We Study Billionaires - The Investor’s Podcast Network - RWH038: The $2.6 Trillion Man w/ Rick Rieder

Episode Date: December 24, 2023

In this rare, in-depth interview, William Green chats with super investor Rick Rieder, who oversees about $2.6 trillion at BlackRock, the world’s largest asset manager. Rick, who probably manages more money than any other investor on Earth, has an enormous range of responsibilities: he’s BlackRock’s chief investment officer of Global Fixed Income, head of the firm’s Global Allocation Investment Team, and chairman of the firm-wide BlackRock investment council. A true titan of the investing world, he recently won Morningstar’s 2023 award for Outstanding Portfolio Manager. IN THIS EPISODE, YOU’LL LEARN: 00:00 - Intro 05:57 - What Rick Rieder learned from a disastrous early investment. 24:43 - Why he focuses relentlessly on leverage, liquidity, & cashflow. 40:13 - How access to vast amounts of data gives him an edge. 43:27 - How he distinguishes meaningful news from meaningless noise. 49:13 - Why he gets grumpy in bull markets & relishes periods of dislocation. 55:49 - What great investors like Ray Dalio & David Tepper have in common. 57:46 - How Rick views the current economic outlook. 1:03:16 - How to take advantage of the “incredible blessing” of high bond yields. 1:13:31 - How he operates on 4 ½ hours of sleep. 1:16:00 - Why he loves to trade in the middle of the night. 1:19:34 - How he handles extreme levels of stress & responsibility.  1:24:40 - How he’s maintained a happy family life, despite a fanatical work ethic. 1:30:36 - Why his hero is Cal Ripken, the Iron Man of baseball. Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences. BOOKS AND RESOURCES Rick Rieder’s article on “The Fixed Income Opportunity for 2024”. Rick Rieder’s Strategic Income Opportunities Fund. Rick Rieder’s Total Return Fund. Follow Rick Rieder on X (AKA Twitter). William Green’s book, “Richer, Wiser, Happier” – read the reviews of this book. William Green’s podcast interview with Ray Dalio | YouTube video. Follow William Green on X (AKA Twitter). Check out all the books mentioned and discussed in our podcast episodes here. NEW TO THE SHOW? Browse through all our episodes (complete with transcripts) here. Try our tool for picking stock winners and managing our portfolios: TIP Finance Tool. Enjoy exclusive perks from our favorite Apps and Services. Stay up-to-date on financial markets and investing strategies through our daily newsletter, We Study Markets. Learn how to better start, manage, and grow your business with the best business podcasts.  SPONSORS Support our free podcast by supporting our sponsors: River AlphaSense Wise NetSuite American Express Business Gold Card Toyota Ka'Chava Babbel Glengoyne Whisky Efani Noble Gold Investments Salesforce Vanta Alto Shopify Masterclass HELP US OUT! Help us reach new listeners by leaving us a rating and review on Apple Podcasts! It takes less than 30 seconds, and really helps our show grow, which allows us to bring on even better guests for you all! Thank you – we really appreciate it! Learn more about your ad choices. Visit megaphone.fm/adchoices Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm

You're listening to TIP. Hi there, welcome back to the richer, wiser, happier podcast. Today's episode is a special treat. Our guest is Rick Reeder, who's one of the world's most important investors. Rick is responsible for a staggering $2.6 trillion in assets at BlackRock, which means that he might actually be managing more money than any other investor on Earth. He has an enormous range of responsibilities at BlackRock, which is the world's largest asset manager.

Among other things, he's the firm's chief investment officer of global fixed income, overseeing a team of something like 350 people. He's also head of the firm's global allocation investment team. He's a member of BlackRock's Global Executive Committee, and he's chairman of the firm-wide BlackRock Investment Council. He also manages some colossal funds, including the $18 billion total return fund and the $36 billion strategic income opportunity.

In case you're wondering, his investment performance has been so strong that Morningstar recently awarded him its 2023 Outstanding Portfolio Manager Award. What kind of person could actually handle this amount of responsibility and pressure and stay on top of it all? Well, as you'll hear in this conversation, Rick is extraordinarily intense, even by the standards of the world's most successful investors. After something like 36 years of working on Wall Street, his level of energy and his sheer will to succeed are as strong as ever. This is a guy who, as you'll hear, prides himself on getting up at 3.45 a.m. every day. He loves trading in the middle of the night when his peers are still fast asleep. He hits the gym at 4.45 a.m. every morning before he heads

to the office so that his regular workday can begin. Like I said, he's intense. In my book, Richer, Wiser Happier, I wrote that I think of the best investors as men. athletes. These are people who strive constantly for an intellectual advantage, more information, better information, faster information, or simply a more nuanced interpretation of information that's already out there for everyone to see. When I think of Rick in these terms, it strikes me that he's possibly the most extreme mental athlete I've ever met. One aspect of this conversation that fascinates me is that we get an unusually vivid, up close, and personal sense of what it's like to operate at the very pinnacle of this game, where this

kind of intensity and competitive drive may be required. I think you'll see how Rick has managed to give himself an edge through a combination of incredibly hard work, robust investing principles, and an ability to distill massive amounts of data and interpret what it means so that he can distinguish the news from the noise. As you'll hear, he's also exceptional. thoughtful about what it takes to succeed over the long run as an investor, managing risk so you can survive through thick and thin, whatever the financial markets throw at you. In any case, I hope you enjoy our conversation and that you learn as much from it as I did. Thanks so much for joining us. You're listening to The Richer Wiser, Happier Podcast, where your host, William Green,

interviews the world's greatest investors and explores how to win in markets and life. Hi, folks. I'm absolutely thrilled to welcome today's guest, Rick Reeder, who's one of the world's most important investors. Rick is responsible for about $2.6 trillion in assets at BlackRock, which is itself the world's largest asset manager. He also recently won Morningstar's 2023 Award for Outstanding Portfolio Manager. So, Rick, it's wonderful to see you. Thanks so much for speaking with us. Thanks for doing us. I appreciate it. It's fun. I also want to point out that Rick just dialed in from an airport, I think in Atlanta, where he's stopping off. And can you explain to us what you did over the last few minutes, Rick?

Because it gives a good insight into the context in which we're having this conversation and also your personality. Yes, sir. So part of my personality is I can't sit still and I do a bunch of things at once. And my wife doesn't really love that at dinner when I've got the phone out all the time doing 12 different things. but no, you know, where markets are moving quite a bit and yield curve's moving quite a bit. So, I know I'm just involved in a, what is a curve flattener trade that we're putting on, that, you know, long end of the yield curve is doing extremely well. And so now we're reducing some of long end exposure to buy some more in what we call the belly of the yield curve.

So I'm trying to try and execute that, you know, as usual while doing something else. So what's funny is that before we started, usually I did with Rick what I usually do with all of our guests, which is I kind of explain some of the ground rules and I say, look, if suddenly something happens like your kid calls or you have to go trade pork bellows or something, it's not a disaster for us to stop. And Rick was the first guest I've ever had who said, actually, it would be great if I could just do a trade right now. So I had to sort of sit here quietly for a couple of minutes while you trade it. So I thought that was a very nice insight into, into her. who you are. Into my persistent stress level for during when the market, when markets are open. Yeah, exactly. We'll get to that later. So Rick also said for people who are watching the video, which is usually a minority, is it okay if I keep one eye on the market while we're talking?

So my challenge is to keep Rick undistracted so that he can sort of, I guess it's to allow you both to trade simultaneously and to give us wise answers to my thorny questions. That sounds great. That was great. Only one I promise. Okay. So, Rick, I'd like to start by asking you about your very early formative experiences as a bond trader, which I think really shaped the type of investor you've become.

And just to give our listeners a little bit of background, as I recall, you graduated from Wharton with an MBA back in 1987 and then joined E.F. Hutton as a trainee. And then, as we might get to later, E.F. Hutton got absorbed into Lehman Brothers after Black Monday and 1987 when the market went kaput. and Jeff Hutton, demised, if that's a word. And so you ended up at Lehman working with a very important mentor named Bart McDade. And I wonder if you could give us a sense of what that early period of working as a trader was like and what you learned from working with Bart, who was not that well known to a lot of our listeners,

but was a very gifted trader who I think eventually went on to become president and CEO briefly of Lehman. Yeah, so that's a great question. And Bart, you know, Bart, you know, first of Bart became president too late. And they, yeah, I mean, I learned a ton. I mean, I got, I got super lucky. I mean, there were a couple people in the training profia Futton that came to Lehman. And I was unbelievably fortunate to talk about nodes in your life that are, that are, you know, create a set of branches off of it.

And, you know, I got to learn from somebody who I, you know, trained me, go out of bed in terms of how to think about markets, how to think about, you know, research, analysis. And, you know, one of the things, I was saying a few people you guys, Gosh, there's so many things that I learned from him and from the team I work with. You know, by the way, I lost a lot of money on a trade earlier in my career. And it taught me a ton about, and, you know, you know, Bart and others, you know, about how to manage the risk. And, you know, I'm talking about this a lot. We're not in the business of being right.

We're in the business of generating return. And, you know, what I learned at the time was I thought I was right on a position. And you usually do well in school. You're trying to do well in school by studying. I was convinced I was right. And I studied it. I knew the technicals, the fundamentals. One of the other things I learned from Bard was reading indentures.

You know, most people in the markets just look at tips of the waves and like to be in the hot sector. And I learned a lot about doing research, analyzing something. And if you analyze it more times or not, you're going to be right. Because most of you don't really study these indentures and go really deep and understand this bond had a lot of convexity. It had a call option. Anyway, I thought I was right.

I could buy it. And then all of a sudden I realized whether I was right or not, market which didn't think I was right. And all of a sudden, I started owning all of them. And it doesn't matter whether you're right. You can be right six months hence or two years hence, you know, where in the business of generating return and people think you're wrong and or you own them all, you're going to lose money. And so it taught me, manage your sizing your position, take the loss when you need to, don't double, you know, don't double triple your position. And I also believe in this idea while that time wasn't necessarily the case, like make sure you do your research.

Because ultimately, you know, the announcers you do are going to win out more times than not. Like I say most people in this business, you know, want to chase momentum and chase, you know, chase whatever, the hot thing is. There's some social media today. It's like, I've got to get on this train. I've got to get on that train. So, anyway, that taught me a lot. And, you know, if I could say one last thing, sorry for being so long an answer.

You know, I've learned a lot from people. And, you know, Bart was one of these people, Corey Booker or somebody who I got to know really in my life who was a, you know, the way you treat people and how you think about teams and your partnerships has really stayed with me for a long time. I mean, part with somebody who treated everybody well, you know, was incredibly, what do I describe, as supportive of his teammates, et cetera, and like to have the right quality of people, culture, people around them. Cory Booker learned the same thing.

Like, when I saw him outside of the, outside of the public arena, I watched the way he, you know, I sat on the board of what was called North Star, the schools. It was one school, now 14 schools. And I watch how he treated people end up with, you know, and I watch how people treat with service people. they treat them with respect, do they treat people the right why. And I learned a ton and I think I'm a crazy fortunate, I have people who work with me that worked with me for 35 years, 30 years, 25 years, a bunch of people. And, you know, I think it's this idea of like you can't do everything in markets, despite, like I said, being distracted. You need to have people who are really

thoughtful of different ideas that are, you know, willing to challenge you. And I know, to me, was a really, really big deal. We had a great team. And today, I'm unbelievably fortunate that I end up worked with a ton of these people for a long time. But anyway, that was a really big deal. I really think people underestimate, like, the quality of the person and what their intentions are. You know, this industry is made up a lot of people like are out for them, you know, out to make money for themselves and faint. How do I make money fast?

