Speaker 1: Welcome the Money in Wealth with John O'Bryant, a production
Speaker 1: of the Black Effect Podcast Network and iHeartRadio. Hey, Hey
Speaker 1: is John Hobryant, And this is Money and Wealth. This
Speaker 1: is another exciting week of conversation. As you see, I'm
Speaker 1: wearing a suit today with those who are viewing this
Speaker 1: versus listening to this, that means I've got a proper
Speaker 1: guest in front of me and Michael Milkin and my
Speaker 1: other friends who I don't wear suits around. You can
Speaker 1: interpret that however you like. This is a guy that
Speaker 1: I just met and I was impressed with him so
Speaker 1: much on an initial meeting, probably the only time I've
Speaker 1: ever done an interview with anybody where literally on just
Speaker 1: meeting them versus having a long term relationship, I said,
Speaker 1: you have got to get on tape like you. The
Speaker 1: world needs to hear. And it was a very improbable meeting. Well,
Speaker 1: let me tell you who he is first. Alexander Rupers
Speaker 1: and he will correct me if I'm not pronouncing his
Speaker 1: name precisely correct. Is a founder and chief investment officer
Speaker 1: of one of the most important investment companies in America.
Speaker 1: He is on Wall Street and a running Atlantic investment
Speaker 1: management which has a global impact but based in New
Speaker 1: York City. He has forty two years of experience in investment,
Speaker 1: thirty six years its founder and CEO CIO Chief Investment
Speaker 1: Officer CIO is more important than CEO in his space
Speaker 1: chief executive officer versus chief investment officer at Atlantic, which
Speaker 1: he founded in nineteen eighty eight. He was private previously
Speaker 1: with a couple other corporations and investment houses. Masters of
Speaker 1: Business Administration Harvard Business School in nineteen eighty four, a
Speaker 1: Bachelor of Business Administration at the Netherlands School of Business
Speaker 1: in nineteen eighty It's fluent Dutch, German, French and finance.
Speaker 1: It is the fluency in finance that we want to
Speaker 1: talk about today. I am honored to welcome someone that
Speaker 1: I'm going to call a new friend onto this podcast
Speaker 1: platform so he can educate you and how we make
Speaker 1: smart sexy. Alex, you're a pretty cool guy. I know
Speaker 1: because I read people very well and it's one of
Speaker 1: my few gifts. And do you remember the conversation that
Speaker 1: we had in the Hamptons that stumped me?
Speaker 2: Yeah, I know, I do. It was part of a
Speaker 2: panel for the Mike Milkin Hampton dialogues with the title
Speaker 2: Minister as a force for good. First of all, thanks
Speaker 2: for having me and great to be with you.
Speaker 1: Well, I'm honored to have you with me. I'm honored
Speaker 1: to have met you through Michael Milkin, and I love
Speaker 1: the way you lead. And I don't just even I
Speaker 1: don't just love your cool house. It is exactly my
Speaker 1: style or your very cool wife who is a wonderful
Speaker 1: soul and spirit. I loved your energy and soul and spirit.
Speaker 1: But I really loved our conversation, not just because you're
Speaker 1: normal and being in the world of finance and high finance,
Speaker 1: some people are just arrogant, they're obnoxious, they're self absorbed,
Speaker 1: they're in a different world because I think they're uncomfortable
Speaker 1: in their own skin. That's a whole different podcast on
Speaker 1: spirituality we're not going to do today. But somehow you
Speaker 1: became reasonably comfortable in your own skin. Maybe we'll talk
Speaker 1: about that as it relates to sort of unpacking your background.
Speaker 1: But you and I had two separate conversations. One was
Speaker 1: briefly at your house and another one was at a
Speaker 1: neighbor of yours home, and you laid some philosophy about
Speaker 1: the world down to me, do you remember that conversation.
Speaker 2: It was tied to the subject matter of the panel
Speaker 2: session that we had at my house in terms of
Speaker 2: education to the broader public out there, in terms of
Speaker 2: basic finance and basic running your your household, more importantly
Speaker 2: saving for the future, and how important that is, and
Speaker 2: how that actually feed us right into investment management on
Speaker 2: Wall Street and certainly the way the Atlantic investment that
Speaker 2: we go about picking our stocks. It's really at the
Speaker 2: household level of simplicity. People forget that when they buy
Speaker 2: a car, or dishwasher or a home, they do a
Speaker 2: ton of research. Actually I do too. I would you
Speaker 2: buy a dishwasher for eighty thousand dollars when you can
Speaker 2: buy it for four dollars? This is I'm saying this
Speaker 2: crazy number because when people buy stocks, they don't do
Speaker 2: the homework, and they just fine because somebody told them
Speaker 2: it's a good idea because it's going up, and they
Speaker 2: hurt some key phrase like artificial intelligence, and therefore they
Speaker 2: should be involved and they should just buy it, and
Speaker 2: they just fail to do any analysis. But yet we
Speaker 2: all are value investors. When you're buying a car a dishwasher,
Speaker 2: you have a sense of what it should cost, and
Speaker 2: if you don't, you go on you know, on the website,
Speaker 2: you go to a dealer or a retailer and you
Speaker 2: figure out what do things go for it, take a
Speaker 2: look at them. In the end, you compare to the shop.
Speaker 2: You be educated, and you can get educated in one
Speaker 2: minute or ten minutes or an hour, depending on how
Speaker 2: much time you want to spend on it. And then
Speaker 2: you make a decision if you need one of these
Speaker 2: things based on the quality of the product and the
Speaker 2: product you get it. This is the same way you
Speaker 2: should have approach selecting stocks. If this is what you
Speaker 2: want to do with some of your money. If you
Speaker 2: want to be in the stock market, you can do
Speaker 2: it through an ETF, which is an exchange traded fund.
Speaker 2: Simple way of saying, this is a daily, actively traded
Speaker 2: vehicle that can capture the index or a sector that
Speaker 2: you're interested in, so you don't have to stock pick.
Speaker 2: He just kind of get broad exposure through the ETF.
Speaker 2: Or if you want to pick an individual stock, then
Speaker 2: you need to roll up your sleeves a little bit
Speaker 2: and take a look at you know, what is the
Speaker 2: value and do a little more analysis. But that might
Speaker 2: be too much time and beyond the reach of a
Speaker 2: lot of people and the interest So then an ETF
Speaker 2: kind of makes sense to get broad exposure to the market.
Speaker 2: But I do recalls talking about this area where you
Speaker 2: kind of bring it down to, you know, get basically
Speaker 2: educated and do your homework when you buy stuff you
Speaker 2: need for the home, for your life, and then once
Speaker 2: you have some savings, it certainly behooves you to put
Speaker 2: it in inequities in my view, because if you have
Speaker 2: a long term view, the return on equities has been
Speaker 2: between eight and ten percent on the indexes over a
Speaker 2: long period of time with volatility, but that far exceeds
Speaker 2: the return you've been able to get cash or on
Speaker 2: fixed income investments.
Speaker 1: So I want to back up and as we go
Speaker 1: through this, and you hit a little bit about the
Speaker 1: magic of what I want to talk about, we're going
Speaker 1: to explain as we go things that you never have
Speaker 1: to explain. We're gonna explain what volatility means. We're gonna
Speaker 1: explain what an intex mean. I mean, we shouldn't assume
Speaker 1: there's no home economics class anymore, Alex in school, there
Speaker 1: are people who are highly sophisticated advanced degrees PhDs, masters degrees,
Speaker 1: white and black Latino women higher high who have not
Speaker 1: a clue what we're talking about here because no one
Speaker 1: taught them, and they fake it. They they don't admit
Speaker 1: that they don't understand how money works. A quarter of
Speaker 1: those who make two hundred and fifty thousand dollars a
Speaker 1: year a living Patieck to paycheck, half of those making
Speaker 1: one hundred thousand dollars a year a living Pagett to paycheck.
Speaker 1: Of course, seventy percent of America is living Patchett to paycheck.
Speaker 1: But I'm getting ahead of myself. I want to come
Speaker 1: back to our conversation because what you just said just
Speaker 1: underscores that you're a decent human being. You're concerned about
Speaker 1: the least of these gods children. You understand that even
Speaker 1: though you know we were in the Hampton's where you
Speaker 1: know it is a very privilege. We'd all admit that's
Speaker 1: the very privileged environment. If you own a home there,
Speaker 1: you even blessed with the American dream and the fact
Speaker 1: that you can live in that world. She'll understand another
Speaker 1: world and have compassion for it and empathy for it.
