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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is Masters in

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Speaker 1: Business with Barry Ritholtz on Bloomberg Radio.

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Speaker 2: On the latest Masters in Business podcast, I have another

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Speaker 2: extra special guest. Billina Penove is Group Chief Investment Officer

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Speaker 2: for insurance giant Swiss Ray. She runs their private internal

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Speaker 2: fund about a one hundred and eight billion dollars that

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Speaker 2: she manages primarily in fixed income, private credit, a variety

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Speaker 2: of other assets. Really a fascinating conversation with someone who

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Speaker 2: is uniquely situated in the investment world. Swiss Ray is

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Speaker 2: a global, very well known insurer and reinsurer. They cover

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Speaker 2: just about everything that's out there. Not only are they

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Speaker 2: the insurance company for insurance company, but they have a

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Speaker 2: variety of lines of business. She has a fascinating career.

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Speaker 2: She helped develop the private equity group for Banning Company

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Speaker 2: in Zurich before heading over to Swiss Ray. I thought

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Speaker 2: this conversation was fascinating and I think you will also

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Speaker 2: with no further ado my discussion with Swiss Reees Velina Pennava.

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Speaker 2: Velena Penava, Welcome to Bloomberg.

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Speaker 3: Thank you Berry. It's a pleasure to be here.

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Speaker 2: Well, it's a pleasure to have you. Let's start out

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Speaker 2: with your background. Bachelors in economics and a BS in

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Speaker 2: computer science from Wellesley in Boston, and then an MBA

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Speaker 2: from Harvard Business School. What were the original career plans?

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Speaker 3: So I was one of the first generations of Eastern

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Speaker 3: Europeans after the Wall came down, who had the opportunity

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Speaker 3: to come to the US. If I had not come

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Speaker 3: to the US, my passion was to become a doctor.

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Speaker 3: And in Bulgaria, where I came from, getting a medical

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Speaker 3: degree meant that after high school you go to medical

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Speaker 3: school for five.

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Speaker 2: Years, no college, high school, real college.

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Speaker 3: And then after five years you can practice. So I

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Speaker 3: arrived at Wellesley with the plan to do pre med.

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Speaker 3: And when I got there, I realized that pre med

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Speaker 3: meant that I study some generic biology in chemistry for

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Speaker 3: four years. Then I have to apply to medical school.

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Speaker 3: Then I have to go to residency, and during that

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Speaker 3: whole time I have to keep on accumulating debt, and

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Speaker 3: at some point in my late twenties I may be

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Speaker 3: able to practice.

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Speaker 2: Right, it's like a twelve year process. It's pretty it's

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Speaker 2: pretty intimidating for and yet all the medical schools seemed

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Speaker 2: to be filled up exactly.

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Speaker 3: But for me, this was not an option. And what

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Speaker 3: I decided to do is just experiment and see what

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Speaker 3: else I could do. And I'm pretty mathematically oriented. I

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Speaker 3: took a lot of math classes. I took a computer

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Speaker 3: science class, which I found super fascinating. I mean, back then,

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Speaker 3: in ninety four it was the early days.

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Speaker 2: Of punch cards. Were you were you still in the

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Speaker 2: punch No, but I was.

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Speaker 3: I started coding in Pascal. Okay, so I think a

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Speaker 3: lot of your listeners probably don't know what that computer

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Speaker 3: language is. So it was Pascal, then C plus plus,

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Speaker 3: and then I took an economics class, and that's when

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Speaker 3: the lights went off because it was a very mathematical

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Speaker 3: field in many ways, but also with a link to

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Speaker 3: the real economy. I couldn't give up math and computer science.

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Speaker 3: So I ended up finishing with two majors and a minor.

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Speaker 3: But business and applying economic concepts and actually going into

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Speaker 3: business was what I decided to do after the second

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Speaker 3: year at Wellesley.

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Speaker 2: That's really interesting, but at some point you spend time

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Speaker 2: within the high speed data division of a company that

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Speaker 2: eventually became part of AT and T. That was in

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Speaker 2: the nineteen nineties. What was that experience like?

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Speaker 3: So when I was a junior in college, I tried

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Speaker 3: to get an internship and I was looking at the

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Speaker 3: typical paths of consulting or banking. It is very difficult

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Speaker 3: to get an internship in junior year. And I had

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Speaker 3: a professor in economics who suggested that I look at

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Speaker 3: this company called Media One in Boston that had recently

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Speaker 3: been acquired by no it was it used to be

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Speaker 3: called Continental Cable Vision. It had been acquired by US West,

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Speaker 3: a Denver based company, and they had rebranded it as

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Speaker 3: Media One. And there I worked in strategy and the

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Speaker 3: strategy focus was on rolling out high speed data through

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Speaker 3: coax cable.

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Speaker 2: And broadband before we really knew broad what broadband was.

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Speaker 3: Absolutely and the tea team actually that did all the

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Speaker 3: technology in Media One ended up being the core technology

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Speaker 3: team for Cisco. So it was really cutting edge at

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Speaker 3: that point.

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Speaker 2: Huh huh. Really interesting. So how did you end up

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Speaker 2: as a consultant in Boston at Bain When did that start?

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Speaker 3: So if the company had stayed in Boston, if Media

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Speaker 3: One had stayed in Boston, I probably would have gone

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Speaker 3: back after I graduated. I had an offer, but they

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Speaker 3: decided to relocate to Denver, and I really wanted to

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Speaker 3: stay on the East Coast. So given I had been

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Speaker 3: doing strategy work and the fact that I wanted to

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Speaker 3: learn as much about business as possible, I thought consulting

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Speaker 3: would be the right next step. So it was similar

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Speaker 3: enough to what I'd been doing, but consulting would allow

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Speaker 3: me to broaden and view.

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Speaker 2: And Baine and Company is one of the biggest consultancies

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Speaker 2: in the United States. What was it like working in

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Speaker 2: Boston at Bain? What sort of projects were you working on?

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Speaker 3: So Boston is the headquarters, biggest office when I joined,

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Speaker 3: and it was a huge variety of projects. So I

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Speaker 3: did a project for MX looking at their credit card

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Speaker 3: solicitation program, how can they can be better competitive with

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Speaker 3: other credit card companies. I worked for Motorola and then

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Speaker 3: I spent quite a bit of time in the emerging

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Speaker 3: private equity practice. So Bain was the pioneer in consulting

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Speaker 3: two private equity companies focusing on strategic due diligence of

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Speaker 3: M and A transactions, and it was very past fast

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Speaker 3: paced environment. You do a due diligence in one, two,

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Speaker 3: three weeks and you need to basically keep pace with

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Speaker 3: a private equity team to make sure that the assumptions

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Speaker 3: they need for the model and the conviction for buying

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Speaker 3: an asset could be backed by the analysis the bank team.

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Speaker 2: So this is in the nineteen nineties, private equity was

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Speaker 2: still relatively small. Back then, this is almost thirty years ago.

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Speaker 2: Did you have any sense as to how rapidly private

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Speaker 2: equity would grow and how big it could have it

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Speaker 2: eventually became.

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Speaker 3: I mean it was, I would say in its second inning,

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Speaker 3: back in the nineteen eighty nineteen ninety eight, ninety seven,

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Speaker 3: ninety eight, it was. I mean, it was attracting a

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Speaker 3: lot of talent. So if you look at who was

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Speaker 3: going to private equity, it was the best from the

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Speaker 3: consulting teams, it was the best from the investment banking teams.

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Speaker 3: And I think the value proposition was just very compelling, right,

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Speaker 3: I mean the returns at those times were easily in

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Speaker 3: the mid to upper twenties.

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Speaker 2: Really wow, that's impressive. At the time, I remember NASDA

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Speaker 2: was similarly putting up high twenty twenty twenty five thirty

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Speaker 2: percent returns, very unusual number years in a row. I

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Speaker 2: had no idea private equity was putting up those sort

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Speaker 2: of numbers back then you end up as the head

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Speaker 2: of Bain's private equity experience was that in the US

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Speaker 2: or overseas.

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Speaker 3: So I spent in total nineteen years at Bain, if

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Speaker 3: you at the time, I spent in business school, and

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Speaker 3: I was first in Boston. I actually spent six months

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Speaker 3: in Australia as well.

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Speaker 2: Wow.

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Speaker 3: And then I moved to San Francisco after business school

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Speaker 3: and was again quite focused on the private equity space.

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Speaker 3: Right before two thousand and nine, I felt I was

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Speaker 3: ready to do something else, and that's something else was

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Speaker 3: renewable infrastructure private equity. So that was an emerging space

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Speaker 3: back then.

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Speaker 2: And my renewable infrastructure so this is everything from solar

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Speaker 2: and wind to battery to more efficient lines, I'm still

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Speaker 2: a burgeoning area. How long did you work in that space?

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Speaker 3: So I didn't, Oh you did not. The catch was

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Speaker 3: that the fund had to raise money, and me going

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Speaker 3: to that fund was contingent on them raising the next round.

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Speaker 2: And oh nine got in the way.

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Speaker 3: And oh nine got in the way. And I had

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Speaker 3: already told Bane. I had told Baine. Listen, I you know,

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Speaker 3: I've been here for a long time. It had been

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Speaker 3: you know ten years by then I need to look

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Speaker 3: at something else. I need to do something else. And

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Speaker 3: they told me, listen, instead of leaving, why don't you

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Speaker 3: do a six month transfer in Europe? Why don't you

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Speaker 3: go to Zurich, for example. It's a small office, there's

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Speaker 3: interesting clients, there's quite a lot of US partners there.

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Speaker 3: Why don't you see how you like another office, and

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Speaker 3: then you can come back in six months and we

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Speaker 3: can think about whether you want to still leave or

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Speaker 3: pick up and go down the partner track.

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Speaker 2: So that was six months, and that six months turned

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Speaker 2: into how long?

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Speaker 3: That six months turned into a year, and that year

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Speaker 3: turned into a permanent relocation.

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Speaker 2: And how long did you stay with Bain in Zurich

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Speaker 2: for So?

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Speaker 3: I stayed until I came to Swiss Free. So I

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Speaker 3: moved to Zurich in two thousand and nine and I

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Speaker 3: left Bain in twenty seventeen.

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Speaker 2: So US London, a lot of money centers were kind

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Speaker 2: of imploding during two thousand and nine. What was the

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Speaker 2: view like from Zurich?

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Speaker 3: I would say not that different. Really, it was a

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Speaker 3: glob we call it a global financial crisis. So business

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Speaker 3: was difficult across the globe. Europe was in a difficult situation.

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Speaker 3: I mean I was in Zurich, but I was serving

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Speaker 3: a lot of the European clients and it was hard.

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Speaker 3: But what was different about Zurich compared to San Francisco

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Speaker 3: is zeroch at that time was a very small office

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Speaker 3: with very few partners on a growth trajectory. So it

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Speaker 3: felt like going from a well established company to a startup,

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Speaker 3: and that's where I could develop also business lines and

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Speaker 3: service areas that were not so established across Bain so

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Speaker 3: institution supporting institutional investors. Right, we had worked a lot

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Speaker 3: with private equity funds, but we had not done as

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Speaker 3: much work with solvereign wealth funds, pension funds, and the

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Speaker 3: problems that those institutional investors face when investing in private

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Speaker 3: markets are well served by the knowledge that Bain had

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Speaker 3: in the space. So that's where I found a niche

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Speaker 3: and that's where I focused when I moved to Zurich.

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Speaker 2: So you have a history and an expertise in private

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Speaker 2: equity consulting analysis just generally the space which was small

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Speaker 2: but rapidly growing. How far were you able to take

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Speaker 2: that for Baine? At what point did you realize, Hey,

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Speaker 2: I've gone as far as I can go with this.

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Speaker 2: We can only do so much as as a consultant.

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Speaker 2: I really want to deploy capital in the space.

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Speaker 3: So that had been on the back of my mind

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Speaker 3: for a long time. I mean, obviously, when you work

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Speaker 3: with investors, you're always quite vested in the decisions being made.

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Speaker 3: You're advising on setting up of a new mandate or

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Speaker 3: executing an investment strategy, and that's super intellectually challenging. But

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Speaker 3: the issue is that at some point you need to

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Speaker 3: hand it over right. Here is the plan, here's how

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Speaker 3: you should go about in this deal or in this

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Speaker 3: new asset class. But then it's up to the client

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Speaker 3: to implement it. And what swiss Ree provided me with

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Speaker 3: was the platform to actually do the investing and to

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Speaker 3: take the strategy that I had helped them develop and

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Speaker 3: implement it.

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Speaker 2: We're going to come back to swiss Ree in a

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Speaker 2: few minutes. I want to just stay with your time

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Speaker 2: at Bain in Zurich. So you're on the investment committee

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Speaker 2: in Zurich. Were you looking at global opportunities just Europe,

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Speaker 2: the rest of the world x US? What was your playground?

