The Wisdom Wall

“One of the big lessons investing is if Chinese are a competitor, be very careful because they will overproduce and kill you.”

“Because specialists at major inflection points are usually wrong. If you're not able to compare, you don't know what good or bad is.”

“Many committees are a nearly impossible task where, particularly in the endowment business, colleges, because rich graduates who've made big donations, Would love to sit on the board. They are treated with kid gloves because they're wonderfully good at making money at private equity or venture capital or hedge funds…”

“I do think this is why a lot of fundamentally based value strategies have struggled for a long time, because the alpha in those strategies Was being willing to own these stocks that other people were embarrassed to own because they were so out of favor. And you didn't have that different of an opinion on the future…”

“The smart employees at those funds know that they will likely never see a dollar of carry. The larger the fund you raise, the harder it is to return in venture.”

“I used to laugh whenever a drawdown private fund has a risk manager. I'm like, well, what does that person do? Because you don't hold cash. You don't hedge. Are they on your investment committee telling you what not to do? Because all of your risk comes from sizing the bets and what you're investing in from the get go.…”

“I think to have a returns that are different, you have to have a belief that's different at the core. And our belief is that we can put a low experience, but high attribute person who's very young into an incredibly high senior leadership role. And in a short period of time, they will eclipse the more experienced…”

“I think the ubiquity of data, social media, maybe indexing, these things have added up to a market where inefficiencies are bigger and last longer.”

“He said, while illiquid markets provide a much greater range of mispriced assets, private investors fare little better than their marketable security counterparts, as the extraordinary fee burden typical of private equity funds almost guarantees delivery of disappointing risk-adjusted results.”

“We lawyers have this incredible ability to invent a flawed business model every 20 years. Right now, I would argue that it's in large part private equity. 20 years ago, it would have been subprime lenders. 40 years ago, it would have been SNLs. 60 years ago, it would have been conglomerates. A hundred years ago, it…”

“I think what we think is a best practice is to say, actually, 100% of your performance in your asset allocation is a function of your organizational capabilities.”

“That's the thing that's crazy about venture. It's like, you have a whole community of people who've been lucky who think they're really smart and the evaluation horizons are so long. There's like no feedback.”

“Because of that, I'm not real thrilled when our GPs will raise five hundred million and then raise five hundred million worth of opportunity for direct co-invest. And my pushback on that is, well, so I'm really just subsidizing the other guy who's taking the co-invest slice. You know, he doesn't care so much about the…”

“I'm even concerned that there are some large institutional investors who would be willing to pay up for the accounting stability of private assets, which might In some points of the cycle, induce a negative illiquidity premium.”

“if you're not going to get one of the top VCs, you don't need five VCs that are all doing the same thing. Like, oh, we'll help you with talent, and we'll do this and that. 10 years ago that mattered, but now all those tools are available to the companies.”

“The term that most people in venture capital wouldn't want me to use Is that we're sort of merchant bankers. We run around, we invest some of our own capital. And then our job is to tell the rest of the market that they should invest at a higher price. And so that is the number one job.”

“We tried doing reference checks on founders and realized that they were a negative signal. Some of the very best founders were horrible employees. They would talk back to their bosses. They would work on their startup at their job. They had the worst references. And some of the companies I didn't invest in were because…”

“when you hire someone to be the head of HR, what do you do? You start outsourcing, I think, very important duties as a leader. You know, if I suddenly need to let somebody go, I'm not going to go do that. Or if I do have a difficult conversation with somebody on the team that did something that is an issue, I'll have…”

“I reject kind of the notion of mean reversion as a point of principle, given our mandate to be long-term fundamental investors.”

“Whether we're talking about Ethereum, two point O near Polkadot, those are sharded blockchains and they require some meaningful Computer science breakthroughs to happen in order to actually function and deliver what they needed. Solana did not need that. Solana had a ton of engineering work ahead of it in order to…”

“a lot of the response that I've seen from the people I talked to is we're going to go invest in a diverse manager, a diverse owned manager and And my contention all along is that's incredibly misguided because the structure of the industry today was created based on the old norms, which paid no attention to that. So…”

“as it learns to maximize the reward, the model, I don't mean to give it human characteristics, but it will moderate risk because it can see that taking full advantage of the underlying patterns may not lead to the best reward, and there's No other optimization process in the world that can do that.”

“Venture capital, not surprisingly, has a higher return than the stock market because of the riskiness of each individual unit. But if you have a diversified portfolio, you have no more risk than the stock market, but you have a higher return.”

“A moderate amount of inflation is completely compatible with a healthy economy, faster growth rates, and better treatment of the workers who have been sadly neglected in the US in particular.”

“I think there's a lot of investment professionals at these organizations that believe that if they reported it to the stakeholders, the stakeholders wouldn't let them pursue the strategy that they believe in their heart of hearts is needed to meet the obligation of the plan. So that the, we can't trust the stakeholders…”

“But if you really want to get to mega scale and run hundreds of billions of dollars and make it a business, you have to over-orient and over-index on fees and not really focus that much on carried interest.”

“And they might have 10 or 15 ideas for ESG change. And, you know, of those, call it 10 ideas. Five might be value neutral. Three might be value destructive, a waste of time or a waste of capital without return. And two might be value accretive.”

“this assumption that you get paid an illiquidity premium for anything that happens to be illiquid is I think dangerous. I think it is going to cause you not to be focused on the question of, all right, if I think this is about operational excellence, why do I think that this company has unique operational excellence?…”

“Passive models do not discover prices. High frequency trading trades around prices, but it doesn't create price discovery. It creates liquidity, but it's not price discovery. It's not determining value.”

“And if you're a financial advisor and you're recommending private equity, first of all, it's the thing you can sell where you get paid the biggest fees usually. And nobody's gonna know if you're right or wrong. For 10 years.”

“that paper itself started, uh, tied the high profit margins to competition and pointed out that it's not because these firms are just that much better and more efficient. They're getting a higher return on assets and it comes from scale. Rather, they end up with pricing power, which of course is what Buffett talks…”

“what Piketty talked about certainly does happen, which is that you end up with an increase in inequality. And it doesn't come because there's a fatal flaw in capitalism. It comes because essentially there's not enough competition. Capitalism itself is not functioning properly. It's not true capitalism.”

“listen, we really need to separate the fiduciary duty and the political policy as it relates to health and dangerous products like cigarettes, because I can't really hold a manager accountable for beating the S&P 500 and then tell him he can't own one of the fastest growing, most lucrative sectors of the S&P 500 with…”

“in the quantitative sense, high ROEs or gross profitability or whatever your measure of quality is really isn't indicative of strong future excess returns. What's really useful about quality is that very bad quality, so really over levered balance sheets, companies reliant on capital markets, aggressive accounting in…”

“In quant research, this is really interesting, which is that you actually get a stronger signal. We found when you share your general findings, not necessarily the code or the particulars, but the general findings with a broad audience, then all of a sudden you're stress testing this idea against like the most…”

“And for me, post-crisis, I will say to everyone, only invest with someone who's blown up or been at a firm that's blown up. Because unless they've been through a tough time, you won't know how they're going to handle it, how they're going to treat their investors, how they're going to treat their team, are they going…”

“We have proven time and again for the last 20 years that divestment does not bring about any social change, and people have to realize boycotts are generally ineffective unless you can get everybody Involved in them.”

“Oftentimes we'll lose deals because other groups will come in and throw out a valuation that's 30, 40% higher than ours. They have no intention of ever closing. And on top of that, if you're a fundless sponsor, you don't even raise the capital yet. You haven't raised the equity capital.”

“And then all of a sudden you have a salesperson who's closing a hundred percent of their sales. And by the way, if you can't change that, you should fire them.”

“secular stagnation is a euphemism for policy failure, meaning that secular stagnation is a choice.”

“And I, the analogy I use is that, to me, diversifying inside crypto is like, A champion, a world champion poker player trying to smooth out her earnings by playing slots on the way to the table. You know, you're actually increasing risk and decreasing expected returns by diversifying.”

“The term valuation is broken, right? We basically take, let's take the price of the most senior security and ascribe that to the price of every other security, regardless of the structure and call the cumulative number, the value. Which is like totally bullshit.”

“So, like I said, those funds will continue to do well, but some of the venture funds that we've seen grow quite large end up doing much better for their partners than they do for their investors.”

“Being able to have an appreciation of theory over data in the right bounds is key. You know, there are times when you want to say, if the data don't support the theory, the data are wrong, right?”

“when you've seen the rise of these individual closed-end funds that are 20 plus billion dollars to be deployed over a four-year period. You can be the world's most extraordinary investor, but if you have that much scale, you are going to be forced to deploy.”

“You've seen more and more mega cap managers that are publicly traded, alts asset managers. Their share price is ultimately going to be a function of their AUM growth. People follow incentives. They are doing the right thing by their shareholders to grow. We have a substantial business. But we are ultimately a small…”

“Anybody who is going to be in front of me as a board member is qualified. I don't need them to necessarily relate to me how they built a team or generated returns. The fact that they're there tells me that they've done that. What I'm interested in is how do they calibrate for or think about navigating through things…”

“That's where I bring in my more fundamental view that no country ever in history has achieved economic success without having cheap energy.”

“How does someone get to be the CEO of a Fortune 500 company or a Euro stocks 50 company? By demonstrating skill as a capital allocator all through their career? That's a giant pile of hooey. They do it by being a good self promoter, a good corporate politician, skilled at whatever their job is running division A or…”

“The thing that a DCF is quite poor at, even though people think it's long-term oriented, is that mathematically a DCF assumes that the multiple fades. It assumes that returns on capital fade to cost capital. But if we're looking for Modi businesses and we're trying to only own businesses that are Likely to, quote…”

“We do discuss and say that privates are not essential. Meaning we should choose to have them because of the return we believe they will deliver over time. And that return needs to be in excess of what's offered in public markets.”

