YouSaid · the spoken record

Bill Spitz

lines on the record: 79
first: 2018-01-22
most recent: 2018-01-22
sittings or episodes: 1
sources: podcast

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“I guess my objective in life, and I've had this objective for many, many years, and I will never get there, but my objective has been to be a Renaissance man. And I don't say that arrogantly. What I mean by that is I've always wanted to have lots of interest. I wanted to do lots of things. I wanted to try lots of things, go lots of places, and I would give that advice to anybody. I think balance is the key to life and really having curiosity about everything in the world is the key to success. And I think it's the key to longevity, and it's the key to keeping a keen mind and all those sorts of things. You know, I would say go for it and try everything you can and go every place you can, and that will be very rewarding.”
2018-01-22 · Capital Allocators · Bill Spitz – Seasoned Commodore (Capital Allocators, EP.37) · IDENTIFIED FROM THE TRANSCRIPT · source
“Not easy to do though. All right, last one. You are in your waning days. You've now failed retirement three times, but you're trying the third time to make it work. Sitting back in a rocking chair, thinking about your life, what advice would you give yourself today?”
2018-01-22 · Capital Allocators · Bill Spitz – Seasoned Commodore (Capital Allocators, EP.37) · IDENTIFIED FROM THE TRANSCRIPT · source
“I guess for many years I would have classified myself as rather impatient, and I think the best thing I've learned over time is to be more patient and maintain a degree of calm and serenity and to not get too agitated about things. And it takes a long time to learn that. And I'm not sure I've totally learned it just yet. But maintaining a sort of equilibrium, I think, is the most important thing I've learned. And I think it's particularly helpful in the investment world because look back on my career, I tried never to gloat about the successes and never get too depressed about the failures. And I think that helped a lot along the way.”
2018-01-22 · Capital Allocators · Bill Spitz – Seasoned Commodore (Capital Allocators, EP.37) · IDENTIFIED FROM THE TRANSCRIPT · source
“Terms of the financial world, I think I love the economist, and it's a big, thick magazine. It takes a lot of effort to get through it. But I find that the global perspective there is probably the most valuable single thing I read. You know, I read other things that everybody else reads, too, Wall Street Journal and Bloomberg and all those things, but I find the economists to be not only valuable in terms of the financial world, but just a global perspective on politics and life in general. I find that to be particularly interesting.”
2018-01-22 · Capital Allocators · Bill Spitz – Seasoned Commodore (Capital Allocators, EP.37) · IDENTIFIED FROM THE TRANSCRIPT · source
“That's a great question. It's interesting. I don't remember a name, but there's a woman who I think is at Yale who wrote a book about tiger moms. And later on she wrote another book about success in life, and one of the things she said was one of the clues to successful living is impulse control. And, you know, my parents taught me to be relatively disciplined and focused, have a sense of direction and goals. And the more I go through the life, the more I believe that's really important. I don't, of course, always achieve them, and I drift a bit here and there, but having a sense of purpose is important. And I particularly found that when I retired, retired, although I flunked retirement and ended up going back to work fairly quickly, but it's very interesting when you wake up one day and you say, holy smokes, I don't have to go to work today. What am I going to do with myself? And you see some people that end up going to the country club and playing golf and spending the afternoon in the bar. And I don't think that's a good prescription for longevity. So I think having some purpose, and it doesn't have to be work, it can be whatever it is. But having some purpose and goals and objectives is really important.”
2018-01-22 · Capital Allocators · Bill Spitz – Seasoned Commodore (Capital Allocators, EP.37) · IDENTIFIED FROM THE TRANSCRIPT · source
“No, my wife had started several years before I did, and she tried to get me to do it, and I really wasn't interested. And I finally said, okay, I'll go take 10 lessons so I can dance with you at a wedding. And I found that I loved it as well. It's been a nice run.”
