Speaker 1: This is Bloomberg Business Week with Carol Messer and Bloomberg
Speaker 1: Quick Takes. Tim Stinovic from Bloomberg Radio joining us as
Speaker 1: Ted Saide's. He's founder imaging partner of Capital Allocators, author
Speaker 1: of a new book entitled Capital Allocators, How the World
Speaker 1: Delete money, Managers, lead and invest and he joins us
Speaker 1: on the phone in Greenwich, Connecticut. Ted, nice to have
Speaker 1: you here on Bloomberg. Oh, thanks so much for having
Speaker 1: me Carol. Well listen, and you're also host of the
Speaker 1: Capital Allocators podcast. You talk to some of the world's
Speaker 1: top professional investors. Um, before we get into the conversations
Speaker 1: you've had in the book, how are you. What's the
Speaker 1: past year been like for you? You know, it's hard
Speaker 1: to stay given what's happened, but honestly, it's been one
Speaker 1: of the best years of my life. Why. Well, it's
Speaker 1: a combination of things on the professional side, the podcast.
Speaker 1: As it turns out, right, this medium can grow and
Speaker 1: continue in an environment like this, So I've been able
Speaker 1: to focus. It's been easier to get access to some
Speaker 1: the people that I get a chance to talk to
Speaker 1: because their scheduled their travel schedules are down and the
Speaker 1: engagement with the content we've been putting out has just grown.
Speaker 1: That grew over last year in terms of downloads, So
Speaker 1: that's been great. On the personal side, I got married
Speaker 1: last year. That's the love of my life, and things
Speaker 1: have been great. Congratulations. Wow, like kidding, get out of
Speaker 1: the park. That is incredible. Um. You know, it's funny
Speaker 1: that you say that about access to people, because I
Speaker 1: think that's something we realized too, that everybody once you
Speaker 1: realized it was kind of okay to talk. Uh, everybody
Speaker 1: was home and in the same situation. And you're right,
Speaker 1: we had like access to people too that we hadn't before.
Speaker 1: So it's interesting that that that was your experience as well.
Speaker 1: Let's talk about um, your book and capital allocators, because
Speaker 1: I do think we're in an interesting time where we're
Speaker 1: watching a lot of investment trends. We're watching this back explosion,
Speaker 1: the Reddit revolution, We're watching crypto bitcoin values continuing to
Speaker 1: grow and actually go more mainstream. Um, how do you
Speaker 1: see it? What are some of the things that you
Speaker 1: find interesting, what's worrisome? What screams opportunity to you? Sure? Well,
Speaker 1: you know the people that I talked to regularly in
Speaker 1: the world, I came from are really these asset owners,
Speaker 1: these long duration, long term pools of capital, and not
Speaker 1: a lot changes in the way they go about investing
Speaker 1: day to day or week to week. So there are
Speaker 1: always a few key trends that come into play and
Speaker 1: come in and out of their idea generation. But for
Speaker 1: the most part, what they're finding um is that generally speaking,
Speaker 1: capital markets look expensive and they all have spending obligations
Speaker 1: they need to meet, call it, you know, five for
Speaker 1: a foundation or a little bit more for pension fund.
Speaker 1: So they're really scratching their heads and saying, how are
Speaker 1: we going to meet these long term objectives given that
Speaker 1: the easy ways of accessing, say you know, index funds
Speaker 1: or things like that, just don't look like they're priced
Speaker 1: to reach these long term return objectives. Okay, So then
Speaker 1: having said that, when you look at some of them more,
Speaker 1: maybe you know other areas to go. Whether it's crypto,
Speaker 1: I mean you like crypto, correct the crypto do I
Speaker 1: like it for a particular reason, which is we are
Speaker 1: in this world of fiat money debasement, and all of
Speaker 1: the risk assets, whether you like stocks or bonds, or
Speaker 1: venture capital or private equity, they're all sort of predicated
Speaker 1: on dollar based instruments, and so crypto is this kind
Speaker 1: of asymmetric option for the potential of digital gold uh
Speaker 1: and bitcoin in particular. So you have a combination of
Speaker 1: the thought of something that may be very important ten
Speaker 1: years from now in terms of maintaining your store of value,
Speaker 1: and then you have attached to that sort of the
Speaker 1: venture capital thesis, which is if you look at where
Speaker 1: all the talent is going of these young people coming
Speaker 1: out of school, all these engineers, something like twenty or
Speaker 1: twenty of them um and this according to Christic said
Speaker 1: that Andrews and Horowist, who I had on the show,
Speaker 1: you said something like them, they're all going to build
Speaker 1: blockchain technologies. And when all the talents that's what Silicon
Speaker 1: Valley does. When the talent moves in a certain direction,
Speaker 1: they go and look to access it. And so you
Speaker 1: put those two things together, and I have a small
Speaker 1: percentage of my personal portfolio invested in crypto in particular.