Speaker 1: Says a lot about you and your character and who
Speaker 1: you are. That's the reason that you're on my podcast
Speaker 1: is I think you're a great, a cool guy. It's
Speaker 1: not a smart one, but is what you said to
Speaker 1: me when we talked. You explained to me in mathematical, numerical,
Speaker 1: statistical terms, your business philosophy, your investment in philosophy. Do
Speaker 1: you remember that conversation.
Speaker 2: Well, I'll try to recall the things we talked about,
Speaker 2: but maybe in a nutshell. I mean you already gave
Speaker 2: it in your introduction. I came from the Netherlands, which is,
Speaker 2: you know, a very nice small country in Europe to
Speaker 2: grow up, but I wanted to definitely move out from there.
Speaker 2: This is in the late seventies when the country is
Speaker 2: quite socialist and tax rates for sixty seventy percent, and
Speaker 2: a lot of young folks wanted to get out there
Speaker 2: out of the air. My hope was to come to
Speaker 2: the United States, which I managed to do by applying
Speaker 2: to an MBA program. Applied to a variety of them,
Speaker 2: because lucky to get into a really good one. But
Speaker 2: I came across I remember one way flight on the
Speaker 2: cheap airline fin Air, with two thousand bucks in my pocket,
Speaker 2: ended up in Bingham to New York on snowy January
Speaker 2: fifth and nineteen eighty one and went to the car
Speaker 2: dealership and bought an Oldshmeel Starfire nineteen seventy six. Was
Speaker 2: my pride and joy and that gave me wheels. And
Speaker 2: I had a job which paide you know, uh okay,
Speaker 2: but just paid the bills for the cheap apartment. And
Speaker 2: that's how I got started with a nice job with
Speaker 2: the company that was an industrial machinery maker that helped automate,
Speaker 2: you know, the manufacturing of what made computers and TV
Speaker 2: stick you printed circuit boards. So anyway, a nice couple
Speaker 2: of years there, went on to business school and from
Speaker 2: there I was lucky to find an employee in New
Speaker 2: York in the field that I wanted, which is in finance,
Speaker 2: and learned a bunch of things during the first four
Speaker 2: years in that job that made me come up with
Speaker 2: an idea to start Atlantic at a pretty early h
Speaker 2: I was twenty eight at the time. Wow had a
Speaker 2: good salary in those years after business school, but you know,
Speaker 2: nothing outrageous. Certainly didn't have any start capital for my business,
Speaker 2: didn't any investment capital from either family or friends. All
Speaker 2: I had was experienced six years at this point, two
Speaker 2: years before business school, four years after. I learned a
Speaker 2: few things about analyzing investments and companies in those years
Speaker 2: and decide to take that toolbox, if you will, or
Speaker 2: the lessons I learned formulate specific specific investment strategy which
Speaker 2: we still do to this day, which is a bottom up,
Speaker 2: you know, value analysis kind of what I described earlier
Speaker 2: with your dishwasher in your car analysis. I don't know
Speaker 2: any other way to getting comfortable with an investment other
Speaker 2: than sticking to a known area. You know, I don't
Speaker 2: go into areas you don't understand. In my case, all
Speaker 2: of technology, I don't understand it. I mean, I like
Speaker 2: to use technology products like we all do. But to
Speaker 2: invest in a company that sells technology, whether it's software,
Speaker 2: chips or high tech products, I'm uncomfortable with it because
Speaker 2: I don't know how it will change and how that
Speaker 2: will affect the business. So I want to invest in
Speaker 2: companies that are very analyzable and understandable, that make products
Speaker 2: that we all use and that we see and can
Speaker 2: touch and have been around for a long time. And
Speaker 2: then you pick companies that are leaders in those areas,
Speaker 2: and then you wait until they're cheap enough, and so
Speaker 2: I decided to pick a strategy that is very comfortable
Speaker 2: for me in terms of competence and experience I've had,
Speaker 2: and also to avoid risk areas. You not to go
Speaker 2: into areas like biotech and high tech, which for your audience,
Speaker 2: there's a lot of money to be made in these areas.
Speaker 2: I'm just personally uncomfortable with it, and I think if
Speaker 2: you invest in these areas, you have to take that
Speaker 2: into account, and quite often it's better to go with
Speaker 2: very large companies that we all know, like Apple and Microsoft,
Speaker 2: which are very very big names within the universe. But
Speaker 2: back to the approach that I started with, it was
Speaker 2: basically middle sized industrial products and service companies where we
Speaker 2: could gain an edge by doing our investigation, our study,
Speaker 2: our review of these companies, meeting with managements, and then
Speaker 2: put together a selection of ten or fifteen names that
Speaker 2: we liked for our clients. So that's how Atlantic started
Speaker 2: with that idea. And the idea was that through our
Speaker 2: stock picking and our focus, we could outperform i e.
Speaker 2: Do better than the index. We need to because if
Speaker 2: we don't, we have no right to exist. You can
Speaker 2: simply buy, my clients can buy. Of course, the index
Speaker 2: back to the exchange trade fund that anybody who's listening
Speaker 2: to this call, if you have some savings, you can
Speaker 2: buy an ETF, which is a way to participate in
Speaker 2: the US stock.
Speaker 1: Market's an ETF.
Speaker 2: An exchange traded suns. So it's like a stock, it's available,
Speaker 2: it's liquid. Does a symbol like sp y? Spy is
Speaker 2: the name of the spiders they call them. Is the
Speaker 2: S and P five hundred, which is the largest stock
Speaker 2: index that most pension funds use and many other players
Speaker 2: used just to get access and exposure to the US
Speaker 2: stock market.
Speaker 1: So let's go back here. Because I've started, I've introduced
Speaker 1: you in a very luminous terms which are appropriate. Youve
Speaker 1: gone to the best schools, all that kind of stuff.
Speaker 1: It came from the Netherlands and the Nordic region. And
Speaker 1: people might assume that you again, you had a trust fund,
Speaker 1: you had you had inherited money. And what I heard
Speaker 1: is you came here on a cheap ticket. You had
Speaker 1: you had a few thousand dollars and you went and
Speaker 1: got some The most important thing you got was an education.
Speaker 1: Is that right?
Speaker 2: So far?
Speaker 1: So you did not get a hook up, as we
Speaker 1: say in my neighborhood. You didn't have a trust fund,
Speaker 1: you didn't have daddy's money or grandpa's. It was it
Speaker 1: was just hustle, correct number one? All right, you work
Speaker 1: for somebody else if you got your education to get
Speaker 1: some experience, and then you started in your own investment
Speaker 1: house at twenty eight years Oh is that right? Correct? Okay?
Speaker 1: And that investment house, without getting too much into your business,
Speaker 1: is now several hundred million dollars under management, correct, correct?
Speaker 1: So you really built yourself literally up from nothing to
Speaker 1: become an American success story. Let's just say again, without
Speaker 1: getting in his business, he is a half a billion
Speaker 1: dollars under management in a company that he controls, no
Speaker 1: complicated management structure. He's the chief investment officer and he's
Speaker 1: been running it since he was twenty eight years old.
Speaker 1: I get that right, correct? All right? And it's a
Speaker 1: very simple business plan. Simpleness is that you're very focused. So,
Speaker 1: as I understand your investment philosophy, you've been known as
Speaker 1: your concentrated approach, your value driven investment approach. Talk a
Speaker 1: little bit about how you developed this strategy and how
Speaker 1: it's evolved over the years. And at some point during
Speaker 1: this interview. You're going to go start as we say
Speaker 1: in music, You're gonna start rapping, riffing, and you're going
Speaker 1: to naturally go into that thing. Say the thing you
Speaker 1: told me when I mention that blew me away, which
Speaker 1: was literally just a mathematical, statistical outline of how you
Speaker 1: go about really a science in investing that I thought
Speaker 1: was brilliant. But what is your approach and how does
Speaker 1: you develop and how's it evolved over time?