2018-01-22 · Capital Allocators · Bill Spitz – Seasoned Commodore (Capital Allocators, EP.37) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes, I spent a lot of money to get a nice big trophy. Exactly. And, you know, the nice thing about that particular hobby is the partnership aspect of working so closely with someone.”
2018-01-22 · Capital Allocators · Bill Spitz – Seasoned Commodore (Capital Allocators, EP.37) · IDENTIFIED FROM THE TRANSCRIPT · source
“That year, we did 13 competitions all around the US, and in each one we did more than 300 dances. So we did about 4,000 competitive dances that year. So that was a really exciting moment for me and something I worked very hard to do.”
2018-01-22 · Capital Allocators · Bill Spitz – Seasoned Commodore (Capital Allocators, EP.37) · IDENTIFIED FROM THE TRANSCRIPT · source
“As a participant, I have an interesting hobby. I'm fairly active ballroom dancer and compete. In 2015, I was the top student in the country, top male amateur ball room dancer in the country. Winning that was a really big thing.”
2018-01-22 · Capital Allocators · Bill Spitz – Seasoned Commodore (Capital Allocators, EP.37) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's interesting. I'd say the thing that gives me the most pleasure is once in a while I've been retired from Vanderbilt for ten years and once in a while I will run into someone who will say I'm the professor of so-and-so. The reason I have my chaired professorship is because of the return you earned on the endowment fund. And someone set up, let's say someone years ago set up an endowment fund to support a chair but because of a great run of returns that we had it's now two chairs or three chairs in some cases. That's really rewarding when you get those kinds of psychic pats on the back. I can look back at my track record versus benchmarks and how we rank versus other endowments and all that's fine but the really nice ones are when you meet a student who had a scholarship or you meet a professor and those sorts of things.”
2018-01-22 · Capital Allocators · Bill Spitz – Seasoned Commodore (Capital Allocators, EP.37) · IDENTIFIED FROM THE TRANSCRIPT · source
“Interesting world. You know, on the other hand, it is a great business. You look at the asset management business, even with the fee compression, it's still a very high margin business, so it's still a wonderful business. And look globally at the pools of assets. They're huge. And you think about middle class coming along in the emerging markets and in China. You think about the sovereign wealth pool. And there are lots of money around the world, so there are opportunities. But I think you clearly are going to have to demonstrate either very low cost, efficient beta, or sustainable alpha of some sort, and not easy to do.”
2018-01-22 · Capital Allocators · Bill Spitz – Seasoned Commodore (Capital Allocators, EP.37) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think you have to really look in the mirror and decide whether you have skill, you have an edge, and what it is, and then if you can identify it and have some confidence in it, you go and do that however you do that. Otherwise, you've got to rethink your career, and it's not to say it's the end of the world. And that was exactly the decision I made. I look back on 10 years of picking stocks and bonds and said, you know, Bill, you're really not very good at this. But you're not stupid. You have some expertise in other areas, so how can you take advantage of that? So I think that's the decision everybody has to make.”
2018-01-22 · Capital Allocators · Bill Spitz – Seasoned Commodore (Capital Allocators, EP.37) · IDENTIFIED FROM THE TRANSCRIPT · source
“You know, I think so. And you look at the flows into funds these days and you look at the flows into passive versus active funds. It's pretty dawning. It's pretty scary if you're in the active management business. I still think there are a small number of people who can add value and will add value. But, you know, can you identify them in advance? Can you get access to them? So there are all those difficult sorts of questions.”
2018-01-22 · Capital Allocators · Bill Spitz – Seasoned Commodore (Capital Allocators, EP.37) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, it is. Well, you know, fee compression is reality in the business. Margin pressure is a reality in the business. Distribution difficulties are really significant. And if you look at a lot of the wealth advisors out there, they are now becoming asset allocators and managers, selectors, and all those sorts of things. It's an Uber competitive world.”
