The Exchanges

Q What were some of those skills back then?

A Part of the skill was being able to just get on the phone with somebody you don't know who manages 10 or fifteen billion dollars of other people's money and ask tough questions. I had the benefit and the curse of, you know, having survived about a decade of seminars at the University of Chicago. Where if you recall the old cartoons where the sheepdog is chasing the fox and they just beat the crap out of each other through the whole cartoon, but at the end the whistle blows and they sort of walk off into the sunset together. That was the Hyde Park culture where I had some of the smartest people I've ever met in my life tell me what an idiot I was right before they bought me beers and told me I was doing good work. So getting on the phone with a mutual fund manager and asking hard questions about What's their process? What do they own? How do they think about risk? How do they distinguish skill from luck? All of those things that I really didn't fully understand at first and maybe don't fully understand today. I was trained really well. So, you know, just having the confidence to ask hard questions of people who in most cases act like they have all of the answers was something that took a little bit of getting used to, but I have to admit Rankling the occasional hottie PM was quite fun for me.

AI assessment note: “Part of the skill was being able to just get on the phone”

Q So you go through the process of writing a book, you write the book, you publish it. What happens?

A Crickets. Uh, no, it, number, number one, the first thing that happens is that I, I had sort of an unmitigated sense of joy. I was actually quite proud of myself. I was, I wrote the book that I wanted to write. The first thing I was able to do, not only with myself, but with my wife and my My kids and close friends and community was take stock of, Hey, this is a pretty cool accomplishment. Like I did it. So there was that part of it. It did go out into the world and people read it. It sold pretty well. I got a lot of great feedback. I made some new friends along the way and probably the most relevant or interesting stop or moment along this journey is that there's a guy at the time who I didn't know. A guy named Barry Mandanak, who lives here in New York, and he's a veteran of the investment business. He's been in the business for decades now. He picked up the book at the Barnes & Noble in Midtown. I don't even know if it's still there. There's so few bookstores left. And the title sort of intrigued him, the subtitle, The Power of Simplicity in a World of Overwhelming Choice. And he liked it so much that he cold called me. You know, he said, you know, we have some friends in common, and reference them, and man, I, not only do I love the way you write, but it really seems like we think about solving big, important problems in the same way. I'd love to just have coffee with you a…

AI assessment note: “It did go out into the world and people read it. It sold pretty well.”

Q Very detailed research. Now, what was it about either what you learned at Morningstar or Mesura or both that translated to this very deep dive to cover all your T's and dot all your I's?

A I can speak sort of a personal level and then at an institutional level. At a personal level, and something I've thought about as I've tried to grow over the years is that I, I am naturally curious about a lot of things, and when I want to know something, I really want to know. And so, I was able to express that in one way, you know, doing a doctorate in the University of Chicago, a different way at Morningstar, and then a different way again at Mesro, but the underlying passion for asking questions and trying to come up with good answers, it drove me then, it absolutely drives me now. From an institutional point of view, I guess I could say that at both of those firms, there was an institutional integrity that was unflappable. Different organizations, and I've already spoken about Morningstar. Mesro had a same, a similar attitude. A vast majority of the assets were pension, endowment, foundation, and I think a lot of people, especially during the heady days, I mean, in oh three, oh four, oh five, oh six, oh seven, I think we were bringing in somewhere between one and two hundred and fifty million dollars a month that we needed to allocate. So it was fast and furious, and I think there was an appreciation that at that pace of growth, If you're not dotting your I's and crossing your T's, you can get into a lot of harm. It ends up that we, you know, lost some money in 2008, but n…

AI assessment note: “at both of those firms, there was an institutional integrity that was unflappable”

Q And what year did you end up leaving Mesereau?

A I left Mesereau in 2010. We had lived in London for a while because I ran global research from there, and I'll say, I'll make a very long story short by saying that 2008 changed the business. The hedge fund industry changed, the fund of funds industry changed, my role in London and then back in Chicago changed, and it just didn't work out. I mean, I'd been doing it for a long time, and it just felt like it was time to do something else. That's about the time that call it sort of a low key midlife crisis wasn't anything dramatic, but I really began to think, okay, what in the hell am I doing with my life? I, I vividly remember I was sitting somewhere. It might've been right down the street here in New York where I was having a drink before meeting somebody. And I wrote on a cocktail napkin who grows up wanting to do manager research. So, you know, I left academia with all this vim and vigor and, and had a great, a great run, but I really began to question what I was doing, and that's when the writing bug bit me really hard because it was an opportunity professionally to express myself and personally sort of just take stock of where I was on my journey.

AI assessment note: “I left Mesereau in 2010.”

Q So let's talk about the geometry of wealth, your new book, hitting the bookshelves momentarily, if not already out. What's the concept?