And I don't know, I really believe in this idea of, you know, the right culture and philosophy. And to go back to this very formative experience with this bond, I think it was, if I remember correctly, it was a Canadian bond issued by Hydro Quebec, this utility company in Canada, I think was yielding more than 10% something like that. So it looked very attractive. And I mean, you were only about two years into your career as a trader, if I remember rightly. Why was it so traumatic? I mean, viscerally and emotionally, why is it helpful in a way to go through something like that, in a way like Ray Dalio's early experience where he almost, and I know you and Ray are friends, where he almost destroyed his career and had to borrow $4,000,000, I think, from his dad.

Why are these early experiences that are just so searing, really formative in that way and kind of shape you for the rest of your career? Yeah. So by the way, I've learned this one, technology people, et cetera. It's almost a badge of honor to lose money early on or have a failure. And like, I've been blown, you know, people I'd be confident. and I win, I win. Actually, it's actually the losses that, you know, galvanize how you learn more and

how you think about things differently. So that bond was at the time, it, I mean, you talk about emblazing in my mind. It was Hydro, Quebec, 10 and three quarters of 615, 10. I remember the maturity, the coupon, the whole thing. Because I mean, it really hurt me, but it, it, it really got me thinking about, by the 15, 10, with a 1995, it's hard to believe this. five call option on, I'll show you how old I am. But anyway, you know, I got me, you know, really thinking about things and how do I unwind this position and what are the technicals

and how do I get out? And then the other thing was, you know, I had developed some relationships on the client side and it'd be also caught me. My clients can be really good partners with you. And so there are a couple of clients I called, what am I doing wrong? And what do you think about this? And, you know, and, you know, they were varying levels. They were willing to buy some. and I was able to start to, you know, people got a sense that there was distribution happening of this position. I started to work my way out of what was a deep hole. And, but I learned a ton from taking that loss.

And, you know, I watched some of the most successful investors in the world. And, you know, it is usually, they usually had a tough, had a tough go at one point. And, I know, I truly think it changes the way you think. You don't learn it. Like, I don't remember the coupon immaturity of bonds. I traded 30 years ago that I made money on. It's the ones that cost me a fortune. I remember you once also saying that the geniuses don't necessarily make the best investors, and you saw this also with the guys from long-term capital management who blew up while you

were at Lehman and you were having to deal with the impact of their unraveling. And it seems like part of what made this such a helpful lesson for you in terms of survival, which is a big part of what we'll talk about today, the importance of actually surviving as an investor. It seems like part of what you learned was just the dangers of overconfidence. You know, I think it's, you know, I used to, when I earlier in my career, when I'd hire people, I was always blown away by resume. And I was blown away. I didn't go, you know, I didn't go, I guess I went to business school in Ivy League, but I didn't undergrad. And I was always blown away by boy, if somebody went to this school or that school, there must be incredible and that would

definitionally be a great investor trader. And then you realize there's something way more to it. Obviously, intellectual acumen is pretty darn important. But there's also savvy. There's also how you communicate. There's also how you partner with people and you work in an atmosphere. And so what I've watched over time is the smartest people become convinced their right. And then they get similar to what I had become convinced that they're right. So they build a position bigger and that the markets will figure out why they're so smart. And then they end up hurting themselves or end up, end up losing money. And, you know, so I, you know, and I've learned over my career when I look at resumes and I look at people I hire, it's actually, I look more for

a desire, an ability to succeed in whatever they attempt, and that could be anything as a swimmer, you know, as an artist or what I view, but that ability and that passion to figure out how to, how to win and how to succeed and that's, you know, because people, I've hired so many people into the wrong jobs, but if you hire them and they're, and they've have that knack for, uh, I don't know, sort of a street sense or like what it takes, you know, to either work harder or to figure some out or understand the technicals, those people tend to do pretty well. And so, I, you know, but to me that has become, again, you have to have a base level of intellectual acumen, which most people in the industry have. And then, you know, beyond that, it's, it's, it's,

a whole series of other things that I think make some of the great investors I've seen out there really good. Yeah, when I was studying you over the last few days, it actually pushed me to look up a quote. I hate to quote myself, but I was happy actually that it was a pretty good sentence that I looked up a quote in my book where I had this revelation where I was writing about some of these super intense, very successful investors. And I think I ended up writing something to the effect of sometimes the secret of success is nothing more mysterious than the unflagging fervency of a person's desire. And that struck me with you and the people you hire.

There's this unflagging fervency in terms of the desire. It's almost like you can't bear not to succeed or you almost can't bear to fail to put it in a negative way. You know, I watch a lot of sports. And, you know, you watch some of these athletes who are not always necessarily the most gifted athletes, but they figure out, you know, they're really crafty or they figure out, like, you know, what is their opponents, Achilles heel, or what is, you know, where is, you know, the opportunity side? And you watch teams that, like, win the Super Bowl World Series. I think, like, how did they do

it? And by the way, oftentimes it was culture and it was, you know, this orientation of teamwork that I think was a, was really powerful. But I think, when I say, I think it's such, such a big deal in terms of people that I find that are really, really good investors. Some of the people that I look up to that are, you know, have that incredible knack for, you know, for figuring things out. And it's an satiable appetite and, you know, for figuring things out. You know, oftentimes I'm always blown away by people in this industry who've done really well. And like, why don't they just retire? But there is, I think, in a lot of those people that I have tons of respect for, you know, I think it's the intellectual pursuit and the challenge of, you know,

trying to, trying to get it right. I saw stat the other day that 50s. that the top world tennis players only win 54% of the points that they play. I thought it was an incredible stat. I was like, how could that be right? And then more you think about it, it's similar to what we do. It's like, you just got to keep trying to get it right more often than not. And just do we to multiply that as many times as you can? And I think there is this innate desire from a lot of the people I've respected or it

have become great investors. It's just, you know, it's an incredibly exciting and dynamic. pursuit, which I think motivates people. It's interesting because in some ways when I, when I studied your early life, it seemed like you were a little bit of a slacker. You were a little bit lost and adrift. And I was reading about how, you know, you went to school, I think, not far from where I live now, you went to school in Scarsdale, I think, which is sort of a plush place. And your parents, your parents were business people, although your father had lots of ups and downs. So, you know, so you were

from a privileged family that then had tough times, I guess. But then you were at high school and you sort of didn't do very well. And then you went to Hobart College, which is not, you know, it's not Harvard, right? I mean, it's not like you were destined for greatness. And you seem sort of a little bit lost in college. Can you talk about the moment when things turned around when I remember hearing about your experiences where you suddenly were getting terrible grades and you were like, oh, my God. Tell us that story. Because I think it's a very interesting sort of turning things.

point in your life in a way. Yeah. So, by the way, my dad, you know, it was interesting because we had, you know, we didn't have a lot of money. And then my dad did really well in this business. And it was, it was an office products company called American Unifax. It was actually, I think his fraternity brother, uh, created Xerox. And, uh, and my dad, you know, it was, it was, it was, typewriter ribbons and, and, um, you know, things that became correction fluid for, for, uh, typing, et cetera. And then it became, you know, quickly antiquated. But anyway, it was an up and down period. But, you know, that taught me a lot about innovation technology and about, gosh, you got to be cutting head, you got to be front-footed about what I said. That was, but, you know,

your point about, I don't know, I didn't, you know, particularly in high school as you got into some of the classes in history and, you know, English literature and, and then on college, you know, philosophy, sociology, it's like, I just didn't, I, A, it didn't sink into me. I mean, it wasn't, It didn't come naturally and I didn't, so I wasn't intrigued by it. And I thought that, you know, human culture is really interesting in that, you know, something motivates you, you'll, you know, you can really attach to it. And I actually think I took a typing class in high school. I'm like, wow, this is pretty cool.

And then not knowing computers would be. So I'm then accounting. And like, wow, I understood debit and credit. It was logical. It was intuitive to me. And then I, you know, I transferred at Emory University and I took business class. and I think my parents were both entrepreneurs and I understood business and to this day. I mean, I love looking at what drives cash flow.

Why do people spend on R&D or what drives employment trends in inventory levels? I don't know, but that all makes a ton of sense to me. But it's funny, like if you get on, and I said this in on some of the things I do with the schools or analysts that we bring in. Like if you get in the right train, like the human being is pretty incredible around if you're motivated by something, your willingness and desire to work out it. I've always said that, you know, like Sunday nights, I'm so pumped up. And like I could, you know, get to go and do it again. And if you're motivated that way as opposed to it's a job or you're motivated, but I, you know, I had a tough time early, you know, early on in academia. That, by the way, that's a great, you know, for liberal arts. It's a great tool. In fact, one of my, my closest

senior partners, you know, graduated there and he's extraordinary. And he thinks of things in a big picture way that, that is, people can succeed from that. It just didn't, it didn't click in for me. So until I got, you know, the ball started, you know, the snowball started rolling downhill and something that I found intriguing. I had a hard time being motivated. And it was something literally my roommate had, we, we, we transfer it together. And my roommate, you know, said, you know, we got to move on. Like, what we were doing was hanging out in the gym and, you know, night watching movies and so in a way, he said, we, you know, we got to move on. And so, you know, he found the school, Emory, and, you know, their business classes. And I, you know, so I, I don't know when I, when I

had to like, the trough of my grades, my freshman year, a middle of my freshman year. And I'm worried about my dad, my dad's reaction to it. The, I said, gosh, I got to change my life. But in a bunch of different ways, I was, you know, my weight was getting high. And so, I know, it's like, it's amazing how, like, something kicked in and, and then the ball started rolling down hill. So, Yeah, I have this great image of you that I think you told once of you kind of sitting on a rock on a golf course in Scarsdale for about four hours scared of going back and talking to your dad and then and then deciding, all right, I'm going to turn things around. Yes, sir. And yeah, no, that was, I don't know. Like I have, you know, I don't know that people in their life have something, but that was, you talk about a catalyzing event.

That was, that was it. And it was it. And you really started. I mean, I sat there for a long time. I just started thinking about life and thinking about, you know, what, where it was going. And you know, thankfully, my wife always talks about it. Like, I want to transfer it. I met my wife and I've had great kids and, boy, thank God for, I wouldn't, I wouldn't, I wouldn't certainly encourage anybody to have really bad grades to create

a catalyzing event. But, uh, it was certainly a motivating event for me. It somehow worked for you. And I think if I remember rightly, you came third in your, in your class at Emory and your wife came first a couple of years later. So, uh, she reminds me of that regularly. Uh, yeah, she's, she's the one we really ought to be investing with. Totally. 100%. She has more of a marketing brand than I'm more in finance, but yeah, she clearly is smarter. So another important early experience that you had that relates to some what we talked about, I think was while you were at Wharton, where you had this CEO from, I think, the Golden Nugget Casino come through. Can you talk about that? Because it also relates to this, really to the philosophy

that you've had as an investor that stood you in very good stead for the last 35, 36 years. Yeah, so, I mean, I mean, even, you know, I was in elementary school. You know, I'm a sports nut. I love it. You know, I started like, I think, oh, this probably date me, but I think I had like a 25 cents for my lunch money. And I used to bet it on oven times, which made me hungry at times, but bet it on Chiefs Raiders game or what I have you. And the, and, you know, so I was always intrigued by taking risk and, you know, and then by the way, I would do this research on like how they played on turf and versus otherwise. I don't know, so, but then, you know, then somebody came in and spoke of Wharton, and I learned a ton of Wharton.