“Relative is fine in an up market, but over the long run, if you don't have absolute returns, nobody needs you. You don't pay bills with relative performance. In a bull market, everybody thinks a relative, but if you want a long-term survival, you need an absolute orientation.”

“The sizing should be based on how a credit analyst would think. You can't have a very large position in monoline business, which operates a very narrow niche. Can't do it. So if you think about how does S&P would give AAA, it would never give AAA to an E&P company. Just can't. No diversity of their asset base,…”

“The whole industry is upside down. People aren't looking for skills, they're looking for personas. If you have a great persona that actually fits, you'll get the job even though you have no experience.”

“Derek and I have joked before, you learn more about a manager on three days on Dockside than three years if you invested in a fund. You understand what they do, what their portfolio looks like, how it evolves.”

“The average hedge fund out there, down the fairway hedge fund, us dumb pensions did the wrong thing by incentivizing them to run lower vol and take in more assets and collect that management fee.”

“I think the more competitive it comes from not just building the tool, but being willing to throw out the tool two weeks later because of how fast technology is progressing. And I don't even say that facetiously because Sherpa, Everest, those tools, we're literally actively changing them right now. Flexibility and…”

“One of the effects of the DPI problem in the broader industry is not just on LPs. It's also on investors, right? And you think about VP, principal, MD, even partner level investors who've been at firms for a while and haven't seen their carry paid out. There are succession log jams that have only gotten worse.”

“They've learned to create relational closeness without empathy. They've learned to create it without being warm and fuzzy and giving people a lot of couch time. What they've done is they've invest deeply in those people and understanding them.”

“You're doing venture lending without warrants.”

“One of the issues with private credit is all the returns are predicated at leverage at the fund level. You need fund level leverage to get anyone excited about it. If anyone came out with a unlevered BDC, it would be a yawn, especially after fees.”

“people think you get fired for underperforming in bear markets, which is nonsense. In a serious bear market, the client becomes catatonic.”

“if you're a big company, you can't fight a major bull market. It's ridiculous. It's terrible business. You have to roll with the punch.”

“The only things that matter in life in investing are the founding, forming, and breaking of the great bubbles. That determines everything. If you can sidestep half of the pain, that will make all the difference in the world.”

“I developed a singular rule that only has occurred four times in U.S. history. The stocks that have been leading the charge up 70% in 1928, the meme stocks in twenty-twenty, up huge amounts. When they start to underperform dramatically, the market, as the bull market continues, now think how unusual that is. They have…”

“Brilliant private equity and venture capital, and they are so much stickier than general money management. They don't turn over as fast in private equity and venture capital. The winners tend to stay winners.”

“I didn't care whether the analysts at Fidelity got their stocks right or wrong. It was utterly immaterial to how I evaluated analysts. There's an analyst, he consistently had some of the worst stock picking metrics in the department. But I made a vast amount of money with that guy because he always laid out all of the…”

“as an investor, you have to either panic early or double down late, and you have to be one of the two. It's hard to be both.”

“By the way, you have to have a process, and you have to have the process that works for you, but any process that's repeatable that generates significant alpha, it's a very competitive world. It's going to quickly be armed away. In fundamental investing, any process-driven advantage just isn't going to last.”

“I would just submit that any investment organization, no matter how big, there's somewhere between two and 10 people, and if you took those people out, and the organization had the exact same process, the results would be very different.”

“Turnover should be a function of how often you change your mind, and part of that in any discipline valuation-based process should be about how the stocks move. For me, turnover is mostly a function of volatility.”

“This is what you do the first time you get a short seller, write a report about you. Do not respond. I know it feels so personal. I know how personal it is, but just don't respond. Let the numbers do the talking. If you get in a public fight with them, it's just blood in the water. Even if you're right, it's just…”

“The biggest trend in our business is the privatization of alpha. Where the alpha is residing on the prop shops, as well as the multi-strategy firms, the multi-strategy firms over time have more and more employee money. And less and less available to investors. People have been giving back capital on it.”

“The view of a PM in this industry is, they want autonomy. Especially the people in the next generation don't necessarily want autonomy. They want autonomy of compensation, but they don't necessarily want autonomy of lifestyle. So they want to say, if I make money, I should get paid on what I do, and if I don't make…”

“The whole system wants you to create sequentially. They say, Bobby, why don't you start in one area? Start a billion and a half dollar fundamental equities business or quant equities. When that works, go do the next thing. Normal. The problem is now you started that first thing. You've built everything for that. You've…”

“If you're sitting there with a strategic asset allocation, and you've got all these asset classes, it could be that you've got a hybrid, where does it sit? Or there could be something that's new, and you don't have a bucket for it. It's hard to do. With the total portfolio approach, you look at what are the return and…”

“the biggest threat is industry concentration in software going to impact portfolios in a way that wasn't expected when they were under it.”

“the deal flow in emerging markets Will not support mono asset class, single country, sub-regional funds, and therefore the people who raise that money end up deploying it badly.”

“If you are a monoline Mid-sized emerging market manager, public or private. It is not a question of, are you going out of business? It's a question of, when are you going out of business? Because of the question you asked, the cycles. Unpredictable and violent. If you tie yourself to one thing, I'm an equity guy, I'm a…”

“The whole industry thinks in terms of capital formation. I just got to raise more capital and I'll deploy it. We flipped that on its head and said, no, the limiter of our growth is not capital. We've never had a situation where we've had good ideas and haven't been able to find the money for it.”

“There's only so much you can deploy in private equity. When you are making six or eight consequential decisions a year, there's only so much capital you can deploy on that basis. In the credit business, instead of buying a hundred million of this particular bond, I can buy two hundred million. The scalability is always…”

“The private wealth channel is a whole different distribution mechanism. What those two things have in common is they benefit the largest firms. They don't benefit the middle market player. So the middle market, you have contraction, and then you have expansion of the already large managers.”

“The one interesting aspect of venture, structurally, is to the extent private equity is private for longer, venture feels like it's private forever.”

“If you need a deck, you're not telling a story. You shouldn't even be walking in the room if you need a deck. Stay home and practice. Turn it into a performance.”

“Our best outcomes, as an aside, have always been an oligopolistic industry structure where there's three or four players who are going to irrationally compete to own the asset because they want it and they don't want their competitor to get it leads to the best outcomes for us, even better than IPOs.”

“Now what you're seeing is those businesses are attached to a lot of very large alternative asset managers, many of whom trade on FRE. A good way to create FRE is to take several billion dollars of loans and charge one percent on them. That's what you're seeing in the ecosystem, so it's incentives.”

“The worst thing possible to do is, well, I think this is overpriced. It makes no sense, but I have a one-five. That's a good way to lose money, because you're going to be misaligned from the get-go, and enforcing liquidity rights that you have in documentation, good luck.”

“There are four things that matter. The ability to put debt on top of you, the ability to take assets away, the ability to take money out of the system, the economic terms of your agreement.”

“I was surprised as I looked at the industry data to see that in many cases, there was much wider dispersion at that earlier phase of a manager's life cycle, that fund one, fund two type era, but it was dispersion in both ways. The average was better than mid cap and mid cap is a little better than large cap.”

“We found over time that simply having strong returns pre-fund is not a good prerequisite for a fund one. It's about the intangibles we learn about you that support them.”

“The issue and the trick for the folks in our seat is it's got a three-fund shelf life. By the time you finish fund three, everybody you know at Airbnb is left. By fund four, you're talking to strangers.”

“We back a lot of these emerging managers. I can tell you they are inundated with offers from folks who are saying, I'll give you a hundred million for your fund one, and I want one to one co-invest. What those folks are really saying is I want half off the rack rate and you for you to double your fund size.”

“If a company just fired 50% of its people quietly, it's going to zero.”

“oftentimes playing the long game is the right strategy, the market's myopic, stick to your knitting, but there are occasions where long-termism is a lazy crutch.”

“In this market, it's been fun because we are viscerally exploiting or have been the specialist trap, where if you're an industry Wall Street specialist, you've looked at the same industry for 15 years, you're in an echo chamber talking about Peer analysts, management teams all day. You're underexposed to what's…”

“There's only three ways to win equity investing. One is you have better information or faster information and computer programs and fiber optic cables that you tunnel through railway Lines and stuff, and we don't do that. The second way is you understand the world better. No one is smart enough to figure it out on…”

“financials are reported out as a function of the bureaucracy of the company, not necessarily as a function of the real economics of the business. So the segment disclosures you're getting are not necessarily the true economic picture, but if you're a good securities analyst, you can deduce what the true economic…”

“Year to year, you don't have big changes in the risk of a large hurricane. Over 10 years, 20 years you do, which is kind of what we've seen, but it's a slow moving increase in risk. That's what's fascinating to us is because you can have these year to year changes in the pricing that is really, really dramatic.”

“I think most of it today is about diversification. It used to be the case that you only participated in these alt strategies for alpha.”

“today the equity book is maybe forty-five billion dollars, and we're just not going to find enough skill out there in the world to invest forty-five billion dollars”

“If you're restructuring your deals where you're converting some of your current cash into PIC, there's only one reason you're doing it. You're doing it because the company doesn't have the free cash flow to service your loans.”

“I think one thing we learned pretty quickly was not straightforward to bring in a guy who'd been a successful CEO at a big Fortune 500 company and have him parachute into an LBO situation as a board member or operating partner. You had to find people with the right skill set and mentality. A lot of CEOs are Used to…”

“Some of the success that our managers generated in the nineties and the first half of the 2000 was due to equity multiples going up in general. The whole 40 years until very recently was a story of declining interest rates and multiples ought to go up in a market like that.”

