YouSaid · the spoken record

Brian Portnoy

lines on the record: 86
first: 2018-06-18
most recent: 2018-06-18
sittings or episodes: 1
sources: podcast

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“To be successful is to have relationships, to have skills, and these are all options in a very generic sense, because you just don't know what's going to connect. And that is not something anyone taught me until maybe five or seven years ago. And once a couple of folks kind of turned me on to that way of thinking, I've tried to learn more and more about that.”
2018-06-18 · Capital Allocators · Brian Portnoy – From Complex to Simple (Capital Allocators, EP.57) · IDENTIFIED FROM THE TRANSCRIPT · source
“To engage the ability to be kind and care, and to bring people along, I always sort of knew it, but then I looked around at people who weren't salesmen per se, but they were quite successful. And I realized what they were all doing was creating compelling visions that other others bought into. I wish someone had told me that. The second one quickly is the principle of optionality, which is something I've thought about a lot in the last few years and I think about it with my kids a fair bit. The idea that much of success is not about pointing to the fences and hitting that one home run and walking off the field. It's more about having lots and lots of iterations across multiple games in your life where you're trying to source as many cheap options as possible. Life's pretty random and arbitrary. Things happen for reasons that we can't and won't understand. And so I think one of the main ways”
2018-06-18 · Capital Allocators · Brian Portnoy – From Complex to Simple (Capital Allocators, EP.57) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, you know, I spent many years on the south side of Chicago in the ivoryest of ivory towers arguing about some of the most esoteric and irrelevant things you could imagine. And the name of the game was being right. And you dug in and you spent months and months researching just one point so that you can weigh over somebody who's researching the same thing. That didn't set me up in multiple ways to be successful in the business world. I think I had some success for other reasons. But this notion that you want to come up with the right answer is one thing. But the bigger picture of, you know, that's not really how people get ahead. What they get ahead with is selling in the good sense, you know, ideas or services or products or whatever that are helping others. And so the”
2018-06-18 · Capital Allocators · Brian Portnoy – From Complex to Simple (Capital Allocators, EP.57) · IDENTIFIED FROM THE TRANSCRIPT · source
“I want to flag too because they're both really important to me. The first is, and I didn't learn either of these until not that long ago, the first one is that we're always selling. Everybody is always selling something.”
2018-06-18 · Capital Allocators · Brian Portnoy – From Complex to Simple (Capital Allocators, EP.57) · IDENTIFIED FROM THE TRANSCRIPT · source
“And so I play this with my kids and it's a really cool world and you think about all the different ways that we can have fun competing against each other or collaborating. I do have a bit of a dream that I'd like to create my own board game one day.”
2018-06-18 · Capital Allocators · Brian Portnoy – From Complex to Simple (Capital Allocators, EP.57) · IDENTIFIED FROM THE TRANSCRIPT · source
“You'd be the leader Yeah, exactly. I pity the fool, right? No. You're on the same team and you find ways through collaboration to beat the game. So there's one, for example. So there's one, for example, that's called Forbidden Island. And the island that you, the playing board disappears. So it's hexagons that intersect. And on every turn, chunks of the board go away because the island is disappearing into the sea.”
2018-06-18 · Capital Allocators · Brian Portnoy – From Complex to Simple (Capital Allocators, EP.57) · IDENTIFIED FROM THE TRANSCRIPT · source
“And whether it be dominion, settlers of Catan, magic the gathering, which is a huge multi hundred million dollar industry, it's game owned by Mattel, Quarto. I mean, we have dozens and dozens of games at home. And my favorite kind, and there's sort of a trend toward so-called cooperative games. So we play Monopoly, and I'm trying to bankrupt you. A lot of games now are designed where we're all on the same team, but we have different skills. You know, we're sort of like the A team. You'd be George Pepard.”