2018-01-22 · Capital Allocators · Bill Spitz – Seasoned Commodore (Capital Allocators, EP.37) · IDENTIFIED FROM THE TRANSCRIPT · source
“Refereeing family disputes. We help families Sell businesses. We help them sell real estate, buy their airplane, whatever it is. I think that's a really valuable and underrated component of that wealth management business. I think in the world you have the mega players at very low cost with margins very narrow. You have a few, a lot lower number than there are today, a sort of active boutiques who add value, and then you have some little niche players.”
2018-01-22 · Capital Allocators · Bill Spitz – Seasoned Commodore (Capital Allocators, EP.37) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think you have big time scale players, particularly in the low-cost beta sorts of products. I think you have a small number of active boutiques that do what they do very well. And then I think you have some sort of high touch Rolls-Royce bespoke kinds of companies, like I hope ours will be, that deals with families. And what I would say about a firm like mine is that we, of course, try to do a good job on the investment front. But where we really add value, particularly with the individuals and families, is on the broad wealth management area. And a lot of people give lip service to wealth management, but if you really do a good job of it, you become a trusted advisor. It's good business, it's psychically rewarding business. We work a lot with these families in terms of helping them understand their objectives, estate planning, tax planning, cash management, psychology, education.”
2018-01-22 · Capital Allocators · Bill Spitz – Seasoned Commodore (Capital Allocators, EP.37) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's a really interesting question, and I actually was just in the last couple of days have been at a mass mutual board meeting, and we spent a lot of time talking about that and had some presentations from people outside in the consulting industry. I think it bifurcates. I think, or maybe what's the word for three...”
2018-01-22 · Capital Allocators · Bill Spitz – Seasoned Commodore (Capital Allocators, EP.37) · IDENTIFIED FROM THE TRANSCRIPT · source
“I don't think we found the category yet, but we're investigating lots of them. Some of the ones I mentioned before and some other ones. So no, we haven't found the holy grail yet. And one of the problems is that even if you do find something that's very interesting, you know, is it investable in the sense of having the right kind of vehicle at the right cost and all those sorts of issues? So, no, as I said before, I don't see any overwhelmingly cheap assets today other than volatility. And I think volatility is cheap, but I have no sense whatsoever as to when it may turn. And if you look at historical volatility, it can stay low for long periods of time. We might be in a low volatility regime for a long period. And obviously you can invest in volatility through ETFs, but they're not the greatest vehicles in the world because of the rolling of the futures contracts. If volatility stays constant, the price of the ETFs goes down. They're not wonderful vehicles, but nevertheless you can do it. But that's the only cheap, cheap asset, I see.”
2018-01-22 · Capital Allocators · Bill Spitz – Seasoned Commodore (Capital Allocators, EP.37) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think it goes back to the discussion we had before about an edge. I mean, you've got to be convinced that there's a pervasive, powerful, repeatable edge to be willing to pay those fees. I also think that fees will continue to come down in some of the non-traditional categories. But nevertheless, I think you really have to be convinced that there's enduring value added there, and you ought to be skeptical about it. You ought to be cynical about it. One thing I would say is, at least from the valuation work that we do, we think the international stocks are a good bit more attractive than US stocks. So you can obviously do that on a relatively low cost basis as well. Maybe that's one way to tilt a portfolio that gives you a little more bang without getting into a high fee proposition.”
