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Jan van Eck on Successful Thematic Investing · Masters in Business

• 0:02
  Speaker 1: This is Master's in Business with Barry Ridholts on Bloomberg Radio.
• 0:07
  Speaker 1: This week on the podcast, I have an extra special guest.
• 0:10
  Speaker 1: His name is Jan van Eck and he has really
• 0:13
  Speaker 1: a fascinating background in history. His father built Vanek Associates
• 0:18
  Speaker 1: in n He never expected to go into the family business,
• 0:24
  Speaker 1: kind of wandered about aimlessly. In the podcast portion we
• 0:28
  Speaker 1: talked about the overlap between our backgrounds. It's kind of
• 0:32
  Speaker 1: amusing to me. But eventually comes into the business, which
• 0:37
  Speaker 1: was about a billion dollars in a u M and
• 0:40
  Speaker 1: here it is, uh some twenty eight years later and
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  Speaker 1: they're up to fifty six billion dollars. He's the CEO
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  Speaker 1: and basically runs the shop with a team. It is
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  Speaker 1: an ensemble practice. They were very early into the world
• 0:54
  Speaker 1: of e t f s and they do a lot
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  Speaker 1: of really interesting thematic funds. If you are all interested
• 1:00
  Speaker 1: in international investments, or thematic investments or E s G investments,
• 1:06
  Speaker 1: then you're going to find this conversation to be quite fascinating. So,
• 1:10
  Speaker 1: with no further ado, my sit down with my friend
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  Speaker 1: Jan van ef This is Masters in Business with Barry
• 1:18
  Speaker 1: Ridholts on Bloomberg Radio. My special guest today is Jan
• 1:23
  Speaker 1: van Eck. He is the CEO and director of Van
• 1:26
  Speaker 1: Eck Associates, where he has worked since. Van Eck manages
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  Speaker 1: about fifty six billion dollars in assets, eight percent of
• 1:37
  Speaker 1: which is in E t F S, for which the
• 1:40
  Speaker 1: firm has won numerous awards. Jan van Eck, Welcome to Bloomberg.
• 1:46
  Speaker 1: Thank you so much. Garry. So you and I know
• 1:49
  Speaker 1: each other um from a few different overlapping entities. Probably
• 1:55
  Speaker 1: inside E t F S is the one that the
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  Speaker 1: entire sans Dashtan crew through Jim Wyant right through et
• 2:03
  Speaker 1: F folks. Let's talk a little bit about your background.
• 2:07
  Speaker 1: You work for a think tank, a newspaper, You go
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  Speaker 1: to law school, you get a degree from Stanford. What
• 2:13
  Speaker 1: were you doing wandering the fields for so long? Didn't
• 2:17
  Speaker 1: you just think it was inevitable you're gonna end up
• 2:20
  Speaker 1: in the business that coincidentally has your last name on it.
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  Speaker 1: Uh In my own mind, Barry Uh, No, I really
• 2:28
  Speaker 1: had no idea what I wanted to do. I graduated
• 2:31
  Speaker 1: with a degree in economics and from what was your
• 2:34
  Speaker 1: undergraduate Williams College? Right? And so you come out with
• 2:37
  Speaker 1: an econ of degree And doesn't that suggest business and
• 2:41
  Speaker 1: or finance or not does. But I did the minimum
• 2:44
  Speaker 1: to get my degree an ECON, and I really enjoyed
• 2:47
  Speaker 1: liberal arts. I took as many classes and I did
• 2:49
  Speaker 1: something that, um, I think a lot of people should
• 2:53
  Speaker 1: do and it's not done enough, which is audit classes.
• 2:56
  Speaker 1: I mean, there's so much great stuff at at a
• 2:58
  Speaker 1: college like Williams. So you know art, history, history, photography, philosophy,
• 3:05
  Speaker 1: lots of things. You know, now people have a tendency
• 3:07
  Speaker 1: to do that later in life. You did that when
• 3:09
  Speaker 1: you were nineteen and twenty. That's free. You know, you're
• 3:12
  Speaker 1: sitting for a course for an hour or two during college,
• 3:14
  Speaker 1: and you know you've already paid the tuition. So the
• 3:17
  Speaker 1: professors love to have more students there at least, you know,
• 3:19
  Speaker 1: in a smaller school. And today you can order classes
• 3:22
  Speaker 1: from Yale or m I T or n y U
• 3:25
  Speaker 1: or any one of a hundred schools online for free.
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  Speaker 1: Are you still doing that? Uh? Well, I love to
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  Speaker 1: listen to podcasts and and get information. Yeah. Maybe, all right,
• 3:37
  Speaker 1: we'll see, we'll see if they get together. Answer your question, right, Um,
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  Speaker 1: I didn't know what I wanted to do when I graduated,
• 3:43
  Speaker 1: and you know that this great podcast I haven't read
• 3:45
  Speaker 1: the book on the book range right, and and just
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  Speaker 1: experiment as much as you can when you're young. So
• 3:52
  Speaker 1: I divide an internship at the Washington Post metrodesk. While
• 3:57
  Speaker 1: I was in law school, I worked for a prosecutor
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  Speaker 1: one summer the UH in the Eastern District of New York.
• 4:01
  Speaker 1: I worked for a corporate law firm during M and
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  Speaker 1: A deals, interned in Germany one summer at a bank.
• 4:07
  Speaker 1: I mean, just tried as many different things. But the
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  Speaker 1: the thing that triggered my love of business was actually
• 4:12
  Speaker 1: working in Silicon Valley and would you work for Silicon Valley?
• 4:16
  Speaker 1: I actually after Brookings, Um, that was the thing Tank
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  Speaker 1: I realized I did not I want to get too
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  Speaker 1: PhD in economics. Academia was not freean and so I
• 4:28
  Speaker 1: put my stuff in a car and drove across country
• 4:30
  Speaker 1: and volunteered on the political campaign. Uh, we don't need
• 4:33
  Speaker 1: to go into it. Um. It was a Senate campaign,
• 4:38
  Speaker 1: and it was a losing Senate campaign. So but I
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  Speaker 1: learned a lot um and most importantly, I met some
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  Speaker 1: entrepreneurs in Silicon Valley who I just loved the attitude
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  Speaker 1: of I try something, it doesn't work. I tried something
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  Speaker 1: else that went public. I'm doing all these different things.
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  Speaker 1: Just that that creativity I didn't perceive. Even though I
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  Speaker 1: grew up in New York City area, you looking at
• 5:00
  Speaker 1: the banks and going up the wrong of management, I
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  Speaker 1: did not perceive that level of creativity. So that's when
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  Speaker 1: I fell in love with business UM. And then you know,
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  Speaker 1: I decided to go back to that region for law school.
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  Speaker 1: It's lucky enough to get into Stanford UM. But that's
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  Speaker 1: that's which is a fabulous, fabulous school. That's a little
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  Speaker 1: more than luck. That's good undergraduate grades, good recommendations, and
• 5:20
  Speaker 1: a good else at score. Yes, are you a good
• 5:23
  Speaker 1: standardized test taker? I must be, But we'll talk more
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  Speaker 1: about that later. So even as a son of a financier,
• 5:31
  Speaker 1: your dad opened and launched Vanac Associates in you never assumed, well,
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  Speaker 1: I'll end up in investing in the family business one day. Look,
• 5:41
  Speaker 1: it's a psychological thing. I can't go through about. Tell
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  Speaker 1: you two things. The door was always open so my
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  Speaker 1: father and my father always said, do what you want
• 5:51
  Speaker 1: to do, because your happiness is more important than you
• 5:54
  Speaker 1: know whether this business UM is there or not. So
• 5:59
  Speaker 1: how those things add up, I'll let for you know,
• 6:01
  Speaker 1: third parties to decide. But you know, my my father
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  Speaker 1: was very no pressure to come into the business. So
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  Speaker 1: one of the questions that I like to ask people
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  Speaker 1: who come from a family background in finance is what
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  Speaker 1: are some of your earliest memories about money and investing.
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  Speaker 1: Do you remember the first stock you ever bought? Or
• 6:25
  Speaker 1: based on what you're saying now, you're not that guy
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  Speaker 1: who was running Eliminate stand to buy UM shares in
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  Speaker 1: ge when you were nine. You know, it's kind of interesting.
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  Speaker 1: I was never a portfolio manager, and I wasn't the
• 6:39
  Speaker 1: guy to buy shares. But you know, when I look
• 6:42
  Speaker 1: back in high school UM, I would buy Coca Cola
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  Speaker 1: from distributors and resell them by the bottle. I worked,
• 6:49
  Speaker 1: probably didn't have to work, so it's just a pure
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  Speaker 1: arbitrary service. Like said, there was something about wanting to
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  Speaker 1: do stuff to make money that was that was definitely
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  Speaker 1: early early on for me. Quite interesting. So Vanek was
• 7:02
  Speaker 1: one of the first asset managers to offer US investors
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  Speaker 1: access to international markets. How did that affect the company
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  Speaker 1: and how how much overseas and investment does Vanek currently
• 7:16
  Speaker 1: do today? We're an American firm, based in New York,
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  Speaker 1: but we always have had a very international orientation. Not
• 7:23
  Speaker 1: only was the first fund that my father launched in
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  Speaker 1: an international equity fund. The idea was to take advantage
• 7:29
  Speaker 1: of the rebound in Germany and Japan after World War Two.
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  Speaker 1: That was the investment thesis at least nineteen fifties. That
• 7:35
  Speaker 1: was going to be Martiall plan and a whole European
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  Speaker 1: and Asian rebound right um and uh and cheaper valuations
• 7:42
  Speaker 1: as well. We've heard that before or still again. Um so,
• 7:47
  Speaker 1: so that was really the story, and so our perspective
• 7:49
  Speaker 1: has always been international. Also, you know he later flipped
• 7:54
  Speaker 1: that fund into a gold fund, and resources investing is
• 7:57
  Speaker 1: very international as well, whether at the time South for CO, Australia, Canada,
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  Speaker 1: You're always a majority of our perspective and assets were
• 8:04
  Speaker 1: not not in the US. Quite interesting, you guys have
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  Speaker 1: some really fascinating investment funds. The one you launched a
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  Speaker 1: few years ago, I I the Van Eck Vector's Video
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  Speaker 1: Gaming and E Sports et F, which I know is
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  Speaker 1: won a number of e t F awards Best Thematic
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  Speaker 1: ETF Best What was the thinking behind an E sports ETF? Well, uh,
• 8:29
  Speaker 1: you know what we try to do is look from
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  Speaker 1: a longer term perspective, we don't want to just chase fads. Right,
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  Speaker 1: there's a lot of ETFs on micro themes, and give
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  Speaker 1: us an example on micro themes, and I mean that
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  Speaker 1: you know, like lots of things. Healthcare industry, for example,
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  Speaker 1: has been sliced and diced into cancer drugs. And this
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  Speaker 1: so really narrow or or even like five G like
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  Speaker 1: I mean, it's it's it's an interesting thesis. But what
• 8:54
  Speaker 1: happens when six G comes out? Then they'll change the
• 8:56
  Speaker 1: name of the funds. Of course, there's always a solution
• 9:01
  Speaker 1: once the ao M is in the door. But um, yeah,
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  Speaker 1: So so I try to take out like a five
• 9:06
  Speaker 1: or ten year view. And one of the things that's
• 9:08
  Speaker 1: happening now so we've had the smartphone for ten years,
• 9:11
  Speaker 1: is the virtualization of life. Virtualization meaning we exist in
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  Speaker 1: a a virtual world of software as opposed to in
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  Speaker 1: in meat space and social media. Right before you and
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  Speaker 1: I met in real life, I was listening to your podcast.