Speaker 2: Roaches to first define your investment universe. So I've decided
Speaker 2: to be just in public equity. There's many ways to invest.
Speaker 2: People can invest in real estate, people can invest in
Speaker 2: small or bigger companies if they have an opportunity. That's
Speaker 2: called private investing. So I'm only dealing with public investments.
Speaker 2: And then within public investments, I want reasonable liquidity, so
Speaker 2: I don't go for very small companies. But I also
Speaker 2: want access to management in order to talk to them
Speaker 2: about the business and to give suggestions where it makes sense.
Speaker 2: And so we focus in the two billion at the
Speaker 2: minimum to twenty billion dollar sized companies. These are very
Speaker 2: large numbers, of course, but within the public equity market
Speaker 2: it's considered smaller, mid gap large gap is much larger companies,
Speaker 2: as you know, Apple, Microsoft are north of three trillion
Speaker 2: dollar market value, so we don't deal with these companies
Speaker 2: at all. Also, we like to focus on companies where
Speaker 2: we have an understanding of the business and where the
Speaker 2: risk factors of the business are reduced, and so we avoid,
Speaker 2: as I mentioned before, high tech and biotech because of
Speaker 2: the risk of what they're called difficult work technological obsolescence risk,
Speaker 2: meaning that new products can come out that make the
Speaker 2: old products obsolete. We've seen so many technology changes, including
Speaker 2: everybody in the audience, I'm sure we'll be very familiar
Speaker 2: with with all the technological advancements we're all enjoying. Well,
Speaker 2: those things have tremendous impact on the profitability of a
Speaker 2: technology product that is being replaced or being made obsolete
Speaker 2: by the next invention. So we stay away from high
Speaker 2: tech and biotech for those reasons. That's just us. Many
Speaker 2: other people love to invest in those areas, not Atlantic,
Speaker 2: and then we stay away from areas where we find
Speaker 2: transparency to be an issue. And with all due respect
Speaker 2: to banks, there are many many great banks out there
Speaker 2: you can invest in, but we stay away from them
Speaker 2: because we find that the transparency of a bank is
Speaker 2: difficult to assess, and so we don't invest in the area.
Speaker 2: So now you have an idea of these areas. So
Speaker 2: two to twenty billion dollars in size, enough liquidity, ability
Speaker 2: to access management with meetings, and stay away from certain
Speaker 2: risk areas. And within that, we want companies with good
Speaker 2: balance sheets. A balance sheet is at home. You have
Speaker 2: your your assets, you have some cash, you have some
Speaker 2: things you bought, you have a house hopefully, and then
Speaker 2: you have a mortgage that's a liability. So you look
Speaker 2: at the balance sheet. Companies have the same if you will,
Speaker 2: with cash and property and receivables and nayables, et cetera.
Speaker 2: And so we want good balance sheets. You can evaluate that.
Speaker 2: It doesn't take a degree to figure out what's a
Speaker 2: good and a bad balance sheet. It's a quick lance
Speaker 2: at what's publicly available to see if a company has
Speaker 2: affordable amount of debt, not too much debt. And so
Speaker 2: we make sure that our companies have good balance sheets
Speaker 2: and that they've always been profitable. One way to make
Speaker 2: sure of that is you look at a ten year
Speaker 2: history of a company. Again, all of this is easily
Speaker 2: available online, and you can see if they ever lost money.
Speaker 2: A simple idea is, you know, if you take a
Speaker 2: company that builds ships or does coal mining, or is
Speaker 2: a pure chemical commodity company, they are very cyclical. Cyclical
Speaker 2: means that if the economy goes down, their revenues go
Speaker 2: down a lot, then they'll probably lose money. And so
Speaker 2: we really are avoiding deep cyclical companies because we don't
Speaker 2: want the company that ever loses money, even during a
Speaker 2: financial crash like O eight or during the COVID disaster
Speaker 2: off the beginning of twenty twenty. And so we look
Speaker 2: for solid, profitable companies in a familiar area that we
Speaker 2: can analyze or a size that we can get our
Speaker 2: hands around it and meet with management to do further
Speaker 2: due diligence. And then we want to wait, very much
Speaker 2: like patient folks looking for a certain target, we wait
Speaker 2: until the share price falls down. In our lap, we're
Speaker 2: basically tracking a whole bunch of companies. It's not that many.
Speaker 2: I mean, it's obviously in our field. With our business.
Speaker 2: We have computer models, we have screens. Don't expect anybody
Speaker 2: to do that. You can be much more focused than
Speaker 2: we are. Even but then you look for companies that
Speaker 2: you track for a while that you watch the share
Speaker 2: price and what they say, and you look for them
Speaker 2: to fall in your lap, meaning they come to a
Speaker 2: price level, valuation level that is very very attractive, that
Speaker 2: is typically the bottom where they trade. And now we're
Speaker 2: talking about valuation multiples, and I don't want to get
Speaker 2: too far into it, but ideally we buy something at
Speaker 2: ten times earnings, Okay, net earnings, that's a good guide
Speaker 2: for our kind of entry level purchase for a company.
Speaker 2: Ten times net earnings or one times revenues is about
Speaker 2: the area in which we are interested.
Speaker 1: So let me break this down a little bit. So
Speaker 1: if the company had one thousand dollars of net earnings
Speaker 1: net meaning minus the expenses and all of the overages
Speaker 1: that's tied to that particular enterprise, So net the money
Speaker 1: that flows to the shareholders and the management team for
Speaker 1: the company, that is one thousand dollars, you would buy
Speaker 1: it in that case, were as much as ten thousand dollars,
Speaker 1: is that right?
Speaker 2: That is correct?
Speaker 1: Ten times net or in that particular case, that business
Speaker 1: might have ten thousand dollars in revenue, so one time
Speaker 1: one time's revenue, right, yeah, right, correct, And that's part
Speaker 1: of your due diligence for those who listening. Due diligence
Speaker 1: means that he's basically gonna do his research. They're gonna
Speaker 1: unpack this company, gonna un They're gonna they're gonna peel
Speaker 1: the layers back. Transparency means he wants to be able
Speaker 1: to see through to the other side. He doesn't like
Speaker 1: Wall Street, doesn't like fall, He doesn't like a lot
Speaker 1: of noise. They want to be able to be quiet
Speaker 1: and elegant and simple and you can see through it.
Speaker 1: You want glasses that are all fogged up. You know,
Speaker 1: it's not good to drive on a foggy day, not fast,
Speaker 1: So you want to slow it down so you have
Speaker 1: clear view, uh transparency to what you're looking at. And
Speaker 1: he talks about this stuff. By the way, this is
Speaker 1: all He's been very basic. He's breaking this stuff down.
Speaker 1: But they talk about this stuff in such a language
Speaker 1: on Wall Streets. People that are there, people are intimidated
Speaker 1: to read the Wall Street Journal, for God's sakes, because
Speaker 1: it's all these uh terms that no one unpacks. So
Speaker 1: I wanted to slow down for a minute now. He mentioned,
Speaker 1: he ain't even things to fall in his lap. And
Speaker 1: I'm not gonna mention this company's name. Although you can
Speaker 1: listeners can probably figure this out. But today a company
Speaker 1: that I believe is a good company, he's not a
Speaker 1: company he would track us too big market cap wise.
Speaker 1: They had a health situation that I think is episodic.
Speaker 1: In other words, it was something that dealt with the
Speaker 1: public and they had an episode, a little bit of
Speaker 1: an outbreak, and the stock price dipped as a result
Speaker 1: of that. My sense was this was not the company's fault,
Speaker 1: that this was just something could have happened to any company,
Speaker 1: And my sense was it was going to happen once
Speaker 1: and it was done, one and done. It was just
Speaker 1: one of these unfortunate situations the delivery truck or whatever
Speaker 1: or something, and the stock dived. I bought it, so
Speaker 1: that fell in my lap. It's not the company. There's
Speaker 1: nothing wrong with the company. The company didn't do anything wrong.