“The biggest problem is they're not really in the hands of the venture capitalists. They're in the hands of the entrepreneurs. If you're an entrepreneur who doesn't want to bother being a public company, they're real questions for institutions about how do they ever get liquidity and how they get the premium pricing…”

“the challenge along the way is that sometimes the skill set that works with the small company is not Applicable to the bigger company. Also, bigger companies tend to be better managed, so maybe there's less you can do with them while you own them. There is a Peter Principle thing at work sometimes that firms start out…”

“the carried interest on a five billion dollar fund compounding at 15% return is a lot more than the carried interest on a five hundred million dollar fund compounding at a 30% rate return. Plus, obviously, the fees are 10 X.”

“They get too anchored to cost as a measure of value, and if they can't get cost, they're going to do whatever they can to get their cost back, and in fact, they might be better off to sell an investment that is not going to perform well no matter how long you own it, freeing up your capital, and probably more…”

“the problem, from my standpoint, is we always thought at Yale, one of the reasons we hire these guys is because they know when's the right time to sell an asset. And we're sort of relying on them to do that. And then if they default that decision back to us and say, well, you can sell on the secondary or not, it's up…”

“What winds up happening is the good businesses get sold in three or four years. The bad businesses hang around for 10 or 12 years. The GPs just think, well, I can fix this, and two years from now it'll be better, and a lot of times when an asset isn't performing, it never performs.”

“Nothing. I had founders start with an idea, and usually nothing else. Let's put off to the side a technical founder who may have come up with a fabulous algorithm that no one else has, but he still has to have an idea for it. What's he gonna do with it? What's the application? Who's he gonna sell it to? They don't do…”

“Early days at Yale, we were targeting market value as a percentage. And so when you're in a bubble, it tells you to over allocate at the top and under allocate when you're in the bottom. So we changed that to grow every client's portfolio by their expected return.”

“the point is you have this free call option as a lender to own companies if you have to. And if you're lending to good companies and you control your outcomes, where you're a lead investor, you can probably get to better resolutions.”

“I would not want 75% of my credit capital to be in a pro-cyclical structure like this, which it inherently is, and that's where you can lose discipline.”

“For managers that are in the, what I call, no man's land, And this is what I mean by that. Your returns are somewhere between 11 to 14% net returns is what you've delivered, and you are looking to lock up your capital for 10 to 15 years, and no one ever ends on time. If you're in that zone, for individuals and…”

“and they've realized that in private markets, for example, the optimal number of funds in a portfolio should actually be between It's like 22 and 27 funds, where as we started shifting there and offering more choice, our clients were like, aren't you diluting returns? And it was actually very additive to returns.”

“If you're going to do that, then you need to have some liquidity function, and that always is going to come at a cost. It could be an explicit cost, it could be an implicit cost, but at the end of the day, you can't magically say something that's illiquid is liquid, and if it does become liquid, then the illiquidity…”

“In policy-induced recessions, what really matters is the second derivative in policy, not data.”

“One of the things that I think is very important as investors start to incorporate politics and geopolitics more and more into their toolbox is just to understand that while you as a human being really cares about absolute levels of risk, the market is not human. It's inhumane. It's a discounting mechanism. And I go…”

“private credit and other private assets do not mark to market in the sense of reflecting the swings of psychology. When you go through a tough period and high yield bonds are down 10% and private credits down two percent, I think that's the explanation.”

“the people who run these funds Pretty much like the fact that they don't mark the market, because then in the bad times when the headlines in the papers are so negative, they don't have to go to the treasurer of the organization and say, we're down 10%. They can say, oh, great news, we're only down two percent.”

“In the 20 teens, you could borrow money at six percent to do private equity deals. Now you have to pay it probably a nine to 10. Well, if you're going to buy a company and make 10 or 11% a year, you have to pay nine to 10% for the money, then a leveraged acquisition is not some miracle.”

“Very few institutional investors organizations are actively managing public equity portfolios. They're not choosing stocks directly, but almost all of them are choosing in private companies directly and co-investing in companies where they have less information that are less liquid, where there's more risk.”

“career risk aversion drives a lot of behavior, and Bill felt to the extent you could put some distance between the asset allocator and the oversight or governance group, you had a shot at allowing the CIO to be more bold, because Bill always said, boldness is necessary for outperformance. Undoubtedly, that is true. You…”

“I think private equity is true equity return, and public equity is a discounted or a lower expected return.”

“When they see a company they've backed in the seed in Series A, they will lean in hard on the subsequent Rounds to the point where at the end of portfolio construction, they might have 40, 50% of the fund in three or four companies. That, to us, is exactly how a two or three or four billion dollar fund needs to be…”

“mediocre ideas tend to cancel each other out in the end, and they consume a lot of time and bandwidth, and so core to our process is I tell the team, don't spend any time on something that we don't think has the characteristics of becoming a large idea. Now, it may end up not being that as we move through the research…”

“changes in the market impact firms that share a level a lot more than firms that share the same strategy. That's pretty unique. A level eight infrastructure firm and a level eight buyout firm are impacted by the market in more similar ways Than a level two and a level eight infrastructure firm.”

“Well, now, if I'm a sponsor, and I'm getting a book from another sponsor, and they're not CV-ing it, I'm a little suspicious.”

“And we had a rule at Bessemer. If the company called you back, it really sucked. It was the CEO you call every two days for a month. That's the CEO you want to get on the phone.”

“if you build a business with 20 of revenue, you're growing 30. And you've only burned three million bucks. You're doing something right. And if we can get in there and own preferred stock at the top of the cap structure, and it's recurring and has 80% gross margin, the probability to lose all your money is really,…”

“One of the ways that a lot of our peers adopted was when horizontal drilling was quite early, before we had really refined the well design and the fracking methodology, people went and drilled a lot of one-off horizontals in virgin acreage on drilling units that hadn't really been drilled before. And that was a real…”

“There's an anchoring effect in private equity, like in every area of investing, that is not rational. It's a very real and tangible thing. In our business, That's manifested by people looking at a three bagger or five bagger and saying, well, that's a great deal. We got to sell it. We got to tell the investors about…”

“There's only so much resource that you're ultimately going to recover, and we just felt like we were getting closer to the sort of maximum economic recovery point, and that, that changed the risk calculus. You had this big asset, you had market risk in retaining it, as we saw come home to roost several times during the…”

“If you look at the real risk in their portfolio, it's probably 90% driven by equities, and it comes in all sorts of different forms, private equity, public equity, credit. You end up with portfolios that there's just one risk factor, which is equities.”

“And if you're raising five billion, just multiply all those figures. You basically need one of five generational companies within that portfolio to meet the return bar.”

“my style, still the Duquesne style, is that the micro drives the macro. We can get a huge amount of information from what companies are telling us. We can't predict the PCE deflator better than anybody. We can't have a better model for LEI, but if trucking companies are telling you the business is taking off, then…”

“What we began to notice in 2019 was stocks were behaving unpredictably, even if you really knew the fundamentals. It was as if the things that we were doing in the short run Didn't matter at all.”

“Really where you want to focus in carbon capture are in industries that emit pure CO₂ as an industrial byproduct. Industrial accident is a better way to think about it. So those are really ethanol plants, ammonia, so fertilizer, and then natural gas processing. Those are the industries where this is applicable in the…”

“If you use the typical institutional playbook, you can't, okay? If you're doing primaries, you got these big unfunded commitments, that implementation approach will not work. You're going to get yourself in trouble. But first of all, you've changed strategy on the private equity. Do very seasoned primaries or…”

“if you get on a golf course and you see a manager that you either have money with or might consider giving money to, And they hit a bad shot and they throw their golf club. Disqualifying. Disqualifying for business, for managing money. Why? Because they can't control their temper.”

“It's GPIF that needs equities to perform to deliver on their pension obligations. So they realized that all of these complex relationships and conflicts in the Japanese financial services market meant that only outsiders could come and constructively cut some of these threads and free up the flow of capital in Japan.”

“Being listed and managing it with cash on the balance sheet is our way of handing the company off to the next generation. And if we can do that at .6 price to book, we save 40 cents on the dollar in terms of the inheritance tax.”

“Japan isn't going to offer everything up for sale, but the bad capital allocators, the companies that have defaulted on their cost of equity, we're being told that that's game on.”

“So startups never win by being better. Better isn't enough. Better doesn't matter. Only by being radically different can a startup make a radical difference.”

“If you're harnessing a regulatory inflection, I hope you were involved in helping that law get written, because very few laws get passed just out of the goodness of people's heart. Usually there's a set of people who are lobbying for those laws. Usually they have a reason that they want to exploit those laws. Ok, if…”

“either it embodies an inflection. You just haven't thought about it enough, or it doesn't embody an inflection, which probably means you're solving present pain for present customers for present unmet needs. And you might build a reasonable business doing that, but you're not going to build a great business doing that.…”

“They believed in an aesthetically different superior future, and that's why early customers move. They move for aesthetic reasons rather than practical reasons. The same reason that people buy art. They buy into the aesthetic vision of the artist.”

“It's like Buffett and Munger talk about your margin of safety when you buy a stock. It was the intrinsic value of the stock higher than the price of the stock. My business is the opposite. My business is margin of asymmetric upside if it works.”

“So I would say that AI is characterized by tons of massive inflections and not enough insights.”