2018-01-22 · Capital Allocators · Bill Spitz – Seasoned Commodore (Capital Allocators, EP.37) · IDENTIFIED FROM THE TRANSCRIPT · source
“You know, the other big challenge is in the liquid markets we talked about, stocks and bonds, we know we can access that with low cost. There's a gentleman in Omaha that says, just buy the S&P 500, everything will be fine. But the other things that give you a chance to earn higher returns than what we're projecting for stocks and bonds cost a lot more. How do you think about the balance of accessing something that's different that you is 7% enough when you know you're paying the fees? You don't know for sure what you're going to get on the other side”
2018-01-22 · Capital Allocators · Bill Spitz – Seasoned Commodore (Capital Allocators, EP.37) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think it's a really interesting question, and I know why people don't do it. I mean, if you've got to earn 5% or 6% to sustain your spending rate and you're earning three quarters of percent on cash, it's a very, very difficult decision to make. But you could certainly argue that saving dry powder for another day is a really sensible thing. But boy, it's a tough one to do. I don't have a good answer as to how to convince people to think about that. You know, personally, I, in my own little account, have a lot of cash, and not that I have any great ability to forecast the world, but my view is I'm more concerned with keeping what I have as opposed to making a bunch. So I'm perfectly willing to sacrifice the opportunity cost of not earning what I could have for sleeping well at night. But that's me, and I'm in a different phase in my life than some other people might be. But it's a really, really interesting question, and I wish I had a good answer, but I don't.”
2018-01-22 · Capital Allocators · Bill Spitz – Seasoned Commodore (Capital Allocators, EP.37) · IDENTIFIED FROM THE TRANSCRIPT · source
“Why is it that endowments, foundations, pension funds aren't able to say, you know, today's return opportunities don't look so good. Sometime tomorrow, I don't know if that's tomorrow or next week or three years from now, they will look better, but we're going to be around for a long time. Let's just move a chunk of our capital to cash.”
2018-01-22 · Capital Allocators · Bill Spitz – Seasoned Commodore (Capital Allocators, EP.37) · IDENTIFIED FROM THE TRANSCRIPT · source
“So we have all of these confounding factors that in the public markets we have return compression and really the dispersion of returns of active managers is way down in the esoteric other investment opportunities. You have more and more people looking and if more capital comes in that same asset stream or that cash flow stream gets devalued. So then you're left with the question of, okay, these are still really long-term pools of capital. Right. We just happen to be sitting at a moment in time where forward-looking returns based on today's prices aren't that interesting. And the one thing that we haven't talked about that most people don't talk about is cash.”
2018-01-22 · Capital Allocators · Bill Spitz – Seasoned Commodore (Capital Allocators, EP.37) · IDENTIFIED FROM THE TRANSCRIPT · source
“Think with a lot of these categories, it's really too early to tell. I mean, there's not enough institutional kinds of history there. There have been investors that have done these sorts of things on a one-off sort of basis. But, you know, in terms of institutional quality funds, I don't know that we really know just yet. That goes back to the comment I made early on that you have to have the courage to do some things without the definitive proof or the track record to really convince you that this is going to work, but you've got to take a shot at some of it. I don't think we know, and I think the returns will be lower than they might have been before. But if you're earning three on bonds and five on stocks, if you earn seven or eight, that may not be the end of the world.”
2018-01-22 · Capital Allocators · Bill Spitz – Seasoned Commodore (Capital Allocators, EP.37) · IDENTIFIED FROM THE TRANSCRIPT · source
“And today, when you talk about these more esoteric investments, it's the same list, it's cat bonds and litigation finance and increasingly music royalties. So let's say that some of these return streams people are looking for call it high single digit to low double digit net returns Have these return streams delivered in these different areas?”
2018-01-22 · Capital Allocators · Bill Spitz – Seasoned Commodore (Capital Allocators, EP.37) · IDENTIFIED FROM THE TRANSCRIPT · source
“So I think And some of this reminds me of timber because I remember when the endowments, it was really Harvard first, probably Harvard and Vanderbilt, but that started adopting timber way back when. Right. But then when the other endowments started adding it to their asset allocation structures, the pricing went up.”