Speaker 1: I'm taking baby steps. So for me, it's just bitcoin
Speaker 1: and ethereum at this point in time. Hey, Ted, one
Speaker 1: thing I want to ask you, and we just did
Speaker 1: a story Charlie and I um for some of our
Speaker 1: audience and it's about E s G and it's an
Speaker 1: opinion column here at Bloomberg. But it's just there is
Speaker 1: a feeling that because there's so much money flowing into
Speaker 1: the E s G space, it's where investors, a lot
Speaker 1: of institutional investors are increasingly looking to commit new money
Speaker 1: that a lot of you know, uh, investment houses are
Speaker 1: fund offerings, are just kind of slapping an E s
Speaker 1: G label on it. What do you think about I
Speaker 1: know you like the E s G space and that
Speaker 1: you are following it. How do you you know, how
Speaker 1: do we make it purer and more true? Yeah, well,
Speaker 1: I think you have to start with that perspective. If
Speaker 1: you look backwards, as this sort of research study showed,
Speaker 1: there will be a lot of that. And the reason is,
Speaker 1: as one of my guests, James Aitken had said, there's
Speaker 1: a tsunami's capital coming into this space for all the
Speaker 1: right reasons. And so, really starting with Greta Thunberg a
Speaker 1: year and a half ago, her her description of what
Speaker 1: was happening Davos just before COVID, every description was about
Speaker 1: climate change. We know that this is really important and
Speaker 1: it will be a very strong secular change in how
Speaker 1: capital gets allocated worldwide. Now, as soon as money starts flowing,
Speaker 1: it's not that surprising that people trying to capture their
Speaker 1: share of it will do, you know, what you call greenwashing.
Speaker 1: But let's not be too short term about that. If
Speaker 1: you look over time, the first thing is we now
Speaker 1: had interest. We have interest in doing things that are
Speaker 1: better for the environment. We have interest in promoting more
Speaker 1: socially diverse people throughout the economy, all of which is
Speaker 1: good for the long term. Now, as that happens, we
Speaker 1: need definitions. We need to understand in the capital markets
Speaker 1: and public markets, we need benchmarks. And if you look
Speaker 1: at the different benchmarks, nobody really knows yet what is
Speaker 1: a good company what is a bad company, And that
Speaker 1: will get worked out, but it does take time. And
Speaker 1: in that process, I'm not that surprised that you have
Speaker 1: products that want to say they have in the s
Speaker 1: G lens for the first time, and maybe they do
Speaker 1: and maybe they don't. But over time, I think we'll
Speaker 1: see the stronger companies that have the those trends and
Speaker 1: doing the right things for a broader constituency than just
Speaker 1: the shareholder will be the winners over time. And you
Speaker 1: know that will play out as capital markets do. Until then, Yeah,
Speaker 1: there'll be a little bit of a mess along the way, okay,
Speaker 1: but ultimately, like the long game is that we get
Speaker 1: to a better point. Yeah, I think so. Hey, listen
Speaker 1: your book, your podcast, your approach. There's a lot of
Speaker 1: useful information. Informative. It's you know, really on how the
Speaker 1: best invest. It's very instructional. I think you even in
Speaker 1: maybe the forward call it a textbook. Um, you talk
Speaker 1: with the best. Are there common threads among the best
Speaker 1: capital allocators and elite money managers and how they lead
Speaker 1: and how they invest? There really are, And you could
Speaker 1: really break it down into two sets of disciplines, one
Speaker 1: or the investment related and then the other the leadership related.
Speaker 1: So if you start with the ladder, the investment industry
Speaker 1: is known for managing money well, not for managing people well.
Speaker 1: And one of the things I've had the benefit of
Speaker 1: doing on the podcast is interview people from other disciplines
Speaker 1: who are talented at leadership and management and things like
Speaker 1: decision making. Annie Duke the Great, the great form of
Speaker 1: poker player, and so the great c I O S
Speaker 1: are really like Baseball's five tool players. They really understand
Speaker 1: all of these different disciplines, And what I tried to
Speaker 1: do in that section of the book is describe some
Speaker 1: of the basics, like how do you do this well?