Speaker 1: It's otherwise a great company, great brand. But I was
Speaker 1: able to get a fifteen percent discount. I believe it
Speaker 1: was because I bought it today, and that stock at
Speaker 1: some point will recover because the cash flows, the profits,
Speaker 1: the brand, the company itself was very strong. So I
Speaker 1: wanted to just sort of give people a bit of
Speaker 1: summary wrap of what some of what you just what
Speaker 1: you just said. And the one thing I think people
Speaker 1: must find fascinating, Alex, is that you say you talk
Speaker 1: to management. Now, when people listen listening to this, are
Speaker 1: the average American or average citizen wherever they're watching this
Speaker 1: in the world. They're thinking about going to the manager
Speaker 1: at the retail store or the grocery store, and they're hard.
Speaker 1: They can't get by the retail clerk they're trying to
Speaker 1: They're trying to get to the manager or a supervisor.
Speaker 1: They have a conversation that person is blocking them. We're
Speaker 1: talking to when you're talking about management. They might find
Speaker 1: it fascinating it here that you literally pick up the
Speaker 1: phone and called the chief executive officer, chief financial officer,
Speaker 1: maybe a board member or two of the whole enterprise,
Speaker 1: and you're able to get these people on the phone
Speaker 1: because they want your investment dollars. Is that right? Uh?
Speaker 2: Correct? But we are very respectful of how the people's signs.
Speaker 2: So unless we are seriously interested to be a large
Speaker 2: investor in that company, we will first go as a
Speaker 2: known institutional investor in the market to the investor relation
Speaker 2: person and I'll have my handless talk to the investor
Speaker 2: relation person. Once we get up to a certain level
Speaker 2: of comfort and conviction through our due diligence, and back
Speaker 2: to your unpacking of that work. Due diligence is everybody
Speaker 2: on this podcast is doing due diligence, just a fancy
Speaker 2: wall set work for doing your homework, you know, checking
Speaker 2: things out. You all do that, looking at your purchase
Speaker 2: of anything you're doing. You check things out, compare prices
Speaker 2: on the shelf. So whatever you're doing, that's due diligence,
Speaker 2: going to the store, kicking the tires. But anyway, we
Speaker 2: get these conversations because we're in in business for a
Speaker 2: long time, we're respectful. We go first through the investor
Speaker 2: relation side, and once we are in a position to
Speaker 2: make this a large investment for us, we will request
Speaker 2: for a meeting, first a call, then a meeting with
Speaker 2: the CFO, and yes we meet with CEOs as well.
Speaker 2: But again you don't We don't want to do that
Speaker 2: unless we are a sizeable investor potentially, and also that's
Speaker 2: one of the reasons we don't want to go above
Speaker 2: a certain size, which is in our case, twenty billion.
Speaker 2: I'm not going to call it. Tim Cook from Apple.
Speaker 2: I have no chance to ever get a meeting with him, frankly,
Speaker 2: because it's a huge company and we're never going to
Speaker 2: be any size investor in Apple. So we want to
Speaker 2: stay with these companies where we have a chance to
Speaker 2: meet with top management. For a normal retail investor, for
Speaker 2: anybody in the podcast, you're not going to get these
Speaker 2: conversations here with a CEO or a CFO of a
Speaker 2: public company, But you don't need to. You can do
Speaker 2: a lot of your homework, a lot of hug due
Speaker 2: diligence by yourself with your friends. Maybe you make a
Speaker 2: little investment group and educate yourself and bring in occasionally
Speaker 2: a podcast like this, or a friend or who is
Speaker 2: in the business to have a chat to have an
Speaker 2: hour long conversation about stocks or the investment world in general,
Speaker 2: and so suggest. But you can do a lot on
Speaker 2: your own looking online, typing in the name of a
Speaker 2: company or incident or the one that you mentioned, which
Speaker 2: a lot of people will know if you would mention it.
Speaker 2: I guess we're not getting into it. That's a perfect example.
Speaker 2: We all know this company, it's a great company, and
Speaker 2: something unfortunate happened. They'll iron it out, and I'm very
Speaker 2: convinced that this particular air pocket you want to call
Speaker 2: that you know where the stock falls like this will
Speaker 2: be corrected over time if it is indeed a one
Speaker 2: off situation, which I think you're right in your assessment.
Speaker 2: But that's the kind of thing where everybody in this
Speaker 2: podcast can pick a number of companies where they are
Speaker 2: customers in their daily life, where they know the company,
Speaker 2: they're inst in the company. Maybe it's five or ten
Speaker 2: that you track a little bit, and you'll find, like yesterday,
Speaker 2: like wow, if this is one of them, look at
Speaker 2: that fifteen percent discount, Just like somebody on the corner saying,
Speaker 2: is this watcher you've been looking at for a year,
Speaker 2: suddenly we're having a off sale. Do you rush over?
Speaker 2: You buy it? Right? Same with stocks, no difference.
Speaker 1: That's right. And uh he mentioned another phrase, folks, He
Speaker 1: mentioned conviction that what he what that translates is unless
Speaker 1: I know I'm really serious. In other words, I've been
Speaker 1: dating you. I mentioned in a dating app we were dating.
Speaker 1: You're cute, you know, you're fine, and I we've had
Speaker 1: a good time, but I'm not sure I want to
Speaker 1: marry you. But if if I propose to you if
Speaker 1: I if I give you a wedding ring, an engagement ring,
Speaker 1: and we set a date, well, I've got conviction. And yes,
Speaker 1: I may not get to the maybe something might have happened.
Speaker 1: Two percent of the time you don't get to uh
Speaker 1: through the ceremony because something I don't know, something weird happens.
Speaker 2: Uh.
Speaker 1: But most times, when you get to that point and
Speaker 1: you got an engagement ring and you got a date,
Speaker 1: there's a lot of conviction there. You told the family,
Speaker 1: everybody's all invested in this thing. You have a comfort.
Speaker 1: So when he's comfortable, when he's got that level of
Speaker 1: con fiction, then he might go beyond the investor relations person.
Speaker 1: Now I'm gonna tell you each a little bit of
Speaker 1: a secret here, and he wouldn't even Now Alice is
Speaker 1: so sophisticated in the way he operates, he wouldn't think
Speaker 1: about this. But I'm sure you would agree with it.
Speaker 1: If you want to have some fun with your kids
Speaker 1: at Christmas, about two months to two months before Christmas,
Speaker 1: go and try and find buy one share of stock
Speaker 1: and get one get one of these these uh, these
Speaker 1: companies that give you certificates and they'll they'll frame them
Speaker 1: for you and send it to your companies to do that.
Speaker 1: They don't. These companies don't don't don't do physicals share
Speaker 1: certificates anymore, most of them. But you can get a
Speaker 1: company to send you a certificate. I have one and
Speaker 1: put it on the wall. Give your kid a share
Speaker 1: stock for Christmas. Anyway. The point of that is once
Speaker 1: you own one share stock of any publicly traded company.
Speaker 1: When you talk about public equities, he mean publicly traded company.
Speaker 1: When you have one share of stock, you have the
Speaker 1: rights to all their financials. Hello, So you get to
Speaker 1: you get to look at into the under their hood
Speaker 1: of any company that's publicly traded with only one share
Speaker 1: of stock. Now, uh, the investor relations if you want to.
Speaker 1: I shouldn't tell you this, but because not only by
Speaker 1: writing letters to boards and members and the board directors
Speaker 1: you get upset with some company, you have a real
Speaker 1: serious issue. Now much about suing them. You just want
Speaker 1: them to know that there they could do better. And
Speaker 1: you can't find the board of directors anywhere. You can't
Speaker 1: find the management level either. It's a big retail company.
Speaker 1: Just go down on the website to investor relations. His
Speaker 1: investor is something right when you go there and you
Speaker 1: open that up. My god, it's like opening the hood
Speaker 1: of a Ferrari. Right, everything's in there, including the board
Speaker 1: and their most recent financial report. So I just wanted
Speaker 1: to he'll so he goes and deals with the investor
Speaker 1: relations departments out of respect, and he only goes one
Speaker 1: step further if he's got conviction. Did I get that right, Alex.
Speaker 2: It's one hundred percent correct. And again it goes back
Speaker 2: to I want to see your personal life. We went
Speaker 2: to the dishwasher example, but went through the you know, girlfriends, engagements,
Speaker 2: wife example. One needs to in any development in life,
Speaker 2: you know, develop conviction that the decision you're going to
Speaker 2: make is the right one. And there's no shortcut to
Speaker 2: doing your homework. And it's just time and effort. And
Speaker 2: depending on how big the decision or how big the
Speaker 2: purchase is, if it's something material, the more you need
Speaker 2: to roll up your sleeves you have a T shirt on.
