1 00:00:02,040 --> 00:00:08,320 Speaker 1: This is Master's in Business with Barry Ridholds on Bloomberg Radio. 2 00:00:09,720 --> 00:00:14,760 Speaker 2: This week on the podcast, I have another extra special guest, ANDREWS. 3 00:00:14,800 --> 00:00:18,760 Speaker 2: Lemons has pretty much done everything on the wealth management 4 00:00:18,840 --> 00:00:23,000 Speaker 2: side of the business, starting at Brown Brothers Harriman before 5 00:00:23,040 --> 00:00:27,200 Speaker 2: going on to Morgan Stanley where he started out as 6 00:00:27,240 --> 00:00:32,000 Speaker 2: a client facing wealth manager, before moving into portfolio manager 7 00:00:32,080 --> 00:00:38,240 Speaker 2: and eventually creating the Applied Equity Advisors team that uses 8 00:00:38,440 --> 00:00:46,159 Speaker 2: a combination of quantitative and fundamental and behavioral thinking to 9 00:00:46,400 --> 00:00:53,480 Speaker 2: create portfolios and funds that are sturdy and can survive 10 00:00:54,320 --> 00:00:59,840 Speaker 2: any sort of change in investor sentiment. They look at geography, 11 00:01:00,120 --> 00:01:04,319 Speaker 2: they look at capsize, they look at style, and they 12 00:01:04,319 --> 00:01:08,840 Speaker 2: look at sector and try and keep a portfolio leaning 13 00:01:08,920 --> 00:01:14,600 Speaker 2: towards what's working best. These tend to be concentrated portfolios. 14 00:01:14,640 --> 00:01:18,320 Speaker 2: The US versions are thirty to sixty holdings, where the 15 00:01:18,880 --> 00:01:23,600 Speaker 2: overseas versions are just twenty holdings. I found this conversation 16 00:01:23,640 --> 00:01:26,720 Speaker 2: to be fascinating. There are a few people in asset 17 00:01:26,760 --> 00:01:31,559 Speaker 2: management that have seen the world of investing from both 18 00:01:31,640 --> 00:01:35,880 Speaker 2: the client's perspective and a client facing advisor side to 19 00:01:36,080 --> 00:01:40,760 Speaker 2: a PM and then a broader asset manager than Andrew has. 20 00:01:41,040 --> 00:01:44,240 Speaker 2: He really comes with a wealth of knowledge and he's 21 00:01:44,319 --> 00:01:48,040 Speaker 2: been with Morganstantley since nineteen ninety one. That sort of 22 00:01:48,760 --> 00:01:51,840 Speaker 2: tenure at a single firm is increasingly rare, rare these days. 23 00:01:52,400 --> 00:01:55,240 Speaker 2: I found this discussion to be absolutely fascinating and I 24 00:01:55,280 --> 00:01:59,960 Speaker 2: think you will also, with no further ado, Morgan Stanley 25 00:02:00,600 --> 00:02:01,720 Speaker 2: Andrews Slimmon. 26 00:02:01,520 --> 00:02:02,760 Speaker 1: Thank you. It's an ho to be here. 27 00:02:02,800 --> 00:02:05,240 Speaker 2: Well, it's a pleasure to have you. So let's start 28 00:02:05,400 --> 00:02:08,400 Speaker 2: at the beginning with your background. You get a BA 29 00:02:08,520 --> 00:02:12,200 Speaker 2: from the University of Pennsylvania and an NBA from University 30 00:02:12,200 --> 00:02:15,160 Speaker 2: of Chicago. Was finance always the plan. 31 00:02:15,400 --> 00:02:18,760 Speaker 1: I think being in a competitive industry with all the plan. 32 00:02:18,840 --> 00:02:21,280 Speaker 1: I played tennis competitively in juniors and went out and 33 00:02:21,280 --> 00:02:23,880 Speaker 1: played in college, and I always liked the you know, 34 00:02:23,960 --> 00:02:26,040 Speaker 1: you either won or loss. And what I always liked 35 00:02:26,040 --> 00:02:28,919 Speaker 1: about this industry it was all about, you know, did 36 00:02:28,919 --> 00:02:32,040 Speaker 1: you win or loose? There wasn't a lot of gray 37 00:02:32,160 --> 00:02:34,120 Speaker 1: era and I think that's what I do love about 38 00:02:34,280 --> 00:02:38,000 Speaker 1: the stock market and investing in general, because there's a 39 00:02:38,000 --> 00:02:40,600 Speaker 1: scorecard and you can't there's no room in the scorecard 40 00:02:40,600 --> 00:02:42,440 Speaker 1: for the editorials. 41 00:02:41,720 --> 00:02:44,519 Speaker 2: No points for style or form. It's just did you 42 00:02:44,560 --> 00:02:47,440 Speaker 2: win or lose? So where did you begin? What was 43 00:02:47,480 --> 00:02:49,040 Speaker 2: your first role within the industry? 44 00:02:49,040 --> 00:02:51,920 Speaker 1: Sure? So, well, my first role was opening the mail 45 00:02:52,000 --> 00:02:55,400 Speaker 1: at a broker's firm in Hartford, Connecticut. But I started 46 00:02:55,440 --> 00:02:58,320 Speaker 1: my career at Brown Brothers Harriman right here in New 47 00:02:58,400 --> 00:03:01,880 Speaker 1: York in a training program, which was great because they 48 00:03:01,880 --> 00:03:05,200 Speaker 1: had commercial banking, they had capital markets, and they had 49 00:03:05,200 --> 00:03:08,280 Speaker 1: the investment management side of the business. And that's what 50 00:03:08,560 --> 00:03:11,560 Speaker 1: getting exposure all those led me to believe, Gee, I 51 00:03:11,760 --> 00:03:14,320 Speaker 1: really am interested in the stock market and how it 52 00:03:14,440 --> 00:03:16,280 Speaker 1: works in investing in general. 53 00:03:16,639 --> 00:03:19,080 Speaker 2: So what led you to Morgan Stanley? How'd you find 54 00:03:19,080 --> 00:03:20,639 Speaker 2: your way to write? 55 00:03:20,760 --> 00:03:25,720 Speaker 1: So? Yeah, I was a research analyst at Brown Brothers 56 00:03:25,760 --> 00:03:29,400 Speaker 1: and I was covering, you know, in healthcare stocks. I 57 00:03:29,840 --> 00:03:34,600 Speaker 1: realized that there must be something more to investing than 58 00:03:34,680 --> 00:03:36,880 Speaker 1: just what was going on at the company level, because 59 00:03:36,920 --> 00:03:39,360 Speaker 1: I noticed that the things that were moving my stocks 60 00:03:39,360 --> 00:03:41,360 Speaker 1: on a day to day basis weren't just what was 61 00:03:41,400 --> 00:03:45,600 Speaker 1: going on at the company level. And University's Chicago, where 62 00:03:45,600 --> 00:03:48,240 Speaker 1: I got to my MBA, was obviously very focused on 63 00:03:48,400 --> 00:03:52,840 Speaker 1: more the quantitative areas of investing, and I took FOMA 64 00:03:52,840 --> 00:03:56,000 Speaker 1: and French and so forth. And Miller and all those 65 00:03:56,040 --> 00:04:01,160 Speaker 1: that taught me that what drives a stock price is 66 00:04:01,240 --> 00:04:05,600 Speaker 1: more than just the company level. And so that was 67 00:04:05,680 --> 00:04:09,640 Speaker 1: really how it rounded my knowledge of kind of investing, 68 00:04:09,680 --> 00:04:15,000 Speaker 1: the first steps. And then coming out of business school, 69 00:04:15,040 --> 00:04:19,240 Speaker 1: it was ninety one, and it was a recession. And 70 00:04:19,320 --> 00:04:21,159 Speaker 1: I had met my wife in business school and she 71 00:04:21,200 --> 00:04:23,240 Speaker 1: got a job at kid r Peabody, if you remember that, 72 00:04:23,480 --> 00:04:27,200 Speaker 1: invest in banking in Chicago, and I couldn't find kind 73 00:04:27,240 --> 00:04:31,880 Speaker 1: of a buy side opportunity, and Morgan Stanley had a 74 00:04:31,920 --> 00:04:36,039 Speaker 1: department called Prior Wealth Management that covered wealthy individuals and 75 00:04:36,080 --> 00:04:40,080 Speaker 1: small institutions in Chicago. And I needed a job, and 76 00:04:40,120 --> 00:04:41,920 Speaker 1: I had a lot of student debts, so I said, hey, 77 00:04:42,120 --> 00:04:44,840 Speaker 1: as opposed to go in the traditional buy side route, 78 00:04:45,000 --> 00:04:48,680 Speaker 1: I'll start in this area, covering clients and investing for them. 79 00:04:49,440 --> 00:04:54,039 Speaker 2: So ninety one kind of a mild recession, mild and 80 00:04:54,240 --> 00:05:00,640 Speaker 2: really halfway through what was a rampaging bull market. What 81 00:05:00,760 --> 00:05:03,680 Speaker 2: was it like in the nineteen nineties in New York and. 82 00:05:03,720 --> 00:05:06,640 Speaker 1: Finance, Well, I mean the thing that was amazing is 83 00:05:06,800 --> 00:05:09,240 Speaker 1: we would have clients in the late nineties. It would 84 00:05:09,279 --> 00:05:13,000 Speaker 1: come to us and they'd say, Andrew, I'm not greedy. 85 00:05:13,040 --> 00:05:15,080 Speaker 1: I just want fifteen to twenty percent returns a year, 86 00:05:15,440 --> 00:05:20,640 Speaker 1: right and no, with limited risks. And that is what 87 00:05:20,720 --> 00:05:24,679 Speaker 1: was so fascinating about today is today people say to me, Andrew, 88 00:05:24,720 --> 00:05:26,800 Speaker 1: why would I invest in equities when I can get 89 00:05:26,800 --> 00:05:30,720 Speaker 1: five percent in the money market. And what a difference 90 00:05:30,800 --> 00:05:33,839 Speaker 1: in a mindset, which tells you where we are. In 91 00:05:33,880 --> 00:05:36,480 Speaker 1: the late nineties, we had just gone through a roaring 92 00:05:36,560 --> 00:05:40,560 Speaker 1: bull market. Optimism was just so rampant in the worst 93 00:05:40,640 --> 00:05:43,839 Speaker 1: year in the business I can remember was nineteen ninety 94 00:05:43,920 --> 00:05:47,360 Speaker 1: nine because as an investor covering clients, I was caught 95 00:05:47,400 --> 00:05:51,000 Speaker 1: between doing the right thing for them, which was avoid 96 00:05:51,080 --> 00:05:55,240 Speaker 1: these ridiculously priced stocks or get on the train because 97 00:05:55,320 --> 00:05:58,120 Speaker 1: the money is pouring through. And then it all came 98 00:05:58,160 --> 00:06:00,400 Speaker 1: to an end in two thousand and two thousand and 99 00:06:00,440 --> 00:06:02,159 Speaker 1: I took a step back and say, thank god, I 100 00:06:02,279 --> 00:06:05,120 Speaker 1: never you know, I just didn't buy in the way 101 00:06:05,160 --> 00:06:08,360 Speaker 1: some people did, and therefore save people a lot of money. 102 00:06:08,360 --> 00:06:12,000 Speaker 1: It was a tremendously good learning experience for me to 103 00:06:12,040 --> 00:06:15,560 Speaker 1: stay true to your values of investing. Ultimately, they work 104 00:06:15,560 --> 00:06:16,360 Speaker 1: out you. 105 00:06:16,279 --> 00:06:21,160 Speaker 2: Are identifying something that I'm so fascinated by. The problem 106 00:06:21,240 --> 00:06:26,279 Speaker 2: we run into with surveys or even the risk tolerance questionnaires. 107 00:06:26,839 --> 00:06:28,800 Speaker 2: Is all you find out is, hey, what has the 108 00:06:28,839 --> 00:06:31,560 Speaker 2: market done for the past six months. If the market's 109 00:06:31,600 --> 00:06:34,440 Speaker 2: been good, hey, I of course I want more risk. 110 00:06:34,880 --> 00:06:37,240 Speaker 2: I'm more than comfortable with it. And if the market 111 00:06:37,279 --> 00:06:40,799 Speaker 2: got shellacked, no, no, no, I can't so offer anymore 112 00:06:40,839 --> 00:06:42,599 Speaker 2: draw downs. It's just pure psychology. 