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Speaker 1: This is Master's in Business with Barry Ridholts on Bloomberg Radio.

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Speaker 1: This week on the podcast, I have an extra special guest.

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Speaker 1: His name is Jan van Eck and he has really

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Speaker 1: a fascinating background in history. His father built Vanek Associates

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Speaker 1: in n He never expected to go into the family business,

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Speaker 1: kind of wandered about aimlessly. In the podcast portion we

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Speaker 1: talked about the overlap between our backgrounds. It's kind of

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Speaker 1: amusing to me. But eventually comes into the business, which

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Speaker 1: was about a billion dollars in a u M and

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Speaker 1: here it is, uh some twenty eight years later and

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Speaker 1: they're up to fifty six billion dollars. He's the CEO

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Speaker 1: and basically runs the shop with a team. It is

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Speaker 1: an ensemble practice. They were very early into the world

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Speaker 1: of e t f s and they do a lot

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Speaker 1: of really interesting thematic funds. If you are all interested

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Speaker 1: in international investments, or thematic investments or E s G investments,

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Speaker 1: then you're going to find this conversation to be quite fascinating. So,

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Speaker 1: with no further ado, my sit down with my friend

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Speaker 1: Jan van ef This is Masters in Business with Barry

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Speaker 1: Ridholts on Bloomberg Radio. My special guest today is Jan

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Speaker 1: van Eck. He is the CEO and director of Van

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Speaker 1: Eck Associates, where he has worked since. Van Eck manages

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Speaker 1: about fifty six billion dollars in assets, eight percent of

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Speaker 1: which is in E t F S, for which the

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Speaker 1: firm has won numerous awards. Jan van Eck, Welcome to Bloomberg.

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Speaker 1: Thank you so much. Garry. So you and I know

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Speaker 1: each other um from a few different overlapping entities. Probably

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Speaker 1: inside E t F S is the one that the

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Speaker 1: entire sans Dashtan crew through Jim Wyant right through et

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Speaker 1: F folks. Let's talk a little bit about your background.

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Speaker 1: You work for a think tank, a newspaper, You go

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Speaker 1: to law school, you get a degree from Stanford. What

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Speaker 1: were you doing wandering the fields for so long? Didn't

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Speaker 1: you just think it was inevitable you're gonna end up

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Speaker 1: in the business that coincidentally has your last name on it.

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Speaker 1: Uh In my own mind, Barry Uh, No, I really

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Speaker 1: had no idea what I wanted to do. I graduated

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Speaker 1: with a degree in economics and from what was your

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Speaker 1: undergraduate Williams College? Right? And so you come out with

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Speaker 1: an econ of degree And doesn't that suggest business and

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Speaker 1: or finance or not does. But I did the minimum

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Speaker 1: to get my degree an ECON, and I really enjoyed

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Speaker 1: liberal arts. I took as many classes and I did

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Speaker 1: something that, um, I think a lot of people should

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Speaker 1: do and it's not done enough, which is audit classes.

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Speaker 1: I mean, there's so much great stuff at at a

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Speaker 1: college like Williams. So you know art, history, history, photography, philosophy,

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Speaker 1: lots of things. You know, now people have a tendency

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Speaker 1: to do that later in life. You did that when

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Speaker 1: you were nineteen and twenty. That's free. You know, you're

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Speaker 1: sitting for a course for an hour or two during college,

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Speaker 1: and you know you've already paid the tuition. So the

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Speaker 1: professors love to have more students there at least, you know,

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Speaker 1: in a smaller school. And today you can order classes

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Speaker 1: from Yale or m I T or n y U

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Speaker 1: or any one of a hundred schools online for free.

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Speaker 1: Are you still doing that? Uh? Well, I love to

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Speaker 1: listen to podcasts and and get information. Yeah. Maybe, all right,

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Speaker 1: we'll see, we'll see if they get together. Answer your question, right, Um,

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Speaker 1: I didn't know what I wanted to do when I graduated,

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Speaker 1: and you know that this great podcast I haven't read

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Speaker 1: the book on the book range right, and and just

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Speaker 1: experiment as much as you can when you're young. So

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Speaker 1: I divide an internship at the Washington Post metrodesk. While

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Speaker 1: I was in law school, I worked for a prosecutor

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Speaker 1: one summer the UH in the Eastern District of New York.

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Speaker 1: I worked for a corporate law firm during M and

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Speaker 1: A deals, interned in Germany one summer at a bank.

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Speaker 1: I mean, just tried as many different things. But the

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Speaker 1: the thing that triggered my love of business was actually

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Speaker 1: working in Silicon Valley and would you work for Silicon Valley?

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Speaker 1: I actually after Brookings, Um, that was the thing Tank

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Speaker 1: I realized I did not I want to get too

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Speaker 1: PhD in economics. Academia was not freean and so I

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Speaker 1: put my stuff in a car and drove across country

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Speaker 1: and volunteered on the political campaign. Uh, we don't need

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Speaker 1: to go into it. Um. It was a Senate campaign,

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Speaker 1: and it was a losing Senate campaign. So but I

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Speaker 1: learned a lot um and most importantly, I met some

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Speaker 1: entrepreneurs in Silicon Valley who I just loved the attitude

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Speaker 1: of I try something, it doesn't work. I tried something

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Speaker 1: else that went public. I'm doing all these different things.

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Speaker 1: Just that that creativity I didn't perceive. Even though I

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Speaker 1: grew up in New York City area, you looking at

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Speaker 1: the banks and going up the wrong of management, I

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Speaker 1: did not perceive that level of creativity. So that's when

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Speaker 1: I fell in love with business UM. And then you know,

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Speaker 1: I decided to go back to that region for law school.

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Speaker 1: It's lucky enough to get into Stanford UM. But that's

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Speaker 1: that's which is a fabulous, fabulous school. That's a little

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Speaker 1: more than luck. That's good undergraduate grades, good recommendations, and

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Speaker 1: a good else at score. Yes, are you a good

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Speaker 1: standardized test taker? I must be, But we'll talk more

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Speaker 1: about that later. So even as a son of a financier,

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Speaker 1: your dad opened and launched Vanac Associates in you never assumed, well,

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Speaker 1: I'll end up in investing in the family business one day. Look,

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Speaker 1: it's a psychological thing. I can't go through about. Tell

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Speaker 1: you two things. The door was always open so my

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Speaker 1: father and my father always said, do what you want

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Speaker 1: to do, because your happiness is more important than you

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Speaker 1: know whether this business UM is there or not. So

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Speaker 1: how those things add up, I'll let for you know,

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Speaker 1: third parties to decide. But you know, my my father

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Speaker 1: was very no pressure to come into the business. So

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Speaker 1: one of the questions that I like to ask people

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Speaker 1: who come from a family background in finance is what

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Speaker 1: are some of your earliest memories about money and investing.

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Speaker 1: Do you remember the first stock you ever bought? Or

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Speaker 1: based on what you're saying now, you're not that guy

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Speaker 1: who was running Eliminate stand to buy UM shares in

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Speaker 1: ge when you were nine. You know, it's kind of interesting.

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Speaker 1: I was never a portfolio manager, and I wasn't the

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Speaker 1: guy to buy shares. But you know, when I look

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Speaker 1: back in high school UM, I would buy Coca Cola

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Speaker 1: from distributors and resell them by the bottle. I worked,

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Speaker 1: probably didn't have to work, so it's just a pure

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Speaker 1: arbitrary service. Like said, there was something about wanting to

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Speaker 1: do stuff to make money that was that was definitely

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Speaker 1: early early on for me. Quite interesting. So Vanek was

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Speaker 1: one of the first asset managers to offer US investors

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Speaker 1: access to international markets. How did that affect the company

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Speaker 1: and how how much overseas and investment does Vanek currently

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Speaker 1: do today? We're an American firm, based in New York,

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Speaker 1: but we always have had a very international orientation. Not

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Speaker 1: only was the first fund that my father launched in

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Speaker 1: an international equity fund. The idea was to take advantage

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Speaker 1: of the rebound in Germany and Japan after World War Two.

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Speaker 1: That was the investment thesis at least nineteen fifties. That

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Speaker 1: was going to be Martiall plan and a whole European

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Speaker 1: and Asian rebound right um and uh and cheaper valuations

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Speaker 1: as well. We've heard that before or still again. Um so,

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Speaker 1: so that was really the story, and so our perspective

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Speaker 1: has always been international. Also, you know he later flipped

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Speaker 1: that fund into a gold fund, and resources investing is

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Speaker 1: very international as well, whether at the time South for CO, Australia, Canada,

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Speaker 1: You're always a majority of our perspective and assets were

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Speaker 1: not not in the US. Quite interesting, you guys have

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Speaker 1: some really fascinating investment funds. The one you launched a

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Speaker 1: few years ago, I I the Van Eck Vector's Video

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Speaker 1: Gaming and E Sports et F, which I know is

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Speaker 1: won a number of e t F awards Best Thematic

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Speaker 1: ETF Best What was the thinking behind an E sports ETF? Well, uh,

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Speaker 1: you know what we try to do is look from

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Speaker 1: a longer term perspective, we don't want to just chase fads. Right,

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Speaker 1: there's a lot of ETFs on micro themes, and give

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Speaker 1: us an example on micro themes, and I mean that

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Speaker 1: you know, like lots of things. Healthcare industry, for example,

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Speaker 1: has been sliced and diced into cancer drugs. And this

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Speaker 1: so really narrow or or even like five G like

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Speaker 1: I mean, it's it's it's an interesting thesis. But what

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Speaker 1: happens when six G comes out? Then they'll change the

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Speaker 1: name of the funds. Of course, there's always a solution

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Speaker 1: once the ao M is in the door. But um, yeah,

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Speaker 1: So so I try to take out like a five

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Speaker 1: or ten year view. And one of the things that's

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Speaker 1: happening now so we've had the smartphone for ten years,

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Speaker 1: is the virtualization of life. Virtualization meaning we exist in

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Speaker 1: a a virtual world of software as opposed to in

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Speaker 1: in meat space and social media. Right before you and

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Speaker 1: I met in real life, I was listening to your podcast.

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Speaker 1: I was you know, you and I have media. Although

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Speaker 1: you're pretty uh pretty constrained, you're pretty low key on

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Speaker 1: on the on the Twitter right, so so so entertainment

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Speaker 1: world just going through that revolution. First of all, as

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Speaker 1: we get wealth are as a society, more people enjoy

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Speaker 1: sports entertainment, betting that that's a growth industry. But it's

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Speaker 1: also transforming from the traditional you know, professional football, basketball,

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Speaker 1: hockey into online gaming and the creation of teams competing

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Speaker 1: against each other, and and that's just that could us

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Speaker 1: continue to grow and their dimensions now right, it's not

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Speaker 1: just the playing of the game, there's the watching of

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Speaker 1: the game, and and there's the playing of those things

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Speaker 1: on YouTube and people watching games and now audience participation

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Speaker 1: Barry is likely to happen right where you're watching a game,

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Speaker 1: and as a spectator you can vote on the teams

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Speaker 1: or advise them. I don't. I don't do that, so

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Speaker 1: so let me ask there's a there's a longer term

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Speaker 1: future as so, so that blows my mind. My frame

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Speaker 1: of references decades ago, when I was on a trading desk,

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Speaker 1: one of my favorite things to do each Tuesday night

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Speaker 1: was once everybody was done with their blodder and their

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Speaker 1: P and L, which you had a save to a

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Speaker 1: disk and then walk to the head trader's office. That's

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Speaker 1: how long ago it was. The quote server would become

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Speaker 1: a Quake server and all the traders would jack in

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Speaker 1: and we would have this giant multiplayer game of Quake,

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Speaker 1: which was so immersive. I would look up and uh, oh,

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Speaker 1: I'm in trouble. It's past ten o'clock. I've been doing

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Speaker 1: this since for already, and I found it fascinating. I

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Speaker 1: cannot imagine watching other people play games. This is going

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Speaker 1: to be a giant, burgeoning industry. It is already, and

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Speaker 1: I think the only thing that we don't know the

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Speaker 1: story that hasn't been written as a monetization of all

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Speaker 1: that traffic and crowds, so we we know that people

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Speaker 1: are doing it. You know, way more people watch these

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Speaker 1: E Sports World Championships than right. I mean some of

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Speaker 1: the kids kids, sorry, expression are making five five million

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Speaker 1: bucks for for winning one of these things all the

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Speaker 1: A lot of the owners of professional sports teams own

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Speaker 1: e sports teams as well, so you know, it's a

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Speaker 1: It's life is a racket, right, so the next next

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Speaker 1: trend and having an et F just allows the rest

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Speaker 1: of us normal people to participate that trend. The other

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Speaker 1: thing that's really worth noting is Asia is a It's

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Speaker 1: a huge cultural thing in Asia, right, not just in China,

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Speaker 1: but in South Korea and Japan end and it's just

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Speaker 1: it's just big. Culturally, a lot of stuff is being

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Speaker 1: their life is being lived online. That's amazing. Let's talk

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Speaker 1: about something that I'm fascinated with, the Van Eck Vector's

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Speaker 1: green bond e t F. The obvious question, what's a

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Speaker 1: green bond? Well, uh so, green bond is very simple.

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Speaker 1: It is money raised by a company or a government

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Speaker 1: that is supposed to go to improve operations that have

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Speaker 1: a better effect on the environment. So bond by bond decision.

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Speaker 1: It's not a company decision. So the dirtiest commodity company

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Speaker 1: in the world could issue a green bond if it

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Speaker 1: was improving it's processing to reduce the use of water

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Speaker 1: for examp. So if you're a coal fired electrical plant

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Speaker 1: and you want to raise money to transition to a

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Speaker 1: natural gas would you consider that a green bond. So

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Speaker 1: it's not. Luckily, it's not us making this the determination.

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Speaker 1: There's a third party that certifies these green bonds, and

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Speaker 1: it's and it's a big source of financing. It's it's

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Speaker 1: it's grown. And these have become pretty popular, haven't they,

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Speaker 1: Or they're starting to ramp up they're starting to. I mean,

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Speaker 1: our funds not not huge. Um. I think what people

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Speaker 1: sometimes says, I want perfection in my alcohol it values

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Speaker 1: based or E s G injustment and perfection doesn't exist.

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Speaker 1: There are tradeoffs in life. So the issue is okay,

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Speaker 1: I get it, the environments getting better, but I may

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Speaker 1: not like the issue, or it's a China government entity,

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Speaker 1: or it's a polluter that or has some other kind

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Speaker 1: of practices I might not like. So I mean, in

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Speaker 1: the US, we have several environmental funds, and I think

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Speaker 1: you have to stack those values and so we say, okay,

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Speaker 1: if you care about the environment more than the other factors,

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Speaker 1: then this is this is a good allocation for you,

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Speaker 1: for for E s G investors. The old maxim don't

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Speaker 1: let the perfect be the enemy of the good. Can

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Speaker 1: very much apply, can it? I think so? Right now

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Speaker 1: it's hard to it's hard to figure out how to

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Speaker 1: optimize everything. So let's talk about something that's not so green.

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Speaker 1: Two of your biggest funds are the gold miners and

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Speaker 1: the junior miners. I've and that's what about twenty billion

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Speaker 1: dollars all told. I noticed back in the day that

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Speaker 1: when there were signs of inflation or signs of deficits.

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Speaker 1: A lot of fund managers wanted an instant hedge on inflation,

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Speaker 1: and so they would all pile into the junior miners.