2018-06-18 · Capital Allocators · Brian Portnoy – From Complex to Simple (Capital Allocators, EP.57) · IDENTIFIED FROM THE TRANSCRIPT · source
“You agree So I read a lot of stuff that our friends are familiar with, economic history, behavioral finance, and I'm kind of obsessed with all of that stuff. I read a lot of political history. In Chicago, I lead a reading group for a big group of folks where we just sort of tackle some of the big issues that are alive in society. But I wouldn't say that there's sort of some micro topic that I've dove into that I have found to be my own little treasure trove. I will say that something I do a lot of that few people know anything about, or at least that I do it, is I play board games. I play a lot of board games. I love board games. And we're not talking candy land or even monopoly. We are in a golden age of gaming. There's a gaming store in Chicago down the street from me that has hundreds and hundreds of boxes lined.”
2018-06-18 · Capital Allocators · Brian Portnoy – From Complex to Simple (Capital Allocators, EP.57) · IDENTIFIED FROM THE TRANSCRIPT · source
“You know, I think back to the very first. Conversation I had at Morningstar. So I did a thousand and two interviews at Morningstar over four years. And I think to the very first one. And here was a guy who simply could not and would not consider the relationship between skill and luck. Now, I wasn't calling the guy an idiot, and he wasn't an idiot. He was a totally capable fund manager. But what I found, and it does drive me nuts, and it drove me more nuts during the hedge fund days when I was talking to these masters of the universe, guys who were just so smart. But then you break down the numbers and you show that there are various forms of skill and that luck is a big part of it. It drives me crazy that I would say a vast majority of money managers I've met over the years, and it's a big number. Simply will not accept that luck is part of the equation.”
2018-06-18 · Capital Allocators · Brian Portnoy – From Complex to Simple (Capital Allocators, EP.57) · IDENTIFIED FROM THE TRANSCRIPT · source
“I'm sorry. Geez, I buried the lead. I bleed black and gold. I grew up in Pittsburgh. Anybody who grew up there or is part of Steelers Nation kind of gets it. We've got black and gold terrible towels every Sunday. Yeah, if you want me to, I could revert into my old Pittsburgh accent. But I'm trying to sound more sophisticated.”
2018-06-18 · Capital Allocators · Brian Portnoy – From Complex to Simple (Capital Allocators, EP.57) · IDENTIFIED FROM THE TRANSCRIPT · source
“I've been waiting to answer this question for so long because I remember I've listened to all your podcasts and the first time you asked it what popped into my mind was Santonio Holmes on his tiptoes with about thirty seconds remaining in Super Bowl forty three. I probably rewatched that video and the video of James Harrison returning the interception for one hundred one yards. I don't know, ten, twelve, fifteen times a year. It is my happiest sports moment. I grew up in Pittsburgh.”
2018-06-18 · Capital Allocators · Brian Portnoy – From Complex to Simple (Capital Allocators, EP.57) · IDENTIFIED FROM THE TRANSCRIPT · source
“Conversations you have with certain entrepreneurs and made the world so fascinating, but it's also so unpredictable, I think I tried to create a little bit of a timeless framework for my kids to think about how to afford a meaningful life long after Tracy and I are gone.”
2018-06-18 · Capital Allocators · Brian Portnoy – From Complex to Simple (Capital Allocators, EP.57) · IDENTIFIED FROM THE TRANSCRIPT · source
“And we have kids very similar ages. Maybe this should have been the first answer. Certainly something I've thought about for years now. But I worry about them. I mean, they're 15, 13, 11, and my wife and I are super lucky to have them. They're just wonderful. And I think they're pretty lucky in the situation that they've been born into. And, you know, sort of the five of us, we're up for a good fight. Tracy and I really want them to have happy and meaningful lives. I did write this book in a way where at various points each of my three kids will be able to read it and hopefully make sense of whatever it is they're going through. The book has dozens of Easter eggs in it for various people. I think there's one in there for you, Ted. So the book has Easter eggs for my three kids at various points, which they'll find probably in a decade or so. And if we accept that 15 to 20 years ago, Google wasn't a thing and we fold forward 15 to 20 years and, you know,”
2018-06-18 · Capital Allocators · Brian Portnoy – From Complex to Simple (Capital Allocators, EP.57) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah. I mean, these are lessons I wish I had as early in my career as I was learning what a hedge fund was same as you, like early on. You want to learn the right fundamentals for your own life first.”