113 00:06:42,839 --> 00:06:45,599 Speaker 1: And I would go one step further. You know this, 114 00:06:45,680 --> 00:06:47,960 Speaker 1: you're in the business, but when you first meet someone, 115 00:06:48,240 --> 00:06:51,000 Speaker 1: you never know the ones that are going to be 116 00:06:51,200 --> 00:06:55,159 Speaker 1: truly risk averse or truly can withstand the vault to 117 00:06:55,200 --> 00:06:57,520 Speaker 1: the and ones that can. Some people say, don't worry, 118 00:06:57,560 --> 00:06:59,520 Speaker 1: I'm not worried about the draw downs, and the minute 119 00:06:59,560 --> 00:07:01,640 Speaker 1: happens on the phone to you, and some people I 120 00:07:01,720 --> 00:07:03,520 Speaker 1: told you I wasn't worried and I didn't call you. 121 00:07:03,800 --> 00:07:06,159 Speaker 1: And you can never know just the first time you 122 00:07:06,200 --> 00:07:07,599 Speaker 1: meet people who that's going to be. 123 00:07:08,160 --> 00:07:11,960 Speaker 2: It's a challenge figuring out who people really are not easy. 124 00:07:12,000 --> 00:07:14,560 Speaker 2: So you start at Morgan Stanley in nineteen ninety one, 125 00:07:14,640 --> 00:07:17,680 Speaker 2: you're in. That's a long time ago. You start on 126 00:07:17,720 --> 00:07:20,920 Speaker 2: the private wealth side. What led you to becoming a 127 00:07:21,000 --> 00:07:24,440 Speaker 2: portfolio manager with Morgan Stanley Wealth Strategy. 128 00:07:24,120 --> 00:07:26,400 Speaker 1: So if you think about my career, I learned to 129 00:07:26,440 --> 00:07:29,720 Speaker 1: be a fundamental analyst. I went to Universe Chicago and 130 00:07:29,800 --> 00:07:33,480 Speaker 1: learned that, oh, there's quantitative factors that drive a stock 131 00:07:33,520 --> 00:07:36,520 Speaker 1: price beyond kind of what's going on at the company level. 132 00:07:36,720 --> 00:07:39,960 Speaker 1: The third part of my experience was being in prior 133 00:07:40,040 --> 00:07:42,640 Speaker 1: wealth management. Clients want to believe they all buy low 134 00:07:42,680 --> 00:07:45,160 Speaker 1: and sell high, but bear you know that doesn't isn't 135 00:07:45,160 --> 00:07:45,520 Speaker 1: the case. 136 00:07:45,640 --> 00:07:49,640 Speaker 2: Somebody does accidentally, someone randomly top ticks and bottom ticks 137 00:07:49,640 --> 00:07:52,080 Speaker 2: of market, but nobody does that conceive exactly. 138 00:07:52,120 --> 00:07:53,960 Speaker 1: And here's a great example of what I mean. If 139 00:07:54,000 --> 00:07:57,520 Speaker 1: you think about the years twenty twenty. In twenty twenty one, 140 00:07:58,120 --> 00:08:02,160 Speaker 1: growth stocks took off right, but in twenty twenty two 141 00:08:02,160 --> 00:08:04,560 Speaker 1: they got crushed. Do you think more money went into 142 00:08:04,720 --> 00:08:08,880 Speaker 1: growth managers and funds in twenty twenty one or the 143 00:08:08,960 --> 00:08:10,880 Speaker 1: end of twenty twenty two after they got crushed. 144 00:08:10,920 --> 00:08:14,960 Speaker 2: The flows are always a year behind me exactly what 145 00:08:15,080 --> 00:08:16,200 Speaker 2: people are backwards. 146 00:08:15,880 --> 00:08:19,200 Speaker 1: Like well, and that's because there's something called the tear sheet. 147 00:08:19,320 --> 00:08:21,560 Speaker 1: If you were my client, I went to you and said, Barry, 148 00:08:22,040 --> 00:08:24,840 Speaker 1: I think you should invest in emerging markets because look 149 00:08:24,880 --> 00:08:27,680 Speaker 1: how terribly it's done. The last five years and I can. 150 00:08:27,720 --> 00:08:30,920 Speaker 1: You're the tear sheet everybody. Hey, I hate it. So 151 00:08:31,000 --> 00:08:34,680 Speaker 1: the problem with this business is a stock price does 152 00:08:34,720 --> 00:08:37,280 Speaker 1: not care what happened in the past. It only cares 153 00:08:37,320 --> 00:08:39,960 Speaker 1: about what's happened in the future. But as humans, we 154 00:08:40,000 --> 00:08:42,920 Speaker 1: all suffer from recency buyas. So what I observed in 155 00:08:42,960 --> 00:08:45,920 Speaker 1: the nineties, it's a long winted answer. Your question is 156 00:08:45,960 --> 00:08:49,079 Speaker 1: what I observed in the nineties. As a coverage offer, 157 00:08:49,120 --> 00:08:52,440 Speaker 1: you can't get clients to actually buy what's out of favor. 158 00:08:52,920 --> 00:08:58,560 Speaker 1: And the flaw in the whole growth value US international 159 00:08:59,200 --> 00:09:03,720 Speaker 1: is people frame, Oh, maybe I should buy more growth 160 00:09:03,920 --> 00:09:07,280 Speaker 1: because it's working well, except it gets too expensive. So 161 00:09:07,880 --> 00:09:10,880 Speaker 1: the reason I left being in wealth management, I was 162 00:09:10,960 --> 00:09:16,240 Speaker 1: convinced that I could start strategies using more quantitative but 163 00:09:16,520 --> 00:09:19,960 Speaker 1: give us flexibility. So if we could start core strategies 164 00:09:20,320 --> 00:09:22,839 Speaker 1: so that if growth got too expensive, we could tilt 165 00:09:22,840 --> 00:09:26,560 Speaker 1: away from growth, or if Europe wasn't working, we could 166 00:09:26,600 --> 00:09:29,760 Speaker 1: tilt away from Europe. That gave us more flexibility as 167 00:09:29,800 --> 00:09:32,400 Speaker 1: an active manager, versus saying I'm only a growth manager, 168 00:09:32,480 --> 00:09:35,040 Speaker 1: that I'm always trying to justify why you should buy growth, 169 00:09:35,200 --> 00:09:39,560 Speaker 1: or if I'm a value manager always justifying why buy value. Remember, 170 00:09:39,880 --> 00:09:44,240 Speaker 1: by nineteen ninety nine, a half of value managers had 171 00:09:44,240 --> 00:09:46,160 Speaker 1: gone out of business in the last three years, that 172 00:09:46,520 --> 00:09:48,079 Speaker 1: just before they took off. 173 00:09:48,120 --> 00:09:52,400 Speaker 2: That's unbelievable. I know folks who run short hedge funds 174 00:09:52,880 --> 00:09:55,280 Speaker 2: and they say they could always tell when we're due 175 00:09:55,320 --> 00:09:58,400 Speaker 2: for a major correction because that's when all of their 176 00:09:58,400 --> 00:10:01,120 Speaker 2: redemptions and outflows hit a crescendo. 177 00:10:01,320 --> 00:10:05,400 Speaker 1: And so that's the problem with the dedicated style is 178 00:10:05,440 --> 00:10:09,320 Speaker 1: you're always fighting human behavior just at the juncture with 179 00:10:09,360 --> 00:10:13,760 Speaker 1: which you should be investing. They're selling, they're selling their stocks. 180 00:10:13,880 --> 00:10:16,600 Speaker 2: So let me ask you the flip side of the question. 181 00:10:16,679 --> 00:10:19,760 Speaker 2: If you can't get people or if it's really challenging 182 00:10:19,840 --> 00:10:24,920 Speaker 2: to make people comfortable with buying out of favor styles 183 00:10:25,120 --> 00:10:29,880 Speaker 2: or companies, can you get them to sell the companies 184 00:10:29,880 --> 00:10:32,400 Speaker 2: that are in favor and have had, you know, an 185 00:10:32,400 --> 00:10:34,920 Speaker 2: exorbitant run up and are really pricey or is that 186 00:10:35,040 --> 00:10:36,320 Speaker 2: just the other side of the same coin. 187 00:10:36,400 --> 00:10:38,080 Speaker 1: It's the other side of the same coin. But I 188 00:10:38,120 --> 00:10:42,280 Speaker 1: think what complicates is is taxes, sure, because people don't 189 00:10:42,320 --> 00:10:46,800 Speaker 1: want to sell for taxes and general Electric was a 190 00:10:46,920 --> 00:10:50,200 Speaker 1: very important experience in my life in a you know 191 00:10:50,400 --> 00:10:52,440 Speaker 1: back in the nineties, which was it became the number 192 00:10:52,520 --> 00:10:56,880 Speaker 1: one stock. Everyone loved it, and then you know, it 193 00:10:56,960 --> 00:11:00,280 Speaker 1: went through a can't grow as quickly anymore. So the 194 00:11:00,280 --> 00:11:03,880 Speaker 1: issue that I see in the industry is stocks never 195 00:11:04,000 --> 00:11:10,520 Speaker 1: survive as the number one company, and so eventually they 196 00:11:11,080 --> 00:11:14,079 Speaker 1: decline and people don't want to take money off the 197 00:11:14,160 --> 00:11:17,120 Speaker 1: table when they're the number one or tops because they 198 00:11:17,120 --> 00:11:19,560 Speaker 1: have big gains. And then ultimately people sold a lot 199 00:11:19,600 --> 00:11:21,680 Speaker 1: of General Electric with a lot less of a gain. 200 00:11:21,840 --> 00:11:26,160 Speaker 1: So the trick is is to reduce the exposures over time. 201 00:11:26,240 --> 00:11:29,520 Speaker 1: So if I'm a core manager and I know that 202 00:11:29,720 --> 00:11:35,040 Speaker 1: growth is expensive relative to its history versus value, we'll 203 00:11:35,160 --> 00:11:38,400 Speaker 1: tilt the portfolio, but we won't go all into value 204 00:11:38,600 --> 00:11:42,079 Speaker 1: all in growth because timing these things is very, very tricky. 205 00:11:42,840 --> 00:11:46,320 Speaker 2: So you've been with Morgan Stanley since nineteen ninety one, 206 00:11:46,880 --> 00:11:50,720 Speaker 2: three decades with the same firm, pretty rare these days. 207 00:11:50,760 --> 00:11:53,160 Speaker 2: What makes the firm so special? What's kept you there 208 00:11:53,360 --> 00:11:54,080 Speaker 2: for all this time? 209 00:11:54,160 --> 00:11:55,839 Speaker 1: Well, you have to remember that when I started in 210 00:11:56,280 --> 00:11:59,760 Speaker 1: nineteen ninety one, wealth management was a relatively small part 211 00:11:59,840 --> 00:12:04,480 Speaker 1: of of the firm, and I give James Gorman tremendous credit. 212 00:12:04,640 --> 00:12:08,360 Speaker 1: He really grew that area because of the stability of 213 00:12:08,400 --> 00:12:11,640 Speaker 1: the cash flow. You know, I'm a pretty stable cash flow. 214 00:12:11,679 --> 00:12:15,480 Speaker 1: And then when I progressed to Morgan Stanley Investment Management, 215 00:12:15,720 --> 00:12:18,839 Speaker 1: it was the same concept, which was we value the 216 00:12:18,960 --> 00:12:24,439 Speaker 1: multiple on stable cash flows is higher than on capital 217 00:12:24,520 --> 00:12:27,840 Speaker 1: markets flows. And so that's I've kind of followed the 218 00:12:27,880 --> 00:12:31,280 Speaker 1: progression of how Morgan Stanley's changed, and that's been a 219 00:12:31,280 --> 00:12:33,679 Speaker 1: great opportunity. And then I look and say, well, I 220 00:12:33,720 --> 00:12:37,120 Speaker 1: was able to go from wealth management into the asset 221 00:12:37,200 --> 00:12:40,040 Speaker 1: management because the firm grew in that era. So it's 222 00:12:40,160 --> 00:12:43,640 Speaker 1: been a tremendously great firm to be with. But I've 223 00:12:43,760 --> 00:12:46,439 Speaker 1: you know, my career has changed over time as the 224 00:12:46,480 --> 00:12:47,520 Speaker 1: firm's changed over time. 225 00:12:47,640 --> 00:12:50,360 Speaker 2: Sure, I had John mac on about a year ago 226 00:12:50,800 --> 00:12:54,480 Speaker 2: and he described that exact same thing, the appeal of 227 00:12:54,840 --> 00:12:57,160 Speaker 2: wealth management, and part of the reason what was a 228 00:12:57,200 --> 00:13:00,280 Speaker 2: Dean winner. The big acquisition that was done was, hey, 229 00:13:00,320 --> 00:13:03,079 Speaker 2: this allows us to suffer the ups and downs in 230 00:13:03,160 --> 00:13:06,000 Speaker 2: the other side of the business, which has potential for 231 00:13:06,080 --> 00:13:11,920 Speaker 2: great rewards but no stability versus ready steady, moderate gains 232 00:13:11,920 --> 00:13:13,120 Speaker 2: from the funeral wealth management. 