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Speaker 1: That behavior kind of changed when the g l D

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Speaker 1: E t F came out. Why does anyone need the

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Speaker 1: execution where managerial risk of a mine and its management

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Speaker 1: team and expenses when you could just buy g LD

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Speaker 1: and and there's your hedge. Am I oversimplifying that, or

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Speaker 1: has has g l D as one of the biggest

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Speaker 1: dtfs out there change the dynamic around the gold miners

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Speaker 1: and junior miners? Uh? Yes, But let me give you

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Speaker 1: some more historical context. Right, So we've had two big

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Speaker 1: commodity booms in my lifetime, in the nineteen seventies and

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Speaker 1: then in the odds, and they were very, very different

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Speaker 1: for the operating companies because in the nineteen seventies commodities

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Speaker 1: gold went from thirty five dollars eight hundred dollars, oil

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Speaker 1: went up, all that stuff, but the cost of manufacturing

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Speaker 1: all those commodities did not change. So the companies were

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Speaker 1: like options. I mean, all all the revenue would go

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Speaker 1: up and the costs really not go up. And so

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Speaker 1: I mean the stocks were fabulous. I mean, so when

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Speaker 1: the price of gold fund that we had in that

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Speaker 1: decade would go up like a hundred hundred a year.

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Speaker 1: We're gonna talk about that gold fund later. But the

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Speaker 1: key is when the price of the commodities went up,

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Speaker 1: the company generated a whole lot more earnings. Right. But

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Speaker 1: now in this last cycle and the odds that was

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Speaker 1: not the case. The costs of manufacturing for a variety

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Speaker 1: of different reasons, Um, the cost would go up as well,

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Speaker 1: the manufacturing costs, So energy was growing, so that was

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Speaker 1: an input to mind that it was a bigger factor. Uh,

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Speaker 1: you have to dig way more dirt per ounce of

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Speaker 1: whatever you're pulling out, whether it's gold or copper or whatever.

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Speaker 1: So there's just a lot of different factors. So the

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Speaker 1: last cycle there wasn't as much return leverage, which is

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Speaker 1: what you're asking about as in the nineties seventies. So

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Speaker 1: now where are we today. Gold is hitting all time

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Speaker 1: highs except in the US dollar. And I would agree

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Speaker 1: with you, Uh, if you want a hedge against of

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Speaker 1: the current monetary system and you're a little bit nervous

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Speaker 1: about central bankers flying around in capes trying to fix

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Speaker 1: every problem including the coronavirus. Then you probably want you know,

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Speaker 1: several different hedges. You want gold mining shares, you probably

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Speaker 1: want gold bullion, but you also want to look at

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Speaker 1: bitcoin and that Oh yeah, so that is the that's

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Speaker 1: the alternative asset for the younger generation. I mean, coin

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Speaker 1: base has between thirty and forty million US American American customers.

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Speaker 1: How do you deal with the fact that's something like

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Speaker 1: a third of all bitcoins that have ever been mined

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Speaker 1: have either been lost in the terms of being misplaced

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Speaker 1: or literally hacked in stolen. How do you how does

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Speaker 1: an investor manage that? I or custody is a major

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Speaker 1: issue there. There are a couple of issues around bitcoin. Uh,

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Speaker 1: Custody I think is being solved because you do have

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Speaker 1: major institutions like Fidelity, uh, the New York Stock Exchange

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Speaker 1: getting involved in offering bitcoin access having solved taken their

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Speaker 1: custody issue away from you as far as you know,

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Speaker 1: some way at what they call whales or people owning

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Speaker 1: a lot of bitcoin or it being lost or whatever.

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Speaker 1: And then the background of the mining community are point

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Speaker 1: and we've got a lot of slides on our on

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Speaker 1: our website to show it is the diversification of ownership, trading,

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Speaker 1: and mining is so much these days. I don't think

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Speaker 1: it's a practical concern to say that this is one

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Speaker 1: just manipulated market by one entity or something. I'm not

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Speaker 1: saying it's manipulated. I'm saying people seem to be You know,

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Speaker 1: when one out of three dollars or even if it's

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Speaker 1: one out of four dollars in bitcoin seems to have vanished,

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Speaker 1: that kind of raises a question for me. Maybe it's

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Speaker 1: still early days and a little bit of the wild West,

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Speaker 1: and they'll eventually wrestle that into submission. But I think

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Speaker 1: that's scared some people. All of these assets have their

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Speaker 1: pros and cons right, I just say buy a basket,

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Speaker 1: because if there is a being scared to the system,

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Speaker 1: what's gonna go all we care about what goes up more.

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Speaker 1: We don't know. Bitcoin could go up way more than

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Speaker 1: gold chairs or bal bullion. So if you can solve

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Speaker 1: the custody issue for yourself, then I then I think

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Speaker 1: I don't care about your concern. Quite interesting, Let's talk

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Speaker 1: a little bit about the company that you joined in

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Speaker 1: ninety two, and I want to focus on the era

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Speaker 1: in the nineties seventies where your dad had an extremely

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Speaker 1: prescient call into gold in a very inflationary era. What

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Speaker 1: more than just being a pundit who said gold's going up,

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Speaker 1: he made a giant bet on that tell us about it.

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Speaker 1: So my father started the firm in fifty five. He

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Speaker 1: actually started it later in life, and so in the

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Speaker 1: in the sixties, he had just gotten married. Um, he

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Speaker 1: was just over fifty years old and he was getting

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Speaker 1: a degree at night at n y U in economics,

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Speaker 1: and one of his professors was an Austrian economist called

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Speaker 1: Ludwig von Mises. And if you know anything, I mean

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Speaker 1: he's famous, right, but Austrians were never really accepted into

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Speaker 1: academia in the United States. Actually was not a full professor,

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Speaker 1: he was just sort of an adjunct. But anyway, my

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Speaker 1: father they are sort of hardcore monitorists and they really

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Speaker 1: focus on money, supply, money, you know, and it was basically, look,

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Speaker 1: guns and butter were happening in the nineteen sixties, my

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Speaker 1: supply was exploding and eventually that was going to break

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Speaker 1: into inflation, and the way to make money off of

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Speaker 1: that was to invest in gold. Now, as you said,

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Speaker 1: I really think it's amazing the risk he took at

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Speaker 1: that point in time because gold had always been fixed

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Speaker 1: against the U. S. Dollar for the entirety of history

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Speaker 1: by the government. Yes, for almost two hundred years of

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Speaker 1: our history, gold had been fixed. He said, this paradigm

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Speaker 1: is going to break. And that's really the philosophy of

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Speaker 1: our firm, which is you can't just look at the

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Speaker 1: four corners of the financial markets. You have to look

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Speaker 1: at technology trends, political trends, and major economic trends. And

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Speaker 1: and several years later, so he didn't have a lot

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Speaker 1: of patients that that broke. By the way, for folks

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Speaker 1: who may not be familiar with Ludwig van Miss, he's

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Speaker 1: one of the most famous of the Austrians. A number

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Speaker 1: of books and really well known. If you're more interested

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Speaker 1: in more of that, just just go Google than Miss.

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Speaker 1: But I'm fascinated by the gold trade. Your father puts

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Speaker 1: how much money into gold at that? Well, he's so

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Speaker 1: he had an international equity fund and he went to

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Speaker 1: Sharrel he said, I'm doing this, and he eight plus

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Speaker 1: percent of the fund and buy gold mining shares. Now

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Speaker 1: you couldn't buy gold, So that he was a little

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Speaker 1: bit to your point before he was forced into buying

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Speaker 1: the share no g l D and if you want

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Speaker 1: to buy actual gold, you're buying futures and its leverage

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Speaker 1: in time future. Then that's right. You were talking seventies,

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Speaker 1: so there really different exactly, So three quarters of a

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Speaker 1: billion dollars more or less into gold or this was

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Speaker 1: this was way before that. Oh my god, the fund

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Speaker 1: was teeny How big was teeny? Oh? I mean it

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Speaker 1: was way less than a hundred millions. Okay. No one

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Speaker 1: wanted international investments in the nineteen sixties. Is kind of

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Speaker 1: like today, right, I mean, you don't want to even

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Speaker 1: talk about it. So he piles into gold in this

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Speaker 1: small formerly international equity funds, it does nothing for two

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Speaker 1: or three years, to what our clients saying, What are

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Speaker 1: investors saying when you have us in gold and not

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Speaker 1: only is it doing nothing, but thanks to inflation, it's

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Speaker 1: actually worthless each year. Well, yeah, gold was less. I

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Speaker 1: think the companies were, Okay, I haven't you know, looked

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Speaker 1: at the performance over that time period. But the industry

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Speaker 1: was so small berry, right. The industry exploded in the

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Speaker 1: late seventies because of money market funds when the rate

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Speaker 1: you could get on banks was regulated, So it was

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Speaker 1: a cottage industry. And you know what ended up happening though,

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Speaker 1: because the performance was so tremendous that fund was the

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Speaker 1: best performing mutual fund in the industry in the seventies

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Speaker 1: and that decade, that Decadecade. Yeah, Peter, Peter Lynch everything,

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Speaker 1: Peter who Yeah, exactly cos he should have been gold

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Speaker 1: and he you know, he went on MERV Griffin. I

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Speaker 1: mean it was action. It was such a big deal

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Speaker 1: back then. It was it was popular culture, right, I mean,

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Speaker 1: interest rates were going into the teens and uh, home

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Speaker 1: watching my dad, griff please going to embarrass us. And

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Speaker 1: so obviously that had to help the company. Is from

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Speaker 1: the time gold explodes when we no longer on the

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Speaker 1: gold standard is what seventy three, seventy four, early seventies,

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Speaker 1: so almost twenty years later, you come into the company,

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Speaker 1: Ino and the firm's up to a billion dollars in assets.

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Speaker 1: Well it got to two billion, yeah, and you know,

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Speaker 1: right at the peak, so right right, um in eight

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Speaker 1: and then Paul Boker comes in, Uh, and the gold

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Speaker 1: went down to you know, two hundred dollars announce, So

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Speaker 1: here's only two thousands. Here's the really big question post gold.

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Speaker 1: You're there in ninety two, the firm is now one

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Speaker 1: billion from two billion today, it's fifty times the size.

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Speaker 1: How did you manage to grow the firm over thirty

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Speaker 1: years fifty x? Well, first of all, it's not first person,

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Speaker 1: you know, singular. There were a lot of people. It

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Speaker 1: was a team um, one of whom was my brother

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Speaker 1: who passed away ten years ago, but he was part

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Speaker 1: of it. But there were a lot of other colleagues

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Speaker 1: as well, and it was building up other mutual funds.

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Speaker 1: And then really before I was what I call e

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Speaker 1: t F guy in two thousand and six, we for

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Speaker 1: ten years we had a hedge fund business and we

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Speaker 1: had to hedge funds. But that we rose about four

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Speaker 1: billion dollars and so I had some good strategies there

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Speaker 1: for a while. Quite fascinating. There's a quote of yours

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Speaker 1: I really like, and I have to start the segment

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Speaker 1: on investing with this quote. The investment world has broken

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Speaker 1: up into two types of people. Historians and statisticians discuss, well,

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Speaker 1: anyone that's not just doing a market cap exposure fund

429
00:24:35,200 --> 00:24:38,080
Speaker 1: tends to have some kind of bias, and they look

430
00:24:38,200 --> 00:24:41,880
Speaker 1: to do asset allocation as well based on that kind

431
00:24:41,880 --> 00:24:44,119
Speaker 1: of bias. And I think there's been a lot of

432
00:24:44,200 --> 00:24:47,160
Speaker 1: quant work done and a lot of the investors. Let's

433
00:24:47,160 --> 00:24:50,000
Speaker 1: take value investing for example, right a study comes out

434
00:24:50,080 --> 00:24:53,040
Speaker 1: says value is the way to go. I've done, you know,

435
00:24:53,040 --> 00:24:55,800
Speaker 1: I look at the fundamentals of a company and those

436
00:24:55,840 --> 00:24:59,360
Speaker 1: with a cheaper price to book. That's gonna work, right,

437
00:24:59,600 --> 00:25:02,840
Speaker 1: because it's worked historic, Because it's worked historically, it's giving

438
00:25:02,840 --> 00:25:05,600
Speaker 1: you some kind of added return over the market return.

439
00:25:06,480 --> 00:25:09,119
Speaker 1: And then it doesn't work, and it doesn't work, and

440
00:25:09,160 --> 00:25:11,440
Speaker 1: it hasn't worked for ten years. I like to point

441
00:25:11,440 --> 00:25:14,720
Speaker 1: out how little we know. Really. I feel like we're

442
00:25:14,760 --> 00:25:17,400
Speaker 1: in the Caveman era of investing, Barry. I know there's

443
00:25:17,400 --> 00:25:19,240
Speaker 1: been a lot of innovation, but there's so little we

444
00:25:19,280 --> 00:25:21,840
Speaker 1: know what is there? Is there an academic theory that

445
00:25:21,880 --> 00:25:24,680
Speaker 1: says growth versus value? No, no one can time growth

446
00:25:24,760 --> 00:25:27,719
Speaker 1: versus value. It's an ongoing debate. Yet those trillions of

447
00:25:27,760 --> 00:25:31,720
Speaker 1: dollars at very prestigious firms that have this value tilt

448
00:25:32,160 --> 00:25:36,120
Speaker 1: that have now been underperforming. So anyway, so that's kind

449
00:25:36,160 --> 00:25:38,919
Speaker 1: of my, uh, you know, my perspective that you just

450
00:25:39,000 --> 00:25:43,720
Speaker 1: can't use these mathematical tests and and mathematicians that that's insulting.

451
00:25:44,040 --> 00:25:48,160
Speaker 1: You really have to call them statisticians whatever that means

452
00:25:48,440 --> 00:25:51,639
Speaker 1: um but basically you can't just use mathematical ratios to

453
00:25:51,720 --> 00:25:54,840
Speaker 1: say their force. There is an investment opportunity, and the

454
00:25:54,880 --> 00:25:58,240
Speaker 1: current one that's floating around today is emerging markets. Value

455
00:25:58,280 --> 00:26:03,119
Speaker 1: stocks have underperform armed and there, and they're cheap and

456
00:26:03,160 --> 00:26:07,399
Speaker 1: therefore mean reversion. The statisticians say, oh, that's great value.

457
00:26:07,760 --> 00:26:10,159
Speaker 1: My perspective on the world is that of historian. The

458
00:26:10,200 --> 00:26:14,200
Speaker 1: world is changing so much all the time, So let

459
00:26:14,200 --> 00:26:17,840
Speaker 1: me just take emerging markets. Emerging Market Index is so

460
00:26:17,960 --> 00:26:21,520
Speaker 1: different today. China dominates that. Asia is eight percent of

461
00:26:21,600 --> 00:26:25,640
Speaker 1: that index. There's basically everything else you can ignore. Ten

462
00:26:25,880 --> 00:26:31,280
Speaker 1: fifteen years ago and Emerging Markets Index had Thailand and Malaysia, Singapore, Korea, remember,

463
00:26:31,400 --> 00:26:34,480
Speaker 1: like Brazil, Mexico. It's it's just not even the same

464
00:26:34,520 --> 00:26:37,800
Speaker 1: thing to to take that statistic and say I'm going

465
00:26:37,840 --> 00:26:41,440
Speaker 1: to do a study and give you an investment recommendation. Look,

466
00:26:41,640 --> 00:26:44,359
Speaker 1: that's a school of thought. I'm in the what I

467
00:26:44,440 --> 00:26:48,479
Speaker 1: call historian school of thought, which is there's so much change.

468
00:26:48,880 --> 00:26:51,680
Speaker 1: Look at all the change that's happening. If only there

469
00:26:51,760 --> 00:26:54,800
Speaker 1: was an e t F that was emerging markets ex China.