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  Speaker 1: I was you know, you and I have media. Although
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  Speaker 1: you're pretty uh pretty constrained, you're pretty low key on
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  Speaker 1: on the on the Twitter right, so so so entertainment
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  Speaker 1: world just going through that revolution. First of all, as
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  Speaker 1: we get wealth are as a society, more people enjoy
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  Speaker 1: sports entertainment, betting that that's a growth industry. But it's
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  Speaker 1: also transforming from the traditional you know, professional football, basketball,
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  Speaker 1: hockey into online gaming and the creation of teams competing
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  Speaker 1: against each other, and and that's just that could us
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  Speaker 1: continue to grow and their dimensions now right, it's not
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  Speaker 1: just the playing of the game, there's the watching of
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  Speaker 1: the game, and and there's the playing of those things
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  Speaker 1: on YouTube and people watching games and now audience participation
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  Speaker 1: Barry is likely to happen right where you're watching a game,
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  Speaker 1: and as a spectator you can vote on the teams
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  Speaker 1: or advise them. I don't. I don't do that, so
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  Speaker 1: so let me ask there's a there's a longer term
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  Speaker 1: future as so, so that blows my mind. My frame
• 10:27
  Speaker 1: of references decades ago, when I was on a trading desk,
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  Speaker 1: one of my favorite things to do each Tuesday night
• 10:36
  Speaker 1: was once everybody was done with their blodder and their
• 10:38
  Speaker 1: P and L, which you had a save to a
• 10:40
  Speaker 1: disk and then walk to the head trader's office. That's
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  Speaker 1: how long ago it was. The quote server would become
• 10:46
  Speaker 1: a Quake server and all the traders would jack in
• 10:50
  Speaker 1: and we would have this giant multiplayer game of Quake,
• 10:53
  Speaker 1: which was so immersive. I would look up and uh, oh,
• 10:57
  Speaker 1: I'm in trouble. It's past ten o'clock. I've been doing
• 10:59
  Speaker 1: this since for already, and I found it fascinating. I
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  Speaker 1: cannot imagine watching other people play games. This is going
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  Speaker 1: to be a giant, burgeoning industry. It is already, and
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  Speaker 1: I think the only thing that we don't know the
• 11:15
  Speaker 1: story that hasn't been written as a monetization of all
• 11:17
  Speaker 1: that traffic and crowds, so we we know that people
• 11:21
  Speaker 1: are doing it. You know, way more people watch these
• 11:23
  Speaker 1: E Sports World Championships than right. I mean some of
• 11:28
  Speaker 1: the kids kids, sorry, expression are making five five million
• 11:32
  Speaker 1: bucks for for winning one of these things all the
• 11:36
  Speaker 1: A lot of the owners of professional sports teams own
• 11:39
  Speaker 1: e sports teams as well, so you know, it's a
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  Speaker 1: It's life is a racket, right, so the next next
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  Speaker 1: trend and having an et F just allows the rest
• 11:48
  Speaker 1: of us normal people to participate that trend. The other
• 11:51
  Speaker 1: thing that's really worth noting is Asia is a It's
• 11:54
  Speaker 1: a huge cultural thing in Asia, right, not just in China,
• 11:58
  Speaker 1: but in South Korea and Japan end and it's just
• 12:01
  Speaker 1: it's just big. Culturally, a lot of stuff is being
• 12:04
  Speaker 1: their life is being lived online. That's amazing. Let's talk
• 12:08
  Speaker 1: about something that I'm fascinated with, the Van Eck Vector's
• 12:12
  Speaker 1: green bond e t F. The obvious question, what's a
• 12:16
  Speaker 1: green bond? Well, uh so, green bond is very simple.
• 12:20
  Speaker 1: It is money raised by a company or a government
• 12:24
  Speaker 1: that is supposed to go to improve operations that have
• 12:29
  Speaker 1: a better effect on the environment. So bond by bond decision.
• 12:34
  Speaker 1: It's not a company decision. So the dirtiest commodity company
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  Speaker 1: in the world could issue a green bond if it
• 12:41
  Speaker 1: was improving it's processing to reduce the use of water
• 12:44
  Speaker 1: for examp. So if you're a coal fired electrical plant
• 12:47
  Speaker 1: and you want to raise money to transition to a
• 12:49
  Speaker 1: natural gas would you consider that a green bond. So
• 12:52
  Speaker 1: it's not. Luckily, it's not us making this the determination.
• 12:55
  Speaker 1: There's a third party that certifies these green bonds, and
• 12:59
  Speaker 1: it's and it's a big source of financing. It's it's
• 13:01
  Speaker 1: it's grown. And these have become pretty popular, haven't they,
• 13:04
  Speaker 1: Or they're starting to ramp up they're starting to. I mean,
• 13:08
  Speaker 1: our funds not not huge. Um. I think what people
• 13:12
  Speaker 1: sometimes says, I want perfection in my alcohol it values
• 13:16
  Speaker 1: based or E s G injustment and perfection doesn't exist.
• 13:20
  Speaker 1: There are tradeoffs in life. So the issue is okay,
• 13:23
  Speaker 1: I get it, the environments getting better, but I may
• 13:27
  Speaker 1: not like the issue, or it's a China government entity,
• 13:30
  Speaker 1: or it's a polluter that or has some other kind
• 13:32
  Speaker 1: of practices I might not like. So I mean, in
• 13:35
  Speaker 1: the US, we have several environmental funds, and I think
• 13:39
  Speaker 1: you have to stack those values and so we say, okay,
• 13:41
  Speaker 1: if you care about the environment more than the other factors,
• 13:45
  Speaker 1: then this is this is a good allocation for you,
• 13:48
  Speaker 1: for for E s G investors. The old maxim don't
• 13:51
  Speaker 1: let the perfect be the enemy of the good. Can
• 13:54
  Speaker 1: very much apply, can it? I think so? Right now
• 13:56
  Speaker 1: it's hard to it's hard to figure out how to
• 13:58
  Speaker 1: optimize everything. So let's talk about something that's not so green.
• 14:02
  Speaker 1: Two of your biggest funds are the gold miners and
• 14:05
  Speaker 1: the junior miners. I've and that's what about twenty billion
• 14:09
  Speaker 1: dollars all told. I noticed back in the day that
• 14:15
  Speaker 1: when there were signs of inflation or signs of deficits.
• 14:18
  Speaker 1: A lot of fund managers wanted an instant hedge on inflation,
• 14:24
  Speaker 1: and so they would all pile into the junior miners.
• 14:27
  Speaker 1: That behavior kind of changed when the g l D
• 14:30
  Speaker 1: E t F came out. Why does anyone need the
• 14:33
  Speaker 1: execution where managerial risk of a mine and its management
• 14:38
  Speaker 1: team and expenses when you could just buy g LD
• 14:41
  Speaker 1: and and there's your hedge. Am I oversimplifying that, or
• 14:46
  Speaker 1: has has g l D as one of the biggest
• 14:48
  Speaker 1: dtfs out there change the dynamic around the gold miners
• 14:53
  Speaker 1: and junior miners? Uh? Yes, But let me give you
• 14:56
  Speaker 1: some more historical context. Right, So we've had two big
• 14:59
  Speaker 1: commodity booms in my lifetime, in the nineteen seventies and
• 15:02
  Speaker 1: then in the odds, and they were very, very different
• 15:05
  Speaker 1: for the operating companies because in the nineteen seventies commodities
• 15:09
  Speaker 1: gold went from thirty five dollars eight hundred dollars, oil
• 15:11
  Speaker 1: went up, all that stuff, but the cost of manufacturing
• 15:15
  Speaker 1: all those commodities did not change. So the companies were
• 15:18
  Speaker 1: like options. I mean, all all the revenue would go
• 15:22
  Speaker 1: up and the costs really not go up. And so
• 15:24
  Speaker 1: I mean the stocks were fabulous. I mean, so when
• 15:26
  Speaker 1: the price of gold fund that we had in that
• 15:29
  Speaker 1: decade would go up like a hundred hundred a year.
• 15:32
  Speaker 1: We're gonna talk about that gold fund later. But the
• 15:34
  Speaker 1: key is when the price of the commodities went up,
• 15:37
  Speaker 1: the company generated a whole lot more earnings. Right. But
• 15:39
  Speaker 1: now in this last cycle and the odds that was
• 15:42
  Speaker 1: not the case. The costs of manufacturing for a variety
• 15:45
  Speaker 1: of different reasons, Um, the cost would go up as well,
• 15:51
  Speaker 1: the manufacturing costs, So energy was growing, so that was
• 15:55
  Speaker 1: an input to mind that it was a bigger factor. Uh,
• 15:58
  Speaker 1: you have to dig way more dirt per ounce of
• 16:01
  Speaker 1: whatever you're pulling out, whether it's gold or copper or whatever.
• 16:03
  Speaker 1: So there's just a lot of different factors. So the
• 16:05
  Speaker 1: last cycle there wasn't as much return leverage, which is
• 16:09
  Speaker 1: what you're asking about as in the nineties seventies. So
• 16:13
  Speaker 1: now where are we today. Gold is hitting all time
• 16:16
  Speaker 1: highs except in the US dollar. And I would agree
• 16:19
  Speaker 1: with you, Uh, if you want a hedge against of
• 16:23
  Speaker 1: the current monetary system and you're a little bit nervous
• 16:26
  Speaker 1: about central bankers flying around in capes trying to fix
• 16:30
  Speaker 1: every problem including the coronavirus. Then you probably want you know,
• 16:35
  Speaker 1: several different hedges. You want gold mining shares, you probably
• 16:38
  Speaker 1: want gold bullion, but you also want to look at
• 16:41
  Speaker 1: bitcoin and that Oh yeah, so that is the that's
• 16:45
  Speaker 1: the alternative asset for the younger generation. I mean, coin
• 16:50
  Speaker 1: base has between thirty and forty million US American American customers.
• 16:56
  Speaker 1: How do you deal with the fact that's something like
• 16:58
  Speaker 1: a third of all bitcoins that have ever been mined
• 17:01
  Speaker 1: have either been lost in the terms of being misplaced
• 17:07
  Speaker 1: or literally hacked in stolen. How do you how does
• 17:10
  Speaker 1: an investor manage that? I or custody is a major
• 17:16
  Speaker 1: issue there. There are a couple of issues around bitcoin. Uh,
• 17:19
  Speaker 1: Custody I think is being solved because you do have
• 17:22
  Speaker 1: major institutions like Fidelity, uh, the New York Stock Exchange
• 17:26
  Speaker 1: getting involved in offering bitcoin access having solved taken their
• 17:30
  Speaker 1: custody issue away from you as far as you know,
• 17:34
  Speaker 1: some way at what they call whales or people owning
• 17:36
  Speaker 1: a lot of bitcoin or it being lost or whatever.
• 17:40
  Speaker 1: And then the background of the mining community are point
• 17:43
  Speaker 1: and we've got a lot of slides on our on
• 17:45
  Speaker 1: our website to show it is the diversification of ownership, trading,
• 17:50
  Speaker 1: and mining is so much these days. I don't think
• 17:53
  Speaker 1: it's a practical concern to say that this is one
• 17:56
  Speaker 1: just manipulated market by one entity or something. I'm not
• 17:59
  Speaker 1: saying it's manipulated. I'm saying people seem to be You know,
• 18:02
  Speaker 1: when one out of three dollars or even if it's
• 18:04
  Speaker 1: one out of four dollars in bitcoin seems to have vanished,
• 18:09
  Speaker 1: that kind of raises a question for me. Maybe it's
• 18:11
  Speaker 1: still early days and a little bit of the wild West,
• 18:13
  Speaker 1: and they'll eventually wrestle that into submission. But I think
• 18:17
  Speaker 1: that's scared some people. All of these assets have their
• 18:21
  Speaker 1: pros and cons right, I just say buy a basket,
• 18:23
  Speaker 1: because if there is a being scared to the system,
• 18:26
  Speaker 1: what's gonna go all we care about what goes up more.
• 18:28
  Speaker 1: We don't know. Bitcoin could go up way more than
• 18:31
  Speaker 1: gold chairs or bal bullion. So if you can solve
• 18:34
  Speaker 1: the custody issue for yourself, then I then I think
• 18:37
  Speaker 1: I don't care about your concern. Quite interesting, Let's talk
• 18:40
  Speaker 1: a little bit about the company that you joined in
• 18:44
  Speaker 1: ninety two, and I want to focus on the era
• 18:48
  Speaker 1: in the nineties seventies where your dad had an extremely
• 18:53
  Speaker 1: prescient call into gold in a very inflationary era. What
• 19:00
  Speaker 1: more than just being a pundit who said gold's going up,
• 19:04
  Speaker 1: he made a giant bet on that tell us about it.