Speaker 2: You just leave it the way it is. But you
Speaker 2: get busy and you talk to people, and you walk
Speaker 2: around blocks and you go to stores and or you
Speaker 2: in the case of a personal situation, you talk to
Speaker 2: more people. You talk spend more time together, you talk
Speaker 2: to their friends, meet the family, et cetera, et cetera,
Speaker 2: all the obviousself.
Speaker 1: When I first started investing, I would buy what I
Speaker 1: what I liked. You know, I like Walmart. I'd BUYT Walmart.
Speaker 1: I like whatever the company was, Uh, you know, whatever
Speaker 1: I was wearing, whatever I was using. I looked around
Speaker 1: my household, like what am I using? What am I wearing?
Speaker 1: What do I trust? And you know, Apple was an
Speaker 1: easy one. We Alrea talked about Tim Cook. I buy
Speaker 1: I buy Apple stock, whatever it is. If I liked it,
Speaker 1: my friends like it, and we're comfortable with it, probably
Speaker 1: a good, pretty good retail investment. And by the way,
Speaker 1: anybody listening to this, if you have a four one
Speaker 1: K plan an investment account, if you work for somebody
Speaker 1: and they're matching your four one K, get as much
Speaker 1: of that as you can because that's free money, right
Speaker 1: as as as jay as jay Z would say, I'm
Speaker 1: gonna give you a main dollars worth of worth of
Speaker 1: worth of advice or nine ninety nine. This is no
Speaker 1: ninety nine because you're not paying a dime for it.
Speaker 1: But if your employer is matching your four in one K,
Speaker 1: that is free money. Now before we get on to
Speaker 1: I'm gonna run through the other questions pretty quickly because
Speaker 1: I because I want to make sure you have a
Speaker 1: chance to answer each one of them. But on this
Speaker 1: investment philosophy, which I think is so important, do you
Speaker 1: have a numerical statistical numeric? Is there a model that
Speaker 1: you use for your investment? Something you wanted to share?
Speaker 2: We use first to find the companies. We use pretty
Speaker 2: sophisticated screens that are available. You know, Bloomberg is a
Speaker 2: well known terminal we used for screening. But having done
Speaker 2: this for so long, we pretty much know all the targets.
Speaker 2: We have wake up calls literally on prices and valuation
Speaker 2: levels that bring them to our attention once they come to.
Speaker 1: Our What a wake up call, I'm sorry, wake up calls.
Speaker 2: Let's say take a stock of a company that you
Speaker 2: just talked about without the name, but that just fell down.
Speaker 2: Let's say the stock was at one hundred bucks went
Speaker 2: up to one hundred and ten. You're interested, but you said,
Speaker 2: you know, I'm really insted at eighty bucks, and so
Speaker 2: you put a price limit in your computer. You can
Speaker 2: do this actually at home fairly quickly. Of the various
Speaker 2: financial websites, and you can put a like a wake
Speaker 2: up call. Okay, let me know when the stock reaches
Speaker 2: eighty you know, boom. So you don't have to watch
Speaker 2: the news all the time. You just look at your computer.
Speaker 2: And I said, look at this, it's like motting a
Speaker 2: fishing line out and a little bellow went off. I
Speaker 2: think there's a hook there. Let's start, you know, yanking
Speaker 2: on that line and see what's on the other end
Speaker 2: of it. So that's that's it. So you do the
Speaker 2: alerts are important, and then once we are alerted to
Speaker 2: the situation, we will roll up our sleeves the good
Speaker 2: old homework and due diligence we talked about. And yes,
Speaker 2: we have financial models. So now we have taken and
Speaker 2: downloaded all the financials that you can get from the
Speaker 2: company website, from the financials in it, you know, Excel
Speaker 2: spreadsheets and out get sophisticated. We do modeling. We look
Speaker 2: on we make estimates as to where the business is
Speaker 2: likely to go. These estimates are determined based on our
Speaker 2: conversations with the management, with other people that know the company,
Speaker 2: with competitors, and then we come up with predictions and
Speaker 2: based on the predictions and based on where the share
Speaker 2: price is. We have very set discipline as to what
Speaker 2: valuation level we're willing to buy. This. Back to the
Speaker 2: example used earlier, Let's make it a restaurant. They can
Speaker 2: relate to a restaurant. Let's say in the neighborhood, a
Speaker 2: restaurant that you know around the corner becomes available for sale.
Speaker 2: Let's say they do a million dollars in revenues a
Speaker 2: year and they make one hundred thousand dollars in profit,
Speaker 2: and they say it's available, and you know, maybe you
Speaker 2: don't have the money, but maybe a group of you
Speaker 2: are inserted in buying into it because it's such a
Speaker 2: great place. You all go there anyway, and maybe you
Speaker 2: can run it better. And he said, okay, how much
Speaker 2: does the seller, the restaurant owner want for this. Let's
Speaker 2: say he says twenty million dollars. He said, you've got
Speaker 2: to be out of your mind. That's twenty times revenues.
Speaker 2: That is two hundred times earnings. It's crazy to go away.
Speaker 1: So this is a great example. Everybody, listen, now, listen,
Speaker 1: he just gave you. By the way, everybody's in the
Speaker 1: private equity business, if you're investing in your cousin's nail
Speaker 1: salon for five hundred dollars. That's private equity, private equity, right,
Speaker 1: So he's just doing it at a much sophisticated with
Speaker 1: higher level. So if somebody's coming to you and they
Speaker 1: want to sell you a business or invest in a business,
Speaker 1: he just gave you a formula and he told you
Speaker 1: what's ridiculous and what's crazy when it falls outside of
Speaker 1: that box. He told you, no more than ten times
Speaker 1: net is a net income or net. I want to
Speaker 1: share you it is your.
Speaker 2: Times net income and maybe one times revenue is a
Speaker 2: good measure for a pretty stable, nice business. I'm not
Speaker 2: talking about a high growth business. I'm talking about it.
Speaker 2: Say a restaurant business has this good solid has been around,
Speaker 2: and if they offer you a debt for sale for
Speaker 2: like a million dollars, that's reasonable. Now we can talk
Speaker 2: about it. They say twenty million dollars, it's a joke.
Speaker 2: Five million dollars is a joke. The funny thing is
Speaker 2: in the stock market, people are buying things that are
Speaker 2: based on what their friends told them at a barbecue
Speaker 2: or what they've heard on TV as something great about
Speaker 2: technology or artificial intelligence, and they just buy it. I
Speaker 2: mean to put it in perspective, the greatest company everybody
Speaker 2: talks about these days is Navidio, which makes the plumbing
Speaker 2: for AI. You know the chips that already needs that, Microsoft, Apple, Amazon, Google,
Speaker 2: These guys need it for their AI artificial intelligence. So
Speaker 2: in the videos, trading at three and a half trillion dollars,
Speaker 2: which is about twenty five times revenues. Now that's ridiculously expensive.
Speaker 2: I wouldn't touch it. But of course it's done very well,
Speaker 2: and it continues to go up because more and more
Speaker 2: people want to buy it, and they do perform very
Speaker 2: very well. But it is extremely expensive and nothing can
Speaker 2: go wrong in terms of the growth slowing down or
Speaker 2: anything else. So that is to me speculative. And yet
Speaker 2: it's one of the largest market caps in the world
Speaker 2: if in fact, it's number two right now buying Apple.
Speaker 2: And so I challenge, or I ask everybody, do your
Speaker 2: homework when it comes to stock market investing, as well
Speaker 2: as you do your homework when you buy a house,
Speaker 2: a car, or a dishwasher, or if you're offered an
Speaker 2: opportunity to invest in a nail salon or a restaurant
Speaker 2: around the corner. Compare it the purchase pride or whatever
Speaker 2: they're asking or whatever the stock is, trading it against
Speaker 2: the total revenues and against the earnings that they have
Speaker 2: and then assess if this makes any sense to you.
Speaker 1: So one thing that I'm going to push back on
Speaker 1: Alex and he won't mind it because he's he has
Speaker 1: no self esteem problem. What is Alice already knows. One
Speaker 1: of the reasons why people are Google gaga about Nvidia
Speaker 1: and why it's it doesn't make any sense on the numbers,
Speaker 1: is at the moment they're perceived to be the primary backbone.