I learned a lot about dealing with people and people from international, some years, and anyway, but somebody came in and I spoke about, you know, we said, well, how do we make money at casinos? You know, and I raised my hand and I said, well, the odds are in your favor, and I gave all the trap and reverse the statistics of what the odds, and he said, actually not. He said, people come, the odds aren't that much other than slot machines. People come with $200 in their pocket, and when they lose the 200, they leave. And like, I kept resonating with me because what happens is you think about how, you know, similar to way markets, they oscillate up and down.

And I thought about, gosh, when you oscillate, you hit the down, you hit the down 200, you leave. So almost, you know, statistically, you're always going to hit the down 200 if you stay there long enough. And more it hit me about investing. It's like there's going to be something exogenous, whether it's geopolitical, whether it's some like companies fraud or something. there's always going to be something exogenous skin and have you hit the down button. And so I always try and think about what are the things that prevent me from doing that. And then because markets oscillate, you know, try and be, I mean, it sounds cliche, but try and, you know, sell when it's going up and others are buying and vice versa. You know, take your profits along the way.

But the big deal for me was thinking about, you know, markets tend to move in trends and they tend to move in trends around a trend. line, but they oscillate, and you know, based on noise and news, et cetera, but then just make sure you don't hit. And like, what are your stopgaps around your, around your position, what are your hedges that so that I don't want to be that person that, you know, that hits the down button, you know, particularly, you know, clients, you know, like I say, I've taken losses over my career. And, you know, I just want to make sure that I'm trying to insulate from that. But it's just emblazoned in my mind, the philosophy around, you know, the random walk alongside of a trend and just make sure you're being thoughtful about optimizing

it versus being on the wrong side of it. Yeah, it seems like a huge part of your process is, or your success is simply this avoidance of catastrophe, the fact that you've managed to stay in the game, whereas a lot of a lot of very talented traders, very talented investors have just blown themselves up. I remember you once saying you would watch a great trader who'd get three, three bets right and then would blow themselves up on the fourth trade. Can you talk about that? Like what, I mean, what's happening just in human terms that people temperamentally, as Ben Graham would say, we're our own worst enemy as investors? So I'll say the first thing. I really don't regard myself when you say successful. Like I always think part of what motivates me is I don't really

regard. I think it's a constant challenge. Like I look back and I say like there are things I should have done are things that, like, I think part of what motivates people to, you know, not be in that where you, where you blow up, it's like, like, I don't, you know, I don't think I figured it out. Like, I don't think I'm, you know, I think we do some good things and you get some, you know, recognition for doing some good things. But, you know, I think what happens is, and we studied this and it was really cool. We did some things on, to look at, you know, who succeeds And it's interesting in, and it happens to be more in males, that there is this dynamic around where you build a confidence level.

And I'll never get this study that showed tennis players, I'm not sure I talk about tennis, I prefer golf, but tennis players, you know, when they, when they're a setup, how men tend to try and go for it. And when they're ahead, they tend to go for it. And I see this all the time is people who get three out of four trades right and then they're down money because they got their confidence level is too big, their position's got too big, and then the fourth position hurt them. And the fourth position wasn't scaled to what is the downside versus the upside. And I think that

is such a big deal is, you know, part of my philosophy around in fixed income, in bonds, bonds mature at par or they go down. And so I always say make a little bit of money a lot of times, make a lot of relative value decisions, you know, try not to have that one trade blow up the three because in, you know, bonds, if you're wrong, they go down 80 points and you're hoping to get a par, or 100 cents on the dollar. So, you know, this idea of don't get overconfident, don't have one, because even though it's working, you know, don't get overconfident. And I see it all the time.

I mean, all the time with investors, traders that, you know, you see the confidence levels growing. You know, I just had a good trade. Another one, another one. And then they end up getting hurt. But that, but I think it's a really big deal around investing or trading. I really want to emphasize for our listeners the importance of that, that line that, that Rick just mentioned, which is kind of a mantra or motto of his, which is let's make a little bit of

money a lot of times because it's so central to Rick's approach of really not so much swing for the fences as diversifying thoughtfully, trying to survive, trying to get relatively consistent returns without huge downside. But in a way, it's curious to me, Rick, because it's sort of the opposite in some ways of the approach of someone like a Charlie Munger who we've read about a lot in the last week and who I've interviewed in the past and who just passed away a few days ago. Because Charlie would talk about being a spear fisherman who would sit by the side of the stream and just wait for one big, fat, juicy salmon, would then spear it and then go back to doing nothing. So in a way, he was a great advocate of, at least if you really know what you're doing, having a very concentrated approach where because you don't know that many things, you wait for something that's a really great opportunity. And otherwise, you just don't do that much.

And you in a way, I mean, there are so many different paths up the mountain, but I wonder if you could unpack for me the difference because there's something very different philosophically and temperamentally going on here that you embody. So I'd say a couple of things. You know, the first one is I think equity and debt and bonds are very, very different. I believe in equity and similar to the description you add, in equities, you should concentrate more because they are convex to the upside. So you think about companies throw off, return on equity, you know, whatever the numbers are, and particularly tech companies, venture companies, you know, you can, if you're in the right zone, you can multiply your profits, multiply your revenues. And so in equities, I actually believe in concentration, scaling your positions the right way. And if you really believe in something,

you can grow it. But bonds are different. And because of they are convex to the downside, so in bonds, I feel like this make a little bit of money a lot of times diversify. But I like in equities. I actually like scaling. So some of the companies, you know, they're invested over the years that I really, really like, you know, including today. I mean, we take bigger positions. And I think, and not only take bigger positions, we use options to try and amplify the upside of it. So I think, I think that is, that is one part of it. Second is, you know, I think it depends who you are and what your objectives are as well in terms of, are you, you know, we're managing money for clients. And, you know, whether it's policeman, firemen, teachers, et cetera. And I, you know,

I take it quite seriously that, you know, it's where their retirement, it's their well-being, and, you know, this idea that I'm going to swing it. And, you know, what I'm trying to protect is, you know, grow their, you know, grow their retirement pool in a deliberate, efficient way, you know, without that, without that big downside. I mean, if you're managing your own money or you're managing your own, you know, whether your own specific, you're willing to take risks because you're willing to take your own personal downside. I think that's a very different framework. I also think a little bit different, but it's a pretty unique place.

But it also depends on the scale that you're operating in. You know, we run a lot of assets. And, you know, the scale, the idea of we're going to get out if we've made a big risky decision, you know, pretty darn hard. And, you know, I think, you know, if you're an insurance company, you have long-dated liabilities, your holding beard can be 20 years. We get measured our clients, depending on who the clients are. We have some that are in very liquid funds, you know, look at returns almost every day.

And so, you know, do you have the ability to hold on for 20 years? So, you know, what is your investment objective? You know, I tend to think of most of our portfolios tend to think of things in six-month increments. You know, it varies. If it's a private investment, I've got a longer throw to it, if it's, you know, something like treasuries or duration, you know, I'm shorter. So it depends on, you know, who are you investing for? What's your objectives set?

How big is you, you know, what's your scaling? is it debt versus equity. And so I think all of that goes into the equation. I think also what you just said about the ability to hold on is really important. And I was very struck by a quote of yours that I'd read where you said, I've always found when I've invested in credit or equities or anything, there are only three things that matter for investing. And there's leverage liquidity and cash flow. And you talked about how if your leverage is high, but you've got plenty of liquidity

and your cash flow is high, you're okay. you can survive. But so you said it's all about how you can service my debt. And in a way, it goes back to that very early experience where you got blown up on that Canadian bond. Yeah, no, I mean, by the way, it's quite a monored. They, you know, one of these things that are looking at these things. So, you know, I think the, I literally think there's only three things that matter, leverage liquidity, cash flow. And, you know, I've learned that you can run a lot of leverage. And by the way, I think this is, this is an acute problem for the U.S. government today, you can run a lot of leverage as long as your cash flow exceed, as long as you

have a liquidity, if you run out of liquidity is over. And so you got to know, deep down, you know, what is your liquidity and what can disrupt your liquidity because it's game over if that. So that is, so to put that aside, then it's your cash flow versus your leverage. You can run, like U.S. government, you can run a lot of leverage as long as your cash flow, your red, your tax stream or your revenue stream is high enough. And your cost of the debt is, you know, meaning your cash flow exceeds your costs of the debts, your cash flow is high. And, you know, I think for the U.S. Cumm is a really big deal. If we're funding the country at five and a half percent is different than we were funding at zero or one percent for a long time. So, and to me,

that is the whole day. And I look at everything, whether it's an equity, whether it's a bond, whether it's a piece of real estate, leverage equity, cash flow. And, you know, in different forms, how much emphasis you put on each of them, that those are the three things. On every single ass, I'm a challenge people. Like, I can, I'm in a literate not that. I'm not that I necessarily haven't figured out, but I feel like I can put those, I can take everything and figure out those buckets and then say, you know, if even if you know, it's a sophisticated, trunched, CLO, real estate securitization, you're, you've got super senior down to equity in Mez. And I just want to know those three metrics. And then where are you in that,

in that spectrum of are you at the top of the stack, at the bottom of the stack, in terms of how your cash flow gets to you? And I, I'd really feel like you can isolate any investment that way. I remember it's a very naive, I mean, I'm still pretty naive, but I was even more naive in my in my early 20s. My brother and I bought an apartment in New York because he wanted to be nearer to this girl he was dating, and I didn't want him to get rich without me. So I bought a small stake in the apartment, and then it was the late 80s and the property market kind of collapsed. And we were so naive, we had an adjustable rate mortgage and interest rates went to something crazy. Like, I think we were paying something 14 percent or something crazy. And I was a young writer.

have much of an income. And I remember the terror of having lots of money going out and not that much money coming in. And I think in the same way as your early experience with the Canadian bond that went wrong, I just never wanted to be in a position ever again where I was caught short, where I was at risk of just finding. So I've just always lived within my means that I've never had much debt. And I think it was just such a that, so when I read you talking about just the importance of liquidity, it just deeply resonated with me personally, I think. So, you know, I find it like, I look at a lot of companies in venture space. And, you know, and they grow, you know, some of them are very pragmatic about how they grow.

And they, because they've got to, usually they burn a lot of cash because you're building the business, you got to spend on R&D and capax and hire people. and you just got to grow. And so oftentimes you see where they grow too fast and they're not managing their liquidity effectively enough. And you could have the greatest business model that will explode. And then it doesn't. And then all of a sudden, like, you know, something happened in exogenous and your liquidity

dries up. And that this unbelievable business model goes away. And I think it is, yeah, I think you have to understand that at, you know, when you think about in real estate, like I've made some sales of, of, uh, like you were describing, you know, early, early on where, you know, like the market went down and like, you know, I didn't have any money. And so you, you know, like, you got, you got to sell or you've got to, you know, figure out something. Or you sell at a price that you don't want to sell at. And so, you know, I think you just got to make sure the liquidity.