• 19:07
  Speaker 1: So my father started the firm in fifty five. He
• 19:09
  Speaker 1: actually started it later in life, and so in the
• 19:12
  Speaker 1: in the sixties, he had just gotten married. Um, he
• 19:16
  Speaker 1: was just over fifty years old and he was getting
• 19:19
  Speaker 1: a degree at night at n y U in economics,
• 19:24
  Speaker 1: and one of his professors was an Austrian economist called
• 19:27
  Speaker 1: Ludwig von Mises. And if you know anything, I mean
• 19:31
  Speaker 1: he's famous, right, but Austrians were never really accepted into
• 19:36
  Speaker 1: academia in the United States. Actually was not a full professor,
• 19:41
  Speaker 1: he was just sort of an adjunct. But anyway, my
• 19:43
  Speaker 1: father they are sort of hardcore monitorists and they really
• 19:47
  Speaker 1: focus on money, supply, money, you know, and it was basically, look,
• 19:51
  Speaker 1: guns and butter were happening in the nineteen sixties, my
• 19:54
  Speaker 1: supply was exploding and eventually that was going to break
• 19:57
  Speaker 1: into inflation, and the way to make money off of
• 20:00
  Speaker 1: that was to invest in gold. Now, as you said,
• 20:03
  Speaker 1: I really think it's amazing the risk he took at
• 20:06
  Speaker 1: that point in time because gold had always been fixed
• 20:10
  Speaker 1: against the U. S. Dollar for the entirety of history
• 20:13
  Speaker 1: by the government. Yes, for almost two hundred years of
• 20:17
  Speaker 1: our history, gold had been fixed. He said, this paradigm
• 20:20
  Speaker 1: is going to break. And that's really the philosophy of
• 20:22
  Speaker 1: our firm, which is you can't just look at the
• 20:24
  Speaker 1: four corners of the financial markets. You have to look
• 20:27
  Speaker 1: at technology trends, political trends, and major economic trends. And
• 20:33
  Speaker 1: and several years later, so he didn't have a lot
• 20:35
  Speaker 1: of patients that that broke. By the way, for folks
• 20:38
  Speaker 1: who may not be familiar with Ludwig van Miss, he's
• 20:41
  Speaker 1: one of the most famous of the Austrians. A number
• 20:43
  Speaker 1: of books and really well known. If you're more interested
• 20:46
  Speaker 1: in more of that, just just go Google than Miss.
• 20:49
  Speaker 1: But I'm fascinated by the gold trade. Your father puts
• 20:54
  Speaker 1: how much money into gold at that? Well, he's so
• 20:57
  Speaker 1: he had an international equity fund and he went to
• 20:59
  Speaker 1: Sharrel he said, I'm doing this, and he eight plus
• 21:03
  Speaker 1: percent of the fund and buy gold mining shares. Now
• 21:06
  Speaker 1: you couldn't buy gold, So that he was a little
• 21:08
  Speaker 1: bit to your point before he was forced into buying
• 21:11
  Speaker 1: the share no g l D and if you want
• 21:14
  Speaker 1: to buy actual gold, you're buying futures and its leverage
• 21:17
  Speaker 1: in time future. Then that's right. You were talking seventies,
• 21:21
  Speaker 1: so there really different exactly, So three quarters of a
• 21:24
  Speaker 1: billion dollars more or less into gold or this was
• 21:28
  Speaker 1: this was way before that. Oh my god, the fund
• 21:29
  Speaker 1: was teeny How big was teeny? Oh? I mean it
• 21:33
  Speaker 1: was way less than a hundred millions. Okay. No one
• 21:37
  Speaker 1: wanted international investments in the nineteen sixties. Is kind of
• 21:40
  Speaker 1: like today, right, I mean, you don't want to even
• 21:42
  Speaker 1: talk about it. So he piles into gold in this
• 21:46
  Speaker 1: small formerly international equity funds, it does nothing for two
• 21:51
  Speaker 1: or three years, to what our clients saying, What are
• 21:54
  Speaker 1: investors saying when you have us in gold and not
• 21:57
  Speaker 1: only is it doing nothing, but thanks to inflation, it's
• 22:00
  Speaker 1: actually worthless each year. Well, yeah, gold was less. I
• 22:05
  Speaker 1: think the companies were, Okay, I haven't you know, looked
• 22:07
  Speaker 1: at the performance over that time period. But the industry
• 22:10
  Speaker 1: was so small berry, right. The industry exploded in the
• 22:14
  Speaker 1: late seventies because of money market funds when the rate
• 22:16
  Speaker 1: you could get on banks was regulated, So it was
• 22:19
  Speaker 1: a cottage industry. And you know what ended up happening though,
• 22:23
  Speaker 1: because the performance was so tremendous that fund was the
• 22:26
  Speaker 1: best performing mutual fund in the industry in the seventies
• 22:30
  Speaker 1: and that decade, that Decadecade. Yeah, Peter, Peter Lynch everything,
• 22:35
  Speaker 1: Peter who Yeah, exactly cos he should have been gold
• 22:39
  Speaker 1: and he you know, he went on MERV Griffin. I
• 22:41
  Speaker 1: mean it was action. It was such a big deal
• 22:43
  Speaker 1: back then. It was it was popular culture, right, I mean,
• 22:47
  Speaker 1: interest rates were going into the teens and uh, home
• 22:52
  Speaker 1: watching my dad, griff please going to embarrass us. And
• 22:56
  Speaker 1: so obviously that had to help the company. Is from
• 23:00
  Speaker 1: the time gold explodes when we no longer on the
• 23:03
  Speaker 1: gold standard is what seventy three, seventy four, early seventies,
• 23:08
  Speaker 1: so almost twenty years later, you come into the company,
• 23:12
  Speaker 1: Ino and the firm's up to a billion dollars in assets.
• 23:16
  Speaker 1: Well it got to two billion, yeah, and you know,
• 23:19
  Speaker 1: right at the peak, so right right, um in eight
• 23:22
  Speaker 1: and then Paul Boker comes in, Uh, and the gold
• 23:29
  Speaker 1: went down to you know, two hundred dollars announce, So
• 23:32
  Speaker 1: here's only two thousands. Here's the really big question post gold.
• 23:36
  Speaker 1: You're there in ninety two, the firm is now one
• 23:38
  Speaker 1: billion from two billion today, it's fifty times the size.
• 23:43
  Speaker 1: How did you manage to grow the firm over thirty
• 23:45
  Speaker 1: years fifty x? Well, first of all, it's not first person,
• 23:49
  Speaker 1: you know, singular. There were a lot of people. It
• 23:52
  Speaker 1: was a team um, one of whom was my brother
• 23:54
  Speaker 1: who passed away ten years ago, but he was part
• 23:57
  Speaker 1: of it. But there were a lot of other colleagues
• 23:59
  Speaker 1: as well, and it was building up other mutual funds.
• 24:02
  Speaker 1: And then really before I was what I call e
• 24:04
  Speaker 1: t F guy in two thousand and six, we for
• 24:07
  Speaker 1: ten years we had a hedge fund business and we
• 24:09
  Speaker 1: had to hedge funds. But that we rose about four
• 24:12
  Speaker 1: billion dollars and so I had some good strategies there
• 24:15
  Speaker 1: for a while. Quite fascinating. There's a quote of yours
• 24:18
  Speaker 1: I really like, and I have to start the segment
• 24:21
  Speaker 1: on investing with this quote. The investment world has broken
• 24:25
  Speaker 1: up into two types of people. Historians and statisticians discuss, well,
• 24:31
  Speaker 1: anyone that's not just doing a market cap exposure fund
• 24:35
  Speaker 1: tends to have some kind of bias, and they look
• 24:38
  Speaker 1: to do asset allocation as well based on that kind
• 24:41
  Speaker 1: of bias. And I think there's been a lot of
• 24:44
  Speaker 1: quant work done and a lot of the investors. Let's
• 24:47
  Speaker 1: take value investing for example, right a study comes out
• 24:50
  Speaker 1: says value is the way to go. I've done, you know,
• 24:53
  Speaker 1: I look at the fundamentals of a company and those
• 24:55
  Speaker 1: with a cheaper price to book. That's gonna work, right,
• 24:59
  Speaker 1: because it's worked historic, Because it's worked historically, it's giving
• 25:02
  Speaker 1: you some kind of added return over the market return.
• 25:06
  Speaker 1: And then it doesn't work, and it doesn't work, and
• 25:09
  Speaker 1: it hasn't worked for ten years. I like to point
• 25:11
  Speaker 1: out how little we know. Really. I feel like we're
• 25:14
  Speaker 1: in the Caveman era of investing, Barry. I know there's
• 25:17
  Speaker 1: been a lot of innovation, but there's so little we
• 25:19
  Speaker 1: know what is there? Is there an academic theory that
• 25:21
  Speaker 1: says growth versus value? No, no one can time growth
• 25:24
  Speaker 1: versus value. It's an ongoing debate. Yet those trillions of
• 25:27
  Speaker 1: dollars at very prestigious firms that have this value tilt
• 25:32
  Speaker 1: that have now been underperforming. So anyway, so that's kind
• 25:36
  Speaker 1: of my, uh, you know, my perspective that you just
• 25:39
  Speaker 1: can't use these mathematical tests and and mathematicians that that's insulting.
• 25:44
  Speaker 1: You really have to call them statisticians whatever that means
• 25:48
  Speaker 1: um but basically you can't just use mathematical ratios to
• 25:51
  Speaker 1: say their force. There is an investment opportunity, and the
• 25:54
  Speaker 1: current one that's floating around today is emerging markets. Value
• 25:58
  Speaker 1: stocks have underperform armed and there, and they're cheap and
• 26:03
  Speaker 1: therefore mean reversion. The statisticians say, oh, that's great value.
• 26:07
  Speaker 1: My perspective on the world is that of historian. The
• 26:10
  Speaker 1: world is changing so much all the time, So let
• 26:14
  Speaker 1: me just take emerging markets. Emerging Market Index is so
• 26:17
  Speaker 1: different today. China dominates that. Asia is eight percent of
• 26:21
  Speaker 1: that index. There's basically everything else you can ignore. Ten
• 26:25
  Speaker 1: fifteen years ago and Emerging Markets Index had Thailand and Malaysia, Singapore, Korea, remember,
• 26:31
  Speaker 1: like Brazil, Mexico. It's it's just not even the same
• 26:34
  Speaker 1: thing to to take that statistic and say I'm going
• 26:37
  Speaker 1: to do a study and give you an investment recommendation. Look,
• 26:41
  Speaker 1: that's a school of thought. I'm in the what I
• 26:44
  Speaker 1: call historian school of thought, which is there's so much change.
• 26:48
  Speaker 1: Look at all the change that's happening. If only there
• 26:51
  Speaker 1: was an e t F that was emerging markets ex China.
• 26:55
  Speaker 1: That would be fantastic. It wouldn't be important in the world,
• 26:58
  Speaker 1: right No, but it could would actually see some long
• 27:01
  Speaker 1: term growth, not dominated by one single company we filed
• 27:05
  Speaker 1: for one go or um. That's why I brought that up.
• 27:08
  Speaker 1: I wanted to toss that out. The other thing you
• 27:11
  Speaker 1: and I briefly discussed a long time ago over wine,
• 27:15
  Speaker 1: and I want to continue the conversation. We'll see if
• 27:17
  Speaker 1: you remember this. There are many ways to measure value,
• 27:21
  Speaker 1: price to book being only one of them, and people
• 27:25
  Speaker 1: kind of forget the days of having a book value
• 27:29
  Speaker 1: with giant factories or thousands of miles of rail tracts
• 27:33
  Speaker 1: or fiber optic cables or whatever. May not really be
• 27:37
  Speaker 1: so applicable to companies like Apple or Google or Facebook.
• 27:41
  Speaker 1: And you point out they have intellectual property, the algorithm
• 27:45
  Speaker 1: of Google search and how they monetize ads is not
• 27:49
  Speaker 1: exactly the sort of book value that we saw in
• 27:52
  Speaker 1: the days of steel manufacturers and railroads and automobile companies.
• 27:57
  Speaker 1: Right Well, I think, as I was implying before, I
• 27:59
  Speaker 1: think there are these these things that people observe in
• 28:03
  Speaker 1: the markets, and then they kind of go away after
• 28:05
  Speaker 1: a while for whatever reason. Maybe they're arbitraged away or
• 28:08
  Speaker 1: for or whatever. And I do think that in the
• 28:10
  Speaker 1: new economy. I'm not saying growth will outperform value forever.
• 28:15
  Speaker 1: I'm not saying you should tilt your portfolio that way,
• 28:17
  Speaker 1: but I definitely don't think you have to look at
• 28:19
  Speaker 1: the measures um these days. The the one that we
• 28:23
  Speaker 1: have as a firm that we like is the wide
• 28:26
  Speaker 1: mode philosophy, which is look at the earnings on a
• 28:29
  Speaker 1: forward looking basis. Okay, so it's not just looking at
• 28:32
  Speaker 1: all the statistics on Yahoo, Finance, er Bloomberg, but and
• 28:36
  Speaker 1: that's produced by morning Star Equity Research, and then so
• 28:40
  Speaker 1: that will estimate the profitability. So even if a company
• 28:42
  Speaker 1: like Facebook is not making money, which it wasn't at
• 28:45
  Speaker 1: a point in time, we know the potential is there,
• 28:48
  Speaker 1: then we include it. And then the second step is
• 28:51
  Speaker 1: to make sure that you're not overpaying for that, because
• 28:54
  Speaker 1: that I think is a real value that doesn't exist
• 28:57
  Speaker 1: in all e T s, which is that value suation
• 29:00
  Speaker 1: discipline of kicking out companies if they just become too expensive.
