1 00:00:03,240 --> 00:00:07,560 Speaker 1: This is Masters in Business with Barry Ridholes on Bloomberg Radio. 2 00:00:08,240 --> 00:00:10,760 Speaker 1: This week on the podcast, I sit down with Gina 3 00:00:10,800 --> 00:00:14,080 Speaker 1: Martin Adams. She is the head of equity strategy at 4 00:00:14,120 --> 00:00:18,520 Speaker 1: Wells Fargo, a giant bank here in the United States, 5 00:00:19,079 --> 00:00:22,960 Speaker 1: and she's really a very very interesting person, a very 6 00:00:23,000 --> 00:00:26,840 Speaker 1: senior woman in the position of equity strategy. You don't 7 00:00:27,280 --> 00:00:29,960 Speaker 1: you know, for for most of the past few centuries 8 00:00:30,360 --> 00:00:33,400 Speaker 1: that has very much been a male dominated position, and 9 00:00:33,400 --> 00:00:37,800 Speaker 1: it's interesting to see somebody who is so smart and 10 00:00:37,800 --> 00:00:43,320 Speaker 1: and experienced and articulate about how she approaches the business 11 00:00:44,159 --> 00:00:49,080 Speaker 1: of dealing with institutional clients who are um looking to 12 00:00:50,320 --> 00:00:52,839 Speaker 1: deploy their capital a way that makes sense relative to 13 00:00:52,840 --> 00:00:55,920 Speaker 1: the amount of risk they want to assume. I found 14 00:00:55,920 --> 00:00:59,400 Speaker 1: her to be quite fascinating and quite knowledgeable, and if 15 00:00:59,400 --> 00:01:05,080 Speaker 1: you're at all interested in equity investing institutional trading, this 16 00:01:05,120 --> 00:01:07,920 Speaker 1: is a person that you should probably listen to. So, 17 00:01:08,040 --> 00:01:12,840 Speaker 1: with no further ado, here is my conversation with Gina 18 00:01:13,480 --> 00:01:21,200 Speaker 1: Martin Adams. This is Masters in Business with Barry Ridholts 19 00:01:21,360 --> 00:01:26,119 Speaker 1: on Bloomberg Radio. My guest today is Gina Martin Adams. 20 00:01:26,160 --> 00:01:30,600 Speaker 1: She is the head of equity strategy for Wells Fargo Security, 21 00:01:30,640 --> 00:01:33,520 Speaker 1: which is headquartered here in New York, at least the 22 00:01:33,520 --> 00:01:37,520 Speaker 1: securities half of it. A little background about Gina. She 23 00:01:37,800 --> 00:01:42,880 Speaker 1: is both a Chartered Financial Analyst and a Chartered market Technician. 24 00:01:43,080 --> 00:01:45,959 Speaker 1: Not a lot of c f A slash c MT 25 00:01:46,160 --> 00:01:50,000 Speaker 1: s around uh. She UH is also a member of 26 00:01:50,040 --> 00:01:56,120 Speaker 1: the Financial Woman's Association and the Association of Professional Technical 27 00:01:56,160 --> 00:01:59,920 Speaker 1: Analysts and a member of the Institutional Investors all amor 28 00:02:00,000 --> 00:02:04,040 Speaker 1: A research team. Gina, welcome to Bloomberg. Thank you, thank 29 00:02:04,040 --> 00:02:07,120 Speaker 1: you for having me, my pleasure. Um. So, you're kind 30 00:02:07,160 --> 00:02:11,080 Speaker 1: of a unique analyst in the world. Um not only 31 00:02:11,120 --> 00:02:14,240 Speaker 1: because of the path your your career took in the 32 00:02:14,280 --> 00:02:17,840 Speaker 1: various places you've worked. But the only other person I 33 00:02:17,960 --> 00:02:21,480 Speaker 1: know of who's both the cf A and a CMT 34 00:02:21,880 --> 00:02:25,239 Speaker 1: is Jeff de Graf. Okay, they're I think they're about 35 00:02:25,280 --> 00:02:27,960 Speaker 1: a hundred of us in the world now, maybe getting 36 00:02:27,960 --> 00:02:32,440 Speaker 1: closer to and how many are there? Of thousands? Thousands 37 00:02:32,440 --> 00:02:35,760 Speaker 1: and thousands. So let's jump right into this. Tell us 38 00:02:35,800 --> 00:02:38,160 Speaker 1: a little bit about your background. How did you work 39 00:02:38,240 --> 00:02:41,280 Speaker 1: your way into the financial services in Okay? So, I 40 00:02:41,360 --> 00:02:45,600 Speaker 1: actually joined the company known as First Union right out 41 00:02:45,639 --> 00:02:47,840 Speaker 1: of college. I went to the University of Florida. I 42 00:02:47,919 --> 00:02:49,959 Speaker 1: thought I was going to be a marketing major, took 43 00:02:50,000 --> 00:02:53,680 Speaker 1: my first finance course and literally fell in love. Added 44 00:02:53,680 --> 00:02:56,720 Speaker 1: that to my UM to my docket. First Union, Now 45 00:02:56,760 --> 00:02:59,600 Speaker 1: that wasn't isn't Tennessee, is it? No, it was in Charlotte, 46 00:02:59,639 --> 00:03:02,080 Speaker 1: North Carol Charlotte. Yeah, it was in Charlotte, North Carolina. 47 00:03:02,120 --> 00:03:05,840 Speaker 1: So they did a big recruiting down at the university. 48 00:03:06,000 --> 00:03:09,519 Speaker 1: I ended up in a program called the Capital Management 49 00:03:10,000 --> 00:03:14,160 Speaker 1: Groups Training Program. So where the securities business the investment 50 00:03:14,160 --> 00:03:17,079 Speaker 1: banks all have their two year training program for bringing 51 00:03:17,120 --> 00:03:20,160 Speaker 1: analysts into the investment bank. We had one for capital 52 00:03:20,160 --> 00:03:26,000 Speaker 1: management investment management, and I joined that, rotated around UM, 53 00:03:26,200 --> 00:03:28,360 Speaker 1: got to know the various divisions of capital management, and 54 00:03:28,440 --> 00:03:32,680 Speaker 1: ended up on the in the Investments group. Yeah. Very interesting. 55 00:03:32,720 --> 00:03:36,280 Speaker 1: So you mentioned First Union. I know of them through 56 00:03:36,320 --> 00:03:40,360 Speaker 1: Wheat First Union, and that eventually down the road got 57 00:03:40,400 --> 00:03:43,920 Speaker 1: taken over by Wacovia. I don't remember how many steps 58 00:03:43,920 --> 00:03:47,680 Speaker 1: that were in between, and then many many steps there was, 59 00:03:47,720 --> 00:03:51,520 Speaker 1: so there were a number of different things. Ultimately, UM, 60 00:03:51,600 --> 00:03:56,000 Speaker 1: during the Great Recession, Wells Fargo took over. I think 61 00:03:56,040 --> 00:03:58,160 Speaker 1: that turned out to be a pretty uh a pretty 62 00:03:58,160 --> 00:04:00,960 Speaker 1: good fit. Yes, So what is a day in the 63 00:04:01,120 --> 00:04:04,880 Speaker 1: life like for a strategist at at Will's Fargo. I 64 00:04:04,920 --> 00:04:07,680 Speaker 1: don't think there is any day, to be honest with you, 65 00:04:07,920 --> 00:04:11,240 Speaker 1: So it's different from day to day. Every day is different. Um, 66 00:04:11,280 --> 00:04:15,600 Speaker 1: you know, the basics are you break my job into research, 67 00:04:16,040 --> 00:04:20,039 Speaker 1: so coming up with an idea, researching those ideas, then 68 00:04:20,279 --> 00:04:23,320 Speaker 1: writing those ideas into a report, and then communicating those 69 00:04:23,360 --> 00:04:24,919 Speaker 1: ideas to the world. So you think of it in 70 00:04:25,000 --> 00:04:28,240 Speaker 1: sort of three parts. Researching an idea, writing an idea, 71 00:04:28,240 --> 00:04:31,400 Speaker 1: and communicating that idea. Getting that idea out is really 72 00:04:31,440 --> 00:04:34,520 Speaker 1: what we're I'm focused on. So some days are very 73 00:04:34,520 --> 00:04:38,599 Speaker 1: research intensive, some days are very communications intensive. It sort 74 00:04:38,640 --> 00:04:41,200 Speaker 1: of depends, but what what sort of clients do you 75 00:04:41,240 --> 00:04:45,200 Speaker 1: typically work with? So I'm dedicated to the institutional clients, 76 00:04:45,200 --> 00:04:48,400 Speaker 1: So the portfolio managers of the world, the hedge fund 77 00:04:48,440 --> 00:04:51,080 Speaker 1: managers of the world, the pension funds of the world 78 00:04:51,120 --> 00:04:55,520 Speaker 1: as well. Um, professional investors are my audience. And there's 79 00:04:55,560 --> 00:04:59,000 Speaker 1: been a lot of changes going on in the changes, yes, 80 00:04:59,120 --> 00:05:03,560 Speaker 1: which must make your work pretty interesting. It does. It's 81 00:05:03,600 --> 00:05:06,480 Speaker 1: you know, it's not interesting just because of the content, 82 00:05:06,480 --> 00:05:08,320 Speaker 1: which I think is always interesting. You know, where is 83 00:05:08,360 --> 00:05:10,960 Speaker 1: the equity market headed and how do we take advantage 84 00:05:11,080 --> 00:05:14,360 Speaker 1: of different trends um in the macro economy in stocks. 85 00:05:14,400 --> 00:05:16,280 Speaker 1: But it's also interesting in the client base and the 86 00:05:16,279 --> 00:05:20,000 Speaker 1: struggles that they've gone through and the changes in the 87 00:05:20,040 --> 00:05:22,560 Speaker 1: client base have been pretty phenomenal. I've been doing equity 88 00:05:22,560 --> 00:05:26,119 Speaker 1: strategy now for nine years and my product has changed 89 00:05:26,160 --> 00:05:28,240 Speaker 1: a lot, but also the client has changed a lot 90 00:05:28,279 --> 00:05:30,880 Speaker 1: over the last nine years. So so let's work backwards 91 00:05:30,960 --> 00:05:34,400 Speaker 1: nine years would put us at two thousand and seven. Yes, 92 00:05:34,560 --> 00:05:40,120 Speaker 1: so you moved into equity strategy did just before just 93 00:05:40,160 --> 00:05:44,359 Speaker 1: a small crash, small change in the charts. So what 94 00:05:44,520 --> 00:05:47,479 Speaker 1: was it like starting this new position just as the 95 00:05:47,520 --> 00:05:50,120 Speaker 1: world was going to help? So in two thousand and 96 00:05:50,160 --> 00:05:53,279 Speaker 1: seven it was great. I actually worked as an economist 97 00:05:53,320 --> 00:05:56,560 Speaker 1: for John Sylvia ar chief economist for several years before 98 00:05:56,560 --> 00:05:59,640 Speaker 1: two thousand seven, and then moved in two thousand seven 99 00:05:59,680 --> 00:06:03,560 Speaker 1: from Charlotte to New York to start this equity strategy product. 100 00:06:03,560 --> 00:06:06,279 Speaker 1: Our entire equity trading businesses in New York, so it 101 00:06:06,320 --> 00:06:07,599 Speaker 1: made a lot of sense for me to be here. 102 00:06:07,960 --> 00:06:10,200 Speaker 1: So the move to New York was fantastic. You know, 103 00:06:10,520 --> 00:06:13,560 Speaker 1: a lot of big changes we got. We had about 104 00:06:13,680 --> 00:06:16,560 Speaker 1: six months to design a product and start putting it out. 105 00:06:16,680 --> 00:06:18,560 Speaker 1: We were putting it out in two thousand seven to 106 00:06:18,680 --> 00:06:20,520 Speaker 1: early two thousand and eight when things started to get 107 00:06:20,520 --> 00:06:23,400 Speaker 1: a bit rocky, and then the summer of two thousand 108 00:06:23,480 --> 00:06:26,400 Speaker 1: eight hit and we had really just gotten comfortable with 109 00:06:26,520 --> 00:06:29,760 Speaker 1: getting the product out there, understanding the client base, and 110 00:06:29,800 --> 00:06:35,360 Speaker 1: then it just went bananas. So what was it like 111 00:06:35,800 --> 00:06:38,360 Speaker 1: at Wells Fargo when everything was just going or at 112 00:06:38,400 --> 00:06:42,919 Speaker 1: the time when everything was going crazy? What what was 113 00:06:42,960 --> 00:06:45,480 Speaker 1: that like? It was tough. You know. I can remember 114 00:06:46,200 --> 00:06:50,960 Speaker 1: many days, especially over that summer after bear Um, many 115 00:06:51,040 --> 00:06:53,240 Speaker 1: days of a lot of question marks is to where 116 00:06:53,240 --> 00:06:55,760 Speaker 1: we were headed. There was one weekends you may recall, 117 00:06:55,839 --> 00:06:58,760 Speaker 1: when it was who's going to buy Yes, who's going 118 00:06:58,800 --> 00:07:01,480 Speaker 1: to buy wa Covia or take over Wacovia. Will it 119 00:07:01,520 --> 00:07:04,520 Speaker 1: be City Bank or Wells Fargo, And it's kind of 120 00:07:04,520 --> 00:07:08,720 Speaker 1: ironic that City Bank actually thought they could take anybody. 121 00:07:08,839 --> 00:07:12,239 Speaker 1: They were on the verge of their own billot. It's yeah. 122 00:07:12,440 --> 00:07:16,000 Speaker 1: In fact, it was a wild time period if memory serves. 