233 00:13:13,160 --> 00:13:16,720 Speaker 1: We bought Smith Barney another thing. So then over the 234 00:13:16,720 --> 00:13:20,800 Speaker 1: acid management side, there's eating Vance each trade wealth management, 235 00:13:20,840 --> 00:13:24,440 Speaker 1: and with eat Advance came Parametric and Calvert. So the 236 00:13:24,480 --> 00:13:27,400 Speaker 1: firm has grown in the areas that I've grown personally. 237 00:13:27,440 --> 00:13:29,800 Speaker 1: So it's been a great, great marriage for a long time. 238 00:13:30,280 --> 00:13:33,000 Speaker 2: So your experience with General Electric, I had a similar 239 00:13:33,040 --> 00:13:37,200 Speaker 2: experience with EMC and with Cisco late nineties, trying to 240 00:13:37,200 --> 00:13:40,800 Speaker 2: get people to recognize, hey, this has been a fantastic run, 241 00:13:41,320 --> 00:13:45,000 Speaker 2: but the growth engine isn't there, the trend has been broken. 242 00:13:45,880 --> 00:13:48,800 Speaker 2: Don't be afraid to ring the bell. And I'm not 243 00:13:48,880 --> 00:13:53,080 Speaker 2: an active trader. I'm a long term holder. Getting people 244 00:13:53,120 --> 00:13:55,160 Speaker 2: to sell their winners not easy to. 245 00:13:55,120 --> 00:13:58,560 Speaker 1: Do, very hard. But also when stocks get very very big, 246 00:13:58,640 --> 00:14:02,320 Speaker 1: companies get very very big, it just gets tougher to grow. 247 00:14:02,720 --> 00:14:05,640 Speaker 1: In my experience, and this has nothing to ge just 248 00:14:05,800 --> 00:14:09,199 Speaker 1: in general, is when companies get big, usually the government 249 00:14:09,280 --> 00:14:13,040 Speaker 1: starts looking into their business because they might dominate too much. 250 00:14:13,080 --> 00:14:17,280 Speaker 1: And so it's a combination of why over time, and 251 00:14:17,320 --> 00:14:19,000 Speaker 1: I know this is hard to believe given the last 252 00:14:19,000 --> 00:14:22,760 Speaker 1: couple of years, why the equal weighted SMP does actually 253 00:14:22,840 --> 00:14:26,920 Speaker 1: outperform the cap weighted S and P because companies mid 254 00:14:26,960 --> 00:14:29,760 Speaker 1: cap companies that are moving up it's easier to grow. 255 00:14:29,960 --> 00:14:32,560 Speaker 2: Well, it hasn't been twenty five years since the Microsoft 256 00:14:32,880 --> 00:14:37,280 Speaker 2: any trust. Uh boy, that's that's that's amazing. How often 257 00:14:37,400 --> 00:14:40,360 Speaker 2: are equal weight SMP outperforming? 258 00:14:40,600 --> 00:14:43,840 Speaker 1: It outperforms about half the time. It's certainly had. I mean, 259 00:14:43,880 --> 00:14:47,680 Speaker 1: think about last year and through October, the cap weighted 260 00:14:47,840 --> 00:14:50,560 Speaker 1: to perform the equated by eleven hundred base ports. Wow. 261 00:14:50,600 --> 00:14:53,280 Speaker 1: That's But the thing that's fascinating about this verier and 262 00:14:53,320 --> 00:14:56,560 Speaker 1: again you know this is that it's always the first 263 00:14:56,640 --> 00:15:00,280 Speaker 1: year off of bear market low investors sell. So tail 264 00:15:00,400 --> 00:15:04,080 Speaker 1: flows were negative from the low of October twenty two 265 00:15:04,480 --> 00:15:08,200 Speaker 1: until for a year in that November twenty three exactly. 266 00:15:08,240 --> 00:15:10,880 Speaker 1: But if you go back to twenty twenty March of 267 00:15:10,920 --> 00:15:15,040 Speaker 1: twenty twenty, flows were negative until February of twenty one. 268 00:15:15,640 --> 00:15:17,400 Speaker 1: So it always takes about. 269 00:15:17,200 --> 00:15:20,520 Speaker 2: A February twenty. That's amazing because from the lows in 270 00:15:20,680 --> 00:15:22,680 Speaker 2: March it was a huge set of game. 271 00:15:22,920 --> 00:15:27,080 Speaker 1: Net flows from muta funds ets. They're always negative the 272 00:15:27,080 --> 00:15:30,400 Speaker 1: first year because of that rear view mirror recency bias. 273 00:15:30,680 --> 00:15:34,040 Speaker 1: The reason why that's relevant, Barry, is because when investors 274 00:15:34,080 --> 00:15:36,960 Speaker 1: finally said I shouldn't sell anymore, I should buy. They're 275 00:15:37,000 --> 00:15:39,000 Speaker 1: not going to buy what's already worked. They're looking for 276 00:15:39,080 --> 00:15:42,320 Speaker 1: other things and that's when the equated really started out before. Huh. 277 00:15:42,360 --> 00:15:43,080 Speaker 1: Really interesting. 278 00:15:43,360 --> 00:15:46,280 Speaker 2: So let's talk a little bit about your concept of 279 00:15:47,000 --> 00:15:52,760 Speaker 2: applied investing. What does that mean? What is applied investing involved? 280 00:15:53,120 --> 00:15:55,960 Speaker 1: Okay, so there's the theoretical story about it, and then 281 00:15:56,000 --> 00:15:57,840 Speaker 1: there's a practical story. I'm sure you'll get a kick 282 00:15:57,840 --> 00:16:01,000 Speaker 1: out of the practical, But the theoretical is that I 283 00:16:01,120 --> 00:16:05,280 Speaker 1: don't believe that a stock price return comes purely from 284 00:16:05,320 --> 00:16:07,840 Speaker 1: what's going on. Fundamentally, you have to decide should I 285 00:16:07,880 --> 00:16:12,920 Speaker 1: own growth, value, large cap, mid cap US versus non 286 00:16:13,040 --> 00:16:17,280 Speaker 1: US any stocks return? About two thirds of return in 287 00:16:17,320 --> 00:16:20,040 Speaker 1: any one year can be defined by those, So we 288 00:16:20,160 --> 00:16:23,520 Speaker 1: have to get that right first, and that's the quantitative size. 289 00:16:23,560 --> 00:16:26,480 Speaker 1: So we use factor models to say, hey, should we 290 00:16:26,480 --> 00:16:29,840 Speaker 1: own growth stocks or value stocks? And so we tilt 291 00:16:29,920 --> 00:16:34,760 Speaker 1: our portfolios quantitatively based on which of those factors are 292 00:16:34,800 --> 00:16:37,000 Speaker 1: setting a signal that they'll work in the future. 293 00:16:37,080 --> 00:16:42,360 Speaker 2: So let me just make sure I understand this geography, size, sector, 294 00:16:43,040 --> 00:16:46,680 Speaker 2: and style, all the four metrics. If you're looking at 295 00:16:46,800 --> 00:16:49,600 Speaker 2: and trying to tilt into what you expect to be 296 00:16:49,640 --> 00:16:50,880 Speaker 2: working away from. 297 00:16:50,920 --> 00:16:54,040 Speaker 1: Exactly, and the goal of that is to keep people 298 00:16:54,480 --> 00:16:57,400 Speaker 1: in the game. Flip side is you know things are 299 00:16:57,440 --> 00:16:59,480 Speaker 1: out of favor, they can stay out of favor. The 300 00:16:59,560 --> 00:17:03,960 Speaker 1: problem in this business is styles and investing can stay 301 00:17:03,960 --> 00:17:06,560 Speaker 1: out of favor longer than the client's patients duration. 302 00:17:07,119 --> 00:17:09,800 Speaker 2: Just look at value in the twenty tens. I mean, 303 00:17:09,840 --> 00:17:13,200 Speaker 2: if you were not leaning into growth, you were left 304 00:17:13,200 --> 00:17:14,240 Speaker 2: way behind exactly. 305 00:17:14,280 --> 00:17:17,600 Speaker 1: And what I observe from my time being advisor is 306 00:17:17,640 --> 00:17:19,600 Speaker 1: at the end of the day, clients don't really care 307 00:17:19,640 --> 00:17:21,680 Speaker 1: where they own growth or value. They don't care where 308 00:17:21,680 --> 00:17:25,159 Speaker 1: they own European US. They want to make money and 309 00:17:25,200 --> 00:17:27,359 Speaker 1: they don't want to go backwards. And if all you 310 00:17:27,440 --> 00:17:30,240 Speaker 1: keep saying is yes, but you know, my value manager 311 00:17:30,240 --> 00:17:32,600 Speaker 1: has outperformed the value index and they're like, yeah, but 312 00:17:32,640 --> 00:17:34,760 Speaker 1: the S and P is going through the roof, right, 313 00:17:35,080 --> 00:17:38,080 Speaker 1: So you have to have some flexibility in your approach. 314 00:17:38,520 --> 00:17:41,280 Speaker 1: So I wanted to start a group that at the 315 00:17:41,320 --> 00:17:48,080 Speaker 1: core would use those quantitative metrics. But pure quantitative takes 316 00:17:48,119 --> 00:17:51,919 Speaker 1: out kind of the fundamentals of investing, because a certain 317 00:17:51,960 --> 00:17:54,240 Speaker 1: portion of a stock's return comes from what's going out 318 00:17:54,280 --> 00:17:56,920 Speaker 1: the company level. And the other thing is if all 319 00:17:56,960 --> 00:18:00,000 Speaker 1: I did was focused on the quantitative. You'd end up 320 00:18:00,040 --> 00:18:03,119 Speaker 1: owning three hundred securities. So let's talk tom and an 321 00:18:03,280 --> 00:18:07,440 Speaker 1: SMA can't do that, or you don't drive enough active share. 322 00:18:07,640 --> 00:18:11,320 Speaker 2: SMA is separately managed account. Let's talk about active share. 323 00:18:11,880 --> 00:18:17,720 Speaker 2: Because your portfolios are fairly concentrated. The US core portfolio 324 00:18:18,080 --> 00:18:23,119 Speaker 2: is thirty to sixty companies. That's considered a modest holding, 325 00:18:23,160 --> 00:18:27,840 Speaker 2: a concentrated holding. Tell us about the thinking behind that concentration. 326 00:18:28,320 --> 00:18:30,879 Speaker 1: So it's funny going back to that first job at 327 00:18:30,920 --> 00:18:33,680 Speaker 1: Brown Brothers, you know, and the time in the eighties, 328 00:18:33,760 --> 00:18:36,199 Speaker 1: no one knew about passive investing. But I observed that, 329 00:18:36,560 --> 00:18:39,280 Speaker 1: you know, they'd have these portfolios and they'd have kind 330 00:18:39,280 --> 00:18:41,480 Speaker 1: of two or three stocks in every sector, so you'd 331 00:18:41,560 --> 00:18:43,600 Speaker 1: end up with you know, one hundred, one hundred and 332 00:18:43,600 --> 00:18:46,600 Speaker 1: fifty stocks, and you know, they not that they did poorly, 333 00:18:46,640 --> 00:18:49,119 Speaker 1: but they never really you know, it's really hard to 334 00:18:49,200 --> 00:18:50,680 Speaker 1: drive a lot of active you know. 335 00:18:50,680 --> 00:18:52,720 Speaker 2: Performance everything is one to two percent. 336 00:18:52,880 --> 00:18:55,080 Speaker 1: And at the time it wasn't really there wasn't really 337 00:18:55,160 --> 00:18:58,920 Speaker 1: passive investing. But then as as time progressed, all these 338 00:18:58,960 --> 00:19:02,760 Speaker 1: studies came out and said, well, actually the most excess 339 00:19:02,920 --> 00:19:06,520 Speaker 1: return in active management comes from managers that are very, 340 00:19:06,600 --> 00:19:09,480 Speaker 1: very active. And if you own one hundred and fifty 341 00:19:09,480 --> 00:19:11,879 Speaker 1: stocks and you're the benchmark is the S and P, 342 00:19:12,560 --> 00:19:15,119 Speaker 1: you're not active. So it was clear to me that 343 00:19:15,160 --> 00:19:20,439 Speaker 1: we needed very concentrated portfolios but control the risk. And 344 00:19:20,520 --> 00:19:24,520 Speaker 1: so that's why we run these limited portfolios. The applied 345 00:19:24,840 --> 00:19:28,520 Speaker 1: term is so it gave some quantitative approach to what 346 00:19:28,600 --> 00:19:31,480 Speaker 1: we do. But here's the practical barrier, which is, when 347 00:19:31,480 --> 00:19:33,479 Speaker 1: the firm came to me and said, okay, you're going 348 00:19:33,560 --> 00:19:36,359 Speaker 1: to become an asset management arm, you got to come 349 00:19:36,440 --> 00:19:39,280 Speaker 1: up with a name for your team. I knew that 350 00:19:39,320 --> 00:19:45,240 Speaker 1: these firms show asset management companies alphabetically, so apply to this. 351 00:19:45,640 --> 00:19:49,480 Speaker 1: I wasn't going to be ze applied, right. I wanted 352 00:19:49,520 --> 00:19:50,600 Speaker 1: to be at the top of the list. 353 00:19:50,640 --> 00:19:56,119 Speaker 2: That's very that's triple a exterminator. So let's talk about 354 00:19:56,240 --> 00:19:59,600 Speaker 2: two things you just mentioned. One is active share. But 355 00:19:59,720 --> 00:20:03,240 Speaker 2: really what you're implying are that a lot of these 356 00:20:03,280 --> 00:20:06,960 Speaker 2: other funds with two hundred and three hundred or more holdings, 357 00:20:07,480 --> 00:20:11,160 Speaker 2: they're all high fee closet indexers. What's the value there? 