• 29:04
  Speaker 1: So you're really talking about GARB growth at a reasonable price.
• 29:07
  Speaker 1: Is that that what you're implying? Yeah, I would say
• 29:10
  Speaker 1: a proprietary version of GARB. They would not like that,
• 29:13
  Speaker 1: but I think that's fair. So let's let's talk about
• 29:16
  Speaker 1: some of the e t f s you've launched. You
• 29:18
  Speaker 1: guys are not known for plain vanilla beta. How do
• 29:22
  Speaker 1: you think about developing a new strategy, How do you
• 29:26
  Speaker 1: put together the philosophy behind a new e t F,
• 29:31
  Speaker 1: and then how do you decide here's how we're going
• 29:33
  Speaker 1: to market this. Because you guys have been very successful
• 29:36
  Speaker 1: with this, I like to call it's like handcrafted beers.
• 29:39
  Speaker 1: Every one of our e t F we really try
• 29:41
  Speaker 1: to think about the underlying structure of the asset class
• 29:43
  Speaker 1: and the market and how to construct an exchange traded
• 29:47
  Speaker 1: vehicle to take advantage of that. So for fixed income UM,
• 29:51
  Speaker 1: if I could talk about that. For we have several
• 29:54
  Speaker 1: high yield funds. You want to make sure there's enough
• 29:57
  Speaker 1: liquidity in that. So for our high yield Muni fund,
• 30:00
  Speaker 1: we made sure a slug was in triple bees so
• 30:03
  Speaker 1: that there would be enough liquidity in our view throughout
• 30:06
  Speaker 1: a market cycle for that product. Also, sticking with fixed income, again,
• 30:10
  Speaker 1: this is the van deck philosophy, right, look at the
• 30:13
  Speaker 1: macro trends and market structure in the industry. So what's
• 30:17
  Speaker 1: happened over the last ten years has been the growth
• 30:20
  Speaker 1: of triple bes as a percent of the overall investment
• 30:24
  Speaker 1: grade market. Right, so the lowest level of rating for
• 30:27
  Speaker 1: investment grade is now fifty percent of all investment grade
• 30:31
  Speaker 1: and triple bes today are greater in issuance than all
• 30:36
  Speaker 1: of investment grade debt ten years ago. So let me
• 30:39
  Speaker 1: let me wrap my head around this. The weakest investment
• 30:42
  Speaker 1: grade bonds are now half of of investment grade portfolios. Correct,
• 30:48
  Speaker 1: So in other words, we've kind of worked a way
• 30:50
  Speaker 1: down the risk scale to get a little more return.
• 30:54
  Speaker 1: Is that the companies are so it's it's natural companies
• 30:58
  Speaker 1: are optimizing. They're saying, let's and I can keep my
• 31:00
  Speaker 1: borrowing costs down if I just keep stay a little
• 31:03
  Speaker 1: bit above junk and then in a low interest rate environment,
• 31:07
  Speaker 1: I've got all this money at two percent. You know
• 31:09
  Speaker 1: what's not to love. And and the spread between investment
• 31:12
  Speaker 1: grade and high yield or junk has really narrowed over
• 31:15
  Speaker 1: the past because we're a wash and money. So that's
• 31:18
  Speaker 1: a separate thing. But anyway, let's let's address that because
• 31:20
  Speaker 1: it's a fascinating topic. Whether we're looking at venture capital
• 31:24
  Speaker 1: or private equity or pretty much everything else. There is
• 31:29
  Speaker 1: just an ungodly amount of capital coursing its way through
• 31:32
  Speaker 1: the system. Absolutely, And what does that mean? Uh, Well,
• 31:37
  Speaker 1: like I say, don't worry, be happy. I mean, you
• 31:41
  Speaker 1: can't fight central banks, don't fight. Don't well, and look
• 31:46
  Speaker 1: at China. That's my thing that I think a lot
• 31:48
  Speaker 1: of people don't look at. You have to look at
• 31:50
  Speaker 1: what's going on in China. And the narrative in China
• 31:53
  Speaker 1: is also right now mildly stimulative. So I can go
• 31:58
  Speaker 1: into that if you like. Well, well, let's talk out that,
• 32:00
  Speaker 1: because you had something I thought was pretty insightful leading
• 32:04
  Speaker 1: into the fourth quarter of when we saw temporary correction
• 32:09
  Speaker 1: and you said, hey, China was looking at a hard landing.
• 32:11
  Speaker 1: They were slowing down, which is why we saw our weakness,
• 32:15
  Speaker 1: and they figured it out and started stimulating again. How
• 32:18
  Speaker 1: do you offset that here in the first quarter of
• 32:24
  Speaker 1: against the coronavirus, which doesn't seem to be coming to
• 32:29
  Speaker 1: a natural end yet. We we assume they'll eventually wrestle
• 32:33
  Speaker 1: this into submission like they have with other pandemics like
• 32:36
  Speaker 1: a bola or zica or going out stars or swine flu.
• 32:40
  Speaker 1: Or pick one, but this is still very much an
• 32:43
  Speaker 1: unknown and how much is this going to impact their
• 32:47
  Speaker 1: g d P and how much is this going to
• 32:49
  Speaker 1: impact the rest of the globes economic activity. Look, I
• 32:52
  Speaker 1: think you can look through I think the markets have
• 32:55
  Speaker 1: looked through the coronavirus. So what I like to say
• 32:58
  Speaker 1: is like I wouldn't say we live in China world,
• 33:00
  Speaker 1: but we are in the same life raft together. And
• 33:03
  Speaker 1: to answer your question, if China's economy goes through a
• 33:06
  Speaker 1: super hard landing, every aspect of our financial markets will
• 33:10
  Speaker 1: get affected. I mean obviously commodities, but commodities flies through
• 33:14
  Speaker 1: effects high yield as well because energy bonds have a
• 33:17
  Speaker 1: lot of issuance. It will affect US equities as well.
• 33:20
  Speaker 1: Right now, I'd say both Chinese equities and US equities
• 33:24
  Speaker 1: are saying this coronavirus will work itself out. Chinese equities
• 33:27
  Speaker 1: are right where they were a month or two ago,
• 33:30
  Speaker 1: so so people buying China stocks don't think so. Again,
• 33:34
  Speaker 1: I hate to oversimplify. What is the Central Bank in
• 33:37
  Speaker 1: China doing so two years ago they were slamming on
• 33:41
  Speaker 1: the brakes because they were worried about debt, but they
• 33:43
  Speaker 1: have since taken their foot off the break. You know,
• 33:46
  Speaker 1: they're not gassing it, but they are giving enough oxygen
• 33:49
  Speaker 1: to the economy that I don't think we really need
• 33:52
  Speaker 1: to worry about global growth. And that does assume that
• 33:54
  Speaker 1: the coronavirus doesn't go crazy, but that's what the markets
• 33:57
  Speaker 1: are assuming. So let's move from China but international. You
• 34:01
  Speaker 1: guys have offices in in Australia and in Frankfurt, Germany.
• 34:05
  Speaker 1: Why expand internationally and why those countries. What we found
• 34:10
  Speaker 1: with our e t S is that buyers around the
• 34:12
  Speaker 1: world we're using it. I mean it was amazing, like
• 34:14
  Speaker 1: g DX, like literally people from a hundred different countries
• 34:17
  Speaker 1: were buying and trading U S e t S. It's
• 34:20
  Speaker 1: a really great invention and we were lucky to be
• 34:22
  Speaker 1: part of it. And so one we saw that, of
• 34:25
  Speaker 1: course we wanted to chase our clients. Um Expanding internationally
• 34:31
  Speaker 1: is not as easy as I thought it might be.
• 34:33
  Speaker 1: But uh, because we had clients in Europe and Australia,
• 34:37
  Speaker 1: we thought, hey, let's provide local opportunities for them. And
• 34:41
  Speaker 1: because our industry is regulated and taxes are different, we
• 34:45
  Speaker 1: basically had to set up shop in those countries. We
• 34:48
  Speaker 1: have been speaking to Jan van Eck vanek associates. You
• 34:52
  Speaker 1: and I know each other for a couple of years.
• 34:54
  Speaker 1: We're not complete and total strangers, And as I was
• 34:58
  Speaker 1: researching you, I found a couple of interesting things. Our
• 35:04
  Speaker 1: backgrounds are shockingly similar in that we both came out
• 35:10
  Speaker 1: of college. We both didn't know what the hell we
• 35:12
  Speaker 1: wanted to do. We both sort of wandered the earth
• 35:15
  Speaker 1: trying a bunch of things, some startups, some this, some that.
• 35:20
  Speaker 1: My joke has been, well, if you are a Jewish
• 35:24
  Speaker 1: boy from Long Island and you don't know what to
• 35:25
  Speaker 1: do with your life, you go to law school. You
• 35:29
  Speaker 1: don't have a whole lot of choice in the matter.
• 35:31
  Speaker 1: It's the law. And it sounds like you had a
• 35:34
  Speaker 1: similarly non Long Island experience. Uh yeah, it took me
• 35:39
  Speaker 1: a while to figure out what I wanted to do,
• 35:41
  Speaker 1: but law school was the backup. So did did eventually
• 35:44
  Speaker 1: punch that ticket? And the other question, which I didn't
• 35:46
  Speaker 1: get to ask during the broadcast portion um, when I
• 35:50
  Speaker 1: was doing my research into Jan van Eck, how do
• 35:53
  Speaker 1: you transition from being a fourteenth century Flemish painter into
• 35:58
  Speaker 1: a career on Wall Street? And that's about as esoterica
• 36:01
  Speaker 1: question as I've ever asked that is that is really amazing.
• 36:05
  Speaker 1: Well funny, my grandfather did the research and we're not
• 36:08
  Speaker 1: not related. I mean, that is not an unknown painter
• 36:12
  Speaker 1: in the world. My wife taught design an illustration and
• 36:16
  Speaker 1: fine arts, and so I've been to every museum in
• 36:19
  Speaker 1: the world just about it certainly feels like I've contract
• 36:21
  Speaker 1: every museum. But when when I first started researching, and
• 36:25
  Speaker 1: I'm like, why is that name so familiar? Oh, that's right,
• 36:28
  Speaker 1: Well you knew. I knew in college when people were
• 36:30
  Speaker 1: taking that class because they were like, yeahn did you
• 36:33
  Speaker 1: know that there was an artis called at granddad? Granddad
• 36:39
  Speaker 1: that that's pretty hilarious. And it's funny because when and
• 36:43
  Speaker 1: a lot of Google searches, he's got much better s
• 36:46
  Speaker 1: c oh than you do. So that's kind of uh,
• 36:48
  Speaker 1: that's that's kind of interesting. So there are a handful
• 36:52
  Speaker 1: of questions I did not get to that I have
• 36:55
  Speaker 1: to ask you about prior to get into our favorite question,
• 37:00
  Speaker 1: ends of which I have a few bonus ones on
• 37:03
  Speaker 1: that I didn't warn you about. I'm want to surprise
• 37:05
  Speaker 1: you with. Um, let's let's talk a little bit about
• 37:09
  Speaker 1: the E T F world and the question I really
• 37:12
  Speaker 1: didn't get to during broadcast that I wanted to is
• 37:15
  Speaker 1: two thousand and six is pretty early days in the
• 37:18
  Speaker 1: world of ETFs. What motivated the move into e t fs.
• 37:24
  Speaker 1: It's obviously been wildly successful, but tell us what that
• 37:28
  Speaker 1: ramp up was like and how did you make the decision? Hey,
• 37:32
  Speaker 1: this ETF thing is going to be big one day,
• 37:34
  Speaker 1: I think you know. My my background is more of
• 37:37
  Speaker 1: a business person who works at an asset manager rather
• 37:41
  Speaker 1: than a portfolio manager. And like a lot of car
• 37:43
  Speaker 1: engineers run car companies, are used to uh that that
• 37:47
  Speaker 1: mindset really matters. So e t s were clearly there,
• 37:52
  Speaker 1: and they were growing, and the question is do you
• 37:55
  Speaker 1: latch on as a person to those new and interesting
• 37:58
  Speaker 1: and growing and maybe better things or do you not?
• 38:01
  Speaker 1: And so we latched on and then also saw wow,
• 38:05
  Speaker 1: if since we were the gold mining fund leaders, if
• 38:08
  Speaker 1: someone does an e t F on gold mining were dead.