A The concept is that there's a difference between being wealthy and being rich. I'll say by way of context that this book is a prequel, not only because I'm a total Star Wars nerd, meaning that I got to the end of The Investor's Paradox, and I was, I know at the time, and certainly in retrospect, kind of struggling with what, what does this all really add up to? I remember vividly reading some of Herbert Simon's work from Decades ago. And this concept of satisficing, which is kind of a really awkward word for don't let the perfect be the enemy of the good. And I think that's just a powerful insight. And so, number one, from a personal point of view, as my kids are growing older and I, and I wonder about the decisions they're going to make and the situation and career and lives that they're going to lead, that, that weighs on my mind as, as they grow older. And at the same time, as I'm now in more of a wealth management context than a in the weeds to the fourth decimal place institutional asset management context, financial advisors and their clients and their clients could have 50,000 dollars or fifty million dollars. They're all sort of asking the question, am I going to be okay? Is this going to work out for me? And yes, it matters which investments you choose, but that's actually the end of the story, not the beginning. And so my thought was, I actually wrote the wrong book f…

AI assessment note: “The concept is that there's a difference between being wealthy and being rich.”

Q And so you take this experience where you're deeply ensconced in active management, doing manager research, long only, and then hedge funds, and you write your first book, The Investor's Paradox. Why don't you paraphrase What that book was about?

A The argument or the investor's paradox is that expectations matter. I went on to a couple other gigs after Mezro, and so all in, over the course of 14 years, I did something north of 4000 manager interviews. And I don't think there's a strategy on the planet that I didn't do some form of due diligence on. So I, I was really blessed to be able to see the entire landscape of really smart, often very well compensated people Making just a wide, massive variety of decisions about how to best navigate global capital markets. In my own exploration of what I really want to do now, what do I want to do next? Where am I going to find my flow? The introspection that I put into sort of what I was doing led me to think about, okay, well, what's really driving success? To your earlier question and sort of implicit notion that I'm a little bit Anal and a little bit aggressive at times. I actually kept a spreadsheet of sorts over those 14 years of almost every interview that I did, and I tried to keep track of type one and type two errors. It was another disaster. I mean, you read Malbussan, and you read Annie Duke, and you read Kahneman, and you read everybody on decision making, and you know, I actually tried the time to think about, ok, am I, am I making good decisions? Am I making good non-decisions? It's impossible to say because you pass on 99 funds for every one that you really dive int…

AI assessment note: “The argument or the investor's paradox is that expectations matter.”

Q you get from, let's call it confusion about money to some clarity and, and potentially funded contentment, including, including investment decisions. So why don't you, why don't we start with the circle and we'll go from there. It's the left most shape in the book. It's also red. I don't know if that matters or not, but why don't you, why don't you go ahead and talk about the circle?

A Well, you know, I, I made the comment earlier that I write for people who don't read, or at least don't read much. So I think it's really important, and on a serious note, to be respectful of your audience is to take them as they are, not, not as you want them to be. And so this was much more clear in the wealth management industry than it was in institutional asset management, where everyone's with their CFA and their puffed chest and their calculator trying to figure out a lot of complex things. Number one, simple is better than complex. Less is better than more. And at a slightly different level, pictures are better than words. So I, like I mentioned, I do a ton of presentations all over the country. My PowerPoints have almost no words in them. Every page is a picture or a cartoon or a photograph that makes reference to a study. And the feedback's pretty positive because if I go back a couple decades to my academic days, I thought that being right was the game. And in a very precise way, but now I realize it's, it's something slightly different, which is that you want to engage and empower people as best that you can. So, you know, I began to think about shapes and the contour and the direction of a path toward contented and a fulfilled life. The path that I draw goes from defining your purpose to setting your priorities to making specific decisions. So what I did with The I…

AI assessment note: “I began to think about shapes and the contour and the direction of a path”

Q Yeah. What information do you read that you get a lot out of that others might not know about?

A So, I read a lot of stuff that our friends are familiar with, economic history, behavioral finance, and I'm kind of obsessed with all of that stuff. I read a lot of political history. In Chicago, I lead a reading group for a big group of folks, where we just sort of tackle some of the big issues that are alive in society. But I wouldn't say that there's sort of some sort of micro topic that I've dove into that I have found to be my own little treasure trove. I will say that something I do a lot of, that few people know anything about, or at least that I do it, is I play board games. I play a lot of board games. I love board games. And we're not talking Candyland or even Monopoly. We are in a golden age of gaming. There's a gaming store in Chicago down the street from me That has hundreds and hundreds of boxes lining the shelves, and whether it be Dominion, Settlers of Catan, Magic the Gathering, which is a huge multi-hundred million dollar industry, it's a game owned by Mattel, Quarto, I mean, there, there, we have dozens and dozens of games at home, and my favorite kind, and there's sort of a trend toward so-called cooperative games, so we play, you know, Monopoly, and I'm trying to bankrupt you, A lot of games now are designed where we're all on the same team, but we have different skills. You know, we're sort of like the A team. You'd be George Pappard. You'd be the leader.

AI assessment note: “something I do a lot of, that few people know anything about... is I play board games”