Like that to me is the first thing. And every day we're looking at new investments, particularly when you're looking at equity or venture or more speculative investments. And like, have they thought through contingent liquidity? You know, there's a lot of things you could do around bank revolvers and things about what is your contingent liquidity if X hits the fan. And to me, that's such a big deal. Let's take a quick break and hear from today's sponsors. All right. I want you guys to imagine spending three days in Oslo at the height of the summer. You've got long days of daylight, incredible food, floating saunas on the Oslo Fjord. And every conversation you have is with people who are actually shaping the future. That's what the Oslo Freedom Forum is. From June 1st through the 3rd, 2026, the Oslo Freedom Forum is entering its 18th year,

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sign up for your $1 per month trial today at Shopify.com slash WSB. Go to Shopify.com slash WSB. That's Shopify.com slash WSB. All right. Back to the show. I also think it's worth emphasizing the degree to which you've seen chaos. on Wall Street and you've managed to survive and navigate it through a mixture of smarts and good fortune because you joined and there was a very significant amount of good fortune because you

joined EF Hutton if I remember correctly in July in 1987 and then October 19th 87 we had Black Monday and the Dow fell 22.6% in a day. So this firm that had been founded in 1904 is suddenly forced into the arms of Lehman Brothers for less than a billion dollars. So you then moved to Lehman's training program. And then you work at Lehman basically for the next 19 or so years. And then you leave Lehman, right before Lehman goes under. And Lehman, this firm that was founded in 1850 suddenly implodes and is like the biggest bankruptcy in U.S. history. And I think it went from basically being the fourth largest investment bank in the country, the 25,000 employees, including a hell of a lot of really talented people, to suddenly just being gone in the blink

of an eye. And I wonder if you could talk about what those experiences of actually seeing E.F. Hutton and Lehman, these two great kind of august institutions with plenty of flaws and plenty of human failures and the like. What impact that had on you in terms of understanding how we live in a world of entropy where things fall apart? You know, and I mean, you said something that I think is people don't realize. I mean, you know, even though EF. Hutton, I don't remember that. that well. But I think about all the people at EF Hutton that have gone on and do some pretty incredible thing today that are doing some pretty incredible things. People I was, you know, as just a trainee, you know, I was, and you know, I've had a lot of respect for and a lot of them

just unextratively well. And obviously, Lehman the same. You know, you can have a business that's got an incredible number of talented people and innovators and, you know, thoughtful practitioners. And then, you know, you just got to think about, you know, the business model all the time and what is, you know, not to go back to that point again, but what is the business model, are you managing your asset liability mix? So you're managing your contingent liquidity or managing for that, you know, very, very tail scenario. And I watch some of the companies, you know, that I think I've been successful over the years that have had, you know, have had, you know, tough experiences, but, you know, Apple's a pretty incredible and pretty

incredible story. We watch about, you know, how Steve Jobs managed. I mean, the failures out, but then, but then, you know, had different ways to manage it and how he raised, and Google has well and how they managed, you know, through some more stressful periods and, you know, thought about you've got to evolve, you got to innovate, you got to change, and you have a thing about the same point about just don't let the business model in a, you know, or your structure, your capitalization, your lack of liquidity, disrupt that. And yeah, no, it's a pretty, you know, even with the most talented people, you know, you can, you can certainly, if it's not structured the right way, you can have like epic disruption that ends the game.

It's also quite striking the degree to which luck plays a role, right? I mean, I remember Howard Marks once saying to me it would sort of break his heart that he would see these people who got washed out at the age of 50 who were just really talented and they just got really unlucky with where they happened to be when things fell apart. Can you talk a bit about just luck? Because it seems to have played a huge role in your life. And obviously you're dealing constantly with markets where things can just go, go against you that sort of undeservedly and can kind of hit you really painfully. So I'm not. So first of all, I'd say, you know, I'd say funny, you know, being lucky I found is generally the,

you know, you usually put yourself hopefully in a position that that is, you know, more designed that that is not just based on fortune. But I've had some pretty bad. And I would say over my career, like you said, some things that have worked against that are just like surprising and bad luck are being. So, you know, but I think the only thing you can do is try and orient yourself in a place where that misfortune in a given point in time, you've tried to anticipate in some way how you would manage through it. But listen, I think, you know, I've always found like you see a lot of people in this industry. You had like one good trade. and I would say maybe a lot of some good work and a lot of luck.

And then they try and replicate it over time. And they're like, it doesn't work the second time and the third time. And I found this with trades and investments. You know, usually if you have a great trade and you're like, and then you think about, gosh, I remember that. That's, you know, that happened and I'm seeing that again. Usually never is successful the second time of the same amplitude the first time. And usually it doesn't work.

And so you always, you know, think about like if you've done your work and you're trying to think about, like there is, there's a series of environmental conditions that are probably completely different from the last time you did something that worked, and then just think through what are these new environmental conditions that can make that successful or not. But, you know, I'm pretty blown away by you see a lot of people that have one big hit and that it's hard to replicate it. And then you see a very, very select few. I wouldn't necessarily consider myself in this. There are a very, very select few that seem to get lucky on their positioning or their ideas more often. And I tend to think that they've, you know, through a lot of guile and

work and, you know, and thoughtful position and got got to that position. Well, we'll talk about this some more because I think a lot of, I want to talk about two things that I think have been really key to your enduring success, one of which is sheer intensity and drive, and one of which is an obsession with data. And it seems, we could start with either of them, because it seems to me they're both so central to why you, have actually survived in this business. I mean, part, part of it seems to be, I mean, I guess the good, the good fortune that you ended up at BlackRock, right, where you, you'd set up this hedge fund in May 08, right, a credit hedge fund right, right before Lehman went under and Lehman had a stake in it,

BlackRock had a stake in it. So then you go with your team of about 42 when everything goes haywire in the bond market and the fund got clobbered. You go work at BlackRock. So you had enormous access to incredible amounts of data and human, human intelligence there. How was just the fact that you have enormous data resources really been kind of the central, the central advantage, the central edge that you actually have these days? I mean, I think it's all about, I mean, part of what, you know, part of why I was so intrigued to come to Black Rock, I mean, with a tough go. And then, you know, then things were doing better in 09. And part of why I was so intrigued by coming to Black Rock is it was, at the time, I thought, you know, the epicenter could be the

epicenter of finance and, you know, it's starting out to be more so than I, then I certainly would have anticipated. But, you know, risk management tools, analytics, you know, a system called Aladdin, that is pretty incredible, allows me to stress tests, scenario analyze, you know, look at return attribution and like, what's daily, what's going right, what's going wrong. And that data is extraordinary. And, you know, your ability to like, you know, you can make some bad calls. I do make a lot of bad calls. As long as I know, because I've stressed it, I've looked at the scenario analysis, as long as I know, what's my downside, how will it impact the rest of the portfolio? How does correlation work? So if I'm wrong on one thing, does it

impact the other parts of the portfolio? Or will other parts suffer at the same time? Like, that to me is like the whole gig. Like if you have, you know, this incredible, you know, anticipating, anticipating markets or the economy. So I don't understand top-down investing at all. I don't, I mean, I'm very much bottoms up. And meaning, like, I, you know, I study companies. Like, I like people follow surveys, I think way too much to understand, like, how are people leaning. And I think these surveys are crazy overstated in terms of influence.

But if I can study, you know, why is a company spending on R&D or why, why are they laying off people or why they grow up, why their inventory levels up, like, what is driven their inventory levels up? And then, if you look at it across a series of companies, and all of a sudden, you can say, okay, now I understand why employment. the economy is starting to slow or what have you. But that's the only thing I think works. I think trying to do it from the top down, I just don't think it's durable because you don't understand the underlying catalysts or instigants to drive the economy or a certain

sector of the economy. So I really believe you got to get, you know, intent. Part of what AI is so exciting is ability to do this at scale and it actually run models and run AI to say, you know, home builders, what's happening in home builders. around, you know, how much have they had to provide in their own financing to drive their business? And if you do it over scale and look at different, it's a fragmented industry. If all of a sudden, I can look at the industry through AI, boy, that's, you know, that's pretty darn exciting. So I really believe in that, that you got to start from the bottom and work your way up. And,

you know, assimilating as much data into your process is a key to that. So you have access to more data than almost anybody. And in a way that puts you in a more extreme version of the challenge that most of us face, which is somehow distinguishing signal from noise, somehow figuring out what actually is relevant. And you do these kind of legendary monthly calls where I think over a thousand people sometimes call in for these calls to hear you opine about the markets and the direction of the economy and the like.

And I wanted to get a sense of what your process is where you're taking this immense amount of information, this immense amount of data. A lot of other people, I guess, have access to some of it. But you're kind of somehow crunching and distilling and synthesizing it so that you can take a view so that you can kind of point the ship in the right direction and then kind of trade within that framework. What's the process and what can we learn from that about how to distinguish real news from just noise? So, I mean, I think that's one of the keys to investment part of the great investment I've seen is just the ability to actually isolate. That's an important piece of news. So the only way, and maybe it's embarrassing, it's somewhat archaic.

Like I look at, you know, I brainstorm with our team and we say, you know, I throw out some ideas, what about this, what about that, what about this? And now the team starts to pull a bunch of the data and put it on graphs and look at tables and what I view. And then I'd literally spend like on a weekend, this is crazy, but I spend on Saturday, you know, Saturday when I do these monthly calls, I mean, a good 10 hours and then Sunday probably probably about the same. And then I try and literally put a, you know, look at all the data and say, and then, you know, you get these aha moments and maybe it's just like I say, archaic

that that it takes a while to think of like, why is dollar yen doing what it's doing? Why are two your swaps doing what they're doing? You know, what's happening on the cross-currency basis. And like, all of a sudden, and then you see like some things tend to like come together like, I got it. And I got it. And I think the only reason why I think so many people dial into these monthlys is, you know, we try and take all this data and put together in a somewhat cohesive pattern of this happening and that's happening and that's happening. The conclusions should be X, Y, and Z, which are not always right.

But the idea of you take so much intense data to try and come up with your set of conclusions, and I just haven't figured out another way to do it. And, you know, like I say, AI is helping us get more of the information and the data. And either way, I work with counterparties who help me with a ton of it, who have, you know, their own internal systems and or see flows or research. And then they help me and they send over a bunch of information based on, you know, trying to go down a certain stream of investigation. And then, you know, they're like, all put it together.

And by the way, like 90-something percent of what you really is like noise is garbage. And like, you know, this is happening because somebody was long or somebody was short and that's driven the currency to a certain level. And you try and like, okay, that doesn't make any stuff. But all these pieces seem to have a cohesive stream to it. That, you know, and so we, you know, I tend to move my position around more around those. Thankfully, they're not weekly or I'd be divorced. But the, you know, thankfully my wife lets me spend one weekend a month socially isolated.

And they, and then the, you know, just trying to put all these things together. But I found it, it's like the critical node to our, you know, to how we position and we manage it. But then I think, you know, thankfully, I think a lot of, you know, a lot of people have found them interesting. So if you were actually forced to focus on just a handful of pieces of data, like if, if, if you were told, look, you can only have two or three pieces of data and you just abandon everything else, just not available to you, when you're trying to figure out the future direction of inflation and interest rate, you can only have two or three pieces of data. and you just abandon everything else, just not available to you. When you're trying to figure out the future direction of inflation and interest rates and bond yields and the like, if you really had to distill it down to the absolute essence of what's most important to you, what do you pay attention to?