470
00:26:55,560 --> 00:26:58,440
Speaker 1: That would be fantastic. It wouldn't be important in the world,

471
00:26:58,880 --> 00:27:01,360
Speaker 1: right No, but it could would actually see some long

472
00:27:01,480 --> 00:27:05,000
Speaker 1: term growth, not dominated by one single company we filed

473
00:27:05,040 --> 00:27:08,120
Speaker 1: for one go or um. That's why I brought that up.

474
00:27:08,440 --> 00:27:11,040
Speaker 1: I wanted to toss that out. The other thing you

475
00:27:11,119 --> 00:27:15,160
Speaker 1: and I briefly discussed a long time ago over wine,

476
00:27:15,200 --> 00:27:17,800
Speaker 1: and I want to continue the conversation. We'll see if

477
00:27:17,840 --> 00:27:20,840
Speaker 1: you remember this. There are many ways to measure value,

478
00:27:21,200 --> 00:27:25,200
Speaker 1: price to book being only one of them, and people

479
00:27:25,320 --> 00:27:29,160
Speaker 1: kind of forget the days of having a book value

480
00:27:29,359 --> 00:27:33,240
Speaker 1: with giant factories or thousands of miles of rail tracts

481
00:27:33,359 --> 00:27:37,119
Speaker 1: or fiber optic cables or whatever. May not really be

482
00:27:37,280 --> 00:27:41,720
Speaker 1: so applicable to companies like Apple or Google or Facebook.

483
00:27:41,760 --> 00:27:45,760
Speaker 1: And you point out they have intellectual property, the algorithm

484
00:27:45,760 --> 00:27:49,119
Speaker 1: of Google search and how they monetize ads is not

485
00:27:49,400 --> 00:27:52,840
Speaker 1: exactly the sort of book value that we saw in

486
00:27:52,880 --> 00:27:57,200
Speaker 1: the days of steel manufacturers and railroads and automobile companies.

487
00:27:57,359 --> 00:27:59,800
Speaker 1: Right Well, I think, as I was implying before, I

488
00:27:59,800 --> 00:28:03,480
Speaker 1: think there are these these things that people observe in

489
00:28:03,520 --> 00:28:05,560
Speaker 1: the markets, and then they kind of go away after

490
00:28:05,600 --> 00:28:08,320
Speaker 1: a while for whatever reason. Maybe they're arbitraged away or

491
00:28:08,359 --> 00:28:10,639
Speaker 1: for or whatever. And I do think that in the

492
00:28:10,680 --> 00:28:14,879
Speaker 1: new economy. I'm not saying growth will outperform value forever.

493
00:28:15,000 --> 00:28:17,240
Speaker 1: I'm not saying you should tilt your portfolio that way,

494
00:28:17,280 --> 00:28:19,879
Speaker 1: but I definitely don't think you have to look at

495
00:28:19,920 --> 00:28:23,080
Speaker 1: the measures um these days. The the one that we

496
00:28:23,160 --> 00:28:26,280
Speaker 1: have as a firm that we like is the wide

497
00:28:26,280 --> 00:28:29,280
Speaker 1: mode philosophy, which is look at the earnings on a

498
00:28:29,400 --> 00:28:32,479
Speaker 1: forward looking basis. Okay, so it's not just looking at

499
00:28:32,520 --> 00:28:36,280
Speaker 1: all the statistics on Yahoo, Finance, er Bloomberg, but and

500
00:28:36,359 --> 00:28:40,080
Speaker 1: that's produced by morning Star Equity Research, and then so

501
00:28:40,200 --> 00:28:42,680
Speaker 1: that will estimate the profitability. So even if a company

502
00:28:42,720 --> 00:28:45,240
Speaker 1: like Facebook is not making money, which it wasn't at

503
00:28:45,240 --> 00:28:48,280
Speaker 1: a point in time, we know the potential is there,

504
00:28:48,840 --> 00:28:51,120
Speaker 1: then we include it. And then the second step is

505
00:28:51,160 --> 00:28:54,280
Speaker 1: to make sure that you're not overpaying for that, because

506
00:28:54,680 --> 00:28:57,680
Speaker 1: that I think is a real value that doesn't exist

507
00:28:57,680 --> 00:29:00,480
Speaker 1: in all e T s, which is that value suation

508
00:29:00,840 --> 00:29:04,440
Speaker 1: discipline of kicking out companies if they just become too expensive.

509
00:29:04,720 --> 00:29:07,440
Speaker 1: So you're really talking about GARB growth at a reasonable price.

510
00:29:07,520 --> 00:29:10,240
Speaker 1: Is that that what you're implying? Yeah, I would say

511
00:29:10,320 --> 00:29:13,640
Speaker 1: a proprietary version of GARB. They would not like that,

512
00:29:13,680 --> 00:29:16,240
Speaker 1: but I think that's fair. So let's let's talk about

513
00:29:16,440 --> 00:29:18,840
Speaker 1: some of the e t f s you've launched. You

514
00:29:18,840 --> 00:29:22,840
Speaker 1: guys are not known for plain vanilla beta. How do

515
00:29:22,920 --> 00:29:26,400
Speaker 1: you think about developing a new strategy, How do you

516
00:29:26,440 --> 00:29:30,680
Speaker 1: put together the philosophy behind a new e t F,

517
00:29:31,120 --> 00:29:33,400
Speaker 1: and then how do you decide here's how we're going

518
00:29:33,440 --> 00:29:36,240
Speaker 1: to market this. Because you guys have been very successful

519
00:29:36,280 --> 00:29:38,880
Speaker 1: with this, I like to call it's like handcrafted beers.

520
00:29:39,000 --> 00:29:41,000
Speaker 1: Every one of our e t F we really try

521
00:29:41,040 --> 00:29:43,640
Speaker 1: to think about the underlying structure of the asset class

522
00:29:43,640 --> 00:29:47,680
Speaker 1: and the market and how to construct an exchange traded

523
00:29:47,760 --> 00:29:51,320
Speaker 1: vehicle to take advantage of that. So for fixed income UM,

524
00:29:51,360 --> 00:29:54,600
Speaker 1: if I could talk about that. For we have several

525
00:29:54,640 --> 00:29:57,040
Speaker 1: high yield funds. You want to make sure there's enough

526
00:29:57,080 --> 00:29:59,800
Speaker 1: liquidity in that. So for our high yield Muni fund,

527
00:30:00,240 --> 00:30:03,120
Speaker 1: we made sure a slug was in triple bees so

528
00:30:03,160 --> 00:30:06,479
Speaker 1: that there would be enough liquidity in our view throughout

529
00:30:06,480 --> 00:30:10,760
Speaker 1: a market cycle for that product. Also, sticking with fixed income, again,

530
00:30:10,800 --> 00:30:12,920
Speaker 1: this is the van deck philosophy, right, look at the

531
00:30:13,000 --> 00:30:17,200
Speaker 1: macro trends and market structure in the industry. So what's

532
00:30:17,200 --> 00:30:19,960
Speaker 1: happened over the last ten years has been the growth

533
00:30:20,000 --> 00:30:24,120
Speaker 1: of triple bes as a percent of the overall investment

534
00:30:24,160 --> 00:30:27,200
Speaker 1: grade market. Right, so the lowest level of rating for

535
00:30:27,280 --> 00:30:31,280
Speaker 1: investment grade is now fifty percent of all investment grade

536
00:30:31,680 --> 00:30:36,800
Speaker 1: and triple bes today are greater in issuance than all

537
00:30:36,840 --> 00:30:39,200
Speaker 1: of investment grade debt ten years ago. So let me

538
00:30:39,320 --> 00:30:42,920
Speaker 1: let me wrap my head around this. The weakest investment

539
00:30:42,960 --> 00:30:47,880
Speaker 1: grade bonds are now half of of investment grade portfolios. Correct,

540
00:30:48,000 --> 00:30:50,240
Speaker 1: So in other words, we've kind of worked a way

541
00:30:50,320 --> 00:30:53,880
Speaker 1: down the risk scale to get a little more return.

542
00:30:54,040 --> 00:30:58,360
Speaker 1: Is that the companies are so it's it's natural companies

543
00:30:58,360 --> 00:31:00,840
Speaker 1: are optimizing. They're saying, let's and I can keep my

544
00:31:00,880 --> 00:31:03,880
Speaker 1: borrowing costs down if I just keep stay a little

545
00:31:03,920 --> 00:31:07,240
Speaker 1: bit above junk and then in a low interest rate environment,

546
00:31:07,240 --> 00:31:09,160
Speaker 1: I've got all this money at two percent. You know

547
00:31:09,200 --> 00:31:12,280
Speaker 1: what's not to love. And and the spread between investment

548
00:31:12,320 --> 00:31:15,400
Speaker 1: grade and high yield or junk has really narrowed over

549
00:31:15,400 --> 00:31:18,160
Speaker 1: the past because we're a wash and money. So that's

550
00:31:18,160 --> 00:31:20,800
Speaker 1: a separate thing. But anyway, let's let's address that because

551
00:31:20,800 --> 00:31:24,000
Speaker 1: it's a fascinating topic. Whether we're looking at venture capital

552
00:31:24,120 --> 00:31:28,560
Speaker 1: or private equity or pretty much everything else. There is

553
00:31:29,160 --> 00:31:32,800
Speaker 1: just an ungodly amount of capital coursing its way through

554
00:31:32,840 --> 00:31:37,040
Speaker 1: the system. Absolutely, And what does that mean? Uh, Well,

555
00:31:37,360 --> 00:31:41,400
Speaker 1: like I say, don't worry, be happy. I mean, you

556
00:31:41,520 --> 00:31:46,200
Speaker 1: can't fight central banks, don't fight. Don't well, and look

557
00:31:46,240 --> 00:31:48,600
Speaker 1: at China. That's my thing that I think a lot

558
00:31:48,640 --> 00:31:50,719
Speaker 1: of people don't look at. You have to look at

559
00:31:50,760 --> 00:31:53,720
Speaker 1: what's going on in China. And the narrative in China

560
00:31:53,920 --> 00:31:58,200
Speaker 1: is also right now mildly stimulative. So I can go

561
00:31:58,240 --> 00:32:00,280
Speaker 1: into that if you like. Well, well, let's talk out that,

562
00:32:00,320 --> 00:32:04,040
Speaker 1: because you had something I thought was pretty insightful leading

563
00:32:04,080 --> 00:32:08,960
Speaker 1: into the fourth quarter of when we saw temporary correction

564
00:32:09,000 --> 00:32:11,240
Speaker 1: and you said, hey, China was looking at a hard landing.

565
00:32:11,280 --> 00:32:15,320
Speaker 1: They were slowing down, which is why we saw our weakness,

566
00:32:15,760 --> 00:32:18,960
Speaker 1: and they figured it out and started stimulating again. How

567
00:32:18,960 --> 00:32:22,880
Speaker 1: do you offset that here in the first quarter of

568
00:32:24,480 --> 00:32:29,200
Speaker 1: against the coronavirus, which doesn't seem to be coming to

569
00:32:29,320 --> 00:32:33,440
Speaker 1: a natural end yet. We we assume they'll eventually wrestle

570
00:32:33,520 --> 00:32:36,600
Speaker 1: this into submission like they have with other pandemics like

571
00:32:36,640 --> 00:32:40,680
Speaker 1: a bola or zica or going out stars or swine flu.

572
00:32:40,840 --> 00:32:43,680
Speaker 1: Or pick one, but this is still very much an

573
00:32:43,760 --> 00:32:47,560
Speaker 1: unknown and how much is this going to impact their

574
00:32:47,640 --> 00:32:49,000
Speaker 1: g d P and how much is this going to

575
00:32:49,080 --> 00:32:52,520
Speaker 1: impact the rest of the globes economic activity. Look, I

576
00:32:52,920 --> 00:32:55,200
Speaker 1: think you can look through I think the markets have

577
00:32:55,360 --> 00:32:58,280
Speaker 1: looked through the coronavirus. So what I like to say

578
00:32:58,400 --> 00:33:00,360
Speaker 1: is like I wouldn't say we live in China world,

579
00:33:00,440 --> 00:33:03,160
Speaker 1: but we are in the same life raft together. And

580
00:33:03,200 --> 00:33:06,440
Speaker 1: to answer your question, if China's economy goes through a

581
00:33:06,440 --> 00:33:10,200
Speaker 1: super hard landing, every aspect of our financial markets will

582
00:33:10,280 --> 00:33:13,920
Speaker 1: get affected. I mean obviously commodities, but commodities flies through

583
00:33:14,560 --> 00:33:17,320
Speaker 1: effects high yield as well because energy bonds have a

584
00:33:17,400 --> 00:33:20,200
Speaker 1: lot of issuance. It will affect US equities as well.

585
00:33:20,680 --> 00:33:24,240
Speaker 1: Right now, I'd say both Chinese equities and US equities

586
00:33:24,240 --> 00:33:27,480
Speaker 1: are saying this coronavirus will work itself out. Chinese equities

587
00:33:27,520 --> 00:33:29,960
Speaker 1: are right where they were a month or two ago,

588
00:33:30,600 --> 00:33:34,760
Speaker 1: so so people buying China stocks don't think so. Again,

589
00:33:34,840 --> 00:33:37,760
Speaker 1: I hate to oversimplify. What is the Central Bank in

590
00:33:37,920 --> 00:33:41,440
Speaker 1: China doing so two years ago they were slamming on

591
00:33:41,480 --> 00:33:43,719
Speaker 1: the brakes because they were worried about debt, but they

592
00:33:43,720 --> 00:33:46,080
Speaker 1: have since taken their foot off the break. You know,

593
00:33:46,120 --> 00:33:49,640
Speaker 1: they're not gassing it, but they are giving enough oxygen

594
00:33:49,680 --> 00:33:52,239
Speaker 1: to the economy that I don't think we really need

595
00:33:52,280 --> 00:33:54,920
Speaker 1: to worry about global growth. And that does assume that

596
00:33:54,960 --> 00:33:57,520
Speaker 1: the coronavirus doesn't go crazy, but that's what the markets

597
00:33:57,520 --> 00:34:01,520
Speaker 1: are assuming. So let's move from China but international. You

598
00:34:01,560 --> 00:34:05,520
Speaker 1: guys have offices in in Australia and in Frankfurt, Germany.

599
00:34:05,800 --> 00:34:10,360
Speaker 1: Why expand internationally and why those countries. What we found

600
00:34:10,440 --> 00:34:12,799
Speaker 1: with our e t S is that buyers around the

601
00:34:12,800 --> 00:34:14,880
Speaker 1: world we're using it. I mean it was amazing, like

602
00:34:14,960 --> 00:34:17,800
Speaker 1: g DX, like literally people from a hundred different countries

603
00:34:17,840 --> 00:34:20,160
Speaker 1: were buying and trading U S e t S. It's

604
00:34:20,200 --> 00:34:22,480
Speaker 1: a really great invention and we were lucky to be

605
00:34:22,560 --> 00:34:25,879
Speaker 1: part of it. And so one we saw that, of

606
00:34:25,920 --> 00:34:31,080
Speaker 1: course we wanted to chase our clients. Um Expanding internationally

607
00:34:31,200 --> 00:34:33,439
Speaker 1: is not as easy as I thought it might be.

608
00:34:33,520 --> 00:34:37,200
Speaker 1: But uh, because we had clients in Europe and Australia,

609
00:34:37,400 --> 00:34:41,600
Speaker 1: we thought, hey, let's provide local opportunities for them. And

610
00:34:41,680 --> 00:34:44,880
Speaker 1: because our industry is regulated and taxes are different, we

611
00:34:45,000 --> 00:34:48,239
Speaker 1: basically had to set up shop in those countries. We

612
00:34:48,400 --> 00:34:52,120
Speaker 1: have been speaking to Jan van Eck vanek associates. You

613
00:34:52,160 --> 00:34:54,000
Speaker 1: and I know each other for a couple of years.