“If we did not have any defaults in our portfolio and we have that yield advantage, then we're not pushing the yield advantage as much as we should, because we should push it to, we have a couple defaults still in line with the market or less, but if we have none, that means we're leaving some potential yield on the…”

“I think it's harder for the equity investors because they identify a stock and they make that purchase and then they hope the next day or shortly thereafter, the rest of the market agrees with their investment thesis and buys that stock. So that trades up. If nobody agrees with their investment thesis, that stock could…”

“But that does not mean because of the asymmetries that venture capital is a winning business because you've got this unlimited upside, or that insurance is a losing business because you've got this unlimited downside. Ultimately, what it comes down to is appropriate price. So you can go broke In venture capital by…”

“The Black-Scholes model, which is literally Nobel Prize winning math, this is amazing stuff, has assumptions built into it that we know are just wrong. Among the assumptions that are built in is a normal distribution of stock returns, which would lead to a log normal distribution of stock prices, which, for any of the…”

“founder-oriented models, generally the ones that didn't survive more than A generation.”

“This is narrative creation. This is what makes for a successful CEO today, Ted, is the ability to create and sell a story.”

“You actually make all your money by focusing on the bright spots and scaling the things that are going right. We've made 95% of our money by focusing on the things that are going well and scaling those until those crowd out the rest of the activities.”

“in the public markets, Ted, you pay a premium to put your own management teams in. In the private market, you get a discount.”

“They go look at people that have run healthcare software companies for 20 years, and so the DE&I battle was won or lost 20 years ago. Now, you could tell them, okay, we want that to be a minority or a woman, but they're not increasing the pool, they're just moving the pool around.”

“To harvest the illiquidity premium, you have to take on the illiquidity risk. There is no free lunch. So these products, I think, are great. They will give you substantially similar exposures, but that liquidity profile is going to lead to slightly different performance outcomes than a long-term allocation to any of…”

“You're not going to outmodel the other guy. We're going to build models. Figure out the one driver that will dictate success or failure to your thesis, and then spend all your time on that one thing.”

“Where private equity is well to the left of public equity, and it's concentrated off in levered equity. So if that's vol on the x-axis, it is not to the left.”

“in spite of all the publicity the zero-based budget gets, the portion of that value creation that is directly associated with the efficiencies and therefore with the zero-based budget is small. I mean, frankly, the majority of that growth came from, again, the organic and the inorganic growth.”

“these networks have a set of shifting incentives where when they start off, They're solicitous to software developers, creators. They have to be their startup. But over time, as they gain power and the network effects kick in, they start to extract.”

“So there's this really reverse thing I think happening now where people are afraid to build useful products, but it's perfectly legal to build useless products.”

“NAV loans that are raised against a portfolio to send capital back to LPs, very unpopular. Very high priced. Many LPs don't like them. They can raise capital cheaper themselves. So those are not popular.”

“we spent a lot of time really thinking about how a manager would treat you when things went wrong, because the documents don't protect you. Ellen talked a lot about that. We have to know that they'll make the right decision when something goes wrong.”

“many people try to separate this, but to me, there's no difference between private credit, public credit, term loans, etc.”

“Second, I really have never met a person over a long period of time who's generated a high rate of return by guessing where interest rates are going. So yes, you're right once. Yes, you're right twice, but not in the long run.”

“We associate power laws with venture, but if you let it play out in public markets, it's also the exact same power law. It's a power of compounding is the key insight.”

“since 2000, roughly speaking, it feels like the economics of the biggest companies have been almost economic law defying by that. I mean, two things. One is they've grown faster than what we would expect big companies to do. And they've sustained very high returns on capital that have really not been driven down in a…”

“So it turns out it's really interesting that companies, they calculate their cost of capital. They know it, but they don't use it. For almost everything they do, they use a hurdle rate, and that hurdle rate's roughly 15%. So whether the cost of capital goes to six or eight or 10, it doesn't make any difference. They're…”

“You can mess up a lot of stuff, and if you have the main trend right, you can make money. And conversely, You can do a thousand things right, and if the big trend is smacking you in the face, it's not going to work.”

“I typically do large deals in pairs. Not always. I'd like to do two large deals near each other and then stop and digest and integrate. The reason I do that is I don't want to have to do two organizational charts.”

“actually the worst possible outcome, in my view, is learning the right lesson at the wrong time. At least in the medium term, you'll end up compounding the mistake you just made and drag out a hundred performance for many years.”

“And so really, in saying the death of traditional portfolio construction, and my team made me put a question mark on the end of the title, because we're really calling for a debate, but I guess I personally think it is. What we're really saying is there might be periods in the future where bonds are still defensive…”

“I don't use the word diversification because we don't assume asset classes behave differently in a particular way. We try to look through that in a more granular way to say, well, these subsets, let's say, of real estate in these geographies will behave this way, but some other type of real estate will behave…”

“if it's a 90 times PE company that's growing earnings only 10%, it's really hard to make the math work long term. But if it's a company that can compound earnings at 45% over the next five years, that can actually be very, very attractive. In an expected return framework, even if you bake in meaningful multiple…”

“I would say at the early stages, having really strong public equity and hedge fund, Expertise is really important because that's where most of the assets are going to live. You can dream about getting into venture funds and buyout funds and all of that, but most of your portfolio return is going to be generated by the…”

“The only risk that can be observed is volatility, but I'm managing seven other ones, and we've tried to do it with vector math. You can't.”

“There were so many businesses in the last decade that were good businesses with a good product that customers loved. And let's say their natural growth rate was 50% per year. Just throwing that out there. But a lot of VCs are like, oh, we're going to give you a billion dollars, but I need you to grow 200% per year. And…”

“if you are a pundit in the financial industry or an analyst or an economist, whatever word you want to use, If you tell people what they want to hear, you can be wrong for a long time without any penalty, because what you are doing, you're giving your clients exactly what they want, which is the reduction of…”

“At the end of a positive rating story, we almost always found that the market is pricing one to two notches too much of a good story. So when credit risk is actually not going down anymore, there's a tendency for investors to stick with a good story for a little bit too long before you realize that is no longer an…”

“The problem is that you are being kicked out at the worst possible time, and typically then you would liquidate the positions and crystallize losses which shouldn't be crystallized. And that is why it's important to be close to index, because a governance structure cannot survive if the leadership of the fund takes too…”

“These are the people who create the value. The people who build the buildings, the people who operate the buildings. Don't get me wrong. You need to be a smart investor, and you need to have the right capital structure and the right alignment, and those are all critical elements. But the real estate, how it's located,…”

“If you want to diversify your equity exposure away from the US equity market, by definition, everything else you do in the world is less liquid. You have to embrace some level of illiquidity in order to get the diversification. In the book, he described illiquidity as the unfortunate cousin of diversification. There's…”

“I've seen An explosion of short vesting schedules of two to four to five years, and it's just not great alignment. I don't want a GP to be able to leave after two years, get a hundred percent of their carry, sit on the beach, and now the team or the LP base have to dilute the carry to bring in another partner, and then…”

“A portfolio of options is more valuable than an option on a portfolio. One of the attractive features of private equity is the absence of cross-collateralization of debt across portfolio companies. Nav loans take away that benefit.”

“It's a way to attract people who are very entrepreneurial and who are real business builders, whereas 20 years ago they probably would have just started their own fund, but now the industry has evolved to where there's so many impediments to doing that and so many resources you need. It just doesn't really make sense…”

“The reason for that is when we look at venture in life sciences, and there's a broad statement, this is not, doesn't cover everybody, but the strategy seems to be to invest in a platform that has multi-molecule outcomes. And in that construct, dollar that goes to a company, it seems like 60 cents goes to building…”

“Nearly every aspect of fund management suffers from decisions made in the self-interest of the agents at the expense of the best interest of the principals.”

“You should pay huge attention to any source of alpha. It's probably beta.”

“A lot of people out there in our business think about the average endowment portfolio should have 10% standard deviation around its annual returns, 10% volatility budget, which makes no sense, because what happens when markets go down, volatility goes up, all of a sudden your portfolio is over risked, what do you do?…”

“I don't think farm team works on the private side only because if you're really undersized in fund one and fund two, a manager becomes proven there, there isn't going to be capacity for you in fund three.”

“And I often do ask managers before we partner with them, tell me about a time where you had a moral dilemma in investing and how did you handle it? And I don't expect everyone's moral compass to point in the same direction, but if the manager cannot think of an example of that, I think it's sometimes a red flag.”

“That, that model of taking illiquid securities and putting them in daily liquidity vehicles maybe was not the best model for the longer term because it's just uncertain.”

“When I look at all of the mistakes that we've made in the last eight, nine years, and all the successes that we've had in that same period of time, 95% of the time, if not more, it's idiosyncratic, is did we get the fundamentals right on the companies that we invested in? Did we value the companies appropriately for…”

“you can't price bad credit. You can try, but you probably won't be right. The thing that's tricky about credit is has a totally asymmetric risk profile. You get paid fees and you get paid a coupon and hopefully you get paid back. If you're wrong, you lose all your money.”

“you can't finance the US economy with senior debt at 12%. You'll create a depression.”

“I think there's too much comfort gained by the, oh, we're only in at 40% LTV. And you're learning that right now in every asset class. Things, even in private markets, can revalue very quickly. So you have to have a lot of conviction around where you are in a capital structure whenever you choose to write a check to be…”

“Stocks kicked out of an index, in the short run, it underperforms. There's a lot of people that have to sell it, nobody that has to buy it. But I would argue that over a longer period of time, it's those stocks that don't make it into the index that are actually the attractive ones, because if they stay out of it,…”

“The hardest thing about value investing without catalysts is you can own something that's out of favor for an incredibly long time and over five or 10 or longer year period. Looking, being early and being wrong look exactly the same, and you can start to get confused, and your people can start to get confused, and your…”

“There's been, I think, a great misunderstanding in recent years Among some people who run money, that illiquidity itself delivers degree of return. That if you take the illiquidity, you automatically get the return. I don't think anything could be weirder than that idea. That the reason you make money from illiquidity…”

“the lower the volatility in the world, the more capital they're deploying. And that was a very interesting concept for us. A concept to that was an eye opening experience. And more importantly, probably now it is dictating a lot of the flows and the performance that we see on a daily basis in markets today.”