• 38:13
  Speaker 1: People love to trade gold, and this is a way
• 38:16
  Speaker 1: better vehicle. And we were thank god we we got
• 38:19
  Speaker 1: there first. Why not put out g l D yourself?
• 38:23
  Speaker 1: Or when you were looking around the world, how long
• 38:26
  Speaker 1: has g l D been around It's ten years, twelve
• 38:28
  Speaker 1: years or did they, So you know it wasn't around
• 38:30
  Speaker 1: in six it was not. It came afterwards. So god, yeah,
• 38:33
  Speaker 1: the gold bullion very We've made so many mistakes, but
• 38:37
  Speaker 1: you know, one one is not being more aggressive in
• 38:40
  Speaker 1: earlier in thinking that the SEC would approve a gold
• 38:43
  Speaker 1: bullion et fu kindsight biases always. I mean, you know
• 38:49
  Speaker 1: who who knew? Sometimes you gotta just roll the dice,
• 38:52
  Speaker 1: although one would imagine that's an expensive risk to take
• 38:56
  Speaker 1: saying they'll never approve this, but let's spend two million
• 38:58
  Speaker 1: dollars anyway on warriors, right, And that was we didn't
• 39:02
  Speaker 1: have that money back then. So that's that's that helps too,
• 39:06
  Speaker 1: I guess, and explaining the past. But by the way,
• 39:08
  Speaker 1: if you there's a fantastic Wall Street Journal story about
• 39:12
  Speaker 1: the history of g l D. It came out a
• 39:14
  Speaker 1: couple of years ago, and the background was the World
• 39:18
  Speaker 1: Gold Council created the e t F because they had
• 39:22
  Speaker 1: too much gold built up in warehouses. It was just
• 39:25
  Speaker 1: a way of, hey, what are we doing with all
• 39:26
  Speaker 1: this yellow crap? We gotta get some of it out.
• 39:29
  Speaker 1: And it was not very pressingent in philosophy. It just
• 39:34
  Speaker 1: worked out fantastic and even worse we knew those people,
• 39:37
  Speaker 1: of course, because all the gold mining companies are members
• 39:40
  Speaker 1: of the World Gold Council. Yeah, I don't go there.
• 39:44
  Speaker 1: So so, um, let's talk a little bit about the
• 39:47
  Speaker 1: operations of of e t f s. How do the
• 39:50
  Speaker 1: flows in and out of index funds affect the underlying securities.
• 39:54
  Speaker 1: This is something that you have to plan and manage,
• 39:58
  Speaker 1: especially if some of the junior minors are a little
• 40:01
  Speaker 1: less liquid than the bigger gold miners. How do you
• 40:05
  Speaker 1: deal with that? Well? As as a lot of your
• 40:07
  Speaker 1: lessoners probably know, the function of an e t F
• 40:10
  Speaker 1: is usually that you can take in kind delivery of
• 40:13
  Speaker 1: the securities. So for the vast majority of US equities
• 40:16
  Speaker 1: and other securities, actually we don't have to worry about it.
• 40:20
  Speaker 1: It's the trading community that has to worry. Say, okay,
• 40:23
  Speaker 1: I anticipate I'm going to get this price for the
• 40:25
  Speaker 1: e t F. I'm going to deliver this bundle of
• 40:27
  Speaker 1: stocks or bonds, and so we don't actually have to
• 40:30
  Speaker 1: trust it, and that's touch it. That's one of the
• 40:32
  Speaker 1: geniuses where we get involved is index rebalances, and uh,
• 40:38
  Speaker 1: you know that is something where our portfolio managers pay
• 40:41
  Speaker 1: a lot of attention because especially if you have a
• 40:43
  Speaker 1: larger et F and the trading community knows Van Neck
• 40:47
  Speaker 1: has got to buy a hundred million or two hundred
• 40:50
  Speaker 1: million of the stock, it's very important that we game them.
• 40:54
  Speaker 1: So we may buy it before the index adds it,
• 40:57
  Speaker 1: we might buy it afterwards, and there's an of folatility
• 41:00
  Speaker 1: in the market that that hopefully the trading community is
• 41:03
  Speaker 1: not taking advantage of shareholders, because that's our number one job.
• 41:07
  Speaker 1: Quite quite interesting, our mutual colleague Dave Noddig is a
• 41:12
  Speaker 1: big advocate of direct indexing. Um, what are your thoughts
• 41:16
  Speaker 1: on this? Is this a challenge to thematic investing or
• 41:20
  Speaker 1: e t F SO or is this really just a
• 41:22
  Speaker 1: niche product? Although there were some companies with you know,
• 41:25
  Speaker 1: Pinnacle has a couple of hundred billion dollars in direct
• 41:28
  Speaker 1: index right, which is another form of s m A. Right,
• 41:31
  Speaker 1: it's it's an index form of s M A And
• 41:33
  Speaker 1: I think, uh so there are slight advantages to that,
• 41:37
  Speaker 1: but one of the you know, I think one of
• 41:40
  Speaker 1: the limitations is you can't really do that for fixed income.
• 41:42
  Speaker 1: Everyone says, oh the spider, you know, sp y everything
• 41:45
  Speaker 1: is transparent. This is not true. You know, of bonds
• 41:49
  Speaker 1: do not trade on a given day, and so that's
• 41:52
  Speaker 1: the I think that's one of the beauties that fixed
• 41:54
  Speaker 1: income ets they have disadvantages. That one of the advantages
• 41:56
  Speaker 1: that you're getting way better liquidity. Like we have an
• 41:59
  Speaker 1: a your market local currency bond ETF. You weigh rather
• 42:03
  Speaker 1: trade that et F at penny wide than you would
• 42:06
  Speaker 1: the underlying bonds. There's so many more bonds than stocks.
• 42:10
  Speaker 1: People don't realize the vast number of bonds. The joke
• 42:14
  Speaker 1: is the Wilshire five thousand is what something like that.
• 42:18
  Speaker 1: I think the last time I looked at is something
• 42:20
  Speaker 1: like forty or sixty thousand bonds that trade at least
• 42:25
  Speaker 1: once a year, some crazy number like that. There are
• 42:28
  Speaker 1: tons and tons of bonds out there, every local municipality,
• 42:32
  Speaker 1: every corporate, in all sorts of different years and all
• 42:36
  Speaker 1: sorts of different chaunches. You would much rather trade the
• 42:39
  Speaker 1: funds than the specific bonds. Absolutely, and that's why that's
• 42:42
  Speaker 1: that's one of the limitations to direct into thing. The
• 42:46
  Speaker 1: thing I like to point out as well, what's happened
• 42:47
  Speaker 1: over our careers right is fixed income is the last
• 42:51
  Speaker 1: holdout for voice broking. So all I couldn't say that
• 42:55
  Speaker 1: again voice being able to pick up the phone and
• 42:58
  Speaker 1: say buy me ten thousand, and the only way to
• 42:59
  Speaker 1: trade it is up the phone. There's no electronic version.
• 43:03
  Speaker 1: Well there's text measaging the same thing, right, So all
• 43:06
  Speaker 1: equity trading has gone electronic. Not true. When we came out,
• 43:10
  Speaker 1: all options trading is electronic. Basically all commodity of futures
• 43:14
  Speaker 1: trading is electronic. Fixed income it's still a minority of trades.
• 43:18
  Speaker 1: You know, even most generous calculation is of investment grade
• 43:23
  Speaker 1: trades last year were electronic. So that just shows you
• 43:27
  Speaker 1: that there the fixed income you can't just do things.
• 43:30
  Speaker 1: And I think people look at direct indexing and other
• 43:31
  Speaker 1: things say, oh yeah, the whole world is electronic. Everything
• 43:34
  Speaker 1: is simple because I can see I'm on Yahoo Finance.
• 43:36
  Speaker 1: Not true. Isn't the US treasury bonds aren't there trading
• 43:40
  Speaker 1: electric elect They're electronic. I mean they're They're the deepest,
• 43:44
  Speaker 1: most liquid markets. And you have a very very specific
• 43:49
  Speaker 1: um run of dates. Everybody knows what what each vintages.
• 43:54
  Speaker 1: But beyond treasuries, things really start to get a little squirrel.
• 43:57
  Speaker 1: They don't think absolutely. So one of the other questions
• 44:01
  Speaker 1: I had to ask you that um is kind of
• 44:05
  Speaker 1: kind of intriguing. Tell us about by the way, this
• 44:08
  Speaker 1: is the worst segue from electronic non electronic trading of
• 44:12
  Speaker 1: bonds to this what is the then eck forest? Ah?
• 44:18
  Speaker 1: So uh not really related to me. Um, it was
• 44:22
  Speaker 1: my own or our firm, I should say. So. I
• 44:24
  Speaker 1: don't want to take any credit. But my uncle Fred
• 44:27
  Speaker 1: uh who never married, gave all his money to charity
• 44:31
  Speaker 1: when he passed away, and he did something super creative.
• 44:35
  Speaker 1: So he he loved trees, and what he did is
• 44:38
  Speaker 1: bought redwood forest in northern California after it had been
• 44:42
  Speaker 1: clear cut, so there was no commercial value. Way back
• 44:46
  Speaker 1: up a sec So you take a redwood forest. Are
• 44:49
  Speaker 1: we using redwood for commercial uses? Yeah? You were doing that?
• 44:53
  Speaker 1: Oh my god. So or beautiful trees five plus percent
• 44:59
  Speaker 1: of all old growth redwoods. I mean, these things are beautiful.
• 45:02
  Speaker 1: The old thousand year old trees were cut down nine
• 45:06
  Speaker 1: I think it's cut down to build San Francisco and
• 45:11
  Speaker 1: other things. And they just let no one said stop.
• 45:15
  Speaker 1: I mean John Muir said stopped. But you know it
• 45:17
  Speaker 1: took a while, but all the damage was done. We
• 45:19
  Speaker 1: were like, why don't you stop at fifty or sixty
• 45:22
  Speaker 1: or seven, like, it's just a complete disaster. So anyway
• 45:26
  Speaker 1: that the but trees grow back. So he uh, he
• 45:30
  Speaker 1: was a great value investor. He just bought all this
• 45:33
  Speaker 1: redwood forest for almost nothing, and guess what, twenty years later,
• 45:37
  Speaker 1: you know, the redwoods are growing. So what he did
• 45:40
  Speaker 1: is basically create a sustainable redwood forest. This is fred
• 45:44
  Speaker 1: Fred Vannack. He was he was a director of our
• 45:46
  Speaker 1: company but otherwise not involved, and he created a sustainable forest.
• 45:51
  Speaker 1: So what he said is, I'm not going to I'm
• 45:54
  Speaker 1: going to give the income to charity. So it was
• 45:57
  Speaker 1: the largest gift to Purdue University ever. But I'm not
• 46:01
  Speaker 1: I'm not gonna know a lot of people just to
• 46:02
  Speaker 1: cut the trees down. I'm gonna do something called selective harvesting,
• 46:06
  Speaker 1: which is basically like weeding a forest. And what happens
• 46:09
  Speaker 1: if you wed a forest, it actually grows fast. So
• 46:13
  Speaker 1: so that's managed by the Pacific Forest Trust. And then
• 46:18
  Speaker 1: what they did as well is because California has carbon credits,
• 46:22
  Speaker 1: they qualified the forest, the Vedic Forest, for carbon credits,
• 46:27
  Speaker 1: so it was the first property in the US to
• 46:29
  Speaker 1: qualify to get carbon credits, which they sold to Arnold
• 46:32
  Speaker 1: Schwartz nigger and Nancy Pelosi. It's such an interesting story,
• 46:36
  Speaker 1: but I take absolutely no credit for it. I mean
• 46:38
  Speaker 1: we we helped it a little bit when I told
• 46:40
  Speaker 1: you I we do a deep dive if I'm finding
• 46:44
  Speaker 1: out about the uh. But actually it was mentioned somewhere
• 46:47
  Speaker 1: on your corporate website if I remember, unless it was
• 46:51
  Speaker 1: just my uh shocking that we mentioned, you know. Yeah,
• 46:55
  Speaker 1: So so that's pretty that's pretty intriguing. Um and finale,
• 47:00
  Speaker 1: before we get to our standard questions is what did
• 47:04
  Speaker 1: you learn from your dad about leadership and running an
• 47:08
  Speaker 1: investment business? You worked with him for how long? How
• 47:12
  Speaker 1: long was the overlap? Well, I mean, you know, we talked,
• 47:15
  Speaker 1: he talked about work at home, so almost so most
• 47:18
  Speaker 1: of your so yeah, most of my life. Um so,
• 47:22
  Speaker 1: and then you know, into my thirties. He luckily had
• 47:25
  Speaker 1: a long life he passed away. Um My dad was
• 47:28
  Speaker 1: an economist, Okay, he was not a businessman, and he
• 47:32
  Speaker 1: was not really a portfolio manager. So his he he
• 47:35
  Speaker 1: had this view of the world like look at what's
• 47:37
  Speaker 1: going on and then take advantage and then implement, right,
• 47:41
  Speaker 1: So just that perspective and that risk taking is really
• 47:44
  Speaker 1: what I learned from him, is question the structure the
• 47:48
  Speaker 1: world is changing, what's changing? And do you does that
• 47:51
  Speaker 1: give you opportunity or risk in your portfolio? So that's
• 47:54
  Speaker 1: really what I what I learned from him. He was
• 47:56
  Speaker 1: very he was very much a gentleman. He was very
• 47:59
  Speaker 1: collaborative within the firm, and you know, he knew what
• 48:02
  Speaker 1: he didn't know. Said the first thing. The first person
• 48:05
  Speaker 1: he hired to run the Gold Fund was a geologist.