614
00:34:54,040 --> 00:34:58,279
Speaker 1: We're not complete and total strangers, And as I was

615
00:34:58,480 --> 00:35:04,239
Speaker 1: researching you, I found a couple of interesting things. Our

616
00:35:04,280 --> 00:35:10,480
Speaker 1: backgrounds are shockingly similar in that we both came out

617
00:35:10,480 --> 00:35:12,279
Speaker 1: of college. We both didn't know what the hell we

618
00:35:12,320 --> 00:35:15,280
Speaker 1: wanted to do. We both sort of wandered the earth

619
00:35:15,440 --> 00:35:19,440
Speaker 1: trying a bunch of things, some startups, some this, some that.

620
00:35:20,360 --> 00:35:24,000
Speaker 1: My joke has been, well, if you are a Jewish

621
00:35:24,120 --> 00:35:25,960
Speaker 1: boy from Long Island and you don't know what to

622
00:35:25,960 --> 00:35:29,560
Speaker 1: do with your life, you go to law school. You

623
00:35:29,600 --> 00:35:31,040
Speaker 1: don't have a whole lot of choice in the matter.

624
00:35:31,160 --> 00:35:34,080
Speaker 1: It's the law. And it sounds like you had a

625
00:35:34,400 --> 00:35:39,600
Speaker 1: similarly non Long Island experience. Uh yeah, it took me

626
00:35:39,640 --> 00:35:41,239
Speaker 1: a while to figure out what I wanted to do,

627
00:35:41,719 --> 00:35:44,360
Speaker 1: but law school was the backup. So did did eventually

628
00:35:44,400 --> 00:35:46,759
Speaker 1: punch that ticket? And the other question, which I didn't

629
00:35:46,760 --> 00:35:50,000
Speaker 1: get to ask during the broadcast portion um, when I

630
00:35:50,040 --> 00:35:53,400
Speaker 1: was doing my research into Jan van Eck, how do

631
00:35:53,480 --> 00:35:57,960
Speaker 1: you transition from being a fourteenth century Flemish painter into

632
00:35:58,040 --> 00:36:01,600
Speaker 1: a career on Wall Street? And that's about as esoterica

633
00:36:01,760 --> 00:36:05,120
Speaker 1: question as I've ever asked that is that is really amazing.

634
00:36:05,239 --> 00:36:08,279
Speaker 1: Well funny, my grandfather did the research and we're not

635
00:36:08,440 --> 00:36:12,600
Speaker 1: not related. I mean, that is not an unknown painter

636
00:36:12,760 --> 00:36:16,799
Speaker 1: in the world. My wife taught design an illustration and

637
00:36:16,840 --> 00:36:19,040
Speaker 1: fine arts, and so I've been to every museum in

638
00:36:19,040 --> 00:36:21,840
Speaker 1: the world just about it certainly feels like I've contract

639
00:36:21,880 --> 00:36:25,600
Speaker 1: every museum. But when when I first started researching, and

640
00:36:25,640 --> 00:36:28,480
Speaker 1: I'm like, why is that name so familiar? Oh, that's right,

641
00:36:28,560 --> 00:36:30,839
Speaker 1: Well you knew. I knew in college when people were

642
00:36:30,840 --> 00:36:32,960
Speaker 1: taking that class because they were like, yeahn did you

643
00:36:33,080 --> 00:36:38,759
Speaker 1: know that there was an artis called at granddad? Granddad

644
00:36:39,160 --> 00:36:43,000
Speaker 1: that that's pretty hilarious. And it's funny because when and

645
00:36:43,080 --> 00:36:45,960
Speaker 1: a lot of Google searches, he's got much better s

646
00:36:46,000 --> 00:36:48,760
Speaker 1: c oh than you do. So that's kind of uh,

647
00:36:48,960 --> 00:36:52,400
Speaker 1: that's that's kind of interesting. So there are a handful

648
00:36:52,440 --> 00:36:55,319
Speaker 1: of questions I did not get to that I have

649
00:36:55,440 --> 00:36:59,960
Speaker 1: to ask you about prior to get into our favorite question,

650
00:37:00,080 --> 00:37:03,319
Speaker 1: ends of which I have a few bonus ones on

651
00:37:03,560 --> 00:37:05,800
Speaker 1: that I didn't warn you about. I'm want to surprise

652
00:37:05,840 --> 00:37:09,719
Speaker 1: you with. Um, let's let's talk a little bit about

653
00:37:09,760 --> 00:37:12,360
Speaker 1: the E T F world and the question I really

654
00:37:12,880 --> 00:37:15,360
Speaker 1: didn't get to during broadcast that I wanted to is

655
00:37:15,960 --> 00:37:18,799
Speaker 1: two thousand and six is pretty early days in the

656
00:37:18,840 --> 00:37:23,799
Speaker 1: world of ETFs. What motivated the move into e t fs.

657
00:37:24,200 --> 00:37:28,839
Speaker 1: It's obviously been wildly successful, but tell us what that

658
00:37:28,960 --> 00:37:32,239
Speaker 1: ramp up was like and how did you make the decision? Hey,

659
00:37:32,280 --> 00:37:34,239
Speaker 1: this ETF thing is going to be big one day,

660
00:37:34,960 --> 00:37:37,840
Speaker 1: I think you know. My my background is more of

661
00:37:37,840 --> 00:37:40,959
Speaker 1: a business person who works at an asset manager rather

662
00:37:41,040 --> 00:37:43,680
Speaker 1: than a portfolio manager. And like a lot of car

663
00:37:43,760 --> 00:37:47,839
Speaker 1: engineers run car companies, are used to uh that that

664
00:37:47,920 --> 00:37:52,400
Speaker 1: mindset really matters. So e t s were clearly there,

665
00:37:52,440 --> 00:37:55,440
Speaker 1: and they were growing, and the question is do you

666
00:37:55,760 --> 00:37:58,400
Speaker 1: latch on as a person to those new and interesting

667
00:37:58,440 --> 00:38:01,719
Speaker 1: and growing and maybe better things or do you not?

668
00:38:01,960 --> 00:38:05,280
Speaker 1: And so we latched on and then also saw wow,

669
00:38:05,320 --> 00:38:08,719
Speaker 1: if since we were the gold mining fund leaders, if

670
00:38:08,760 --> 00:38:11,720
Speaker 1: someone does an e t F on gold mining were dead.

671
00:38:13,480 --> 00:38:16,439
Speaker 1: People love to trade gold, and this is a way

672
00:38:16,480 --> 00:38:19,600
Speaker 1: better vehicle. And we were thank god we we got

673
00:38:19,640 --> 00:38:23,480
Speaker 1: there first. Why not put out g l D yourself?

674
00:38:23,719 --> 00:38:26,040
Speaker 1: Or when you were looking around the world, how long

675
00:38:26,120 --> 00:38:28,160
Speaker 1: has g l D been around It's ten years, twelve

676
00:38:28,280 --> 00:38:30,919
Speaker 1: years or did they, So you know it wasn't around

677
00:38:30,920 --> 00:38:33,359
Speaker 1: in six it was not. It came afterwards. So god, yeah,

678
00:38:33,360 --> 00:38:37,359
Speaker 1: the gold bullion very We've made so many mistakes, but

679
00:38:37,480 --> 00:38:40,480
Speaker 1: you know, one one is not being more aggressive in

680
00:38:40,600 --> 00:38:43,879
Speaker 1: earlier in thinking that the SEC would approve a gold

681
00:38:43,920 --> 00:38:49,160
Speaker 1: bullion et fu kindsight biases always. I mean, you know

682
00:38:49,239 --> 00:38:52,520
Speaker 1: who who knew? Sometimes you gotta just roll the dice,

683
00:38:52,719 --> 00:38:56,120
Speaker 1: although one would imagine that's an expensive risk to take

684
00:38:56,600 --> 00:38:58,839
Speaker 1: saying they'll never approve this, but let's spend two million

685
00:38:58,880 --> 00:39:02,080
Speaker 1: dollars anyway on warriors, right, And that was we didn't

686
00:39:02,080 --> 00:39:06,160
Speaker 1: have that money back then. So that's that's that helps too,

687
00:39:06,239 --> 00:39:08,440
Speaker 1: I guess, and explaining the past. But by the way,

688
00:39:08,440 --> 00:39:12,400
Speaker 1: if you there's a fantastic Wall Street Journal story about

689
00:39:12,480 --> 00:39:14,520
Speaker 1: the history of g l D. It came out a

690
00:39:14,600 --> 00:39:18,280
Speaker 1: couple of years ago, and the background was the World

691
00:39:18,400 --> 00:39:22,200
Speaker 1: Gold Council created the e t F because they had

692
00:39:22,280 --> 00:39:25,000
Speaker 1: too much gold built up in warehouses. It was just

693
00:39:25,120 --> 00:39:26,880
Speaker 1: a way of, hey, what are we doing with all

694
00:39:26,920 --> 00:39:28,799
Speaker 1: this yellow crap? We gotta get some of it out.

695
00:39:29,360 --> 00:39:34,560
Speaker 1: And it was not very pressingent in philosophy. It just

696
00:39:34,640 --> 00:39:37,799
Speaker 1: worked out fantastic and even worse we knew those people,

697
00:39:37,880 --> 00:39:40,720
Speaker 1: of course, because all the gold mining companies are members

698
00:39:40,800 --> 00:39:43,120
Speaker 1: of the World Gold Council. Yeah, I don't go there.

699
00:39:44,800 --> 00:39:47,360
Speaker 1: So so, um, let's talk a little bit about the

700
00:39:47,520 --> 00:39:50,200
Speaker 1: operations of of e t f s. How do the

701
00:39:50,320 --> 00:39:54,840
Speaker 1: flows in and out of index funds affect the underlying securities.

702
00:39:54,920 --> 00:39:58,360
Speaker 1: This is something that you have to plan and manage,

703
00:39:58,800 --> 00:40:01,120
Speaker 1: especially if some of the junior minors are a little

704
00:40:01,160 --> 00:40:05,160
Speaker 1: less liquid than the bigger gold miners. How do you

705
00:40:05,239 --> 00:40:07,440
Speaker 1: deal with that? Well? As as a lot of your

706
00:40:07,520 --> 00:40:09,960
Speaker 1: lessoners probably know, the function of an e t F

707
00:40:10,239 --> 00:40:13,680
Speaker 1: is usually that you can take in kind delivery of

708
00:40:13,719 --> 00:40:16,880
Speaker 1: the securities. So for the vast majority of US equities

709
00:40:16,920 --> 00:40:19,960
Speaker 1: and other securities, actually we don't have to worry about it.

710
00:40:20,040 --> 00:40:23,160
Speaker 1: It's the trading community that has to worry. Say, okay,

711
00:40:23,239 --> 00:40:25,320
Speaker 1: I anticipate I'm going to get this price for the

712
00:40:25,400 --> 00:40:27,480
Speaker 1: e t F. I'm going to deliver this bundle of

713
00:40:27,600 --> 00:40:30,520
Speaker 1: stocks or bonds, and so we don't actually have to

714
00:40:30,600 --> 00:40:32,680
Speaker 1: trust it, and that's touch it. That's one of the

715
00:40:32,760 --> 00:40:37,799
Speaker 1: geniuses where we get involved is index rebalances, and uh,

716
00:40:38,080 --> 00:40:41,480
Speaker 1: you know that is something where our portfolio managers pay

717
00:40:41,480 --> 00:40:43,880
Speaker 1: a lot of attention because especially if you have a

718
00:40:43,960 --> 00:40:47,680
Speaker 1: larger et F and the trading community knows Van Neck

719
00:40:47,760 --> 00:40:50,080
Speaker 1: has got to buy a hundred million or two hundred

720
00:40:50,120 --> 00:40:54,200
Speaker 1: million of the stock, it's very important that we game them.

721
00:40:54,400 --> 00:40:57,200
Speaker 1: So we may buy it before the index adds it,

722
00:40:57,320 --> 00:41:00,719
Speaker 1: we might buy it afterwards, and there's an of folatility

723
00:41:00,800 --> 00:41:03,480
Speaker 1: in the market that that hopefully the trading community is

724
00:41:03,560 --> 00:41:06,319
Speaker 1: not taking advantage of shareholders, because that's our number one job.

725
00:41:07,280 --> 00:41:11,880
Speaker 1: Quite quite interesting, our mutual colleague Dave Noddig is a

726
00:41:12,000 --> 00:41:16,160
Speaker 1: big advocate of direct indexing. Um, what are your thoughts

727
00:41:16,200 --> 00:41:20,120
Speaker 1: on this? Is this a challenge to thematic investing or

728
00:41:20,239 --> 00:41:22,000
Speaker 1: e t F SO or is this really just a

729
00:41:22,160 --> 00:41:25,400
Speaker 1: niche product? Although there were some companies with you know,

730
00:41:25,480 --> 00:41:28,720
Speaker 1: Pinnacle has a couple of hundred billion dollars in direct

731
00:41:28,800 --> 00:41:31,560
Speaker 1: index right, which is another form of s m A. Right,

732
00:41:31,840 --> 00:41:33,840
Speaker 1: it's it's an index form of s M A And

733
00:41:33,960 --> 00:41:37,360
Speaker 1: I think, uh so there are slight advantages to that,

734
00:41:37,920 --> 00:41:40,279
Speaker 1: but one of the you know, I think one of

735
00:41:40,320 --> 00:41:42,640
Speaker 1: the limitations is you can't really do that for fixed income.

736
00:41:42,920 --> 00:41:45,720
Speaker 1: Everyone says, oh the spider, you know, sp y everything

737
00:41:45,800 --> 00:41:49,400
Speaker 1: is transparent. This is not true. You know, of bonds

738
00:41:49,440 --> 00:41:52,359
Speaker 1: do not trade on a given day, and so that's

739
00:41:52,400 --> 00:41:54,359
Speaker 1: the I think that's one of the beauties that fixed

740
00:41:54,360 --> 00:41:56,960
Speaker 1: income ets they have disadvantages. That one of the advantages

741
00:41:56,960 --> 00:41:59,799
Speaker 1: that you're getting way better liquidity. Like we have an

742
00:41:59,800 --> 00:42:03,040
Speaker 1: a your market local currency bond ETF. You weigh rather

743
00:42:03,160 --> 00:42:06,080
Speaker 1: trade that et F at penny wide than you would

744
00:42:06,280 --> 00:42:10,360
Speaker 1: the underlying bonds. There's so many more bonds than stocks.

745
00:42:10,480 --> 00:42:14,080
Speaker 1: People don't realize the vast number of bonds. The joke

746
00:42:14,239 --> 00:42:17,840
Speaker 1: is the Wilshire five thousand is what something like that.