“If you work at these shops, it took me a while to figure out, but almost all of them Are 90, 95% of the time long short-term momentum, which is in English is long something that is working right now. And when you think why they have to do it, if you're so levered the way they are, the last thing you can be is…”

“If they couldn't empathize with the host, how can I be helpful? Then it just shows somebody who is not equipped to build a startup because a startup is constantly about empathizing with your customer and your user, and then showing how can I make it easier for them? How can I be helpful? How can I help my employees?”

“So anytime we remove carbon from a process, it just gets cheaper. Carbon has an inherent value. It's necessary for a lot of the stuff we do, And it has a monetary value. And so any way we could take it out of building a product or running a service, we just had the opportunity to make a bunch of money.”

“We have a very strong belief, backed up by quite a lot of data, that there is a sweet spot in the careers of great investment managers that really occurs in those first five or so years when somebody who's proven themselves at a larger firm leaves, start something new. And those first five years are the period in which…”

“nothing's really occurring in a vacuum anymore, largely because of the influence of multi-strategy funds and platforms that will trade all of these strategies at the same time. And have aggressive risk cutting guidelines for when they're losing money in any one book. So it could be today that you have some large hedge…”

“I think some have what optically seem like good risk systems that are very backward looking. You have lots of people using the same risk systems. I think it can lull you into a false sense of security that can make you feel like, hey, I can lever up my portfolio. My standard deviation is only X. I feel good about that.…”

“I honestly don't think you're ever comfortable with that. If you're comfortable with leverage, you are doing something wrong.”

“So what's happened the last 1012 years, you've had a lot more money flow into passive investments versus active investments, and you've had a lot of money flow into the platforms, which Not to paint a broad brush, but generally are shorter term traders. And so in our view, that's created a real vacuum for active stock…”

“So there's kind of a sweet spot in the middle where there's enough exposure and let's call this a hundred long by 60 short as sort of a sweet spot, if you will. Depends a little on the volatility and dispersion of the area. You can probably go a little lower than that in higher volatility sectors, maybe a little higher…”

“The difference is that you have a tangible asset that it relatively is operationally simple to run. There's a positive correlation between the success of it and the willingness of the government to ultimately want to take it off you at some point in time, because there is a real underlying tangible asset that they can…”

“if you make a mediocre model that's very uncorrelated, you can do particularly well. Because of its lack of correlation is actually helping Numeri more than a good model that's correlated with the one we already have.”

“I often joke that the only way you get fired from a pension fund is you innovate, which means you've deviated from a peer group, and somebody says, huh, what are you up to? And then all of a sudden, you've got to justify it.”

“The industry has simply outgrown both in terms of its size and its desire for more size. Has outgrown the limited partner capacity to fund it for a period of time. There's just not enough money in the world to give GPs everything that they want, whether it's a much bigger fund.”

“the reality is for most institutions, not all, but for most institutions, they're simply not resourced enough to do co-investments. And so our view is they either ought to do every co-investment that walks in the door and just make sure you do enough of them, you're diversified, or have someone else do it because there…”

“Private equity outperforms because it's a better form of governance, period. I mean, I get the leverage and I get all that other crap, but it is a better form of governance. You'd much rather be private than public in terms of your ability to do things.”

“We are witnessing the creation of a private capital markets, kind of not dissimilar to what we saw a 150 years ago underneath the old oak tree or whatever tree it was down at the corner of wall and broad.”

“I think, and history's shown me, that it's very hard to get an investment committee to agree to firing a manager when their performance is stellar, or to not re-up With a manager when they've got absolutely shoot the lights out numbers, but in our view, they've got ahead of themselves. They're raising too big a fund.…”

“So, I mean, I guess the first thing on divestment versus engagement, people often are in one camp or the other, and I would say it's a false dichotomy. You need both, because I think engagement without the ultimate threat of divestment is a very blunt instrument, and I've never met anybody that can tell me that…”

“So divestment and climate solutions, in my view, deal with the two pillars, but about 80% are going to fall somewhere in between. How do you decarbonize a heavy industry? How do you decarbonize buildings and the built environment? Obviously transportation. And so you need to really activate the entirety of the balance…”

“The typical fee load applied to that activity is a real deterrent to crowding in large pools of capital. They aren't assets that have the optionality that can really absorb a two in 20 or a one in 20 fee load.”

“I think with inflation where it is, with debt levels where they are, with political gridlock where it is currently, It's very dangerous to think that a rescue will come relatively quickly the next time we have a crisis type environment.”

“Let's be clear. The single biggest way that you change the differential of the wealth equation in this country or any developed nation is ownership, equity, ownership in scalable, saleable businesses.”

“If duration's our advantage, it doesn't really play in public markets.”

“This whole concept of the math works for any deal at any valuation because the cost of capital is near zero. I think that is probably the most pernicious thing that was learned by a generation of investors.”

“The fact that illiquidity premium had been completely obliterated as more and more money poured into private markets.”

“because I think not being able to commit because you are already over your NAV is actually a really big mistake, because some of the best funds are actually invested during down years, and so you don't want to miss those years.”

“When you're buying used with limited exception, there's no bad bonds, just bad prices now. And if someone's a little less good at managing a CLO, we'll just back up our bid five points and maybe that offsets it.”

“Oddly, the higher default, lower reinvestment price scenarios are typically the best, but that goes back to my data about 2006 and seven being the best vintages.”

“We have some growth in buyout mid-cap, and we just never went deep into venture, you know, seed or A round, partially because we just, you know, we're not interesting money to Sequoia and to Sand Hill Row, because Sand Hill Row says, you're not going to be here in the long run.”

“Well, it's not something we like to shout from the rooftops, and I guess here I am shouting it from the rooftops, but these businesses can be extremely profitable. I think the old adage that the management fees keep the lights on, I think that's a good motto. I'm not sure how accurate it is. I think what we've seen is…”

“it's hard to model a portfolio of LP interests, investing in funds, that will outperform a portfolio of investing in stakes.”

“Some of the great law firms in the space stuck to a more traditional model, and what I mean by that is you recruit people from law school, you train them up, and they decide to stay, and their skill sets fit, and they, 1015 years later, are partnered. But we saw this big market opportunity where the private equity…”

“The new two anti-fragile assets are one energy and the other is emerging market bonds.”

“when you're approaching a problem, you want to think about what are the bottlenecks? What's the really hard thing that needs to happen in order for me to be able to unlock this problem? And that's the thing that you're supposed to go after first. You're not supposed to build the pedestals.”

“One of the things that doesn't help, and I think this is very, very important for financial professionals to hear, is one of the things that does not help is saying, just treat the decision like it's fresh.”

“And you can't ask people who make less than a 100,000 dollars to invest in the company. That needs to be an entirely free incremental benefit. This is not about shifting risk onto workers.”

“For this to work, people need to see a path to at least six months of their income with upside, hopefully a year of income on average.”

“One of the things I've made money on for 30 years is that the rating's Are very, very stale. And sometimes they're stale too good. Sometimes they're stale too bad.”

“If your whole entire mantra is I just short bad businesses. Eventually you're going to get caught in a real bad bear trap.”

“Essentially, these are seed stage and series A companies that have gone public.”

“The belief we've come to is that the NFT markets Are actually going to be more defensible than the cryptocurrency markets. And it's because the assets that you're purchasing are by definition, unique and distinct.”

“The nice thing in the private markets right now is you don't have as many critical players in terms of being in a position To take down the economy or threaten the liquidity of the whole financial system. As long as the banks are forced into a more conservative mode, where they're not using their balance sheets as…”

“And so I think from a pricing perspective, we spend so much time on pricing and obsess on it as the only thing that matters, and it just is not. It's important, especially at the extreme. So late last year, especially in some of the high growth areas, you kind of looked at things and went, God, it's got to be priced to…”

“The other thing is, is shorts are working. It's tough, but you need to keep the position on. Let's say you start with a three percent short. It halves. It's only one and a half percent now. So Julian would always say, well, the best shorts go down 90%. They don't get them 40 or 50%. They go down 90%.”

“That is the engine of wealth creation. That is where all of wealth gets created, and so I analyzed the Forbes 400. I tried to figure out how wealth gets created, and it was really what I had learned in my interaction with these internet millionaires in 99, 2000. You take human capital, something you're good at,…”

“The goal of web three is to get the best of both worlds, to get the democratized open protocols of web one and the advanced functionality that we've come to love, mobile apps, fast user experience, everything else from web two and combine those.”

“I think that every blockchain in the long term needs to have a tightly coupled mechanistic value accrual mechanism between use of the system And the price of the asset.”

“And now it's just which chain does USDC and Tether go to? Because they can't duplicate the offline reserves. When the chain forks, they really are going to determine the real chain.”

“I think that this is an economic and technological renaissance dressed up as a get rich quick scheme.”

“And in some ways, governance and human involvement is almost a bug. It's not a feature. You want these systems and networks to stand on their own two feet, almost as public utilities.”

“Take Uniswap as a governance token, the Uni token, or other types of DeFi tokens. Effectively, they give governance rights on a platform that performs a service to the holders of it. And either today or in the future, they can give also economic power to these governance token holders in the same way that equity…”

“wide open competition is ultimately destructive, because there's always someone who's willing to do it for cheaper than you are. Or do it in a manner that you're just not willing to do.”

