hero UM. Michael Korda, 1020 00:58:29,520 --> 00:58:32,840 Speaker 1: uh life in Times of Lawrence of Arabia just a 1021 00:58:32,960 --> 00:58:37,000 Speaker 1: just a fascinating historical figure. You know, he led the 1022 00:58:37,040 --> 00:58:39,680 Speaker 1: Arab revolt against the Turks in World War One. I mean, 1023 00:58:39,680 --> 00:58:42,040 Speaker 1: you're the famous movie in the early six Petero tool 1024 00:58:42,080 --> 00:58:47,240 Speaker 1: but just a scholar, a writer, a warrior, a journalist. 1025 00:58:47,280 --> 00:58:51,520 Speaker 1: It's just a fascinating individual. I mean, I just found 1026 00:58:51,520 --> 00:58:56,360 Speaker 1: that very interesting. Um. Another recent historical would be Andrew 1027 00:58:56,440 --> 00:59:00,880 Speaker 1: Roberts new book on Churchill, which is a one biography, 1028 00:59:00,960 --> 00:59:03,880 Speaker 1: which is hard to do, but I would say it's 1029 00:59:03,880 --> 00:59:07,360 Speaker 1: probably gonna in retrospect end up being the best one 1030 00:59:07,440 --> 00:59:11,240 Speaker 1: volume biography. Andrew Roberts is just tremendous. He wrote The 1031 00:59:11,280 --> 00:59:13,240 Speaker 1: Storms of War on one World War two, is a 1032 00:59:13,360 --> 00:59:17,520 Speaker 1: great great biographer. On the finance side, another book that's 1033 00:59:17,560 --> 00:59:22,720 Speaker 1: fascinating is The Lords of Finance something like that. That's 1034 00:59:22,920 --> 00:59:24,960 Speaker 1: I think that one. The Pulitzer that was a really 1035 00:59:25,080 --> 00:59:28,120 Speaker 1: interesting nine or ten one. I did not until I 1036 00:59:28,120 --> 00:59:31,520 Speaker 1: read that book, I had no idea how much monetary 1037 00:59:31,600 --> 00:59:35,560 Speaker 1: policy led to World What two. It's just amazing. I mean, 1038 00:59:35,680 --> 00:59:37,680 Speaker 1: I love it. The focus on the four central bankers 1039 00:59:37,680 --> 00:59:39,760 Speaker 1: of the world back then in the twenties and what 1040 00:59:40,280 --> 00:59:43,520 Speaker 1: just the just how it all went down, and it's 1041 00:59:43,520 --> 00:59:46,280 Speaker 1: so beautifully written to it's just tremendous. So that's a 1042 00:59:46,280 --> 00:59:49,440 Speaker 1: great one. I'm I'm a big fan of the American novel, 1043 00:59:50,200 --> 00:59:54,240 Speaker 1: the classic American novel, you know, Hemingway. I just The 1044 00:59:54,280 --> 00:59:57,800 Speaker 1: Old Man in the Sea on its get old. And 1045 00:59:57,840 --> 01:00:01,520 Speaker 1: the thing about those books, particularly a great gas here 1046 01:00:01,800 --> 01:00:07,280 Speaker 1: or um uh J. D. Salinger, Um, you can read them. Yeah, 1047 01:00:07,320 --> 01:00:09,400 Speaker 1: you can read them in one or two sittings, and 1048 01:00:09,680 --> 01:00:12,400 Speaker 1: you can reread them ten twenty years later, you can 1049 01:00:12,440 --> 01:00:15,480 Speaker 1: reread them. Um. On the modern side, it would be 1050 01:00:15,480 --> 01:00:20,040 Speaker 1: more Um Walker Percy the Movie Go or The Last Gentleman. 1051 01:00:20,520 --> 01:00:25,720 Speaker 1: He's just great fiction novelist. And then Tom Wolf, of course, 1052 01:00:26,280 --> 01:00:28,840 Speaker 1: I want to say Hemingway's all Man the Sea is 1053 01:00:28,880 --> 01:00:31,600 Speaker 1: like a hundred pages, like you could sit down and 1054 01:00:32,040 --> 01:00:34,040 Speaker 1: that's a short flight. You can you can go through 1055 01:00:34,080 --> 01:00:37,760 Speaker 1: that whole quite quite interesting. So tell us about a 1056 01:00:37,800 --> 01:00:41,280 Speaker 1: time you failed and what you learned from the experience. Yeah, 1057 01:00:41,360 --> 01:00:44,400 Speaker 1: that's a great one, great question, um, thinking about that, 1058 01:00:44,480 --> 01:00:48,000 Speaker 1: and it