358 00:20:11,240 --> 00:20:13,800 Speaker 1: Right? And that's why as an active manager, I have 359 00:20:13,960 --> 00:20:16,879 Speaker 1: nothing against ETFs. I think it's done great for the 360 00:20:17,040 --> 00:20:21,440 Speaker 1: industry because shame on funds that own lots and lots 361 00:20:21,480 --> 00:20:24,720 Speaker 1: of securities. You're not doing a service to your investing. 362 00:20:24,760 --> 00:20:28,400 Speaker 1: But at the end of the day, if I marginally underperform, 363 00:20:28,440 --> 00:20:30,600 Speaker 1: not me, but in general, you know, it will take 364 00:20:30,680 --> 00:20:32,800 Speaker 1: time to lose your assets. You know, what's right for 365 00:20:32,840 --> 00:20:35,520 Speaker 1: the money management firm is not always what's right for 366 00:20:35,560 --> 00:20:39,480 Speaker 1: the investors. So the right thing is choose passive strategies. 367 00:20:39,600 --> 00:20:41,720 Speaker 1: But there's a place for activities, but it's got to 368 00:20:41,720 --> 00:20:42,560 Speaker 1: be active. 369 00:20:42,400 --> 00:20:45,560 Speaker 2: Core and satellite. You have a core of a passive index, 370 00:20:45,600 --> 00:20:47,920 Speaker 2: but you're surrounding it, which something that gives you a 371 00:20:47,920 --> 00:20:51,600 Speaker 2: little opportunity for more upside exactly. Huh really really interesting. 372 00:20:51,760 --> 00:20:54,760 Speaker 2: So if the US holdings are thirty to sixty companies, 373 00:20:55,280 --> 00:20:59,800 Speaker 2: the global portfolio is even more concentrated about twenty companies. 374 00:21:00,359 --> 00:21:04,480 Speaker 1: Yeah, I mean, so taking a step back again, one 375 00:21:04,520 --> 00:21:07,280 Speaker 1: of the you know, remember I run mutual funds, but 376 00:21:07,359 --> 00:21:11,080 Speaker 1: I started in the separate managed account business. So what 377 00:21:11,240 --> 00:21:15,080 Speaker 1: it what means is they would wealth manage would implement 378 00:21:15,359 --> 00:21:19,960 Speaker 1: our portfolio for individuals by buying socks. And one of 379 00:21:20,000 --> 00:21:24,200 Speaker 1: the things that I observed is that clients pull from 380 00:21:24,280 --> 00:21:29,239 Speaker 1: the market faster than they pull from stocks. So in 381 00:21:29,240 --> 00:21:32,520 Speaker 1: other words, when you're worried about the market, if it's 382 00:21:32,560 --> 00:21:36,560 Speaker 1: about the market some macro story, Well do you want 383 00:21:36,600 --> 00:21:39,159 Speaker 1: to sell your Microsoft? Oh? No, I like Microsoft, but 384 00:21:39,160 --> 00:21:43,280 Speaker 1: I'm worried about the market. Okay, Well, owning individual securities 385 00:21:43,359 --> 00:21:46,600 Speaker 1: is really powerful because it actually keeps people invested. 386 00:21:46,680 --> 00:21:48,800 Speaker 2: There's a brand name, there's a brand. 387 00:21:49,240 --> 00:21:52,840 Speaker 1: Exactly, so people are more likely to pull from the market. 388 00:21:52,880 --> 00:21:55,960 Speaker 1: So I believe in owning stocks. But the problem is 389 00:21:56,000 --> 00:21:57,680 Speaker 1: again it goes back to but if you own two 390 00:21:57,720 --> 00:22:00,159 Speaker 1: hundred sucks, then they don't have any wedded So did 391 00:22:00,200 --> 00:22:02,440 Speaker 1: we start a strategy? We started this so eight where 392 00:22:02,480 --> 00:22:05,120 Speaker 1: all the securities would be on one page. That's amazing. 393 00:22:05,240 --> 00:22:10,960 Speaker 2: So your global portfolio also has some international US companies. 394 00:22:11,240 --> 00:22:13,720 Speaker 2: So in addition to things like LVMH and some other 395 00:22:14,119 --> 00:22:17,400 Speaker 2: international stocks, you have Microsoft, you have Costco. Correct, what's 396 00:22:17,440 --> 00:22:20,920 Speaker 2: the thinking of putting those because giant US companies in 397 00:22:21,000 --> 00:22:21,880 Speaker 2: a global portfolio. 398 00:22:21,960 --> 00:22:25,160 Speaker 1: It goes back to Barry that concept, which is clients 399 00:22:25,359 --> 00:22:29,040 Speaker 1: don't care really where they make their money. And the 400 00:22:29,160 --> 00:22:33,880 Speaker 1: problem with the benefit of global global strategies. I can 401 00:22:33,920 --> 00:22:37,200 Speaker 1: own some US stocks and international only I can't own 402 00:22:37,520 --> 00:22:41,679 Speaker 1: and what happens If the US just so happens to 403 00:22:41,760 --> 00:22:44,879 Speaker 1: do better than the rest of the world, then international 404 00:22:44,960 --> 00:22:47,040 Speaker 1: doesn't work as well. So it just gives us more 405 00:22:47,119 --> 00:22:51,360 Speaker 1: flex It's that flexible flexibility to go where the opportunity 406 00:22:51,440 --> 00:22:51,760 Speaker 1: set up. 407 00:22:51,840 --> 00:22:55,880 Speaker 2: And to that point, your fund. The Morgan Stanley Institutional 408 00:22:55,920 --> 00:23:01,680 Speaker 2: Global Concentrated Funds, which does have US stock trounce the 409 00:23:02,359 --> 00:23:07,800 Speaker 2: MSCI X US because the US has been out performing international. 410 00:23:08,040 --> 00:23:11,879 Speaker 2: That's another style for fifty since the financial crisis. The 411 00:23:11,960 --> 00:23:14,320 Speaker 2: US has been crushing everyone else. 412 00:23:14,359 --> 00:23:16,360 Speaker 1: But think about this way also, if I can own 413 00:23:16,440 --> 00:23:19,760 Speaker 1: twenty stocks, okay, but they're not all correlated to each other, 414 00:23:19,880 --> 00:23:22,280 Speaker 1: so they have a lot of different themes. Like I 415 00:23:22,440 --> 00:23:27,840 Speaker 1: really like this the infrastructure stocks right now, but I 416 00:23:27,880 --> 00:23:31,159 Speaker 1: also think they're a place as you said Microsoft, but 417 00:23:32,000 --> 00:23:35,879 Speaker 1: luxury brands only a few stocks but have a different theme. 418 00:23:36,280 --> 00:23:39,040 Speaker 1: Then I can control the risk in the portfolio. You 419 00:23:39,760 --> 00:23:42,639 Speaker 1: act to share, good concentrate high act to share, but 420 00:23:42,920 --> 00:23:44,240 Speaker 1: lower kind of risk. 421 00:23:44,520 --> 00:23:48,520 Speaker 2: So when I look at the Morgan Stanley Institutional US Core, 422 00:23:49,440 --> 00:23:54,000 Speaker 2: the description is we seek to outperform the benchmark, regardless 423 00:23:54,040 --> 00:23:58,080 Speaker 2: of which investment style, value or growth, is currently in favor. 424 00:23:58,400 --> 00:24:01,359 Speaker 2: So your style agnostic. You want to just stay with 425 00:24:01,400 --> 00:24:02,920 Speaker 2: what's working exactly. 426 00:24:02,920 --> 00:24:05,360 Speaker 1: And Philip Kim is the other portfolio manager. We've worked 427 00:24:05,359 --> 00:24:08,000 Speaker 1: together fourteen years. I started these quantitative models and then 428 00:24:08,040 --> 00:24:09,800 Speaker 1: he really took it to the next level, and this 429 00:24:10,040 --> 00:24:14,480 Speaker 1: was what has the likelihood of outperforming for the next 430 00:24:14,600 --> 00:24:18,720 Speaker 1: twelve to eighteen months. From a style standpoint, that's how 431 00:24:18,720 --> 00:24:22,159 Speaker 1: we buy us the portfolio. Things could get just too expensive, 432 00:24:22,280 --> 00:24:24,280 Speaker 1: things get too cheaps, but we need to see some 433 00:24:24,760 --> 00:24:28,400 Speaker 1: migration in the opposite direction, and then we buy us accordingly. 434 00:24:28,440 --> 00:24:29,600 Speaker 1: We want to stay in the game. 435 00:24:29,920 --> 00:24:34,240 Speaker 2: What about the Russell three thousand strategy that's not It's 436 00:24:34,280 --> 00:24:37,399 Speaker 2: obviously more concentrated than the Russell, but it's still a 437 00:24:37,400 --> 00:24:39,440 Speaker 2: few hundred stocks. Tell us what goes into that thing. 438 00:24:39,520 --> 00:24:42,919 Speaker 1: Well, we noticed that our just our quantitative factor model 439 00:24:43,000 --> 00:24:47,800 Speaker 1: alone was doing well right beyond just adding the stock 440 00:24:47,880 --> 00:24:50,960 Speaker 1: to buy. So we wanted to start a strategy that 441 00:24:51,000 --> 00:24:55,199 Speaker 1: would add a little bit of excess return versus just 442 00:24:55,240 --> 00:24:58,600 Speaker 1: buying an ETF that was just focused on that factor models, 443 00:24:58,800 --> 00:25:02,639 Speaker 1: but we would diverse five away. The stock risk really intriguing. 444 00:25:02,760 --> 00:25:05,639 Speaker 2: So let's talk a little bit about Slimmon's take, which 445 00:25:05,680 --> 00:25:09,080 Speaker 2: is not only widely read at Morgan Stanley, it's also 446 00:25:09,160 --> 00:25:12,920 Speaker 2: pretty widely distributed on the street itself. Towards the end 447 00:25:12,960 --> 00:25:15,600 Speaker 2: of twenty twenty three, you put out a piece a 448 00:25:15,600 --> 00:25:18,520 Speaker 2: few lessons from the year, and I thought some of 449 00:25:18,600 --> 00:25:21,960 Speaker 2: these were really fascinating, Starting with the S and B 450 00:25:22,040 --> 00:25:26,040 Speaker 2: five hundred has produced a positive return in sixty seven 451 00:25:26,119 --> 00:25:30,560 Speaker 2: of the past ninety three years, the market produced two 452 00:25:30,600 --> 00:25:34,840 Speaker 2: consecutive down years only eleven times. That's amazing. 453 00:25:34,880 --> 00:25:37,040 Speaker 1: I had no idea. Well, I mean, think about it, 454 00:25:37,160 --> 00:25:40,480 Speaker 1: the likelihood over time in any one year the market's 455 00:25:40,520 --> 00:25:44,000 Speaker 1: going to go up, and if it doesn't go up, 456 00:25:44,280 --> 00:25:46,879 Speaker 1: that's irregular, but then to have another year in a 457 00:25:46,920 --> 00:25:50,040 Speaker 1: row is very very irregular. So that's why being in 458 00:25:50,040 --> 00:25:53,680 Speaker 1: twenty twenty three saying hey, it's it's highly likely it's 459 00:25:53,720 --> 00:25:56,720 Speaker 1: going to be a good year, just purely based on 460 00:25:56,760 --> 00:25:59,720 Speaker 1: the odds, and then you layer in that whole recency 461 00:25:59,720 --> 00:26:02,840 Speaker 1: by rear view mirror, and people were way too negative. 