2018-06-18 · Capital Allocators · Brian Portnoy – From Complex to Simple (Capital Allocators, EP.57) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's funny. It's easy to sit back and say, oh, you know, in the institutional investment world, we know all this stuff. But we've talked about this, the number of professional money managers whose own”
2018-06-18 · Capital Allocators · Brian Portnoy – From Complex to Simple (Capital Allocators, EP.57) · IDENTIFIED FROM THE TRANSCRIPT · source
“That I call adaptive simplicity to say, okay, there might be 15 things to consider here, but I'm not going to talk about 13 of them. We're only going to talk about two. And it goes back to that notion of satisfying. We're not going to let the perfect be the enemy of the good. So I hope people can read this. And number one say, geez, I'm not alone. This stuff's hard and it's stressful and I don't want to talk about it. No one likes talking about this and maybe gives them some tools to end up in a better place.”
2018-06-18 · Capital Allocators · Brian Portnoy – From Complex to Simple (Capital Allocators, EP.57) · IDENTIFIED FROM THE TRANSCRIPT · source
“I hope it makes a difference in people's lives. I really am privileged to travel the country and meet thousands of investors and kind of hear the stories about what matters to them. And it takes me back to my Morningstar days. It takes me back to that sign above the door that Joe put up there. Investors come first. And I think a lot of people are intimidated by money. It's sort of the starting premise of the book. It's the most emotionally fraught thing. It's a lightning rod for all the other things in life that drive us a little bit crazy. It can make good situations bad and it can make bad situations worse. And so I hope people can read this and see through three basic shapes that you can actually underwrite contentment, that you can afford a meaningful life with just a little bit of preparation and a little bit of work along the way. I tried pretty hard at various points through principles.”
2018-06-18 · Capital Allocators · Brian Portnoy – From Complex to Simple (Capital Allocators, EP.57) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, the institutional parallel to that is private equity. Yeah. There's a lot of benefits to private equity. There's a lot of risks in the asset class. But at the end of the day, you've taken layers and layers of human emotion out of that potential decision process for a long time.”
2018-06-18 · Capital Allocators · Brian Portnoy – From Complex to Simple (Capital Allocators, EP.57) · IDENTIFIED FROM THE TRANSCRIPT · source
“The ability to buy and sell something on every tick can lead to really bad outcomes. And so we need to think about sort of the ability to change your mind as a double-edged sword. We know that people who are in target date funds and who are in sort of the institutional or defined contribution share classes of big funds tend to have better behavioral outcomes than those who are in the daily discretionary versions of the exact same funds. And why is that? It's because they can't really change their mind easily. They can change their mind”
2018-06-18 · Capital Allocators · Brian Portnoy – From Complex to Simple (Capital Allocators, EP.57) · IDENTIFIED FROM THE TRANSCRIPT · source
“Sort of the classic dyad between stocks versus bonds and them being supposedly lowly or un and sometimes negatively correlated assets, well, the real answer is it depends. Sometimes it's positive, sometimes it's negative, and we need to be prepared for those outcomes. We need to think in probabilistic terms about that. And then last piece is a technical issue of liquidity, which is a very, very deep and fascinating and complex topic. I refer to liquidity as flexibility, and I put it in terms of can you change your mind? Okay, so we're just regular folks. We can't obsess about this. We can't work on this 25 hours a day. If I'm going to get involved in a particular structure, whether it be a mutual fund or a hedge fund or private equity vehicle or an MLP or whatever the case may be, am I going to be able to move on if I want to? And one shouldn't assume that more flexibility is better.”
2018-06-18 · Capital Allocators · Brian Portnoy – From Complex to Simple (Capital Allocators, EP.57) · IDENTIFIED FROM THE TRANSCRIPT · source
“I'm just going to state that the smartest of the smart guys say that volatility is not risk. And I strongly, strongly disagree. Because if what you're really trying to do is achieve your goals in life, and the more volatile an investment is makes it more likely that you're going to drop that investment probably at the worst possible time. It means you're very unlikely to meet your goals. So I think volatility is risk in a very profound sense. And it's our ability, you know, back to that point about behavior being the main driver, that thinking about that pain ahead of time is really important. There's two other dimensions I'll touch on quickly, the other two corners of the square. One is fit, which I think wonks would just call correlation. But thinking about that is easier said than done in no small part because correlations are unstable. So if you look at...”