2018-01-22 · Capital Allocators · Bill Spitz – Seasoned Commodore (Capital Allocators, EP.37) · IDENTIFIED FROM THE TRANSCRIPT · source
“That's the only asset class I can find today, perhaps with the exception of MLPs. But, you know, most asset classes do not look cheap. And so if I'm an endowment fund and to sustain the spending rate got to earn 7-8%, 6, 7, 8% kind of return, I think that's going to be a pretty significant challenge looking ahead. So if I were in the CIO seat, I would be paying attention to costs. I would be using low-cost vehicles in the categories where I don't think it's easy to add value. And I would really be digging around for interesting, uncorrelated kinds of strategies. In my firm, we do a little bit of that, although we're probably not big enough to do some of the things that we could have at Vanderbilt, but we've looked at”
2018-01-22 · Capital Allocators · Bill Spitz – Seasoned Commodore (Capital Allocators, EP.37) · IDENTIFIED FROM THE TRANSCRIPT · source
“I guess I'm glad I'm not because I think it's a particularly difficult time. I think it's not often that you're happy about getting older, but I'm sort of happy that that part of my career is over. I think it's an extraordinarily difficult time because if you buy my premise that returns are not going to be particularly exciting in the traditional asset classes, then you begin to look farther afield. But the problem is in most of those other asset classes, there have been tremendous capital inflows. So, you know, there was reasonable questions as to whether returns on private equity and real estate and some of these other strategies are going to be as attractive as they have been. If you're going to truly find value added, uncorrelated, we call them idiosyncratic return streams, I think you've got to look pretty far afield. And I'm not sure where they are. Personally, when I look around the world, I don't see any cheap assets today with maybe the exception of volatility. And I don't have any sense or any skill at figuring out when volatility might pick up.”
2018-01-22 · Capital Allocators · Bill Spitz – Seasoned Commodore (Capital Allocators, EP.37) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, and regardless of what you think, for example, of the macro managers, most of them have not gotten it right for a number of years now, so I'm not entirely convinced that that provides a lot of value added. Yes, you need to be aware of what's going on in the world. But when you look at the big macro hedge funds in the last eight or nine years, their track records are not overwhelming, to say the least.”
2018-01-22 · Capital Allocators · Bill Spitz – Seasoned Commodore (Capital Allocators, EP.37) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, you know, I know in the fundamental manager community there was a phrase, and this really, you'd see it a lot right after the financial crisis, where people said they had to be macro aware. And a friend of mine once referred to it as crack row. Once you go there, it's hard to go back and get addicted to just sort of making that type of call.”
2018-01-22 · Capital Allocators · Bill Spitz – Seasoned Commodore (Capital Allocators, EP.37) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think when you invest with a manager, what you're trying to do is identify the skill, the edge that they have. And so if they vary from that edge or skill, that's when you get worried. That same skill or edge can be applied in other sectors, perhaps, or in other cap sizes. So I'm not too concerned about that. But I am concerned when they do something fundamentally different. And I'll give you a good example. We had at Vanderbilt a fund that was run by a guy who's really good tech stock picker. And all of a sudden when we would meet with him, he started always talking about macro themes. And I think he was an aspiring Paul Tudor-Jones or something. And I realized this is not your core strength. And we exited.”
2018-01-22 · Capital Allocators · Bill Spitz – Seasoned Commodore (Capital Allocators, EP.37) · IDENTIFIED FROM THE TRANSCRIPT · source
“In that first characteristic of someone changing their strategy or the composition of their positions, just that, markets evolve, and on the one hand it's really important to be invested with a manager who has great discipline. On the other hand, if the thing that they're disciplined about no longer works, you want them to evolve. So how do you decide which shift is quote unquote style drift that's a bad thing and which is just an opportunistic evolution of a strategy?”
2018-01-22 · Capital Allocators · Bill Spitz – Seasoned Commodore (Capital Allocators, EP.37) · IDENTIFIED FROM THE TRANSCRIPT · source
“We've been pretty good about not pulling the trigger at the bottom. We've really looked for the qualitative events to change managers. Another thing I didn't mention was asset size when the assets get too large. So we've been pretty good about not making knee-jerk reactions to periods of poor performance. I heard the other day, and I haven't verified this, but I heard that if you look at Warren Buffett's track record, more than a third of three-year periods he underperformed throughout his history. And I'm not sure if that's exactly right, but I think the point is that the best people in this business underperform for significant periods. And if you pull the trigger in those periods, it's probably not going to work.”