123 00:07:16,040 --> 00:07:19,560 Speaker 1: There was negotiation with the fd i C sort of 124 00:07:19,640 --> 00:07:23,480 Speaker 1: managing it talking to City and when Wells Fargo stepped up, 125 00:07:23,520 --> 00:07:26,200 Speaker 1: it was like Hey, thanks for coming by, but now 126 00:07:26,240 --> 00:07:28,960 Speaker 1: a real buyers. Yeah, I mean I'm not overstating that, 127 00:07:29,040 --> 00:07:31,120 Speaker 1: am I. Uh, you know, I don't know all the 128 00:07:31,160 --> 00:07:35,080 Speaker 1: details of everything that happened. I can say internally there 129 00:07:35,160 --> 00:07:38,080 Speaker 1: was a lot of rooting for Wells Fargo. Because Wells 130 00:07:38,120 --> 00:07:41,880 Speaker 1: Fargo didn't have an investment bank, there would have been 131 00:07:42,120 --> 00:07:48,320 Speaker 1: instant department, better capital, all sorts of better adjustments in 132 00:07:48,440 --> 00:07:50,600 Speaker 1: terms of it was just easier on us. So from 133 00:07:50,600 --> 00:07:54,320 Speaker 1: a personal perspective, you know, and for my colleagues as well, 134 00:07:54,880 --> 00:07:58,280 Speaker 1: there weren't any competitors internally within Wells Fargo, so there 135 00:07:58,320 --> 00:08:00,960 Speaker 1: was a chance that we could survive as opposed to 136 00:08:01,040 --> 00:08:03,520 Speaker 1: going to somebody. They had. City had Solomon Brothers, they 137 00:08:03,560 --> 00:08:06,560 Speaker 1: had all these other things. That sounds very big equity 138 00:08:06,600 --> 00:08:10,040 Speaker 1: business at City. I'm Barry Ridhults. You're listening to Masters 139 00:08:10,080 --> 00:08:13,240 Speaker 1: in Business on Bloomberg Radio. My special guest today is 140 00:08:13,320 --> 00:08:17,480 Speaker 1: Gina Martin Adams. She is the equity strategist at Wells Fargo, 141 00:08:18,080 --> 00:08:20,360 Speaker 1: and let's talk a little bit about what it's like 142 00:08:20,640 --> 00:08:24,240 Speaker 1: to be a woman working in the world of finance. 143 00:08:24,280 --> 00:08:28,920 Speaker 1: We've had other women's strategists like Liz Anne Saunders, Kelly 144 00:08:28,960 --> 00:08:31,840 Speaker 1: Coffee is the head of the private banquet at JP Morgan. 145 00:08:32,240 --> 00:08:35,760 Speaker 1: But something that Michelle Meyer said, she's one of the 146 00:08:35,760 --> 00:08:39,840 Speaker 1: economists at Meryl Lynch, really really stayed with me, which was, 147 00:08:40,800 --> 00:08:44,000 Speaker 1: and this is a quote, the lack of women at 148 00:08:44,000 --> 00:08:47,240 Speaker 1: the top of the industry serves as a real challenge 149 00:08:47,360 --> 00:08:50,000 Speaker 1: for women in finance. Do you agree with that? What 150 00:08:50,040 --> 00:08:52,720 Speaker 1: do you think about that? Uh? You know, the way 151 00:08:52,720 --> 00:08:54,760 Speaker 1: that I see it is being a woman on Wall 152 00:08:54,800 --> 00:08:57,800 Speaker 1: Street is both a blessing and a curse. I mean, 153 00:08:57,800 --> 00:08:59,760 Speaker 1: I think that there are a lot of blessings that 154 00:08:59,800 --> 00:09:01,880 Speaker 1: come come along with being a woman on Wall Street. 155 00:09:02,040 --> 00:09:07,760 Speaker 1: You are immediately recognizable right there are off with a 156 00:09:07,760 --> 00:09:10,640 Speaker 1: white shirt and red tar, right, So you know, on 157 00:09:10,640 --> 00:09:12,840 Speaker 1: on that hand, it's a blessing. It's a curse because 158 00:09:12,880 --> 00:09:17,720 Speaker 1: you don't fit in still. But I think, you know, 159 00:09:17,800 --> 00:09:20,360 Speaker 1: I have to admit there have been remarkable changes just 160 00:09:20,440 --> 00:09:23,920 Speaker 1: in my career, and I meet a lot more women 161 00:09:23,960 --> 00:09:25,719 Speaker 1: doing what I do, and a lot more women that 162 00:09:25,760 --> 00:09:28,240 Speaker 1: sit across the table as clients today than I did 163 00:09:28,400 --> 00:09:31,080 Speaker 1: even nine years ago when I started any strategy, and 164 00:09:31,160 --> 00:09:33,319 Speaker 1: certainly more than I did twenty years ago when I 165 00:09:33,360 --> 00:09:35,800 Speaker 1: started this business. So I started on a trading desk, 166 00:09:35,840 --> 00:09:38,240 Speaker 1: and I remember the days of the boom boom rooms 167 00:09:38,280 --> 00:09:40,959 Speaker 1: and the sexism on Wall Street was it was pretty 168 00:09:41,040 --> 00:09:47,760 Speaker 1: much a frat house. That seems to have really matured dramatically, absolutely, 169 00:09:47,840 --> 00:09:50,080 Speaker 1: and I had. I didn't see that in my career 170 00:09:50,120 --> 00:09:51,600 Speaker 1: because I was on the buy side for the first 171 00:09:51,600 --> 00:09:53,800 Speaker 1: several years of my career, and then I was an economist. 172 00:09:53,880 --> 00:09:56,880 Speaker 1: So you know, I've only been in the equity business 173 00:09:56,920 --> 00:09:59,079 Speaker 1: specifically for the last ten and I didn't see that 174 00:10:00,040 --> 00:10:03,840 Speaker 1: in and certainly don't see that today. Well, it's completely different, 175 00:10:03,840 --> 00:10:06,680 Speaker 1: it's completely change. What other changes have you seen that 176 00:10:06,720 --> 00:10:10,520 Speaker 1: have taken place, whether it's on the equity side, I 177 00:10:10,520 --> 00:10:12,160 Speaker 1: don't just mean as a woman, but what have you 178 00:10:12,240 --> 00:10:16,320 Speaker 1: seen change over the course of your career. The most 179 00:10:16,520 --> 00:10:20,120 Speaker 1: dramatic change, I think is the regulatory environment. It's post 180 00:10:20,440 --> 00:10:23,960 Speaker 1: Dodd Frank, post financial crisis, post financial crisis, but also 181 00:10:24,160 --> 00:10:27,120 Speaker 1: post tech bubble bursting. You know, I go back to 182 00:10:27,320 --> 00:10:29,440 Speaker 1: the late nineties, and I did have a few years 183 00:10:29,480 --> 00:10:34,240 Speaker 1: of experience in the nineties in the absolute boom years, 184 00:10:34,280 --> 00:10:36,480 Speaker 1: you know, in the years when the investment bank was 185 00:10:36,520 --> 00:10:40,480 Speaker 1: not entirely separate from the research division. While I was 186 00:10:40,480 --> 00:10:43,280 Speaker 1: on the BI side and only peripherally noting these things. 187 00:10:44,080 --> 00:10:46,520 Speaker 1: The changes from two thousand two to two thousand and four, 188 00:10:46,559 --> 00:10:49,200 Speaker 1: I think we're very profound for the investment banking industry. 189 00:10:49,320 --> 00:10:52,000 Speaker 1: And now the changes post financial crisis have been very 190 00:10:52,000 --> 00:10:55,800 Speaker 1: profound for the banking industry at large. So you had 191 00:10:55,840 --> 00:10:59,880 Speaker 1: to cris post crisis periods of regulatory change, and that's 192 00:11:00,000 --> 00:11:03,040 Speaker 1: I think been the most profound change the citial services business. 193 00:11:03,160 --> 00:11:06,400 Speaker 1: Then the analysts um the crisis that we saw on 194 00:11:06,679 --> 00:11:11,079 Speaker 1: the the end ron Jack Grubman that that whole run 195 00:11:11,120 --> 00:11:15,160 Speaker 1: of stuff was really those were enormous changes that took 196 00:11:15,160 --> 00:11:18,200 Speaker 1: place because at one point in time, I think the 197 00:11:18,200 --> 00:11:22,040 Speaker 1: retail investor thought the analyst community worked for them, and 198 00:11:22,400 --> 00:11:24,680 Speaker 1: it was kind of a wake up call when they realized, no, 199 00:11:24,760 --> 00:11:27,800 Speaker 1: it's part of investment banking. They're here to generate m 200 00:11:27,840 --> 00:11:30,920 Speaker 1: and A and underwriting, not actually tell you what to 201 00:11:30,960 --> 00:11:33,480 Speaker 1: buy and sell. I think that was a huge shock 202 00:11:33,559 --> 00:11:37,800 Speaker 1: to people, very very big change. And so tell us 203 00:11:37,840 --> 00:11:43,520 Speaker 1: about what you've observed firsthand post financial crisis, mostly due 204 00:11:43,559 --> 00:11:46,600 Speaker 1: to the Dodd Frank changes. Well, you know, the first 205 00:11:46,640 --> 00:11:49,240 Speaker 1: thing you observe is that the fastest growing divisions of 206 00:11:49,280 --> 00:11:53,119 Speaker 1: banks are the regulatory and compliance departments. Really that's fascinating, 207 00:11:53,120 --> 00:11:57,800 Speaker 1: but it's very account budget. Absolutely. Just keeping up with 208 00:11:57,840 --> 00:12:02,080 Speaker 1: these compliance regulations is a tremendous allane. You also have 209 00:12:02,320 --> 00:12:05,640 Speaker 1: a level of conservatism, and Wells Fargo has always been 210 00:12:05,679 --> 00:12:09,360 Speaker 1: a very conservative organization, so I think, you know, there 211 00:12:09,400 --> 00:12:12,240 Speaker 1: you were certainly unique in that in that aspect, but 212 00:12:12,320 --> 00:12:16,559 Speaker 1: there's a level of conservatism across banks, and especially in 213 00:12:16,640 --> 00:12:19,600 Speaker 1: investment banks that maybe didn't exist. The risk taking is 214 00:12:19,640 --> 00:12:23,640 Speaker 1: not as extreme. Um, you know, there's always risk taking 215 00:12:23,640 --> 00:12:25,800 Speaker 1: it is an investment bank, but I think the decision 216 00:12:25,840 --> 00:12:29,600 Speaker 1: process is a little bit different considering the regulatory angle. 217 00:12:29,679 --> 00:12:32,200 Speaker 1: I mean, obviously that there's been a shift in even 218 00:12:32,240 --> 00:12:36,800 Speaker 1: the capacity to trade in these divisions is pretty much gone. 219 00:12:36,880 --> 00:12:38,920 Speaker 1: So I think, you know, there have been a lot 220 00:12:38,920 --> 00:12:40,960 Speaker 1: of changes, but a lot of them are related to 221 00:12:40,960 --> 00:12:44,680 Speaker 1: regulatory pressures. The other big change that I see is, 222 00:12:44,920 --> 00:12:47,719 Speaker 1: you know, there are really two. One is technological advancement 223 00:12:47,760 --> 00:12:50,000 Speaker 1: is obviously changing the way in which we do business, 224 00:12:50,000 --> 00:12:52,520 Speaker 1: and that's changed from when I started in this business. 225 00:12:53,080 --> 00:12:55,000 Speaker 1: To make a trade in a mutual fund, you had 226 00:12:55,000 --> 00:12:58,200 Speaker 1: to call a company, right, I mean, it wasn't It 227 00:12:58,320 --> 00:13:01,679 Speaker 1: was very different. End of day trading at four oh 228 00:13:01,679 --> 00:13:05,320 Speaker 1: one exactly, megaphone callet. Sometimes you wouldn't get a price 229 00:13:05,360 --> 00:13:07,600 Speaker 1: till four or fifteen exactly. It took a while while 230 00:13:07,640 --> 00:13:10,679 Speaker 1: we're waiting for some subtly accounts every night. I mean, 231 00:13:10,720 --> 00:13:13,800 Speaker 1: just a totally different business model. Um. And I was 232 00:13:13,840 --> 00:13:16,880 Speaker 1: fortunate enough in my rotational training program that we referenced 233 00:13:16,920 --> 00:13:19,640 Speaker 1: earlier in the program, I was fortunate enough to sit 234 00:13:19,679 --> 00:13:23,640 Speaker 1: on a desk where we designed the automated trading in 235 00:13:23,760 --> 00:13:26,520 Speaker 1: mutual funds on the investment side of the business. Yeah, 236 00:13:26,559 --> 00:13:30,160 Speaker 1: so that was in the late nineties. Um. The technology 237 00:13:30,160 --> 00:13:32,800 Speaker 1: has been there for a long time. Yes, just building 238 00:13:32,840 --> 00:13:35,360 Speaker 1: it and implementing right exactly. Think about there was no 239 00:13:35,440 --> 00:13:38,400 Speaker 1: BlackBerry also right in the late nineties, nobody carried around 240 00:13:38,400 --> 00:13:40,959 Speaker 1: a BlackBerry until right around two thousands your cell phone 241 00:13:41,040 --> 00:13:45,240 Speaker 1: was voice exactly, a very big change. You could barely 242 00:13:45,640 --> 00:13:48,600 Speaker 1: SMS that barely existed short messaging not at all, not 243 00:13:48,679 --> 00:13:52,200 Speaker 1: at all. So that's just an example of how different 244 00:13:52,200 --> 00:13:54,400 Speaker 1: it is so technology. And then what was the other 245 00:13:54,440 --> 00:13:57,800 Speaker 1: thing I think is investor appetite for risk And this 246 00:13:58,080 --> 00:14:00,560 Speaker 1: sort of speaks to what the retail investor is doing 247 00:14:00,600 --> 00:14:03,200 Speaker 1: with their capital. You go all the way back to 248 00:14:03,240 --> 00:14:05,600 Speaker 1: two thousand. That was pretty much the peak of household 249 00:14:05,600 --> 00:14:09,959 Speaker 1: ownership of equity, right, and we have yet to recover 250 00:14:10,679 --> 00:14:12,679 Speaker 1: from the two thousand and two thousand bubble. And then 251 00:14:12,679 --> 00:14:16,120 Speaker 1: on top of that the two thousand two nine crash, 252 