would one that really stands out is we 1059 01:00:48,240 --> 01:00:52,920 Speaker 1: started a mutual fund in the early two thousand's and 1060 01:00:53,040 --> 01:00:56,080 Speaker 1: it was just a mistake. I mean we decided to 1061 01:00:56,360 --> 01:00:58,800 Speaker 1: you know, you know, we we would have these inquiries 1062 01:00:58,920 --> 01:01:01,400 Speaker 1: in terms of we would really love to invest with you, 1063 01:01:01,440 --> 01:01:04,240 Speaker 1: we don't meet your minimum. Um. So we had these visions, 1064 01:01:04,320 --> 01:01:05,960 Speaker 1: all right, we'll just start a mutual fund. There's no 1065 01:01:06,000 --> 01:01:09,080 Speaker 1: big deal. Oh, my gosh, the time and the money 1066 01:01:09,120 --> 01:01:11,600 Speaker 1: and then the realization the light bulb comes on that 1067 01:01:11,640 --> 01:01:14,840 Speaker 1: way a second, these things are sold over and now 1068 01:01:14,920 --> 01:01:17,240 Speaker 1: they're just sold. We didn't have the ability to do that, 1069 01:01:17,320 --> 01:01:19,400 Speaker 1: and plus we were had to rely on somebody else 1070 01:01:19,440 --> 01:01:22,960 Speaker 1: for a lot of stuff. I just didn't. It taught 1071 01:01:23,000 --> 01:01:26,640 Speaker 1: me that we needed to focus on our core uh 1072 01:01:26,680 --> 01:01:31,000 Speaker 1: discipline in terms of the investment side with current clients 1073 01:01:31,000 --> 01:01:34,560 Speaker 1: and just rely on referrals. It didn't work, It was expensive, 1074 01:01:34,640 --> 01:01:37,840 Speaker 1: it was time consuming. It was just a mistake. UM 1075 01:01:37,920 --> 01:01:39,840 Speaker 1: that venture. What do you What do you do for 1076 01:01:39,880 --> 01:01:44,080 Speaker 1: fun out of the office? Um? Guyship would be dominated 1077 01:01:44,080 --> 01:01:50,000 Speaker 1: by triathlon racing? Yeah, triathlon? Quite interesting. Tell us what 1078 01:01:50,040 --> 01:01:54,360 Speaker 1: you're most optimistic and most pessimistic about today? Gosh, I 1079 01:01:54,800 --> 01:02:00,040 Speaker 1: would say I'm most optimistic about just the continuation of 1080 01:02:00,080 --> 01:02:05,200 Speaker 1: the entrepreneurial and innovative zeal that this company, excuse me, 1081 01:02:05,280 --> 01:02:10,080 Speaker 1: country possesses. It's just incredible. I think the energy and 1082 01:02:10,120 --> 01:02:13,440 Speaker 1: the drive, the American spirit that's still there and with 1083 01:02:13,520 --> 01:02:16,320 Speaker 1: new company startups and the vision, I just think that's 1084 01:02:16,360 --> 01:02:21,120 Speaker 1: so exciting. UM. And I guess that ties into what 1085 01:02:21,160 --> 01:02:23,800 Speaker 1: I'm most I guess what I would be concerned with 1086 01:02:23,880 --> 01:02:26,560 Speaker 1: is that we somehow we lose that and we fall 1087 01:02:26,600 --> 01:02:32,120 Speaker 1: into more the European lethargic UH state where we're growing, 1088 01:02:32,640 --> 01:02:36,000 Speaker 1: but you know, you have demograhical issues. You just got 1089 01:02:36,040 --> 01:02:42,320 Speaker 1: this financial repression environment where you have abnormally low interest rates, 1090 01:02:42,400 --> 01:02:46,320 Speaker 1: low growth rates, demographic issues, a lot of disancenters for 1091 01:02:46,400 --> 01:02:49,800 Speaker 1: capital formation and new business startups. I would hate to 1092 01:02:49,840 --> 01:02:52,960 Speaker 1: see us fall into that model, um that you're seeing 1093 01:02:53,160 --> 01:02:55,400 Speaker 1: somewhat in Japan and Europe. I want to keep our 1094 01:02:55,480 --> 01:02:59,400 Speaker 1: zeal going here. Our last two questions. If a millennial 1095 01:02:59,520 --> 01:03:02,040 Speaker 1: or recent college grad came and said they were thinking 1096 01:03:02,080 --> 01:03:04,920 Speaker 1: about a career and asset