Speaker 1: Then you turn to the investment side. And you know,
Speaker 1: I was very fortunate to learn in the formative part
Speaker 1: of my career from David Swinton, who is sort of
Speaker 1: the dean of this and wrote the seminal book twenty
Speaker 1: years ago. Um, And it does start with really an
Speaker 1: understanding of what's the purpose of the capital, what is
Speaker 1: the time horizon, what beliefs about investing the people bring in?
Speaker 1: And then the discipline process that I walked through in
Speaker 1: the book of how did these people find their investment ideas,
Speaker 1: how do they do their research, how do they make decisions?
Speaker 1: And then how do they monitor and manage their portfolio,
Speaker 1: manage risk over time? Is there something to like do
Speaker 1: all of them admit that they've made some really big
Speaker 1: mistakes and that was kind of a big learning opportunity,
Speaker 1: Not all of them, but only the good ones. Okay,
Speaker 1: you admit that they made a mistake. You know, the
Speaker 1: investment business in some ways is very humbling. Morgan Howbell,
Speaker 1: who recently wrote the book Psychology of Money, has this
Speaker 1: great analogy that he says, you could be trained at
Speaker 1: the greatest academic institution, worked for the best place on
Speaker 1: Wall Street, and still underperform someone who knows is nothing.
Speaker 1: If you were a brain surgeon, that would never ever happen.
Speaker 1: So yeah, the great investors are only right to six
Speaker 1: of the time in the public market. So um. Yeah.
Speaker 1: It's a very humbling business and it's important for people
Speaker 1: who learn from their mistakes. How do you hope people
Speaker 1: use this book? You know? I wrote this book in
Speaker 1: large part because it was what I wanted to distill
Speaker 1: from my own investing in the investing that I do,
Speaker 1: and what I hope is that people see it as
Speaker 1: incremental ways that they can get better. And that's what
Speaker 1: the podcast has been. This just phenomenal way of sharing
Speaker 1: in public with some of these great investors how they
Speaker 1: go about doing what they do, and every single one
Speaker 1: of them has a little nugget of wisdom along the way,
Speaker 1: which in fact is the whole third section of the
Speaker 1: book is just a series of quotes that are some
Speaker 1: of the very best quotes about how these people think
Speaker 1: about it, the nuggets of wisdom, nuggets of wisdom, and
Speaker 1: how they think about life too. Well, listen, I'm not
Speaker 1: going to ask you to say your favorite conversation. That
Speaker 1: wouldn't be fair. I you know, somebody who talks to
Speaker 1: a lot of people. When people ask me that question,
Speaker 1: I'm like, I like everybody. I mean, you know, it's
Speaker 1: just a it's fun to kind of go back and forth. Um,
Speaker 1: but you have some that stand out for you? It's hard.
Speaker 1: I do have two hundred children, and probably undred ninety
Speaker 1: of them have been outstanding students. Um or any surprises, Yeah, god, yeah,
Speaker 1: there there is one I loved to point to. Not
Speaker 1: so much that it's so much different or better than
Speaker 1: any others, but it really was what I thought I
Speaker 1: might be able to get at. And that was the
Speaker 1: conversation I had with Scott Malpas, who's the recently retired
Speaker 1: chief investment officer at Notre Dame University. And I had
Speaker 1: known Scott from when I worked at Yale, but I
Speaker 1: hadn't seen him and I hadn't seen him in over
Speaker 1: a decade. And when we sat down, that conversation for
Speaker 1: me was, hey, how have you evolved investing over the
Speaker 1: last ten years? And he walked through every aspect of
Speaker 1: what they had done in that office, and there was
Speaker 1: so much rich information about his investment process, and he's
Speaker 1: uniquely positioned because he had been in the seat for
Speaker 1: thirty years and really had a stellar result. So that
Speaker 1: wasn't so much. It wasn't my favorite or least favorite.
Speaker 1: It was just something that was really emblematic over the
Speaker 1: lessons that people can learn from listening to the show. Well,
Speaker 1: I'm just thinking these words of wisdom, uh, or nuggets
Speaker 1: of wisdom. I should say it would be a great
Speaker 1: series of T shirts because there's some really great ones
Speaker 1: um there listen. Good luck with the book, uh, and
Speaker 1: really fun to have you join us, So thank you
Speaker 1: so much, really appreciate it. Ted Side's he's founder and
Speaker 1: managing partner Capital Allocators. The book Capital Allocators How the
Speaker 1: world's elite money managers lead and invest just out