What would be most valuable to you? Wow, that's a good question. So, hmm, how do I think through this? The, you know, I would throw out a lot of survey data because I think it's not. noise. And oftentimes, I just say it's all noise. Like, oftentimes how people are positioned is helpful. And, you know, it tends to gives you, gives you some directional help at times around inflection points. But I find that most surveys predict nine out of three right events. So if you said to me, I can only use two or three pieces of information or data, you know, I would

always err on the side of looking at corporate activity and, you know, look and reading too many documents around, you know, what's happening with, with companies and then, and then, you know, the consumer data. I mean, 70% of U.S. economy is consumption oriented or service oriented. And today, to me, you know, I'm always amazed. Like, people look at the, you know, the same analogs for how the economy operated in the 70s and 80s. And the economy is much more sophisticated, much more service oriented, much more mature technology oriented. And so I really like digging in in terms of consumer service, what's driving the service sector. And that, you know, that to me gives me a better, like, I still can't believe that

people spend so much time on some of the manufacturing activity, you know, which is, you know, not what drives the economy today, you know, particularly in aging demography. It's healthcare and education and service and technology. So, I know, those are the things I tend to focus more on, but it is definitely the hard data, you know, really good hard data. And oftentimes the big economic releases are an aggregated mess because they tell you, oh, it's up point two. Well, up point two means nothing because you have one sector that's killing another sector that's getting crushed. Like, what is it telling you?

Like, I don't even like it's that meaningful. The only thing is markets respond to it. So, like, I've learned, like, we can, you know, you have to be respectful of your data. Markets move on sentiment. And if, you know, you could know, like what's happening on inflation. And we've studied the million prices and look at it. But like the markets focused on the CPI report. If it's up point four, of point three or point two, it's like, that's what the markets move on.

So you've got to have the good data, but then be really thoughtful about if the markets are going to react to, you know, some pieces of news that are, you know, less robust. You also have to consider that in your investment, interest in the process. Yeah, I remember hearing you say at one point, markets are all about turns in the data. And it was one of those things that's sort of so obvious and yet that I hadn't really thought about that, that, that, um, Because I guess so many of the investors that I focus on on the whole are these much more long-term investors. And in a way, it goes back to the famous Ben Graham statement where he said in the in the short run, the market is a voting machine. But in the long run, it's a weighing machine. And so most of the investors I look at like the sort of Munga Buffett types, they're working on the basis that they want the market to be their servant.

And so they're taking these very long, they're taking advantage of the short-term volatility to place these kind of long-term trades. You, in a way, is often doing something very different, right, where you're playing the part of Graham's statement about the market being a voting machine. So I'd say a couple things. First of all, I don't really like bull markets. You know, I get grumpy in bull markets because I think the opportunity set. Like, you know, that to me levels the playing field. Like everybody jumps on the drum like we're all buying together. and you see this in some of the new issue markets, whether it's the IPO market,

the equity market or a new issue market and credit. Like everybody, you know, everybody likes to hold hands, get a warm feeling around. We're all buying together. It all feels good. And the consensus move under it. I find that incredibly unfulfilling. And I don't need a lot of money in it because everybody is doing the same thing at the same time and probably getting long at the wrong time.

I actually find fragmented, dislocated markets and oftentimes which are bare markets are much more interesting than where there's much more return to be generated because you know, you are, you know, prices, people, I always said this market's going to have five times faster than they go up. And it's really the case that, you know, markets iterate higher, people take profits. When they go down, people don't like to lose money. And that's where there's real opportunity. And that's where I think it becomes much more interesting, where you can use your research, use your analytics and try and figure out, gosh, something is, is overdone. And that to me is a whole lot more interesting than just playing along.

And by the way, sometimes you got to do this. Sometimes you got to, and the consensus can be right for a period of time. You just got to ride alongside of it. But I don't find that nearly as fulfilling as, you know, markets that are dislocated, you know, disjointed and where you can do your work and really try and, you know, isolate, gosh, it's some real value here. And I think some of the, you know, some of the people that I found that are, you know,

David Tepper at, you know, Apple Luzon is like, he's unbelievable. It's like when markets are broken, like he goes to work. And I think that's, you know, I think that's a very cool way to, you know, that's where I think the real money is. When you look at friends of yours like David Tapper or Ray Dahlia or Paul Tudor Jones or, I guess Stanley Drucken Miller, these legendary investors, often kind of speculate us in a way, traders, what are they have in common? I mean, what's the, and does it in some way remind you of what you see? I know you're a huge sports watcher. Does it remind you of what you see in the great athletes in a way? So, I mean, taking, you know, they all take a lot of risk.

And they, you know, they all, you know, they all are, they all like having, you know, maybe to use that sports metaphor, they're all like having the ball in their hand at the end of the game. And they're, you know, they're pretty, you know, they like being the decision maker. I like being the one who is at the inflection point, like to be the person, you know, willing to take that risk. And I think all of those people, I'd have tried, they're very different in terms of how they create alpha or how they create returns.

They're very different philosophies. But they're all, I think they're all pretty extraordinary in that. They like taking risks. They like being making the decision. And they, and in very different ways, all of those are incredible students of the market

and what they're trying to, what they're trying to do. And, you know, some are really, really good at technical. Some are really good at big picture where we are versus history. Some are really good at distress and understanding distress. But they're incredible students of the markets. And they're willing to take risk.

I mean, they're willing to say, okay, I'm willing. You know, we talk about to separate the news from the noise. Once they understand the news and what's a critical inflection point or the regime. And I spent a lot of time trying to think about regime. And they're really, really good. different ways of saying, okay, this is a regime evolution, time to go. And I think they're all pretty consistent around doing that. That seems also very central to your process, this idea of regime identification of identifying the type of environment we're in and then positioning yourself

in a way that's sympathetic to that kind of regime and then trading within that framework. Like, given that that's something that's so central to your approach, when you look at where we are today, say with a six-month view or a one-year view, where are we? What's your bet in terms of interest rates, inflation, bond yields, and the like? Like is, you know, if you, if you had to distill it down to give you a picture of basically where we are in, in this sort of the pendulum swing of markets, where are we now? So, you know, I actually don't think, like, you know, I know in the media in TV yesterday or other than, you know, I talk about a week soft landing, hard landing. And I actually don't think, like a modern economy that is driven by services tends not to go through those epic cycles. it tends to be much more stable. And I think we're in a period of we went through massive amounts of fiscal and monetary stimulus. And so what happens is the economy tends to follow the demographic

curve with incredible consistency over the intermediate term. But then once you use policy aggressively, you come off the curve, but then you've got to get back on the curve. And over time, you're going to get back on the curve. And I think we're in the process of getting back on the curve. And we got a, you know, part of what I talked about is too much debt on the U.S. economy. So we was utilized to get off the curve because the pandemic was so brutal for the system. So, but now we're going to get back on the curve, including repaying some of the debt, including funding, all this debt. And I think what's happening is we're getting back on the curve.

And by the way, I don't think it's you still have a consumer that's got savings. You still have a wealth effect that's reasonable on the backside of this epic monetary and fiscal stimulus. And you have corporate cap-ex that's spending on technology and innovation, largely, because you have to bring your costs down out, because you can't decrease in. I think price elasticity is coming back in. Like, we've raised the price. Okay, we can't raise the price again because the economy is moderating. Cut costs. What does that mean? I think inflation is moderating. Growth is coming down, but I think to a reasonable place that, and by the way, the level of where the economy is after you grow nominal GDP at such high levels, you're still

in a pretty darn good economic condition. It allows companies to throw off cash flow, et cetera. So, I know, I think we're in this period of moderation from being way above the curve. I don't think it augurs for, you know, real deprave recession or deep recession, you know, different in parts of Europe where you got to be, you know, a bit careful, China got to be a bit careful, but I think the U.S. economy is much more of a, by the way, I think both of those will be fine as well. But I think we are moderating, and I think the investment paradigm from here is create a lot of income, because now we have this incredible blessing of this, you know, yields really high. And you can create income at very attractive levels because of that,

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All right. Back to the show. If you're a regular investor and you're not like hugely excited by bonds, but you're aware that after they got crushed in 2022, there's the environment is sort of changing a bit and there's a little more opportunities. there. I mean, you're an expert on asset allocation within BlackRock. How should we be thinking about taking advantage of the opportunities if, say, we have a diversified portfolio and we want to reduce risk and get some generous yield, say we want to make six or seven percent off bonds

without crazy risk? What's the simple way to do it without needing to be a bond expert? I mean, I think today, I mean, there's ETFs, there's mutual funds. that are, you know, studying people's style or what have you, that can get you six and a half, seven. And, you know, if rates come down, maybe that maybe that is six, five and a half, six. But I think we have some time. I think the central banks, he will still keep rates that want to make sure they put a stake in inflation. And by the way, treasuries work, you know, things like high quality assets like agency mortgage is investment grade credit and there's some ETFs, there's some funds that gets you that. And you don't. I mean, this is one of these unique points in time

where, gosh, you can buy high quality assets and clip a lot of yield. And so it doesn't mean, no, there are points of time you got to use like the emerging markets. Do you want to buy Brazil versus Argentina? That gets really complex. Do you want to buy, you know, trunch, complex, commercial mortgage security hard, hard to do. There's some funds that I think do it well. Hopefully we have some of those that do well at it. And the, but otherwise today we're in an environment like, Dash treasury is pretty attractive mortgages, investment great. So buying high quality yielding assets through funds, ETFs are outright. Like, this is a pretty good time to get income.

Is it, you know, even an investor that's not deep into it every day? And you've said before that actually unlike in the stock market, it's actually much easier to beat the indexes when it comes to bonds. Why is that? So there are a couple things. First of all, you know, it's interesting. So you think about you would never buy. company that puts on more and more leverage. But do you think what the index is for fixed income,

the more debt you put on, the bigger you are on the index. And it's different than the equity markets, you know, almost it's almost counterintuitive in the equity market. If the company's doing well and a market cap is high, there are a lot of things they could do in bonds. The more debt you put on, the more you're in the index. Why would you ever put up like by that? And so the idea being first, get the, you know, who is over elaborate? And by the way, where are you not getting paid for it? They're parts of the index. And there's 68,000. securities and fixed income. It's different than the S&B 500. They're 60 at that. So there are so many assets that trade too rich because central banks, reserve managers have to own them. And I get

rid of them. They don't give you any yield. They don't do anything for you. So kick those out. And I think those, you know, can you create, you know, 25 base points or 50 basements of alpham, kick out all the stuff that's not worth it. And then, you know, use, you know, your research, your analytics, et cetera, then think through where are you optimizing return versus your risk allocation? And then, you know, we do a lot of bespoke financing that is, you know, it's hard, you know, a AAA CLO, hard. You know, I can never in my personal account do that. But gosh, if I can understand the collateral, you know, the structure, the manager, et cetera, like, boy, they trade pretty cheap relative to other AAA assets. And so, you know, your ability to tap into

a bunch of those is, you know, by the way, not just ourselves for sure. I think it's something like 85% of fixed income managers outperform over time the indices. And I think it's because of the structure of the index and so many securities you can tap into that allow you to do it. And by the way, I've learned over my career, income wins. And, you know, if you can manage your income, and it's the secret sauce for fixed income, if you can run a higher level of income and just manage your downside, carry wins. It compounds beautifully. And you see this and like, why is the high yield market over time do pretty darn well, even relative equities, coupon income wins. And so, you know, part of the, you know, I think the secret sauce and fixed income is get as, you know, get as much

income as you can in and then try and manage the downside of that. We talked a bit about one of your key competitive avonchees, which is just the sheer amount of data that you have and your ability to analyze it. and get a picture of where you stand. It strikes me just studying your life and your career, that the other huge advantage that you have is a more personal and temperamental one, which is the sheer fanaticism of your drive and your work ethic. And I wonder if you could start by talking a bit about your typical day when it starts, what you do, because it's unusual.