747
00:42:18,719 --> 00:42:20,680
Speaker 1: I think the last time I looked at is something

748
00:42:20,719 --> 00:42:25,440
Speaker 1: like forty or sixty thousand bonds that trade at least

749
00:42:25,600 --> 00:42:28,400
Speaker 1: once a year, some crazy number like that. There are

750
00:42:28,960 --> 00:42:32,360
Speaker 1: tons and tons of bonds out there, every local municipality,

751
00:42:32,520 --> 00:42:35,920
Speaker 1: every corporate, in all sorts of different years and all

752
00:42:36,000 --> 00:42:39,200
Speaker 1: sorts of different chaunches. You would much rather trade the

753
00:42:39,320 --> 00:42:42,799
Speaker 1: funds than the specific bonds. Absolutely, and that's why that's

754
00:42:42,920 --> 00:42:46,000
Speaker 1: that's one of the limitations to direct into thing. The

755
00:42:46,160 --> 00:42:47,920
Speaker 1: thing I like to point out as well, what's happened

756
00:42:47,960 --> 00:42:51,719
Speaker 1: over our careers right is fixed income is the last

757
00:42:51,840 --> 00:42:55,600
Speaker 1: holdout for voice broking. So all I couldn't say that

758
00:42:55,640 --> 00:42:58,000
Speaker 1: again voice being able to pick up the phone and

759
00:42:58,040 --> 00:42:59,800
Speaker 1: say buy me ten thousand, and the only way to

760
00:42:59,880 --> 00:43:03,040
Speaker 1: trade it is up the phone. There's no electronic version.

761
00:43:03,160 --> 00:43:06,439
Speaker 1: Well there's text measaging the same thing, right, So all

762
00:43:06,640 --> 00:43:10,080
Speaker 1: equity trading has gone electronic. Not true. When we came out,

763
00:43:10,280 --> 00:43:14,200
Speaker 1: all options trading is electronic. Basically all commodity of futures

764
00:43:14,239 --> 00:43:18,440
Speaker 1: trading is electronic. Fixed income it's still a minority of trades.

765
00:43:18,600 --> 00:43:23,560
Speaker 1: You know, even most generous calculation is of investment grade

766
00:43:23,680 --> 00:43:26,880
Speaker 1: trades last year were electronic. So that just shows you

767
00:43:27,040 --> 00:43:29,960
Speaker 1: that there the fixed income you can't just do things.

768
00:43:30,000 --> 00:43:31,920
Speaker 1: And I think people look at direct indexing and other

769
00:43:31,960 --> 00:43:34,400
Speaker 1: things say, oh yeah, the whole world is electronic. Everything

770
00:43:34,440 --> 00:43:36,320
Speaker 1: is simple because I can see I'm on Yahoo Finance.

771
00:43:36,480 --> 00:43:40,840
Speaker 1: Not true. Isn't the US treasury bonds aren't there trading

772
00:43:40,880 --> 00:43:44,640
Speaker 1: electric elect They're electronic. I mean they're They're the deepest,

773
00:43:44,760 --> 00:43:48,319
Speaker 1: most liquid markets. And you have a very very specific

774
00:43:49,040 --> 00:43:53,799
Speaker 1: um run of dates. Everybody knows what what each vintages.

775
00:43:54,080 --> 00:43:57,880
Speaker 1: But beyond treasuries, things really start to get a little squirrel.

776
00:43:57,920 --> 00:44:00,840
Speaker 1: They don't think absolutely. So one of the other questions

777
00:44:01,160 --> 00:44:04,800
Speaker 1: I had to ask you that um is kind of

778
00:44:05,160 --> 00:44:08,239
Speaker 1: kind of intriguing. Tell us about by the way, this

779
00:44:08,320 --> 00:44:12,480
Speaker 1: is the worst segue from electronic non electronic trading of

780
00:44:12,560 --> 00:44:17,879
Speaker 1: bonds to this what is the then eck forest? Ah?

781
00:44:18,800 --> 00:44:22,719
Speaker 1: So uh not really related to me. Um, it was

782
00:44:22,840 --> 00:44:24,840
Speaker 1: my own or our firm, I should say. So. I

783
00:44:24,880 --> 00:44:27,120
Speaker 1: don't want to take any credit. But my uncle Fred

784
00:44:27,960 --> 00:44:31,120
Speaker 1: uh who never married, gave all his money to charity

785
00:44:31,160 --> 00:44:35,360
Speaker 1: when he passed away, and he did something super creative.

786
00:44:35,440 --> 00:44:38,120
Speaker 1: So he he loved trees, and what he did is

787
00:44:38,160 --> 00:44:42,680
Speaker 1: bought redwood forest in northern California after it had been

788
00:44:42,760 --> 00:44:46,080
Speaker 1: clear cut, so there was no commercial value. Way back

789
00:44:46,160 --> 00:44:49,200
Speaker 1: up a sec So you take a redwood forest. Are

790
00:44:49,520 --> 00:44:53,520
Speaker 1: we using redwood for commercial uses? Yeah? You were doing that?

791
00:44:53,640 --> 00:44:59,120
Speaker 1: Oh my god. So or beautiful trees five plus percent

792
00:44:59,280 --> 00:45:02,840
Speaker 1: of all old growth redwoods. I mean, these things are beautiful.

793
00:45:02,880 --> 00:45:06,239
Speaker 1: The old thousand year old trees were cut down nine

794
00:45:06,680 --> 00:45:11,000
Speaker 1: I think it's cut down to build San Francisco and

795
00:45:11,239 --> 00:45:15,239
Speaker 1: other things. And they just let no one said stop.

796
00:45:15,400 --> 00:45:17,719
Speaker 1: I mean John Muir said stopped. But you know it

797
00:45:17,800 --> 00:45:19,800
Speaker 1: took a while, but all the damage was done. We

798
00:45:19,840 --> 00:45:22,120
Speaker 1: were like, why don't you stop at fifty or sixty

799
00:45:22,239 --> 00:45:25,560
Speaker 1: or seven, like, it's just a complete disaster. So anyway

800
00:45:26,040 --> 00:45:30,000
Speaker 1: that the but trees grow back. So he uh, he

801
00:45:30,120 --> 00:45:32,480
Speaker 1: was a great value investor. He just bought all this

802
00:45:33,000 --> 00:45:36,480
Speaker 1: redwood forest for almost nothing, and guess what, twenty years later,

803
00:45:37,200 --> 00:45:40,200
Speaker 1: you know, the redwoods are growing. So what he did

804
00:45:40,520 --> 00:45:44,160
Speaker 1: is basically create a sustainable redwood forest. This is fred

805
00:45:44,320 --> 00:45:46,799
Speaker 1: Fred Vannack. He was he was a director of our

806
00:45:46,840 --> 00:45:51,360
Speaker 1: company but otherwise not involved, and he created a sustainable forest.

807
00:45:51,480 --> 00:45:54,440
Speaker 1: So what he said is, I'm not going to I'm

808
00:45:54,440 --> 00:45:57,600
Speaker 1: going to give the income to charity. So it was

809
00:45:57,640 --> 00:46:01,000
Speaker 1: the largest gift to Purdue University ever. But I'm not

810
00:46:01,360 --> 00:46:02,719
Speaker 1: I'm not gonna know a lot of people just to

811
00:46:02,800 --> 00:46:05,960
Speaker 1: cut the trees down. I'm gonna do something called selective harvesting,

812
00:46:06,640 --> 00:46:09,680
Speaker 1: which is basically like weeding a forest. And what happens

813
00:46:09,760 --> 00:46:13,279
Speaker 1: if you wed a forest, it actually grows fast. So

814
00:46:13,640 --> 00:46:17,680
Speaker 1: so that's managed by the Pacific Forest Trust. And then

815
00:46:18,120 --> 00:46:22,240
Speaker 1: what they did as well is because California has carbon credits,

816
00:46:22,680 --> 00:46:26,600
Speaker 1: they qualified the forest, the Vedic Forest, for carbon credits,

817
00:46:27,000 --> 00:46:29,520
Speaker 1: so it was the first property in the US to

818
00:46:29,719 --> 00:46:32,600
Speaker 1: qualify to get carbon credits, which they sold to Arnold

819
00:46:32,600 --> 00:46:36,320
Speaker 1: Schwartz nigger and Nancy Pelosi. It's such an interesting story,

820
00:46:36,480 --> 00:46:38,680
Speaker 1: but I take absolutely no credit for it. I mean

821
00:46:38,719 --> 00:46:40,600
Speaker 1: we we helped it a little bit when I told

822
00:46:40,640 --> 00:46:44,040
Speaker 1: you I we do a deep dive if I'm finding

823
00:46:44,080 --> 00:46:47,280
Speaker 1: out about the uh. But actually it was mentioned somewhere

824
00:46:47,360 --> 00:46:51,320
Speaker 1: on your corporate website if I remember, unless it was

825
00:46:51,440 --> 00:46:55,000
Speaker 1: just my uh shocking that we mentioned, you know. Yeah,

826
00:46:55,320 --> 00:46:59,960
Speaker 1: So so that's pretty that's pretty intriguing. Um and finale,

827
00:47:00,360 --> 00:47:04,400
Speaker 1: before we get to our standard questions is what did

828
00:47:04,480 --> 00:47:08,600
Speaker 1: you learn from your dad about leadership and running an

829
00:47:08,640 --> 00:47:12,239
Speaker 1: investment business? You worked with him for how long? How

830
00:47:12,280 --> 00:47:15,600
Speaker 1: long was the overlap? Well, I mean, you know, we talked,

831
00:47:15,680 --> 00:47:18,759
Speaker 1: he talked about work at home, so almost so most

832
00:47:18,840 --> 00:47:21,880
Speaker 1: of your so yeah, most of my life. Um so,

833
00:47:22,280 --> 00:47:24,960
Speaker 1: and then you know, into my thirties. He luckily had

834
00:47:25,000 --> 00:47:28,920
Speaker 1: a long life he passed away. Um My dad was

835
00:47:28,960 --> 00:47:32,000
Speaker 1: an economist, Okay, he was not a businessman, and he

836
00:47:32,120 --> 00:47:35,600
Speaker 1: was not really a portfolio manager. So his he he

837
00:47:35,800 --> 00:47:37,759
Speaker 1: had this view of the world like look at what's

838
00:47:37,760 --> 00:47:40,799
Speaker 1: going on and then take advantage and then implement, right,

839
00:47:41,280 --> 00:47:44,879
Speaker 1: So just that perspective and that risk taking is really

840
00:47:44,920 --> 00:47:48,480
Speaker 1: what I learned from him, is question the structure the

841
00:47:48,520 --> 00:47:51,320
Speaker 1: world is changing, what's changing? And do you does that

842
00:47:51,400 --> 00:47:54,399
Speaker 1: give you opportunity or risk in your portfolio? So that's

843
00:47:54,440 --> 00:47:56,520
Speaker 1: really what I what I learned from him. He was

844
00:47:56,719 --> 00:47:59,040
Speaker 1: very he was very much a gentleman. He was very

845
00:47:59,160 --> 00:48:02,880
Speaker 1: collaborative within the firm, and you know, he knew what

846
00:48:02,960 --> 00:48:04,960
Speaker 1: he didn't know. Said the first thing. The first person

847
00:48:05,040 --> 00:48:07,520
Speaker 1: he hired to run the Gold Fund was a geologist.

848
00:48:08,040 --> 00:48:11,120
Speaker 1: So that's one of our histories is having real people

849
00:48:11,239 --> 00:48:15,000
Speaker 1: from industry as part of our portfolio management team. Quite

850
00:48:15,120 --> 00:48:18,760
Speaker 1: quite fascinating. Any major topics I didn't get to before

851
00:48:18,800 --> 00:48:22,640
Speaker 1: we get to my favorite questions, Well, we'll get this

852
00:48:22,719 --> 00:48:26,600
Speaker 1: to some other time. But the fact that the explosion

853
00:48:26,680 --> 00:48:29,920
Speaker 1: of passive means that ownership of corporate America is in

854
00:48:30,600 --> 00:48:34,479
Speaker 1: you know, concentrated some very big firms. Let's talk about

855
00:48:34,520 --> 00:48:39,600
Speaker 1: that because I'm astonished at some of the uh myths

856
00:48:39,880 --> 00:48:45,080
Speaker 1: and discussions that have arisen around this. Do you look

857
00:48:45,120 --> 00:48:49,440
Speaker 1: at passive as um a challenge to your core business

858
00:48:49,520 --> 00:48:52,960
Speaker 1: model or do you look at passive as a lazy

859
00:48:53,120 --> 00:48:58,080
Speaker 1: person's approach to investing? How how do you think of passive? Well,

860
00:48:58,160 --> 00:49:01,680
Speaker 1: I think you know my bias. Yeah, she cheap market exposure.

861
00:49:01,760 --> 00:49:05,960
Speaker 1: Passive has been fantastic for investors. Right, It's lowered costs,

862
00:49:06,800 --> 00:49:11,920
Speaker 1: uh thematically, dramatically and um, it's in a way not

863
00:49:12,080 --> 00:49:15,200
Speaker 1: our business. We tried to do value added or different exposures.

864
00:49:15,640 --> 00:49:17,760
Speaker 1: What I would say is it's also been a perfect

865
00:49:17,880 --> 00:49:20,520
Speaker 1: environment for that. You know. You know, one of your

866
00:49:20,600 --> 00:49:22,319
Speaker 1: questions is what do you wish you had known thirty

867
00:49:22,400 --> 00:49:25,759
Speaker 1: years ago? Well, I wish I will tell everybody. I

868
00:49:25,880 --> 00:49:28,399
Speaker 1: wish I had known that interest rates we're gonna fall

869
00:49:28,560 --> 00:49:32,280
Speaker 1: my entire career because financial assets have had this huge

870
00:49:32,440 --> 00:49:36,239
Speaker 1: tail wind really for for you know, since I'm gonna

871
00:49:36,280 --> 00:49:39,600
Speaker 1: I'm gonna stop you right there, and I have to

872
00:49:39,640 --> 00:49:44,960
Speaker 1: stop you because the person responsible for that is it

873
00:49:45,120 --> 00:49:50,000
Speaker 1: forty years eighty two to almost forty year bond bull

874
00:49:50,080 --> 00:49:52,960
Speaker 1: market and falling interest rates and to this day they're

875
00:49:52,960 --> 00:49:57,240
Speaker 1: still falling. When was the thirty years one five five something? Crazy?

876
00:49:57,960 --> 00:50:02,839
Speaker 1: Um was Paul volle car right, who on occasion am

877
00:50:02,920 --> 00:50:07,040
Speaker 1: I remembering this correctly? Did your dad have lunch with

878
00:50:07,160 --> 00:50:10,760
Speaker 1: Paul Vulcan on a regular basis, No, not regular basis?

879
00:50:10,840 --> 00:50:14,560
Speaker 1: Once once and I was luckily to be invited. So

880
00:50:14,680 --> 00:50:16,879
Speaker 1: someone thought it was funny probably someone with your type

881
00:50:16,920 --> 00:50:20,960
Speaker 1: of personality, say, hey, this guy got you know, solved

882
00:50:21,200 --> 00:50:23,680
Speaker 1: the inflation problem in the US, and you know gold

883
00:50:23,760 --> 00:50:27,200
Speaker 1: got killed for twenty years afterwards. They should meet each other,

884
00:50:28,560 --> 00:50:30,960
Speaker 1: because is that my dad made I don't. I don't

885
00:50:30,960 --> 00:50:33,480
Speaker 1: know if that's my sense of humor to me. Any

886
00:50:33,520 --> 00:50:36,200
Speaker 1: opportunity I get to meet a fed chair, I'm going

887
00:50:36,280 --> 00:50:40,920
Speaker 1: to take that. Yes, you'd like to put interesting. And

888
00:50:41,000 --> 00:50:44,040
Speaker 1: there was probably a little humor associated with this particular combination.

889
00:50:44,760 --> 00:50:48,279
Speaker 1: In any case, so arranged that lunch. I don't I

890
00:50:48,400 --> 00:50:50,960
Speaker 1: don't remember. It was fitt of the vague associate if

891
00:50:51,040 --> 00:50:52,680
Speaker 1: my dad's I think it was someone who ran a

892
00:50:52,719 --> 00:50:55,759
Speaker 1: fixed income shop, like we didn't know. We didn't know

893
00:50:55,840 --> 00:50:58,600
Speaker 1: that person well anyway, so I tagged along and it

894
00:50:58,719 --> 00:51:04,480
Speaker 1: was told you at the time, Wow, I uh, probably

895
00:51:04,520 --> 00:51:08,080
Speaker 1: in my theories, okay, did you? Did you appreciate the gravity?