management, what sort of advice 1097 01:03:04,920 --> 01:03:08,600 Speaker 1: would you give. I would say that there's more than 1098 01:03:08,640 --> 01:03:11,960 Speaker 1: one way to do this. UM, don't necessarily take the 1099 01:03:12,000 --> 01:03:15,520 Speaker 1: conventional route. You don't have to have a finance degree, 1100 01:03:15,560 --> 01:03:18,360 Speaker 1: you don't have to major in finance. They're all kind 1101 01:03:18,360 --> 01:03:22,120 Speaker 1: of different ways to be successful in this business. And UM, 1102 01:03:22,320 --> 01:03:25,960 Speaker 1: no job is too small. Absolutely learned something. I don't 1103 01:03:26,000 --> 01:03:28,560 Speaker 1: care what you're doing. If you're in the door at 1104 01:03:28,600 --> 01:03:32,560 Speaker 1: any institution, man, I mean, just take advantage of it 1105 01:03:32,920 --> 01:03:36,000 Speaker 1: and get in the door and and work within that 1106 01:03:36,280 --> 01:03:39,560 Speaker 1: environment to see where you're where you're comfortable, and where 1107 01:03:39,600 --> 01:03:42,120 Speaker 1: you can flourish. And our final question, what do you 1108 01:03:42,120 --> 01:03:45,800 Speaker 1: know about the world of investing today that you wish 1109 01:03:45,800 --> 01:03:50,280 Speaker 1: you knew when you begin almost forty years ago? Right? God, 1110 01:03:50,400 --> 01:03:52,080 Speaker 1: you know the one that stands out is that I 1111 01:03:52,120 --> 01:03:55,480 Speaker 1: wish I'd put the entire portfolio in thirty year treasury bonds. 1112 01:03:58,400 --> 01:04:01,440 Speaker 1: Everybody there were long stch is where they were beating stocks, 1113 01:04:01,440 --> 01:04:06,760 Speaker 1: weren't there. Yeah, it's it's something, um, but really, you know, 1114 01:04:08,120 --> 01:04:11,160 Speaker 1: I would say that you don't always have to be right. 1115 01:04:12,120 --> 01:04:14,240 Speaker 1: You know, you don't always have to be right. I 1116 01:04:14,240 --> 01:04:18,240 Speaker 1: could really beat myself up initially for being wrong every 1117 01:04:18,280 --> 01:04:21,160 Speaker 1: now and then, and you're gonna be wrong. The other 1118 01:04:21,200 --> 01:04:23,560 Speaker 1: side of that, you're gonna be wrong and you need 1119 01:04:24,120 --> 01:04:28,360 Speaker 1: to learn how to absorb it, to process it, to 1120 01:04:28,480 --> 01:04:33,280 Speaker 1: accept it, and to take the loss and move on. Great, 1121 01:04:33,360 --> 01:04:37,960 Speaker 1: great advice. We have been speaking with Jay Bowen of Bowen, 1122 01:04:38,080 --> 01:04:42,040 Speaker 1: Haines and Company. If you enjoy this conversation, well be 1123 01:04:42,120 --> 01:04:44,160 Speaker 1: sure and look up an Inch or down an inch 1124 01:04:44,880 --> 01:04:49,880 Speaker 1: on Apple iTunes overcasts that your Spotify wherever your final 1125 01:04:49,920 --> 01:04:52,800 Speaker 1: podcasts are found, and you can see any of the 1126 01:04:52,880 --> 01:04:56,360 Speaker 1: previous two hundred and fifty such conversations we've had over 1127 01:04:56,400 --> 01:04:59,400 Speaker 1: the past five years. We love your comments, feedback and 1128 01:04:59,440 --> 01:05:02,920 Speaker 1: suggest in his right to us at m IB podcast 1129 01:05:02,960 --> 01:05:06,200 Speaker 1: at Bloomberg dot net. I would be remiss if I 1130 01:05:06,200 --> 01:05:08,440 Speaker 1: did not thank the crack staff that helps put together 1131 01:05:08,480 --> 01:05:12,720 Speaker 1: this conversation each week. Michael Batnick is my head of research. 1132 01:05:13,360 --> 01:05:17,960 Speaker 1: Michael Boyle is our producer slash booker. Charlie Valmer is 1133 01:05:18,000 --> 01:05:21,800 Speaker 1: our chief engineer. I'm Barry Ritolts. You've been listening to 1134 01:05:21,880 --> 01:05:24,280 Speaker 1: Masters in Business on Bloomberg Radio