462 00:26:03,000 --> 00:26:05,560 Speaker 2: Yeah, At the end of twenty twenty two, the SMP 463 00:26:06,119 --> 00:26:10,399 Speaker 2: peak to troth was down about twenty five percent. You 464 00:26:10,440 --> 00:26:14,320 Speaker 2: point out there were only eight instances since nineteen sixty 465 00:26:14,320 --> 00:26:17,679 Speaker 2: where you had that level of draw down and the 466 00:26:17,840 --> 00:26:21,080 Speaker 2: average one year return was twenty two percent following that. 467 00:26:21,280 --> 00:26:24,320 Speaker 1: So I put out a piece in September of twenty 468 00:26:24,359 --> 00:26:28,320 Speaker 1: twenty two saying market's down twenty percent, you should add 469 00:26:28,359 --> 00:26:30,560 Speaker 1: money down twenty percent, And of course I felt like 470 00:26:30,600 --> 00:26:32,600 Speaker 1: an idiot, you know, a month later, because and then 471 00:26:32,640 --> 00:26:34,720 Speaker 1: the mark was down twenty five percent, and I produce 472 00:26:34,760 --> 00:26:38,040 Speaker 1: a piece saying the average return is just over twenty 473 00:26:38,080 --> 00:26:40,960 Speaker 1: percent if you buy into down twenty five percent, which 474 00:26:41,000 --> 00:26:43,720 Speaker 1: doesn't necessarily mean it stops going down, right, But what's 475 00:26:43,760 --> 00:26:46,280 Speaker 1: amazing about that is, you know what the return off 476 00:26:46,320 --> 00:26:49,720 Speaker 1: that October twenty second low of twenty twenty two was 477 00:26:50,000 --> 00:26:53,560 Speaker 1: thirty something twenty one percent. Oh really, dead right, dead 478 00:26:53,600 --> 00:26:56,440 Speaker 1: on in line. It's uncanny how these things repeat itself. 479 00:26:56,480 --> 00:26:59,119 Speaker 1: And that's Barry again. It goes back to, you know, 480 00:26:59,200 --> 00:27:05,120 Speaker 1: your experience experiences the macro changes, but behaviors don't. That's 481 00:27:05,200 --> 00:27:08,679 Speaker 1: the consistency of this business. And that's what I'm fascinated with. 482 00:27:08,800 --> 00:27:11,760 Speaker 2: Human nature is what it is, no doubt about it. 483 00:27:11,880 --> 00:27:14,360 Speaker 1: And that's what gave me confident that the fun flows 484 00:27:14,560 --> 00:27:17,520 Speaker 1: would turn positive at some point in the fourth quarter, 485 00:27:17,560 --> 00:27:18,800 Speaker 1: because it was a year off below. 486 00:27:19,040 --> 00:27:21,399 Speaker 2: I really liked that be dubious when a stock is 487 00:27:21,440 --> 00:27:26,440 Speaker 2: declared expensive or cheap based on a singular evaluation methodology 488 00:27:26,520 --> 00:27:29,959 Speaker 2: like pe, this is a pet peeve of mine. The 489 00:27:30,080 --> 00:27:33,639 Speaker 2: E is an estimate, it's someone's opinion. How can you 490 00:27:34,359 --> 00:27:38,000 Speaker 2: rely on something, especially from someone who doesn't have a 491 00:27:38,040 --> 00:27:39,240 Speaker 2: great track record of. 492 00:27:39,119 --> 00:27:43,120 Speaker 1: Making it's the I think that's the biggest air investors 493 00:27:43,160 --> 00:27:46,480 Speaker 1: make over time is well, this stock is you know, 494 00:27:46,520 --> 00:27:49,400 Speaker 1: as you said, this stock is cheap or this market. 495 00:27:49,800 --> 00:27:53,640 Speaker 1: Think about Europe mark. Europe has looked cheaper than the 496 00:27:53,800 --> 00:27:56,879 Speaker 1: US for a number of years. The flaw on that 497 00:27:57,240 --> 00:28:00,359 Speaker 1: is the E is a forward estimate, and it's turned 498 00:28:00,359 --> 00:28:02,840 Speaker 1: out that the E for Europe hasn't been as good 499 00:28:02,840 --> 00:28:06,160 Speaker 1: as what's expected, and the E for the US, especially 500 00:28:06,160 --> 00:28:10,240 Speaker 1: the NASTAC has been a lot higher than was expected. 501 00:28:10,280 --> 00:28:13,800 Speaker 1: So the denominator has come up in the US, which 502 00:28:13,800 --> 00:28:16,720 Speaker 1: makes it Pe lower, and the denominator has come down US, 503 00:28:16,880 --> 00:28:18,360 Speaker 1: which made it look more expensive. 504 00:28:18,440 --> 00:28:21,840 Speaker 2: So that's always amazing is if the estimates are wrong 505 00:28:21,960 --> 00:28:26,240 Speaker 2: to the downside, well then expensive stocks aren't that expensive, 506 00:28:26,280 --> 00:28:29,400 Speaker 2: and vice versa. If the estimates are too high, cheap 507 00:28:29,440 --> 00:28:30,960 Speaker 2: stocks really ain't cheap right. 508 00:28:31,119 --> 00:28:34,640 Speaker 1: I watched that, but we also watch revisions, and I've 509 00:28:34,720 --> 00:28:37,440 Speaker 1: learned also from being, you know, cynically in this business. 510 00:28:37,640 --> 00:28:40,080 Speaker 1: Companies don't always come clean right away and say, oh, 511 00:28:40,280 --> 00:28:43,040 Speaker 1: business really bad. It's that they drip out the news. 512 00:28:43,640 --> 00:28:46,520 Speaker 1: Usually one bad quote as follows another bad quote. I mean, 513 00:28:46,560 --> 00:28:50,880 Speaker 1: it's very rare, so be careful that. And analysts are 514 00:28:51,040 --> 00:28:56,280 Speaker 1: slow to adjust their numbers. Anytime someone says, I'm cutting 515 00:28:56,320 --> 00:29:01,200 Speaker 1: my estimates, cutting my price target, but I think it's bottomed. Yeah, 516 00:29:01,480 --> 00:29:02,080 Speaker 1: be careful. 517 00:29:03,000 --> 00:29:06,640 Speaker 2: That's always amusing. I thought this was really very perceptive. 518 00:29:06,920 --> 00:29:09,600 Speaker 2: Over thirty seven years in the investment business, I have 519 00:29:09,760 --> 00:29:14,080 Speaker 2: become convinced that the most money is made when perceptions 520 00:29:14,160 --> 00:29:17,840 Speaker 2: move from very bad to less bad. I love that 521 00:29:17,960 --> 00:29:21,160 Speaker 2: because if you've lived through the dot com implosion, or 522 00:29:21,160 --> 00:29:25,400 Speaker 2: the financial crisis, or even the first quarter of twenty twenty, 523 00:29:25,800 --> 00:29:26,840 Speaker 2: you know how true that is. 524 00:29:27,080 --> 00:29:29,840 Speaker 1: Think about last year. You know it's the old saying 525 00:29:30,160 --> 00:29:33,719 Speaker 1: by Sir John Templeton. Bull markets are born on pessimism, 526 00:29:33,800 --> 00:29:37,240 Speaker 1: they grow in skepticism, they mature on optimism, and they 527 00:29:37,280 --> 00:29:39,840 Speaker 1: die on you for it. Well, we had a bear 528 00:29:39,960 --> 00:29:44,680 Speaker 1: market bottom in October of twenty twenty two. And so 529 00:29:44,760 --> 00:29:48,200 Speaker 1: we came into last year twenty twenty three, with it's 530 00:29:48,200 --> 00:29:50,240 Speaker 1: going to be a hard landing, it's going to be bad, 531 00:29:50,280 --> 00:29:53,880 Speaker 1: and so there's high levels of pessimism. And now as 532 00:29:53,880 --> 00:29:58,000 Speaker 1: you advance into the fourth quarter, fun flows turned positive 533 00:29:58,080 --> 00:30:01,400 Speaker 1: as people realize, well, maybe it wasn't gonna be so bad. 534 00:30:01,800 --> 00:30:04,720 Speaker 1: We've moved into the skepticism phase. So that's why the 535 00:30:04,760 --> 00:30:10,320 Speaker 1: biggest return year is always the first year off the low, 536 00:30:10,800 --> 00:30:14,200 Speaker 1: because that's the biggest pivot and has the least volatility. 537 00:30:14,360 --> 00:30:16,520 Speaker 1: We didn't have a lot of volatility last year, and. 538 00:30:16,960 --> 00:30:20,040 Speaker 2: We saw that in eight oh nine, and we saw 539 00:30:20,080 --> 00:30:23,240 Speaker 2: that in twenty twenty twenty. It was really, it was 540 00:30:23,280 --> 00:30:26,960 Speaker 2: really quite amazing. The flip side of this is also true, 541 00:30:27,120 --> 00:30:31,400 Speaker 2: which is most money is lost when things moved from 542 00:30:31,520 --> 00:30:32,720 Speaker 2: great to just good. 543 00:30:33,440 --> 00:30:37,640 Speaker 1: Well again, if I go back to kind of growth investing, 544 00:30:37,880 --> 00:30:41,400 Speaker 1: it got expensive and the growth rates of companies were 545 00:30:41,600 --> 00:30:44,400 Speaker 1: quite as good. And you know, in twenty twenty two 546 00:30:44,520 --> 00:30:47,840 Speaker 1: and the Fed started raising rates and that was problematic. 547 00:30:47,920 --> 00:30:49,959 Speaker 1: It was no different. It reminded me a little bit 548 00:30:49,960 --> 00:30:52,560 Speaker 1: of the dot com bubble. What brought down the dot 549 00:30:52,600 --> 00:30:55,480 Speaker 1: com bubble is that companies just couldn't report the earnings 550 00:30:55,520 --> 00:30:58,040 Speaker 1: that were expected, and you had plenty of time to 551 00:30:58,080 --> 00:31:00,240 Speaker 1: get out. But the problem is what I said on 552 00:31:00,240 --> 00:31:02,560 Speaker 1: the dot com bubble, people wanted to kept buying these 553 00:31:02,600 --> 00:31:05,360 Speaker 1: stocks as they're going lower because they were you know, 554 00:31:05,520 --> 00:31:09,080 Speaker 1: rear view mirror investing. They were their previous the loves. 555 00:31:09,120 --> 00:31:11,920 Speaker 1: And what's amazing is think about I said before half 556 00:31:11,960 --> 00:31:14,600 Speaker 1: the value managers allount of business ninety nine. By the 557 00:31:14,680 --> 00:31:16,520 Speaker 1: year two thousand and eight, you know what the biggest 558 00:31:16,600 --> 00:31:20,440 Speaker 1: sector of the SMP was financials. They grew from nothing 559 00:31:20,600 --> 00:31:24,200 Speaker 1: to thirty percent of the sp So value worked all 560 00:31:24,240 --> 00:31:26,480 Speaker 1: through the first period until we know what happened in 561 00:31:26,480 --> 00:31:27,560 Speaker 1: Great Financial Crisis. 562 00:31:27,920 --> 00:31:31,120 Speaker 2: It's amazing that muscle memory. When you're rewarded for buying 563 00:31:31,160 --> 00:31:34,880 Speaker 2: the dip for a decade, it's a tough habit to break, exactly. 564 00:31:35,280 --> 00:31:39,640 Speaker 2: So here's another really interesting observation of yours. Whatever the 565 00:31:39,640 --> 00:31:43,520 Speaker 2: hot product is rarely works the next twelve months. 566 00:31:43,760 --> 00:31:50,480 Speaker 1: It's because a hot product invariably pushes oftentimes valuations to 567 00:31:50,640 --> 00:31:52,800 Speaker 1: extreme And one of the things that we got very 568 00:31:52,840 --> 00:31:56,280 Speaker 1: right in twenty twenty three was in twenty twenty two 569 00:31:56,320 --> 00:31:58,600 Speaker 1: bear market, what did people buy into the lows of 570 00:31:58,640 --> 00:32:04,440 Speaker 1: bear market they bought defense stocks. Dividend oriented, low volatility 571 00:32:04,520 --> 00:32:09,640 Speaker 1: type strategies became very popular in twenty twenty two during 572 00:32:09,680 --> 00:32:12,400 Speaker 1: a bear market, and so we could see that the 573 00:32:12,480 --> 00:32:17,880 Speaker 1: defensive factor safety became very expensive. So as we came 574 00:32:17,880 --> 00:32:23,800 Speaker 1: out of this bear market, what lack consumer staples, healthcare utilities, 575 00:32:23,880 --> 00:32:28,680 Speaker 1: all the safe things, so hot products pushes things to 576 00:32:29,120 --> 00:32:34,040 Speaker 1: extreme and that usually, you know, unwinds itself badly. 577 00:32:34,520 --> 00:32:40,320 Speaker 2: Historically, once the FED stops hiking rates, equity rallies last 578 00:32:40,480 --> 00:32:42,760 Speaker 2: longer and go higher than anyone expects. 