• 48:08
  Speaker 1: So that's one of our histories is having real people
• 48:11
  Speaker 1: from industry as part of our portfolio management team. Quite
• 48:15
  Speaker 1: quite fascinating. Any major topics I didn't get to before
• 48:18
  Speaker 1: we get to my favorite questions, Well, we'll get this
• 48:22
  Speaker 1: to some other time. But the fact that the explosion
• 48:26
  Speaker 1: of passive means that ownership of corporate America is in
• 48:30
  Speaker 1: you know, concentrated some very big firms. Let's talk about
• 48:34
  Speaker 1: that because I'm astonished at some of the uh myths
• 48:39
  Speaker 1: and discussions that have arisen around this. Do you look
• 48:45
  Speaker 1: at passive as um a challenge to your core business
• 48:49
  Speaker 1: model or do you look at passive as a lazy
• 48:53
  Speaker 1: person's approach to investing? How how do you think of passive? Well,
• 48:58
  Speaker 1: I think you know my bias. Yeah, she cheap market exposure.
• 49:01
  Speaker 1: Passive has been fantastic for investors. Right, It's lowered costs,
• 49:06
  Speaker 1: uh thematically, dramatically and um, it's in a way not
• 49:12
  Speaker 1: our business. We tried to do value added or different exposures.
• 49:15
  Speaker 1: What I would say is it's also been a perfect
• 49:17
  Speaker 1: environment for that. You know. You know, one of your
• 49:20
  Speaker 1: questions is what do you wish you had known thirty
• 49:22
  Speaker 1: years ago? Well, I wish I will tell everybody. I
• 49:25
  Speaker 1: wish I had known that interest rates we're gonna fall
• 49:28
  Speaker 1: my entire career because financial assets have had this huge
• 49:32
  Speaker 1: tail wind really for for you know, since I'm gonna
• 49:36
  Speaker 1: I'm gonna stop you right there, and I have to
• 49:39
  Speaker 1: stop you because the person responsible for that is it
• 49:45
  Speaker 1: forty years eighty two to almost forty year bond bull
• 49:50
  Speaker 1: market and falling interest rates and to this day they're
• 49:52
  Speaker 1: still falling. When was the thirty years one five five something? Crazy?
• 49:57
  Speaker 1: Um was Paul volle car right, who on occasion am
• 50:02
  Speaker 1: I remembering this correctly? Did your dad have lunch with
• 50:07
  Speaker 1: Paul Vulcan on a regular basis, No, not regular basis?
• 50:10
  Speaker 1: Once once and I was luckily to be invited. So
• 50:14
  Speaker 1: someone thought it was funny probably someone with your type
• 50:16
  Speaker 1: of personality, say, hey, this guy got you know, solved
• 50:21
  Speaker 1: the inflation problem in the US, and you know gold
• 50:23
  Speaker 1: got killed for twenty years afterwards. They should meet each other,
• 50:28
  Speaker 1: because is that my dad made I don't. I don't
• 50:30
  Speaker 1: know if that's my sense of humor to me. Any
• 50:33
  Speaker 1: opportunity I get to meet a fed chair, I'm going
• 50:36
  Speaker 1: to take that. Yes, you'd like to put interesting. And
• 50:41
  Speaker 1: there was probably a little humor associated with this particular combination.
• 50:44
  Speaker 1: In any case, so arranged that lunch. I don't I
• 50:48
  Speaker 1: don't remember. It was fitt of the vague associate if
• 50:51
  Speaker 1: my dad's I think it was someone who ran a
• 50:52
  Speaker 1: fixed income shop, like we didn't know. We didn't know
• 50:55
  Speaker 1: that person well anyway, so I tagged along and it
• 50:58
  Speaker 1: was told you at the time, Wow, I uh, probably
• 51:04
  Speaker 1: in my theories, okay, did you? Did you appreciate the gravity?
• 51:09
  Speaker 1: By the way, he's a rock star, star, absolute superstar.
• 51:12
  Speaker 1: I think he deserves much more of the credit for
• 51:15
  Speaker 1: the so called Reagan Revolution than he's gotten because Reagan
• 51:19
  Speaker 1: did a bunch of things that I think were very helpful,
• 51:21
  Speaker 1: but none of which would have happened. And I don't
• 51:24
  Speaker 1: think you know. In fact, he reminder when Volker's term
• 51:29
  Speaker 1: was up, Reagan replaced him with some guy named Alan Greenspan.
• 51:33
  Speaker 1: So that's another reason to be a little miffed at
• 51:36
  Speaker 1: Ronald Reagan. He fobbed that. Uh, I won't use any
• 51:41
  Speaker 1: cursewords on the air, but I blame the crisis. The
• 51:45
  Speaker 1: Great Financial Crisis had a lot of inputs and a
• 51:47
  Speaker 1: lot of factors that caused it. But towards the top
• 51:50
  Speaker 1: of that list is Alan Greenspan. Both as a monetist
• 51:53
  Speaker 1: and a regulator, he messed up. I'm trying to keep
• 51:59
  Speaker 1: it g ridded. He messed up in two different ways.
• 52:02
  Speaker 1: But of what, let's avoid that digression. I got to
• 52:06
  Speaker 1: meet told Paul at I think it was an oh
• 52:10
  Speaker 1: eight at Chris Whalen's election party, and I found him
• 52:15
  Speaker 1: to be absolutely charming. Um, he just passed away last year.
• 52:20
  Speaker 1: What was your lunch with him? Like, what was your
• 52:22
  Speaker 1: experience like? And were you aware that you know, you
• 52:25
  Speaker 1: were having a brush with greatness? Oh yeah, I mean,
• 52:28
  Speaker 1: of course, I mean he this this is sort of
• 52:30
  Speaker 1: like like you said, he had a major effect on everything,
• 52:35
  Speaker 1: on everything, right, the structure of financials and and and everything.
• 52:39
  Speaker 1: So um, yeah, it was. It was great meeting him.
• 52:43
  Speaker 1: You know, he was more disengaged from the financial markets
• 52:47
  Speaker 1: at the time than than my dad was, which I
• 52:49
  Speaker 1: thought it was just odd, uh, disengaged with the day
• 52:53
  Speaker 1: to day Okay, So again, my dad was like a
• 52:56
  Speaker 1: pencil sharp economist. He was upset with money supply growth.
• 53:01
  Speaker 1: And I think they were talking about Japan at the time.
• 53:03
  Speaker 1: That was a hot topic. And you know, this was
• 53:06
  Speaker 1: the beginnings of Japan. So it's just at the end
• 53:09
  Speaker 1: of the bubble, at the end of the bubble, how
• 53:11
  Speaker 1: to deal with the bubble and you know, before this
• 53:14
  Speaker 1: long period of disinflation or whatever you wanna call it,
• 53:17
  Speaker 1: deflation deflation in Japan. And my dad knew this. I
• 53:21
  Speaker 1: didn't know statistics at the last month, you know, money
• 53:25
  Speaker 1: supply growth in Japan. And Booker was like, no, it's
• 53:29
  Speaker 1: just in this topic. So money supply is part of
• 53:33
  Speaker 1: this huge list of economic and market indicators that people
• 53:39
  Speaker 1: used to track obsessively because they thought it would help
• 53:43
  Speaker 1: them figure out what's going on with the market, and
• 53:45
  Speaker 1: one by one, because if you think about it, hey,
• 53:48
  Speaker 1: the money supply is expanding, all that will eventually work
• 53:51
  Speaker 1: its way into the stock market and stocks will go higher.
• 53:53
  Speaker 1: Until that just completely stopped working. It was a coincidential
• 53:58
  Speaker 1: correlation for a long time, or maybe it was an
• 54:01
  Speaker 1: input factor. I don't know. We look at so much.
• 54:03
  Speaker 1: We used to look at so much the odd lot
• 54:06
  Speaker 1: data point, and I know guys who used to do
• 54:08
  Speaker 1: and was all guys who used to track that stuff
• 54:11
  Speaker 1: obsessively in the nineties and it just stopped working. Charles
• 54:18
  Speaker 1: Bitterman ran trim tabs that used to check money flow
• 54:21
  Speaker 1: in and out of mutual funds. This market has done
• 54:24
  Speaker 1: more or less nothing but go up for over a decade,
• 54:27
  Speaker 1: and at the same time money flows out of funds.
• 54:30
  Speaker 1: Something like a half a trillion dollars have left mutual funds,
• 54:36
  Speaker 1: not left mutual funds to go into et f s,
• 54:38
  Speaker 1: They've left the building, and the market continues to go. Well,
• 54:42
  Speaker 1: that's a separate that's a separate podcast on I don't
• 54:44
  Speaker 1: believe flows affect prices, but for a long time people
• 54:48
  Speaker 1: it was. It was gospel. Here's my point. It used
• 54:51
  Speaker 1: to be that all money would go through you know,
• 54:55
  Speaker 1: the central bank, into commercial banks. Now there's so much money,
• 54:58
  Speaker 1: so much lending happening outside the banking system. Right, only
• 55:02
  Speaker 1: half of the lending is happening inside our banking system.
• 55:04
  Speaker 1: They've got hedge funds, lending companies probably, but but credit.
• 55:09
  Speaker 1: I'm just talking about credit. So you've got a totally
• 55:11
  Speaker 1: different world. That's why we don't care about that stuff
• 55:13
  Speaker 1: is because the transmission mechanic is totally different. That's why
• 55:15
  Speaker 1: the central bank has to go and buy bonds and
• 55:18
  Speaker 1: you know, even stocks and ets in different countries to
• 55:21
  Speaker 1: affect the markets because they're not being able to transmit
• 55:24
  Speaker 1: through reserve ratio requirements. Remember all that kind of stuff
• 55:28
  Speaker 1: where are gone? And um, we used to call that
• 55:33
  Speaker 1: the shadow banking sector, and it's not in the shadows
• 55:38
  Speaker 1: and more it's huge. It's now the banking sector. They're
• 55:42
  Speaker 1: just non bank lenders, which is very different than when
• 55:46
  Speaker 1: it seemed a little subversive and uh, you know, a
• 55:50
  Speaker 1: little illicit. It's not. It's just a different form of credit. Alright.
• 55:54
  Speaker 1: Quite fascinating, all right, So let's get to our favorite questions. Um,
• 55:59
  Speaker 1: I I'm interested to hear about some of your answers,
• 56:03
  Speaker 1: and I have to start out with, um, what was
• 56:06
  Speaker 1: the first car you ever had? First car? Oh, my god,
• 56:10
  Speaker 1: my brother and I in college share the cheap I
• 56:13
  Speaker 1: don't know, and I know you're a car guy, but
• 56:15
  Speaker 1: it was like an old sumobile that had five hundred
• 56:17
  Speaker 1: thousand miles on it. And they're happy. We're happy to
• 56:22
  Speaker 1: hit you up on you. What do you What are
• 56:26
  Speaker 1: you streaming in terms of video on Netflix or Amazon Prime?
• 56:30
  Speaker 1: What are you downloading in terms of podcasts? And listening
• 56:33
  Speaker 1: to tell us what you're entertaining yourself with. Well, I'm
• 56:38
  Speaker 1: a little bit of a junkie and podcasts, so I
• 56:41
  Speaker 1: don't really watch a lot of video. So I listened
• 56:44
  Speaker 1: to about seven hours of podcasts. I love a week. Sorry,
• 56:49
  Speaker 1: different day, it would be hard to get happened. Um,
• 56:52
  Speaker 1: I've learned a lot from I'll call it the stars
• 56:56
  Speaker 1: in our industry. Give us some names, well, yours truly,
• 57:00
  Speaker 1: Patrick K'shaughnessy, Ted Saide's you know Capital allocators, Um, and
• 57:06
  Speaker 1: uh a little bit off stream. I love Kara Swish her. Uh,
• 57:10
  Speaker 1: she's so much fun. I had her. Not only did
• 57:12
  Speaker 1: I have her as a guest where she chewed the scenery,
• 57:16
  Speaker 1: but if you listen to Pivot with her on Scott Galloway, Yeah,
• 57:19
  Speaker 1: so much fun. Yeah. The So I learned a lot.