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Speaker 3: So I'll give a bit of background on what this

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Speaker 3: investment committee is so Bain does a lot of due

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Speaker 3: diligence for private equity clients and as part of that relationship,

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Speaker 3: we as a partnership were allowed by the private equity

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Speaker 3: fund to co invest in transactions that we had diligenced.

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Speaker 2: And that's a voter coninence. Oh we think you should

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Speaker 2: put money into this and we're going to co invest

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Speaker 2: along with you.

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Speaker 3: Absolutely. Well, it's it helps with with kind of the

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Speaker 3: broader relationship, and it's it's an attractive opportunity for the

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Speaker 3: employees of Bane who invest in those co invest vehicles

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Speaker 3: because you're able to do that co investment without fee

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Speaker 3: and carry.

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Speaker 2: Wow.

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Speaker 3: And as you know, well those v and carries are

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Speaker 3: a pretty big chunk of the cost of the product.

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Speaker 3: So the Investment Committee was a small group of global

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Speaker 3: partners that had to decide which ideas that came from

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Speaker 3: the teams we would put into the Bane co Investment Fund.

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Speaker 3: So we were the diligence on the diligence team.

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Speaker 2: Wow. So you really have to know your stuff if

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Speaker 2: you're doing the due diligence for the due diligence team.

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Speaker 3: I mean, that's well, and you need to be willing

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Speaker 3: to say I know two colleagues and friends, who then

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Speaker 3: have to deal with the repercussions of saying to the

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Speaker 3: private equity fund, well, we think it's a good deal,

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Speaker 3: but our investment committee decided to pass.

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Speaker 2: Really, so does that create a problem or is it, hey,

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Speaker 2: we only have so much money to do and this

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Speaker 2: is broader than we usually like, or how do they

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Speaker 2: manage around that?

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Speaker 3: I think that the clients understand that when you're thinking

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Speaker 3: about portfolio construction, you can have only so much allocation

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Speaker 3: to a given geography, to a different industry. So I

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Speaker 3: think that nobody took it personally. I think if you

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Speaker 3: consistently say no to a co investment from a particular client,

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Speaker 3: it may raise questions, but generally the quality of those

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Speaker 3: proposals was very high.

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Speaker 2: Really interesting. So the question that's going to lead us

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Speaker 2: to Swiss Ree is how did your time at Bane

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Speaker 2: and Company influence your coach to investment management strategy private

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Speaker 2: equity selection. This had to be pretty seminal in your

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Speaker 2: developments as an investor.

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Speaker 3: Yeah, So if you think about what you learn as

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Speaker 3: a consultant, first of all, you observe a lot of

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Speaker 3: management teams, right, So ultimately it's all about the team

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Speaker 3: and the quality of the team and the people. That's

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Speaker 3: both with clients and also within Bain. And I think

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Speaker 3: that's also very true about how you set up an

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Speaker 3: investment organization. You can have the frameworks, you can have

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Speaker 3: the processes, but at the end of the day, it's

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Speaker 3: about the quality of the team, the trust between team members,

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Speaker 3: and the culture you create. And I think you know,

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Speaker 3: you may be surprised here, that's the first thing I

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Speaker 3: start with, But I truly believe that quality investment requires

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Speaker 3: just a very strong team behind it.

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Speaker 2: It's the venture capitalists we like to bet on the

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Speaker 2: jockey and not the horse. It's very much a people business.

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Speaker 2: You have to be able to evaluate not just folks

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Speaker 2: ability and insight, but their ability to execute and make

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Speaker 2: stuff happen. So is it safe to say all of

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Speaker 2: the decade you spent in private equity at Bain carried

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Speaker 2: forward to Swiss Rea. No.

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Speaker 3: Absolutely, And maybe there are two more things that I

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Speaker 3: would say carry over. When we talk about investing, we

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Speaker 3: really focus a lot on macro right, but at the

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Speaker 3: end of the day, good investing is a good balance

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Speaker 3: between macro thinking. So, what's happening with the global economy,

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Speaker 3: what's happening with interest rates, what is the FED going

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Speaker 3: to do? And micro right, and understanding how different segments

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Speaker 3: of the economy, how different businesses make money, make profit,

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Speaker 3: what you know, not everything is correlated to GDP growth.

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Speaker 3: And I think that balance. I brought that balance from

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Speaker 3: my consulting days because a lot of the colleagues in

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Speaker 3: the investment organization think first macro and then micro, and

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Speaker 3: I think both in private equity and in consulting, it

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Speaker 3: is more of.

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Speaker 2: That balance, really really interesting.

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Speaker 3: And the third is decision making right, So decision making.

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Speaker 3: I'm an analytical person, and in consulting you focus on

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Speaker 3: the data, on the model, but also observing behavior and

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Speaker 3: stakeholder management. So understanding how the data and how the

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Speaker 3: analytics drives the decision, but then also how do the

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Speaker 3: biases of different stakeholders drive the decisions?

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Speaker 2: Huh, absolutely fascinating. Coming up, we continue our conversation with

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Speaker 2: Billina Penava, Group chief Investment Officer for Swiss Ray, discussing

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Speaker 2: how she found her way to the insurance giant. Let's

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Speaker 2: jump into Swiss Ray a little bit. You join in

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Speaker 2: twenty seventeen after you had been a consultant for Banning

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Speaker 2: Company for nineteen years. What motivated the transition to full

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Speaker 2: time asset management, so Barrie.

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Speaker 3: As we spoke, consulting is exciting because you get to

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Speaker 3: work on your client's most challenging problems. It is super

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Speaker 3: intellectually stimulating and rewarding. However, you lack ownership in the

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Speaker 3: solution that you bring, so for me, that was always

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Speaker 3: the one piece missing in my consulting job. You can

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Speaker 3: come up with the best framework with the best answer,

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Speaker 3: but then you hand it over and how it gets

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Speaker 3: implemented and whether it succeeds. You don't get to follow

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Speaker 3: the whole journey. So the opportunity for me to come

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Speaker 3: to Swiss Free and actually invest and implement a strategy

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Speaker 3: was extremely exciting.

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Speaker 2: I'm curious if consultants run into the same problem that

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Speaker 2: I call it the cocktail party problem. If someone asks

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Speaker 2: you about a particular stock at a cocktail party and

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Speaker 2: you give them an answer, well, if it works out,

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Speaker 2: it's because they're a genius. But if it doesn't work out,

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Speaker 2: it's your fault. Do consultants run into that same lack

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Speaker 2: of agency issue.

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Speaker 3: I don't think it's lack of agency, I think it's

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Speaker 3: lack of opportunity. To follow through, right. I mean consultants

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Speaker 3: are expensive, right, So if you're a company and you

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Speaker 3: want to hire consultants, you want to focus them on

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Speaker 3: getting you the answer that's hard. Right. Consultants often ask

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Speaker 3: the question why is the client's problem so hard? And

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Speaker 3: if you can't really answer that question, then it's you know,

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Speaker 3: why are you then at the client in the first

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Speaker 3: place if the problem is not hard, And that's why

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Speaker 3: companies focus their resources on consulting, on really solving the

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Speaker 3: hardest piece of the problem. But companies run big operations

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Speaker 3: and the implementation is typically something that takes a long time.

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Speaker 3: And even if you were to bring a consultant in

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Speaker 3: to help you with implementation, it's the cost benefit is

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Speaker 3: just not there. So I think if you ask many

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Speaker 3: people who were in consulting, that's always the complaint did

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Speaker 3: they have is yes, I follow through. You know, you

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Speaker 3: obviously keep in touch with your client, you have multier clients,

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Speaker 3: but you have a huge sense of ownership for the

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Speaker 3: solution you have created. You have a huge sense of responsibility.

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Speaker 3: But then you don't have control, You don't have control

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Speaker 3: over the outcome.

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Speaker 2: So you moved to Swiss Ray in twenty seventeen as

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Speaker 2: head of private equity, did you have ownership and control?

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Speaker 2: What was that transition? Like?

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Speaker 3: Absolutely, I had a P and L. So the mandate

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Speaker 3: that I had to set up was selecting private equity funds,

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Speaker 3: co investments, secondaries to put into Swiss frees portfolio and

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Speaker 3: then to make sure that we beat the private equity

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Speaker 3: benchmark or the equity benchmark with that selection.

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Speaker 2: How do they figure out what the targets are for

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Speaker 2: private equity? I know there's a bunch of different benchmarks.

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Speaker 2: There's US, the Europe, this global. Did you have the

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Speaker 2: mandate to go anywhere just find us the best deals

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Speaker 2: or were they focused focusing you in particular sectors or geographies?

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Speaker 3: So I was also responsible for deciding that, and ultimately

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Speaker 3: the decision was to focus more on developed markets, so

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Speaker 3: we really emphasize US Europe, Developed Asia.

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Speaker 2: Which is primarily Japan and Korea.

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Speaker 3: Or Australia, Krea.

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Speaker 2: Yes, all right, So how long were you running private

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Speaker 2: equity for Swiss Ree before they said, hey, we think

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Speaker 2: we have bigger things in mind for you.

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Speaker 3: So sadly only two years it was exact.

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Speaker 2: Sadly you got a giant promotion, right, Sadly.

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Speaker 3: Well, because I just set the mandate up right, it

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Speaker 3: was it was a lot of effort to you know,

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Speaker 3: get with the relationships back with private equity funds, to

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Speaker 3: build the team, to build the operations, to build the systems,

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Speaker 3: and just when things were running and we're looking like

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Speaker 3: you could cruise for a while, you know, opportunity knocked

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Speaker 3: and I had to jump into a completely new and

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Speaker 3: unknown area to me at the time.

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Speaker 2: So we'll talk a little bit about your role as

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Speaker 2: group chief investment Officer for Swiss Ree. But I'm curious

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Speaker 2: as when you're running private equity, are you allocating capital

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Speaker 2: to different private equity funds? Were you investing directly into

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Speaker 2: private equity opportunities as a co investor along with p funds?

387
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Speaker 2: A little bit of everything? How are you alcanning Swiss

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Speaker 2: rays internal capital?

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Speaker 3: So it's a little bit of all, but it's mostly

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Speaker 3: investing in private equity funds. So I would say about

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Speaker 3: seventy eighty percent of the allocation is in funds and

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Speaker 3: then the rest is in co investments alongside the funds

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Speaker 3: that we have invested in.

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Speaker 2: Huh, really interesting, all right, So two years later you

395
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Speaker 2: get a promotion, you're head of Swiss Rays Group, your

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Speaker 2: chief investment officer for Swiss Rays Group. That's their internal

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Speaker 2: pool of assets.

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Speaker 3: They yet not yet, Yeah, I had an intermediate promotion.

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Speaker 2: So what was the twenty nineteen promotion?

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Speaker 3: So the twenty nineteen promotion was Head of Client co

401
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Speaker 3: Head of c Solutions and Analytics, and I was focused

402
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Speaker 3: more on the ALM side of the business ALMB asset

403
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Speaker 3: liability management. So it was if you think about insurance

404
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Speaker 3: asset management, we have you know, we obviously served the group,

405
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Speaker 3: but we have business units and Lego entities, and each

406
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Speaker 3: of these business units and Lego entities have their own

407
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Speaker 3: strategic asset allocations. So my role was to manage those

408
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Speaker 3: business unit and Lego entity ACID allocations.

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Speaker 2: So how long did you do that for? From twenty

410
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Speaker 2: nineteen till.

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Speaker 3: One until I got the CIO job, which was in twenty.

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Speaker 2: Three Okay, so seventeen nineteen twenty three. So for the

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Speaker 2: past two years, you've been chief investment officer for Swiss

414
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Speaker 2: Ray's internal fund, which is one hundred something billion dollars

415
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Speaker 2: Is that right?

416
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Speaker 3: One hundred and eight hundred, one hundred and eight.

417
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Speaker 2: It's a billionaire or two between friends. How much of

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Speaker 2: that is allocated to private equity and alternatives. How much

419
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Speaker 2: of that goes to public assets like stocks and bonds?

420
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Speaker 2: Is it a different set of strategies, a very different

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Speaker 2: mandate than you had when you were running private equity.

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Speaker 3: So maybe before I answer this question for your listeners,

423
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Speaker 3: I want to give a very quick primer of what

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Speaker 3: insurance asset management is and how it's different from asset

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Speaker 3: management for other institutional investors, because I think you know

426
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Speaker 3: the answer will make a lot more sense with that.

427
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Speaker 3: With that in mind, So, if you think about insurance

428
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Speaker 3: asset management, the optimizing function that we have is in

429
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Speaker 3: three pillars. First is long term value creation. We'd focus

430
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Speaker 3: on stable, sustainable returns and cash flows. And our liabilities

431
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Speaker 3: if you think about especially the life business, are long term.

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Speaker 2: But you do have annuity to.