Speaker 1: He already said it for artificial intelligence, which is a new,
Speaker 1: the new, the new you know, uh d jure sexy
Speaker 1: investment and opportunity for the next five years. And it's
Speaker 1: not twenty of them, there's not one hundred of them.
Speaker 1: It's not a restaurant around the corner. It's not a
Speaker 1: nail saloon around the corner. There's there's there's not even
Speaker 1: an attorney. There's hundreds of attorneys, thousands, hundreds of thousands
Speaker 1: of attorneys, law firms. It's one of these, so you
Speaker 1: can decide whether you want to invest in it or not.
Speaker 1: But that's why there's a lot of hype around this
Speaker 1: particular investment, which is why he calls it speculative, which
Speaker 1: is correct. Bitcoin could be the bitcoin, sorry, cryptocurrency could
Speaker 1: be the same kind of conversation. You can get lucky
Speaker 1: with a bitcoin, but you might get unlucky with the
Speaker 1: thousands of other cryptocurrencies which are completely speculative. So just again,
Speaker 1: it comes back to do your homework. You know, I've
Speaker 1: about Alex being this very successful guy, and he's got
Speaker 1: this beautiful home I was in. He doesn't spend time
Speaker 1: in most of those rooms of his house, as I
Speaker 1: don't either. We spend time a lot of time in
Speaker 1: one room, our office, and it's it's late in the
Speaker 1: day in Manhattan. He's in his office. He's not at
Speaker 1: I don't know what your perception as a successful people
Speaker 1: look at that desk behind them. But those who are
Speaker 1: watching this on video, after you listen to it on
Speaker 1: the audio, and if you listen to an audio, go
Speaker 1: and watch this clip also in video. Behind his desk
Speaker 1: is nothing but papers, documents, stacks of analysis and best
Speaker 1: I can tell, there's a highlight marks on the different reports.
Speaker 1: If I'm seeing this properly, and there's a pen that's yours.
Speaker 1: There's a newspaper, there's a Wall Street Journal. You're looking
Speaker 1: at the market for today. There's a remote for the TV.
Speaker 1: You're looking at CNBC or some are Bloomberg or whatever
Speaker 1: to see what's going on in the markets. In other words,
Speaker 1: this guy's not relying on other people and sit around
Speaker 1: Struggan cocktails, whatever your perception is of highly successful people.
Speaker 1: This guy is hustling and he's working. I have that right, Alex,
Speaker 1: Are you working today?
Speaker 2: I think so? You got it right? Absolutely?
Speaker 1: So those were those documents behind you. That's not your assistant,
Speaker 1: that's not your chief of staff, that's your desk. Is
Speaker 1: that right?
Speaker 2: That's correct? And you're looking at a whole bunch of
Speaker 2: screens on this side, including the one you and I
Speaker 2: are talking on. And when we're done, I turn around
Speaker 2: to go back to my reports that I'm reading on companies,
Speaker 2: cashw models and papers, et cetera.
Speaker 1: So you don't trust anybody else to do that analysis
Speaker 1: one investing hundreds of millions of dollars or even tens
Speaker 1: of millions, you make sure, as chief investment officer and
Speaker 1: a CEO, you do it yourself. Is that right? Yeah?
Speaker 1: So let's now cut to the current situation, the current
Speaker 1: environment we we you know, there's there's political, socio instability
Speaker 1: and change and environmental and the world's going we perceive
Speaker 1: bonkers these days a little bit. But what do you
Speaker 1: what's your view on the current economic environment, and what's
Speaker 1: your advice for aspiring investors on on opportunities if you
Speaker 1: want to call it that broadly defined for the future.
Speaker 2: I think, first of all, we're all very lucky to
Speaker 2: live in the United States of America, number one democracy
Speaker 2: to capitalistic society. It's the American dream. A lot of
Speaker 2: people want to come here. In fact, a lot more
Speaker 2: people want to come here then we can, you know,
Speaker 2: reset at any given time. But I came here. I'm
Speaker 2: an immigrant and I left you know, beautiful Europe if
Speaker 2: you will. But also I came here for opportunity. Many
Speaker 2: people do the same thing, and so we're all lucky
Speaker 2: to be in a country where you can educate yourself,
Speaker 2: you can work yourself up, even if you have modest
Speaker 2: means or very little means, you can. Really there's a
Speaker 2: place everywhere for a job, for learning and for advancing yourself.
Speaker 2: The Keith thing is be disciplined, be focused, try to
Speaker 2: avoid taking on debts where you can first pay down
Speaker 2: debt as much as you can, and then try to
Speaker 2: save and always try to put somebody away. When you
Speaker 2: get going and things are going well, always say, but
Speaker 2: the sooner the better. The younger you are, the better.
Speaker 2: And if you work hard and you get the controllable
Speaker 2: variables right, So what is a controllable variable. You can't
Speaker 2: control you know what the weather will be like, you
Speaker 2: can't control what all the others will do. What you
Speaker 2: can control is what you can do. You can be
Speaker 2: on time, you can be reliable, you can be trustworthy,
Speaker 2: you can be hard working. These are the things you
Speaker 2: can control. Always control them. Don't mess up, don't you know?
Speaker 2: Be reliable ninety percent of the time. Be reliable hundred
Speaker 2: percent of the time. The example I use is when
Speaker 2: somebody comes for an interview in a nice white shirt
Speaker 2: and there's a pizza staying right here. It will be
Speaker 2: where the eye of the potential employer will go. Even
Speaker 2: though nine your shirt is perfectly white, there's a pizza
Speaker 2: staying and kind of wonder the employer wonders, like, why
Speaker 2: didn't you remove that? And why don't you change your
Speaker 2: shirt before you got there, same with the typo in
Speaker 2: your resume. These are controllable variables. You need to get
Speaker 2: that stuff right, spend the extra time to review stuff,
Speaker 2: to be on time. And once you have a job,
Speaker 2: you know, be on time, be reliable, work hard, do
Speaker 2: the right thing, and be patient. You know, it takes
Speaker 2: three years to get three years of experience. It's that's
Speaker 2: very obvious. But people, particularly in this generation, think they
Speaker 2: want it all right now, and it takes a while.
Speaker 2: You know, if you look at my business started at
Speaker 2: twenty eight. The first three years I didn't do very
Speaker 2: well at all. I had to borrow money for my
Speaker 2: brother after three years in business to pay the rent.
Speaker 2: He charged me ten percent.
Speaker 1: Very nice of him, your brother, I love it.
Speaker 2: I'll mind you. At the time industry were about eight percent,
Speaker 2: so you figured he needed to charge your premium. You know,
Speaker 2: if there junk at Mike Milkine might relate to that.
Speaker 2: So I bought ten grant and this is now, I'm
Speaker 2: thirty one. I got my MBA. I've been working for
Speaker 2: other people and I was to spend whatever savings I
Speaker 2: had on the first two or three years to keep
Speaker 2: my business going. And the business didn't go well. I
Speaker 2: had setbacks, and I just stayed with it and persistence.
Speaker 2: You know, if you if you stay with something that
Speaker 2: makes sense, whether it's a job or a new business
Speaker 2: that you're trying, if you know it makes sense and
Speaker 2: you know you didn't get the breaks you wanted or
Speaker 2: the tailwind that you're looking for, stay with it, you know,
Speaker 2: keep at it. I mean, I'm certainly an example of
Speaker 2: that where you know, ten years into it, finally things
Speaker 2: started to go my way, and even then you got
Speaker 2: to watch it. So stay paranoids, meaning have the fear
Speaker 2: of failure as an entrepreneur. Always have the fear of
Speaker 2: failure that will keep you from falling into the complacency trap.
Speaker 2: Never get complacent unless you step out of the game.
Speaker 2: Then step out. And if you've achieved everything you wanted
Speaker 2: and you want to just play golf or sit on
Speaker 2: a bench or go for walks, that's fine too. But
Speaker 2: then you can be complacent. But if you're alive, meaning
Speaker 2: like we're live on this podcast, if you're alive in
Speaker 2: a business or in a career, never get complacent. Always
Speaker 2: have the fear of failure. Be one hundred percent reliable,
Speaker 2: one hundred percent on time, and these are the controllable variables.