00:14:16,360 --> 00:14:18,440 Speaker 1: and you you have the housing collapse in the middle 253 00:14:18,480 --> 00:14:21,000 Speaker 1: of that, and then after that you have the commodities call. 254 00:14:21,560 --> 00:14:26,160 Speaker 1: So that's four major booms that that the individual investor 255 00:14:26,520 --> 00:14:29,840 Speaker 1: has lived through. And the investors today think very differently 256 00:14:29,880 --> 00:14:32,720 Speaker 1: than the generation of investors prior to that. If you 257 00:14:32,720 --> 00:14:35,920 Speaker 1: think about how the baby boomer generation sort of came 258 00:14:36,000 --> 00:14:40,640 Speaker 1: up um in the workforce, they went through the two 259 00:14:40,680 --> 00:14:45,880 Speaker 1: thousand biggest bull market, right, it was just incredible environment 260 00:14:45,920 --> 00:14:49,200 Speaker 1: where obviously you owned stocks for the long haul, and 261 00:14:49,280 --> 00:14:51,840 Speaker 1: obviously you put money to work in stocks, and you 262 00:14:51,880 --> 00:14:54,280 Speaker 1: know your pension was clearly going to be there for you. 263 00:14:54,360 --> 00:14:57,880 Speaker 1: Because the equity market was constantly rising, bonds were in 264 00:14:57,880 --> 00:15:00,360 Speaker 1: a bull market at the same time. And then in 265 00:15:00,440 --> 00:15:03,640 Speaker 1: two thousand, really starting in two thousand, those assumptions started 266 00:15:03,680 --> 00:15:07,120 Speaker 1: to break um. And I think that that's a huge 267 00:15:07,200 --> 00:15:09,360 Speaker 1: change for the industry at large, is what does the 268 00:15:09,440 --> 00:15:13,120 Speaker 1: investor want out of us? What do they command out 269 00:15:13,120 --> 00:15:16,480 Speaker 1: of us, and what is their perception of assets in 270 00:15:16,520 --> 00:15:20,160 Speaker 1: general and their willingness to tolerate the risk that comes 271 00:15:20,160 --> 00:15:23,040 Speaker 1: along with ownership. I'm Barry rid Halts. You're listening to 272 00:15:23,160 --> 00:15:26,680 Speaker 1: Masters in Business on Bloomberg Radio. My special guest today 273 00:15:26,720 --> 00:15:30,720 Speaker 1: is Gina Martin Adams. She is the head of Equity 274 00:15:30,800 --> 00:15:35,280 Speaker 1: Strategy for Wills Fargo Security, which is located here in 275 00:15:35,640 --> 00:15:38,600 Speaker 1: uh New York. In addition to being a member of 276 00:15:38,640 --> 00:15:43,880 Speaker 1: the Institutional Investors All America Research team, she is both 277 00:15:44,080 --> 00:15:48,800 Speaker 1: a chartered financial analyst and a chartered market technician, which 278 00:15:48,840 --> 00:15:53,040 Speaker 1: is a unique and interesting combination. And prior to working 279 00:15:53,040 --> 00:15:57,560 Speaker 1: at Wells Fargo, she was at Wacovia in the economics department, 280 00:15:57,720 --> 00:16:02,040 Speaker 1: which was acquired by Will's RGO. During the financial collapse, 281 00:16:02,360 --> 00:16:04,520 Speaker 1: Let's talk a little bit about that summer, which was 282 00:16:05,360 --> 00:16:09,440 Speaker 1: a fun period of Wall Street history. Um, even though 283 00:16:09,680 --> 00:16:13,760 Speaker 1: there was so much um, in hindsight, it's a fascinating era. 284 00:16:13,880 --> 00:16:16,560 Speaker 1: At the time, it was pretty frightening. People were genuinely 285 00:16:17,160 --> 00:16:20,000 Speaker 1: afraid that the system itself was going to break the 286 00:16:20,160 --> 00:16:23,800 Speaker 1: entire financial system. Yeah, it was. It was brutal, to 287 00:16:23,840 --> 00:16:26,200 Speaker 1: say the least. I mean, what was amazing about that 288 00:16:26,240 --> 00:16:28,120 Speaker 1: summer is if you look back at what the market 289 00:16:28,160 --> 00:16:33,520 Speaker 1: did between the Bear Stearns collapse, which was let's call 290 00:16:33,600 --> 00:16:38,400 Speaker 1: that March spring, the spring of sometime, and then the 291 00:16:39,520 --> 00:16:43,840 Speaker 1: big moment for us, obviously was the acquisition of Wacovia 292 00:16:43,920 --> 00:16:47,960 Speaker 1: by Wells Fargo in September from the city. All Right, 293 00:16:48,000 --> 00:16:51,040 Speaker 1: the markets were actually remarkably stable during that period. They 294 00:16:51,040 --> 00:16:53,440 Speaker 1: were bouncing up and down, they were bouncing up and down, 295 00:16:53,440 --> 00:16:56,200 Speaker 1: but they were range bound. And then September happened and 296 00:16:56,200 --> 00:16:59,920 Speaker 1: it was an absolute crash. But I distinctly recall sitting 297 00:17:00,000 --> 00:17:02,840 Speaker 1: in my office during that summer and thinking, why is 298 00:17:02,880 --> 00:17:06,000 Speaker 1: the market so ridiculously stable? What does the market know 299 00:17:06,119 --> 00:17:07,679 Speaker 1: that I don't know? And you think back to that 300 00:17:07,720 --> 00:17:09,400 Speaker 1: period and there were a lot of people saying Bear 301 00:17:09,520 --> 00:17:12,840 Speaker 1: was the big moment, for the big moment, and that 302 00:17:12,960 --> 00:17:15,440 Speaker 1: was going to be it. And then suddenly you had 303 00:17:15,920 --> 00:17:19,119 Speaker 1: this just wave of trouble that occurred in the in 304 00:17:19,160 --> 00:17:21,639 Speaker 1: the fall. So even though that summer we think of 305 00:17:21,640 --> 00:17:24,080 Speaker 1: it as you know, that was when everything happened, it 306 00:17:24,119 --> 00:17:26,000 Speaker 1: was really the fall when everything happened, because the summer 307 00:17:26,040 --> 00:17:28,520 Speaker 1: was a quiet period. It was, oh, you know, things 308 00:17:28,720 --> 00:17:31,560 Speaker 1: really don't seem stable, but the market seems somewhat stable. 309 00:17:31,640 --> 00:17:35,400 Speaker 1: What's going on here? And then it just absolutely fell, um, 310 00:17:35,560 --> 00:17:38,320 Speaker 1: you know, through the floor. People forget if if you're 311 00:17:38,400 --> 00:17:40,159 Speaker 1: if you're not looking at the charts, if you're not 312 00:17:40,160 --> 00:17:44,320 Speaker 1: looking at the timeline housing prices. I want to say, 313 00:17:44,520 --> 00:17:47,520 Speaker 1: housing volumes peaked in OH five, and then prices peaked 314 00:17:47,520 --> 00:17:51,040 Speaker 1: in and then when housing began to roll over and 315 00:17:51,119 --> 00:17:57,040 Speaker 1: everything associated with mortgages. So first you have the banks, 316 00:17:57,040 --> 00:17:58,840 Speaker 1: and then you have the securities firm, and then you 317 00:17:58,840 --> 00:18:02,560 Speaker 1: have the home builders. As home prices fell, that started 318 00:18:02,560 --> 00:18:07,040 Speaker 1: a cascade. I've argued that Lehman was just the first 319 00:18:07,119 --> 00:18:10,280 Speaker 1: trailer to get taken out by the tornado. It didn't 320 00:18:10,280 --> 00:18:14,560 Speaker 1: cause everything. As home prices were falling, that storm was 321 00:18:14,600 --> 00:18:17,080 Speaker 1: going to take everything in its path. So so you're 322 00:18:17,080 --> 00:18:19,639 Speaker 1: at withall Covia. What is it like when when you 323 00:18:19,920 --> 00:18:23,159 Speaker 1: you're hearing internally, hey we might get brought by city. 324 00:18:23,359 --> 00:18:27,240 Speaker 1: Here's what's going on? What? What? What did that feel like? Uh? 325 00:18:27,280 --> 00:18:29,040 Speaker 1: It was pretty awful. I mean, I don't want to 326 00:18:29,080 --> 00:18:31,880 Speaker 1: say it was debilitating. We still were producing research and 327 00:18:31,960 --> 00:18:34,560 Speaker 1: kind of wondering what the point was. But nonetheless, week 328 00:18:35,600 --> 00:18:38,120 Speaker 1: I was in New York. I was in New York 329 00:18:38,160 --> 00:18:41,000 Speaker 1: and had just for a year been doing equity strategy 330 00:18:41,040 --> 00:18:43,960 Speaker 1: at that point, So it was it was tricky because 331 00:18:43,960 --> 00:18:45,600 Speaker 1: you kind of wondered, you know, where are we going 332 00:18:45,640 --> 00:18:48,600 Speaker 1: to end up? What are the On a daily basis, 333 00:18:48,880 --> 00:18:52,280 Speaker 1: your color, my colleagues and I would discuss what are 334 00:18:52,280 --> 00:18:54,119 Speaker 1: what are What's going to happen to us? Right? It 335 00:18:54,160 --> 00:18:56,919 Speaker 1: was as much as we wanted to do business as usual, 336 00:18:57,400 --> 00:19:00,160 Speaker 1: so much of your day was dedicated to following what's 337 00:19:00,200 --> 00:19:03,400 Speaker 1: happening in the financial news, what's happening in the financial stocks? 338 00:19:03,600 --> 00:19:08,080 Speaker 1: You know who's crashing today? Um, you know where where's 339 00:19:08,119 --> 00:19:11,639 Speaker 1: the next crisis? And how are we going to survive this? Uh? 340 00:19:11,840 --> 00:19:15,080 Speaker 1: So it was it was really tough. Is the best 341 00:19:15,200 --> 00:19:17,639 Speaker 1: the best word that I can can use to describe it, 342 00:19:17,680 --> 00:19:20,280 Speaker 1: because it was in a lot of ways, because somewhat 343 00:19:20,280 --> 00:19:22,719 Speaker 1: indescribable because it was such a unique experience. And I 344 00:19:22,760 --> 00:19:26,479 Speaker 1: recall having conversations with people walking down the streets of 345 00:19:26,560 --> 00:19:30,000 Speaker 1: Manhattan and saying, you can feel the tension in the 346 00:19:30,040 --> 00:19:34,200 Speaker 1: as It wasn't just me projecting. There was a genuine 347 00:19:34,280 --> 00:19:37,960 Speaker 1: angst throughout the entire city, and I imagined throughout any 348 00:19:37,960 --> 00:19:41,240 Speaker 1: other financial center in the world, right, And so when 349 00:19:41,240 --> 00:19:43,280 Speaker 1: did you guys find out? Oh, by the way, Wills 350 00:19:43,280 --> 00:19:46,760 Speaker 1: Fargo was our white night, everything is fantastic. Well, it 351 00:19:46,840 --> 00:19:49,879 Speaker 1: was a weekend. It happened over a weekend, as all 352 00:19:50,000 --> 00:19:52,159 Speaker 1: great news does. I remember it was a weekend, and 353 00:19:52,160 --> 00:19:54,840 Speaker 1: I remember the exact day, but I remember it was 354 00:19:54,880 --> 00:19:56,879 Speaker 1: a weekend. We knew that Wells Fargo had bought us, 355 00:19:56,920 --> 00:19:58,800 Speaker 1: but there was still a big question mark in our minds, 356 00:19:58,840 --> 00:20:03,399 Speaker 1: and that was Wells Fargo historically had not, you know, 357 00:20:03,760 --> 00:20:06,399 Speaker 1: been interested in taking the risk of having an investment bank. 358 00:20:06,680 --> 00:20:13,000 Speaker 1: It's a very dedicated, very conservative, large bank, but having 359 00:20:13,080 --> 00:20:15,760 Speaker 1: an investment bank was not something they historically had been 360 00:20:15,800 --> 00:20:19,479 Speaker 1: interested in. So in the investment bank, we wondered, you know, 361 00:20:19,720 --> 00:20:21,800 Speaker 1: are they actually going to be interested in the investment bank. 362 00:20:21,920 --> 00:20:25,000 Speaker 1: And as much as they told us yes, everything's fine, 363 00:20:25,480 --> 00:20:29,160 Speaker 1: I don't think anyone felt fine with it really until 364 00:20:29,160 --> 00:20:31,400 Speaker 1: the end of two thousand eight, early two thousand nine, 365 00:20:32,000 --> 00:20:35,320 Speaker 1: when we've got much more communication about you know, this 366 00:20:35,400 --> 00:20:38,680 Speaker 1: is happening, you really are part of this bank. So 367 00:20:38,800 --> 00:20:41,439 Speaker 1: there was a period of time where, you know, the 368 00:20:41,480 --> 00:20:45,159 Speaker 1: markets were imploding, and that implosion itself made you question 369 00:20:45,240 --> 00:20:47,760 Speaker 1: how much risk this giant institution was willing to take 370 00:20:47,760 --> 00:20:51,320 Speaker 1: on with its investment bank. Um, but I think we really, 371 00:20:51,400 --> 00:20:53,159 Speaker 1: we all started to feel a lot better late two 372 00:20:53,200 --> 00:20:55,359 Speaker 1: thousand early two thousand nine that at the very least, 373 00:20:55,600 --> 00:20:58,000 Speaker 1: what Covia in its former self would survive as a 374 00:20:58,160 --> 00:21:00,199 Speaker 1: you know what Covia's investment bank would survive as a 375 00:21:00,240 --> 00:21:03,520 Speaker 1: portion of Wells Fargo. I'm Barry Ridholts. You're listening to 376 00:21:03,640 --> 00:21:07,560 Speaker 1: Masters in Business on Bloomberg Radio. My special guest today 377 00:21:07,840 --> 00:21:12,399 Speaker 1: is Gina Martin Adams. She is the head equity strategist 378 00:21:12,800 --> 00:21:17,000 Speaker 1: at Wells Fargo Securities located here in New York. And 379 00:21:17,080 --> 00:21:20,400 Speaker 1: let's talk a little bit about your unusual background. Both 380 00:21:20,480 --> 00:21:25,520 Speaker 1: a Chartered market technician meaning you look at charts, your technician, 381 00:21:26,080 --> 00:21:29,040 Speaker 1: and a cf A meaning you can do the full 382 00:21:29,440 --> 00:21:33,399 Speaker 1: fundamental analysis. UM, we had Jeff degraph On. He is 383 00:21:33,520 --> 00:21:37,760 Speaker 1: really the only other person I know of personally who's 384 00:21:37,840 --> 00:21:41,439 Speaker 1: both a A, a c MT and a c f A. 385 00:21:42,320 --> 00:21:44,159 Speaker 1: I think you mentioned there there are a hundred or 386 00:21:44,200 --> 00:21:48,159 Speaker 1: so of you folks. What motivated you to to go 387 00:21:48,359 --> 00:21:51,359 Speaker 1: that route and get both designations? Yeah, it's it's a 388 00:21:51,359 --> 00:21:55,760 Speaker 1: great question. I actually started as a fundamental analyst. UM. 389 00:21:55,800 --> 00:21:58,800 Speaker 1: I think every university in the country in the if 390 00:21:58,800 --> 00:22:01,080 Speaker 1: you were taking taking finance courses, you were taught a 391 00:22:01,080 --> 00:22:03,639 Speaker 1: fundamental way to look at the market right and and 392 00:22:03,760 --> 00:22:08,200 Speaker 1: ultimately you have to take the three part exam in 393 00:22:08,200 --> 00:22:11,080 Speaker 1: investment management. It was very promoted, you know, going to 394 00:22:11,160 --> 00:22:13,240 Speaker 1: do the c f A. It's it's your next step. 395 00:22:13,359 --> 00:22:16,280 Speaker 1: So I definitely did that and found it very valuable. 396 00:22:16,280 --> 00:22:19,560 Speaker 1: But when I was working as an economist, UM, we 397 00:22:19,760 --> 00:22:23,000 Speaker 1: really struggled to explain things like oil prices and where 398 00:22:23,040 --> 00:22:25,600 Speaker 1: oil prices were going at the time. Remember between two 399 00:22:25,600 --> 00:22:29,480 Speaker 1: thousand one and two thousand eight, oil prices just soared. 400 00:22:30,359 --> 00:22:36,359 Speaker 1: We we struggled to explain oil prices where went pretty 401 00:22:36,760 --> 00:22:39,600 Speaker 1: went out of control, right. And we also really struggled 402 00:22:39,600 --> 00:22:41,840 Speaker 1: and I think most shops have struggled with forecasting the 403 00:22:41,880 --> 00:22:46,280 Speaker 1: tenure treasury bund the famous Greenspan's famous conundrum. Why is 404 00:22:46,320 --> 00:22:49,320 Speaker 1: the tenure treasury staying low despite short rates moving higher? 405 00:22:49,600 --> 00:22:52,840 Speaker 1: And what's happening here? So I started to develop a 406 00:22:52,880 --> 00:22:55,439 Speaker 1: lot more respect for what, you know, what the market 407 00:22:55,480 --> 00:22:57,600 Speaker 1: was actually telling me what and wanted to look at 408 00:22:57,640 --> 00:23:03,520 Speaker 1: the charts and wanted to explore other options because sometimes 409 00:23:03,560 --> 00:23:08,159 Speaker 1: the price trend goes beyond the fundament what fundamentals can justify. 410 00:23:08,280 --> 00:23:12,200 Speaker 1: And so I started looking into the technicians designation. UM 411 00:23:12,280 --> 00:23:17,200 Speaker 1: went through that process and I didn't take a course. 412 00:23:17,240 --> 00:23:19,480 Speaker 1: I did it all on my own. Really. Yeah, it's 413 00:23:19,760 --> 00:23:22,080 Speaker 1: very similar to the CFA where you read, you know, 414 00:23:22,320 --> 00:23:25,159 Speaker 1: I don't know, eight different textbooks and you get a 415 00:23:25,200 --> 00:23:27,919 Speaker 1: test at three different tests to pass the test. And 416 00:23:28,840 --> 00:23:31,360 Speaker 1: so I didn't exactly do a course, but I will 417 00:23:31,400 --> 00:23:34,679 Speaker 1: say there were some figures that really there's some um, 418 00:23:34,680 --> 00:23:37,439 Speaker 1: you know, practitioners of technical analysis that really made a 419 00:23:37,440 --> 00:23:42,200 Speaker 1: big impression on me. And one is John Murphy did 420 00:23:42,240 --> 00:23:45,560 Speaker 1: a lot of work on inner market analysis, which you know, 421 00:23:45,640 --> 00:23:49,119 Speaker 1: I think it really speaks to fundamental investors in a 422 00:23:49,160 --> 00:23:50,840 Speaker 1: lot of way. You know, we all know that there's 423 00:23:50,840 --> 00:23:54,240 Speaker 1: an economic cycle. It's a very fundamental tenant. But here 424 00:23:54,280 --> 00:23:56,880 Speaker 1: is a technician talking about how to describe that economic 425 00:23:56,960 --> 00:24:00,680 Speaker 1: cycle and charts and relative sector performance and the like. UM, 426 00:24:00,760 --> 00:24:05,080 Speaker 1: here's the technician talking about bonds versus stocks, versus commodities 427 00:24:05,080 --> 00:24:09,320 Speaker 1: and different cycles that occur through time. There thing, it's 428 00:24:09,359 --> 00:24:13,240 Speaker 1: a lot of crossover, I think between fundamentals and technicals UM. 429 00:24:13,400 --> 00:24:16,960 Speaker 1: In some of Mercy's Murphy's work, and I really appreciated that. 430 00:24:17,040 --> 00:24:20,920 Speaker 1: And then you know, I think on the technicals, there's 431 00:24:21,000 --> 00:24:26,399 Speaker 1: no better explanation for market sentiment than the price itself. Right, 432 00:24:26,560 --> 00:24:30,440 Speaker 1: and say that again, there's no better explanation for sentiment 433 00:24:30,600 --> 00:24:34,080 Speaker 1: than meaning people are affected by whether their portfolios are 434 00:24:34,119 --> 00:24:37,600 Speaker 1: going up or down exactly. Well, just price is representative 435 00:24:37,680 --> 00:24:41,840 Speaker 1: of sentiment, right, It's what stocks are doing is in 436 00:24:41,880 --> 00:24:45,480 Speaker 1: and of itself sentiment. If stocks are rising, you've got 437 00:24:45,840 --> 00:24:49,480 Speaker 1: buyers willing to bid up prices. If stocks are falling, 438 00:24:49,800 --> 00:24:54,160 Speaker 1: you've got sellers willing to take less. Right. So there's 439 00:24:54,320 --> 00:24:59,080 Speaker 1: there's a psychological component that is completely and totally described 440 00:24:59,280 --> 00:25:03,480 Speaker 1: through price that I absolutely appreciate. So so let's talk 441 00:25:03,520 --> 00:25:05,800 Speaker 1: about that because I sense a bit of a chicken 442 00:25:06,000 --> 00:25:12,359 Speaker 1: and egg conundrum. Are buyers bullish and are driving prices higher? 443 00:25:12,680 --> 00:25:17,800 Speaker 1: Or do buyers having just bought feel bullish, because now 444 00:25:17,840 --> 00:25:19,879 Speaker 1: that represents I think there's a little bit of both. 445 00:25:19,920 --> 00:25:22,560 Speaker 1: I think there's a little bit of both, And again 446 00:25:22,600 --> 00:25:26,840 Speaker 1: it's sentiments, so it's a fuzzy measure, but I do 447 00:25:26,920 --> 00:25:29,040 Speaker 1: think there's a little bit of both. And what we've done, 448 00:25:29,160 --> 00:25:33,520 Speaker 1: some of our work is has focused along even describing valuation, 449 00:25:33,600 --> 00:25:36,560 Speaker 1: which is a fundamental concept in technical terms. So if 450 00:25:36,560 --> 00:25:39,000 Speaker 1: you look over a long period of history and you 451 00:25:39,040 --> 00:25:41,359 Speaker 1: look at the market valuation and how it moves. A 452 00:25:41,400 --> 00:25:43,320 Speaker 1: lot of people look at valuation and they say, okay, 453 00:25:43,320 --> 00:25:47,159 Speaker 1: relative to a mean, whereas valuation, assuming the valuation is 454 00:25:47,200 --> 00:25:49,520 Speaker 1: always mean, revert. And that may be true over long 455 00:25:49,560 --> 00:25:51,159 Speaker 1: periods of time. But if you really look at the 456 00:25:51,240 --> 00:25:55,480 Speaker 1: chart of the market pe it actually trends. Valuations go 457 00:25:55,560 --> 00:25:58,159 Speaker 1: through periods of time where they're rising, and they go 458 00:25:58,200 --> 00:26:00,560 Speaker 1: through periods of time where they're falling. I could not 459 00:26:00,640 --> 00:26:04,520 Speaker 1: possibly agree more. I've argued that people misunderstand what a 460 00:26:04,560 --> 00:26:07,600 Speaker 1: bull market is. A bull market isn't just a rise 461 00:26:07,640 --> 00:26:11,400 Speaker 1: in price. A bull market is an increasing willingness by 462 00:26:11,440 --> 00:26:15,040 Speaker 1: buyers to pay more for the same share of stock, absolutely, 463 00:26:15,119 --> 00:26:18,600 Speaker 1: and that's represented in valuations, which ultimately drive prices high. Right, 464 00:26:18,680 --> 00:26:20,800 Speaker 1: And you see valuations peak at the end of a 465 00:26:20,840 --> 00:26:23,720 Speaker 1: bull market and bottom at the end of a bear market, 466 00:26:23,960 --> 00:26:27,400 Speaker 1: more or less. So there's there's a great chart. I'll 467 00:26:27,440 --> 00:26:29,880 Speaker 1: fold it to you. I'm trying to remember who put 468 00:26:29,960 --> 00:26:34,120 Speaker 1: it out that literally breaks bull and bear markets into 469 00:26:34,320 --> 00:26:36,960 Speaker 1: the top half of the charters. Price the bottom half 470 00:26:37,000 --> 00:26:39,399 Speaker 1: of the charters valuation, and if you look at it, 471 00:26:39,400 --> 00:26:43,280 Speaker 1: it's pretty clear they trend together and not not a 472 00:26:43,280 --> 00:26:48,720 Speaker 1: big surprise. So so given that which is more significant 473 00:26:48,920 --> 00:26:52,280 Speaker 1: for your market calls. Is it the valuation or is 474 00:26:52,320 --> 00:26:56,600 Speaker 1: it the charts um? It's completely dependent on time period, Okay, right, 475 00:26:56,640 --> 00:26:59,879 Speaker 1: so we use we use technicals a lot more in 476 00:27:00,040 --> 00:27:04,160 Speaker 1: describing short term trends in the market right where we're 477 00:27:04,160 --> 00:27:06,159 Speaker 1: talking about you, where is the market likely to go 478 00:27:06,200 --> 00:27:08,880 Speaker 1: over the next three to six months? We oftentimes will 479 00:27:08,920 --> 00:27:12,720 Speaker 1: reference things like what's breath doing, is breath expanding or contracting? 480 00:27:12,720 --> 00:27:15,679 Speaker 1: What's momentum doing? Is it confirming or diverging from price? 481 00:27:15,760 --> 00:27:17,720 Speaker 1: And what does that mean for the short term outlook 482 00:27:17,720 --> 00:27:21,960 Speaker 1: for stocks? I'll use technicals for long term trends. When 483 00:27:22,040 --> 00:27:24,919 Speaker 1: major crossovers occur in moving averages, then you get a 484 00:27:24,960 --> 00:27:27,679 Speaker 1: better sense of whether you're in your entering a longer 485 00:27:27,800 --> 00:27:30,359 Speaker 1: term bear or or exiting a longer term bowl or 486 00:27:30,840 --> 00:27:35,240 Speaker 1: vice versa. Um. When we look at sort of valuing 487 00:27:35,280 --> 00:27:38,359 Speaker 1: the market, it's a fundamental concept, right what is a 488 00:27:38,440 --> 00:27:42,360 Speaker 1: fair value for stocks right now is a completely fundamental concept. 489 00:27:43,000 --> 00:27:45,440 Speaker 1: And when we look at sort of forward twelve month 490 00:27:45,920 --> 00:27:49,280 Speaker 1: ideas for where should stocks trade. It's a fundamental concept, 491 00:27:49,320 --> 00:27:52,000 Speaker 1: but I don't think that they're completely I don't. I 492 00:27:52,000 --> 00:27:54,800 Speaker 1: don't think you should detach fundamentals from technicals. I think 493 00:27:54,800 --> 00:27:58,680 Speaker 1: that technicals describe the market and can be incredibly additive 494 00:27:58,760 --> 00:28:01,439 Speaker 1: to a fundamental process us as well. I mean, there 495 00:28:01,480 --> 00:28:04,679 Speaker 1: are a lot of fundamental analysts who I call closet technicians. 496 00:28:05,040 --> 00:28:07,760 Speaker 1: There are a lot of that's for sure, fundamental analysts 497 00:28:07,800 --> 00:28:10,639 Speaker 1: who don't they they'll tell you they don't believe in technicals. 498 00:28:10,680 --> 00:28:12,920 Speaker 1: But what fundamental analysts doesn't look at a price chart? 