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Speaker 3: We don't have annuities, but we have not annuities.

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Speaker 2: I'm using the wrong word, so I'm gonna have to

435
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Speaker 2: pull that out. You have life expectancy tables, so you

436
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Speaker 2: have some sense of what you're exactly. Life insurers have

437
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Speaker 2: a sense of, hey, we have this much of a

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Speaker 2: future liability in twenty five thirty years down the road.

439
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Speaker 2: We don't know who's going to pass away when but

440
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Speaker 2: with a large enough group we can more or less

441
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Speaker 2: have a sense of future liabilities.

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Speaker 3: No, no, we have a decent scent of future liabilities.

443
00:27:33,960 --> 00:27:36,000
Speaker 3: But we also need to make sure we have a

444
00:27:36,040 --> 00:27:42,280
Speaker 3: portfolio that's resilient across cycles. The second pillar is asset

445
00:27:42,359 --> 00:27:46,760
Speaker 3: liability management. Right, so because we have a view on

446
00:27:47,560 --> 00:27:51,919
Speaker 3: our liability profile, we need to make sure we match

447
00:27:52,000 --> 00:27:56,919
Speaker 3: our assets on a currency, duration, and liquidity basis. So

448
00:27:57,480 --> 00:28:02,320
Speaker 3: the strategy is very intricately linked with what's happening on

449
00:28:02,359 --> 00:28:05,000
Speaker 3: the other side of the balance sheet. And then the

450
00:28:05,040 --> 00:28:09,560
Speaker 3: third pillar is capital efficiency and diversification. I think that

451
00:28:09,680 --> 00:28:14,000
Speaker 3: is one of the big differences with other institutional investors.

452
00:28:14,480 --> 00:28:21,719
Speaker 3: We are regulated and we have a risk based capital regime,

453
00:28:22,359 --> 00:28:26,120
Speaker 3: which means that the cost that we have for holding

454
00:28:26,640 --> 00:28:30,480
Speaker 3: certain high volatility asset classes is very high, such as

455
00:28:30,520 --> 00:28:35,159
Speaker 3: equities or high yield, and that means that we maximize

456
00:28:35,680 --> 00:28:39,920
Speaker 3: return on a risk adjusted basis. So it's you know,

457
00:28:40,040 --> 00:28:43,800
Speaker 3: maximizing risk adjusted return per unit of capital.

458
00:28:44,440 --> 00:28:47,960
Speaker 2: That makes sense. When we were talking about private equity,

459
00:28:48,720 --> 00:28:52,520
Speaker 2: I was thinking about those future liabilities. A lot of

460
00:28:52,600 --> 00:28:56,360
Speaker 2: people realize private equity has tends to be liquid for

461
00:28:56,520 --> 00:28:58,960
Speaker 2: five or seven years at a time, but I would

462
00:28:59,000 --> 00:29:04,240
Speaker 2: imagine that you could ladder or stagger that, so there's

463
00:29:04,280 --> 00:29:08,640
Speaker 2: always some fun coming up when a future liability arises.

464
00:29:09,120 --> 00:29:12,040
Speaker 2: It may be you liquid for five years or seven years,

465
00:29:12,480 --> 00:29:15,479
Speaker 2: but you're talking about twenty thirty, forty years in the future.

466
00:29:15,600 --> 00:29:17,240
Speaker 3: On the life side, I mean, we also have a

467
00:29:17,320 --> 00:29:19,200
Speaker 3: property and casualty business, which is.

468
00:29:19,280 --> 00:29:21,240
Speaker 2: Much short random.

469
00:29:21,360 --> 00:29:25,720
Speaker 3: Yeah, well, it's annual renewal, and it's a function of

470
00:29:25,800 --> 00:29:29,120
Speaker 3: what happens with natural catastrophes, so whether you have a

471
00:29:29,200 --> 00:29:33,280
Speaker 3: hurricane or an earthquake, but that business renews every year,

472
00:29:33,280 --> 00:29:35,000
Speaker 3: so it's a very short tail.

473
00:29:35,120 --> 00:29:39,720
Speaker 2: On the liability side of that. It feels these days

474
00:29:39,840 --> 00:29:45,360
Speaker 2: like natural catastrophes are not just more frequent, but so random.

475
00:29:45,440 --> 00:29:47,400
Speaker 2: I don't know if we're just paying more attention to

476
00:29:47,440 --> 00:29:51,400
Speaker 2: them or if they're actually happening more frequently. How do

477
00:29:51,480 --> 00:29:55,760
Speaker 2: you manage around having that sort of future liability when

478
00:29:56,440 --> 00:29:59,240
Speaker 2: it kind of feels a little random. When a hurricane hits,

479
00:29:59,280 --> 00:30:03,040
Speaker 2: a tornado hit, it's a wildfire happens, all these things

480
00:30:03,200 --> 00:30:05,680
Speaker 2: just seem to come out of nowhere.

481
00:30:06,680 --> 00:30:10,160
Speaker 3: Well, so I think that's why the whole element of

482
00:30:10,480 --> 00:30:13,840
Speaker 3: liquidity and stability is so important on the asset side,

483
00:30:14,840 --> 00:30:19,440
Speaker 3: we need to have a sustainable portfolio regardless of psycho

484
00:30:19,440 --> 00:30:21,760
Speaker 3: and regardless of what happens, which means we need to

485
00:30:21,800 --> 00:30:24,760
Speaker 3: hold more liquidity then you would think at first glance,

486
00:30:25,240 --> 00:30:27,960
Speaker 3: and we need to have a portfolio that can cover liability.

487
00:30:28,000 --> 00:30:30,840
Speaker 3: So it cannot be the case that if a hurricane

488
00:30:31,080 --> 00:30:35,479
Speaker 3: hits and we have claims and people are waiting to

489
00:30:35,880 --> 00:30:38,840
Speaker 3: get paid to rebuild their roof, we say we're sorry, but.

490
00:30:38,840 --> 00:30:41,480
Speaker 2: There is a market alternatives. We're locked up.

491
00:30:41,520 --> 00:30:44,640
Speaker 3: We can't see exactly so and then keep that in mind.

492
00:30:44,680 --> 00:30:47,000
Speaker 2: You know, in the US, I think Swiss Rea is

493
00:30:47,120 --> 00:30:53,480
Speaker 2: known primarily as a giant reinsurer. Same situation. Obviously, you

494
00:30:53,560 --> 00:30:57,479
Speaker 2: never know when some insurance company gets to make a

495
00:30:57,480 --> 00:31:01,200
Speaker 2: claim on their reinsurance policy. I'm going to assume that

496
00:31:01,360 --> 00:31:07,640
Speaker 2: having stability, sustainability and liquidity is really important for those

497
00:31:07,680 --> 00:31:09,080
Speaker 2: future liabilities as well.

498
00:31:09,600 --> 00:31:12,200
Speaker 3: No, no, absolutely, I mean we are ultimately the insure

499
00:31:12,520 --> 00:31:18,040
Speaker 3: of insurance companies. We ensure the tail. So every time

500
00:31:18,040 --> 00:31:21,000
Speaker 3: you open the paper and there's a big event, you

501
00:31:21,040 --> 00:31:24,160
Speaker 3: should think of Swiss Rea real and what the impact is.

502
00:31:24,320 --> 00:31:28,240
Speaker 3: So whether there is a you know, the Suez Canal

503
00:31:28,680 --> 00:31:33,280
Speaker 3: is blocked, or there's a big earthquake, or the airplanes

504
00:31:33,840 --> 00:31:37,720
Speaker 3: have been cannot be returned to the lessers in Russia.

505
00:31:38,160 --> 00:31:43,080
Speaker 3: All of these macro big events ultimately hit reinsurance. Or

506
00:31:43,080 --> 00:31:48,520
Speaker 3: if there's a big pandemic and the Tokyo Olympics are delayed,

507
00:31:49,000 --> 00:31:51,200
Speaker 3: that is a reinsurance level event.

508
00:31:51,560 --> 00:31:54,160
Speaker 2: So it's interesting because you spend so much time in

509
00:31:54,200 --> 00:31:59,680
Speaker 2: private equity, but it sounds like what Swiss raid does

510
00:31:59,800 --> 00:32:05,040
Speaker 2: in internally is going to be a little less alternative focused,

511
00:32:05,080 --> 00:32:09,480
Speaker 2: a little more liquidly focused. Is that a fair statement? No?

512
00:32:09,600 --> 00:32:12,720
Speaker 3: Absolutely, And if you look at our portfolio, we are

513
00:32:13,080 --> 00:32:16,560
Speaker 3: eighty five percent fixed income, oh no kidding, of which

514
00:32:16,920 --> 00:32:20,520
Speaker 3: half is government bonds and we use government bonds to

515
00:32:21,200 --> 00:32:26,440
Speaker 3: match liabilities. That is our risk freeway of matching liabilities.

516
00:32:27,280 --> 00:32:30,400
Speaker 3: And then the rest is corporate credit and private debt.

517
00:32:30,400 --> 00:32:33,160
Speaker 3: And private debt has been one of the acid classes

518
00:32:33,320 --> 00:32:36,880
Speaker 3: that we have participated in for a long time, but

519
00:32:37,320 --> 00:32:39,400
Speaker 3: where we're seeing a lot of opportunities. So if you

520
00:32:39,400 --> 00:32:44,080
Speaker 3: say eighty five percent fixed income, the rest is private equity,

521
00:32:44,160 --> 00:32:47,400
Speaker 3: listed equity, we have some minority positions, and then real estate.

522
00:32:47,880 --> 00:32:51,520
Speaker 2: Huh, that's really fascinating. I wouldn't have guessed so much.

523
00:32:51,720 --> 00:32:57,120
Speaker 2: We're in government bonds. But I guess if you want

524
00:32:57,200 --> 00:33:00,320
Speaker 2: liquid and you want stable, and you want just buy,

525
00:33:01,080 --> 00:33:03,480
Speaker 2: what's the tenure now? Four and a half percent.

526
00:33:03,400 --> 00:33:04,200
Speaker 3: That's not so bad.

527
00:33:05,280 --> 00:33:07,400
Speaker 2: Well with inflation two and a half percent, it's not

528
00:33:07,440 --> 00:33:10,840
Speaker 2: so good. So what do you how do you think

529
00:33:10,880 --> 00:33:14,720
Speaker 2: about the return. It's it's really more about staying ahead

530
00:33:14,760 --> 00:33:19,320
Speaker 2: of inflation than it is about generating market beating returns.

531
00:33:19,920 --> 00:33:20,840
Speaker 2: Is that is that fair?

532
00:33:21,840 --> 00:33:25,400
Speaker 3: Well? You want to so, as I mentioned, we we

533
00:33:25,480 --> 00:33:29,320
Speaker 3: do focus on long term value creation. And if you

534
00:33:29,320 --> 00:33:35,280
Speaker 3: think about again our optimizing function, most institutional investors focus

535
00:33:35,320 --> 00:33:41,480
Speaker 3: on economic returns. We focus on economic returns and accounting returns,

536
00:33:41,640 --> 00:33:44,360
Speaker 3: and we always need to strike that balance.

537
00:33:44,840 --> 00:33:47,920
Speaker 2: To find accounting returns versus economic returns.

538
00:33:48,320 --> 00:33:50,800
Speaker 3: So economic returns is you know, if you have a

539
00:33:50,840 --> 00:33:54,240
Speaker 3: bond and you know the market value of that bond

540
00:33:54,320 --> 00:33:59,080
Speaker 3: moves in a negative direction, even if it pays your yield,

541
00:33:59,280 --> 00:34:02,080
Speaker 3: you know, net, you might be losing economic value on

542
00:34:02,160 --> 00:34:07,200
Speaker 3: holding that position. In ifs, if you hold a corporate bond,

543
00:34:07,960 --> 00:34:10,520
Speaker 3: the market movements do not go through.

544
00:34:10,400 --> 00:34:15,000
Speaker 2: P and L, so you'll eventually get par when it because.

545
00:34:14,719 --> 00:34:17,960
Speaker 3: We hold it to maturity right, exactly, all right, So

546
00:34:18,040 --> 00:34:21,839
Speaker 3: what features into our I for us result is only

547
00:34:21,920 --> 00:34:24,240
Speaker 3: the yield on that bond, not the market movement.

548
00:34:25,160 --> 00:34:28,920
Speaker 2: So here we are in twenty twenty five, we're still

549
00:34:28,960 --> 00:34:31,240
Speaker 2: debating whether or not the FED is going to cut.

550
00:34:31,880 --> 00:34:37,120
Speaker 2: How much attention do you pay as chief chief investment

551
00:34:37,160 --> 00:34:42,040
Speaker 2: officer to all of the noise around? Will the Fed cut?