Speaker 2: Then you can still have set backs, but you can
Speaker 2: also put yourself with that in a position to suddenly
Speaker 2: reap the benefits of your experience, your patience to make
Speaker 2: some real good progress and money when the tide turns
Speaker 2: your way.
Speaker 1: So I want people as we wrap this up, I
Speaker 1: want the audience to listen very carefully, rewind this and
Speaker 1: listen to the last twenty minutes of this podcast. In particular,
Speaker 1: I really want you to get into this and I
Speaker 1: want you to remember what he just said. Now, controllable
Speaker 1: variables are things that are within your obviously control. I
Speaker 1: would say that this way, most success is tied to
Speaker 1: good habits and execution. Good habits and execution execution means
Speaker 1: doing things. Good habits is having a set of standards
Speaker 1: about things that are consistent and do that consistently over time,
Speaker 1: which is another way of what he just said. My
Speaker 1: wife Shascher, would say that most behavior is learned behavior.
Speaker 1: So you want to be nosy about everything, but certainly
Speaker 1: the right things. When Alex and I met, one thing
Speaker 1: was obviously about both of us. We not talked about
Speaker 1: any of this, by the way, beforehand, we were both
Speaker 1: nosy I mean, God gave you two ears in one mouth.
Speaker 1: If you listen twice as much as you talk. I
Speaker 1: was nosy about his business in his life. He was
Speaker 1: nosy about my business's life. He was so nosy about
Speaker 1: inclusive economics, inclusive capitalism. We hosted the meeting in his house.
Speaker 1: That's how nosy he was. And he didn't hold them,
Speaker 1: host the meeting and leave. He holds the meeting a
Speaker 1: set in the audience with a notepad to take notes,
Speaker 1: because he wanted to learn. Who knows whether he's going
Speaker 1: to end up investing in a business that that may
Speaker 1: be tied to an underserved neighborhood or community, their huge
Speaker 1: market opportunity. But he, whatever his reason was, he was
Speaker 1: just passionate about education. Something else that wants you to
Speaker 1: notice again, I'm not gonna get any of his business
Speaker 1: about net words, none of your business either. Let me
Speaker 1: say let me just say this. My man has done
Speaker 1: very well for himself. He's very comfortable. Now. If he
Speaker 1: walked down the street, you would never notice he's got
Speaker 1: a We didn't. We didn't talk about this. We can
Speaker 1: talk about our wardrobe. My guess is how he dresses
Speaker 1: every day. He's got a powder blue shirt maybe light gray,
Speaker 1: light blue. He's got it buttoned up to the second button. Uh,
Speaker 1: he probably has no fancy jewelry on, no watch or anything.
Speaker 1: I'm sure he doesn't have any fancy rings that stuff.
Speaker 1: I want me to see your hands, Alex, I just
Speaker 1: I'm just curious. Let me see.
Speaker 2: Okay, here we go.
Speaker 1: No, it's a beautiful if you don't watch it. But
Speaker 1: he's got his wedding ring on. What's the other hand
Speaker 1: on the other hand or ring?
Speaker 2: This is like, you know, no commercially but uh, a
Speaker 2: ring front that's.
Speaker 1: Look at that. No jewelry right now, He's had nothing
Speaker 1: and there's nothing. He wants you to see him. He
Speaker 1: wants you to focus. If you're an investor, if you
Speaker 1: think about coming in his office and giving him some
Speaker 1: of your money to invest, he doesn't want you to
Speaker 1: focus on that other stuff. He wants you focused on him.
Speaker 1: He also doesn't want you to think that if you
Speaker 1: give him some money, he's going to waste that money
Speaker 1: on stupid stuff. So it's a very simple mestha. So
Speaker 1: you don't so the creative class that's listening to this,
Speaker 1: you get paid for being loud. It's jewelry it's sunglasses
Speaker 1: at night? Is you know broach?
Speaker 2: Is?
Speaker 1: Is you know? Is fancy cars? I get it, I
Speaker 1: get it. But if you want to know from cashing
Speaker 1: the check to writing it, and you want to become
Speaker 1: from a consumer to an investor, if you want a
Speaker 1: job at if you're if you just forget the creative,
Speaker 1: those are successful and creative, God bless you. But if
Speaker 1: you want to go to working at an investment house,
Speaker 1: don't walk in his office or anybody else's office with
Speaker 1: a lot of stuff on. That distracts people from the
Speaker 1: one thing they're buying. Your brilliance, your intellect, your good habits,
Speaker 1: the things he just mentioned. He wants to folks he
Speaker 1: wants to So you're going to be focused on his
Speaker 1: clients advancement period. It's very simple, good habits executed over time. Alex,
Speaker 1: Did I get in that wrong?
Speaker 2: No? You got it all right.
Speaker 1: So let's uh, let's wrap this up. Let me ask
Speaker 1: as a closing question, people are listening to this now
Speaker 1: that they feel more successful. I'm so they feel more
Speaker 1: comfortable that they can approach somebody like you, that you're
Speaker 1: you're talking the language they understand. You've demystified Wall Street
Speaker 1: and finance. And by the way, just for those who
Speaker 1: don't know, an investment house like Alex's is not FDI
Speaker 1: and CE ensure it like a bank would be. A
Speaker 1: bank is the only basically government backed business in America,
Speaker 1: backed by the full faith and credit of the federal government.
Speaker 1: You don't care which bank you put the money in
Speaker 1: is guarantee. When he what he's done is much more
Speaker 1: much difficult, much more difficult because he had to get
Speaker 1: private capital to invest in an investment house on theoretically
Speaker 1: is at risk. And so what he's done is he's
Speaker 1: got to be very very precise and very very clear
Speaker 1: on the numerical the numbers of the KPIs key performance indicators,
Speaker 1: because he's gonna be judge on everything. He can't afford
Speaker 1: a moment of mistake. So it's really create what he's built.
Speaker 1: As you're looking, Alex at the future twenty twenty five,
Speaker 1: twenty twenty six, people here listen. They have become more comfortable,
Speaker 1: They feel like they know you a little bit. What
Speaker 1: advice do you have for them about are there any
Speaker 1: we're the last term we're gonna unpack to day. Is
Speaker 1: is it a is it a bullish environment? Or a
Speaker 1: bearish environment. Can you please explain what that means? And
Speaker 1: if you believe it's an environment that's opportunistic, meaning there's
Speaker 1: opportunity in all the chaos. Are there two or three
Speaker 1: or four categories areas industries that you encourage people to
Speaker 1: look at. And then I have one last question for
Speaker 1: you before we wrap.
Speaker 2: Okay, So bullish means everything is looking positive, everything is
Speaker 2: looking up, the economy is good. Therefore you know the
Speaker 2: stock market may do well. Bearish is when people are
Speaker 2: very worried. We trench, companies, hire less people, people spend
Speaker 2: less money, the economy contracts, the earnings of the companies
Speaker 2: go down, and therefore the stock market goes down. So
Speaker 2: that's bearish versus bullish. I'm a bullish guy. I'm always
Speaker 2: optimistic pretty much all the time. So I'm looking at
Speaker 2: the next couple of years again with great optimism. Why
Speaker 2: we have fortunately very low unemployment overall. Of course, there
Speaker 2: are pockets where it's difficult as always, but in general
Speaker 2: it's a pretty good environment. We have interest rates which
Speaker 2: were high recently, but they're coming down as well, so
Speaker 2: that's positive. We've had a lot of uncertainties and we
Speaker 2: continue them some, but I think they will go and
Speaker 2: become less uncertain as time goes on. You know, for instance,
Speaker 2: the US presidential election, we'll have certainty on that. Soon,
Speaker 2: we'll have geopolitical issues that might bother people that are
Speaker 2: and all of us that will suddenly be less of
Speaker 2: an issue. These things do resolve themselves over time, So
Speaker 2: I'm looking optimistic to twenty twenty five and twenty six
Speaker 2: particular areas of interest. Of course, there's a tremendous amount
Speaker 2: of excitement in the technology area, but again, buyer beware,
Speaker 2: beware of what you pay for certain stocks in these areas.