896
00:51:09,320 --> 00:51:12,440
Speaker 1: By the way, he's a rock star, star, absolute superstar.

897
00:51:12,600 --> 00:51:15,480
Speaker 1: I think he deserves much more of the credit for

898
00:51:15,600 --> 00:51:19,000
Speaker 1: the so called Reagan Revolution than he's gotten because Reagan

899
00:51:19,040 --> 00:51:21,200
Speaker 1: did a bunch of things that I think were very helpful,

900
00:51:21,520 --> 00:51:24,799
Speaker 1: but none of which would have happened. And I don't

901
00:51:24,800 --> 00:51:29,600
Speaker 1: think you know. In fact, he reminder when Volker's term

902
00:51:29,760 --> 00:51:33,320
Speaker 1: was up, Reagan replaced him with some guy named Alan Greenspan.

903
00:51:33,800 --> 00:51:35,960
Speaker 1: So that's another reason to be a little miffed at

904
00:51:36,040 --> 00:51:41,399
Speaker 1: Ronald Reagan. He fobbed that. Uh, I won't use any

905
00:51:41,440 --> 00:51:45,320
Speaker 1: cursewords on the air, but I blame the crisis. The

906
00:51:45,360 --> 00:51:47,360
Speaker 1: Great Financial Crisis had a lot of inputs and a

907
00:51:47,400 --> 00:51:50,000
Speaker 1: lot of factors that caused it. But towards the top

908
00:51:50,040 --> 00:51:53,279
Speaker 1: of that list is Alan Greenspan. Both as a monetist

909
00:51:53,880 --> 00:51:59,799
Speaker 1: and a regulator, he messed up. I'm trying to keep

910
00:51:59,840 --> 00:52:02,040
Speaker 1: it g ridded. He messed up in two different ways.

911
00:52:02,440 --> 00:52:06,279
Speaker 1: But of what, let's avoid that digression. I got to

912
00:52:06,400 --> 00:52:10,120
Speaker 1: meet told Paul at I think it was an oh

913
00:52:10,280 --> 00:52:15,319
Speaker 1: eight at Chris Whalen's election party, and I found him

914
00:52:15,360 --> 00:52:19,680
Speaker 1: to be absolutely charming. Um, he just passed away last year.

915
00:52:20,320 --> 00:52:22,880
Speaker 1: What was your lunch with him? Like, what was your

916
00:52:22,920 --> 00:52:25,840
Speaker 1: experience like? And were you aware that you know, you

917
00:52:25,960 --> 00:52:28,200
Speaker 1: were having a brush with greatness? Oh yeah, I mean,

918
00:52:28,280 --> 00:52:30,360
Speaker 1: of course, I mean he this this is sort of

919
00:52:30,520 --> 00:52:35,840
Speaker 1: like like you said, he had a major effect on everything,

920
00:52:35,960 --> 00:52:39,560
Speaker 1: on everything, right, the structure of financials and and and everything.

921
00:52:39,680 --> 00:52:43,480
Speaker 1: So um, yeah, it was. It was great meeting him.

922
00:52:43,600 --> 00:52:47,480
Speaker 1: You know, he was more disengaged from the financial markets

923
00:52:47,480 --> 00:52:49,520
Speaker 1: at the time than than my dad was, which I

924
00:52:49,600 --> 00:52:53,359
Speaker 1: thought it was just odd, uh, disengaged with the day

925
00:52:53,400 --> 00:52:56,440
Speaker 1: to day Okay, So again, my dad was like a

926
00:52:56,560 --> 00:53:01,400
Speaker 1: pencil sharp economist. He was upset with money supply growth.

927
00:53:01,440 --> 00:53:03,480
Speaker 1: And I think they were talking about Japan at the time.

928
00:53:03,560 --> 00:53:06,080
Speaker 1: That was a hot topic. And you know, this was

929
00:53:06,920 --> 00:53:09,560
Speaker 1: the beginnings of Japan. So it's just at the end

930
00:53:09,600 --> 00:53:11,279
Speaker 1: of the bubble, at the end of the bubble, how

931
00:53:11,320 --> 00:53:14,400
Speaker 1: to deal with the bubble and you know, before this

932
00:53:14,640 --> 00:53:16,759
Speaker 1: long period of disinflation or whatever you wanna call it,

933
00:53:17,200 --> 00:53:21,880
Speaker 1: deflation deflation in Japan. And my dad knew this. I

934
00:53:21,960 --> 00:53:25,759
Speaker 1: didn't know statistics at the last month, you know, money

935
00:53:25,800 --> 00:53:29,640
Speaker 1: supply growth in Japan. And Booker was like, no, it's

936
00:53:29,680 --> 00:53:33,680
Speaker 1: just in this topic. So money supply is part of

937
00:53:33,800 --> 00:53:39,640
Speaker 1: this huge list of economic and market indicators that people

938
00:53:39,760 --> 00:53:43,200
Speaker 1: used to track obsessively because they thought it would help

939
00:53:43,239 --> 00:53:45,200
Speaker 1: them figure out what's going on with the market, and

940
00:53:45,400 --> 00:53:48,000
Speaker 1: one by one, because if you think about it, hey,

941
00:53:48,040 --> 00:53:51,120
Speaker 1: the money supply is expanding, all that will eventually work

942
00:53:51,200 --> 00:53:53,440
Speaker 1: its way into the stock market and stocks will go higher.

943
00:53:53,880 --> 00:53:58,439
Speaker 1: Until that just completely stopped working. It was a coincidential

944
00:53:58,520 --> 00:54:01,080
Speaker 1: correlation for a long time, or maybe it was an

945
00:54:01,120 --> 00:54:03,440
Speaker 1: input factor. I don't know. We look at so much.

946
00:54:03,520 --> 00:54:05,399
Speaker 1: We used to look at so much the odd lot

947
00:54:06,040 --> 00:54:08,279
Speaker 1: data point, and I know guys who used to do

948
00:54:08,400 --> 00:54:10,920
Speaker 1: and was all guys who used to track that stuff

949
00:54:11,080 --> 00:54:18,040
Speaker 1: obsessively in the nineties and it just stopped working. Charles

950
00:54:18,080 --> 00:54:21,560
Speaker 1: Bitterman ran trim tabs that used to check money flow

951
00:54:21,600 --> 00:54:24,279
Speaker 1: in and out of mutual funds. This market has done

952
00:54:24,520 --> 00:54:27,200
Speaker 1: more or less nothing but go up for over a decade,

953
00:54:27,600 --> 00:54:30,120
Speaker 1: and at the same time money flows out of funds.

954
00:54:30,560 --> 00:54:35,200
Speaker 1: Something like a half a trillion dollars have left mutual funds,

955
00:54:36,000 --> 00:54:38,120
Speaker 1: not left mutual funds to go into et f s,

956
00:54:38,320 --> 00:54:42,200
Speaker 1: They've left the building, and the market continues to go. Well,

957
00:54:42,239 --> 00:54:44,919
Speaker 1: that's a separate that's a separate podcast on I don't

958
00:54:44,960 --> 00:54:48,520
Speaker 1: believe flows affect prices, but for a long time people

959
00:54:48,719 --> 00:54:51,839
Speaker 1: it was. It was gospel. Here's my point. It used

960
00:54:51,840 --> 00:54:55,160
Speaker 1: to be that all money would go through you know,

961
00:54:55,239 --> 00:54:58,600
Speaker 1: the central bank, into commercial banks. Now there's so much money,

962
00:54:58,840 --> 00:55:02,239
Speaker 1: so much lending happening outside the banking system. Right, only

963
00:55:02,360 --> 00:55:04,960
Speaker 1: half of the lending is happening inside our banking system.

964
00:55:04,960 --> 00:55:08,960
Speaker 1: They've got hedge funds, lending companies probably, but but credit.

965
00:55:09,000 --> 00:55:11,160
Speaker 1: I'm just talking about credit. So you've got a totally

966
00:55:11,239 --> 00:55:13,200
Speaker 1: different world. That's why we don't care about that stuff

967
00:55:13,280 --> 00:55:15,879
Speaker 1: is because the transmission mechanic is totally different. That's why

968
00:55:15,920 --> 00:55:18,080
Speaker 1: the central bank has to go and buy bonds and

969
00:55:18,600 --> 00:55:21,320
Speaker 1: you know, even stocks and ets in different countries to

970
00:55:21,400 --> 00:55:24,400
Speaker 1: affect the markets because they're not being able to transmit

971
00:55:24,480 --> 00:55:27,400
Speaker 1: through reserve ratio requirements. Remember all that kind of stuff

972
00:55:28,360 --> 00:55:33,400
Speaker 1: where are gone? And um, we used to call that

973
00:55:33,640 --> 00:55:37,960
Speaker 1: the shadow banking sector, and it's not in the shadows

974
00:55:38,040 --> 00:55:42,320
Speaker 1: and more it's huge. It's now the banking sector. They're

975
00:55:42,440 --> 00:55:46,560
Speaker 1: just non bank lenders, which is very different than when

976
00:55:46,600 --> 00:55:50,640
Speaker 1: it seemed a little subversive and uh, you know, a

977
00:55:50,719 --> 00:55:54,720
Speaker 1: little illicit. It's not. It's just a different form of credit. Alright.

978
00:55:54,920 --> 00:55:58,680
Speaker 1: Quite fascinating, all right, So let's get to our favorite questions. Um,

979
00:55:59,840 --> 00:56:03,400
Speaker 1: I I'm interested to hear about some of your answers,

980
00:56:03,440 --> 00:56:06,560
Speaker 1: and I have to start out with, um, what was

981
00:56:06,640 --> 00:56:10,120
Speaker 1: the first car you ever had? First car? Oh, my god,

982
00:56:10,200 --> 00:56:13,200
Speaker 1: my brother and I in college share the cheap I

983
00:56:13,280 --> 00:56:15,040
Speaker 1: don't know, and I know you're a car guy, but

984
00:56:15,200 --> 00:56:17,760
Speaker 1: it was like an old sumobile that had five hundred

985
00:56:17,800 --> 00:56:22,759
Speaker 1: thousand miles on it. And they're happy. We're happy to

986
00:56:22,960 --> 00:56:26,880
Speaker 1: hit you up on you. What do you What are

987
00:56:26,920 --> 00:56:30,680
Speaker 1: you streaming in terms of video on Netflix or Amazon Prime?

988
00:56:30,719 --> 00:56:33,600
Speaker 1: What are you downloading in terms of podcasts? And listening

989
00:56:33,680 --> 00:56:38,759
Speaker 1: to tell us what you're entertaining yourself with. Well, I'm

990
00:56:38,760 --> 00:56:40,920
Speaker 1: a little bit of a junkie and podcasts, so I

991
00:56:41,000 --> 00:56:44,759
Speaker 1: don't really watch a lot of video. So I listened

992
00:56:44,760 --> 00:56:49,160
Speaker 1: to about seven hours of podcasts. I love a week. Sorry,

993
00:56:49,840 --> 00:56:52,719
Speaker 1: different day, it would be hard to get happened. Um,

994
00:56:52,960 --> 00:56:55,840
Speaker 1: I've learned a lot from I'll call it the stars

995
00:56:56,040 --> 00:56:59,440
Speaker 1: in our industry. Give us some names, well, yours truly,

996
00:57:00,320 --> 00:57:05,640
Speaker 1: Patrick K'shaughnessy, Ted Saide's you know Capital allocators, Um, and

997
00:57:06,200 --> 00:57:10,080
Speaker 1: uh a little bit off stream. I love Kara Swish her. Uh,

998
00:57:10,360 --> 00:57:12,319
Speaker 1: she's so much fun. I had her. Not only did

999
00:57:12,360 --> 00:57:15,520
Speaker 1: I have her as a guest where she chewed the scenery,

1000
00:57:16,160 --> 00:57:19,240
Speaker 1: but if you listen to Pivot with her on Scott Galloway, Yeah,

1001
00:57:19,480 --> 00:57:23,360
Speaker 1: so much fun. Yeah. The So I learned a lot.

1002
00:57:23,520 --> 00:57:26,000
Speaker 1: I did my bitcoin learning in twenty seventeen. So I

1003
00:57:26,120 --> 00:57:29,080
Speaker 1: learned a lot from Patrick O'Shaughnessy a lot, learned a

1004
00:57:29,160 --> 00:57:32,960
Speaker 1: lot from pomp and this Australian guy Stefan Lavera. But

1005
00:57:33,560 --> 00:57:37,680
Speaker 1: I would say the podcast episode you know of the

1006
00:57:38,200 --> 00:57:43,000
Speaker 1: my podcasting career was when Scott Galloway predicted the takeover

1007
00:57:43,120 --> 00:57:45,880
Speaker 1: of Whole Foods by Amazon on Kara Swishers podcast. I'll

1008
00:57:45,920 --> 00:57:48,600
Speaker 1: remember I was just coming finishing a run and I

1009
00:57:48,720 --> 00:57:52,760
Speaker 1: was like, wow, because everyone in business is always looking

1010
00:57:52,880 --> 00:57:55,320
Speaker 1: at the fangs, going how is this going to impact

1011
00:57:55,440 --> 00:57:58,760
Speaker 1: my business? Right? Is Amazon going to come into finance

1012
00:57:58,800 --> 00:58:00,960
Speaker 1: all this kind of stuff? And he just he just

1013
00:58:01,120 --> 00:58:03,640
Speaker 1: nailed it. And then literally it happened, and I'm like, wow,

1014
00:58:03,720 --> 00:58:05,040
Speaker 1: there are a lot of smart people out there. I

1015
00:58:05,080 --> 00:58:07,600
Speaker 1: think I think he's been a guest four times on

1016
00:58:07,680 --> 00:58:11,160
Speaker 1: the show She He's just been a ton of fun

1017
00:58:11,240 --> 00:58:15,560
Speaker 1: to interview, and um man, you gotta give him credit

1018
00:58:15,720 --> 00:58:20,160
Speaker 1: for being way out there now. His background in branding

1019
00:58:20,200 --> 00:58:23,960
Speaker 1: and marketing really helps him. Um but that was just

1020
00:58:24,080 --> 00:58:27,400
Speaker 1: such a prescient call, so so sharp. Uh, what's the

1021
00:58:27,440 --> 00:58:32,440
Speaker 1: most important thing people don't know about Jan Vanak? It's important,

1022
00:58:32,520 --> 00:58:35,920
Speaker 1: but h my first language wasn't English, what was it?

1023
00:58:36,040 --> 00:58:39,640
Speaker 1: It was German. Uh, my mom was German and she

1024
00:58:39,960 --> 00:58:42,479
Speaker 1: just came over to the US shortly before they got married.

1025
00:58:42,520 --> 00:58:45,320
Speaker 1: They met in Germany and so she spoke German at

1026
00:58:45,360 --> 00:58:48,000
Speaker 1: home and that's what I learned. And what was funny

1027
00:58:48,120 --> 00:58:51,720
Speaker 1: about it is that the elementary school thought I was

1028
00:58:52,560 --> 00:58:56,040
Speaker 1: not fast because I was learning English at the same time.