552
00:34:42,080 --> 00:34:44,359
Speaker 2: Will they not cut? Are they staying put? Oh? Here

553
00:34:44,400 --> 00:34:48,960
Speaker 2: comes the dot plot like how noisy and and or

554
00:34:49,080 --> 00:34:53,400
Speaker 2: insignificant is everything around central bank activity.

555
00:34:54,840 --> 00:34:58,879
Speaker 3: We start the year always with highlighting where we think

556
00:34:58,960 --> 00:35:01,200
Speaker 3: markets will go and what is our baseline and what

557
00:35:01,239 --> 00:35:05,239
Speaker 3: are our scenarios. So of course what the FED will

558
00:35:05,280 --> 00:35:11,560
Speaker 3: do impact markets, impact valuations, impact interest rates, so of

559
00:35:11,600 --> 00:35:14,680
Speaker 3: course we follow it. We are a long term investors,

560
00:35:14,800 --> 00:35:19,520
Speaker 3: so we try to While we i'd say sometimes obsessively

561
00:35:19,600 --> 00:35:24,880
Speaker 3: follow the market news, we try to separate the noise

562
00:35:24,960 --> 00:35:27,520
Speaker 3: from what we really need to do.

563
00:35:27,560 --> 00:35:32,080
Speaker 2: You guys were in private credit before it became very popular,

564
00:35:32,320 --> 00:35:35,880
Speaker 2: as it seems to have done recently. At what point

565
00:35:35,960 --> 00:35:39,440
Speaker 2: does that become a little bit of a crowded trade

566
00:35:40,080 --> 00:35:44,359
Speaker 2: or given the size and the history of Swiss ray

567
00:35:44,600 --> 00:35:49,520
Speaker 2: in the space, you have your favorite places to play

568
00:35:49,560 --> 00:35:52,600
Speaker 2: in you know, the funds you like, the private credit

569
00:35:52,640 --> 00:35:55,319
Speaker 2: shops you like, like, how are you looking at the

570
00:35:55,480 --> 00:35:58,359
Speaker 2: change in private credit over the past five years, How's

571
00:35:58,400 --> 00:36:01,000
Speaker 2: that affecting your investment strategy?

572
00:36:01,440 --> 00:36:05,040
Speaker 3: Private credit is in the usual lot these days. The

573
00:36:05,120 --> 00:36:09,120
Speaker 3: reality is that private credit is not one asset class.

574
00:36:09,440 --> 00:36:14,320
Speaker 3: There are many, many flavors, and you have private credit

575
00:36:14,440 --> 00:36:19,280
Speaker 3: that is mostly IG like investment grade, like senior secured loans.

576
00:36:19,880 --> 00:36:26,040
Speaker 3: You have some pretty speculative asset classes, and Swiss Free

577
00:36:26,719 --> 00:36:30,880
Speaker 3: has been focusing on the former. So we started building

578
00:36:31,080 --> 00:36:32,960
Speaker 3: and we play in that aset class in a more

579
00:36:33,000 --> 00:36:39,400
Speaker 3: direct way. So we provide infrastructure loans directly to projects

580
00:36:40,800 --> 00:36:45,799
Speaker 3: and we underwrite each of those loans, so we have

581
00:36:45,840 --> 00:36:49,320
Speaker 3: a pretty high bar of what we see as quality.

582
00:36:49,640 --> 00:36:53,280
Speaker 3: And also the private debt premium, so that's the premium

583
00:36:53,320 --> 00:36:58,200
Speaker 3: above the spread that those loans provide in order to

584
00:36:58,239 --> 00:36:59,480
Speaker 3: put those in our portfolio.

585
00:37:00,000 --> 00:37:02,840
Speaker 2: So I mentioned the ten years about four and a

586
00:37:02,880 --> 00:37:07,800
Speaker 2: half percent today. Go back before twenty twenty two and

587
00:37:08,239 --> 00:37:15,000
Speaker 2: the yield on government bonds were half or worse. Were

588
00:37:15,200 --> 00:37:17,480
Speaker 2: what were you guys doing when we were in an

589
00:37:17,560 --> 00:37:21,440
Speaker 2: era of one percent inflation and two and a half

590
00:37:21,440 --> 00:37:24,439
Speaker 2: percent yield, Does that get you to where you want

591
00:37:24,440 --> 00:37:28,520
Speaker 2: to be? Or is that still did that raise problems

592
00:37:28,600 --> 00:37:30,760
Speaker 2: for being insurers like Swiss Ree.

593
00:37:31,280 --> 00:37:33,320
Speaker 3: I think this was a problem for the whole industry,

594
00:37:33,400 --> 00:37:36,880
Speaker 3: especially for the insurance industry, given how much reliance we

595
00:37:37,000 --> 00:37:41,520
Speaker 3: have on fixed income. And that was the driver in

596
00:37:41,680 --> 00:37:44,840
Speaker 3: a way for us to start looking at areas like

597
00:37:44,920 --> 00:37:49,440
Speaker 3: private debt, because there you have bespoke transactions and you

598
00:37:49,480 --> 00:37:53,399
Speaker 3: can definitely earn a premium versus what you get even

599
00:37:53,440 --> 00:37:55,239
Speaker 3: in the corporate bond space. But I mean, I'm not

600
00:37:55,280 --> 00:37:58,520
Speaker 3: going to lie. You're looking to you're reaching for yield

601
00:37:58,800 --> 00:38:01,080
Speaker 3: right in those in the those moments, well.

602
00:38:01,000 --> 00:38:04,480
Speaker 2: There's reaching for yield like people did during the financial crisis,

603
00:38:04,920 --> 00:38:11,839
Speaker 2: and then there's senior secured privately due diligenced debt that

604
00:38:12,239 --> 00:38:15,480
Speaker 2: didn't carry the same leverage and risk characteristics like we

605
00:38:15,560 --> 00:38:20,640
Speaker 2: saw with securitized junk mortgages. That was a very different world.

606
00:38:20,719 --> 00:38:24,560
Speaker 2: But I guess the insight that I'm picking up from

607
00:38:24,640 --> 00:38:28,560
Speaker 2: you is, hey, two decades of zero percent interest rate

608
00:38:28,960 --> 00:38:32,920
Speaker 2: from the US Central Bank and other central banks really

609
00:38:33,040 --> 00:38:37,320
Speaker 2: is the key driver of what's expanded private debt, private credit,

610
00:38:37,400 --> 00:38:44,280
Speaker 2: private equity, and a whole slew of alternatives that substituted

611
00:38:44,360 --> 00:38:50,440
Speaker 2: for sovereign treasuries and other issuances. Fair insight, No.

612
00:38:50,440 --> 00:38:52,680
Speaker 3: It's a fair insight. And I think if there's one

613
00:38:53,360 --> 00:38:56,120
Speaker 3: concern that we have is if you look at when

614
00:38:56,360 --> 00:39:00,000
Speaker 3: this space really exploded, it was after the financial crime

615
00:39:01,160 --> 00:39:05,960
Speaker 3: and there hasn't been a test of the market. So

616
00:39:06,040 --> 00:39:10,280
Speaker 3: since two thousand and ten, there hasn't been a real

617
00:39:11,320 --> 00:39:15,120
Speaker 3: credit crisis to really test the quality of these of

618
00:39:15,160 --> 00:39:20,319
Speaker 3: these products. And I think they have. You know, new

619
00:39:20,360 --> 00:39:23,960
Speaker 3: products have kept coming to the market, some with a

620
00:39:24,200 --> 00:39:29,200
Speaker 3: very short history, and we still don't know how private

621
00:39:29,680 --> 00:39:33,640
Speaker 3: credit will actually react in a more prolonged crisis.

622
00:39:33,800 --> 00:39:37,000
Speaker 2: Well, well, twenty twenty two was pretty much a down

623
00:39:37,080 --> 00:39:42,000
Speaker 2: fifteen percent year for treasuries and down twenty plus for equities.

624
00:39:42,000 --> 00:39:44,520
Speaker 2: That's kind of unusual. I think you have to go

625
00:39:44,560 --> 00:39:46,600
Speaker 2: back to nineteen eighty one to have them both down

626
00:39:46,640 --> 00:39:48,120
Speaker 2: double digits in the same year.

627
00:39:49,440 --> 00:39:52,359
Speaker 3: But we had no defaults, so our portfolio had no

628
00:39:52,520 --> 00:39:53,279
Speaker 3: default So.

629
00:39:53,440 --> 00:39:57,040
Speaker 2: The fact that and the accounting hold till maturity means

630
00:39:57,040 --> 00:39:59,680
Speaker 2: we don't care what the noisy day to day stuff is.

631
00:40:00,280 --> 00:40:01,800
Speaker 2: We're in it until this matures.

632
00:40:01,880 --> 00:40:04,879
Speaker 3: So well, we care about quality because what hurts us

633
00:40:04,960 --> 00:40:07,520
Speaker 3: is defaults and reratings.

634
00:40:08,760 --> 00:40:11,200
Speaker 2: So you had no defaults, any reratings.

635
00:40:11,560 --> 00:40:14,680
Speaker 3: We've had some reratings, but I mean we also have

636
00:40:14,760 --> 00:40:17,920
Speaker 3: middle market lending, so we have been expecting to see

637
00:40:18,800 --> 00:40:23,719
Speaker 3: some wobble, but not so much and not so much. Yeah,

638
00:40:23,760 --> 00:40:28,840
Speaker 3: and I think, and you know, you always attribute good

639
00:40:28,880 --> 00:40:32,759
Speaker 3: outcomes to skill when maybe some of it is attributable

640
00:40:32,760 --> 00:40:37,480
Speaker 3: to luck. But so far our very conservative underwriting has

641
00:40:37,520 --> 00:40:38,040
Speaker 3: paid off.

642
00:40:38,280 --> 00:40:41,879
Speaker 2: Huh really really very interesting. Coming up, we continue our

643
00:40:41,920 --> 00:40:46,840
Speaker 2: conversation with Elena Heneva, Group chief Investment Officer for Swiss

644
00:40:46,880 --> 00:40:51,880
Speaker 2: Ray discussing the state of markets and fixed income today.

645
00:40:52,280 --> 00:40:56,280
Speaker 2: So it's twenty twenty five. The year is just about

646
00:40:56,280 --> 00:41:00,520
Speaker 2: halfway done. Kind of been a wacky year. What surprised

647
00:41:00,560 --> 00:41:04,200
Speaker 2: you most about the global economy in twenty twenty five?

648
00:41:06,880 --> 00:41:10,040
Speaker 3: So I have to say coming into the year, sentiment

649
00:41:10,239 --> 00:41:13,840
Speaker 3: was very bullish. I was in the Valce in January,

650
00:41:13,880 --> 00:41:15,799
Speaker 3: and there's always the joke of whatever you hear in

651
00:41:15,840 --> 00:41:19,399
Speaker 3: the vals, the reverse will happen. Whatever you hear where

652
00:41:19,800 --> 00:41:21,879
Speaker 3: in the vals at the world economic for.

653
00:41:22,000 --> 00:41:25,719
Speaker 2: Oh, Davos, okay, yeah, yeah, so yeah, it's Davos has

654
00:41:25,719 --> 00:41:30,080
Speaker 2: a tendency to pick tops and bombs accidentally exactly.

655
00:41:30,960 --> 00:41:34,719
Speaker 3: But back in January, the sentiment was super bullish. It

656
00:41:34,760 --> 00:41:40,120
Speaker 3: was all about us exceptionalism. It was all about Ai

657
00:41:40,400 --> 00:41:46,760
Speaker 3: and how AI will drive returns to the moon. And

658
00:41:47,120 --> 00:41:51,359
Speaker 3: the sentiment has vastly shifted. So just the speed with

659
00:41:51,440 --> 00:41:57,120
Speaker 3: which we saw sentiment reverse and the narrative reverse this

660
00:41:57,200 --> 00:42:02,600
Speaker 3: year a few times now has been to some degree surprising.

661
00:42:02,239 --> 00:42:07,520
Speaker 2: To be fair, As much as the US President has

662
00:42:07,560 --> 00:42:11,680
Speaker 2: been talking about Tariff's whole adult life, it's his favored word,

663
00:42:11,800 --> 00:42:16,560
Speaker 2: call me tariff man. You know, I believe that everybody

664
00:42:16,680 --> 00:42:19,799
Speaker 2: saw his first term. All right, we'll get some ten

665
00:42:19,840 --> 00:42:24,360
Speaker 2: percent tariffs. We can live with that. It feels like

666
00:42:24,440 --> 00:42:28,680
Speaker 2: a collective failure of imagination as to what took place

667
00:42:28,800 --> 00:42:32,959
Speaker 2: on April second. I'm loath to call it liberation Day

668
00:42:33,040 --> 00:42:36,239
Speaker 2: because the only thing that was liberated were a bunch

669
00:42:36,320 --> 00:42:40,120
Speaker 2: of people were liberated from their money. But other than that,

670
00:42:41,520 --> 00:42:47,080
Speaker 2: everybody seemed to be surprised by that. And should we

671
00:42:47,120 --> 00:42:52,960
Speaker 2: have been should we have expected that, or just collectively knowing,

672
00:42:53,080 --> 00:42:55,360
Speaker 2: why would you mess with this? This is going so well?