2018-06-18 · Capital Allocators · Brian Portnoy – From Complex to Simple (Capital Allocators, EP.57) · IDENTIFIED FROM THE TRANSCRIPT · source
“Volatility. So, volatility is some abstract number. I think of volatility in terms of the ability to stay in your seat. The more volatile an investment, the more likely it is you're going to get spooked and bolt. Okay, so I actually, this will be at the part of the conversation where I say Warren Buffett and Howard Marks have it wrong. Okay, I'm not making a bet though. I'm just going to state.”
2018-06-18 · Capital Allocators · Brian Portnoy – From Complex to Simple (Capital Allocators, EP.57) · IDENTIFIED FROM THE TRANSCRIPT · source
“and fit. And what I do in the book is walk through how each of those are dimensions that we should think about, what I provide in the book are specific questions a client could ask of an advisor or an advisor could ask of a fun company to create a win-win situation. A lot of what I've tried to do over both books is create good conversations with people who maybe haven't thought about it exactly the same way I have. And here's a different set of frameworks or different vocabulary. So we want to grow our capital. That's sort of obvious. But how do you set expectations for that? I present some data that shows that, well, you can kind of tell whatever story you want depending on which data and over what time frame. It's an easy question to ask, okay, what do stocks do over time, becoming up with an answer that's both accurate and helpful is really quite difficult. So that's the growth piece. I talk about pain, which is my word for violence.”
2018-06-18 · Capital Allocators · Brian Portnoy – From Complex to Simple (Capital Allocators, EP.57) · IDENTIFIED FROM THE TRANSCRIPT · source
“And mutual fund selection. And I think I've established that that's backwards. That should be the end of the conversation, not the beginning, let alone the only part of the conversation. And one of my favorite lines of all time, which is supposedly attributed to Mark Twain, but I think I've been disabused through Twitter and other places that almost nothing that Mark Twain was supposed to have said he actually said. But, you know, there's this line out there that if I had more time, I'd write you a shorter letter. I really work hard explicitly every day at Vertus and in my writing career to write shorter letters. And so the square, I think captures what I think are just the four dimensions of any investment decision, whether you're buying a mutual fund or a private equity exposure or some of the complex stuff that you and I diligent on the hedge fund side back in the day. And I put them, I think, in layman's terms. We want what I call growth, pain, flexibility.”
2018-06-18 · Capital Allocators · Brian Portnoy – From Complex to Simple (Capital Allocators, EP.57) · IDENTIFIED FROM THE TRANSCRIPT · source
“This to me is the least necessary part of the book. I think the book goes from most important slash most abstract to most specific of least impact. So if someone wanted to read just the circle great or the circle and the triangle, good, I hope they read the whole thing. There's a good reveal at the very end, so they should probably make it through the square part. In the spirit of trying to move from complex to simple, I wanted to think holistically. I wanted to basically rethink the investor's paradox. I wanted to come up with something that was as simple as it needed to be, but no simpler that can really give end investors as well as their financial advisors a really comfortable conversation space to talk about how investment decisions are being made. Because I see on the ground every week meeting with advisors and clients that so much of the conversation around financial planning actually is a conversation about portfolio.”
2018-06-18 · Capital Allocators · Brian Portnoy – From Complex to Simple (Capital Allocators, EP.57) · IDENTIFIED FROM THE TRANSCRIPT · source
“Major asset classes, you're probably going to be in pretty good shape for a long period of time. The issue is that people start where I started my writing career, which is the wrong place, which is, hey, let's pick the good investments. That does matter. It is important. There are some managers who are highly skilled and much better than others, and it's worthwhile to track them down, but only within the context of a smart portfolio and the recognition that it's your own behavior and transcending your emotional and cognitive biases that are going to get you to a good spot.”