499 00:28:13,119 --> 00:28:17,520 Speaker 1: You know? Ralph what technicals are? Ralph Akampora, who um 500 00:28:17,640 --> 00:28:22,040 Speaker 1: pretty much created the Market Technicians Association way back when 501 00:28:22,240 --> 00:28:25,439 Speaker 1: used to say fundamentals tell you what to buy and 502 00:28:25,520 --> 00:28:28,600 Speaker 1: technicals tell you when to buy. And I think that's 503 00:28:28,600 --> 00:28:31,840 Speaker 1: significant for people who are wondering why we talk about 504 00:28:31,880 --> 00:28:35,320 Speaker 1: charts versus listeners who, maybe hearing well, don't the fundamentals. 505 00:28:35,400 --> 00:28:38,320 Speaker 1: Isn't that what matters? Yes, but sometimes the stock has 506 00:28:38,320 --> 00:28:40,840 Speaker 1: already run up and you want to know about that 507 00:28:41,440 --> 00:28:44,840 Speaker 1: before before you put money to work. So so um, 508 00:28:44,880 --> 00:28:48,040 Speaker 1: between the two of them, which is the more significant 509 00:28:48,040 --> 00:28:51,880 Speaker 1: when it comes to making a buy or cell decision. Again, 510 00:28:51,920 --> 00:28:55,360 Speaker 1: I use technicals more for timing and fundamentals more for 511 00:28:55,440 --> 00:28:57,960 Speaker 1: long term. But if you look at my model, for instance, 512 00:28:57,960 --> 00:29:01,080 Speaker 1: for sector selection, which is what we spend the vast 513 00:29:01,080 --> 00:29:03,600 Speaker 1: majority of our time on his sector and industry selection 514 00:29:03,680 --> 00:29:08,880 Speaker 1: allocation recommendations, Um, it's equal parts technicals and fundamentals. It's 515 00:29:08,920 --> 00:29:11,920 Speaker 1: equal parts price momentum, learning through vision momentum as the 516 00:29:11,960 --> 00:29:16,160 Speaker 1: more technical concepts, and valuation and learning's estimate achievability, which 517 00:29:16,160 --> 00:29:19,760 Speaker 1: are the more fundamental concepts. So I literally use them 518 00:29:19,800 --> 00:29:22,760 Speaker 1: in equal parts for the vast majority of my work. 519 00:29:22,880 --> 00:29:24,560 Speaker 1: So I'm going to ask you the same question, but 520 00:29:24,600 --> 00:29:28,840 Speaker 1: I asked the inverse of it, between technicals and fundamentals. 521 00:29:29,800 --> 00:29:33,800 Speaker 1: Which impact of those forces do you get more grief 522 00:29:33,840 --> 00:29:38,480 Speaker 1: about from from customers? Meaning when you make a technical 523 00:29:38,560 --> 00:29:42,600 Speaker 1: call and and customers push, what generates more pushback? The 524 00:29:42,680 --> 00:29:47,880 Speaker 1: technical calls are the fundamental technical real zero on the 525 00:29:47,880 --> 00:29:51,160 Speaker 1: fund Well, the fundamental side is a narrative, and people 526 00:29:51,200 --> 00:29:53,880 Speaker 1: can wrap their head around that the technicals are well, 527 00:29:53,960 --> 00:29:56,680 Speaker 1: this is what the chart says in some people obviously 528 00:29:56,760 --> 00:29:59,880 Speaker 1: have a hard time. Yeah, well, and somebody very much 529 00:30:00,120 --> 00:30:03,520 Speaker 1: more brilliant than me, stated Um, you put this idea 530 00:30:03,560 --> 00:30:06,280 Speaker 1: in my head years ago that one of the sort 531 00:30:06,320 --> 00:30:10,400 Speaker 1: of you know, more disappointing aspects of our community of 532 00:30:10,520 --> 00:30:14,760 Speaker 1: investment investment professionals is we have this tendency to water 533 00:30:14,840 --> 00:30:18,160 Speaker 1: our weeds and pull our flowers, right instead of watering 534 00:30:18,160 --> 00:30:22,440 Speaker 1: our flowers and pulling our weeds, and technicals help you 535 00:30:22,560 --> 00:30:24,720 Speaker 1: not to do that. They help you to continue to 536 00:30:24,760 --> 00:30:27,800 Speaker 1: write a price trend that's still moving higher, even if 537 00:30:27,880 --> 00:30:30,640 Speaker 1: valuations are getting a bit stretched and every fundamental part 538 00:30:30,680 --> 00:30:33,560 Speaker 1: of your body is saying, maybe I don't necessarily want 539 00:30:33,600 --> 00:30:36,400 Speaker 1: to continue to own this stock. The technicals helped help 540 00:30:36,440 --> 00:30:38,240 Speaker 1: you to stay in that trade. On the other on 541 00:30:38,240 --> 00:30:40,800 Speaker 1: the other end, if the fundamentals are still great but 542 00:30:40,840 --> 00:30:42,920 Speaker 1: the price trend is turned, the technicals tell you to 543 00:30:42,960 --> 00:30:47,080 Speaker 1: get out of that idea. Right. But on in this business, 544 00:30:47,080 --> 00:30:49,640 Speaker 1: we have this tendency to want to ignore the technicals 545 00:30:49,640 --> 00:30:52,000 Speaker 1: and really focus on what we truly believe, which is 546 00:30:52,000 --> 00:30:54,440 Speaker 1: our sort of fundamental basis for why I bought that 547 00:30:54,520 --> 00:30:57,560 Speaker 1: stock or why I'm selling that stock. And sometimes the 548 00:30:57,560 --> 00:30:59,560 Speaker 1: technicals tell you that you're wrong, and we need to 549 00:30:59,600 --> 00:31:03,120 Speaker 1: respect that. The narrative is very reassuring. Look, everybody, whoever 550 00:31:03,160 --> 00:31:06,040 Speaker 1: started on a trading desk in this business as I did, 551 00:31:06,360 --> 00:31:09,280 Speaker 1: or pretty much any other part of the of the 552 00:31:09,320 --> 00:31:13,200 Speaker 1: financial industry is always told uh, cut your losers short 553 00:31:13,240 --> 00:31:16,480 Speaker 1: and let you winners run. Understanding that and actually doing 554 00:31:16,520 --> 00:31:20,080 Speaker 1: it are two completely different things. So for listeners who 555 00:31:20,160 --> 00:31:22,680 Speaker 1: might want to find any of your research or writing, 556 00:31:22,680 --> 00:31:25,080 Speaker 1: where's the best place for them to go? Well, it's 557 00:31:25,080 --> 00:31:30,880 Speaker 1: pretty restricted, actually. The I am the institutionally designated equity strategies, 558 00:31:30,920 --> 00:31:32,720 Speaker 1: so my work is as I send it out on 559 00:31:32,760 --> 00:31:35,120 Speaker 1: a distribution list, so they can contact me at Gina 560 00:31:35,160 --> 00:31:37,280 Speaker 1: dot Martin Adams at Wells Fargo dot com and I 561 00:31:37,320 --> 00:31:40,360 Speaker 1: can get them on the distribution. But generally, if you 562 00:31:40,520 --> 00:31:42,080 Speaker 1: want to get access to my research, you have to 563 00:31:42,080 --> 00:31:44,160 Speaker 1: be able to get through to our website, which means 564 00:31:44,160 --> 00:31:46,880 Speaker 1: you have to be an institutional investor. If you have 565 00:31:47,080 --> 00:31:50,480 Speaker 1: enjoyed this conversation, be sure and check out our podcast AFTRAS, 566 00:31:50,480 --> 00:31:53,640 Speaker 1: where we keep the tape rolling and continue chatting about 567 00:31:53,680 --> 00:31:57,880 Speaker 1: all things equity. Be sure and check out my daily 568 00:31:58,000 --> 00:32:01,640 Speaker 1: column on Bloomberg View dot com or follow me on 569 00:32:01,680 --> 00:32:05,960 Speaker 1: Twitter at Rid Halts. We love your comments, feedbacks and suggestions. 570 00:32:06,080 --> 00:32:09,400 Speaker 1: Be sure and right to us at m IB podcast 571 00:32:09,800 --> 00:32:13,760 Speaker 1: at Bloomberg dot net. I'm Barry Ridlts. You've been listening 572 00:32:14,080 --> 00:32:18,560 Speaker 1: to Masters in Business on Bloomberg Radio. Welcome to the podcast. 573 00:32:19,000 --> 00:32:21,800 Speaker 1: I'm here with Gina Martin Adams, who I keep saying 574 00:32:21,800 --> 00:32:24,400 Speaker 1: her name faster and faster, and that's why I stopped 575 00:32:24,440 --> 00:32:28,520 Speaker 1: during the broadcast to say Gina Martin Adams, because Sunday 576 00:32:28,640 --> 00:32:32,920 Speaker 1: became Gina Martin Adams. UM. So you were talking during 577 00:32:33,000 --> 00:32:38,200 Speaker 1: the broadcast portion about um the change that technology has 578 00:32:38,240 --> 00:32:42,040 Speaker 1: wrought to the industry. So I have just it happened 579 00:32:42,040 --> 00:32:44,440 Speaker 1: today is the only reason why the story is so 580 00:32:45,320 --> 00:32:48,760 Speaker 1: fresh in my mind. So as is often it's ilk 581 00:32:48,840 --> 00:32:52,840 Speaker 1: the long On Railroad had had the whole system is 582 00:32:52,840 --> 00:32:56,440 Speaker 1: closed this morning, not actually not for anything they did wrong. 583 00:32:56,720 --> 00:32:58,960 Speaker 1: Somebody was struck by a train and anytime there's a 584 00:32:59,520 --> 00:33:03,160 Speaker 1: you know, one of those events, everything freezes. I don't know, 585 00:33:03,400 --> 00:33:05,440 Speaker 1: it's it's terrible and I want to go into the details. 586 00:33:05,480 --> 00:33:10,280 Speaker 1: But so a bunch of people at my train station 587 00:33:10,360 --> 00:33:13,160 Speaker 1: we all jump in a cab and we head over 588 00:33:13,240 --> 00:33:16,920 Speaker 1: to Manhasset, which is the adjacent train line, which is 589 00:33:17,000 --> 00:33:20,960 Speaker 1: unaffected by this because it's where the accident was is 590 00:33:21,040 --> 00:33:25,840 Speaker 1: bypassed one of the gentlemen um isn't. One of the 591 00:33:25,880 --> 00:33:27,920 Speaker 1: people in the in the cab is an older gentleman. 592 00:33:28,200 --> 00:33:30,520 Speaker 1: And we were all talking about, you know, what we 593 00:33:30,520 --> 00:33:33,120 Speaker 1: were doing, and and he was going in for a 594 00:33:33,200 --> 00:33:37,080 Speaker 1: board meeting. And he worked in the industry years ago, 595 00:33:37,200 --> 00:33:40,200 Speaker 1: and he was telling the story that in the nineties, 596 00:33:40,200 --> 00:33:44,880 Speaker 1: sixties and seventies, clients would come into their office not 597 00:33:45,040 --> 00:33:50,600 Speaker 1: only with stock certificates, but with cash. And he had 598 00:33:50,600 --> 00:33:54,080 Speaker 1: to get a carry permit for a handgun because he 599 00:33:54,200 --> 00:33:56,360 Speaker 1: was the manager of the office. And he had a 600 00:33:56,440 --> 00:34:00,160 Speaker 1: walk around the block often carrying hundreds of thousands of 601 00:34:00,200 --> 00:34:04,720 Speaker 1: dollars worth of certificates Bearraman's cash. I'm like, what, what 602 00:34:04,880 --> 00:34:10,399 Speaker 1: sort of a caveman industry? So I said, so let 603 00:34:10,400 --> 00:34:12,600 Speaker 1: me And he's been sort of out of the business 604 00:34:12,680 --> 00:34:15,000 Speaker 1: for a few years. He's on some boards. He's in 605 00:34:15,040 --> 00:34:17,719 Speaker 1: the city, I guess once a month or something like that. 606 00:34:18,239 --> 00:34:21,200 Speaker 1: Let me tell you how the technology has changed. We 607 00:34:21,320 --> 00:34:24,400 Speaker 1: have a scanner for our local bank account, and we 608 00:34:24,480 --> 00:34:27,839 Speaker 1: have a scanner for our custodian And when checks come in, 609 00:34:28,480 --> 00:34:32,080 Speaker 1: we don't even take them to the bank. They get scanned, 610 00:34:32,480 --> 00:34:35,239 Speaker 1: a photo copy gets uploaded to I shouldn't even call 611 00:34:35,280 --> 00:34:38,160 Speaker 1: it a photo copy. A scan of of the of 612 00:34:38,239 --> 00:34:43,799 Speaker 1: the check gets uploaded to our cloud, and after we 613 00:34:43,840 --> 00:34:48,040 Speaker 1: get the confirm thirty seconds later that the deposit has accepted, 614 00:34:48,160 --> 00:34:51,040 Speaker 1: the check gets shredded. It's not like you even have 615 00:34:51,200 --> 00:34:54,040 Speaker 1: to walk around the corner to the bank to make 616 00:34:54,080 --> 00:34:57,080 Speaker 1: a deposit. And this guy's telling stories about having to 617 00:34:57,200 --> 00:35:00,680 Speaker 1: carry a handgun because New York was not the safest place, 618 00:35:00,680 --> 00:35:03,880 Speaker 1: and so you you were telling the story about how 619 00:35:03,920 --> 00:35:07,319 Speaker 1: technology has changed stuff. All I can think of is 620 00:35:07,719 --> 00:35:10,759 Speaker 1: this poor guy literally is packing heat because he has 621 00:35:10,840 --> 00:35:13,560 Speaker 1: bonds and sirs, and he said he goes he occasionally 622 00:35:13,600 --> 00:35:15,640 Speaker 1: would get a big pile of cash, but just for 623 00:35:15,680 --> 00:35:18,320 Speaker 1: the certificates. And you know, you take a bear of bonds, 624 00:35:19,400 --> 00:35:22,120 Speaker 1: that's as good as