673
00:42:55,600 --> 00:42:58,680
Speaker 2: Seems to be the Wall Street consensus. Hey, you've inherited

674
00:42:58,680 --> 00:43:01,960
Speaker 2: a great economy, in the stockho markets trending higher. Just

675
00:43:02,120 --> 00:43:06,520
Speaker 2: leave it alone, like, how does that perceived from Europe?

676
00:43:07,680 --> 00:43:10,040
Speaker 3: So I wish I said that we were super surprised.

677
00:43:10,080 --> 00:43:13,160
Speaker 3: I mean, we do always tend to be a little

678
00:43:13,160 --> 00:43:16,840
Speaker 3: bit glass half empty, because you know, we are risk company,

679
00:43:16,880 --> 00:43:18,240
Speaker 3: We're a risk knowledge company.

680
00:43:18,760 --> 00:43:22,400
Speaker 2: Bond investors are always about return of capital, not return

681
00:43:22,480 --> 00:43:26,360
Speaker 2: on capital. So you're the glass half empty. The equity

682
00:43:26,360 --> 00:43:29,520
Speaker 2: side is the glass half full. But even given that,

683
00:43:30,239 --> 00:43:32,719
Speaker 2: it still feels like this was really a surprising year.

684
00:43:33,280 --> 00:43:37,800
Speaker 3: I think the extent of the announcement on April second

685
00:43:38,480 --> 00:43:41,200
Speaker 3: was a shock. I don't think that. I mean, if

686
00:43:41,239 --> 00:43:46,759
Speaker 3: you remember that day, people couldn't understand the magnitude of

687
00:43:46,800 --> 00:43:49,759
Speaker 3: some of the numbers that were shown on that chart, right,

688
00:43:49,800 --> 00:43:52,280
Speaker 3: and what the formula was and what it really meant.

689
00:43:52,840 --> 00:43:57,680
Speaker 3: But I think the direction of travel was you know,

690
00:43:57,760 --> 00:44:01,320
Speaker 3: if you had listened to also what President said before

691
00:44:01,719 --> 00:44:04,919
Speaker 3: the election, you know that you know we expect at

692
00:44:04,920 --> 00:44:07,360
Speaker 3: some level of increase in terroris. I think it was

693
00:44:07,440 --> 00:44:12,080
Speaker 3: just the weight was communicated right and the execution of

694
00:44:12,120 --> 00:44:15,120
Speaker 3: it that that caught many, including us, off guard.

695
00:44:15,440 --> 00:44:18,960
Speaker 2: It seemed to be a little ham fisted, especially when

696
00:44:19,000 --> 00:44:23,080
Speaker 2: we see how the pains the Federal Reserve takes to

697
00:44:23,320 --> 00:44:27,320
Speaker 2: not surprise the markets. Hey there's a rate increase coming

698
00:44:27,480 --> 00:44:30,320
Speaker 2: a couple of months. Get ready, Hey we're two months away.

699
00:44:30,440 --> 00:44:34,440
Speaker 2: Look at CPI, look at PCE, and then all the

700
00:44:34,480 --> 00:44:36,520
Speaker 2: Fed governors go out and they all speak at the

701
00:44:36,600 --> 00:44:41,520
Speaker 2: various clubs, like the Fed really takes pains to not

702
00:44:41,640 --> 00:44:44,920
Speaker 2: surprise the market. It kind of felt like this was

703
00:44:44,960 --> 00:44:48,239
Speaker 2: a purposeful surprise to the markets. How big of an

704
00:44:48,280 --> 00:44:49,160
Speaker 2: impact did that have?

705
00:44:51,800 --> 00:44:53,560
Speaker 3: I think the good news for us was that we

706
00:44:53,600 --> 00:44:58,719
Speaker 3: don't hold a lot of listed equities, right, so it

707
00:44:58,800 --> 00:45:01,200
Speaker 3: was more an opportunity to think about our playbook of

708
00:45:01,239 --> 00:45:05,360
Speaker 3: when do we add exposure in the market versus you know, stressing.

709
00:45:05,400 --> 00:45:09,440
Speaker 3: So we actually if we look back at that period

710
00:45:09,520 --> 00:45:13,200
Speaker 3: of about a month where you had extreme volatility, we

711
00:45:13,320 --> 00:45:16,480
Speaker 3: didn't make a lot of sharp turns, right. It was about,

712
00:45:16,560 --> 00:45:19,400
Speaker 3: you know, are we still comfortable with the portfolio we're holding.

713
00:45:20,680 --> 00:45:24,919
Speaker 3: We had come into the year with cautious optimism, right,

714
00:45:24,960 --> 00:45:28,720
Speaker 3: but I think the emphasis on cautious and we felt

715
00:45:29,160 --> 00:45:31,560
Speaker 3: comfortable holding the risk that we had in the book.

716
00:45:32,719 --> 00:45:36,680
Speaker 3: At the same time, we were surprised by the resilience

717
00:45:36,719 --> 00:45:39,239
Speaker 3: of the market right. I mean, this was a very

718
00:45:39,280 --> 00:45:45,880
Speaker 3: sharp reaction, but the recovery was also lightning fast.

719
00:45:46,160 --> 00:45:49,120
Speaker 2: So I'm glad you use the word resilience because that's

720
00:45:49,160 --> 00:45:53,600
Speaker 2: the word that keeps coming up. Resilience in the economy,

721
00:45:53,880 --> 00:45:58,080
Speaker 2: resilience in consumer spending even if their consumer sentiment is

722
00:45:58,160 --> 00:46:02,880
Speaker 2: kind of weak, and resilience in both equity and bond markets.

723
00:46:04,200 --> 00:46:07,480
Speaker 2: It seems that you can throw anything at this economy,

724
00:46:07,480 --> 00:46:10,920
Speaker 2: in this market, and at least so far, it brushes

725
00:46:10,960 --> 00:46:14,640
Speaker 2: itself up often and just keeps going. How surprising has

726
00:46:14,640 --> 00:46:15,000
Speaker 2: that been?

727
00:46:16,120 --> 00:46:18,880
Speaker 3: I mean, if you look at the valuations, if you

728
00:46:18,880 --> 00:46:23,320
Speaker 3: look at the fundamentals, it is it's surprising, right, because

729
00:46:23,360 --> 00:46:27,759
Speaker 3: you would expect I mean, you're seeing the consumer slowing down,

730
00:46:28,239 --> 00:46:32,240
Speaker 3: you still have high interest rates, valuations especially in the US,

731
00:46:32,880 --> 00:46:38,960
Speaker 3: are in their top test styles, and outlook is not

732
00:46:39,000 --> 00:46:42,160
Speaker 3: looking as promising as a few months back. So I

733
00:46:42,239 --> 00:46:48,800
Speaker 3: think from a pure fundamentals perspective, it's surprising. But markets

734
00:46:48,840 --> 00:46:51,680
Speaker 3: are not you know better than me, Markets are not

735
00:46:51,760 --> 00:46:55,879
Speaker 3: driven purely by fundamentals. There are a lot of technicals

736
00:46:56,040 --> 00:46:58,520
Speaker 3: that have maintained the resilience of the market. First of all,

737
00:46:58,520 --> 00:47:00,120
Speaker 3: there's just a lot of money.

738
00:47:00,360 --> 00:47:03,160
Speaker 2: There endless amounts of capital slashing around.

739
00:47:03,080 --> 00:47:05,719
Speaker 3: And there's not that many assets to invest in. So

740
00:47:05,719 --> 00:47:09,200
Speaker 3: if you look at the size of the US stock

741
00:47:09,280 --> 00:47:14,200
Speaker 3: market versus the amount of money that needs to be invested,

742
00:47:15,480 --> 00:47:18,280
Speaker 3: you have a bit of a supply demand and balance,

743
00:47:18,320 --> 00:47:22,560
Speaker 3: which basically is keeping valuations higher than historically.

744
00:47:22,960 --> 00:47:26,560
Speaker 2: And isn't the same true in sovereign treasuries not just

745
00:47:26,600 --> 00:47:30,720
Speaker 2: the US, but there really isn't a lot of sovereign paper,

746
00:47:30,760 --> 00:47:33,920
Speaker 2: at least a rated paper around. It's almost as if

747
00:47:33,960 --> 00:47:36,720
Speaker 2: there's a shortfall of sovereign treasury paper.

748
00:47:38,080 --> 00:47:42,280
Speaker 3: Well, and if you think about also ig credit investment

749
00:47:42,320 --> 00:47:47,040
Speaker 3: great credit, you could almost argue. Now the other surprise

750
00:47:47,080 --> 00:47:52,640
Speaker 3: has been how tight spreads have become in high quality credit.

751
00:47:53,000 --> 00:47:55,319
Speaker 2: Right, Why go risky if you're not getting paid to

752
00:47:55,360 --> 00:47:56,120
Speaker 2: take that risk.

753
00:47:56,480 --> 00:47:59,000
Speaker 3: But if you think about what companies are issuing that

754
00:47:59,080 --> 00:48:05,439
Speaker 3: credit are maybe this will sound controversial, some of these

755
00:48:05,480 --> 00:48:11,080
Speaker 3: companies are more credit worthy than some governments. So in

756
00:48:11,120 --> 00:48:14,839
Speaker 3: a way, you could imagine a situation where you know,

757
00:48:15,000 --> 00:48:18,719
Speaker 3: some investment great credit even goes tighter, you know the

758
00:48:19,680 --> 00:48:22,560
Speaker 3: crazy Yeah, Microsoft could have negative spread.

759
00:48:22,480 --> 00:48:25,480
Speaker 2: Right, Microsoft is more credit worthy than a lot of

760
00:48:25,880 --> 00:48:28,960
Speaker 2: large nations out there exactly, that's.

761
00:48:28,600 --> 00:48:30,600
Speaker 3: Right, and that is what I think has been keeping

762
00:48:30,920 --> 00:48:35,000
Speaker 3: you know, both equities higher and spreads as tight as

763
00:48:35,040 --> 00:48:35,359
Speaker 3: they are.

764
00:48:35,680 --> 00:48:38,640
Speaker 2: So you mentioned we're in the top death style evaluation

765
00:48:38,719 --> 00:48:43,920
Speaker 2: in the US, But for almost a year now Europe

766
00:48:44,040 --> 00:48:48,000
Speaker 2: has been outperforming, very quietly, at least for the first

767
00:48:48,800 --> 00:48:51,719
Speaker 2: for the tail end of twenty twenty four, but a

768
00:48:51,760 --> 00:48:56,239
Speaker 2: little more visibly in twenty twenty five, Europe has been

769
00:48:56,520 --> 00:49:00,600
Speaker 2: significantly outperforming the US. You know, people been waiting for

770
00:49:00,640 --> 00:49:04,440
Speaker 2: this mean reversion to take place, this leadership swap for

771
00:49:04,480 --> 00:49:08,600
Speaker 2: a decade. It finally seems to be happening. First, why

772
00:49:08,600 --> 00:49:10,800
Speaker 2: do you think that is? Is it strictly a function

773
00:49:11,080 --> 00:49:15,120
Speaker 2: of valuation, or are some of these things being driven

774
00:49:15,200 --> 00:49:20,520
Speaker 2: by policy, by the US dollar, by a return of

775
00:49:20,560 --> 00:49:24,160
Speaker 2: capital away from the United States? What is leading to

776
00:49:24,239 --> 00:49:27,600
Speaker 2: this outperformance elsewhere in the world.

777
00:49:27,840 --> 00:49:29,600
Speaker 3: So I want to start by saying that Europe still

778
00:49:29,640 --> 00:49:31,680
Speaker 3: has a lot of catching up to do, for sure.