“one of my most successful deals was the deal we lost fifty million on. But before we did it, We did a risk analysis, concluded that if it didn't work, we were going to lose fifty million dollars, and that's what we lost. And so, from my perspective, that was a very successful deal, because I had identified the risk,…”

“in the seventies, when we did our first major grave dancing from 73 to 77, we were operating on a very simple premise, and that was that if you could buy stuff at 30% of replacement cost, and you designed the buying so that you had time, Staying power. That, how could you lose?”

“I think that the question of being an investor in the emerging markets comes down to a very simple question. Are you getting paid for the risk of the volatility? And at times, frankly, the answer is yes. But I'd say generally, our experience suggests that you're not getting paid for the risk.”

“I think the other thing is the focus on earnings, EBITDA, and not the focus on cash. Cash is king. You can have great numbers and great stories, but if you can't produce the cash, it doesn't matter.”

“the goal in crypto is simply don't be the midwit. That's it. Just don't be the midwit, because there are a million reasons why a marginally smart person would look at all of this stuff and say, that's ridiculous. That that is never going to work. That there's all these reasons why that's going to fail. And yet, what…”

“Whereas in crypto, because of the limited liquidity these days, you can run a 500 to billion dollar liquidly traded crypto firm Pretty well in an inefficient market. You may not be able to run a ten billion dollar firm these days there, which is why you may not see the much, much larger equity trading firms out there…”

“well, you can set up five trusts. And get five times a QSPS exemption. And then upon exit, you can roll them into one entity. So just think about that. Like you have a five million dollar tax free gain or a twenty five million dollar tax free gain.”

“venture strategies, private equity, real estate, they're all equity strategies, and so if you look at your portfolio, you're going to be long S&P, basically. So macro provides a diversifier, and if it's not working, great, the rest of your portfolio is working, but when the rest of your portfolio is not working, like…”

“my starting point when I look at the world today is that the biggest comparative advantage the Western world has is the rule of law, is the fact that you can be brown, black, white, Chinese, Indian, it doesn't matter. You can be Hindu, Muslim, Jewish, Christian. You can go in front of a court of law in New York, in…”

“And I think there's a much more level playing field today, and I think that, look, we all have a fiduciary duty to the investors we serve, and so if the opportunity for value creation exists, it's your obligation to take it.”

“So I think the biggest mistake, if you ask me, is that we're not able to hold on to the winner because the fund has limited life. And the once and all solve this problem is just have this evergreen structure that enable us to hold on to a winner for a long, long time and really enjoy the power compounding.”

“You burn so much money used for subsidy to the customer. Do you think the customer is going to be royal to you? Of course not. They will choose whoever is the cheaper, better. So at the end of the day, it's a competition of supply chain, competition of logistics.”

“If you ask me, if you force me to choose one among which was more important, I would say the business is more important than the founders. I have seen a lot of very smart founder struggling in a mediocre business. They will never get it. But if you have a very great business, and the founder saw that business, their…”

“particularly for early stage deal, you can have like a 100 reason don't invest, but you just need one reason to invest. If the founder have killer instinct, he can see what others cannot see. And that's enough. He may have a lot of shortcomings, like, oh, he's not a very good people manager, he has a very short temper,…”

“The biggest mistake is hire the professional above the founder. I kind of feel like in China, in this kind of dynamic, competitive environment, you need the founder to run the company. If the founder is not running the company, if the founder has some shortcomings, it doesn't matter. If he has that instinct, that's…”

“If you're the lieutenant, number two guy is not very good, that typically says the founder is not capable enough. In that case, you can almost decide to just pass.”

“90% of the time, companies do not have product market fit. That's a really hard statement. Even companies that have raised upwards of 25, 50, a hundred million dollars, sometimes they don't have product market fit.”

“one thing that never changes, and we've seen that across every company, we've been a part of Uber, Facebook, Airbnb, Lyft, et cetera. The list goes on where we built a lot of these growth and data science frameworks is that their product market fit and how they interact with their customer never changes. That doesn't…”

“So to me, it's not the official sanctions that are driving the turbulence under the surface of commodity markets in particular. It's the eagerness of private sector financial institutions and banks in particular To self-sanction, lest they inadvertently release payment to an entity or a company or a person who is going…”

“This is truly what should happen across America at every level. I was like, you really should have doctors at risk. For managing patients over the long term. That's what's going to have the most impact.”

“When the United States of America starts building fabs in the US, it actually reduces the strategic value of Taiwan.”

“The problem is there are a lot of competitors in many of those businesses, and often the reasons why one becomes that runaway success, even in the power law distribution within a sector, is sometimes random. Sometimes it's related to locks. Sometimes it's related to a key sale. Sometimes it's related to executives.…”

“One, we've seen the emergence of firms that write checks really quickly and are extremely aggressive, whether it's Tiger Global, D-One, CO-Two, name your favorite firm. That's just a very different strategy. They don't take board seats, but they're extremely knowledgeable about the sectors in which they invest, and…”

“We think on a risk reward basis, and our data shows this in our funds over the past five funds, that investing in growth equity on a risk return basis is a far more compelling Opportunity and attractive opportunity, particularly given its liquidity profile than late stage venture, where, as you pointed out earlier,…”

“this is a business of outliers. Nothing that is an outlier is normal. So if you try to bring normalcy or strings attached or boxes into venture, you're not going to succeed, or at best, you're going to be mediocre. So if you want outliers, you need to have an outlier strategy, and you need to have outlier thinking.”

“It's sort of a contrarian business, but what it really is, it's a contrarian business that you're really working hard to turn into a consensus business. If you invest in a company and 12 months later is still contrarian, the company's gonna run out of money unless you can keep funding it.”

“I would actually argue that right now in the Amazon ecosystem, the worst place to be is between 10 and twenty million dollar EBITDA. Because at 10 and twenty million of EBITDA, it's too big for a family office or a high net worth individual or a group of angel investors to finance it. And it's not a big enough where…”

“We have certain companies in our portfolio that have done tremendously well for reasons that we didn't predict. Those are not high quality returns.”

“The currency risk is relatively expensive most of the time. So the best hedge for the currency and for volatility is growth in emerging market. It's not value.”

“It used to be 20%. Now we're hearing about a lot of 15% discount saves, and it's like, holy smokes, you're putting the riskiest dollars that are ever going to go into that company in for a very modest return. Now you're on the cap table, and you can put more money in later, so maybe you're buying it as an option, but…”

“There are a lot of big players. They built their business on a cost plus strategy, and they had no interest in turning rockets into airplanes. And that's fundamentally what needed to happen in order to increase access to space.”

“we began to wrestle with that whole idea of what is important with a competitive advantage, and part of that was it wasn't about the absolute size, it was about the direction of that competitive advantage.”

“the firms that have failed have been the ones that have taken on massive amounts of debt in order to finance the buyout of the founder, and that's fine as long as everything's going well, but when it's not, inevitably the younger people who have all the debt then You start toying with their temperament because they…”

“What we concluded is the best way to transition wealth is the founders have to be generous. The founders ultimately have to take a significant haircut in order to make sure that the company continues to prosper.”

“Just from what we've seen from fundraising, once you get grouped into an impact bucket, usually their magnitude smaller than the main buckets. And so I think it changes how many dollars you get allocated.”

“it's really hard to get two or three people to have the same conviction on similar deals, but it doesn't mean that the deals aren't great because a lot of our winners were deals where we weren't both positives.”

“They feel that their mission is so important that We're saving the world. We're transforming the automobile. We're landing on Mars. I mean, you name it. That they have the right to be cruel to people who are not performing to the specs that they think they deserve. They feel that their goals are so lofty, and that they…”

“I think we define great as a fund that's 10 X or better. And so a lot of funds are asking for premium carry when we tell them we would fire them in our portfolio.”

“we should be only building software that is truly new and novel, where we're going to be first or second to market. But if we're late to a market, the catch-up work, we've got to do that through M&A, because then you're buying market share, you're cutting price, you're behind on features, you're trying to force churn.…”

“Also, in some of the cases in some asset classes, for instance, venture capital, unless you had access to the very best managers, it wasn't worth doing at all.”

“We need to supplement the trading and debt skills because that is a business of many decisions with imperfect information rather than few decisions with, in a perfect world, perfect information. I believe that those teams need to be different and need to be separate because private equity teams need to not lose their…”

“Great investors are typically contrarian and you need that to generate returns. You have to see things others don't. You have to believe something that others don't. And that involves strong analytical skills, being very detail oriented. Whereas successful business builders are consensus builders, they have strong…”

“And something I often share with my founders is you want to keep complexity low, because I think both complexity and size to a certain extent are the enemies of performance. And a quick definition of complexity when you're running investment firms is number of investors, number of strategies, and number of employees…”

“cash to me is a costless option. People say, oh, it's such a drag. It's such a drag. I don't think it is. I mean, you've seen those situations we've had where something we have falls 40% on earnings. If you have a 15% position and it falls 40%, now it's a nine percent position. If I want to take it back to a 15%…”

“the reed industry was born not because people wanted to the good graces of these very rich real estate guys, it's because they were all on recourse debt, and interest rates plummeted, And all of a sudden the dividend yield of an unleveraged real estate portfolio was higher than interest rates. So Sam Zell took public…”

“one of the lessons I've learned over the last couple of years, 30 years, is we don't put enough political risk into our Like a 20 in India is not the same thing as a 20 in the United States. There's so many things that can go wrong, and the rule of law is so less developed. And the same would be true of China. An 18 in…”

“Turned out they had the same margins as multis. The tenants are usually higher quality, so you're less default because it's a family, not a kid. And with tech, you organize your maintenance calls in a route that didn't really tax you.”