2018-01-22 · Capital Allocators · Bill Spitz – Seasoned Commodore (Capital Allocators, EP.37) · IDENTIFIED FROM THE TRANSCRIPT · source
“From my standpoint, the major reasons to change managers are one, they change their strategy or style, and this is certainly not original to me. Lots of people talk about that. And you can see that if you meet with them frequently enough and you see changes in the portfolio and you ask them about them and you don't get a satisfactory answer, you know something is up. A second one to me is personnel turnover, chemistry problems with people. And the third one is motivation. When firms sell, that's not an automatic red light, but it's close to it because people who are hungry, who are excited about being in the game, and they've recently made a stack of money and now they're going to cruise, that doesn't particularly work for us. So it's the qualitative sort of things again. And you get that wrong sometimes. But I think both in my Vanderbilt life and my current firm's life, we, by the way, in my current firm, we use all outside managers. So it's an open architecture sort of structure.”
2018-01-22 · Capital Allocators · Bill Spitz – Seasoned Commodore (Capital Allocators, EP.37) · IDENTIFIED FROM THE TRANSCRIPT · source
“I'd love to hear your opinion on exiting managers because when I looked at the decisions that I and my team had made, with somewhat great consistency, you'd tend to exit managers after a week period, and you tend almost never to exit a manager after a very strong period of performance.”
2018-01-22 · Capital Allocators · Bill Spitz – Seasoned Commodore (Capital Allocators, EP.37) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think manager selection is a little bit like dating. I don't think you make the decision on the first try, so at least where we were able to, we would meet with people over time and not pull the trigger right away. Occasionally, if there was a fun that was in tremendous demand and sort of one time you get in or you don't, you know, we would pull the trigger more quickly. But in general, it was a slow get-to-know-your process, talk to them over and over again, talk to a lot of people who know them, either existing clients or people in their former firms or whatever, and do as much of that kind of due diligence as you can. But again, in the end, it's a very subjective, qualitative sort of process. And I have no illusions about how often I'm going to get it right.”
2018-01-22 · Capital Allocators · Bill Spitz – Seasoned Commodore (Capital Allocators, EP.37) · IDENTIFIED FROM THE TRANSCRIPT · source
“If you took an example of an initial due diligence process on a manager, so there's a manager, let's say you haven't known for years, maybe you've heard good things about, maybe someone else referred them, and you're taking these initial meetings. And you know that there are only certain days you're meeting them. So maybe they slept really well, maybe they took some pill that morning, and so their level of excitement and enthusiasm is very high in that moment. How do you get a sense of whether that's who they are as their disposition, or it's just how they presented themselves to you in those few times that you happen to be face-to-face with them?”
2018-01-22 · Capital Allocators · Bill Spitz – Seasoned Commodore (Capital Allocators, EP.37) · IDENTIFIED FROM THE TRANSCRIPT · source
“And what are the this is one of those schemas that we all know and believe, but there's a big difference between objectively saying, oh, we want good people with high integrity and great character. And then the subjective part of that. So what are some of the subjective lenses that you've looked at that you said this is the kind of person I want to have as a partner versus the kind of person I don't?”
2018-01-22 · Capital Allocators · Bill Spitz – Seasoned Commodore (Capital Allocators, EP.37) · IDENTIFIED FROM THE TRANSCRIPT · source
“Sitting across the table from the people. I heard an interview recently with Dave Swenson, and he said manager selection is about people, people, people. And I agree with him 100%.”