779
00:49:32,160 --> 00:49:35,840
Speaker 3: So if you look at multiples in Europe, there in

780
00:49:35,920 --> 00:49:39,440
Speaker 3: kind of the mid teens. Now multiples in the US

781
00:49:40,280 --> 00:49:43,439
Speaker 3: are you know, mid twenties, slow mid twenties, So there's

782
00:49:43,480 --> 00:49:45,920
Speaker 3: still a pretty big valuation gap, and some of that

783
00:49:46,200 --> 00:49:48,840
Speaker 3: is just the constitution of the market. You know, you

784
00:49:48,960 --> 00:49:52,319
Speaker 3: have more high tech, more high growth, but some of

785
00:49:52,360 --> 00:49:56,120
Speaker 3: it is kind of a European penalty, just given all

786
00:49:56,160 --> 00:49:59,799
Speaker 3: the you know, regulation and slow growth and challenges that

787
00:49:59,800 --> 00:50:03,960
Speaker 3: you has been facing. So yes, we have done better

788
00:50:04,000 --> 00:50:07,919
Speaker 3: in Europe in the equity space in the last year,

789
00:50:08,760 --> 00:50:12,359
Speaker 3: you know, then in the last ten, but I think

790
00:50:12,400 --> 00:50:14,560
Speaker 3: the gap is still pretty meaningful, and I think there's

791
00:50:14,600 --> 00:50:18,800
Speaker 3: some level of optimism that Europe will need to really

792
00:50:19,000 --> 00:50:23,359
Speaker 3: speed up investments, whether it's military or infrastructure. I think

793
00:50:23,360 --> 00:50:26,279
Speaker 3: that Europe has woken up to the fact that in

794
00:50:26,400 --> 00:50:31,200
Speaker 3: order to quote unquote survive in this new geopolitical environment,

795
00:50:31,800 --> 00:50:34,239
Speaker 3: they need to get their act together and they need

796
00:50:34,280 --> 00:50:38,279
Speaker 3: to start focusing on investing and reducing a bit the

797
00:50:38,360 --> 00:50:45,000
Speaker 3: regulatory burden that that we've had on companies on the continent.

798
00:50:46,120 --> 00:50:48,960
Speaker 2: It's much greater on the content. And but the flip

799
00:50:49,000 --> 00:50:54,040
Speaker 2: side of that is I vividly recall in two thousand,

800
00:50:54,160 --> 00:50:57,879
Speaker 2: right in the middle of the dot com implosion, going

801
00:50:57,920 --> 00:51:04,000
Speaker 2: to London, going to and New York was very stressed out, Hey,

802
00:51:04,040 --> 00:51:07,640
Speaker 2: I lose my job, I lose my healthcare. What happens

803
00:51:07,680 --> 00:51:11,200
Speaker 2: if my kid needs a surgery? In Europe, people were

804
00:51:11,200 --> 00:51:15,239
Speaker 2: still having cappuccino and cigarettes in the cafes there was.

805
00:51:15,560 --> 00:51:18,400
Speaker 2: It just felt a lot looser and a lot less stressful.

806
00:51:19,840 --> 00:51:23,399
Speaker 2: Is that simply a quality of life trade off that, Hey,

807
00:51:23,440 --> 00:51:26,480
Speaker 2: the Europeans know how to live. Yeah, the Americans can

808
00:51:26,520 --> 00:51:31,560
Speaker 2: make fast growth tech companies, but we have a better lifestyle.

809
00:51:32,040 --> 00:51:34,760
Speaker 2: How do you respond to that sort of position?

810
00:51:36,160 --> 00:51:39,759
Speaker 3: I mean, I think the European expectation for what a

811
00:51:39,760 --> 00:51:43,879
Speaker 3: good life is is probably quite a bit different from

812
00:51:43,920 --> 00:51:48,160
Speaker 3: the American definition. I think that there's some people see

813
00:51:48,239 --> 00:51:58,359
Speaker 3: certain elements of government service as basic right, so be healthcare, education, Right.

814
00:51:58,400 --> 00:52:01,239
Speaker 3: I can send my kids to a Swiss university for

815
00:52:01,560 --> 00:52:05,000
Speaker 3: I don't know, a thousand francs a year, and you know,

816
00:52:05,200 --> 00:52:08,120
Speaker 3: you can get an MIT type education for you know,

817
00:52:08,160 --> 00:52:10,600
Speaker 3: a small fraction of what you pay in the US. Right,

818
00:52:10,640 --> 00:52:12,600
Speaker 3: And and that's considered a social good.

819
00:52:12,920 --> 00:52:13,120
Speaker 1: Right.

820
00:52:13,200 --> 00:52:16,440
Speaker 2: So I think the taxes are much higher, so you pay,

821
00:52:16,480 --> 00:52:17,360
Speaker 2: taxes are higher.

822
00:52:18,160 --> 00:52:24,799
Speaker 3: Taxes are higher, but there is this social web that

823
00:52:25,280 --> 00:52:27,520
Speaker 3: you know that people value, right. You Also, you know,

824
00:52:27,600 --> 00:52:31,160
Speaker 3: you go to most European cities, you don't see homeless

825
00:52:31,160 --> 00:52:34,319
Speaker 3: people right on the street. To the degree you don't

826
00:52:34,360 --> 00:52:37,640
Speaker 3: have you don't have some of these, you know, extreme

827
00:52:37,719 --> 00:52:40,760
Speaker 3: situations that you have in the US. And another question

828
00:52:40,840 --> 00:52:44,120
Speaker 3: is how far is you know what's the right balance.

829
00:52:44,520 --> 00:52:46,800
Speaker 3: So I'm not saying that it's all good, right because

830
00:52:47,480 --> 00:52:54,560
Speaker 3: you also have a generation in Europe that expects this

831
00:52:54,719 --> 00:52:58,399
Speaker 3: but doesn't understand the cost that it comes it comes at,

832
00:52:58,920 --> 00:53:02,400
Speaker 3: and expects the life though and expects work like life balance.

833
00:53:02,440 --> 00:53:07,319
Speaker 3: But at the same time, you know it doesn't have

834
00:53:07,440 --> 00:53:13,320
Speaker 3: the work ethic required to keep the economy successful.

835
00:53:14,040 --> 00:53:19,239
Speaker 2: So we're recording this. The Russian Ukraine War is still ongoing,

836
00:53:19,880 --> 00:53:24,520
Speaker 2: the Israel Hamas War has now become an Israel Iran war.

837
00:53:25,080 --> 00:53:30,440
Speaker 2: There are all these geopolitical tensions and shifts taking place.

838
00:53:31,080 --> 00:53:33,440
Speaker 2: How do you think about what's going on in the

839
00:53:33,480 --> 00:53:39,960
Speaker 2: broader geopolitical area when you're thinking about making investments for

840
00:53:40,160 --> 00:53:43,600
Speaker 2: ten twenty years down the road. Is it significant or

841
00:53:43,680 --> 00:53:46,799
Speaker 2: is it something that, hey, there's a war every year.

842
00:53:46,840 --> 00:53:48,440
Speaker 2: It's just something we have to deal with.

843
00:53:49,880 --> 00:53:53,920
Speaker 3: So if you look at history and what impact wars

844
00:53:54,000 --> 00:53:59,040
Speaker 3: have on markets, the conclusion is that yes, there's a

845
00:53:59,080 --> 00:54:02,760
Speaker 3: short term show, but in the long term, even within

846
00:54:02,840 --> 00:54:08,360
Speaker 3: a few months, that dissipates. So making near term investment

847
00:54:08,400 --> 00:54:16,239
Speaker 3: decisions driven by geopolitics is probably not the best investment strategy.

848
00:54:16,840 --> 00:54:21,200
Speaker 3: I think what matters is what is the symptom behind

849
00:54:21,360 --> 00:54:26,200
Speaker 3: these events? So these wars are a symptom of the

850
00:54:26,239 --> 00:54:31,080
Speaker 3: fact that we have deglobalization, We are moving in different

851
00:54:31,640 --> 00:54:38,240
Speaker 3: spheres of influence, and Swiss Free is a truly global company.

852
00:54:38,600 --> 00:54:44,880
Speaker 3: So the value we bring is that we can ensure

853
00:54:44,960 --> 00:54:48,759
Speaker 3: tail risks because we can diversify a lot of tail

854
00:54:48,840 --> 00:54:54,080
Speaker 3: risks at a global level. Right we reinsure earthquakes in

855
00:54:54,120 --> 00:55:01,080
Speaker 3: California and in Japan, and hurricanes in Florida and pandemics

856
00:55:01,239 --> 00:55:05,480
Speaker 3: and those risks are uncorrelated at a global level. And

857
00:55:05,560 --> 00:55:09,040
Speaker 3: in order to provide that extra cover, you need to

858
00:55:09,120 --> 00:55:15,280
Speaker 3: have a global mindset. And in an environment where globalization

859
00:55:16,160 --> 00:55:19,239
Speaker 3: is no longer what it was ten years ago, one

860
00:55:19,280 --> 00:55:24,400
Speaker 3: needs to think about how does that impact truly global businesses.

861
00:55:24,920 --> 00:55:28,360
Speaker 3: So we think about it as long term trend and

862
00:55:28,560 --> 00:55:31,000
Speaker 3: impact on where we think the portfolio needs to go,

863
00:55:31,680 --> 00:55:37,440
Speaker 3: versus making tactical decisions influenced by short term events.

864
00:55:37,840 --> 00:55:41,520
Speaker 2: So given that that you're a long term thinker, you're

865
00:55:41,560 --> 00:55:45,120
Speaker 2: not playing the tactical game, you still end up with

866
00:55:45,200 --> 00:55:49,920
Speaker 2: these disruptions and risks and opportunities. How do you assess

867
00:55:50,000 --> 00:55:53,160
Speaker 2: the state of the market today? Where do you see opportunities?

868
00:55:53,200 --> 00:55:54,200
Speaker 2: Where do you see risks?

869
00:55:58,360 --> 00:56:03,440
Speaker 3: So I would say that and maybe that's my private

870
00:56:03,480 --> 00:56:09,560
Speaker 3: markets background. I continue to see opportunities in private markets

871
00:56:09,600 --> 00:56:13,600
Speaker 3: in part because you have imperfect information. You can actually

872
00:56:14,160 --> 00:56:16,880
Speaker 3: add value to your portfolio if you really have the

873
00:56:16,960 --> 00:56:22,120
Speaker 3: channels and expertise. I think areas like infrastructure debt are

874
00:56:22,920 --> 00:56:26,480
Speaker 3: ones that will only grow in the next few years

875
00:56:27,040 --> 00:56:32,160
Speaker 3: because the world needs a lot more new infrastructure and

876
00:56:32,520 --> 00:56:36,720
Speaker 3: companies that provide loans but also equity in the infrastructure space,

877
00:56:38,120 --> 00:56:42,600
Speaker 3: we'll both find a lot of deals but also have

878
00:56:42,640 --> 00:56:44,880
Speaker 3: a lot of opportunities. So you need to think of

879
00:56:44,880 --> 00:56:49,200
Speaker 3: it from a macro perspective of what you know, where

880
00:56:49,320 --> 00:56:53,120
Speaker 3: is the need for capital and can do we have

881
00:56:53,200 --> 00:56:57,799
Speaker 3: the expertise as a team to provide a solution that

882
00:56:57,880 --> 00:56:58,960
Speaker 3: is uniquely fitted to.

883
00:56:58,920 --> 00:57:04,640
Speaker 2: This mentioned private equity and private credit. European Central Bank

884
00:57:04,680 --> 00:57:08,239
Speaker 2: has cut rates recently a number of times. Does that

885
00:57:08,320 --> 00:57:11,600
Speaker 2: work as a tailwind for private credit? How does that

886
00:57:11,640 --> 00:57:13,560
Speaker 2: impact what you see out there?

887
00:57:14,520 --> 00:57:18,160
Speaker 3: It's definitely a tailwind for private equity, right, So what

888
00:57:18,240 --> 00:57:23,120
Speaker 3: we see is European funding cost has actually fallen twenty

889
00:57:23,120 --> 00:57:28,080
Speaker 3: basis points since Liberation Day versus in the US funding

890
00:57:28,080 --> 00:57:31,600
Speaker 3: costs has gone up twenty points. And if you think

891
00:57:31,640 --> 00:57:34,840
Speaker 3: about what makes private equity successful, it is, you know,

892
00:57:34,920 --> 00:57:39,120
Speaker 3: it's a leveraged buyout right that's ultimately part of the

893
00:57:39,200 --> 00:57:42,760
Speaker 3: value of those transactions is in the leverage part. And

894
00:57:42,840 --> 00:57:47,560
Speaker 3: lower interest rates clearly are beneficial for the private equity space.

895
00:57:48,160 --> 00:57:52,040
Speaker 2: So the phrase we hear and quite honestly hear way

896
00:57:52,080 --> 00:57:55,720
Speaker 2: too much in the US is so much uncertainty, so

897
00:57:55,800 --> 00:58:00,080
Speaker 2: much economic uncertainty. How do you see this lack of

898
00:58:00,080 --> 00:58:05,400
Speaker 2: clarity at least around policy decisions in the US affecting

899
00:58:05,440 --> 00:58:09,120
Speaker 2: your outlook for the markets, for the economy. How does

900
00:58:09,160 --> 00:58:13,440
Speaker 2: this sort of new regime in Washington, d C. Affect

901
00:58:13,960 --> 00:58:16,680
Speaker 2: the global economy?