And I remember Larry Fink had a great quote, the CEO of Black Rock, who said his particular strength is his headfirst approach to everything he does. He does everything with an incredible passion. And he said, I tend to like passionate people. And he said, more than 50% what attracted to me to Rick and having him come to BlackRock rock was his personal being and his character. So passion and intensity is central to the Rick reader kind of motorsop brand. So tell us about your typical day. So yeah, no, I'm, so first of all have signs all over my house. So I have two, two common philosophies. One is work hard, play hard, give back, reboot. Like I run a really simple. And the other one is life is not a dress rehearsal.

Like I'm in it, you know, I have very simple life. You know, I have my friends, my family. And they, yeah, I know, I have my job. And then, and then, you know, I like sports. And, but I have a really simple, you know, there are three sports teams I'm super passionate about. And they, but I, you know, it's a really simple life. I get up early. I get up crazy early. They get at 3.45 in the morning. And, you know, I look at markets. I oftentimes trade early in the morning and I work out. And then, you know, and I go on a pretty intense all day.

And I really believe in this idea, work, guard, play, or I'd get back, reboot. And then, like, you got one shot at it. And, like, you know, I think the, you know, life records you, the, ford you this opportunity to take advantage and do a bunch of different things to, you know, hopefully contribute. And so I'm pretty intense about it. You know, I go by, like, my meeting date. And I know there's a bad, there's a, you know, C. O'Leary says this all the time, that, you know, you got to take time off in space in your day to think.

I schedule meetings like 15 minutes and strategy sessions and research sessions. Like every 15 minute quadrant is taken up. And, you know, it's probably the wrong. But anyway, I really believe there's so much we could do that, you know, that I like to do it. And, you know, I haven't said, like, there's a lot of things that I don't, you know, I've just determined maybe it's just getting older. like there are just certain things that I'm not going to do in life but I but you know I believe in you know I like doing what I like to do and I and I believe in uh you know putting a lot of intensity to it so part of it part of the strategy and I'd like to break this down more because I think

it's both very very idiosyncratic but also it points us towards the sort of an understanding of the street at the extreme end of high performance so if we break this down a little bit part of it is that you absolutely love what you're doing so you so so so we it's not that burdensome for you to spend 20 hours at the weekend once every four weeks studying the market, right? I mean, that's, and you read a lot other weekends as well, just maybe not 20 hours. Is that fair to say that just actually loving it is kind of at the heart of this? Totally. My wife says to me, like, on vacation, I'm reading work stuff and what are you doing?

And I'm like, you know, if I read Apple's earnings report and I can understand like why other peripherals, doing, you know, doing what they're doing, why is, you know, why they sold so many iPhones, are they selling into India versus China? Like to me, that's the coolest thing. I mean, I find it incredibly intriguing. And I know, I enjoy it. You know, it's just like you can't keep up with the amount of stuff that, you know, that's out there. And so, yeah, no, I, it's like, it's literally, you know, I imagine it's like if you're a treasure hunter, you know, reading a 10K, I think for most people wouldn't be that exciting. But like, if you read through it, then, like, all of a sudden you realize like, wow, now I realize their cash flow is driven because they've

been cutting costs as opposed to reinvesting in their business. Like, I, you know, I think I found something that, you know, I thought I found that like a challenge and I find it super fun. So, you know, but if you didn't have that, if it wasn't interesting to you, yeah, I know that it would be, it would be work. And, you know, I don't, you know, I find it, I find it like a side of business fascinating. And there are not many businesses like this that are so dynamic and so, you know, ever changing that become intriguing. It's part of, you know, I was very kind of like you were saying with sports. Like what's so cool about sports is like you're just watching a constant dynamism taking

place and the score changing and like what happens and how do you react and how do you react on the fly? You know, I think the markets are quite quite similar to that. And markets, economies, businesses are quite similar to that. I remember Peter Lynch saying to Bill Miller early in Bill's career that Bill said, can you ever slow down? And he said, not really. He said, there are really two gears, either full speed ahead or stop.

And Bill said to me, yeah, that's actually about right. Do you think that's true that to play a game at this kind of level, the sort of game that you're playing, you actually can't slow down because you would lose your sort of total mark? Because in a sense, you're having to carry all of this market information, economic information in your head at once. No, my wife will tell you, I've always said all the time. And there's only, there are only two, two calibrations on the tile.

It's 10 or zero. And, you know, when I, you know, I collapse at night, you know, we run the engine really hard. But I really think that, you know, it's so hard. And I've watched, you know, a number of it. It's so hard. I mean, the intensity they have to bring to it. And, you know, I think you're either all in or you're not. And I think it's so hard to do it in a peripheral way.

And, by the way, not to say that some people aren't hugely successful in what they're trying to achieve and looking at slices of the market or slices of, anyway, there are. And there are obviously very varying levels of success around how you want to achieve what you're trying to achieve. But yeah, and I think there's an intensity to, I mean, you know, same thing with playing golf and et cetera. I feel like, you know, whatever, whether it's right or wrong, I feel like it's either a 10 or a zero.

And, you know, I don't, you know, like doing this as a six. And when you get to the end of the day and it goes down to a zero and you're, watching sports. I know you like the Baltimore Orioles and New Jersey Devils and people like that. You, you kind of, you, when do you fall asleep? When do you like, what's the evening like when it's, when it's, when it's some downtime? I said as soon as I sit down. The, uh, yeah, no, I, it literally, I mean, I, you know, it's all of a sudden, you know, I sit and I, it's depending on the game. I know, you turn it on or you turn on whatever show you're watching or reading or whatever. But it's pretty as soon as I, you know, as soon as you sit on the couch, it pretty much,

it's almost instantaneous. So, by the way, I do a lot of work and a lot of research at night. And I try and try and not sit down or I try and do it in a way that I can't fall asleep. But, yeah, I know at the end of the day, it, by the way, you know, I don't, I tend to recharge really quickly. And, you know, I study out of these woo band that I think is incredible because it, you know, shows you your strain. It shows you how you're sleeping. You know, I get in a really deep and REM sleep, whether that's because you run the engine so hard early, you know, during the day.

But I tend to sleep intensely. By the way, it's happened. You know, we've had like something happens in the house or like it's allowed. And like, I don't even hear it because I'm, I'm so deep into sleep. But I tend to, I get like really deep REM and deep sleep. And so, you know, he's done to recharge pretty quickly. And you're just sleeping about four hours or what? Yes, sir.

So I'd say four and a half at night. And I'd like I say, because I think you get into, you know, get in a really, really deep sleep quickly, then I tend to be like, I don't wake up tired. I got, you know, and, you know, there was an interesting thing that we did, we tested our stress. And on there, forget this. They said to me, they tested using this different form of the Woot Band, but they said, you know, when anything, your stress level peaks. and I said, I don't know, and they said, 11.30 at night. I said, no, I get it. And they said, what do you think it comes down?

I said, they said at about 3, 45 in the morning. And I said, why do you think that is? I said, no, what that is. Because I tend, you know, when I'm in control and I can see the markets, then it's a very different paradigm than when I go to something, I have to put my phone down. And, you know, by the way, they tested this during the time that China was really volatile and was driving the markets.

But I know, like, I don't like that feeling of not seeing what's happening. and the market's moving around when I'm critical not in not in control of our of our you know, trajectory around our positioning. And so it, uh, I know, human mind is pretty crazy that way that, you know, you like to, as long as you're in control, you can see the markets, you know, even on vacation. Like I check the markets nonstop. And I feel better. I mean, I feel more relaxed if I can do that.

Like I don't, I really don't like the feeling of like people say, put your phone away. Like I feel much more relaxed. if I can at it periodically to understand, you know, that things are okay. And so. So I wonder if part of it is actually just knowing what type of weirdo we are. Like you have to be a really great operator of the machine called Rick Rita, right? So you operate on different amount of sleep than most people. And I mean, it's just like it seems like there's something kind of anomalous about the way you operate.

Yeah, no, I'm, yeah, and I, did I say, you know, up a pretty intense level, but, you know, it's interesting, like we, you know, we're talking about earlier. Like, if you're not motivated to do what you're doing, like, you know, I just wouldn't. And now, now, I feel like I'm, you know, you're so energized by what you're doing, not just at work, but whether it's family stuff or philanthropic stuff or, you know, sports stuff that I follow. I'm so energized by what I'm doing. I feel like, you know, I just want to get up and do it and, or participate in it. So. Well, I had this really interesting image of you doing nighttime trading, right, where you would get up at 3.45, you kind of check Twitter and the like and check the markets. And then my sense is that you're doing a lot of trading between 4 a.m. and 6.30 a.m. And you had this lovely phrase where you talked about the unshaperoned European trading hours. Can you talk about what you're doing during those hours? Because it seems in some way to embody a lot of what you're about, your love of the markets, the fact that you're getting some kind of edge because you understand. understand the meaning of the data that other people don't necessarily understand that suddenly, where suddenly an event is happening and you're not competing with that many people who understand what it means. Talk about those early hours. So it's 100% right. I mean, part of the video saying this, the news markets are unschaparone at those times at that time. Most of the time, the markets in a 24-hour cycle, you know, Asia's open while the U.S. is open or Europe's open while Asia's open, et cetera. And there are times where you just have a small set of

traders, you know, generally that are operating. And, you know, I would say they tend to overreact to things. And it tends to be more of a, I'll describe it, more of a trading. And they tend to overreact to nuanced pieces of data that are just not that interesting, that are not that meaningful. And so what happens is in those markets that tend to be pretty thin, that, you know, there'll be a piece of news and markets were like grossly overreact to it either way. And I find Like being an almost, I would say 90% of the times that I trade in those hours, if the market's up, I sell it and vice versa. And because it almost always, not always, but it almost always overreacts because it's a thin

market and it reacts to superficial data. So, anyway, so I like, and similarly, you always found like your differentiated advantage or in markets, you know, picking, you know, the big liquid, you know, dollar euro is hard because it's big, it's liquid. It's got flows from non-economic players, corporates, sovereign central banks. But, you know, the markets, if we're looking at a CLO that we may be the only one or two or three people, and we could look at the structure and analyze it, what have you, the odds almost definitionally are much better. And so I tend to like those markets that are less efficient, that are, you know,

there are less people parsing out or eliminating the alpha that's there. It seems like there's such a simple but important lesson there about just playing games against weak players where you have an edge. And so I don't, I mean, by the way, you know, one thing I've always said, I always feel this like the competitors and people that are in there are not smarter than me or as smart as me by it. But as I don't know, the necessarily weaker players, I think there is, I would say fewer players that are in that are, that are, you know, investigating a specific situation, you know, it's a real estate transaction we're involved with, you know, they're probably, we're probably probably not competing against a thousand people that are doing it. And, you know, if we can look at the mezzanine part of the structure or the equity, you know, we're probably one of a few players that are going to do it. And so your economics

tend to be better. So it's definitely not the weaker players, but I just think if you have, you know, the ability to tilt the odds a bit more in your favor, you know, versus where, you know, most people in the markets like to be in the hot, you know, really popular big areas. And I just think there are too many people and then it squeezes the alpha out of it. Talk to me about how you deal with just the sheer pressure of what you're doing. Because one of the things that's very distinctive about your position is just the incredible range and size of responsibilities, right? We mentioned that you're overseeing about $2.6 trillion. I think you have about 350 people in the fixed income team.