1029
00:58:56,160 --> 00:58:59,439
Speaker 1: So they want me to repeat a great My parents said,

1030
00:59:00,160 --> 00:59:02,200
Speaker 1: we're out of here. We're going to the suburbs New

1031
00:59:02,280 --> 00:59:06,920
Speaker 1: York City. Has to he isn't van Eck a Dutch name,

1032
00:59:07,040 --> 00:59:09,280
Speaker 1: or my dad's side was Dutch? Telling him mom's side

1033
00:59:09,360 --> 00:59:12,720
Speaker 1: was German. Quite interesting And speaking of your dad, who

1034
00:59:12,920 --> 00:59:15,880
Speaker 1: are who were some of your early mentors? And I

1035
00:59:15,960 --> 00:59:19,480
Speaker 1: assume your dad looms large in that. Yeah, you know

1036
00:59:19,480 --> 00:59:22,360
Speaker 1: I talked about my dad. I would say, uh, you know,

1037
00:59:22,440 --> 00:59:24,640
Speaker 1: the one person that we had mentioned is a Stanford

1038
00:59:24,720 --> 00:59:29,320
Speaker 1: Law School professor, Joe Grundfest him. He was an SEC

1039
00:59:29,480 --> 00:59:34,080
Speaker 1: commissioner and he does he's involved in a lot of stuff.

1040
00:59:34,080 --> 00:59:40,200
Speaker 1: He comments in government governance. Uh, work at Stanford as well. Uh.

1041
00:59:41,000 --> 00:59:42,840
Speaker 1: But you know, in a class I was taking with

1042
00:59:42,960 --> 00:59:45,320
Speaker 1: him and I was his research assistant as well. He

1043
00:59:45,440 --> 00:59:48,480
Speaker 1: basically made fun of active managers. He's like that that

1044
00:59:48,720 --> 00:59:50,920
Speaker 1: is like a dinosaur, and I was. He was probably

1045
00:59:50,920 --> 00:59:53,760
Speaker 1: the first person who said that to me. And I

1046
00:59:53,840 --> 00:59:55,680
Speaker 1: think that's also when I saw the E t F

1047
00:59:55,800 --> 00:59:59,240
Speaker 1: trend triggered that wow, this actually might be the future.

1048
01:00:00,240 --> 01:00:02,960
Speaker 1: So he he would I would put him in that category.

1049
01:00:03,680 --> 01:00:09,440
Speaker 1: Quite interesting. Um, what investors influence the way you approach investor?

1050
01:00:11,440 --> 01:00:13,400
Speaker 1: There I go back to my my father. I think,

1051
01:00:13,640 --> 01:00:16,000
Speaker 1: you know, Barry have learned so much from so many

1052
01:00:16,080 --> 01:00:18,480
Speaker 1: different people so that I just can't really do a

1053
01:00:18,560 --> 01:00:22,120
Speaker 1: shout out. But um, you know, I love the people

1054
01:00:22,440 --> 01:00:24,880
Speaker 1: that are talking about how the world is changing today,

1055
01:00:25,240 --> 01:00:28,360
Speaker 1: who are forward looking because I think the market structure

1056
01:00:28,440 --> 01:00:34,280
Speaker 1: is changing and so um you know that's that's there's

1057
01:00:34,440 --> 01:00:36,040
Speaker 1: so many people that are good at that I think

1058
01:00:36,240 --> 01:00:39,280
Speaker 1: be unfair to pull one person out. Fair enough, UM,

1059
01:00:39,400 --> 01:00:42,000
Speaker 1: let's talk a little bit about books. What do you read?

1060
01:00:42,120 --> 01:00:43,880
Speaker 1: What sort of books? What? What are some of the

1061
01:00:43,960 --> 01:00:48,520
Speaker 1: most recent books you've enjoyed? So I'm I don't have

1062
01:00:48,600 --> 01:00:50,080
Speaker 1: a lot of time. You know, in our industry, we

1063
01:00:50,160 --> 01:00:52,440
Speaker 1: consume so much content and it's it's hard to get

1064
01:00:52,480 --> 01:00:57,080
Speaker 1: through books. But I'll mention to um. One is, uh,

1065
01:00:57,480 --> 01:01:00,560
Speaker 1: the over story. And if you've heard about this won

1066
01:01:00,600 --> 01:01:04,880
Speaker 1: the Pulitzer Prize. Uh, it was written by Richard Powers,

1067
01:01:05,200 --> 01:01:09,880
Speaker 1: and it's basically about trees, where it's it's a fiction

1068
01:01:10,000 --> 01:01:14,120
Speaker 1: book where trees play a major part in it. And um,

1069
01:01:14,400 --> 01:01:18,600
Speaker 1: it's a it's a long book. Uh, but I would

1070
01:01:19,080 --> 01:01:22,000
Speaker 1: I really, I really enjoyed it, and um, it really

1071
01:01:22,080 --> 01:01:25,440
Speaker 1: made me appreciate forests. If I had to give you

1072
01:01:25,600 --> 01:01:28,840
Speaker 1: one takeaway from a fiction book, which is weird that

1073
01:01:29,440 --> 01:01:34,280
Speaker 1: that forests are are really environments that you know, they

1074
01:01:34,360 --> 01:01:37,240
Speaker 1: go beneath the ground, the trees interact with each other,

1075
01:01:37,600 --> 01:01:40,600
Speaker 1: and it's it's so much more complex than the way

1076
01:01:40,640 --> 01:01:42,360
Speaker 1: I look at a single tree singing in my front

1077
01:01:42,440 --> 01:01:45,320
Speaker 1: yard all alone. That's not the way to look at trees.

1078
01:01:45,440 --> 01:01:48,400
Speaker 1: And so if you're interested in that, can I give

1079
01:01:48,440 --> 01:01:51,760
Speaker 1: you my second one out of the blue. So, um,

1080
01:01:52,160 --> 01:01:54,320
Speaker 1: I have these enthusiasms, and I tried to reach a

1081
01:01:54,480 --> 01:01:57,320
Speaker 1: read a biography on every American president and I ran

1082
01:01:57,400 --> 01:02:01,360
Speaker 1: out of ran out of energy, out of energy. Didn't

1083
01:02:01,400 --> 01:02:04,400
Speaker 1: run that presidents. But uh, but one of my favorites

1084
01:02:04,520 --> 01:02:08,880
Speaker 1: is Jane Smith's Grant biography. So I gotta believe no

1085
01:02:08,960 --> 01:02:12,560
Speaker 1: one's talked to you about uh Ulysses s Grant on

1086
01:02:12,680 --> 01:02:16,320
Speaker 1: your podcasts, and I wouldn't make that. All right, Well,

1087
01:02:16,720 --> 01:02:21,520
Speaker 1: the two here, right here, two takeaways. It's just Grants, um.

1088
01:02:22,080 --> 01:02:25,960
Speaker 1: But but i'll tell you why. Number one, you know,

1089
01:02:26,120 --> 01:02:28,760
Speaker 1: Grant helped win the war. I mean, we focus on Lincoln,

1090
01:02:28,840 --> 01:02:31,280
Speaker 1: but if Lincoln, if we had lost the of the North,

1091
01:02:31,360 --> 01:02:35,680
Speaker 1: had lost the Civil War, the United States is a

1092
01:02:35,760 --> 01:02:40,120
Speaker 1: completely different country. And he was so celebrated. He gets

1093
01:02:40,200 --> 01:02:42,640
Speaker 1: such a bad rap when it comes to history that

1094
01:02:42,760 --> 01:02:45,000
Speaker 1: he was, you know, an alcoholic and this, and that

1095
01:02:45,520 --> 01:02:48,960
Speaker 1: he was very magnanimous as he could be when he

1096
01:02:49,080 --> 01:02:52,600
Speaker 1: was president towards the South and towards um, you know,

1097
01:02:52,680 --> 01:02:55,400
Speaker 1: towards the blacks that you know, he really I think

1098
01:02:55,440 --> 01:02:58,440
Speaker 1: deserves a lot more credit for those two reasons. The

1099
01:02:58,560 --> 01:03:01,640
Speaker 1: second element of the reason I love this book is,

1100
01:03:01,720 --> 01:03:03,560
Speaker 1: you know, when you go to college and you read

1101
01:03:03,600 --> 01:03:06,120
Speaker 1: about these historians, you get kind of a view of history.

1102
01:03:06,200 --> 01:03:09,560
Speaker 1: And what you don't realize is that the schools of

1103
01:03:09,680 --> 01:03:12,840
Speaker 1: thought right and and that and and this book was

1104
01:03:13,120 --> 01:03:15,479
Speaker 1: a revision as school of thought. Like, you know, people

1105
01:03:15,560 --> 01:03:19,360
Speaker 1: get trashed by historians and then their reputations come back.

1106
01:03:19,600 --> 01:03:22,520
Speaker 1: And I didn't realize that dynamic went on so much

1107
01:03:22,560 --> 01:03:28,600
Speaker 1: in academia. You know every natural uh, you know natural biology,

1108
01:03:28,720 --> 01:03:30,640
Speaker 1: and we know that's changing all the time and it's

1109
01:03:30,680 --> 01:03:32,240
Speaker 1: not the same as it was thirty years ago. But

1110
01:03:32,320 --> 01:03:37,240
Speaker 1: it's true for history too. Quite interesting. Um. When I

1111
01:03:37,280 --> 01:03:42,760
Speaker 1: said don't don't assume so quickly, I was mostly wrong.

1112
01:03:43,440 --> 01:03:46,000
Speaker 1: Someone recommended a Grand book, but it was the churn

1113
01:03:46,080 --> 01:03:49,000
Speaker 1: out Grand book, not the Smith Grand book. His books

1114
01:03:49,000 --> 01:03:50,760
Speaker 1: are so long, I mean, can you really read that?

1115
01:03:51,320 --> 01:03:53,600
Speaker 1: I don't know. I everything I've read of his has

1116
01:03:53,680 --> 01:03:58,120
Speaker 1: just been Spectacling's. I've been giving that book five times.

1117
01:03:58,200 --> 01:04:00,800
Speaker 1: You know, well because I talked about Grant, so I

1118
01:04:00,960 --> 01:04:04,000
Speaker 1: should read it. So so if you read presidential biographies,

1119
01:04:04,360 --> 01:04:06,840
Speaker 1: did you read any of the churn at Washington or

1120
01:04:06,960 --> 01:04:10,520
Speaker 1: Jefferson or any uh of the other churn out presidential

1121
01:04:11,160 --> 01:04:15,000
Speaker 1: things or are they just too long? Yeah? Right, Hey, listen,

1122
01:04:15,200 --> 01:04:16,640
Speaker 1: I don't want to talk about how many books I

1123
01:04:16,680 --> 01:04:20,320
Speaker 1: have at home. I'm a Hamilton's fan. I'll just put

1124
01:04:20,400 --> 01:04:23,080
Speaker 1: it out there so you know. But I don't know

1125
01:04:23,200 --> 01:04:26,920
Speaker 1: if you know that we designed our own ties. So

1126
01:04:27,080 --> 01:04:32,040
Speaker 1: I'm wearing a Hamilton. So that's my I'll defend Hamilton's

1127
01:04:32,400 --> 01:04:38,080
Speaker 1: um before I saw the show again. Not recommended. I

1128
01:04:38,160 --> 01:04:44,800
Speaker 1: get the annotated Hamilton's lyrics. Um. Hamilton's Revolution is his

1129
01:04:44,960 --> 01:04:51,280
Speaker 1: annotated version of the lyrics to the show Lynn Manuel

1130
01:04:51,360 --> 01:04:56,000
Speaker 1: Mirande's lyrics. And it's really quite fascinating how he explains everything,

1131
01:04:56,960 --> 01:05:00,760
Speaker 1: um and annotates how there's so many different interests references.

1132
01:05:01,840 --> 01:05:07,479
Speaker 1: But given your predilection for biographies, do you UM read

1133
01:05:07,520 --> 01:05:11,160
Speaker 1: anything like McCullough's book on the Right Brothers or anything

1134
01:05:11,200 --> 01:05:14,600
Speaker 1: along those lines and gotten to that. Just so much stuff. Yeah,

1135
01:05:14,760 --> 01:05:19,080
Speaker 1: I've heard he's a he's a great popularizer of American history.

1136
01:05:19,640 --> 01:05:25,160
Speaker 1: Okay Lehman, Yes, Leman Trilogy. Someone else recommends coming back

1137
01:05:25,200 --> 01:05:29,200
Speaker 1: to Broadway, and uh, you know, if you like history

1138
01:05:29,800 --> 01:05:33,760
Speaker 1: and you know finance, you have to see that play.

1139
01:05:35,000 --> 01:05:38,360
Speaker 1: I mean, that's a that's a must. The Leman Trilogy. Yeah,

1140
01:05:39,240 --> 01:05:41,640
Speaker 1: it was here briefly started in London. You know, it's

1141
01:05:41,680 --> 01:05:44,280
Speaker 1: just theater. So maybe they make a movie. I guess,

1142
01:05:44,320 --> 01:05:46,280
Speaker 1: I don't know, but I really recommend that. If you

1143
01:05:46,360 --> 01:05:49,800
Speaker 1: all right, I'll put I'll put that on on our list. UM,

1144
01:05:50,280 --> 01:05:52,440
Speaker 1: tell us about a time you failed and what you

1145
01:05:52,640 --> 01:05:58,360
Speaker 1: learned from the experience. So, uh, lots of failures, I

1146
01:05:58,520 --> 01:06:01,320
Speaker 1: think of what The one that resonates the most with

1147
01:06:01,520 --> 01:06:04,919
Speaker 1: me is when we were launching different mutual funds before

1148
01:06:05,000 --> 01:06:09,120
Speaker 1: et S, we launched some international fixed income funds that

1149
01:06:09,280 --> 01:06:13,440
Speaker 1: invested in high yielding European debt. It's not like it

1150
01:06:13,520 --> 01:06:16,800
Speaker 1: was Russian debt, no, but it turned out to be

1151
01:06:16,920 --> 01:06:20,400
Speaker 1: like it. So basically, you know, as a money manager,

1152
01:06:20,440 --> 01:06:22,760
Speaker 1: whenever you can sell a yield, you can get flows.

1153
01:06:22,840 --> 01:06:24,960
Speaker 1: And we were getting a ton of money into this fund.

1154
01:06:25,520 --> 01:06:28,880
Speaker 1: And this was the time where European exchange rates, it's

1155
01:06:28,960 --> 01:06:32,040
Speaker 1: it's sort of the pre euro environment or exchange rates

1156
01:06:32,080 --> 01:06:37,880
Speaker 1: were linked and as George Soros famously predicted and made

1157
01:06:37,880 --> 01:06:40,320
Speaker 1: a lot of money on, that link was going to break.