2018-06-18 · Capital Allocators · Brian Portnoy – From Complex to Simple (Capital Allocators, EP.57) · IDENTIFIED FROM THE TRANSCRIPT · source
“Somebody on the outside saying, hey, you know what? Let's keep you from being the worst version of yourself at the worst possible time. That's incredibly valuable. And it's not something that advisors, even to this day, are very good at articulating to their clients. And it's something I do on the road a lot where I coach advisors on that element of behavioral coaching. And so behavior to me is the main driver. And then within that, you can begin to get into the weeds. You know, there's classic studies that you know, and I bet a lot of the listeners know, that show that asset allocation is a much bigger driver of financial outcomes, investment outcomes than security selection. I find the argument both theoretically compelling and empirically convincing. One thing many clients, including advisors, don't realize is that we're making this game much harder than it needs to be. So if you appreciate behavior and then you set up a diversified portfolio across”
2018-06-18 · Capital Allocators · Brian Portnoy – From Complex to Simple (Capital Allocators, EP.57) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, yeah, I added a second triangle. I personally find it a little bit confusing, but I couldn't get away from it because I am obsessed with behavioral finance. And so once we've defined our purpose, once we've set our major priorities, then we have to start making decisions. And what I wanted to do was define for folks based not just on my observations, but on a lot of research as to what”
2018-06-18 · Capital Allocators · Brian Portnoy – From Complex to Simple (Capital Allocators, EP.57) · IDENTIFIED FROM THE TRANSCRIPT · source
“And if you translate that over onto the investment side, you had another framework of a triangle, and it wouldn't be hard to say, oh, it's about asset allocation, manager selection, security selection, but you started the base of triangle with behavior.”
2018-06-18 · Capital Allocators · Brian Portnoy – From Complex to Simple (Capital Allocators, EP.57) · IDENTIFIED FROM THE TRANSCRIPT · source
“Funds for a nice fee. It's only over the last five, ten, fifteen years that the bulk of the wealth management industry has bought into this idea that people need a financial plan. So I think some of the things, when I say them out loud, they seem so obvious. But the fact is that so many of the clients of wealth management firms actually still don't have financial plans today just to have a plan in place, the chance that you're going to have better life outcomes is considerably more than if you don't.”
2018-06-18 · Capital Allocators · Brian Portnoy – From Complex to Simple (Capital Allocators, EP.57) · IDENTIFIED FROM THE TRANSCRIPT · source
“And then finally is reach, meaning that we're always going to be ambitious. We always want to aspire. But if you put some good thought and planning into protecting yourself from unwanted outcomes to really thinking about matching what you own versus what you owe, you sort of won the money game at that point and you can really reach for more. And I don't mean just going and buying a fancy car. I mean you could be more charitable. You can help out your family. You can help the community. You can do good things for yourself. You can basically spend more on the four C's that we talked about. So it's hard to move from big picture thinking about what really motivates us in life financial planning. But I think it's really important. And the big trend, I should point out, in the wealth management business is this notion of goals-based wealth management. It wasn't that long ago that the advice business was really a brokerage business. It was selling stocks and bonds.”
2018-06-18 · Capital Allocators · Brian Portnoy – From Complex to Simple (Capital Allocators, EP.57) · IDENTIFIED FROM THE TRANSCRIPT · source
“Style decisions in terms of what you save, what you spend, decision to have kids, the decision on where you want to live, the vocation that you want to employ. I think a little bit of thinking about risk and what's the potential range of outcomes here can go a really, really long way to putting people in a good spot. I read the line the other day that the best way to manage risk is just not to be there. So I think that's really important. Once you kind of have that kind of less wrong or that protect mindset, I think you can then get into the day-to-day of financial planning, what I call it match. We know from the institutional side of the money management business, there's something called asset liability matching. But it basically means mapping up what you're spending and what you're saving and how is that going to go over time. I think a little bit of thinking from a budgetary perspective can go a long way.”