2018-01-22 · Capital Allocators · Bill Spitz – Seasoned Commodore (Capital Allocators, EP.37) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, first of all, I'd say my favorite way not to do it is by looking at track records and long believed that track records have virtually no predictive ability. And I think the New York Times a couple of weeks ago had an article about the Morningstar rating saying that they really don't have any efficacy in terms of predicting returns. So I never spent an awful lot of time looking at track record. The things I really spent time on, is this an investment approach or philosophy that makes sense to me and I can understand and is well articulated. And that's not always the case, which is interesting. And for that reason, I never was a fan of black box approaches of any sort. Although some of them have been quite successful, but that was just not something we do. So the first thing is, does the basic investment approach make good sense? Second, is it applied on a disciplined basis? A repeatable basis? Because not only do you have to have an edge, but you have to have a repeatable edge. You have to have some sort of process or structure that makes it repeatable. Third, very interested in the people.”
2018-01-22 · Capital Allocators · Bill Spitz – Seasoned Commodore (Capital Allocators, EP.37) · IDENTIFIED FROM THE TRANSCRIPT · source
“Of course, we had no insight as to what was going to actually happen. So occasionally someone will remember that you were right and thank you for it. Not all that often, but it's nice. You know, some of the more interesting things that we see, we work with a number of multi-generation families where we're working with sometimes three generations. And it's interesting to see the differences in approach and psychology and risk tolerance and patience and all those sorts of things across three generations. It's quite interesting.”
2018-01-22 · Capital Allocators · Bill Spitz – Seasoned Commodore (Capital Allocators, EP.37) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's interesting. We got a couple of calls on the morning after Trump selection saying, get me out, the world's coming to an end. And we said we don't know what's going to happen, but we do know that knee-jerk sort of reactions are generally a bad idea, so let's sit tight. I actually saw one of these people just the other day, and he said, thank you so much.”
2018-01-22 · Capital Allocators · Bill Spitz – Seasoned Commodore (Capital Allocators, EP.37) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, we do try to find managers who will take it into account if they're thinking about selling something but holding it a short time would make it go long term. We would like it if they would think about those kinds of things. Another thing that you deal with with individuals and families obviously is emotions. Some of that disappears in the structure of a committee for an endowment. Not all of it, but some of that disappears. But with individuals and families, you're dealing with psychology and emotions and all those sorts of things.”
2018-01-22 · Capital Allocators · Bill Spitz – Seasoned Commodore (Capital Allocators, EP.37) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, a couple of differences. First is time horizon, you know, endowments, at least in theory or perpetual funds, although an old friend of mine who is a consultant at Cambridge Associates used to say that the time horizon for an endowment was really three years. And I said, where did you come up with that? He said, well, after one year of bad results, trustees get antsy, but they don't pull the trigger. After two years they get really antsy, and they begin to pull the trigger, but it takes them a year to do it. So I always thought that was sort of humorous. But at least in theory, the time horizon of an endowment is perpetual. Obviously with 75% of our clients being individuals and families, you have more limited time horizon. So that's one thing. The second thing is taxes, obviously, liquidity is another issue. So there are significant differences. In our manager selection process, particularly on the equity side, one of the things we do is pay attention to tax efficiency and whether a lot of managers, primarily those who deal with institutional portfolios, don't think about tax.”
2018-01-22 · Capital Allocators · Bill Spitz – Seasoned Commodore (Capital Allocators, EP.37) · IDENTIFIED FROM THE TRANSCRIPT · source
“Morgan Stanley, all rights reserved. And now, back to the show. Can you touch a little bit on some of the differences in managing an endowment and then presumably in the trust company there's some taxable pools of capital? And how do you think about asset allocation differences, manager selection differences”
2018-01-22 · Capital Allocators · Bill Spitz – Seasoned Commodore (Capital Allocators, EP.37) · IDENTIFIED FROM THE TRANSCRIPT · source
“make available to a broader universe of investors funds that were similar to endowment funds couldn't do all the same things that we did at Vanderbilt, but the idea was to come up with very diversified portfolios, access to nontraditional investments, and to provide that to smaller clients, both individual and institutional. At the time, that was a fairly novel idea, not so novel today, it's widely practiced today, but that was the initial idea. It's been a successful strategy and a successful firm now. We're almost 25 years old. As I said, we're six and a half billion, which is not huge, but we really don't mark it. We've really done it all organically, word of mouth sort of friends and family, and it's spread from there, but it's been a nice run.”