cash if you could take if 625 00:35:22,120 --> 00:35:25,799 Speaker 1: you're sophisticated enough thief back in the nineteen seventies. So 626 00:35:25,840 --> 00:35:28,880 Speaker 1: that's how much technology. Imagine you're working in a brokerage 627 00:35:28,880 --> 00:35:30,840 Speaker 1: from and you have to get a gun so you 628 00:35:30,880 --> 00:35:37,480 Speaker 1: could deposit client assets. Just just insane. So you talked 629 00:35:37,480 --> 00:35:40,080 Speaker 1: about technology. One of the things we didn't get to 630 00:35:40,360 --> 00:35:44,560 Speaker 1: is there's been a bit of a shift. It's it's 631 00:35:44,640 --> 00:35:49,280 Speaker 1: not everybody but there's a big shift away from active 632 00:35:49,360 --> 00:35:52,080 Speaker 1: to passive. How does that impact what you do? What 633 00:35:52,080 --> 00:35:55,640 Speaker 1: do you what do you see from from your perch 634 00:35:55,800 --> 00:36:01,200 Speaker 1: looking at institutional trading. Um, So it's definitely impacted my 635 00:36:01,280 --> 00:36:03,680 Speaker 1: client base. I'd say that's the biggest impact is in 636 00:36:03,719 --> 00:36:07,320 Speaker 1: the client base. How money has managed and the products 637 00:36:07,320 --> 00:36:11,400 Speaker 1: that they offered at customers are very different. So you know, 638 00:36:11,800 --> 00:36:15,320 Speaker 1: it doesn't impact my work as much because I'm still 639 00:36:15,360 --> 00:36:20,560 Speaker 1: making sector and industry allocations, recommendations that's still ultimately is 640 00:36:20,640 --> 00:36:23,360 Speaker 1: relevant for if I'm going to buy, for instance, if 641 00:36:23,360 --> 00:36:25,960 Speaker 1: I'm going to go along a healthcare et F or 642 00:36:26,920 --> 00:36:29,400 Speaker 1: a technology e t F, It's still relevant there. But 643 00:36:30,360 --> 00:36:33,480 Speaker 1: for clients it's it's changed a lot. Our clients are 644 00:36:33,480 --> 00:36:36,360 Speaker 1: the institutional investors. What are the products that they're their 645 00:36:36,400 --> 00:36:39,960 Speaker 1: clients are asking them for. It's passive products in a 646 00:36:40,000 --> 00:36:43,640 Speaker 1: lot of ways. So you know, my client may want 647 00:36:43,719 --> 00:36:46,640 Speaker 1: something very different than they would have wanted in the past, 648 00:36:46,840 --> 00:36:49,799 Speaker 1: and we've all had to adjust as a result of that. 649 00:36:50,080 --> 00:36:52,440 Speaker 1: So let me double down with the same question that 650 00:36:52,520 --> 00:36:57,879 Speaker 1: we're doubled down as uh political season is in my head, Um, 651 00:36:57,920 --> 00:37:02,480 Speaker 1: how does the rise of past of and indexes in etfe. 652 00:37:02,600 --> 00:37:05,640 Speaker 1: How does that impact the way you do market analysis? 653 00:37:05,960 --> 00:37:08,840 Speaker 1: Or does it not matter if money is flowing into equities, 654 00:37:09,160 --> 00:37:11,600 Speaker 1: if it flows into passive indexes, or if it flows 655 00:37:11,600 --> 00:37:15,120 Speaker 1: into individual stocks or mutual funds. Does that actually have 656 00:37:15,160 --> 00:37:17,800 Speaker 1: an impact? The reason I ask is there are people 657 00:37:17,840 --> 00:37:21,040 Speaker 1: who are insisting all this money flowing a passive is bubble. 658 00:37:21,280 --> 00:37:24,560 Speaker 1: I've heard that phrase, which seems a little curious, and 659 00:37:24,560 --> 00:37:28,200 Speaker 1: then I've had other people say all this passive investing 660 00:37:28,800 --> 00:37:31,359 Speaker 1: is impacting my ability to figure out what's going on 661 00:37:31,400 --> 00:37:34,640 Speaker 1: in the market. I don't think it necessarily has impacted 662 00:37:34,640 --> 00:37:36,840 Speaker 1: our ability to figure out what's going on in the market. 663 00:37:36,880 --> 00:37:41,600 Speaker 1: I mean, you know, prices are prices, Earnings are earnings, 664 00:37:41,880 --> 00:37:45,319 Speaker 1: regardless of who's buying stocks. Somebody's buying stocks at most 665 00:37:45,320 --> 00:37:49,960 Speaker 1: points in time. What has impacted us in the sort 666 00:37:50,000 --> 00:37:54,440 Speaker 1: of shift to passive versus active um Part of it 667 00:37:54,520 --> 00:37:57,799 Speaker 1: is a measurement issue, right, because when you look at 668 00:37:58,080 --> 00:38:01,920 Speaker 1: mutual fund flows through this cycle and you look at 669 00:38:02,000 --> 00:38:06,200 Speaker 1: what's gone into the US equity market, we're still actually 670 00:38:06,239 --> 00:38:09,400 Speaker 1: sitting on net negative inflows to the US equity market 671 00:38:09,440 --> 00:38:11,239 Speaker 1: from two thousand nine to date. If you look at 672 00:38:11,239 --> 00:38:15,040 Speaker 1: the official now that's a fascinating data point because the 673 00:38:15,040 --> 00:38:17,920 Speaker 1: market has done nothing but go up and mine. So 674 00:38:18,120 --> 00:38:21,560 Speaker 1: how significant our outflows if the market drugs it off 675 00:38:21,600 --> 00:38:23,960 Speaker 1: and just keeps going, It's hard to imagine. It's hard 676 00:38:24,000 --> 00:38:26,480 Speaker 1: to tell. So that's what's important. That's what's tricky is 677 00:38:27,000 --> 00:38:29,840 Speaker 1: maybe something's gone awry in the measurement because the measurement 678 00:38:29,920 --> 00:38:32,160 Speaker 1: is based on the idea that you have these sort 679 00:38:32,200 --> 00:38:35,240 Speaker 1: of actively managed funds and they're easily measured, they report 680 00:38:35,239 --> 00:38:39,719 Speaker 1: their assets right. There's clearly something going on with passive investment. 681 00:38:39,760 --> 00:38:42,240 Speaker 1: That's where all the dollars have gone so far this cycle, 682 00:38:42,280 --> 00:38:45,360 Speaker 1: and maybe we're under measuring what's going into the equity market. 683 00:38:45,760 --> 00:38:49,239 Speaker 1: So if you were basing a methodology and methodology at 684 00:38:49,280 --> 00:38:53,440 Speaker 1: all on flows, and we dropped sector flows from our 685 00:38:53,480 --> 00:38:56,360 Speaker 1: methodology years ago because we were not able to prove 686 00:38:56,400 --> 00:38:59,840 Speaker 1: a relationship between flows into sector based funds and sector 687 00:38:59,840 --> 00:39:03,680 Speaker 1: per formants. There was a firm trip Tabs years ago 688 00:39:04,320 --> 00:39:06,879 Speaker 1: that used to track that stuff, and it seems dark 689 00:39:06,920 --> 00:39:10,160 Speaker 1: pools and and all sorts of other things kind of 690 00:39:10,320 --> 00:39:13,479 Speaker 1: blinded that flow analysis. I don't know if that's really 691 00:39:13,840 --> 00:39:17,399 Speaker 1: what what caused it, but the ability to track where 692 00:39:17,440 --> 00:39:19,879 Speaker 1: money was going seems to have been a little obscure. Yeah, 693 00:39:19,920 --> 00:39:22,120 Speaker 1: I think it's very very difficult. It also moves so 694 00:39:22,200 --> 00:39:25,920 Speaker 1: quickly with a high frequency trading and whatnot, So I 695 00:39:25,960 --> 00:39:29,480 Speaker 1: think it's it's difficult to capture flows to the extent 696 00:39:29,520 --> 00:39:30,960 Speaker 1: that we used to feel. And maybe part of that 697 00:39:31,080 --> 00:39:33,279 Speaker 1: is active. Maybe it's maybe I'm just maybe part of 698 00:39:33,280 --> 00:39:36,000 Speaker 1: that as active versus passive, maybe just finding a scapegoat 699 00:39:36,040 --> 00:39:39,719 Speaker 1: because it's so difficult now. I don't know, UM, but 700 00:39:40,440 --> 00:39:44,320 Speaker 1: I think it's it's definitely changed the way that investors 701 00:39:44,320 --> 00:39:46,359 Speaker 1: approach markets. So the other the other thing I think 702 00:39:46,400 --> 00:39:51,400 Speaker 1: is that it's done is made access to non domestic stocks, 703 00:39:52,320 --> 00:39:56,120 Speaker 1: emerging markets, Developed X, North America much easier to do. 704 00:39:56,200 --> 00:40:00,000 Speaker 1: It's just easier to access and opportunities outside of the US. 705 00:40:00,040 --> 00:40:02,400 Speaker 1: It used to be if you wanted to invest overseas, 706 00:40:02,400 --> 00:40:05,239 Speaker 1: you can invest in a mutual fund, but they were 707 00:40:05,440 --> 00:40:10,799 Speaker 1: very pricy. Yes, they've become very reasonable. Change the dynamic, no, 708 00:40:10,800 --> 00:40:13,480 Speaker 1: no doubt about that. So you mentioned something during the 709 00:40:13,480 --> 00:40:18,880 Speaker 1: broadcast portion about um the two thousand dot com crash, 710 00:40:19,040 --> 00:40:23,160 Speaker 1: the financial crisis, and I brought up housing and commodities crashing. 711 00:40:23,600 --> 00:40:29,720 Speaker 1: So how important is that psyche psychologically to the shift 712 00:40:29,800 --> 00:40:32,879 Speaker 1: towards passive. Have people just thrown up their hands and say, 713 00:40:32,920 --> 00:40:34,560 Speaker 1: you know what, I give up, I'm just gonna index 714 00:40:34,560 --> 00:40:37,560 Speaker 1: and not even think twice about it. I think that's 715 00:40:37,640 --> 00:40:41,239 Speaker 1: part of it. I think more importantly it's been investors 716 00:40:41,239 --> 00:40:45,160 Speaker 1: have just shunned the equity market altogether. And if you 717 00:40:45,200 --> 00:40:48,080 Speaker 1: look at household ownership of equities, and this comes from 718 00:40:48,080 --> 00:40:51,319 Speaker 1: this FED survey of consumer finances, which they do every 719 00:40:51,320 --> 00:40:54,719 Speaker 1: three years, you go back to the financial crisis in 720 00:40:54,760 --> 00:40:57,120 Speaker 1: two thousand and eight to the most recent survey, which 721 00:40:57,160 --> 00:41:05,640 Speaker 1: was as believe and three years. Yeah, that's quarterly. But 722 00:41:05,719 --> 00:41:10,040 Speaker 1: this is uh that does detail. This survey of consumer 723 00:41:10,080 --> 00:41:13,680 Speaker 1: finances shows that all segments of consumer income classes have 724 00:41:13,760 --> 00:41:16,880 Speaker 1: actually seen their holdings in equity markets shrink over that 725 00:41:17,000 --> 00:41:19,120 Speaker 1: even as the market has gone up. Yeah, except for 726 00:41:19,160 --> 00:41:21,279 Speaker 1: the top five percent. Only the top five percent of 727 00:41:21,320 --> 00:41:25,800 Speaker 1: income earners are actually still actively investing in the equity market, 728 00:41:25,840 --> 00:41:27,640 Speaker 1: whether it be active or passive. They're putting money to 729 00:41:27,640 --> 00:41:30,080 Speaker 1: work in stocks, and the rest of the income groups 730 00:41:30,120 --> 00:41:34,239 Speaker 1: at least yeah, and I'm gonna guess that's half, maybe 731 00:41:34,280 --> 00:41:37,319 Speaker 1: even more, of the total equity ownership at least Yeah, 732 00:41:37,880 --> 00:41:39,920 Speaker 1: so it's always been skewed, but now we're saying it's 733 00:41:39,960 --> 00:41:44,080 Speaker 1: even more skews. Yeah. So the bottom of income earning 734 00:41:44,120 --> 00:41:48,320 Speaker 1: households have largely not participated at all in this massive 735 00:41:48,360 --> 00:41:52,440 Speaker 1: bull run that we've had from percent. So that's the 736 00:41:52,480 --> 00:41:54,759 Speaker 1: bigger impact. I do think that there is something to 737 00:41:54,800 --> 00:41:57,720 Speaker 1: be said for you know, investors also moving into passive 738 00:41:57,800 --> 00:41:59,800 Speaker 1: because and this goes back to the two thousand crisis, 739 00:41:59,800 --> 00:42:01,759 Speaker 1: like going back there, because I think that's when all 740 00:42:01,800 --> 00:42:05,720 Speaker 1: of this really shifted. The two thousand eight exacerbated the trouble, 741 00:42:05,760 --> 00:42:08,160 Speaker 1: But in two thousand and two thousand two there was 742 00:42:08,239 --> 00:42:12,440 Speaker 1: definitely a shift in investor sentiment towards equities. And a 743 00:42:12,440 --> 00:42:14,680 Speaker 1: lot of that is all the accounting scandals that came up, 744 00:42:14,920 --> 00:42:19,400 Speaker 1: the research and banking scandals that were uncovered, um and 745 00:42:19,480 --> 00:42:24,200 Speaker 1: it investors, yes, exactly lost a lot of faith in 746 00:42:24,719 --> 00:42:28,839 Speaker 1: the institution of investment itself and the financial markets themselves. 