You're running various funds like the strategic income opportunities fund, which I think on its own is about $36 billion in assets. Maybe my numbers are outdated. Then you've got the firm-wide BlackRock Investment Council that you're the chairman of. So you have this enormous array of both management responsibilities and investment responsibilities. is, do you ever get overwhelmed by it all? Are you, like, are there ways that you're dealing with the pressure that are instructive for the rest of us?

Because I think, I think all of us are struggling on a, no doubt, small scale in most our ways, but all of us are struggling, I think, with a sense of being kind of overwhelmed, not knowing quite how to juggle things in our lives. So it's hard. I mean, I, you know, I'd be lying if I said I figured it out or even have any, any sense of mastery over it. I think there is, listen, I think one of the things I always say is you try and put things into a box and try and think about, you know, strategically, you know, what it,

what it means. And then, you know, you got, you know, definitionally all, you know, I get bad news all day, like, all day. You know, whenever, you know, this argument about tennis players, you have 54% of the points when, you're getting 46% of the time, you're getting bad news. And so, you know, I just think I, you know, I know, I'm any good. But, you know, you're trying like put it in a box and you recognize that statistically, you're going to get. bad news a lot. And that, but don't let it overwhelm you or don't let the stress overwhelm you. And then, you know, statistically, by the way, and I will say, like, there are days like you get three things in a row that go wrong, you know, see me away. And like, wow, and like all of it.

But you think about over 365 days, statistically, that's always going to happen. And what I've learned is like, just you got to, you got to respect the fact that that is going to happen. And to have the high is not to be too high and the lows not be too low. But I'd be lying if I didn't say, like when things are going awry or you have those three things in a row that went wrong or three days in a row, you lost money, you know, I can't say I'm not in a bad mood. Like it, you know, I think what part of what drives you is like how to correct when things are and aren't going wrong. But listen, I'm in Australia, you know, I enjoy them and I know when I go to see the doctor and, you know, we were talking about it. You know, I like, I like stress. I like pressure.

And, you know, I think I'd, I really believe this. So it keeps people going. And I think once you like eliminate all that, you know, the intent of the stress, you know, you tend to decline, I think. And, um, but I know, I like in different people and different levels of that. But I, um, anyway, I like it. I like, I like doing a lot, a lot of things at once. And, uh, and you're using the sense of pressure in the sense of stress in your body as a kind of, um, as a signal in terms of your trading in the way that say Soros would talk about, watching his back pain as an indicator that something was wrong in his portfolio. I remember Jeff Vinnick, who ran the Magellan Fund in his early 30s, telling me that

sometimes he would buy a stock that was so out of favor that he would literally feel nauseous. And he learned that that was a really good sign. How are you actually using your stress so that it helps you as a trader? So come on. So, by the way, you know, it's always nice to be even considered people like that because I have unbelievable respect for them. But, you know, I, so I think a couple of things. One, I've learned to walk around. And, you know, I feel like, like, you can just stare at the markets and stare at every blip. And, like, I've learned, like, just walk around, you know, get away and

and take a walk around the block. And, you know, you got to get away from, you know, particularly when things aren't going the way you expect them to go or want them to go. I've learned to, like, you know, just get away. And, you know, I've also learned there's a, there's a really wild thing. Like, I find that that Mondays and Friday's. Fridays are less effective as an investor than the middle of the week. And I don't know whether that is you're just winding down. Markets are less liquid on Fridays or Monday. There's a little bit of, you're just not.

The intensity isn't there yet coming up a weekend. But it's interesting that I find I try not to, you know, particularly on a Friday, I try and maybe tone it down a little bit around, you know, all the decisions you're making and all the things you're doing. And I, you know, whether that is anecdotal or, or there's a quantitative basis behind that, but I definitely find that that is, that is the case. You need to take a bit of, you know, a bit of a break. And I think, you know, I think part of why, whether it's a vacation calendar, otherwise,

that, you know, to try and step back from some of these things at time. I don't know there's a physical dynamic around it, other than I know I need to, like, when things aren't going right, you know, take a walk around and just rely, you know, try and think about the big picture as opposed to the, you know, the specifics. And are there things that you're doing to manage your energy level? Because I know you're wearing the whoop strap. You're wearing your Apple Watch. You love data in every area, whether it's with your philanthropy or markets or with your health.

Like, what are you doing to make sure that you don't crash during the day? Like, are you, are you off sugar? Are you drinking tons of caffeine? Are you, do you meditate? Do you take naps? Do you have a personal trainer? Like, is there anything distinctive about, like, how you're actually managing your health and your energy? So I tried meditating.

The Red Dahlia, I think is a genius. And, you know, he taught me about medit. I can't do it. I tried. I don't know. I just got to pick my phone up within 30 seconds. I can't really do it. I tried.

I understand. By the way, I got into it when I did it. I totally understand the efficacy of it. I totally understand. But I don't, you know, what I, you know, I would say, I, I've, so I'll say one thing that is interesting. I don't really, you know, you go out to dinner. clients and you do things. I'm like, I don't like to drink much because it's incredible. If I follow it on the whoop, like you realize, like if you have a couple of drinks,

you don't realize it, but how it changes your sleep patterns, how it changes your deep, you know, the intensity of your sleep, how you end up dreaming versus getting. So anyway, I try, not to, you know, just eat a bit better. And I try not to drink, you know, particularly during the week of, you know, even, you know, I'll never have more than one drink during the, during the even weekends I don't drink much. So I find like I try and manage that. And then, you know,

then otherwise just, you know, a trainer, work out, you know, a trainer workout almost seven days a week. I'm doing it. And,

you know, I feel like, you know, start trying to stay in shape and, and, but I think all those things, all those things contributed and manage, you know,

manage the, uh, the energy level. But, uh, I don't know. I also feel like, like,

I don't know, I feel like at, I feel like at my age now, I have as much energy as I had 40 years ago. and like I said I think a lot of it because I really love you know the lot of the things that are better you know I'm happy about my life and you're working out that's a long side of it yeah but you're working out at like 4.30 in the morning right yes sir 440 yeah no I no we go you know go early and

then you know but and then it's great and I can get to my desk and and start the day so yeah no it's it is it is early it is usually not a line at the gym and when you say we go earlier you going with a trainer to Yeah, I know I work at generally half the week I work out, you know, roughly three days a week. I work out with a trainer, but otherwise I'm up like golf or workout on my own. But yeah. So there are a few patterns here that I think are really interesting. One of which is consistent exercise, doing something you're passionate about simplifying your life so that it's, I mean, my sense is it revolves around family, friends, work, sports and exercise, right? I read somebody, you're not a great fan of going to museums. or movies and the like. Like you've simplified and then philanthropy, which we'll get to in a minute, if you don't mind me asking you a few more questions before you catch your flight. That's okay.

Oh, good. Yeah, I know good. No, sorry, we went asked. I mean, is that right that it's, a lot of it is down to simplicity. Like the ability to actually simplify your life makes it possible to streamline it into a few buckets of things that are really the core focus of what you do. That makes it manageable in a way, this complexity of your life. I mean, I've realized there's just certain things I'm not going to be any good at.

And like you say, you know, I tend not to watch a lot of movies. And, you know, I find that, you know, I find that if I can accomplish more things and do more things around what I'm, you know, not to say that it is I'm growing necessarily by sitting and watching the Dolphins game. But anyway, I thoroughly enjoy it. And so, yeah, no, I just have realized like, this is what I'm going to do. And I'm pretty maniacal about those are the things that take my time. And how have you managed to sustain a successful family life for all these years? Because my sense is you got married about 36 years ago.

I remember Charlie Munger when he read my book was like, yeah, one thing that struck me was just how many of us ended up getting divorced. And he said it kind of totally made sense because he said the game is so all consuming that we sort of neglected our partners. And I'm wondering, like, you have two adult daughters who, by sense, is you're close to. Like, how do you manage to operate at a very high level without totally sacrificing family and friends? If you have, I don't know. Yeah, no, no, no. I mean, in my family, we are like crazy close. And so I think, I think a lot of it is, you know, this idea of simplifying.

Like, you know, when I'm, you know, with my family and friends, not to say, I'm not looking at my phone. But the, but, you know, it's a really good quality time. We love, I mean, we got a dinner's vacation. And we just like being it with each other. I mean, literally gets at a table. Maybe we don't even talk that much at that, you know, whatever, but by just being together, I think it's a really big thing. And I also think it's having complimentary, you know, the son, I think, I think, particularly

my wife, I mean, we have very complimentary, you know, she's not into the markets at all. And, you know, I think having, you know, with complimentary desires in terms of, you know, what she likes to do when I like to do. and, you know, it's very patient around, you know, around the business life. But, you know, it's when we, you know, we do things together that are, you know, I think I've made it really good. And, you know, I think, you know, we just like being with each other. Even if I'm, you know, even if I'm working, you know, I like, you know, being in the same room. And so.

And you have these two adult daughters, Danielle and Melanie, who both went to Emory's business school like you and your wife, Deborah. And you mentioned before the two of your credos that you have around the house. One, life is not a dress rehearsal. And two, work hard, play hard, give back, reboot. Is there other advice that you've tried to share with your daughters that would be helpful to the rest of us? Whether in business or life, I mean, I know one of your daughters works at Walmart, I think. What do you try to share with them that could benefit the rest of us?

So, hold on the good question. I think there are a few things. One, you know, I really believe in, you know, treating people the right way and, you know, my kids are unbelievable about, you know, treat people the right way. You know, I know, I think I've sort of alluded this earlier. Like I watch how people treat service level people or people that are, you know, there's some people who feel like, you know, you're here to serve me and other people like, wow, those are really high quality people that, you know, you treat with respect. And, you know, I think my kids are unbelievable about, you know, being respectful and, and, and, and, and, and, you know, and polite and treating people the right way, I think is to me number one thing. You know, I think this idea around, I also believe in this thesis that people bring stuff to you all the time. And I always say, you've got to go and get it as opposed to letting people. Like, I find, like, the opportunities that have been, you know, we've had, whether it's investments or otherwise, oftentimes people bringing stuff to you is not what you want to

invest in or do or what have you. It's what you actually go and get. Because oftentimes the things are brought to you, it's because somebody else didn't want it or they're trying to sell it. And so I always feel like going, you know, you got to be proactive versus reactive. And so we do we talk a lot about that. And then, you know, I, you know, one of my idols, my big idol, my younger daughter's named Cal, his middle name's Callie after Cal Ripkin. And then, you know, why do I love Cal, you know, why I was, you know, I got to meet him and and we invested together in something. But the, anyway, he came to work every day. He was incredibly

diligent. He did things the right way. He was culturally, you know, I think, moral. incredibly sincere. And I really, really believe on that. And they are, you know, believe in you do the right thing into your end. You know, I go to work every day. And so, I know, that to me stands for a lot. And so I, you know, I think I can serve.