579 00:32:43,040 --> 00:32:45,520 Speaker 1: Explain the thinking though, So I think it's good news 580 00:32:45,520 --> 00:32:47,720 Speaker 1: for this year, but also worries me about this year 581 00:32:47,880 --> 00:32:50,280 Speaker 1: is if you look at the history of the period 582 00:32:50,320 --> 00:32:53,000 Speaker 1: of time when the FED said we're done hiking till 583 00:32:53,160 --> 00:32:57,800 Speaker 1: we're going to cut, that period does very very well 584 00:32:57,840 --> 00:33:01,680 Speaker 1: for equities, and we're kind of at a juncture where 585 00:33:02,000 --> 00:33:04,800 Speaker 1: we've done pretty well. But if they're not going to 586 00:33:04,840 --> 00:33:08,120 Speaker 1: cut rates until the summer, I think there's more room 587 00:33:08,200 --> 00:33:10,600 Speaker 1: to run for stocks now. The flip side is I 588 00:33:10,600 --> 00:33:13,200 Speaker 1: hear a lot of people talk about when the FED cuts, 589 00:33:13,520 --> 00:33:16,520 Speaker 1: the perception that that's going to be good for equities. 590 00:33:17,120 --> 00:33:19,360 Speaker 1: I'm not so sure about that because if you look 591 00:33:19,400 --> 00:33:23,120 Speaker 1: back in history, when the FED cuts, markets tend to 592 00:33:23,160 --> 00:33:26,120 Speaker 1: go down initially, not up. And you could argue yes, 593 00:33:26,160 --> 00:33:29,400 Speaker 1: but Andrew, that's because usually when they're raising rates, it's 594 00:33:29,400 --> 00:33:33,640 Speaker 1: an economic cycle, and therefore, if they're cutting, there's a 595 00:33:33,720 --> 00:33:37,840 Speaker 1: problem and this time is all about inflation. But what 596 00:33:37,920 --> 00:33:40,600 Speaker 1: worries me is when the Fed does announce the cut, well, 597 00:33:40,600 --> 00:33:45,040 Speaker 1: people say, oh, they know something you don't know. There's 598 00:33:45,080 --> 00:33:47,560 Speaker 1: a problem out there, And I think there's an that 599 00:33:47,640 --> 00:33:52,000 Speaker 1: will increase the anxiety. And so I think that's we're 600 00:33:52,000 --> 00:33:54,080 Speaker 1: in a good period right now. But it worries me 601 00:33:54,120 --> 00:33:56,920 Speaker 1: when they do cut, will it be people start to 602 00:33:56,920 --> 00:33:59,360 Speaker 1: worry about there's a problem in the economy. 603 00:33:59,440 --> 00:34:02,920 Speaker 2: See, I'm a student of Federal Reserve history, and I 604 00:34:02,960 --> 00:34:06,200 Speaker 2: could say with a high degree of confidence, they don't 605 00:34:06,280 --> 00:34:09,040 Speaker 2: know anything that you don't know. They look at the 606 00:34:09,080 --> 00:34:12,880 Speaker 2: same data. They're populated by humans. None of them have 607 00:34:13,000 --> 00:34:18,160 Speaker 2: demonstrated any particular sort of prescience. And if we watched 608 00:34:18,320 --> 00:34:21,279 Speaker 2: the past decade, they were late to get off their 609 00:34:21,280 --> 00:34:24,440 Speaker 2: emergency footing. They were late to recognize inflation, they were 610 00:34:24,520 --> 00:34:27,880 Speaker 2: late to recognize inflation peaked, and now it feels like 611 00:34:27,960 --> 00:34:30,920 Speaker 2: they're late to recognize, Hey, you guys, won you begin 612 00:34:30,960 --> 00:34:34,319 Speaker 2: inflation take a victory lap. They seem to always be 613 00:34:34,719 --> 00:34:37,560 Speaker 2: talking about backwards looking. They always seem to be behind 614 00:34:37,600 --> 00:34:38,000 Speaker 2: the right. 615 00:34:38,280 --> 00:34:41,120 Speaker 1: But I just think the stock market is an emotional beast. Sure, 616 00:34:41,400 --> 00:34:44,000 Speaker 1: And you know, and I looked last year and the 617 00:34:44,040 --> 00:34:47,040 Speaker 1: bears people were too pessimistic. Every time they popped their 618 00:34:47,080 --> 00:34:49,360 Speaker 1: head out of the den, they got stampeded. And so 619 00:34:49,400 --> 00:34:51,120 Speaker 1: they'll have a better year this year. And I think 620 00:34:51,120 --> 00:34:54,919 Speaker 1: it will scare investors, and cynically, I can't help but think, well, 621 00:34:55,000 --> 00:34:57,239 Speaker 1: people missed. A lot of people missed last year, and 622 00:34:57,280 --> 00:34:59,680 Speaker 1: the other started to get back in. And after a 623 00:35:00,080 --> 00:35:03,959 Speaker 1: very low volatility year, there's always more volatile the next year, 624 00:35:04,000 --> 00:35:06,160 Speaker 1: and so it's inevitable it's going to be more. It 625 00:35:06,160 --> 00:35:08,440 Speaker 1: doesn't mean it'll be a bad year for equities, it 626 00:35:08,680 --> 00:35:10,760 Speaker 1: just will have more gut wrenching periods. 627 00:35:10,880 --> 00:35:14,719 Speaker 2: I love this data point. Since nineteen forty, markets have 628 00:35:15,080 --> 00:35:18,800 Speaker 2: always gone up in the year when an incumbent president 629 00:35:19,160 --> 00:35:23,320 Speaker 2: runs for reelection seventeen for seventeen. Now, if we break 630 00:35:23,360 --> 00:35:26,239 Speaker 2: that down, what you're really saying is, hey, if an 631 00:35:26,280 --> 00:35:29,160 Speaker 2: incumbent isn't running, the economy really has to be in 632 00:35:29,200 --> 00:35:33,240 Speaker 2: the stinkaroo when the stock market is following. But anytime 633 00:35:33,280 --> 00:35:37,600 Speaker 2: an incumbent is running typically means we're doing pretty okay well. 634 00:35:37,680 --> 00:35:42,640 Speaker 1: And remember I said, didn't get reelected, just ran for reelection, right, 635 00:35:42,680 --> 00:35:45,640 Speaker 1: And so what happens, and I see it this year, 636 00:35:45,840 --> 00:35:49,120 Speaker 1: is when presidents run for reelection, they want to juice 637 00:35:49,120 --> 00:35:51,399 Speaker 1: the economy. They want the economy going well. And we 638 00:35:51,480 --> 00:35:55,600 Speaker 1: have Joe Biden has in his pocket the Infrastructure Act, 639 00:35:55,640 --> 00:35:58,840 Speaker 1: the Chips Act, in the Inflation Reduction Act, we own. 640 00:35:59,320 --> 00:36:03,919 Speaker 1: The reason why we own industrial stocks is because they 641 00:36:04,000 --> 00:36:07,960 Speaker 1: are telling us that the money is just starting to 642 00:36:08,000 --> 00:36:10,840 Speaker 1: come in from the government and these projects are getting 643 00:36:10,960 --> 00:36:12,840 Speaker 1: just getting off the way. We've seen this with the 644 00:36:12,920 --> 00:36:15,399 Speaker 1: Chips Act. That money has just started poor. That's why 645 00:36:15,440 --> 00:36:18,520 Speaker 1: the market tends do well, because the economy stays afloat 646 00:36:18,600 --> 00:36:19,879 Speaker 1: during a reelection year. 647 00:36:20,040 --> 00:36:22,359 Speaker 2: And the really interesting thing about all this, you know, 648 00:36:22,360 --> 00:36:25,920 Speaker 2: it's funny. The twenty twenties is the decade of fiscal stimulus, 649 00:36:25,960 --> 00:36:30,440 Speaker 2: whereas the twenty tens were monetary stimulus. The first three 650 00:36:30,480 --> 00:36:33,640 Speaker 2: Cares Acts, that was just a boatload of money that 651 00:36:33,719 --> 00:36:36,439 Speaker 2: hit the market, hits the economy all at once. Each 652 00:36:36,520 --> 00:36:41,240 Speaker 2: of the legislation packages you mentioned that's spending over a decade, 653 00:36:41,280 --> 00:36:43,439 Speaker 2: that could be a pretty decent tail wind for a while. 654 00:36:43,640 --> 00:36:45,920 Speaker 1: Very interesting between listening to Wall Street and what you 655 00:36:46,080 --> 00:36:48,239 Speaker 1: listen to companies. And so I'm a company guy. I 656 00:36:48,320 --> 00:36:50,400 Speaker 1: listen to companies, and I'll give you a great example. 657 00:36:50,480 --> 00:36:52,839 Speaker 1: Right now, people think the consumer is getting tapped out, 658 00:36:52,840 --> 00:36:55,480 Speaker 1: but on the costco call the other day, they say 659 00:36:55,520 --> 00:36:59,480 Speaker 1: they see big ticket purchase items reaccelerating. Well, wait a minute, 660 00:36:59,719 --> 00:37:02,359 Speaker 1: I thought, the considering which is it? Which is it? Right? 661 00:37:02,600 --> 00:37:04,879 Speaker 1: And you know, and so the point of this is 662 00:37:04,880 --> 00:37:07,360 Speaker 1: is that I go back to listen to what companies say, 663 00:37:07,480 --> 00:37:10,120 Speaker 1: and I suspect as food inflation starts to come down 664 00:37:10,239 --> 00:37:13,200 Speaker 1: and people have jobs, they actually could start to go buy, 665 00:37:13,400 --> 00:37:14,960 Speaker 1: you know, higher ticket purchases. 666 00:37:15,200 --> 00:37:17,920 Speaker 2: And we've seen some uptick in credit card use, but 667 00:37:18,200 --> 00:37:21,919 Speaker 2: nothing problematic with the ability to service that debt still 668 00:37:22,000 --> 00:37:24,000 Speaker 2: seems to be very much intact. 669 00:37:23,680 --> 00:37:25,680 Speaker 1: Correct, And that goes back to last year. One of 670 00:37:25,719 --> 00:37:27,680 Speaker 1: the reasons. The other reason I was optimistic is I 671 00:37:27,800 --> 00:37:30,479 Speaker 1: kept hearing our companies say to me, I'm being told 672 00:37:30,520 --> 00:37:33,320 Speaker 1: the recessions around the corner, but our business seems to 673 00:37:33,360 --> 00:37:35,120 Speaker 1: be doing with it. We don't see it. 674 00:37:35,160 --> 00:37:38,280 Speaker 2: That's really amazing. So let's talk a little bit about 675 00:37:38,440 --> 00:37:42,160 Speaker 2: who your clients are. You obviously are working with all 676 00:37:42,160 --> 00:37:46,320 Speaker 2: the advisors at Morgan Stanley, but you're managing mutual funds. 677 00:37:46,719 --> 00:37:50,080 Speaker 2: Who are the buyers of those funds? Are they in house? 678 00:37:50,120 --> 00:37:53,440 Speaker 2: Are they the rest of the investing community? Who are 679 00:37:53,480 --> 00:37:54,040 Speaker 2: your clients? 680 00:37:54,120 --> 00:37:57,160 Speaker 1: Yeah? I mean so that's when I left being advisor 681 00:37:57,560 --> 00:38:01,239 Speaker 1: in two thousand and four, I started this group within 682 00:38:01,320 --> 00:38:03,879 Speaker 1: more coan Stailing Wealth Management with the products were only 683 00:38:03,920 --> 00:38:07,040 Speaker 1: available to financial advisors at Morgan Stailing. But when I 684 00:38:07,120 --> 00:38:09,920 Speaker 1: left to go into more Cogan Saliing Investment Management in 685 00:38:10,000 --> 00:38:13,719 Speaker 1: twenty fourteen, the purpose of that was to make my 686 00:38:13,880 --> 00:38:16,799 Speaker 1: products available beyond more con Stailing Wealth Management because I 687 00:38:16,840 --> 00:38:21,960 Speaker 1: was getting calls from consultants and institutional investors saying, how 688 00:38:21,960 --> 00:38:23,800 Speaker 1: do we get access to these funds? And I'd have 689 00:38:23,840 --> 00:38:25,320 Speaker 1: to think, well, you have to go through advisors, So 690 00:38:26,120 --> 00:38:29,080 Speaker 1: that I wanted to broaden out the reach beyond. So 691 00:38:29,239 --> 00:38:32,480 Speaker 1: I would say, we're on a number of platforms. You 692 00:38:32,480 --> 00:38:36,480 Speaker 1: can buy our funds through the self directed route, and 693 00:38:36,520 --> 00:38:40,799 Speaker 1: so we're broading out the distribution. And you mentioned the 694 00:38:40,840 --> 00:38:46,520 Speaker 1: slim and take before that is a methodology that we 695 00:38:46,680 --> 00:38:50,239 Speaker 1: use to reach out to our investor base. Obviously, I'd 696 00:38:50,239 --> 00:38:51,879 Speaker 1: love to talk to each of every one of them, 697 00:38:51,880 --> 00:38:54,680 Speaker 1: but I can't. But I've learned in this business, if 698 00:38:54,719 --> 00:39:00,040 Speaker 1: you communicate in a way that they can understand. I 699 00:39:00,080 --> 00:39:03,480 Speaker 1: don't mean understanding in a bad way, like but writing 700 00:39:03,520 --> 00:39:06,640 Speaker 1: a six page di tribe about why my stocks are 701 00:39:06,680 --> 00:39:08,320 Speaker 1: so great and why the rest of the market stinks, 702 00:39:08,320 --> 00:39:09,800 Speaker 1: no one's going to read that. They put it aside 703 00:39:09,800 --> 00:39:11,360 Speaker 1: and say I'll read it tonight, then they don't. But 704 00:39:11,400 --> 00:39:14,960 Speaker 1: if you can provide short bullets of what's going on 705 00:39:15,200 --> 00:39:19,600 Speaker 1: in the market, why people should be bullish or bearish, 706 00:39:19,719 --> 00:39:21,880 Speaker 1: you provide them with talking points. And that's what we 707 00:39:21,920 --> 00:39:24,120 Speaker 1: really try to do within the firm, but beyond the 708 00:39:24,120 --> 00:39:24,759 Speaker 1: firm as well. 709 00:39:25,200 --> 00:39:27,960 Speaker 2: Yeah, one of the reasons I like Slimmon's take is 710 00:39:28,560 --> 00:39:31,520 Speaker 2: you really boil things down to brass tacks. You're not 711 00:39:31,560 --> 00:39:36,000 Speaker 2: afraid to use third parties in some of your competitors research. 