747 00:42:29,680 --> 00:42:31,799 Speaker 1: UM and I think that started back in the two 748 00:42:31,800 --> 00:42:34,520 Speaker 1: thousand and two thousand two periods. So you reference price 749 00:42:34,600 --> 00:42:37,080 Speaker 1: as a key driver of sentiment, let me let me 750 00:42:37,080 --> 00:42:40,000 Speaker 1: share a little price data with you that confirms what 751 00:42:40,040 --> 00:42:45,400 Speaker 1: you're saying. Um. When we look at the democrazation of investing. 752 00:42:46,360 --> 00:42:48,440 Speaker 1: Someone in the eighties put a lot in the nineties, 753 00:42:48,480 --> 00:42:51,799 Speaker 1: if you look at where the drumbeat of financial television 754 00:42:51,840 --> 00:42:55,200 Speaker 1: and press was, it was all technology. Yes, I think 755 00:42:55,280 --> 00:42:57,520 Speaker 1: if you look at the average portfolio, and I've looked 756 00:42:57,520 --> 00:43:00,960 Speaker 1: at a ton of portfolios over the years of vigial investors, 757 00:43:01,680 --> 00:43:05,399 Speaker 1: you like, I was at one point I could look 758 00:43:05,400 --> 00:43:08,960 Speaker 1: at a portfolio two oh three, oh four and say, oh, 759 00:43:09,040 --> 00:43:11,879 Speaker 1: American line dell, I go through the list. I know, oh, 760 00:43:11,920 --> 00:43:13,920 Speaker 1: this is a Merrill Lynch portfolio, and this is a 761 00:43:14,000 --> 00:43:16,359 Speaker 1: Morgan Stanley portfolio, and this is so it's a whole 762 00:43:16,440 --> 00:43:20,000 Speaker 1: run of different things. Not that they were bad portfolios, 763 00:43:20,080 --> 00:43:22,719 Speaker 1: but it was a lot of the same names, a lot. 764 00:43:23,080 --> 00:43:26,640 Speaker 1: And if you think about the technology sector, she'll lacked 765 00:43:27,160 --> 00:43:31,560 Speaker 1: almost from peak to trough. Hey, if you're holdings are 766 00:43:31,560 --> 00:43:37,680 Speaker 1: concentrating the technology and that sector gets whacked, that might change. 767 00:43:37,840 --> 00:43:40,200 Speaker 1: You might take your bowl and go home. You might 768 00:43:40,200 --> 00:43:43,440 Speaker 1: not be as inclined to play in that same space again. 769 00:43:43,560 --> 00:43:48,200 Speaker 1: So your comment that price drive sentiment. It might have 770 00:43:48,280 --> 00:43:50,600 Speaker 1: driven sentiment to the point where people said, okay, I 771 00:43:50,640 --> 00:43:52,680 Speaker 1: give up. Well, and we saw that, right, I mean 772 00:43:52,719 --> 00:43:56,399 Speaker 1: you saw technology relative performance really from two thousand into 773 00:43:56,440 --> 00:43:59,359 Speaker 1: the two thousand seven peak was pretty terrible. I mean, 774 00:43:59,400 --> 00:44:01,600 Speaker 1: nobody was doing more money to work and tech stocks 775 00:44:01,640 --> 00:44:04,200 Speaker 1: after that blow up. And it's been the same with financials. 776 00:44:04,239 --> 00:44:06,960 Speaker 1: I mean, I think financials A lot of what's happened 777 00:44:07,000 --> 00:44:09,799 Speaker 1: with the financial sector relative performance in the SMP five 778 00:44:09,800 --> 00:44:12,120 Speaker 1: foundered over this cycle is legacy. What happened in two 779 00:44:12,120 --> 00:44:16,000 Speaker 1: thou amazing parallel. If you look at the two thousand peak, 780 00:44:16,680 --> 00:44:20,160 Speaker 1: you broach that peak and the SMP in the TAO 781 00:44:21,200 --> 00:44:24,000 Speaker 1: two thousand seven or so something like that, you didn't 782 00:44:24,000 --> 00:44:28,600 Speaker 1: do it back until you know, until you got back over, 783 00:44:30,200 --> 00:44:36,120 Speaker 1: which is that that's it was even. That was a 784 00:44:36,160 --> 00:44:39,480 Speaker 1: long long time to wait to get back to break even. 785 00:44:39,680 --> 00:44:41,680 Speaker 1: Not a whole lot of dividends in that space either. 786 00:44:42,200 --> 00:44:46,440 Speaker 1: So now the financials, how parallel is the financial sector 787 00:44:47,040 --> 00:44:51,680 Speaker 1: a key lubricant of economic growth? How how parallel are 788 00:44:51,719 --> 00:44:55,920 Speaker 1: the financials to technology? Well, the one big difference is 789 00:44:55,920 --> 00:44:59,759 Speaker 1: the financial stocks never achieved the excessive valuation in this 790 00:45:00,040 --> 00:45:04,320 Speaker 1: extraordinarily positive market sentiment in the bubble status that tected 791 00:45:04,880 --> 00:45:09,040 Speaker 1: financials as a share of the economy got very big. Housing, 792 00:45:09,120 --> 00:45:12,680 Speaker 1: specifically as a share of the economy was double its 793 00:45:12,800 --> 00:45:15,520 Speaker 1: historical average share by its peak in two thousand six, 794 00:45:15,600 --> 00:45:19,640 Speaker 1: So it was that again double its historical average share 795 00:45:19,640 --> 00:45:21,960 Speaker 1: of the economy. Yeah, so some people have called that 796 00:45:22,080 --> 00:45:25,640 Speaker 1: the financialization of the economy. Other people have used the 797 00:45:26,040 --> 00:45:31,080 Speaker 1: phrase fire, financial insurance, and real estate yet as real 798 00:45:31,160 --> 00:45:35,600 Speaker 1: estate obviously so mortgage driven. How much have we normalized 799 00:45:35,680 --> 00:45:38,640 Speaker 1: finance as an overall part of the economy. It's back 800 00:45:38,840 --> 00:45:42,560 Speaker 1: to actually just below its historical So is that going 801 00:45:42,640 --> 00:45:44,759 Speaker 1: to keep going? And I know I never asked for 802 00:45:44,760 --> 00:45:46,959 Speaker 1: forecast on the show. Is it going to keep getting lower? 803 00:45:47,080 --> 00:45:48,960 Speaker 1: What is the trend? Is the trend that it's a 804 00:45:49,000 --> 00:45:53,680 Speaker 1: small increasingly small portion of the overall economy or are 805 00:45:53,719 --> 00:45:56,120 Speaker 1: we starting to see a bottoming out process. We've started 806 00:45:56,120 --> 00:45:58,960 Speaker 1: to see a bottoming out process really starting in and 807 00:45:59,320 --> 00:46:02,320 Speaker 1: how exceller it again, we started to see a bottoming 808 00:46:02,320 --> 00:46:04,279 Speaker 1: process and now it's growing as a share of the 809 00:46:04,320 --> 00:46:06,960 Speaker 1: economy again. But we still see the big bank stocks, 810 00:46:07,040 --> 00:46:10,560 Speaker 1: the big brokerage firms not exactly lighting the world on fire. 811 00:46:11,120 --> 00:46:13,440 Speaker 1: How much of that is they're still carrying a lot 812 00:46:13,440 --> 00:46:16,040 Speaker 1: of bit debt and bed paper or is it just 813 00:46:16,120 --> 00:46:18,440 Speaker 1: people are a little skittish of the entire sector, and 814 00:46:18,480 --> 00:46:21,360 Speaker 1: it's a sentiment. Then I think a very little of 815 00:46:21,400 --> 00:46:23,920 Speaker 1: it is bad debt, at least for the US banks. 816 00:46:24,120 --> 00:46:27,399 Speaker 1: I mean it next to nothing is bad debt. There 817 00:46:27,440 --> 00:46:29,799 Speaker 1: have been some scares, and this year's scare was the 818 00:46:29,920 --> 00:46:33,000 Speaker 1: energy complex, and what does that really mean for bank 819 00:46:33,080 --> 00:46:34,880 Speaker 1: balance sheets? But when you look at energy as a 820 00:46:34,960 --> 00:46:39,200 Speaker 1: share of the debt on the assets on bank balance sheets, 821 00:46:39,080 --> 00:46:41,719 Speaker 1: it's tiny. So it's funny you bring that up, because 822 00:46:41,800 --> 00:46:45,120 Speaker 1: first we heard, oh look they did it again, it's 823 00:46:45,160 --> 00:46:48,239 Speaker 1: the energy sector. Here comes into the crisis. After that 824 00:46:48,280 --> 00:46:52,520 Speaker 1: we heard sub primortal, this is the new subprime mortgage, 825 00:46:52,840 --> 00:46:55,360 Speaker 1: and somewhere in the middle of it is student loans. 826 00:46:55,480 --> 00:46:57,399 Speaker 1: That's the next thing that's going to destroy us all. 827 00:46:57,719 --> 00:46:59,920 Speaker 1: But meanwhile, none of these things have turned out to 828 00:47:00,040 --> 00:47:03,920 Speaker 1: be remotely like subprimary. And that's the big psychological difference 829 00:47:03,960 --> 00:47:07,520 Speaker 1: between today versus two thousand five to two thousand seven. Right, 830 00:47:07,520 --> 00:47:09,920 Speaker 1: two thousand five to two thousand seven, you did have 831 00:47:10,400 --> 00:47:13,279 Speaker 1: some people suggesting subprime is a problem, and everyone was 832 00:47:13,320 --> 00:47:17,200 Speaker 1: a massively denying this as an underlying issue. Today, anything 833 00:47:17,280 --> 00:47:19,279 Speaker 1: is a massive problem for the banks. So I think 834 00:47:19,280 --> 00:47:22,640 Speaker 1: a lot of what's holding financials back is this psychological impediment. 835 00:47:22,760 --> 00:47:25,279 Speaker 1: It's when's the next crisis coming? You know? Is it 836 00:47:25,320 --> 00:47:27,000 Speaker 1: going to generate out of Europe? Is it going to 837 00:47:27,080 --> 00:47:29,520 Speaker 1: come out of China? Is it the energy complex, is 838 00:47:29,560 --> 00:47:32,719 Speaker 1: its student loan debt. You can name a gazillion things 839 00:47:32,760 --> 00:47:34,799 Speaker 1: that are going to quote unquote bring the banks under 840 00:47:35,000 --> 00:47:39,200 Speaker 1: the next So unlikely, but the psychology is set up 841 00:47:39,280 --> 00:47:42,520 Speaker 1: to expect that. It's classic recency effect. Every general is 842 00:47:42,560 --> 00:47:45,719 Speaker 1: finding the last war, every investor is thinking about, here 843 00:47:45,760 --> 00:47:49,360 Speaker 1: comes the next credit crisis. It's never what just happened. 844 00:47:49,360 --> 00:47:54,520 Speaker 1: It's always something different, which is probably why post tech bubble, 845 00:47:54,960 --> 00:47:57,040 Speaker 1: when you looked at the home builders, when you looked 846 00:47:57,080 --> 00:47:59,560 Speaker 1: at banks, when you looked at brokerage firms, there were 847 00:47:59,640 --> 00:48:02,440 Speaker 1: reason we priced oh five or six o seven, as 848 00:48:02,480 --> 00:48:07,360 Speaker 1: each of them also had their collapse. Good rule of 849 00:48:07,400 --> 00:48:10,680 Speaker 1: thumb a sector outside of leather belts and steam engines 850 00:48:10,920 --> 00:48:16,880 Speaker 1: that drops typically a good a good bye signal. All right, 851 00:48:16,920 --> 00:48:18,839 Speaker 1: so I know I only have you for another ten 852 00:48:18,880 --> 00:48:22,240 Speaker 1: fifteen minutes. Let me get to some of my favorite questions, 853 00:48:22,239 --> 00:48:26,480 Speaker 1: the standard questions I asked all my guests. You told 854 00:48:26,600 --> 00:48:29,880 Speaker 1: us about your background, tell us a little bit about 855 00:48:29,880 --> 00:48:32,560 Speaker 1: some of your early mentors. Who are the people who 856 00:48:33,280 --> 00:48:37,080 Speaker 1: were deeply influential to you? Wow? Um Well, I had 857 00:48:37,080 --> 00:48:40,360 Speaker 1: a number of really really great colleagues in the first 858 00:48:40,440 --> 00:48:45,680 Speaker 1: Union Wells Fargo or Wacovia. Early Wells Fargo days, I 859 00:48:45,719 --> 00:48:49,600 Speaker 1: worked for John Sylvia, who's our chief economy time. He's 860 00:48:49,600 --> 00:48:52,800 Speaker 1: a fishing boat with mine. He was very influential. Um 861 00:48:52,840 --> 00:48:55,520 Speaker 1: I worked with By the way, before you move off 862 00:48:55,560 --> 00:48:58,640 Speaker 1: of John Sylvia, is there like a nicer person on 863 00:48:58,680 --> 00:49:00,880 Speaker 1: the world now. He's fantastic And he when I was 864 00:49:00,920 --> 00:49:03,359 Speaker 1: in my late twenties, you know, threw me out into 865 00:49:03,400 --> 00:49:05,359 Speaker 1: things that I never thought I could do. So he 866 00:49:05,480 --> 00:49:08,640 Speaker 1: was really sort of pushed me forward to try new 867 00:49:08,680 --> 00:49:11,359 Speaker 1: things and and really stretch my boundaries. And I will 868 00:49:11,360 --> 00:49:14,479 Speaker 1: always appreciate that. And he's still a mentor today. And John, 869 00:49:14,520 --> 00:49:16,640 Speaker 1: if you're listening, you know, we have to get you 870 00:49:16,680 --> 00:49:19,839 Speaker 1: in here at one of these so we will. He's 871 00:49:19,920 --> 00:49:22,600 Speaker 1: not in New York, He's in uh, he's in Charlotte. 