1158
01:06:40,360 --> 01:06:43,880
Speaker 1: And that link broke, and so our funds, as did

1159
01:06:43,920 --> 01:06:46,080
Speaker 1: a lot of others. But our funds lost a lot

1160
01:06:46,160 --> 01:06:48,440
Speaker 1: of ny V value. And one of the principles I

1161
01:06:48,520 --> 01:06:51,560
Speaker 1: take away from that learning experiences, it's so important to

1162
01:06:51,600 --> 01:06:54,880
Speaker 1: try to identify the risks of an investment along with

1163
01:06:55,000 --> 01:06:57,920
Speaker 1: the potential return. And you know, in a prospectus you

1164
01:06:57,960 --> 01:07:00,800
Speaker 1: can put down twenty risks, you get any points for

1165
01:07:01,040 --> 01:07:03,920
Speaker 1: you know, identifying a risk in the prospectus, you've got

1166
01:07:04,040 --> 01:07:06,720
Speaker 1: to pull it up in center and say hey, listen,

1167
01:07:06,840 --> 01:07:09,600
Speaker 1: this is a major risk to this fund. And we've

1168
01:07:09,880 --> 01:07:13,479
Speaker 1: really tried to get better at that. And whenever there's

1169
01:07:13,520 --> 01:07:17,560
Speaker 1: been funds UM that we could have launched, UM, that's

1170
01:07:17,600 --> 01:07:18,960
Speaker 1: been in my mind. And and there are a lot

1171
01:07:19,000 --> 01:07:21,640
Speaker 1: of funds we haven't launched because of that experience. What

1172
01:07:21,720 --> 01:07:23,040
Speaker 1: do you do for fun? What do you do when

1173
01:07:23,080 --> 01:07:26,560
Speaker 1: you're not in the office. I love to travel. I

1174
01:07:26,720 --> 01:07:30,280
Speaker 1: learned so much from traveling. UM and and thanks to

1175
01:07:30,360 --> 01:07:32,800
Speaker 1: my wife it likes to travel as well. It was

1176
01:07:32,960 --> 01:07:35,320
Speaker 1: on our honeymoon and we went to Hong Kong and

1177
01:07:35,760 --> 01:07:37,440
Speaker 1: I saw what was going on in China. It was

1178
01:07:37,600 --> 01:07:39,919
Speaker 1: never in the paper. Then you can learn so much

1179
01:07:40,080 --> 01:07:44,560
Speaker 1: from contextualizing through travel. UM. So there's there's a lot

1180
01:07:44,640 --> 01:07:47,240
Speaker 1: of you know, the Van Neck Forest. Frankly, my wife

1181
01:07:47,320 --> 01:07:50,520
Speaker 1: dragged me out there. It wasn't I was dying to

1182
01:07:50,600 --> 01:07:52,480
Speaker 1: go look at a bunch of trees. But you know,

1183
01:07:52,640 --> 01:07:56,360
Speaker 1: learned so much from that experience and gotten more involved tennis.

1184
01:07:56,920 --> 01:08:00,840
Speaker 1: And then the last thing tennis for so uh. One

1185
01:08:00,880 --> 01:08:03,400
Speaker 1: of my sons plays tennis for Brown. He starts on

1186
01:08:03,480 --> 01:08:06,600
Speaker 1: the varsity team and you know, you're sitting in these

1187
01:08:06,680 --> 01:08:10,320
Speaker 1: cold tennis courts in Long Island on the middle of

1188
01:08:10,440 --> 01:08:13,240
Speaker 1: February and I'm standing talking to the dads and all

1189
01:08:13,320 --> 01:08:15,920
Speaker 1: of them had played college tennis, and I was like,

1190
01:08:16,720 --> 01:08:19,519
Speaker 1: you know whatever, I was such an hack athlete and everything.

1191
01:08:19,560 --> 01:08:22,080
Speaker 1: And I was like, okay, but I know he's genetically

1192
01:08:22,160 --> 01:08:24,800
Speaker 1: related to me. I can't be that bad. So I

1193
01:08:24,840 --> 01:08:27,640
Speaker 1: picked up tennis about ten years ago and enjoy playing that.

1194
01:08:28,280 --> 01:08:30,040
Speaker 1: And then I like to host dinners. I mean, I

1195
01:08:30,400 --> 01:08:33,720
Speaker 1: know you do that too, Love to brainstorm with, you know,

1196
01:08:33,840 --> 01:08:35,760
Speaker 1: bring people together when I can. So I tried to

1197
01:08:35,840 --> 01:08:38,040
Speaker 1: do that, you know, three or four times. Ether there's

1198
01:08:38,080 --> 01:08:40,640
Speaker 1: so much intellectual capital here in New York. How do

1199
01:08:40,760 --> 01:08:44,000
Speaker 1: you not take advantage of You can't swing a dead

1200
01:08:44,040 --> 01:08:46,800
Speaker 1: cat without hitting a Nobel Laurie at a billionaire. Someone

1201
01:08:46,960 --> 01:08:50,000
Speaker 1: was really insightful and they got to eat all And

1202
01:08:50,040 --> 01:08:52,439
Speaker 1: the world is changing. That's what's cool, right, I mean,

1203
01:08:52,520 --> 01:08:54,640
Speaker 1: that's what you just can't go out and read a

1204
01:08:54,720 --> 01:08:58,000
Speaker 1: book because some of these changes haven't been you know, documented.

1205
01:08:58,400 --> 01:09:00,240
Speaker 1: I found out a lot with China. That why I

1206
01:09:00,280 --> 01:09:02,800
Speaker 1: traveled there fifty times is like you couldn't read about

1207
01:09:02,800 --> 01:09:04,479
Speaker 1: what was going on in China. You had to see it.

1208
01:09:05,040 --> 01:09:08,759
Speaker 1: And and I know other people do these idea dinners

1209
01:09:08,880 --> 01:09:12,880
Speaker 1: where it's an attempt to sell something. We set hours

1210
01:09:12,960 --> 01:09:15,519
Speaker 1: up and I know you do the same. Where there's

1211
01:09:15,600 --> 01:09:18,920
Speaker 1: no agenda. It's just let's get eight really interesting people

1212
01:09:18,960 --> 01:09:21,800
Speaker 1: in a room and have a conversation to see where

1213
01:09:21,840 --> 01:09:25,080
Speaker 1: it goes. There's no sales pitches. Nobody asked anybody to

1214
01:09:25,320 --> 01:09:28,479
Speaker 1: do anything. It's just, hey, let's talk about what's going

1215
01:09:28,520 --> 01:09:32,000
Speaker 1: on in the world. Absolutely, it's quite quite fascinating. So

1216
01:09:32,320 --> 01:09:35,320
Speaker 1: within our industry, what are you most optimistic about and

1217
01:09:35,439 --> 01:09:41,400
Speaker 1: what are you most pessimistic about? Uh? Optimistic. I have

1218
01:09:41,520 --> 01:09:43,720
Speaker 1: to be optimistic. As I said before, there's so many

1219
01:09:43,840 --> 01:09:47,280
Speaker 1: unsolved problems. I think an understanding how financial markets work,

1220
01:09:47,439 --> 01:09:50,240
Speaker 1: and I know you're you're doing research in that area.

1221
01:09:50,280 --> 01:09:53,360
Speaker 1: So I'm optimistic about all the innovations that are to come.

1222
01:09:53,840 --> 01:09:57,200
Speaker 1: I think the pessimistic thing about our industry we what

1223
01:09:57,320 --> 01:09:59,439
Speaker 1: do you and I do We manage money? For people

1224
01:09:59,600 --> 01:10:02,519
Speaker 1: who have money? Why they have money because they've saved

1225
01:10:02,920 --> 01:10:05,600
Speaker 1: or someone gave them money right or they started the

1226
01:10:05,680 --> 01:10:09,920
Speaker 1: business that ended up being very successful. Americans and we

1227
01:10:10,000 --> 01:10:12,320
Speaker 1: talked about this in our industry, but half of Americans

1228
01:10:12,479 --> 01:10:15,559
Speaker 1: don't save, They don't they don't know how to save,

1229
01:10:15,640 --> 01:10:18,560
Speaker 1: they don't know how to open a brokerage account. We

1230
01:10:18,760 --> 01:10:21,479
Speaker 1: just led an investment in a company called financial Jim,

1231
01:10:21,680 --> 01:10:24,479
Speaker 1: which is just oriented around that, like getting physically fit,

1232
01:10:24,600 --> 01:10:26,880
Speaker 1: and it's just like the gym, like you don't want

1233
01:10:26,920 --> 01:10:28,800
Speaker 1: to go, You think you want to go, and your

1234
01:10:28,880 --> 01:10:31,519
Speaker 1: needs resolution, then you don't go. And they are just

1235
01:10:31,680 --> 01:10:34,439
Speaker 1: real life people who have found ways of engaging and

1236
01:10:34,479 --> 01:10:37,080
Speaker 1: they've got unlimited demand because a lot of people need

1237
01:10:37,160 --> 01:10:40,519
Speaker 1: financial advice. I'm intrigued by the Robin Hood concept of

1238
01:10:40,760 --> 01:10:43,479
Speaker 1: rounding up whatever you spend on a credit card and

1239
01:10:43,680 --> 01:10:47,720
Speaker 1: sending it to a savings or brokerage account. And you

1240
01:10:47,760 --> 01:10:50,200
Speaker 1: wouldn't think that rounding up is a lot of money,

1241
01:10:50,360 --> 01:10:52,840
Speaker 1: but it can be. I have a jar of loose change.

1242
01:10:53,120 --> 01:10:56,040
Speaker 1: It's probably nine hundred dollars and weighs a hundred pounds

1243
01:10:56,520 --> 01:10:58,560
Speaker 1: that I just come home and throw the change on

1244
01:10:58,640 --> 01:11:00,160
Speaker 1: the mind. There are a lot of apps out there,

1245
01:11:00,240 --> 01:11:01,960
Speaker 1: there's a lot of tools, but a lot of people

1246
01:11:02,040 --> 01:11:06,160
Speaker 1: don't even they don't think about that need and and

1247
01:11:06,280 --> 01:11:09,680
Speaker 1: the consequence is stress. If you don't have money, you

1248
01:11:09,760 --> 01:11:13,400
Speaker 1: have stress in your life. And that's like we've all

1249
01:11:13,439 --> 01:11:15,840
Speaker 1: lived through periods of stress and and that. And that's

1250
01:11:15,880 --> 01:11:19,000
Speaker 1: so when I think about our our industry collectively, I

1251
01:11:19,120 --> 01:11:21,800
Speaker 1: hope that business people can help solve you know, solve

1252
01:11:21,880 --> 01:11:25,960
Speaker 1: that problem a little bit quite intriguing. And our final

1253
01:11:26,040 --> 01:11:29,200
Speaker 1: two questions, what advice would you give to a recent

1254
01:11:29,320 --> 01:11:33,320
Speaker 1: college graduate who was just beginning their career and interested

1255
01:11:33,520 --> 01:11:37,320
Speaker 1: in either finance or asset management. It's it's it's what

1256
01:11:37,439 --> 01:11:40,479
Speaker 1: we talked about before. Try a lot of different things,

1257
01:11:40,600 --> 01:11:43,400
Speaker 1: you know, David Rubinstein said, I saw him last week,

1258
01:11:43,479 --> 01:11:47,320
Speaker 1: said what you do before your thirty doesn't matter. Um,

1259
01:11:47,760 --> 01:11:51,360
Speaker 1: And you know, so many UM people I know who

1260
01:11:51,400 --> 01:11:54,280
Speaker 1: are younger in college are so concerned about their career track.

1261
01:11:54,400 --> 01:11:57,360
Speaker 1: And I get that. But you really have to know

1262
01:11:57,520 --> 01:12:00,920
Speaker 1: what you like to do, uh and and can succeed in.

1263
01:12:01,120 --> 01:12:04,479
Speaker 1: So that is that is the that's the big thing

1264
01:12:04,760 --> 01:12:08,040
Speaker 1: is try and try different things, because I don't know

1265
01:12:08,160 --> 01:12:10,160
Speaker 1: how you can figure out whether you like something if

1266
01:12:10,200 --> 01:12:12,439
Speaker 1: you haven't tried it. You're you're from the same camp

1267
01:12:12,520 --> 01:12:14,360
Speaker 1: as I, which is, I don't know what the hell

1268
01:12:14,400 --> 01:12:17,639
Speaker 1: I wanted to do when I was nineteen or twenty five,

1269
01:12:17,840 --> 01:12:20,640
Speaker 1: or by thirty, I started to having an inkling. I

1270
01:12:20,720 --> 01:12:23,880
Speaker 1: get the sense you traveled a similar path, and I'm

1271
01:12:23,880 --> 01:12:26,479
Speaker 1: worried the kids don't do that enough these days. And

1272
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Speaker 1: our final question, what do you know about the world

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01:12:29,400 --> 01:12:33,400
Speaker 1: of investing today that you wish you knew thirty years ago,

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01:12:34,200 --> 01:12:37,680
Speaker 1: thirty years ago, let's call it, uh yeah, ninety two,

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01:12:37,800 --> 01:12:42,200
Speaker 1: thirty years ago. Wow. Uh don't have a great answer

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Speaker 1: to that. I guess I wish I knew interest rates

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01:12:44,040 --> 01:12:48,240
Speaker 1: were gonna come down the whole time. I think there

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01:12:48,640 --> 01:12:51,160
Speaker 1: is right. Was there was there any sign in ninety

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Speaker 1: two that this was a c change in the world

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01:12:54,800 --> 01:12:59,720
Speaker 1: of inflation and yield? Or did it? Was it? Just

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01:13:00,080 --> 01:13:04,439
Speaker 1: remember the like eighty nine when when did when did Vulker?

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Speaker 1: Oh I'm sorry, sight was when he caused the double

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01:13:08,960 --> 01:13:11,640
Speaker 1: dip eight and eighty two, the double dip recession. He

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Speaker 1: broke the back of inflation. So you were barely a

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01:13:14,160 --> 01:13:18,960
Speaker 1: dozen years into that, right, Um? Yeah, So I wish

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Speaker 1: i'd known that. You know, I really that that when

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01:13:21,720 --> 01:13:25,080
Speaker 1: you have lower interest rates, that helps stock market valuations

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01:13:25,200 --> 01:13:28,040
Speaker 1: and obviously helps fixed income. And I think we're now

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01:13:28,160 --> 01:13:29,760
Speaker 1: in a spot where what is the next twenty year

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01:13:29,800 --> 01:13:31,840
Speaker 1: was going to bring us? I want to know what

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01:13:31,920 --> 01:13:34,280
Speaker 1: was happening in the next ten years, Barry, that is

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01:13:34,600 --> 01:13:38,560
Speaker 1: the trillion dollar question, and I'll tell you afterwards. We

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01:13:38,800 --> 01:13:44,000
Speaker 1: have been speaking with Jan van Eck, CEO of Vent Associates.

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01:13:44,479 --> 01:13:47,160
Speaker 1: If you enjoy this conversation well, be sure to look

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01:13:47,240 --> 01:13:50,160
Speaker 1: up an Intra down an Inch on Apple iTunes, where

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01:13:50,160 --> 01:13:54,240
Speaker 1: you could see any of our prior three plus conversations.

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01:13:55,120 --> 01:13:59,040
Speaker 1: You'll find that on iTunes, Spotify, Google of a Cast,

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01:13:59,040 --> 01:14:02,839
Speaker 1: Stitcher where your final podcasts are sold. We love your comments,

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01:14:02,880 --> 01:14:06,400
Speaker 1: feedback and suggestions. Be sure and go to Apple iTunes

1300
01:14:06,560 --> 01:14:09,280
Speaker 1: and give us a review. Send us an email at

1301
01:14:09,439 --> 01:14:12,439
Speaker 1: m ib podcast at Bloomberg dot net. You can check

1302
01:14:12,479 --> 01:14:15,640
Speaker 1: out my daily column on Bloomberg dot com. Sign up

1303
01:14:15,720 --> 01:14:20,080
Speaker 1: from my daily reads at Ridhalts dot com. I would

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01:14:20,120 --> 01:14:22,479
Speaker 1: be remiss if I did not thank the cract staff

1305
01:14:22,479 --> 01:14:27,200
Speaker 1: who helps put these conversations together each week. Sam Schivrov

1306
01:14:27,479 --> 01:14:32,439
Speaker 1: is our producer, slash booker, Mark Sineskalgee is our audio engineer.

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01:14:32,840 --> 01:14:36,640
Speaker 1: Michael Batnick is my head of research. I'm Barry Ridhalts.

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01:14:37,040 --> 01:14:40,599
Speaker 1: You've been listening to Masters and Business on Bloomberg Radio.