2018-01-22 · Capital Allocators · Bill Spitz – Seasoned Commodore (Capital Allocators, EP.37) · IDENTIFIED FROM THE TRANSCRIPT · source
“So at most universities, faculty members are allowed to spend some percentage, typically 20%, of their time consulting and doing other things. Typically administrators are not allowed to do that. For whatever reason the president of Vanderbilt, when I was there, said, well, if they can do it, we can do it. I was allowed to spend a small percentage of my time doing other things. I had a friend who is the CFO of a hospital and in my part of the world, and the docs would come to him frequently saying, you know, I don't have any place to invest my money where I have confidence, you know, I don't trust these people. So my friend came to me and said, you know, there's got to be an opportunity somehow to create an entity that these people would feel excited about investing with. And so we decided to do it in the form of a trust company because having trust powers allowed us to work with these complex families. So we created and the initial idea, this was in 1994, the initial idea was to try to”
2018-01-22 · Capital Allocators · Bill Spitz – Seasoned Commodore (Capital Allocators, EP.37) · IDENTIFIED FROM THE TRANSCRIPT · source
“We're getting it, and frankly, I personally don't have a particularly intelligent answer yet. I guess what I would say is that those of us with financial training think about analyzing an investment in a certain way, discounted cash flow basis, and so I've always found it very hard to analyze gold, art, other similar sorts of investments. And I put Bitcoin in the same category. It may well do well. Everything I read tells me the underlying blockchain technology is really important, but I have no idea how to value. And I think, I don't know whether it was Buffett or Ben Graham or someone said, if you can't really calculate evaluation, it's not investing in speculation. And that doesn't say it's bad. It's just you have to understand it for what it is.”
2018-01-22 · Capital Allocators · Bill Spitz – Seasoned Commodore (Capital Allocators, EP.37) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I think one of the things you have to do is choose your clients carefully. The second thing you have to do is educate them. And I should say a word about the firm I'm involved with now. We're a smallish firm six and a half billion dollars, a private trust company. About 75% of our clients are individuals and families, about 20 or 25 percent are institutions, primarily smaller endowments. So when we're working with these folks, we spend a lot of time talking about projected returns. We'd spend a lot of time talking about risk management. These days it falls on deaf ears largely, but perhaps at some point, it'll begin to be important again. But it's an uphill battle. I have to tell you, every conversation we have with clients now is why do we have hedge funds? Why do we have private equity? Why do we have all this complexity? Why don't we just do stocks and bonds until a few months ago it was, why do we have any international stocks? Fortunately, they've outperformed a good bit this year, so that conversation seems to have died down a little bit.”
2018-01-22 · Capital Allocators · Bill Spitz – Seasoned Commodore (Capital Allocators, EP.37) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, you know, the fun part about that this conversation is it's timeless in the sense that I feel like if we were sitting here seven or eight, nine years ago, 10, 11, 12 years ago, we probably would have had the same exact conversation. GMO's forecast for equities 10 years ago were flat to negative, bond yields were a little bit higher, but not much. How do you work with a client and keep them apace at a strategy that clearly isn't keeping up with the S&P five hundred over a long period of time where if that is their benchmark, you're underperforming?”
2018-01-22 · Capital Allocators · Bill Spitz – Seasoned Commodore (Capital Allocators, EP.37) · IDENTIFIED FROM THE TRANSCRIPT · source