712 00:39:36,680 --> 00:39:39,960 Speaker 2: You cite other people on the street when they have 713 00:39:40,040 --> 00:39:44,560 Speaker 2: an interesting data point or and I very much appreciate 714 00:39:44,640 --> 00:39:47,600 Speaker 2: that because a lot of people sort of take the 715 00:39:47,960 --> 00:39:51,239 Speaker 2: if it wasn't invented here, it doesn't exist to us. 716 00:39:51,600 --> 00:39:54,400 Speaker 1: Yeah, I mean, look, I want to grow the assets, 717 00:39:54,800 --> 00:39:59,880 Speaker 1: I want to perform well, but I value the response 718 00:40:00,160 --> 00:40:02,800 Speaker 1: is from those who sit on the front lines dealing 719 00:40:02,840 --> 00:40:06,720 Speaker 1: with clients every day, because they're the ones that feel 720 00:40:06,840 --> 00:40:09,560 Speaker 1: kind of the emotional side of the business. If you 721 00:40:09,719 --> 00:40:13,040 Speaker 1: sit back in my office and all I'm looking at 722 00:40:13,080 --> 00:40:15,880 Speaker 1: a company and just evaluating whether it's pe is appropriate 723 00:40:15,960 --> 00:40:18,760 Speaker 1: and earnings, you're missing a huge part of this business. 724 00:40:18,800 --> 00:40:23,600 Speaker 1: It's a behavioral business, and so having access to advisors 725 00:40:23,640 --> 00:40:26,600 Speaker 1: and listening to their feedback is so important. 726 00:40:27,080 --> 00:40:31,640 Speaker 2: So you serve on Morgan Stanley's Wealth Management's Global Investment Committee, 727 00:40:32,040 --> 00:40:34,440 Speaker 2: what is that experience? Like, I would imagine that's a 728 00:40:34,640 --> 00:40:38,880 Speaker 2: huge amount of capital and a tremendous responsibility. 729 00:40:38,960 --> 00:40:41,240 Speaker 1: It is a huge amount of capital and it drives 730 00:40:41,440 --> 00:40:46,440 Speaker 1: kind of suggested asset allocation for advisors. They don't necessarily 731 00:40:46,760 --> 00:40:50,080 Speaker 1: have to pursue it that way. My input is obviously 732 00:40:50,160 --> 00:40:52,520 Speaker 1: on the equity side, but they have people in the 733 00:40:53,080 --> 00:40:58,240 Speaker 1: the fixed income, high yield alternatives and they all provide 734 00:40:58,239 --> 00:41:02,600 Speaker 1: inputs into framing and overview. So I'm really I sit 735 00:41:02,680 --> 00:41:05,400 Speaker 1: in more than Stanily Investment Management, but I do provide 736 00:41:05,440 --> 00:41:07,120 Speaker 1: that context and I think they like to have me 737 00:41:07,160 --> 00:41:09,160 Speaker 1: on because I actually have skin in the game and 738 00:41:09,239 --> 00:41:13,200 Speaker 1: I run money for a living, and I'm not always 739 00:41:13,200 --> 00:41:15,239 Speaker 1: there saying you gotta buy growth, you gotta buy value. 740 00:41:15,239 --> 00:41:18,600 Speaker 1: So I'm an agnostic. I'm just trying to figure out 741 00:41:18,600 --> 00:41:19,960 Speaker 1: where the kind of the ball is going. 742 00:41:20,520 --> 00:41:22,680 Speaker 2: So in the old days, you used to speak with 743 00:41:22,760 --> 00:41:26,920 Speaker 2: retail investors all the time as a PM. Do you 744 00:41:27,560 --> 00:41:31,160 Speaker 2: miss that back and forth because there is some signal 745 00:41:31,520 --> 00:41:35,280 Speaker 2: in all of that noise, whether it's fear or greed 746 00:41:35,400 --> 00:41:40,120 Speaker 2: or emotion. How do you operate being arm's length away 747 00:41:40,120 --> 00:41:41,840 Speaker 2: from that. 748 00:41:41,840 --> 00:41:45,640 Speaker 1: That is a big concern I have is losing that access. 749 00:41:45,640 --> 00:41:48,120 Speaker 1: So I still I'm going to I'm speaking an event 750 00:41:48,160 --> 00:41:52,160 Speaker 1: tonight with you know, a room full of advisors, so 751 00:41:52,480 --> 00:41:55,359 Speaker 1: and then you know, we'll get together afterwards and I'll 752 00:41:55,400 --> 00:41:57,880 Speaker 1: listen to what they have to say. So I'm always 753 00:41:57,920 --> 00:42:01,400 Speaker 1: interested in feedback that I get from advised. Obviously, I 754 00:42:01,400 --> 00:42:04,040 Speaker 1: can't spend all day talking on the phone. That's the 755 00:42:04,040 --> 00:42:08,040 Speaker 1: big reason why I left being an advisor was I recognize, hey, 756 00:42:08,320 --> 00:42:10,520 Speaker 1: being advisor, you got to talk to your clients. So 757 00:42:10,600 --> 00:42:13,439 Speaker 1: forth you can't manage money, and we're into you can't 758 00:42:13,480 --> 00:42:15,680 Speaker 1: do both and anyone that things you can't you know, 759 00:42:15,760 --> 00:42:19,000 Speaker 1: it's it's crazy and I really want to develop these models. 760 00:42:19,400 --> 00:42:23,759 Speaker 1: But so so all these communication ways like slim and 761 00:42:23,840 --> 00:42:26,799 Speaker 1: take is a way to be in touch with advisors, 762 00:42:26,920 --> 00:42:31,120 Speaker 1: encourage them. Hey, you think you disagree, send me an email. 763 00:42:31,280 --> 00:42:33,160 Speaker 1: You know, I'm happy to happy to hear from you 764 00:42:33,920 --> 00:42:38,360 Speaker 1: because I think that's very important and really behavioral finance. 765 00:42:39,040 --> 00:42:41,120 Speaker 1: You know, the longer I've been in this busin I've 766 00:42:41,160 --> 00:42:44,240 Speaker 1: been in this business a long time, it's the behavioral 767 00:42:44,360 --> 00:42:49,680 Speaker 1: finance that's the consistency of this business. Geopolitics changes, right, 768 00:42:49,880 --> 00:42:52,440 Speaker 1: but how people react is it's not right. 769 00:42:52,960 --> 00:42:57,520 Speaker 2: You can't control what country is invading what other country, but. 770 00:42:57,560 --> 00:43:00,319 Speaker 1: You can manage your own behavior. And people a hard 771 00:43:00,360 --> 00:43:01,440 Speaker 1: time with that exactly. 772 00:43:01,480 --> 00:43:04,319 Speaker 2: It's really interesting. I know only have you for another 773 00:43:04,360 --> 00:43:07,000 Speaker 2: five minutes, so let me jump to my favorite questions. 774 00:43:07,040 --> 00:43:09,719 Speaker 2: I ask all of my guests starting with what have 775 00:43:09,760 --> 00:43:12,640 Speaker 2: you been screaming these days? Tell us what's been either 776 00:43:12,680 --> 00:43:14,920 Speaker 2: audio or video? What's been keeping you entertained? 777 00:43:15,560 --> 00:43:18,319 Speaker 1: Yeah, so, if I think about my career, no one 778 00:43:18,440 --> 00:43:22,160 Speaker 1: took me aside and said this is how you manage money, right, Like, 779 00:43:22,200 --> 00:43:24,319 Speaker 1: think about it. I learned about fundamental research, I learned 780 00:43:24,320 --> 00:43:28,080 Speaker 1: about quantitative I learn about the practicality of being in 781 00:43:28,120 --> 00:43:32,359 Speaker 1: wealth management. And so I've always researched and watched. And 782 00:43:32,400 --> 00:43:34,239 Speaker 1: what does that do to do with your question is 783 00:43:34,280 --> 00:43:38,600 Speaker 1: I've learned my way to being successful portfolio managers. So 784 00:43:39,000 --> 00:43:42,839 Speaker 1: I'm obsessed with kind of always learning along the way. 785 00:43:42,920 --> 00:43:45,840 Speaker 1: So you know, when I watch podcasts, it's all about 786 00:43:45,840 --> 00:43:50,319 Speaker 1: well or or listen to podcasts or watch you know things, 787 00:43:50,080 --> 00:43:53,840 Speaker 1: it's all how to advance my knowledge base. Now, I 788 00:43:53,880 --> 00:43:55,960 Speaker 1: did play tennis, you know, in college, and so I 789 00:43:56,000 --> 00:44:00,239 Speaker 1: love all those you know, breakpoint first tea, know the 790 00:44:00,280 --> 00:44:03,560 Speaker 1: formula one. I love all those things. But but you know, 791 00:44:03,600 --> 00:44:05,680 Speaker 1: as my wife gets frustrated with me because I'm probably 792 00:44:05,960 --> 00:44:08,839 Speaker 1: not gonna sit down and watch a three hour mindless 793 00:44:08,960 --> 00:44:13,359 Speaker 1: movie because it's kind of like not not advancing, huh. 794 00:44:13,440 --> 00:44:17,040 Speaker 2: Really really interesting to tell us about your mentors who 795 00:44:17,080 --> 00:44:17,640 Speaker 2: helped to. 796 00:44:17,800 --> 00:44:21,200 Speaker 1: Shape your career. So I mean, again, I look at 797 00:44:21,360 --> 00:44:24,640 Speaker 1: points along the way we're in their valuable. When I 798 00:44:24,800 --> 00:44:29,759 Speaker 1: got to Morgan Stanley Byron Ween, who you know, I 799 00:44:29,920 --> 00:44:33,120 Speaker 1: barely knew, but he was the first person that I 800 00:44:33,160 --> 00:44:37,600 Speaker 1: recognized had this very good touch of fundamentals. But also 801 00:44:37,680 --> 00:44:41,839 Speaker 1: the psychology, and so he was a great mentor, even 802 00:44:41,880 --> 00:44:44,880 Speaker 1: though he never really knew me, but listening and reading 803 00:44:44,960 --> 00:44:48,000 Speaker 1: and understanding him was really important. But then I had 804 00:44:48,000 --> 00:44:51,160 Speaker 1: a guy who ran our department named Glenn Reagan, who 805 00:44:51,160 --> 00:44:54,799 Speaker 1: had come from studying money management organizations, and I didn't 806 00:44:54,800 --> 00:44:56,759 Speaker 1: know how to start on money management organizing because it 807 00:44:56,800 --> 00:44:59,120 Speaker 1: was a team within and how do you grow and diversify. 808 00:44:59,440 --> 00:45:03,560 Speaker 1: So there's different people along the way that have really 809 00:45:03,600 --> 00:45:06,400 Speaker 1: shaped me. I came out of Universe Chicago. Gene Fama 810 00:45:06,440 --> 00:45:10,080 Speaker 1: told me buy cheap stocks. But then William O'Neill said, yeah, 811 00:45:10,080 --> 00:45:12,279 Speaker 1: but that doesn't work, and you need to have some 812 00:45:12,400 --> 00:45:15,239 Speaker 1: momentum to you, you know, like he didn't tell cancel. You 813 00:45:15,239 --> 00:45:17,319 Speaker 1: need to know you had a little cancelor, so you 814 00:45:17,400 --> 00:45:21,120 Speaker 1: need to cancel exactly. So there's been people along the 815 00:45:21,200 --> 00:45:24,279 Speaker 1: way that have been great influences on me, that have 816 00:45:24,480 --> 00:45:26,879 Speaker 1: mentioned me at the right time in my correct. 