2018-06-18 · Capital Allocators · Brian Portnoy – From Complex to Simple (Capital Allocators, EP.57) · IDENTIFIED FROM THE TRANSCRIPT · source
“But the general attitude that managing risk is in many ways more important than trying to achieve more and more a higher rate of return. And so Howard Marks has been incredibly influential in the way that I think about this, that relationship between risk and return, putting risk first. But Seth Clarman and many of the great investors you and I have met over time, they engage in something that I've now labeled, they want to be less wrong. I think as ambitious people, we want to be more right. We want to be faster, smarter, better, et cetera. That's great. But in the money life that we're trying to manage well, you can easily get over your skis if you tried to be more right. To be less wrong means to think about, okay, into the future, where might this get off the track? And I'm not just talking about your portfolio and choosing one fund versus another. I'm talking about life.”
2018-06-18 · Capital Allocators · Brian Portnoy – From Complex to Simple (Capital Allocators, EP.57) · IDENTIFIED FROM THE TRANSCRIPT · source
“That order. So, the first thing we want to do is develop a mindset and put things in place that protect us from catastrophe. The obvious example is insurance. Now, the book isn't in any way about whole life versus whatever. My wife handles that part of our family enterprise. I don't know anything about insurance.”
2018-06-18 · Capital Allocators · Brian Portnoy – From Complex to Simple (Capital Allocators, EP.57) · IDENTIFIED FROM THE TRANSCRIPT · source
“On a lot of things because I've learned, especially from my hedge fund days, the deeper you go into those weeds, the more you're lost and the less likely it is you're going to find some treasure that you think is buried down there. And so I refer to the three priorities as protect, match, and reach.”
2018-06-18 · Capital Allocators · Brian Portnoy – From Complex to Simple (Capital Allocators, EP.57) · IDENTIFIED FROM THE TRANSCRIPT · source
“The triangle. I mean, it has a certain Sesame Street quality to it. Old school hip hop Della Soul, you know, three is the magic number. And the big turn in the book is, okay, it's one thing to think big picture by yourself or with your partner or friends walking through the woods. Hey, what the hell am I doing with my life? I think where, and I hope the book can fill this gap a little bit, well, how do you then actually connect that to navigating money life, earning, saving, spending, investing? That's what I'm really trying to accomplish here in the triangle as the step indicates that there's sort of three priorities. So we go from setting purpose, defining purpose to setting main priorities in our lives. I'm trying to keep the entire narrative at a simple level. You know, Einstein said as simple as possible, but no simpler. I don't get into the weeds.”
2018-06-18 · Capital Allocators · Brian Portnoy – From Complex to Simple (Capital Allocators, EP.57) · IDENTIFIED FROM THE TRANSCRIPT · source
“I tell I'm loving this. Well, I like the fact that you're adding this dramatic, I don't know if you bring sound effects in in post-production.”
2018-06-18 · Capital Allocators · Brian Portnoy – From Complex to Simple (Capital Allocators, EP.57) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think for some people it's stressful, is think about okay, here's who I am now, who do I want to be in the future? And the path from here to there isn't a straight line. I think it's more of like a spiral where you kind of, you know, we all deal with a lot of noise and a lot of stress and pain and navigating that is not only important, it could be super empowering.”
2018-06-18 · Capital Allocators · Brian Portnoy – From Complex to Simple (Capital Allocators, EP.57) · IDENTIFIED FROM THE TRANSCRIPT · source
“We want control over our lives. We want a sense of autonomy, not just in the cartoonish Ayn Randian sense that you can do whatever the hell you want to others, but in a more subtle sense that you want to be able to write your own story in the way that you want. And so when you read people like Solzen Nietzschein and Viktor Frankl, you get this inspired sense of even under duress, you can tell your own story. The third C is competence. The idea that you're really good at something that's meaningful to you, whatever that is, your job, your vocation, your hobby, your passion. And then context, which is just that sense of connection to something outside yourself. Traditionally over thousands of years, that was religion or spirituality, that's still obviously very, very important. But there's your nation, your tribe, your cause, or whatever. And so I wanted people in the context of this adaptive circle to say, okay, these are the things that sort of matter to me. And they're probably going to matter different things will matter over time. And part of what we want to do, and to me, it's fun.”