Speaker 2: In general, I think there's going to be an upturn
Speaker 2: in housing and automotive from very low levels we've seen
Speaker 2: because of the higher interest rates and mortgages. Mortgage rates
Speaker 2: decline in existing home sales. People don't want to move
Speaker 2: from one home to the next. And therefore, if you
Speaker 2: don't move from one home to the next because you
Speaker 2: have a low mortgage rate, that was locked in and
Speaker 2: you don't want to make the move. So right now,
Speaker 2: existing home sales are as low as they were in
Speaker 2: the crash of two thousand and eight two thousand and nine,
Speaker 2: they pick up. You see a pickup in applying sales
Speaker 2: in paint and carpets and all the things that people
Speaker 2: do when they get a new house. They renovate it,
Speaker 2: they freshen it up, they make it look like their house.
Speaker 2: And so existing home sales are at the bottom. They're
Speaker 2: likely to move up as interest rates come down in
Speaker 2: the coming year. So those are areas of interest, if
Speaker 2: I may.
Speaker 1: And the companies and the companies that make paint, and
Speaker 1: the companies that make fenses, and the company that make
Speaker 1: you know, turf, and the companies that sell that stuff,
Speaker 1: those might be might be also moving up with them.
Speaker 1: Continue Alex, sir.
Speaker 2: Correct. So as a message to everybody on the podcast,
Speaker 2: I think, as maybe parting notes, you're all about education
Speaker 2: and financial literacy, and I think everybody needs to take
Speaker 2: that to heart and do this at home as much
Speaker 2: as possible. Unfortunately, in school, they don't teach kids basic economics,
Speaker 2: and we're not talking about sophisticated stuff. We're talking about
Speaker 2: the checkbook, balancing, balancing your checkbook, credit card spending, mortgages,
Speaker 2: all these basic things. You can just in the words,
Speaker 2: get simple educational information that you can discuss at the
Speaker 2: dinner table with everybody. With yourself, with your spouse, with
Speaker 2: your loved one, with your young kids. Talk about balance sheets.
Speaker 2: What is an asset, what's a liability, what's depth? What
Speaker 2: is a mortgage? How do we save money? How do
Speaker 2: we grow money? Give, if possible your kids when they're twelve, thirteen,
Speaker 2: fourteen years old and an account. I'm not saying any particular,
Speaker 2: but e trade accounts, some account where you can buy stocks,
Speaker 2: and then for Christmas or birthdays, or for whatever holiday
Speaker 2: you celebrate, give another one hundred dollars or two hundred
Speaker 2: dollars or whatever you can give to this account instead
Speaker 2: of another toy, and let them pick their own stocks,
Speaker 2: or let's discuss those stocks together. I've done it with
Speaker 2: my kids. And at one point, you know, if you
Speaker 2: start at twelve or thirteen, maybe at age twenty five,
Speaker 2: twenty six, it could be a meaningful amount. And then
Speaker 2: you have your job as a young person. But you
Speaker 2: also have your savings account. You shouldn't touch that and
Speaker 2: keep growing it. And as you said, you're four to
Speaker 2: one K, which you might get from the company if
Speaker 2: they match it. Maximize it for sure, and then make
Speaker 2: sure it's invested properly. And if you have choices, try
Speaker 2: to put it into equities. I think those are good points.
Speaker 1: So I'm gonna I've never done this before. I'm honored
Speaker 1: when I get a chance to meet a guy like
Speaker 1: you who's so successful and so approachable. I have a
Speaker 1: book that's financial literacy for all number one business finance
Speaker 1: in the country for the last eight months. I'm gonna
Speaker 1: say to anybody watch this podcast if you were inspired
Speaker 1: by Alex and you're wondering, like, I'll never meet a
Speaker 1: guy like this, Like I'll never run into him on
Speaker 1: the street. I'll never run into in the elevator. He's
Speaker 1: probably got security. Whatever I never run in, I'll never
Speaker 1: be in the Hamptons. I just would love to spend
Speaker 1: thirty minutes with a guy like him and ask him
Speaker 1: questions and be inspired and may and maybe even pitch
Speaker 1: him for an internship for me or my son or
Speaker 1: daughter or whatever. But I love to just have thirty
Speaker 1: minutes with this guy. I'm making a commitment for him
Speaker 1: that hopefully he won't hate me for. But if you
Speaker 1: write me a note, write it to Senate Bill dot Fair,
Speaker 1: Bill dot Fai R at Operation NOPE dot Org, my
Speaker 1: deputy chief of staff, and make a case for why
Speaker 1: you should have an audience with Alex and his firm.
Speaker 1: Why you think that you are worth thirty minutes or
Speaker 1: forty five minutes of his time? The top ten people,
Speaker 1: but the letters I get. I'll give nine of them
Speaker 1: a copy of my book Financial Literacy for all just
Speaker 1: to write in the letter at the top ten and
Speaker 1: the number one best one I'm gonna recommend to Alex
Speaker 1: he actually meets with you for thirty to forty five
Speaker 1: minutes and give you, you know, just give you an audience,
Speaker 1: one on one, and hopefully that might inspire you to
Speaker 1: change the course of your life. Alex, would you mind
Speaker 1: doing that.
Speaker 2: Note at all?
Speaker 1: There we go, pleasure closed mouths, don't get fit, as
Speaker 1: they would say. And I knew you'd say that because
Speaker 1: Alex is a great guy. So we've gone over. Thanks
Speaker 1: for your time. Quick question, how'd you get so decent?
Speaker 1: It's a quick question, just and I know it makes
Speaker 1: you uncomfortable. I know you're a humble guy, but like
Speaker 1: you're just normal, like you're just parents. You know.
Speaker 2: It's I think if the parents have good values and
Speaker 2: teach you all the controllable varials we just talked about earlier,
Speaker 2: that you know is something that stays with you from
Speaker 2: an early age. So lead by example. My parents led
Speaker 2: by example, and hopefully I'm leading by example for my kids.
Speaker 2: I think picking your friends is important. If you're three
Speaker 2: brilliant people or fund people, you're probably going to be
Speaker 2: the fourth one. If you're around three really nuts, good
Speaker 2: people that are slacking off and hanging out, you're probably
Speaker 2: going to be the fourth one. So pick your friends carefully.
Speaker 2: You can't pick your family. And if you don't have
Speaker 2: the values from home, try to get it from somewhere else.
Speaker 2: Get it from people that inspire you. Read books about
Speaker 2: people that were very successful. There's so many out there
Speaker 2: where people who write memoirs or write about them. And
Speaker 2: read how these folks started and how they got somewhere,
Speaker 2: and you'll learn that most all of them recommended or
Speaker 2: did the things that we were talking about today about
Speaker 2: the values and the variables you can control.
Speaker 1: Amen, I tell you Ambassador Andrew Young's as a quote, Alex,
Speaker 1: coincidence is God's way of remaining anonymous. And you said
Speaker 1: something that you would never know, You would have no
Speaker 1: idea that that makes you my brother. You said that
Speaker 1: if you hang around four or five successful people, you
Speaker 1: might become the fourth or the fifth one, right, third, fourth,
Speaker 1: fifth one. I often say, if you hang around nine
Speaker 1: broke people, you'll be the tenth. And those are the
Speaker 1: bookends of our lives. Watching you hang around, watch what
Speaker 1: you do, watch your your habits. What these are your
Speaker 1: controllable variables, some of them. And as Michael Milk and
Speaker 1: our mutual friend who introduced us would say, that we
Speaker 1: are all born with even our equal potential and equal
Speaker 1: intelligent intelligence. For that potential, for that intelligence if you
Speaker 1: grow it, but not equal opportunity. Thank you Alex for
Speaker 1: being a beacon and a lighthouse for equal opportunity.
Speaker 2: Thank you John, and thanks to everybody for listening to
Speaker 2: the podcast. And it was my pleasure.
Speaker 1: Ladies and gentlemen, this has been Money and Wealth. You've
Speaker 1: been listening to alec Roopers, who is a chief investment officer,
Speaker 1: effectively that c EO in the investment terms of Atlantic
Speaker 1: investment management. Go change your life. It's all in your hands.
Speaker 1: Money and Wealth with John O'Brien is a production of
Speaker 1: the Black Effect Podcast Network. For more podcasts from the
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