902
00:58:17,640 --> 00:58:20,440
Speaker 3: So if you think about how we plan right on

903
00:58:20,480 --> 00:58:23,880
Speaker 3: an annual or three year basis for many years, we

904
00:58:24,400 --> 00:58:27,400
Speaker 3: would have a baseline, right would say we think there's

905
00:58:27,480 --> 00:58:30,360
Speaker 3: a seventy percent chance that this will happen, and we'll

906
00:58:30,360 --> 00:58:33,520
Speaker 3: set up our portfolio and our decisions based on this

907
00:58:34,040 --> 00:58:38,480
Speaker 3: core scenario. And then there's some tail scenarios which we

908
00:58:38,520 --> 00:58:42,800
Speaker 3: will assess and we'll look at you know water, you know,

909
00:58:43,640 --> 00:58:47,840
Speaker 3: how could we assess whether we're moving into those scenarios today?

910
00:58:48,560 --> 00:58:52,520
Speaker 3: Our baseline quote unquote is a forty percent odds, so

911
00:58:53,160 --> 00:58:56,000
Speaker 3: I don't want to even call it a baseline. And

912
00:58:56,040 --> 00:58:59,680
Speaker 3: we have moved from thinking in baseline and other scenarios

913
00:58:59,720 --> 00:59:02,640
Speaker 3: to what is the range of outcomes that we should

914
00:59:02,640 --> 00:59:06,160
Speaker 3: expect and what do we need to be tracking on

915
00:59:06,200 --> 00:59:10,280
Speaker 3: the macro side, on kind of the high frequency data

916
00:59:10,320 --> 00:59:13,360
Speaker 3: site to understand how we're moving from the scenario we

917
00:59:13,400 --> 00:59:16,880
Speaker 3: think we're in right now to something else. But if

918
00:59:16,920 --> 00:59:21,640
Speaker 3: you have that path, you have fewer surprises, right. So

919
00:59:21,720 --> 00:59:24,640
Speaker 3: that's one thing that we have done, and we dynamically

920
00:59:24,680 --> 00:59:27,960
Speaker 3: assess the probabilities of those scenarios on a monthly basis.

921
00:59:28,120 --> 00:59:32,520
Speaker 3: We have an investment committee and we do a survey

922
00:59:32,760 --> 00:59:35,760
Speaker 3: of fifteen investment committee members to say, you know, what

923
00:59:35,840 --> 00:59:37,520
Speaker 3: do you think the odds are? It's kind of the

924
00:59:37,560 --> 00:59:40,920
Speaker 3: wisdom of the crowd's idea, and we discuss, you know,

925
00:59:40,960 --> 00:59:43,960
Speaker 3: where in which scenario are we moving. So that's one

926
00:59:44,000 --> 00:59:46,560
Speaker 3: thing we have done and I think that provides a

927
00:59:46,560 --> 00:59:50,640
Speaker 3: lot more flexibility in thinking. And the second is we

928
00:59:50,720 --> 00:59:55,960
Speaker 3: think ahead of risk events. So markets are much more

929
00:59:56,040 --> 01:00:01,800
Speaker 3: volatile today, and typically at the depth of a correction,

930
01:00:03,480 --> 01:00:09,080
Speaker 3: you're scared, you don't know how to interpret the information

931
01:00:09,200 --> 01:00:13,320
Speaker 3: you're getting, and you're paralyzed in making decisions. So what

932
01:00:13,360 --> 01:00:17,560
Speaker 3: we do is we have playbooks to say, if the

933
01:00:17,600 --> 01:00:23,960
Speaker 3: market moves up or down at certain levels, these are

934
01:00:24,000 --> 01:00:28,320
Speaker 3: the levels at which we'll add risk. This amount of

935
01:00:28,400 --> 01:00:30,840
Speaker 3: risk and is you know, as the market goes down,

936
01:00:31,120 --> 01:00:34,000
Speaker 3: we'll continue to add risk. And then we have playbooks

937
01:00:34,040 --> 01:00:36,080
Speaker 3: to think about, okay, at what levels if the market

938
01:00:36,120 --> 01:00:40,800
Speaker 3: recovers has gone too far and we lighten up on risk,

939
01:00:41,360 --> 01:00:44,560
Speaker 3: And those playbooks have taken the emotion and the bias

940
01:00:44,800 --> 01:00:49,160
Speaker 3: out of the decisions and it makes it much, you know,

941
01:00:49,800 --> 01:00:53,960
Speaker 3: much less stressful in a way to execute on strategy because.

942
01:00:53,720 --> 01:00:55,920
Speaker 2: You have a plan that you created when you were

943
01:00:55,960 --> 01:01:00,080
Speaker 2: calm and relaxed, as opposed to responding when you're stressful. We'

944
01:01:00,120 --> 01:01:05,600
Speaker 2: kind of fascinated by the seventy percent baseline in normal circumstances,

945
01:01:06,160 --> 01:01:09,200
Speaker 2: but this year it's more of a forty percent baseline.

946
01:01:09,840 --> 01:01:15,480
Speaker 2: It sounds like you're saying that tail risk is rising.

947
01:01:15,760 --> 01:01:18,400
Speaker 2: Is that a fair assessment?

948
01:01:18,960 --> 01:01:23,080
Speaker 3: Yeah, this is you call it fatter tails. So we

949
01:01:24,600 --> 01:01:29,600
Speaker 3: see the more uncertainty means that it's less clear what

950
01:01:29,680 --> 01:01:32,320
Speaker 3: will turn out to be, so there are more scenarios

951
01:01:32,360 --> 01:01:33,280
Speaker 3: that are more.

952
01:01:33,240 --> 01:01:39,080
Speaker 2: Likely, including the possibility of something really extreme on either

953
01:01:39,160 --> 01:01:40,360
Speaker 2: end of the tail exactly.

954
01:01:40,400 --> 01:01:42,240
Speaker 3: And we do I mean again, we're in the business

955
01:01:42,280 --> 01:01:46,320
Speaker 3: of til tail risk, so we also do think about

956
01:01:46,600 --> 01:01:49,800
Speaker 3: what could be a really really tail scenario and what

957
01:01:49,840 --> 01:01:51,720
Speaker 3: that means for our business. But we do it not

958
01:01:51,840 --> 01:01:55,439
Speaker 3: just at the acid management level, more broadly at.

959
01:01:55,320 --> 01:01:58,640
Speaker 2: The group, do across the entire insurance company. I would imagine,

960
01:01:58,680 --> 01:02:01,040
Speaker 2: all right, I only have you for a few more minutes,

961
01:02:01,080 --> 01:02:05,320
Speaker 2: so let's jump to our favorite section, our favorite questions

962
01:02:05,360 --> 01:02:08,920
Speaker 2: we ask all of our guests starting with what are

963
01:02:08,960 --> 01:02:13,200
Speaker 2: you watching or listening to these days? What's keeping you entertained?

964
01:02:14,400 --> 01:02:15,000
Speaker 2: So I have two.

965
01:02:14,920 --> 01:02:20,800
Speaker 3: Kids and I try to show them some more, you know,

966
01:02:21,360 --> 01:02:25,120
Speaker 3: intellectual programming. And the latest show we've been watching is

967
01:02:25,120 --> 01:02:31,480
Speaker 3: called The Real Bugs Life on Disney, which is, if

968
01:02:31,520 --> 01:02:33,680
Speaker 3: you know, a bugs life, it was a Disney movie.

969
01:02:34,560 --> 01:02:40,280
Speaker 3: This is real. So it's amazing technology that's being used

970
01:02:40,360 --> 01:02:44,840
Speaker 3: to record this. But it follows different insects in their

971
01:02:44,920 --> 01:02:49,640
Speaker 3: natural environment at a very with amazing cameras. Right, So

972
01:02:49,720 --> 01:02:54,600
Speaker 3: they have you basically get a macro view of you know,

973
01:02:54,760 --> 01:03:00,600
Speaker 3: how a dragonfly flies and how a dragonfly you know,

974
01:03:00,720 --> 01:03:05,320
Speaker 3: runs away from from it's from frogs or other animals.

975
01:03:05,800 --> 01:03:08,400
Speaker 3: So it's a it's a fascinating show. So that's on

976
01:03:08,440 --> 01:03:12,120
Speaker 3: the on the TV side. On podcasts in good Company,

977
01:03:13,080 --> 01:03:16,760
Speaker 3: I guess this might be a competitive podcast to yours.

978
01:03:16,800 --> 01:03:18,320
Speaker 3: It's Nicolai Tongan.

979
01:03:19,800 --> 01:03:20,640
Speaker 2: Who hosts that.

980
01:03:20,960 --> 01:03:25,840
Speaker 3: It's Nikolaye Tongan. He's the CEO of the Norges Bank.

981
01:03:26,320 --> 01:03:30,720
Speaker 3: So that's the largest sovereign wealth fund in Norway and

982
01:03:30,760 --> 01:03:33,240
Speaker 3: they're a large equity investor and.

983
01:03:33,120 --> 01:03:35,720
Speaker 2: They I'm going to look into that.

984
01:03:35,760 --> 01:03:37,840
Speaker 3: They hold one or two percent share in some of

985
01:03:37,840 --> 01:03:41,800
Speaker 3: the largest companies. So he gets to interview CEOs of

986
01:03:41,960 --> 01:03:45,680
Speaker 3: these companies and it's a it's always pretty fascinating discusion.

987
01:03:45,680 --> 01:03:48,160
Speaker 2: I'm gonna definitely check that out. That sounds good. Tell

988
01:03:48,240 --> 01:03:51,840
Speaker 2: us about your mentors who helped to shape your career.

989
01:03:53,360 --> 01:03:58,720
Speaker 3: Early on. It was definitely my grandmother. She she was

990
01:03:58,720 --> 01:04:02,000
Speaker 3: a professor of agronomy.

991
01:04:01,880 --> 01:04:03,280
Speaker 2: Back in the day.

992
01:04:03,400 --> 01:04:08,640
Speaker 3: Agronomy is the science of agriculture, and she took a

993
01:04:08,720 --> 01:04:13,880
Speaker 3: keen interest in my education and really pushing me to

994
01:04:14,200 --> 01:04:19,160
Speaker 3: push myself to do better, to have the right moral compass.

995
01:04:19,520 --> 01:04:22,800
Speaker 3: So some of the lessons that weren't instilled in me

996
01:04:22,920 --> 01:04:27,520
Speaker 3: are still from her time. And then during the Bay years,

997
01:04:28,600 --> 01:04:31,440
Speaker 3: a partner called Dan has who was one of the

998
01:04:31,480 --> 01:04:34,919
Speaker 3: founders of our private equity practice back in Boston and

999
01:04:35,000 --> 01:04:38,120
Speaker 3: whom I met in Zurich and who I blame for

1000
01:04:38,160 --> 01:04:42,720
Speaker 3: staying in Zurich permanently after I came in two thousand

1001
01:04:42,720 --> 01:04:46,320
Speaker 3: and nine. But he really has played a fundamental role

1002
01:04:46,400 --> 01:04:49,600
Speaker 3: in kind of coaching me, you know, on both my

1003
01:04:49,720 --> 01:04:55,600
Speaker 3: career moves, on how I approach problems, just listening at

1004
01:04:55,640 --> 01:04:59,920
Speaker 3: times and really being an invaluable friend and co.

1005
01:05:01,080 --> 01:05:03,400
Speaker 2: Let's talk about books. What are some of your favorites?

1006
01:05:03,440 --> 01:05:04,600
Speaker 2: What are you reading right now?

1007
01:05:06,200 --> 01:05:09,880
Speaker 3: I'd say my all time favorite is The Three Body Problem.

1008
01:05:10,360 --> 01:05:14,479
Speaker 3: It's a trilogy by now miss pronounce the name Lord

1009
01:05:14,760 --> 01:05:21,920
Speaker 3: Tsushin right, And it's sci fi mixed with history, philosophy,

1010
01:05:22,400 --> 01:05:26,720
Speaker 3: game theory, you name it. I don't know if you

1011
01:05:26,800 --> 01:05:27,680
Speaker 3: were familiar with it.

1012
01:05:27,720 --> 01:05:30,200
Speaker 2: Oh, I'm very familiar with the book. And I actually

1013
01:05:30,360 --> 01:05:32,280
Speaker 2: watched the Apple TV.

1014
01:05:32,200 --> 01:05:34,160
Speaker 3: Series, which is not as good.

1015
01:05:34,720 --> 01:05:37,520
Speaker 2: Well, it seems like it just pulls a handful of

1016
01:05:37,560 --> 01:05:42,440
Speaker 2: things out of it. Although, to be honest, I started

1017
01:05:42,440 --> 01:05:46,440
Speaker 2: reading the first book, and the three body problem for

1018
01:05:46,480 --> 01:05:50,000
Speaker 2: those people who aren't physical nerds are we can predict

1019
01:05:50,040 --> 01:05:53,360
Speaker 2: two bodies, but once you introduce a third body, the

1020
01:05:53,480 --> 01:05:56,400
Speaker 2: range of outcomes are practically infinite, and you really have

1021
01:05:56,480 --> 01:05:59,920
Speaker 2: no idea where these three gravitational bodies are going to

1022
01:06:00,040 --> 01:06:03,760
Speaker 2: are going to take us. But it was I believe

1023
01:06:03,800 --> 01:06:06,960
Speaker 2: the author is Chinese. It was originally written in Chinese

1024
01:06:06,960 --> 01:06:11,520
Speaker 2: and then translated. The US translation is a little challenging

1025
01:06:11,640 --> 01:06:12,240
Speaker 2: to fight you.