2018-06-18 · Capital Allocators · Brian Portnoy – From Complex to Simple (Capital Allocators, EP.57) · IDENTIFIED FROM THE TRANSCRIPT · source
“Retire at a certain period in time, but what's actually happening in our minds is that we're adapting through a process of choice and circumstance. New things are happening, a lot of things out of our control. And we want to take stock as best as possible as to what really matters to us. And so I have a chapter in the book called What Matters. And I walk through sort of 2,000 years of the history of the concept of happiness, starting with Aristotle and ending with Marty Seligman and positive psychology, and focusing on things that really drive a more meaningful life. I make a big distinction between sort of pleasure and contentment. Aristotle made original distinctions with this, and they're still very relevant today. Our day-to-day life is just wrapped up with mood and pleasure versus pain, and we're just wired that way. It's not a good or a bad thing.”
2018-06-18 · Capital Allocators · Brian Portnoy – From Complex to Simple (Capital Allocators, EP.57) · IDENTIFIED FROM THE TRANSCRIPT · source
“Being right was the game and in a very precise way, but now I realize it's something slightly different, which is that you want to engage and empower people as best that you can. So, you know, I began to think about shapes and the contour and the direction of a path toward contented and a fulfilled life, the path that I draw goes from defining your purpose to setting your priorities to making specific decisions. So what I did with the investors paradox is that I started way at the wrong end. And actually, the investor's paradox is a book about getting rich. I think it's a subtle book. I think there's some interesting points in it, but let's make great decisions to make more. This book is not that. And the circle represents that we're going around than around. We set goals. They sound sort of linear. I want to say for my kids college.”
2018-06-18 · Capital Allocators · Brian Portnoy – From Complex to Simple (Capital Allocators, EP.57) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, you know, I made the comment earlier that I write for people who don't read or at least don't read much. So I think it's really important on a serious note to be respectful of your audience is to take them as they are, not as you want them to be. And so this was much more clear in the wealth management industry than it was in institutional asset management, where everyone's with their CFA and their puff chest and their calculator trying to figure out a lot of complex things. Number one, simple was better than complex. Less is better than more, and at a slightly different level, pictures are better than words. So like I mentioned, I do a ton of presentations all over the country. My PowerPoints have almost no words in them. Every page is a picture or a cartoon or a photograph that makes reference to a study. And the feedback's pretty positive because if I go back a couple decades to my academic days, I thought that being”
2018-06-18 · Capital Allocators · Brian Portnoy – From Complex to Simple (Capital Allocators, EP.57) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, Much use to you. And then you take this path of using shapes, circles, triangles, squares to walk someone through how you get from, let's call it confusion about money to some clarity and potentially funded contentment, including investment decisions. Why don't we start with the circle and we'll go from there? It's the leftmost shape in the book. It's also red. I don't know if that matters or not, but why don't you go ahead and talk about the circle?”
2018-06-18 · Capital Allocators · Brian Portnoy – From Complex to Simple (Capital Allocators, EP.57) · IDENTIFIED FROM THE TRANSCRIPT · source
“That can help people to lead to a good answer to the question, am I going to be okay? Wealthy is funded contentment, rich is the quest for more. And I could cite you 1,001 articles from social psychology and other disciplines that show that the quest for more is nothing better than a treadmill. And no matter how fast you run, you really don't get much further. And we sort of know that to be true. Nonetheless, in wealthy societies, in American society in particular, which is relatively materialistic, we are all chasing that. We're chasing more money. And so I wanted to really articulate a fork in the road that you can choose to be wealthy. And it takes some work. And I set out the path to get there. Or you can sprint on this treadmill and just be exhausted and not particularly satisfied.”
2018-06-18 · Capital Allocators · Brian Portnoy – From Complex to Simple (Capital Allocators, EP.57) · IDENTIFIED FROM THE TRANSCRIPT · source
“Funded contentment Yeah, that popped into my mind one day. The thing about money is that you can't escape it. It's a really kind of bizarre topic, not the practice, but the psychology of money. It infuses almost everything we do, the relationships that we have. And so coming to terms with what the psychology of money is is really, it was more difficult than I thought it was going to be because the more I dug, the more I realized that there was a lot going on there. So I had focused most of my career on investing, but I talk in the book a lot about what I call money life. And by money life, I mean not just investing, but earning, saving, spending, and then investing. And the four of those together encompass a lot of different activities, a lot of different decisions, and certainly a ton of different emotions. So how can I write something?”