• 57:23
  Speaker 1: I did my bitcoin learning in twenty seventeen. So I
• 57:26
  Speaker 1: learned a lot from Patrick O'Shaughnessy a lot, learned a
• 57:29
  Speaker 1: lot from pomp and this Australian guy Stefan Lavera. But
• 57:33
  Speaker 1: I would say the podcast episode you know of the
• 57:38
  Speaker 1: my podcasting career was when Scott Galloway predicted the takeover
• 57:43
  Speaker 1: of Whole Foods by Amazon on Kara Swishers podcast. I'll
• 57:45
  Speaker 1: remember I was just coming finishing a run and I
• 57:48
  Speaker 1: was like, wow, because everyone in business is always looking
• 57:52
  Speaker 1: at the fangs, going how is this going to impact
• 57:55
  Speaker 1: my business? Right? Is Amazon going to come into finance
• 57:58
  Speaker 1: all this kind of stuff? And he just he just
• 58:01
  Speaker 1: nailed it. And then literally it happened, and I'm like, wow,
• 58:03
  Speaker 1: there are a lot of smart people out there. I
• 58:05
  Speaker 1: think I think he's been a guest four times on
• 58:07
  Speaker 1: the show She He's just been a ton of fun
• 58:11
  Speaker 1: to interview, and um man, you gotta give him credit
• 58:15
  Speaker 1: for being way out there now. His background in branding
• 58:20
  Speaker 1: and marketing really helps him. Um but that was just
• 58:24
  Speaker 1: such a prescient call, so so sharp. Uh, what's the
• 58:27
  Speaker 1: most important thing people don't know about Jan Vanak? It's important,
• 58:32
  Speaker 1: but h my first language wasn't English, what was it?
• 58:36
  Speaker 1: It was German. Uh, my mom was German and she
• 58:39
  Speaker 1: just came over to the US shortly before they got married.
• 58:42
  Speaker 1: They met in Germany and so she spoke German at
• 58:45
  Speaker 1: home and that's what I learned. And what was funny
• 58:48
  Speaker 1: about it is that the elementary school thought I was
• 58:52
  Speaker 1: not fast because I was learning English at the same time.
• 58:56
  Speaker 1: So they want me to repeat a great My parents said,
• 59:00
  Speaker 1: we're out of here. We're going to the suburbs New
• 59:02
  Speaker 1: York City. Has to he isn't van Eck a Dutch name,
• 59:07
  Speaker 1: or my dad's side was Dutch? Telling him mom's side
• 59:09
  Speaker 1: was German. Quite interesting And speaking of your dad, who
• 59:12
  Speaker 1: are who were some of your early mentors? And I
• 59:15
  Speaker 1: assume your dad looms large in that. Yeah, you know
• 59:19
  Speaker 1: I talked about my dad. I would say, uh, you know,
• 59:22
  Speaker 1: the one person that we had mentioned is a Stanford
• 59:24
  Speaker 1: Law School professor, Joe Grundfest him. He was an SEC
• 59:29
  Speaker 1: commissioner and he does he's involved in a lot of stuff.
• 59:34
  Speaker 1: He comments in government governance. Uh, work at Stanford as well. Uh.
• 59:41
  Speaker 1: But you know, in a class I was taking with
• 59:42
  Speaker 1: him and I was his research assistant as well. He
• 59:45
  Speaker 1: basically made fun of active managers. He's like that that
• 59:48
  Speaker 1: is like a dinosaur, and I was. He was probably
• 59:50
  Speaker 1: the first person who said that to me. And I
• 59:53
  Speaker 1: think that's also when I saw the E t F
• 59:55
  Speaker 1: trend triggered that wow, this actually might be the future.
• 1:00:00
  Speaker 1: So he he would I would put him in that category.
• 1:00:03
  Speaker 1: Quite interesting. Um, what investors influence the way you approach investor?
• 1:00:11
  Speaker 1: There I go back to my my father. I think,
• 1:00:13
  Speaker 1: you know, Barry have learned so much from so many
• 1:00:16
  Speaker 1: different people so that I just can't really do a
• 1:00:18
  Speaker 1: shout out. But um, you know, I love the people
• 1:00:22
  Speaker 1: that are talking about how the world is changing today,
• 1:00:25
  Speaker 1: who are forward looking because I think the market structure
• 1:00:28
  Speaker 1: is changing and so um you know that's that's there's
• 1:00:34
  Speaker 1: so many people that are good at that I think
• 1:00:36
  Speaker 1: be unfair to pull one person out. Fair enough, UM,
• 1:00:39
  Speaker 1: let's talk a little bit about books. What do you read?
• 1:00:42
  Speaker 1: What sort of books? What? What are some of the
• 1:00:43
  Speaker 1: most recent books you've enjoyed? So I'm I don't have
• 1:00:48
  Speaker 1: a lot of time. You know, in our industry, we
• 1:00:50
  Speaker 1: consume so much content and it's it's hard to get
• 1:00:52
  Speaker 1: through books. But I'll mention to um. One is, uh,
• 1:00:57
  Speaker 1: the over story. And if you've heard about this won
• 1:01:00
  Speaker 1: the Pulitzer Prize. Uh, it was written by Richard Powers,
• 1:01:05
  Speaker 1: and it's basically about trees, where it's it's a fiction
• 1:01:10
  Speaker 1: book where trees play a major part in it. And um,
• 1:01:14
  Speaker 1: it's a it's a long book. Uh, but I would
• 1:01:19
  Speaker 1: I really, I really enjoyed it, and um, it really
• 1:01:22
  Speaker 1: made me appreciate forests. If I had to give you
• 1:01:25
  Speaker 1: one takeaway from a fiction book, which is weird that
• 1:01:29
  Speaker 1: that forests are are really environments that you know, they
• 1:01:34
  Speaker 1: go beneath the ground, the trees interact with each other,
• 1:01:37
  Speaker 1: and it's it's so much more complex than the way
• 1:01:40
  Speaker 1: I look at a single tree singing in my front
• 1:01:42
  Speaker 1: yard all alone. That's not the way to look at trees.
• 1:01:45
  Speaker 1: And so if you're interested in that, can I give
• 1:01:48
  Speaker 1: you my second one out of the blue. So, um,
• 1:01:52
  Speaker 1: I have these enthusiasms, and I tried to reach a
• 1:01:54
  Speaker 1: read a biography on every American president and I ran
• 1:01:57
  Speaker 1: out of ran out of energy, out of energy. Didn't
• 1:02:01
  Speaker 1: run that presidents. But uh, but one of my favorites
• 1:02:04
  Speaker 1: is Jane Smith's Grant biography. So I gotta believe no
• 1:02:08
  Speaker 1: one's talked to you about uh Ulysses s Grant on
• 1:02:12
  Speaker 1: your podcasts, and I wouldn't make that. All right, Well,
• 1:02:16
  Speaker 1: the two here, right here, two takeaways. It's just Grants, um.
• 1:02:22
  Speaker 1: But but i'll tell you why. Number one, you know,
• 1:02:26
  Speaker 1: Grant helped win the war. I mean, we focus on Lincoln,
• 1:02:28
  Speaker 1: but if Lincoln, if we had lost the of the North,
• 1:02:31
  Speaker 1: had lost the Civil War, the United States is a
• 1:02:35
  Speaker 1: completely different country. And he was so celebrated. He gets
• 1:02:40
  Speaker 1: such a bad rap when it comes to history that
• 1:02:42
  Speaker 1: he was, you know, an alcoholic and this, and that
• 1:02:45
  Speaker 1: he was very magnanimous as he could be when he
• 1:02:49
  Speaker 1: was president towards the South and towards um, you know,
• 1:02:52
  Speaker 1: towards the blacks that you know, he really I think
• 1:02:55
  Speaker 1: deserves a lot more credit for those two reasons. The
• 1:02:58
  Speaker 1: second element of the reason I love this book is,
• 1:03:01
  Speaker 1: you know, when you go to college and you read
• 1:03:03
  Speaker 1: about these historians, you get kind of a view of history.
• 1:03:06
  Speaker 1: And what you don't realize is that the schools of
• 1:03:09
  Speaker 1: thought right and and that and and this book was
• 1:03:13
  Speaker 1: a revision as school of thought. Like, you know, people
• 1:03:15
  Speaker 1: get trashed by historians and then their reputations come back.
• 1:03:19
  Speaker 1: And I didn't realize that dynamic went on so much
• 1:03:22
  Speaker 1: in academia. You know every natural uh, you know natural biology,
• 1:03:28
  Speaker 1: and we know that's changing all the time and it's
• 1:03:30
  Speaker 1: not the same as it was thirty years ago. But
• 1:03:32
  Speaker 1: it's true for history too. Quite interesting. Um. When I
• 1:03:37
  Speaker 1: said don't don't assume so quickly, I was mostly wrong.
• 1:03:43
  Speaker 1: Someone recommended a Grand book, but it was the churn
• 1:03:46
  Speaker 1: out Grand book, not the Smith Grand book. His books
• 1:03:49
  Speaker 1: are so long, I mean, can you really read that?
• 1:03:51
  Speaker 1: I don't know. I everything I've read of his has
• 1:03:53
  Speaker 1: just been Spectacling's. I've been giving that book five times.
• 1:03:58
  Speaker 1: You know, well because I talked about Grant, so I
• 1:04:00
  Speaker 1: should read it. So so if you read presidential biographies,
• 1:04:04
  Speaker 1: did you read any of the churn at Washington or
• 1:04:06
  Speaker 1: Jefferson or any uh of the other churn out presidential
• 1:04:11
  Speaker 1: things or are they just too long? Yeah? Right, Hey, listen,
• 1:04:15
  Speaker 1: I don't want to talk about how many books I
• 1:04:16
  Speaker 1: have at home. I'm a Hamilton's fan. I'll just put
• 1:04:20
  Speaker 1: it out there so you know. But I don't know
• 1:04:23
  Speaker 1: if you know that we designed our own ties. So
• 1:04:27
  Speaker 1: I'm wearing a Hamilton. So that's my I'll defend Hamilton's
• 1:04:32
  Speaker 1: um before I saw the show again. Not recommended. I
• 1:04:38
  Speaker 1: get the annotated Hamilton's lyrics. Um. Hamilton's Revolution is his
• 1:04:44
  Speaker 1: annotated version of the lyrics to the show Lynn Manuel
• 1:04:51
  Speaker 1: Mirande's lyrics. And it's really quite fascinating how he explains everything,
• 1:04:56
  Speaker 1: um and annotates how there's so many different interests references.
• 1:05:01
  Speaker 1: But given your predilection for biographies, do you UM read
• 1:05:07
  Speaker 1: anything like McCullough's book on the Right Brothers or anything
• 1:05:11
  Speaker 1: along those lines and gotten to that. Just so much stuff. Yeah,
• 1:05:14
  Speaker 1: I've heard he's a he's a great popularizer of American history.
• 1:05:19
  Speaker 1: Okay Lehman, Yes, Leman Trilogy. Someone else recommends coming back
• 1:05:25
  Speaker 1: to Broadway, and uh, you know, if you like history
• 1:05:29
  Speaker 1: and you know finance, you have to see that play.
• 1:05:35
  Speaker 1: I mean, that's a that's a must. The Leman Trilogy. Yeah,
• 1:05:39
  Speaker 1: it was here briefly started in London. You know, it's
• 1:05:41
  Speaker 1: just theater. So maybe they make a movie. I guess,
• 1:05:44
  Speaker 1: I don't know, but I really recommend that. If you
• 1:05:46
  Speaker 1: all right, I'll put I'll put that on on our list. UM,
• 1:05:50
  Speaker 1: tell us about a time you failed and what you
• 1:05:52
  Speaker 1: learned from the experience. So, uh, lots of failures, I
• 1:05:58
  Speaker 1: think of what The one that resonates the most with
• 1:06:01
  Speaker 1: me is when we were launching different mutual funds before
• 1:06:05
  Speaker 1: et S, we launched some international fixed income funds that
• 1:06:09
  Speaker 1: invested in high yielding European debt. It's not like it
• 1:06:13
  Speaker 1: was Russian debt, no, but it turned out to be
• 1:06:16
  Speaker 1: like it. So basically, you know, as a money manager,
• 1:06:20
  Speaker 1: whenever you can sell a yield, you can get flows.