“the key to investing is actually doing your own work. Then you triangulate other people's opinions and stuff, but do your own work. And, and And I, the biggest mistakes like you often find when you find Andreas and Horowitz and Sequoia are, they're all in this deal. I don't have to do any work. Do your own work. You…”

“I strongly believe that you can't have a purely bottom-up discussion on emerging market stock because you miss a key part of their story, which is the nature of the system these companies operate in.”

“Like this could be a game changing technology but the destruction of capital because of so much money flowing in, we could all be changing how we trade, how we clear, how we transact, how we communicate, but it's not clear any of us will have made money on that sea change.”

“The other issue that happens that we see is there's these pockets of money that you have to be majority owned by a woman, and I think that also just kind of is hurting the women who are leading firms, but maybe had to take outside capital to get started because they're already at a Disadvantage. And then all of a…”

“What I experienced in investing in funds is alpha maintains much more than people expect for a certain period of time in a strategy, certain size growth in a strategy. But once it starts to drift off, it collapses and goes negative. And once you fall off the cliff, you can't get back up the cliff.”

“In financial markets, the vast majority of what happens is just noise. And so you have to be very careful to not try to find a signal in the noise when there isn't one. We've had some real success doing things with machine learning and AI, but equally we've seen a lot of holes that you could go down where the nature of…”

“human beings, I think on average tend to take risk off if they fear. Whereas if you've got a systematic strategy, you have a good chance of carrying on with your investment process and just saying, no, no, the signal says I should short.”

“if you look at everything through the lens of some immutable characteristic, then you'll victimize yourself faster than anybody else will.”

“The beauty of being in the Midwest and focusing primarily on Midwestern companies is that it takes about a third less dollars to To develop the company in the Midwest because salaries, rent, vendor costs, just all those things all combined. You basically get an additional one X return on your investment by investing…”

“pharma adjacencies, which is companies that play in the pharma space, but it's without a drug, so they have the same upside potential, because pharma has big upside potential, but without the binary risk that the drug would fail in phase three.”

“Caesars ended up being less of a cautionary tale and more of a roadmap, and the reason for that, I think, is very simple. People realized that after this deal, Apollo raises a twenty-five billion dollar fund, and the LP community didn't really penalize them, and maybe if they can face modest consequences for what was…”

“the incentives are there and LPs at the end of the day, if someone is making them money consistently, Are going to continue to give those funds money and somebody's going to, there's no question about it. No matter what amount of bad behavior there may be, if that doesn't affect a fund's performance, I've never seen…”

“You have a negative real yield world borrowing to do things that are good for society. You don't even have to be very good at it when the real yield is negative. You can be pretty crappy at deciding what's good for society and it's still worth it.”

“We construct concentrated portfolios. We prefer to do all of our work upfront and gain a lot of conviction and invest in a size that really is going to matter to performance. We don't take toehold positions and see how it works over time. And, you know, we don't want to wake up with a portfolio with 80 managers, all of…”

“And we think that most companies that end up in distress outside of recessions are bad businesses. And generally investing in bad businesses is not a good business for you.”

“Our view is at the beginning of a sell off, the worst thing you could do is buy the lowest dollar price, crappiest companies. If you were a company that traded, let's say you were an oil company that was trading at 75 in January of 2020 and was trading at 25 in March of 2020. That's not interesting to us because you're…”

“So sometimes it's good that they miss numbers because it gives us an opening to have them listen to us and become more open-minded.”

“It's not as sticky as maintenance was because the customer hasn't made the capital expenditure.”

“When a strategic approaches you, look to sell, because they won't approach you again. They'll either build the product internally or buy somebody else.”

“the fact that valuations have been high, some claim too high, Actually, it's a barrier to entry. It keeps big players that could be new players or new entrants out of this market. There should be 20 or 30 private equity firms doing large buyouts and software. It's a great place to be. But if you have to pay 10 times…”

“The other thing we need to do is because we can do a lot more diligence than a syndicated participant is to make sure we better protect the downside. Whatever the loan losses are in the syndicated market, we need to do a much, much better job. Because we have better information, and we've been able to do that.”

“The problem, if you think about it, think about the loans you make in years three and four. Usually they have a year or two years of call protection. A lot today have only a year. So what happens is if a company does well, they refinance you out. And so you have adverse selection. Your best loans pay down very quickly.…”

“When you have to show exits, you sell your best assets first.”

“What typical venture investors try to get as much money in, in their first slug, and then they fight dilution on the way down. What we're doing is scaling up over time because these companies are burning a hundred to a hundred and fifty million dollars every 12 to 18 to 24 months. Voracious consumption of capital. And…”

“if you're trying to time the breaking of a bubble, the value is not that important. All of them are overpriced, and whether they're overpriced at 25 times earnings or 35 times earnings or in Japan at 65 times earnings, it's very difficult to work out in any sort of academic way since you're dealing with craziness where…”

“ten-year arguments are not enough to justify short sales.”

“the economy is very, very durable in the face of Anything up to intermediate inflation levels, three, four, five percent. It won't affect the economy, but it will knock down price earnings ratios.”

“There's this natural tendency to believe or feel like that scale is correlated with lower returns, and it is, by the way, but it doesn't mean it's causal, which is to say, if you can find the selective opportunities at scale where you can generate high performance, which we think we've done over the course of our…”

“if you're A company today that's given away half your equity, you can only give away your equity once. You can't actually give it away twice. And so right now, that's one of the reasons why our generations of partners that are leaders now stayed and are motivated by our model.”

“The biggest information for people who are interested in the profession and for people who are looking for a good manager is the data documenting the inability of active managers to outperform other brilliantly talented, fully informed, Fabulous equipment, active managers in very, very, very large numbers who have been…”

“Most of these organizations have monopolies over the asset base, which means Stanford management company isn't going away. CalPERS isn't going away, but the people in those organizations can be fired. And so you as an employee of these organizations, and I'm not suggesting that people are doing this consciously, I'm…”

“A lot of the boards of directors think they're protecting their organization from failure by telling their teams they can't do first time funds, or they can't invest in hedge funds below a certain AUM, which is another way of saying you can only invest in funds that are really expensive. And have like demonstrated that…”

“The consulting businesses are based on scale. So if they go and do a diligence on a manager, A deep dive and really understand that manager. They want to use those reports many times because that's how they make the business work. That's how you get the margin doing like a deep dive on a new manager just doesn't make…”

“the reality is the ESG stuff is just pre-financial risk. I'm on the Future of Finance Council at the CFA, and it's actually Roger Irwin who instructed me on this. He's like, look, we should just be thinking about ESG as pre-financial risk. It will become financial if you give it enough time.”

“we found that overall level of compensation doesn't matter so much. Fairness, perception of fairness in compensation matters a lot.”

“One of the things we find is that it's not about just the overall level of, let's say, feeling appreciated. So we find that feeling appreciated is a very good signal. But it's not just the overall level of being appreciated. It's the difference between how management and rank and file employees feel about being…”

“One of the easiest things to get right for LPs, but still the thing that almost everybody seems to get wrong, is being disciplined about pacing, because there's so many structural mechanisms that push us as limiteds To increase our pacing in hot markets, to increase our pacing precisely when you shouldn't”

“I mean, we know from years of research on the academic side that job interviews don't predict a whole lot. The main thing they predict is whether I like you and whether we can get along interpersonally. That's not necessarily job-relevant information.”

“These guys who believe in analytics and believe in the trade down philosophy and believe in uncertainty, it's a lot easier to believe in that stuff in January than it is in April, because between January and April, they're studying film. They're having debates with their colleagues. They're putting guys on the board in…”

“In a massive drawdown, your shorts have been eviscerated. You have to cover them. They're extremely dangerous. In fact, they're the most dangerous thing in your portfolio.”

“The reason why you buy private equity isn't for the total return, in my view, it's the relative return to your PME, because a private equity portfolio or private equity management, let me just give you an example. Let's say they generate a 12% IR. Well, if you actually broke out that 12% IRR, eight to 10% of that is…”

“And we were strongly convicted that that's nonsense, that Bitcoin is a risk asset. And while it might not be correlated one to one on a five percent S&P move, If S and P falls enough, Bitcoin is going to catch up to the downside because that's wealth destruction. If you have a global recession, just all risk assets get…”

“They have all capitulated from the career risk Of getting involved or being the guy in the investment committee that raises their hand and says, well, why don't we put 50 basis points into crypto or, you know, and capitulated to the career risk of not being the person that raises their hand.”

“Once you've moved people off paper money, there's no place to hide. And so that's how the government acquires power through that, because once they do that, well, think of all the things that you can do with that, right? One of the things you can do is you can stop money laundering and stop Dodgy movements. You can…”

“The ones who are thinking about digital assets are thinking about it in kind of that debasement hedge part of their portfolio. And it's really attractive because it is highly convex. So you could have a relatively small allocation and it could go up 10 X or it could go up more than 10 X. And so at a two percent…”

“We no longer really have independent central banks. They're working together with treasury, and politicians are looking at that as a solution right now, and inflation hasn't taken off.”

“This is not a CalPERS, CalSTRS, Hermes problem. This is a Japanese pension fund problem that the Japanese have to decide for themselves To start paying their beneficiaries properly.”

“If you think something that trades ten million dollars a day is going to be mispriced, your own arrogance is just too big.”

“For me or Providence Equity, I always say, if you go into a board meeting, and you know more than the CEO, or you think you know more than the CEO, you got the wrong CEO.”