Yeah, he's the one who who played something like 2,600 games in a row, right? So it's very much that ethic of showing up doing your work and hoping that over the long run, if you're doing it right, if you, if you do it right, lots of little times. I mean, in a way, in a way it goes back. to the casino lesson from the Golden Nugget. Yeah. No, I mean,

it's, so you think about it, it's almost, it's, it's physically impossible. It'll never happen again that somebody could, could literally not, you know,

play sick, play hurt and do it every same. But think about how extraordinary that is. I mean, even just, you know, you said it, but you have to have some good luck.

So as you didn't, you know, crash into a player or what have you. But, you know, this idea that, that, that you could just,

you could come in every day and operate it an incredible, incredibly high level is, I mean, I think it's extraordinary. I don't think we'll ever see that again. I mean, there are levels of it. I don't think we'll ever see that again. But yeah, no, that, you know, watching that guy for a long time was, was, was, I thought amazing. I thought there was historic we get to watch. I got to go to the game where he broke Luke, Luke Gary's record. And I, you know, I thought was a greatest sporting event all the time. Like, how did, how does this guy do that? And so it was very cool. He didn't be unbelievably emotional.

And you have his jersey in your office, right? it is the it is the uh it is the epicenter in my office and they yeah no i you know i have a signed jersey of his and then like i say we got to know him and like i say you know he bodies everything that i you know i was believing like i want to watch you know even when you play golf like how do you treat the people around you and i got to do that with him but uh but yeah no i think he's i think he's pretty extraordinary i have a friend who who works your firm who is the guy who introduced us um thomas mullerborja who I asked him about questions the other day, and I, that I should ask you.

And one thing he mentioned, since it's nice, and I'm sure he won't mind me mentioning it to you, he said, you know, you're known as being really nice to the people in your team. Like, you're very approachable, very friendly. And one of the things he was saying to me is he's really interested in your management style, because given the intensity of what you have to do and the amount of responsibility, like, how did you come to that philosophy of like, obviously you have to hold, people to a high standard and yet you're being very nice to them. You're very approachable. Like is that, can you talk a little bit about like your management style?

Yeah, you know, hopefully I've tried to, you know, particularly on weekends, has tried to be somewhat respectful or very respectful of people's time and that, you know, everybody's different and everybody works, work in different schedules. The nice thing about having a bunch of people on the team is like somebody may be around on Saturday morning from seven to 10 and somebody else may be around Sunday afternoon. So try and be respectful of their time. And, you know, and by the way, they have personal commitments, et cetera. But, you know, I do believe in this idea that, you know, this work hard thing and that if, you know, as long as the people have different schedules and those are providing them flexibility and as long as, you know, varying levels of intensity, all I care about is that you're, you know, you're proud of what you did and you're proud of the work that you're doing and that you're contributing to it. And I'm not, you know, I'm not, I'm just not great.

You know, people produce stuff that that is, you know, not efficient, not, not, not, not well done or not well researched. But, you know, so, but as long as, you know, I'm respectful of people's time. But, you know, when I asked to, you know, whenever fits them, whenever asked to do it, you know, appreciate the people put in, you know, really excellent work. And, you know, they're proud of them. You go to our client. And, you know, their money and how and what you're doing for them is, to me, is like San Francisco. And you got to do things in a professional manner for them.

So that's all I ask of people. Do you think at a certain point, it sounds like a lot of your career, particularly the early years, but maybe later as well, you were motivated by this kind of terror of failure and becoming mediocre and letting people down. I'm wondering if at a certain point that shifted for you ever and it became more about serving people or if you're still really in a way motivated by that terror and fear of failure. No, I don't, I don't, you know, even when you do, I do tons of including tons of client presentations, that, you know, I think you got one shot. And, you know, I really, really am motivated by if you give

that presentation, you know, I saw like today, people say, like that was, you know, somebody said was the best presentation I ever saw, I don't know, it may probably be a nice, but anyway, I really am motivated by that. Like, I really like when people say, like, you put it. the effort and the work product was was awesome. And so I'm, you know, I still don't like, you know, if I come out of a presentation and I sort of laid an egg, you know, I find that incredibly disappointing. So no, I still, I still feel like I'm going to get fired every day. And so I don't know, I just, I don't know that that's ever going to change. In the equation you talked about before, work hard, play hard, give back, reboot, obviously

the giving back has actually been really central to your life. And I know that for about 19 years, you've been chair of the board of North Star Academy, this system of what's now 14 charter schools in New Jersey started out as just one school. And I was looking on their website last night, and it says it's New Jersey's number one highest performing public charter school. And it serves over 5,000000 people and more than 99% of these North Star graduates It's been accepted to college. It's very formidable.

And I know it's been important to you that you bring your children to their graduation ceremonies and you sign off on every check that the school rights and stuff. Can you talk about why this focus on urban education, both in newer and also in Atlanta where you're very involved as well through Emory and this organization you set up there? Why this is the choice, like why it's such an important part of your life? So, you know, it goes back to, you know, like we were talking about earlier, like, you know, we had, you know, tougher, I had a tougher upbringing socially or economically, I should say. And then, and then, you know, went well and then it went and then, you know, declined a bit.

You know, I watched like the difference. Like, you know, I went to, you know, I went to different schools. And I watched the difference when I ended up going to a high performing school. Like, everything is put in front of you. And every, I didn't really take advantage of it. So a lot. But every advantage you could hire. And it was almost you're in this pipeline of going to college and then getting to the next job and, you know, probably you had a family relationship that got you into a right at a contact that got you into the right job. If you're on the other side of it, you have no chance. And the, you know, you don't get all those benefits. You don't get all those contacts. And it's like I just, I've always felt it's an extraordinary injustice. And there is, you know, my schools in Newark and the, you know, the dynamic around.

You know, you know, these kids are going to college and they're succeeding. They're going to, you know, the top schools in the country. And, and, you know, I've hired a bunch of them. And it's unbelievable, you know, what they are accomplished. Same thing in Atlanta. There are graduating generation program. You know, it's pretty extraordinary. You know, and I just think in this country in the world, but certainly, you know,

what I focus on in this country is the ability to provide, you know, these people, the opportunity. And I think it, you know, I think our education system in many ways is broken. And I think, you know, whether it's health care, social work, tutoring, you know, that a lot of these people don't have. And if you give them the environment around it, you can, you know, there's a incredible unlocked economic and social success that can come on the backside of it. And I just think, quite frankly, I think it's, I think your, your moral responsibility is to do that. It's you being summoned. Is that because you've got to go to a plane? Yes. As a matter of fact. All right.

You want to get that for a second? Can you give me just one one quick second? Yeah, yeah, yeah. Go for it. One quick second. Are you okay for half a minute longer? Yes, sir. Yep.

Okay. So we just had a very quick hiatus because Rick has to go get a plane. Is there any, just to end, is there any specific story of someone where you've seen some kid whose life has just been transformed by this that gives us a sense of why this is such a life enriching mission? many, but I will tell you the one, I would say maybe the one experience that I've had is so my, at North Star, you know, when we have what's called College Signing Day, and we have all our kids, all our juniors come into the, into this huge arena. And the students, and the juniors are all there supporting the seniors who are graduating. And then all the parents and, you know, related family or intermediate families are in the, in the arena. And these kids come up and they say going to this university, full ride, and then the place goes crazy.

And you realize that people haven't, you know, many of them is first generation that have gone to college and they're getting a full ride, oftentimes getting a full ride or getting a lot of scholarship money. Like that is game changing. I've had my kids come to that. Like that to me is like it makes all, I can't, you know, it's hard emotionally to keep it together when you see, when you watch this. And it is, it's pretty amazing.

Like something you feel like, gosh, you know, maybe making some small. contribution, that to me is like the greatest, the great, by the way, I don't go anymore because I can't. I have a reputation and I can't hold it together in those things. So I still go to graduate, I go to all our graduations, but I can't go to that anymore because it's an emotional disaster for me. But they're, they're very cool. And to watch, you know, watch these kids do what they're doing and watch them succeed, whether, however you define success, which I would argue is not economically for a lot of people, is emotionally or what they're contributing in society, et cetera. But

That to me is like the coolest thing that I've gotten a chance to witness. Rick, that's a beautiful note on which ended. I don't want to be the one who makes you miss your plane. So this has been an absolute delight. And I hope it's the first of multiple conversations because it's been a real joy to to meet you and chat with you. Thank you. Thanks for doing it.

It's a real honor. I appreciate that. Ah, it's a great pleasure. I'll let you go now. Take care. Thanks so much. Thank you. All right, folks.

I hope you enjoyed this conversation with the remarkable Rick Reader. If you'd like to learn more from Rick, it's well worth following him on Twitter or X, where he posts a lot of helpful data and insights. You can also find some of his writings about the economy and markets on Black Rock's website, including a recent blog that he wrote titled The Fixed Income Opportunity for 2024. I've included these and various other links in the show notes for this episode. I'll be back very soon with some more fascinating guests, including an incredibly rich conversation that I recently had with Daniel Goldman. who's most famous as the author of a seminal book titled Emotional Intelligence.

As you'll hear, Dan and I talk in depth about his new book, Optimal, which is all about how to sustain excellence every day. In the meantime, please feel free to follow me on Twitter at William Green 72, and do let me know how you're enjoying the podcast. As we approach the end of another year, I really wanted to thank you all for listening to the podcast and for sending me so many kind and thoughtful messages about it. When I launched this podcast almost two years ago,

I initially expected to record about six episodes or maybe 12 episodes and then call it a day. I thought of it really as a series of conversations that would be a follow-up to my book. And then what I found to my surprise is that it's just been such an enjoyable and life-enriching experience for me that I kept going. So now we have an archive of 38. episodes and many more to come. One reason why I kept going is that it's really been wonderful

to receive so much warm feedback and support from you all. So thank you truly for joining me on this journey. As we draw to the end of 2023, I'd also like to say a really big thank you to the fantastic team helping to produce the podcast in the Philippines, especially Jadidia Lampa and Christine Romero, who edit most of the episodes and do a terrific job. I'm also really grateful to the rest of the team at the Investors' podcast network, including Sorrell and Camille and Noel and Anna and Lee Rich. Thank you all for making this podcast possible. And above all, a big thank you to my friend and co-host Stig Brodison. I couldn't have asked for a better partner. I wish everyone a very happy holiday season and a wonderful

year in 2024 is hoping that it's a happy and healthy one and truly abundant in the broadest sense of the word. For now, take good care and stay well. Thank you for listening to TIP. Make sure to subscribe to We Study Billionaires by the Investors Podcast Network. Every Wednesday, we teach you about Bitcoin and every Saturday we study billionaires and the financial markets. To access our show notes, transcripts or courses, go to the investorspodcast.com. This show is for entertainment purposes only. Before making any decision consult a professional, this show is copyrighted by the Investors Podcast Network. Written permission must be granted before syndication or rebroadcasting.