817 00:45:26,680 --> 00:45:28,680 Speaker 2: What are some of your favorite books? And what are 818 00:45:28,719 --> 00:45:29,759 Speaker 2: you reading right now? 819 00:45:29,840 --> 00:45:33,319 Speaker 1: I just finished Same as Ever by Morgan House. Again, 820 00:45:33,440 --> 00:45:36,840 Speaker 1: this concept of behavioral I will eat up at you 821 00:45:36,920 --> 00:45:39,400 Speaker 1: put a behavioral anything about behaviors in front of me. 822 00:45:39,440 --> 00:45:42,080 Speaker 1: I read it so like you know, Richard Thalor or 823 00:45:42,120 --> 00:45:45,959 Speaker 1: misbehaving or you know, think fast and slow, all those 824 00:45:46,000 --> 00:45:49,040 Speaker 1: boasts of books. Daniel Crosby is another one all those books. 825 00:45:49,120 --> 00:45:51,120 Speaker 1: I just but I just finished that and I just 826 00:45:51,200 --> 00:45:53,840 Speaker 1: love it because again, all he spends the whole book 827 00:45:53,880 --> 00:45:56,279 Speaker 1: is about these things. They just don't change over to 828 00:45:56,320 --> 00:46:01,400 Speaker 1: human nature, human human nature. I'll tell you the last story, 829 00:46:01,640 --> 00:46:03,560 Speaker 1: so or I was tell you story I was. I 830 00:46:03,680 --> 00:46:06,359 Speaker 1: was on the floor of the New York Stocks Change 831 00:46:06,360 --> 00:46:09,080 Speaker 1: the day that Russian Vada Crimea and one of my 832 00:46:09,200 --> 00:46:12,600 Speaker 1: stocks was down. My biggest position was down eight percent 833 00:46:12,680 --> 00:46:16,200 Speaker 1: that day. And I said, they don't have any stores 834 00:46:16,239 --> 00:46:19,200 Speaker 1: in Crimea. Why is a stock down? Well, because it 835 00:46:19,239 --> 00:46:21,239 Speaker 1: was geopolitics, well you know. And within three days the 836 00:46:21,280 --> 00:46:24,080 Speaker 1: stock came running back. So it's all it points to 837 00:46:24,239 --> 00:46:29,280 Speaker 1: is sometimes fundamentals dislodge from you know, the stock prices, 838 00:46:29,280 --> 00:46:32,000 Speaker 1: and you have to understand that there's a behavioral element. 839 00:46:32,480 --> 00:46:36,240 Speaker 2: My favorite version of that story was are you familiar 840 00:46:36,280 --> 00:46:40,960 Speaker 2: with Cuba? So Obama announces we're going to normalize or 841 00:46:41,000 --> 00:46:44,640 Speaker 2: start the process of normalizing relationships with Cuba. There's a 842 00:46:44,680 --> 00:46:49,080 Speaker 2: stock that trades under the symbol Cuba, having nothing whatsoever, 843 00:46:49,520 --> 00:46:52,440 Speaker 2: and it runs up twenty percent just on the announcement 844 00:46:52,840 --> 00:46:55,960 Speaker 2: because some algorithm picked up Cuba and bought it and 845 00:46:55,960 --> 00:46:59,320 Speaker 2: off we go. Amazing. All right, our final two questions, 846 00:47:00,040 --> 00:47:02,120 Speaker 2: what sort of advice would you give to a recent 847 00:47:02,200 --> 00:47:06,440 Speaker 2: college grad interested in the career in either investment management 848 00:47:06,760 --> 00:47:07,400 Speaker 2: or finance. 849 00:47:07,840 --> 00:47:10,000 Speaker 1: Yeah, so it's interested to have for kids that are, 850 00:47:10,040 --> 00:47:12,359 Speaker 1: you know, in the process of or have just come 851 00:47:12,360 --> 00:47:14,239 Speaker 1: out of college, or in the process of it. And 852 00:47:14,440 --> 00:47:17,080 Speaker 1: one of the dangers I see today is kids come 853 00:47:17,120 --> 00:47:18,840 Speaker 1: out of school and they think they know exactly what 854 00:47:18,960 --> 00:47:21,759 Speaker 1: they want to do, you know, and then and I'll say, 855 00:47:21,760 --> 00:47:25,320 Speaker 1: you don't know what your capabilities are when you're twenty 856 00:47:25,480 --> 00:47:27,879 Speaker 1: two years old. I mean I was an introvert where 857 00:47:27,880 --> 00:47:30,520 Speaker 1: I was twenty two. I've I've realized in their early thirties, 858 00:47:30,520 --> 00:47:33,919 Speaker 1: I knew how to communicate. So I all say, get 859 00:47:33,960 --> 00:47:36,279 Speaker 1: into if you can get into a firm that has 860 00:47:36,400 --> 00:47:40,520 Speaker 1: a lot of opportunities. You know, today there's less training programs, 861 00:47:40,520 --> 00:47:43,359 Speaker 1: but those types of things with lots of opportunities. Because 862 00:47:43,400 --> 00:47:45,000 Speaker 1: you don't know what you're going to be good at 863 00:47:45,239 --> 00:47:48,000 Speaker 1: and what you're good at, always follow what you think 864 00:47:48,040 --> 00:47:51,040 Speaker 1: you're interested in as long as it makes money, because 865 00:47:51,520 --> 00:47:54,720 Speaker 1: that's ultimately, but you don't know initially. So I always 866 00:47:54,760 --> 00:47:57,640 Speaker 1: encourage people initially, don't come out and say I want 867 00:47:57,680 --> 00:47:59,520 Speaker 1: to do this the rest of my life. You don't know. 868 00:47:59,520 --> 00:48:03,040 Speaker 1: That's too narrow. Try to go to something broad. That's 869 00:48:03,080 --> 00:48:06,160 Speaker 1: the first advice. And I see today we're people too 870 00:48:06,920 --> 00:48:08,160 Speaker 1: narrow in their focus. 871 00:48:08,560 --> 00:48:12,120 Speaker 2: I think that's great advice. People. Most of the folks 872 00:48:12,160 --> 00:48:15,440 Speaker 2: I work with who are very successful, they're not doing 873 00:48:15,440 --> 00:48:17,640 Speaker 2: what they did right out of school. And to imagine 874 00:48:17,640 --> 00:48:21,200 Speaker 2: that that's going to be your career very much misleading. 875 00:48:21,360 --> 00:48:23,920 Speaker 2: And our final question, what do you know about the 876 00:48:23,960 --> 00:48:27,120 Speaker 2: world of investing today that you wish you knew thirty 877 00:48:27,120 --> 00:48:29,400 Speaker 2: plus years ago when you were first getting started. 878 00:48:29,480 --> 00:48:31,920 Speaker 1: Well, I think, you know, thirty years ago, I thought 879 00:48:31,960 --> 00:48:34,839 Speaker 1: it was all about just what's going at the company level, 880 00:48:34,960 --> 00:48:37,759 Speaker 1: and then I realized, oh wait, that doesn't really you know, 881 00:48:37,880 --> 00:48:40,840 Speaker 1: drive most of a stocks return, So you have to 882 00:48:40,960 --> 00:48:46,359 Speaker 1: understand more about the broader implications of companies. I think 883 00:48:46,400 --> 00:48:51,360 Speaker 1: thirty years ago there was less dissemination of fundamental news broadly. 884 00:48:51,520 --> 00:48:55,160 Speaker 1: Today it's much you know, it's much broader, so having 885 00:48:55,280 --> 00:48:59,200 Speaker 1: information access fundamentally is more more difficult. So I think 886 00:48:59,239 --> 00:49:03,560 Speaker 1: the business has changed, but again I go back to 887 00:49:03,719 --> 00:49:07,000 Speaker 1: I think the biggest change in how I think about 888 00:49:07,040 --> 00:49:09,680 Speaker 1: it as behaviorally. I've come to the real estate that 889 00:49:10,160 --> 00:49:13,080 Speaker 1: being an advisor, sitting on the front line. I view 890 00:49:13,160 --> 00:49:17,160 Speaker 1: that as a very key part of what's shaped my career. 891 00:49:17,400 --> 00:49:20,400 Speaker 1: Understanding that, you know, again, it doesn't matter that the 892 00:49:20,440 --> 00:49:23,120 Speaker 1: company didn't have any stories in Crimea it went down 893 00:49:23,400 --> 00:49:26,080 Speaker 1: for you know quite a bit, or your Cuba story. 894 00:49:26,120 --> 00:49:29,239 Speaker 1: I mean that there's just a behavioral element to this 895 00:49:29,960 --> 00:49:33,120 Speaker 1: investing investing business. And look, you know again, I go 896 00:49:33,719 --> 00:49:36,440 Speaker 1: a great example which I've mentioned before, which is it 897 00:49:36,480 --> 00:49:38,680 Speaker 1: didn't matter what gross stocks you're own. In twenty twenty two, 898 00:49:38,800 --> 00:49:41,560 Speaker 1: they all went down right, and so was it. All 899 00:49:41,600 --> 00:49:45,160 Speaker 1: the companies did poorly, no growth, got too overbought, and 900 00:49:45,239 --> 00:49:47,439 Speaker 1: so it had a correction. They all came back last year, 901 00:49:47,800 --> 00:49:52,399 Speaker 1: you know, so understanding kind of those behaviors. I love 902 00:49:52,480 --> 00:49:56,360 Speaker 1: that Warren Buffett quote investors framed their view looking solidly 903 00:49:56,360 --> 00:49:59,320 Speaker 1: in the rearview mirror. Understanding that and having the ability 904 00:49:59,360 --> 00:50:02,960 Speaker 1: to attack against that. That's really what's worked for me 905 00:50:03,000 --> 00:50:03,480 Speaker 1: over time. 906 00:50:04,680 --> 00:50:08,160 Speaker 2: Really fascinating stuff. Thank you Andrew for being so generous 907 00:50:08,200 --> 00:50:11,160 Speaker 2: with your time. We have been speaking with Andrew Slimon. 908 00:50:11,560 --> 00:50:15,879 Speaker 2: He's Managing director at Morgan Stanley Investment Management, where he 909 00:50:16,000 --> 00:50:19,799 Speaker 2: is also lead portfolio manager for the long equity Strategies 910 00:50:19,840 --> 00:50:24,960 Speaker 2: for the Applied Equity Advisors team. If you enjoy this conversation, 911 00:50:25,160 --> 00:50:27,520 Speaker 2: be sure and check out any of the five hundred 912 00:50:27,840 --> 00:50:31,719 Speaker 2: previous discussions we've done over the past nine and a 913 00:50:31,800 --> 00:50:36,360 Speaker 2: half years. You can find those at iTunes, Spotify, YouTube, 914 00:50:36,680 --> 00:50:40,400 Speaker 2: wherever you find your favorite podcast. Sign up for my 915 00:50:40,520 --> 00:50:44,120 Speaker 2: daily reading list at Ridhelts dot com. Follow me on 916 00:50:44,160 --> 00:50:48,040 Speaker 2: Twitter at Rittholtz, follow all of the Bloomberg family of 917 00:50:48,120 --> 00:50:53,799 Speaker 2: podcasts on Twitter at podcasts, and be sure to check 918 00:50:53,800 --> 00:50:58,520 Speaker 2: out my new podcast, At the Money. Short ten minute 919 00:50:58,520 --> 00:51:03,480 Speaker 2: conversations with experts about the most important topics affecting you 920 00:51:04,000 --> 00:51:06,879 Speaker 2: and your money. At the Money can be found at 921 00:51:06,880 --> 00:51:10,280 Speaker 2: the Masters in Business podcast feed. I would be remiss 922 00:51:10,280 --> 00:51:12,200 Speaker 2: if I did not thank the Cracked team that helps 923 00:51:12,200 --> 00:51:15,880 Speaker 2: put these conversations together each week. Meredith Frank is my 924 00:51:16,000 --> 00:51:20,000 Speaker 2: audio engineer. Attika of Albron is my project manager. Shortan 925 00:51:20,080 --> 00:51:24,279 Speaker 2: Russo is my head of research. Anna Luke is my producer. 926 00:51:25,000 --> 00:51:28,560 Speaker 2: I'm Barry Ridolts. You've been listening to masters of business 927 00:51:29,160 --> 00:51:45,080 Speaker 2: on Bloomberg Radio.