“I call blockchains computers that can make commitments. And so what that means is you write some software on the Ethereum computer and you can write some software that says, I'm going to build a social network. And on this social network, I'm going to commit to you that if you make a post, I'm not going to take down…”

“I believe that in my business, at least liquidity is a bug and not a feature. And what I mean by that is the ability to sell something is a very, very dangerous thing and can mess with you. And I bet you that if most venture capitalists could sell their stock along the way would have far lower returns because The…”

“One of the common mistakes that people make in mentoring women and people of color oftentimes is that in their organization will during a performance review go easier or not. They're like, well, this person's really experienced a lot of pain in their life. They're constantly overlooked and underestimated. And now I…”

“manager concentration always drives decaying returns. And the problem is either the surface area of their skill becomes very rigid and fixed, and so you force them to go out of their sweet spot. Or even worse, they become risk averse because they have not refined their own psychological biases, going back to repetitive…”

“sports teams like never go down in valuation and people never want to sell them. So The entirety of that valuation goes to the owner. That's not shared with anybody else who helped create the wealth. Like players don't get stock or equity in the franchises they play for. So that's really the long-term play here. In…”

“And I think the key to sizing them, if you want to know my portfolio management philosophy, is look down, not up. Meaning, the largest positions were not the ones I thought were Absolutely the best or that I was going to make the most money in sizing all had to do with how much money could you lose? If you couldn't…”

“I don't think that's a business model. I think that's a great investing model. I don't think that's really a viable business model, except for the longest term investors.”

“And we ran through the math of it and it turned out you made more money when you go long, short and put on leverage with more diversified portfolios than concentrated portfolios because those bad periods end up in negative compounding and negative compounding is bad for your longterm returns. So it was a fascinating…”

“if you shifted from an asset allocation approach to a factor approach, And you really wanted to get very clear on what the unique risks are, that if you ended up in a crisis, would tend to not be correlated. Asset classes are. Factors by construction are not.”

“And it's that delta between what the market's expectations for the fade are and when they actually takes place is where all that alpha generation opportunity exists.”

“Now, most investors will say it was Paul Volcker that did this, and I have a huge problem with that. There's no way that an academic No matter how freakishly tall they may be. There's no way that they get to crush inflation by inducing a recession and high unemployment. And so this is like a fantasy of people in…”

“I think the rewiring of supply chains is growth positive. It's positive for commodities. You have to build new factories. You have to move stuff around.”

“I think that this great power competition between China and the U.S. and potentially other countries mixed in creates a really interesting environment for frontier markets like Africa, maybe some of the less developed countries in Latin America and Asia as well. Because they can play all sides together. And I think…”

“because essentially you're an index fund on both sides of the market with an expensive active management fee structure on top of it. And the fee structure is problematic in that it guarantees you always do worse than the average, right? So you're essentially in long correlation. If you have a hedge fund that's up 10%…”

“it's amazing what a high proportion of the really successful people in our industry have either had or have really bad relationships with their fathers.”

“We have a long-term conviction that skill is persistent, that if somebody is good, They stay good. Unless, almost invariably, when it goes wrong, it's actually a character thing rather than a skill issue.”

“if you begin to see that the individual not only Consistently delivers alpha, but their success ratio is consistently between 50 and 60%, so they're consistently getting it more right than wrong. There's a skew in there, and then you can look at how that works in different sectors, in countries, and so on, and their…”

“I might argue that people are successful at things they stuck to, which is actually very different than if you stick to something, you'll be successful.”

“the goal of a really good group meeting is not to agree. And we think that the goal is agreement. We think that everybody has to walk out of that room on the same page. The goal of a great group meeting, rather, should be to inform, which is very different. So it should be okay that you allow that divergence of opinion…”

“particularly when people are very successful, it's particularly uncomfortable for them to imagine that there might be a ways that they could really improve their decision process. And I think that the reason is that then there's all of a sudden you open up a counterfactual world where maybe they did even better. And in…”

“I just don't fundamentally believe it's enough for firms to say, we really want to change our diversity, so our starting point and our focus is going to be the establishment or expansion of our internship programs. Now, let me be clear. I'm big on internship programs. I think we should multiply those exponentially and…”

“Well, if that's your bias, you are going to disadvantage people of color. Let's just instead think about what Someone being on the lacrosse team tells you about them, and is there another proxy for that? That is more applicable for a person of color, or a person who's just come from a different background, who may not…”

“I'm actually Of the belief that the bigger impact will be on getting the large firms to be more diverse. That has a bigger overall impact than funding diverse managers. Although I think the more bang for the buck is finding these new diverse managers to support and build relationships with over time. But if the big…”

“Arguably, they should be better because it's so hard for a diverse talent to get capital. If you do, chances are you're good, right? Like you may not be great, but you probably weed out all the average because there's not a lot of rich dads who give their diverse people money who are marginal. They're not a lot of…”

“The best returns comes with out of the box thinking. These large firms are already seeped in how they do things. They have an established playbook. They will continue to execute on that playbook. Hard to compete with them on the playbook they have established. But it is with new perspectives and new experiences that…”

“Wall Street's a meritocracy. And I always say the numbers don't lie. And at the end of the year, you can add everything up. Well, if an African-American marketing professional or asset manager or portfolio manager had much less in the way of an opportunity set, fewer clients to cover, smaller dollars to manage, at the…”

“And I actually tend to think it has very little to do with the data sources itself or the information. It's the competitive advantage you're looking for is the ability to integrate across your investors with your data scientist, with the people who are sourcing the data and get that whole chain of people to work well…”

“The biggest issues for hedge fund managers, as far as I'm concerned, is a couple things. Number one, many of them like themselves way too much, and so they really need somebody that's willing to be honest with them. They're very powerful people, both financially and personally, and so the ability to speak truth to…”

“profile is your enemy. It makes you a target for litigation. It makes you a target for media scrutiny. It makes you a target for pure jealousy. Profile for all great leaders, unless they can't avoid it, Is your enemy, and your job is not to covet profile.”

“central banks, in their zeal to destroy volatility, they've created so much correlation that it's really hard to find anti-correlation is kind of a way to think about it.”

“if I look at the long-term performance of all the big asset owners, I mean, big or small, their performance pretty much dictated by what happened to the global economy. Or the global stock market. I concluded that we probably think the way to change that or make a contribution to change the global capital market more…”

“Well, the point is, most of the big asset owners, let's take public pension fund as an example, GPF, Culpers, Coasters, and all the big public pension funds, their most critical decision In terms of the financial performance of their portfolio performance is not actually decided by executive team or investment team.…”

“Passive investment is effective or efficient because it take all the active managers or the active investors opinion into their pricing. So the basically they are free riding all the other active investors. I'm not only talking about active portfolio manager, but including, uh, individual investors, actively investment…”

“So we basically just said we are owner of the unique capital market universe. So we are universal owner. So our job is not to be the universe because we cannot. So, uh, let's see. What we can do to make that universe better.”

“We just basically came up with the concept of, for our portfolio to become sustainable, We need to make sure the capital market to be sustainable, and for the capital market to be sustainable, we need to make sure society must be sustainable, and for the society to be sustainable, we need to make sure the environment…”

“And the index tracking, that's what people say that they add value, but I really believe that should be cost-free because we don't need a human to track the index anymore. Only the area I thought the passive manager can really add value and differentiate their service is stewardship activities.”

“even if the other one of our active managers build the portfolio, which perform the better short term, but those companies in their portfolio is actually producing a lot of negative externality, which damage the long-term sustainability of the environmental society. And also the other stock market that active manager…”

“We are passing ownership of those problematic business to the people who don't care about it. We don't want it to reduce the carbon footprint by divesting carbon heavy industry because it doesn't reduce the carbon footprint of the world anyway.”

“We are the rare activists that will say, you know what, you should make this investment that might diminish your margins in this quarter or the next The next couple of quarters, because we have such high conviction in the longer term IRRs, and we have the capital that's aligned with our ability to do that.”

“for every three years that we delay pricing emissions, the maximum temperature, the best case, or let's say the optimal solution is another 10th of a degree onto that expected maximum temperature.”

“I also looked at the value of the option in a CDO, and I said, if I short this, whatever it might be, mortgage bond, ABS bond, into this structure, And the structure never liquidates. I can't get out. And I kind of came to this conclusion that the only way this is ever going to work is if the entire world blows up.”

“It's where bias happens is when the Video shows someone doing something pretty well, but not perfectly. Like an eight out of 10. Seven or eight, somewhere in there. Then the man gets the eight, and the female gets the seven.”

“The underlying driver of a stock Isn't the growth of the overall economy. It's the growth of corporate profitability.”

“When we are analyzing these companies, we realize it's not just that we don't care about their book value anymore, but even their stated earnings turn out to be a lousy test of whether this is a good business model.”

“I think one of the things we have seen in the, in some of the trials of what's gone on with the Vision Fund is this basic idea that, well, we can determine who is going to be the winner here by throwing a ton of money at one of the competitors. And assuming that that means they will conquer everybody else. And it turns…”

“the cool eye of financial history might conclude that by driving interest rates to ridiculously low levels, while simultaneously driving financial intermediation out of prudentially regulated banks, We or policymakers perhaps effectively uncapped leverage in the system and motivated unconstrained growth of leverage in…”

“volatility scaling, or the assumption of volatility scaling, I think had a large hand in the disruption we've seen, and just to finish this point, there was a marvelous article written in the autumn of 1987 by an extraordinary Chicago trader called Richard Dennis, and Richard wrote of the slower fool theory. And his…”

“We're focused on ESG improvers as opposed to just ESG leaders. Because we think if a company is making a lot of progress on ESG metrics that we look at, that is often a leading indicator for alpha creation going forward.”

“Because a firm that has eight X debt to EBITDA, that is taking out all of its excess free cash flow to pay interest, can't reinvest for growth. So why buy a compounder and lever it up? In theory, you should have much higher return opportunities other than paying interest.”