1026
01:06:12,240 --> 01:06:13,479
Speaker 3: With, especially the second book.

1027
01:06:13,520 --> 01:06:17,920
Speaker 2: I'd say so I found the first book difficult, Like

1028
01:06:18,000 --> 01:06:20,680
Speaker 2: it's a little like you could see that whoever did

1029
01:06:20,680 --> 01:06:24,640
Speaker 2: the translation English wasn't necessarily their their native land.

1030
01:06:24,720 --> 01:06:27,840
Speaker 3: But the concepts were pretty fascinating, yeah, to think about.

1031
01:06:28,200 --> 01:06:30,040
Speaker 3: I mean, it was a lot about game theory, right,

1032
01:06:30,080 --> 01:06:33,840
Speaker 3: and and and the fact that humanity lacks the ability

1033
01:06:34,560 --> 01:06:40,560
Speaker 3: of reacting to you know, existential long term threats, right

1034
01:06:40,720 --> 01:06:44,640
Speaker 3: and what is the psychology behind it? Even when faced

1035
01:06:44,640 --> 01:06:49,360
Speaker 3: with something that you know guarantees destruction of humanity, we

1036
01:06:49,440 --> 01:06:53,959
Speaker 3: still squabble around more earthly, earthly.

1037
01:06:53,680 --> 01:06:57,360
Speaker 2: Problems, tribal arguments as opposed to, hey, we're all going

1038
01:06:57,440 --> 01:06:58,640
Speaker 2: to die. We better do something.

1039
01:06:58,680 --> 01:07:00,640
Speaker 3: The aliens are coming, right, that's right.

1040
01:07:00,520 --> 01:07:02,200
Speaker 2: And we know you get fifty years to prepare.

1041
01:07:02,600 --> 01:07:03,800
Speaker 3: It was five hundred in the book.

1042
01:07:04,240 --> 01:07:04,920
Speaker 2: Five hundred.

1043
01:07:05,200 --> 01:07:08,160
Speaker 3: Yeah. And even with that, I mean on the positive side,

1044
01:07:08,280 --> 01:07:12,360
Speaker 3: it also awoke amazing innovation. Right, So it shows you

1045
01:07:12,360 --> 01:07:16,520
Speaker 3: also the best of humanity that you know, when people

1046
01:07:16,600 --> 01:07:21,000
Speaker 3: put their mind to it, they can solve really impossible problems.

1047
01:07:22,320 --> 01:07:24,200
Speaker 3: But I think that the outcome is a mixed bag

1048
01:07:24,240 --> 01:07:24,960
Speaker 3: for humanity.

1049
01:07:25,560 --> 01:07:26,760
Speaker 2: What else are you reading? What else are you?

1050
01:07:27,200 --> 01:07:31,400
Speaker 3: So? Today I'm reading a book called Human Kind. It's

1051
01:07:31,480 --> 01:07:36,000
Speaker 3: by Dutch writer called Rodger Bragmann, and the premise of

1052
01:07:36,040 --> 01:07:43,320
Speaker 3: the book is that humans are innately kind. And meanwhile,

1053
01:07:43,360 --> 01:07:49,000
Speaker 3: so our human nature is not savage, but it's actually good, right,

1054
01:07:49,040 --> 01:07:50,400
Speaker 3: And he goes through.

1055
01:07:51,720 --> 01:07:54,400
Speaker 2: Cooperative social primates right exactly.

1056
01:07:55,000 --> 01:07:56,920
Speaker 3: But a lot of history has been telling us that,

1057
01:07:56,960 --> 01:08:01,040
Speaker 3: you know, we have this veneer of civility and underneath

1058
01:08:01,480 --> 01:08:06,360
Speaker 3: we we're untrustworthy and evil beings. And I think he

1059
01:08:06,440 --> 01:08:08,680
Speaker 3: goes through a lot of that, and this proves a

1060
01:08:08,680 --> 01:08:13,640
Speaker 3: lot of historical beliefs. And you know, in this day

1061
01:08:13,680 --> 01:08:16,240
Speaker 3: and age, you need some optimism, and I'd say this

1062
01:08:16,240 --> 01:08:20,880
Speaker 3: this book gives you belief and trust in humanity.

1063
01:08:20,400 --> 01:08:26,040
Speaker 2: So humankind kind of the opposite of sapiens exactly like

1064
01:08:27,280 --> 01:08:31,519
Speaker 2: that that that book was fascinating, but like a little bit, gee,

1065
01:08:31,520 --> 01:08:34,960
Speaker 2: we really suck as a species or the selfish gene.

1066
01:08:35,040 --> 01:08:37,680
Speaker 3: Right, So Richard Dawkins book that also, I mean he

1067
01:08:38,280 --> 01:08:42,040
Speaker 3: did this author disproves some of the thesis, right because

1068
01:08:42,520 --> 01:08:45,640
Speaker 3: Richard Dawkins basically says, well, ey genes basically make us,

1069
01:08:47,120 --> 01:08:49,360
Speaker 3: you know, the species we are, and there's a lot

1070
01:08:49,400 --> 01:08:53,679
Speaker 3: of not so on good features. This version says, well,

1071
01:08:53,720 --> 01:08:57,160
Speaker 3: there's a lot of misrepresentation there, and ultimately he shows

1072
01:08:57,200 --> 01:09:00,000
Speaker 3: examples of you know, why people I mean, he gets

1073
01:09:00,120 --> 01:09:03,639
Speaker 3: and the example of when soldiers in the First World War,

1074
01:09:04,880 --> 01:09:08,639
Speaker 3: you know what percent of debts was caused by people

1075
01:09:08,680 --> 01:09:11,439
Speaker 3: directly shooting at the enemy, and that was a tiny

1076
01:09:11,520 --> 01:09:15,400
Speaker 3: percent because soldiers had a very difficult time to look

1077
01:09:15,479 --> 01:09:18,320
Speaker 3: the enemy in the eye and kill them. So most

1078
01:09:18,360 --> 01:09:20,800
Speaker 3: of the debts were done by you know, grenade or

1079
01:09:21,000 --> 01:09:26,200
Speaker 3: kind of indirect means. Because ultimately, you know, humans don't

1080
01:09:26,240 --> 01:09:28,200
Speaker 3: want to hurt other humans.

1081
01:09:28,439 --> 01:09:32,280
Speaker 2: That's that's really fascinating. Our final two questions, what sort

1082
01:09:32,280 --> 01:09:35,320
Speaker 2: of advice would you give a recent college grad interested

1083
01:09:35,439 --> 01:09:40,719
Speaker 2: in a career in either investing or private equity or finance.

1084
01:09:42,000 --> 01:09:46,400
Speaker 3: I would say, don't narrow down your options too early.

1085
01:09:47,800 --> 01:09:50,880
Speaker 3: As as I've experienced in my career, I've done a

1086
01:09:50,920 --> 01:09:54,160
Speaker 3: lot of different things, and I learned in each experience,

1087
01:09:54,200 --> 01:09:57,200
Speaker 3: even though they might not look related. I've learned things

1088
01:09:57,240 --> 01:10:01,240
Speaker 3: that have made me a better investor, a better leader.

1089
01:10:02,000 --> 01:10:04,160
Speaker 3: And I think a lot of young people today come

1090
01:10:04,200 --> 01:10:06,840
Speaker 3: in to the workforce and say I know what I

1091
01:10:06,880 --> 01:10:12,280
Speaker 3: want to do, and I think that they actually don't.

1092
01:10:12,960 --> 01:10:17,120
Speaker 2: And your experience going from consulting to private equity to

1093
01:10:17,600 --> 01:10:21,080
Speaker 2: being CIO. Did you have any idea that would be

1094
01:10:21,120 --> 01:10:22,880
Speaker 2: your path when you first started.

1095
01:10:22,640 --> 01:10:24,000
Speaker 3: Well, I thought I wanted to be a doctor.

1096
01:10:24,680 --> 01:10:25,080
Speaker 1: There you go.

1097
01:10:25,840 --> 01:10:29,559
Speaker 2: Well, so not just one pivot, but multiple pivots exactly.

1098
01:10:29,560 --> 01:10:31,439
Speaker 3: So I think that young people really need to be

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01:10:31,520 --> 01:10:36,600
Speaker 3: open minded and explore and you know, take opportunities for

1100
01:10:36,680 --> 01:10:39,120
Speaker 3: what they are. Right. So, if you're given the chance

1101
01:10:39,200 --> 01:10:41,200
Speaker 3: to if you're loving what you do, but you're given

1102
01:10:41,200 --> 01:10:44,280
Speaker 3: the chance to experiment with something else, instead of immediately

1103
01:10:44,360 --> 01:10:46,360
Speaker 3: saying no, think twice and think you know, what could

1104
01:10:46,360 --> 01:10:49,679
Speaker 3: I learn? How could this be good for me? Because

1105
01:10:49,720 --> 01:10:52,679
Speaker 3: I think that richness of experience at the end makes

1106
01:10:52,720 --> 01:10:55,639
Speaker 3: you makes you a better business person.

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01:10:56,160 --> 01:10:58,559
Speaker 2: And our final question, what do you know about the

1108
01:10:58,600 --> 01:11:01,880
Speaker 2: world of investing today that would have been helpful back

1109
01:11:01,880 --> 01:11:03,960
Speaker 2: in the nineties when you were first getting started.

1110
01:11:04,840 --> 01:11:07,479
Speaker 3: Well, so, when you study in academia, you do a

1111
01:11:07,479 --> 01:11:11,760
Speaker 3: lot of analysis, right, So we talked about markets are overvalued,

1112
01:11:11,920 --> 01:11:16,080
Speaker 3: multiples are high. I think when I was starting out,

1113
01:11:16,120 --> 01:11:20,360
Speaker 3: I had a lot more belief in you know, rigorous

1114
01:11:20,360 --> 01:11:24,280
Speaker 3: analysis and numbers give you the right answer. I think

1115
01:11:24,320 --> 01:11:28,479
Speaker 3: investing is much more messy, right, So putting in the

1116
01:11:28,600 --> 01:11:33,760
Speaker 3: rigor of the analysis, with understanding behavior and human biases,

1117
01:11:35,320 --> 01:11:40,000
Speaker 3: technicals flows, that is the way you get a fuller

1118
01:11:40,040 --> 01:11:42,960
Speaker 3: picture of the investment space. And I think we talk

1119
01:11:43,200 --> 01:11:45,040
Speaker 3: I mean, there's a lot of very smart people that

1120
01:11:45,080 --> 01:11:49,679
Speaker 3: are very good with numbers, but I think understanding behavior

1121
01:11:49,720 --> 01:11:51,639
Speaker 3: and people is just as important.

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01:11:51,880 --> 01:11:58,080
Speaker 2: Huh, really, really fascinating. We have been speaking with Felina Panava,

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01:11:58,320 --> 01:12:02,040
Speaker 2: Group chief investment Officer for WIS Ray. If you enjoy

1124
01:12:02,120 --> 01:12:04,479
Speaker 2: this conversation, well, be sure and check any of the

1125
01:12:04,560 --> 01:12:08,320
Speaker 2: five hundred we've done over the past eleven years. You

1126
01:12:08,360 --> 01:12:12,920
Speaker 2: can find those at iTunes, Spotify, YouTube, Bloomberg, wherever. Week

1127
01:12:13,040 --> 01:12:16,720
Speaker 2: you find your favorite podcasts, be sure and check out

1128
01:12:16,800 --> 01:12:20,719
Speaker 2: my new book How Not to Invest The Ideas, numbers,

1129
01:12:20,760 --> 01:12:24,160
Speaker 2: and behaviors that destroy wealth and how to avoid them

1130
01:12:24,479 --> 01:12:27,280
Speaker 2: How Not to Invest. Wherever you find your favorite books,

1131
01:12:27,840 --> 01:12:29,559
Speaker 2: I would be remiss if I did not thank the

1132
01:12:29,560 --> 01:12:32,639
Speaker 2: Crack staff that helps put these conversations together each week.

1133
01:12:33,040 --> 01:12:38,799
Speaker 2: Peter Nicolina is my audio engineer. Anna Luke is my producer.

1134
01:12:38,880 --> 01:12:43,240
Speaker 2: Sean Russo is my researcher. I'm Battery Results. You've been

1135
01:12:43,320 --> 01:12:50,560
Speaker 2: listening to pastors in business on Boomberg Radio