• 1:06:22
  Speaker 1: And we were getting a ton of money into this fund.
• 1:06:25
  Speaker 1: And this was the time where European exchange rates, it's
• 1:06:28
  Speaker 1: it's sort of the pre euro environment or exchange rates
• 1:06:32
  Speaker 1: were linked and as George Soros famously predicted and made
• 1:06:37
  Speaker 1: a lot of money on, that link was going to break.
• 1:06:40
  Speaker 1: And that link broke, and so our funds, as did
• 1:06:43
  Speaker 1: a lot of others. But our funds lost a lot
• 1:06:46
  Speaker 1: of ny V value. And one of the principles I
• 1:06:48
  Speaker 1: take away from that learning experiences, it's so important to
• 1:06:51
  Speaker 1: try to identify the risks of an investment along with
• 1:06:55
  Speaker 1: the potential return. And you know, in a prospectus you
• 1:06:57
  Speaker 1: can put down twenty risks, you get any points for
• 1:07:01
  Speaker 1: you know, identifying a risk in the prospectus, you've got
• 1:07:04
  Speaker 1: to pull it up in center and say hey, listen,
• 1:07:06
  Speaker 1: this is a major risk to this fund. And we've
• 1:07:09
  Speaker 1: really tried to get better at that. And whenever there's
• 1:07:13
  Speaker 1: been funds UM that we could have launched, UM, that's
• 1:07:17
  Speaker 1: been in my mind. And and there are a lot
• 1:07:19
  Speaker 1: of funds we haven't launched because of that experience. What
• 1:07:21
  Speaker 1: do you do for fun? What do you do when
• 1:07:23
  Speaker 1: you're not in the office. I love to travel. I
• 1:07:26
  Speaker 1: learned so much from traveling. UM and and thanks to
• 1:07:30
  Speaker 1: my wife it likes to travel as well. It was
• 1:07:32
  Speaker 1: on our honeymoon and we went to Hong Kong and
• 1:07:35
  Speaker 1: I saw what was going on in China. It was
• 1:07:37
  Speaker 1: never in the paper. Then you can learn so much
• 1:07:40
  Speaker 1: from contextualizing through travel. UM. So there's there's a lot
• 1:07:44
  Speaker 1: of you know, the Van Neck Forest. Frankly, my wife
• 1:07:47
  Speaker 1: dragged me out there. It wasn't I was dying to
• 1:07:50
  Speaker 1: go look at a bunch of trees. But you know,
• 1:07:52
  Speaker 1: learned so much from that experience and gotten more involved tennis.
• 1:07:56
  Speaker 1: And then the last thing tennis for so uh. One
• 1:08:00
  Speaker 1: of my sons plays tennis for Brown. He starts on
• 1:08:03
  Speaker 1: the varsity team and you know, you're sitting in these
• 1:08:06
  Speaker 1: cold tennis courts in Long Island on the middle of
• 1:08:10
  Speaker 1: February and I'm standing talking to the dads and all
• 1:08:13
  Speaker 1: of them had played college tennis, and I was like,
• 1:08:16
  Speaker 1: you know whatever, I was such an hack athlete and everything.
• 1:08:19
  Speaker 1: And I was like, okay, but I know he's genetically
• 1:08:22
  Speaker 1: related to me. I can't be that bad. So I
• 1:08:24
  Speaker 1: picked up tennis about ten years ago and enjoy playing that.
• 1:08:28
  Speaker 1: And then I like to host dinners. I mean, I
• 1:08:30
  Speaker 1: know you do that too, Love to brainstorm with, you know,
• 1:08:33
  Speaker 1: bring people together when I can. So I tried to
• 1:08:35
  Speaker 1: do that, you know, three or four times. Ether there's
• 1:08:38
  Speaker 1: so much intellectual capital here in New York. How do
• 1:08:40
  Speaker 1: you not take advantage of You can't swing a dead
• 1:08:44
  Speaker 1: cat without hitting a Nobel Laurie at a billionaire. Someone
• 1:08:46
  Speaker 1: was really insightful and they got to eat all And
• 1:08:50
  Speaker 1: the world is changing. That's what's cool, right, I mean,
• 1:08:52
  Speaker 1: that's what you just can't go out and read a
• 1:08:54
  Speaker 1: book because some of these changes haven't been you know, documented.
• 1:08:58
  Speaker 1: I found out a lot with China. That why I
• 1:09:00
  Speaker 1: traveled there fifty times is like you couldn't read about
• 1:09:02
  Speaker 1: what was going on in China. You had to see it.
• 1:09:05
  Speaker 1: And and I know other people do these idea dinners
• 1:09:08
  Speaker 1: where it's an attempt to sell something. We set hours
• 1:09:12
  Speaker 1: up and I know you do the same. Where there's
• 1:09:15
  Speaker 1: no agenda. It's just let's get eight really interesting people
• 1:09:18
  Speaker 1: in a room and have a conversation to see where
• 1:09:21
  Speaker 1: it goes. There's no sales pitches. Nobody asked anybody to
• 1:09:25
  Speaker 1: do anything. It's just, hey, let's talk about what's going
• 1:09:28
  Speaker 1: on in the world. Absolutely, it's quite quite fascinating. So
• 1:09:32
  Speaker 1: within our industry, what are you most optimistic about and
• 1:09:35
  Speaker 1: what are you most pessimistic about? Uh? Optimistic. I have
• 1:09:41
  Speaker 1: to be optimistic. As I said before, there's so many
• 1:09:43
  Speaker 1: unsolved problems. I think an understanding how financial markets work,
• 1:09:47
  Speaker 1: and I know you're you're doing research in that area.
• 1:09:50
  Speaker 1: So I'm optimistic about all the innovations that are to come.
• 1:09:53
  Speaker 1: I think the pessimistic thing about our industry we what
• 1:09:57
  Speaker 1: do you and I do We manage money? For people
• 1:09:59
  Speaker 1: who have money? Why they have money because they've saved
• 1:10:02
  Speaker 1: or someone gave them money right or they started the
• 1:10:05
  Speaker 1: business that ended up being very successful. Americans and we
• 1:10:10
  Speaker 1: talked about this in our industry, but half of Americans
• 1:10:12
  Speaker 1: don't save, They don't they don't know how to save,
• 1:10:15
  Speaker 1: they don't know how to open a brokerage account. We
• 1:10:18
  Speaker 1: just led an investment in a company called financial Jim,
• 1:10:21
  Speaker 1: which is just oriented around that, like getting physically fit,
• 1:10:24
  Speaker 1: and it's just like the gym, like you don't want
• 1:10:26
  Speaker 1: to go, You think you want to go, and your
• 1:10:28
  Speaker 1: needs resolution, then you don't go. And they are just
• 1:10:31
  Speaker 1: real life people who have found ways of engaging and
• 1:10:34
  Speaker 1: they've got unlimited demand because a lot of people need
• 1:10:37
  Speaker 1: financial advice. I'm intrigued by the Robin Hood concept of
• 1:10:40
  Speaker 1: rounding up whatever you spend on a credit card and
• 1:10:43
  Speaker 1: sending it to a savings or brokerage account. And you
• 1:10:47
  Speaker 1: wouldn't think that rounding up is a lot of money,
• 1:10:50
  Speaker 1: but it can be. I have a jar of loose change.
• 1:10:53
  Speaker 1: It's probably nine hundred dollars and weighs a hundred pounds
• 1:10:56
  Speaker 1: that I just come home and throw the change on
• 1:10:58
  Speaker 1: the mind. There are a lot of apps out there,
• 1:11:00
  Speaker 1: there's a lot of tools, but a lot of people
• 1:11:02
  Speaker 1: don't even they don't think about that need and and
• 1:11:06
  Speaker 1: the consequence is stress. If you don't have money, you
• 1:11:09
  Speaker 1: have stress in your life. And that's like we've all
• 1:11:13
  Speaker 1: lived through periods of stress and and that. And that's
• 1:11:15
  Speaker 1: so when I think about our our industry collectively, I
• 1:11:19
  Speaker 1: hope that business people can help solve you know, solve
• 1:11:21
  Speaker 1: that problem a little bit quite intriguing. And our final
• 1:11:26
  Speaker 1: two questions, what advice would you give to a recent
• 1:11:29
  Speaker 1: college graduate who was just beginning their career and interested
• 1:11:33
  Speaker 1: in either finance or asset management. It's it's it's what
• 1:11:37
  Speaker 1: we talked about before. Try a lot of different things,
• 1:11:40
  Speaker 1: you know, David Rubinstein said, I saw him last week,
• 1:11:43
  Speaker 1: said what you do before your thirty doesn't matter. Um,
• 1:11:47
  Speaker 1: And you know, so many UM people I know who
• 1:11:51
  Speaker 1: are younger in college are so concerned about their career track.
• 1:11:54
  Speaker 1: And I get that. But you really have to know
• 1:11:57
  Speaker 1: what you like to do, uh and and can succeed in.
• 1:12:01
  Speaker 1: So that is that is the that's the big thing
• 1:12:04
  Speaker 1: is try and try different things, because I don't know
• 1:12:08
  Speaker 1: how you can figure out whether you like something if
• 1:12:10
  Speaker 1: you haven't tried it. You're you're from the same camp
• 1:12:12
  Speaker 1: as I, which is, I don't know what the hell
• 1:12:14
  Speaker 1: I wanted to do when I was nineteen or twenty five,
• 1:12:17
  Speaker 1: or by thirty, I started to having an inkling. I
• 1:12:20
  Speaker 1: get the sense you traveled a similar path, and I'm
• 1:12:23
  Speaker 1: worried the kids don't do that enough these days. And
• 1:12:26
  Speaker 1: our final question, what do you know about the world
• 1:12:29
  Speaker 1: of investing today that you wish you knew thirty years ago,
• 1:12:34
  Speaker 1: thirty years ago, let's call it, uh yeah, ninety two,
• 1:12:37
  Speaker 1: thirty years ago. Wow. Uh don't have a great answer
• 1:12:42
  Speaker 1: to that. I guess I wish I knew interest rates
• 1:12:44
  Speaker 1: were gonna come down the whole time. I think there
• 1:12:48
  Speaker 1: is right. Was there was there any sign in ninety
• 1:12:51
  Speaker 1: two that this was a c change in the world
• 1:12:54
  Speaker 1: of inflation and yield? Or did it? Was it? Just
• 1:13:00
  Speaker 1: remember the like eighty nine when when did when did Vulker?
• 1:13:04
  Speaker 1: Oh I'm sorry, sight was when he caused the double
• 1:13:08
  Speaker 1: dip eight and eighty two, the double dip recession. He
• 1:13:11
  Speaker 1: broke the back of inflation. So you were barely a
• 1:13:14
  Speaker 1: dozen years into that, right, Um? Yeah, So I wish
• 1:13:18
  Speaker 1: i'd known that. You know, I really that that when
• 1:13:21
  Speaker 1: you have lower interest rates, that helps stock market valuations
• 1:13:25
  Speaker 1: and obviously helps fixed income. And I think we're now
• 1:13:28
  Speaker 1: in a spot where what is the next twenty year
• 1:13:29
  Speaker 1: was going to bring us? I want to know what
• 1:13:31
  Speaker 1: was happening in the next ten years, Barry, that is
• 1:13:34
  Speaker 1: the trillion dollar question, and I'll tell you afterwards. We
• 1:13:38
  Speaker 1: have been speaking with Jan van Eck, CEO of Vent Associates.
• 1:13:44
  Speaker 1: If you enjoy this conversation well, be sure to look
• 1:13:47
  Speaker 1: up an Intra down an Inch on Apple iTunes, where
• 1:13:50
  Speaker 1: you could see any of our prior three plus conversations.
• 1:13:55
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• 1:13:59
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• 1:14:02
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• 1:14:09
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• 1:14:12
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• 1:14:15
  Speaker 1: from my daily reads at Ridhalts dot com. I would
• 1:14:20
  Speaker 1: be remiss if I did not thank the cract staff
• 1:14:22
  Speaker 1: who helps put these conversations together each week. Sam Schivrov
• 1:14:27
  Speaker 1: is our producer, slash booker, Mark Sineskalgee is our audio engineer.
• 1:14:32
  Speaker 1: Michael Batnick is my head of research. I'm Barry Ridhalts.
• 1:14:37
  Speaker 1: You've been listening to Masters and Business on Bloomberg Radio.