872 00:49:24,400 --> 00:49:27,279 Speaker 1: Um So, in the earlier on in my career, I 873 00:49:27,280 --> 00:49:30,880 Speaker 1: worked with John Lynch, who is a market strategist for 874 00:49:31,080 --> 00:49:33,319 Speaker 1: Wells Fargo as well, but he's on the buy side 875 00:49:33,320 --> 00:49:35,840 Speaker 1: of the firm. He had a number of years in 876 00:49:35,840 --> 00:49:38,040 Speaker 1: New York working with d l J. He's got a 877 00:49:38,040 --> 00:49:42,120 Speaker 1: lot of you know, great historical understanding of markets and 878 00:49:42,160 --> 00:49:46,719 Speaker 1: really sorted forming my interest in strategy as a function. Um. 879 00:49:47,640 --> 00:49:51,560 Speaker 1: Great technicians out there. Charlie Kirkpatrick is a current fantastic 880 00:49:51,600 --> 00:49:54,959 Speaker 1: mentor of mine. Charlie does a lot of amazing work 881 00:49:55,000 --> 00:49:59,440 Speaker 1: on price and momentum um and has written a number 882 00:49:59,440 --> 00:50:03,480 Speaker 1: of books. Uh, and he's he's a fantastic mentor as well. 883 00:50:03,480 --> 00:50:07,040 Speaker 1: Give his book. Oh it's very technically oriented, so I'll 884 00:50:07,040 --> 00:50:08,719 Speaker 1: have to look it up for you, but you just 885 00:50:08,760 --> 00:50:11,640 Speaker 1: search on Charlie Kirkpatrick. He writes with the Julie Daalquist 886 00:50:11,680 --> 00:50:16,640 Speaker 1: out of Texas um on price and momentum signals and 887 00:50:16,640 --> 00:50:20,640 Speaker 1: and there I think very very useful and very helpful. Um. 888 00:50:20,640 --> 00:50:23,600 Speaker 1: He's helped me bring an understanding of sort of back 889 00:50:23,640 --> 00:50:26,600 Speaker 1: testing and optimization that I didn't really have, you know, 890 00:50:26,640 --> 00:50:29,080 Speaker 1: five years ago. So you mentioned books. What are some 891 00:50:29,160 --> 00:50:33,680 Speaker 1: of your favorite books, be they investing books, fiction or nonfiction? Oh? Yeah, 892 00:50:33,920 --> 00:50:36,600 Speaker 1: so I talked a lot about investing books already with 893 00:50:36,960 --> 00:50:40,600 Speaker 1: Kirkpatrick and John Murphy. So in terms of you know, 894 00:50:40,760 --> 00:50:44,960 Speaker 1: personal more fiction oriented books, I'm a huge Steinbeck fan. 895 00:50:45,960 --> 00:50:48,200 Speaker 1: I don't know where this came from. If it's because 896 00:50:48,280 --> 00:50:52,320 Speaker 1: we went, yes exactly, which is it sounds so boring, 897 00:50:52,640 --> 00:50:55,879 Speaker 1: but I think when we went they become classics. It's 898 00:50:55,920 --> 00:51:00,120 Speaker 1: not just let's randomly pick a Daniel Steele novel. The 899 00:51:00,120 --> 00:51:03,600 Speaker 1: Steinbeck survives for great lessons as to what a real 900 00:51:03,640 --> 00:51:07,080 Speaker 1: depression looks like, right, I mean it helps those Does 901 00:51:07,120 --> 00:51:09,319 Speaker 1: it make you crazy when people say, you know, this 902 00:51:09,400 --> 00:51:12,279 Speaker 1: isn't a recession, this is a depression. Well not if 903 00:51:12,320 --> 00:51:14,920 Speaker 1: you look at the data. If you understand what it's 904 00:51:14,960 --> 00:51:17,880 Speaker 1: like when one in five houses going to foreclosure and 905 00:51:17,920 --> 00:51:22,000 Speaker 1: the unemployment rate is that's there is no real technical 906 00:51:22,040 --> 00:51:25,080 Speaker 1: definition of a depression. This was a bad recession. It's 907 00:51:25,160 --> 00:51:28,680 Speaker 1: kind of hard to say it's it's pretty crazy when 908 00:51:28,680 --> 00:51:30,920 Speaker 1: you look at our standard of living and you know, 909 00:51:31,080 --> 00:51:33,280 Speaker 1: I understand that there are still a lot of households 910 00:51:33,280 --> 00:51:35,480 Speaker 1: that are struggling to make ends meet, But you look 911 00:51:35,480 --> 00:51:37,600 Speaker 1: at our broad standard of living and you compare that 912 00:51:37,640 --> 00:51:40,439 Speaker 1: to what happened in the depression, and there's nobody better 913 00:51:40,480 --> 00:51:44,080 Speaker 1: at doing that than Steinbeck. The look the bottom half 914 00:51:44,120 --> 00:51:46,880 Speaker 1: of the country is certainly not seeing income gains. The 915 00:51:46,880 --> 00:51:52,920 Speaker 1: bottom of incomes, but the standard of living. You know, 916 00:51:53,000 --> 00:51:56,399 Speaker 1: people are not going through what they went through, right, 917 00:51:56,680 --> 00:51:58,800 Speaker 1: I mean there when you actually look at the data, 918 00:51:59,280 --> 00:52:02,399 Speaker 1: the Great DEPRESSI is horrifying. Yeah, I mean it's not 919 00:52:02,880 --> 00:52:06,360 Speaker 1: genus is inconvenient. It's people died. It led to wars, 920 00:52:06,680 --> 00:52:09,719 Speaker 1: it led to civil unrest. It was really horrific. Yeah. 921 00:52:09,800 --> 00:52:11,960 Speaker 1: I think I think a lot of people don't realize 922 00:52:12,280 --> 00:52:18,480 Speaker 1: how bad things got in the late twenties and early thirties. Um. 923 00:52:18,640 --> 00:52:23,960 Speaker 1: So what other on the nonfiction side, I actually love 924 00:52:24,040 --> 00:52:28,560 Speaker 1: Milton Friedman's work. I mean I've I've devoured those books 925 00:52:28,560 --> 00:52:33,960 Speaker 1: over time. Now he's kind of fallen, from which surprised. 926 00:52:33,960 --> 00:52:35,719 Speaker 1: But if you look at some of his work. He 927 00:52:35,719 --> 00:52:38,360 Speaker 1: did the Monetary History of the United States, which have 928 00:52:38,880 --> 00:52:41,080 Speaker 1: all the way back in time, and I've referenced to 929 00:52:41,160 --> 00:52:44,359 Speaker 1: that piece um on a number of occasions, looking at 930 00:52:44,400 --> 00:52:47,080 Speaker 1: what banks did, for example, and the Great Depression versus 931 00:52:47,120 --> 00:52:49,200 Speaker 1: what they're doing today. You can look at some of 932 00:52:49,239 --> 00:52:52,239 Speaker 1: his work and it shows it has great historical perspective. 933 00:52:52,719 --> 00:52:55,400 Speaker 1: You can find little nuggets of information and that's so 934 00:52:55,600 --> 00:53:00,439 Speaker 1: very useful. That ultimately led to Ben Bernanke saying to him, Hey, 935 00:53:00,520 --> 00:53:02,840 Speaker 1: we messed up last time and we won't do it again. 936 00:53:03,680 --> 00:53:07,000 Speaker 1: That was pretty Uh, that was pretty interesting. Yeah. Um, 937 00:53:07,640 --> 00:53:11,640 Speaker 1: have a one nonfiction that's not that's not finance related 938 00:53:12,080 --> 00:53:16,920 Speaker 1: or not almost impossible. Everything I read in a nonfiction 939 00:53:17,000 --> 00:53:21,319 Speaker 1: universe is either finance or economics, economics but finance. What 940 00:53:21,320 --> 00:53:23,359 Speaker 1: what have you read that you like that's that's not 941 00:53:23,400 --> 00:53:26,160 Speaker 1: finance but economy, no other way around. That's not economics 942 00:53:26,200 --> 00:53:33,200 Speaker 1: but is just finance. Probably Moneyball, Okay, Yeah, Michael Lewis 943 00:53:33,320 --> 00:53:35,640 Speaker 1: is pretty fun. He has a book coming out. I 944 00:53:35,680 --> 00:53:39,879 Speaker 1: think it's December on a kaniment in Travarsity, and I'm 945 00:53:39,920 --> 00:53:44,800 Speaker 1: sure that's going to be spectum definitely. I'm going away 946 00:53:45,040 --> 00:53:48,040 Speaker 1: in February and I already have that book tied up. Yeah, 947 00:53:48,560 --> 00:53:51,520 Speaker 1: it's ready to go. Yeah. For it's not even published yet, 948 00:53:51,520 --> 00:53:54,759 Speaker 1: and I know I'm reading that on a beach somewhere. Um. 949 00:53:54,760 --> 00:53:57,440 Speaker 1: All right, so let me get to my um last 950 00:53:57,440 --> 00:54:00,400 Speaker 1: few questions before I have to send you or have 951 00:54:00,440 --> 00:54:04,000 Speaker 1: to let you go on your way. Um. So, if 952 00:54:04,040 --> 00:54:07,279 Speaker 1: you had some millennial or a recent college graduate come 953 00:54:07,320 --> 00:54:10,760 Speaker 1: to you and say I'm thinking about finance as a career, 954 00:54:10,800 --> 00:54:13,239 Speaker 1: what sort of advice would you give them? Go for it. 955 00:54:13,400 --> 00:54:15,960 Speaker 1: I mean, you know, just like that. Yeah, if you 956 00:54:16,040 --> 00:54:19,680 Speaker 1: love finance, there is a home for you. Um. I 957 00:54:19,719 --> 00:54:24,480 Speaker 1: think that this generation is very different than past generations 958 00:54:24,600 --> 00:54:28,000 Speaker 1: in that they have sort of a different standard for 959 00:54:28,120 --> 00:54:30,120 Speaker 1: what they want out of a work life balance. You know, 960 00:54:30,160 --> 00:54:32,719 Speaker 1: when I got out of school, the goal was to 961 00:54:32,760 --> 00:54:34,719 Speaker 1: work a hundred and twenty hours a week for two 962 00:54:34,800 --> 00:54:37,160 Speaker 1: years so that you could be in an investment bank. Right, 963 00:54:37,520 --> 00:54:39,279 Speaker 1: So this is a little bit different. But I think 964 00:54:39,280 --> 00:54:42,880 Speaker 1: that there are a lot of opportunities in finance, within, 965 00:54:43,239 --> 00:54:48,279 Speaker 1: within and without you do. I think, you know, if 966 00:54:48,320 --> 00:54:50,399 Speaker 1: you have a passion for this business, you will find 967 00:54:50,400 --> 00:54:53,879 Speaker 1: a home. But you have to have the passion. And 968 00:54:54,000 --> 00:54:56,640 Speaker 1: my final question, what is it that you know about 969 00:54:56,760 --> 00:55:00,000 Speaker 1: investing in equity markets today that you wish you knew 970 00:55:00,200 --> 00:55:03,040 Speaker 1: when you began twenty years ago? Oh my gosh, I 971 00:55:03,040 --> 00:55:06,120 Speaker 1: should have looked at this question more carefully. I've warned you. 972 00:55:06,200 --> 00:55:10,680 Speaker 1: I said, look at sex five. It requires a little Um. 973 00:55:10,719 --> 00:55:14,839 Speaker 1: What do I know? The price trend matters? Absolutely? When 974 00:55:14,840 --> 00:55:18,799 Speaker 1: I started out, I was fully fundamentally biased, you know, 975 00:55:18,920 --> 00:55:21,640 Speaker 1: I had my I had my fundamental hat on and 976 00:55:21,680 --> 00:55:23,480 Speaker 1: I held to it and I've held to it too. 977 00:55:23,560 --> 00:55:26,040 Speaker 1: Strongly on a number of occasions. I mean the times 978 00:55:26,040 --> 00:55:28,480 Speaker 1: that I regret most in my career and in my 979 00:55:28,560 --> 00:55:30,640 Speaker 1: investing life for the times when I ignored what the 980 00:55:30,640 --> 00:55:33,960 Speaker 1: market was telling me. Everybody says that, everybody says, you know, 981 00:55:34,120 --> 00:55:36,600 Speaker 1: I had a story, the price told me something else, 982 00:55:36,600 --> 00:55:39,480 Speaker 1: ignored the price that listened to story. To my do 983 00:55:39,600 --> 00:55:42,080 Speaker 1: not get caught in the the idea that you know 984 00:55:42,200 --> 00:55:44,719 Speaker 1: better than the millions of investors out there that make 985 00:55:44,760 --> 00:55:47,879 Speaker 1: a market. Gina, thank you so much for for doing this. 986 00:55:47,880 --> 00:55:51,560 Speaker 1: This has been absolutely fascinating. UH. For those of you 987 00:55:51,680 --> 00:55:56,160 Speaker 1: listening at home, if you enjoy this conversation, be sure 988 00:55:56,160 --> 00:55:58,359 Speaker 1: and take a look on Apple iTunes and you could 989 00:55:58,400 --> 00:56:01,080 Speaker 1: look up an Intra Down an Inch and see any 990 00:56:01,120 --> 00:56:03,399 Speaker 1: of the other I want to say hundred and three 991 00:56:03,640 --> 00:56:07,440 Speaker 1: or so episodes that we've done in the past. You 992 00:56:07,480 --> 00:56:10,359 Speaker 1: can check out my daily column on Bloomberg View dot 993 00:56:10,400 --> 00:56:13,840 Speaker 1: com and follow me on Twitter at rid Alts. We 994 00:56:13,960 --> 00:56:18,440 Speaker 1: love your comments, suggestions and feedback. Our email address is 995 00:56:18,640 --> 00:56:22,000 Speaker 1: am i B, which stands for Masters in Business m 996 00:56:22,040 --> 00:56:25,719 Speaker 1: I B Podcast at Bloomberg dot net. I would be 997 00:56:25,760 --> 00:56:29,000 Speaker 1: remiss if I did not thank Michael bat Nick, my 998 00:56:29,040 --> 00:56:31,920 Speaker 1: head of research Cholie Ulmar a producer, and Tail Riggs 999 00:56:31,920 --> 00:56:35,840 Speaker 1: are booker. You've been listening to Masters in Business on 1000 00:56:35,920 --> 00:56:36,920 Speaker 1: Bloomberg Radio.