2018-06-18 · Capital Allocators · Brian Portnoy – From Complex to Simple (Capital Allocators, EP.57) · IDENTIFIED FROM THE TRANSCRIPT · source
“They're all sort of asking the question, am I going to be okay? Is this going to work out for me? And yes, it matters which investments you choose, but that's actually the end of the story, not the beginning. And so my thought was I actually wrote the wrong book first. So the geometry of wealth ends where the investor's paradox begins. The investor's paradox is about investment decision making. The geometry of wealth to this distinction between rich versus wealthy, I've come to believe that being truly wealthy is the ability to underwrite a meaningful life.”
2018-06-18 · Capital Allocators · Brian Portnoy – From Complex to Simple (Capital Allocators, EP.57) · IDENTIFIED FROM THE TRANSCRIPT · source
“The concept is that there's a difference between being wealthy and being rich. I'll say by way of context that this book is a prequel, not only because I'm a total Star Wars nerd, but Meaning that I got to the end of the investors paradox and I was, I know at the time, and certainly in retrospect, kind of struggling with what is this all really add up to. I remember vividly reading some of Herbert Simon's work from decades ago and this concept of satisficing, which is kind of a really awkward word for don't let the perfect be the enemy of the good. And I think that just a powerful insight. And so number one from a personal point of view, as my kids are growing older and I wonder about the decisions they're going to make and the situation and career and lives that they're going to lead, that weighs on my mind as they grow older. And at the same time, as I'm now in more of a wealth management context than in the weeds to the fourth decimal place institutional asset management context, financial advisors and their clients and their clients could have fifty thousand dollars or fifty million dollars.”
2018-06-18 · Capital Allocators · Brian Portnoy – From Complex to Simple (Capital Allocators, EP.57) · IDENTIFIED FROM THE TRANSCRIPT · source
“on the wealth management side where someone is really busy building a portfolio and managing the portfolio, but also spending a ton of time”
2018-06-18 · Capital Allocators · Brian Portnoy – From Complex to Simple (Capital Allocators, EP.57) · IDENTIFIED FROM THE TRANSCRIPT · source
“I've realized in retrospect is sort of maybe the driving theme of the last twenty years of my career. But trying to figure out what an institutional investor wants in terms of the wide array of due diligence documents that they want, it's a very different process. I actually find the wealth management side of the business, which it's funny. Like, of course, I thought I knew who Merrill Lynch or Raymond James was, but I had no idea. My first day on the job, I said to Barry, what's a wholesaler? I didn't know the process, but now I've been into hundreds of branch offices and conferences and stuff like that. The questions that get asked are not as deep. You could say from one perspective, they're not as rigorous. They're probably wider and not as deep, but they're really quite practically oriented. Basically, I think there's maybe a little bit more of a BS.”
2018-06-18 · Capital Allocators · Brian Portnoy – From Complex to Simple (Capital Allocators, EP.57) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's a really good question. You have different problems to solve. I would say on the institutional side, allocators are very good at creating confusion and problems that don't exist, such as, well, the need to do analysis out to the fourth decimal place to what's the sortino ratio here or the sharp ratio there, or when this guy says he's got a multistrat ARB fund, you know, how much is going to be allocated to convert ARB versus merger ARB versus event-driven trades or whatever. And that conversation that I tried to speak to in the investors paradox, it can get out of control, not just because the PM and the salespeople are trying to sell something. It's also because complexity is a good thing for people's careers in our industry. I would argue that there's not a complexity premium for investors, generally the simpler the better, how to get from complex to simple kind of...”
2018-06-18 · Capital Allocators · Brian Portnoy – From Complex to Simple (Capital Allocators, EP.57) · IDENTIFIED FROM THE TRANSCRIPT · source