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Charles D. Ellis

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2017-04-13
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2017-04-13
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  1. “And you get a huge increase in the percentage of workers who become part of the plan, huge increase in the percentage of people who take the match, huge increase in the percentage of people who escalate over time their savings rate, huge increase in number of people who get into an automatic investment program. Those are really positive moves.”

    2017-04-13 · Masters in Business · Charles D. Ellis Interview (Replay):Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  2. “You have a choice at all times, and you would have the choice to say, nope, that's not for me. Nope, that's not for me. Nope, that's not for me. It's called opt-out. You say, I don't want to be in the plan. Okay, if you'd make that as your choice, fine, and say, no, I want to be in the plan, but I don't want to match the match. I don't want free money by putting up my 4% of... Match the employer's 4%. If you really don't want to do it, that's your freedom of choice. If you say, well, I do want to do the 4% match, but I don't want to increase the savings rate as I get raises from time to time. Okay, you can do that. I don't want to be in a target date fund. Fine. If you don't want to do that, you could do something else. But we make it available to you.”

    2017-04-13 · Masters in Business · Charles D. Ellis Interview (Replay):Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  3. “I think it's a terrific idea for two different reasons. There's a strong political view, social view, that we should not have government setting the rules. Telling us what to do, that'd be better. This does not tell you what to do.”

    2017-04-13 · Masters in Business · Charles D. Ellis Interview (Replay):Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  4. “Not in those levels if you got to ninety percent, maybe But look at what you have to do. You got a million people who are active involved in active investing. How many of those people have to retire from the field and say I'm going to quit? I'm going to go back and be a lawyer instead of being an investor. I'm going to go into a normal business instead of investment management. I don't want to do this stuff anymore. It's going to be a long, long time before, what do you have to do? You have to cut their pay by 50%. That wouldn't be enough to cause most people to quit. You really got a major change on your hands before you're going to see anything like that. It won't happen in my lifetime. I doubt it'll happen in my son's lifetime. And I doubt, doubt, doubt it'll happen in my granddaughter's lifetime.”

    2017-04-13 · Masters in Business · Charles D. Ellis Interview (Replay):Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  5. “And you talk to the people who know the most about it because they're trading for index funds. They've figured out how to handle almost every one of the questions.”

    2017-04-13 · Masters in Business · Charles D. Ellis Interview (Replay):Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  6. “Or less, and it's not aggressive, it's kind of go with the flow activity most of the time, highly skilled in the transactions, very skilled, but actually it's just kind of going with the normal flow. So the impact on pricing is de minimis.”

    2017-04-13 · Masters in Business · Charles D. Ellis Interview (Replay):Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  7. “30% of assets, but the game is in the trading markets and in the trading markets because index funds are very low turnover”

    2017-04-13 · Masters in Business · Charles D. Ellis Interview (Replay):Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  8. “When a lot more people are in the United States worldwide, more people are smoking now than ever It's very, very unlikely that we will get so much indexing going on that smart people won't be smart enough to figure out that they should now think about doing a little bit of active investing.”

    2017-04-13 · Masters in Business · Charles D. Ellis Interview (Replay):Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  9. “But that's hyperbole, and it's future stuff if you had everybody indexing, wouldn't that mean that we've got a real problem? Yeah, of course it would. And when everybody stops smoking, Please let me know because that would be a really important reality.”

    2017-04-13 · Masters in Business · Charles D. Ellis Interview (Replay):Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  10. “There's one other thing that's really important, the data that was available to people was inaccurate. It was precise. But it was inaccurate. The reports on who was performing compared to the market looked terribly encouraging. Looked like seventy or eighty percent of the professional managers were beating the market Yeah, but you've left out somebody. Who'd you leave out? The guys that got killed.”

    2017-04-13 · Masters in Business · Charles D. Ellis Interview (Replay):Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  11. “It's too much fun. It requires concentrated attention. So people are really, really working at that. How are they going to pay any attention to something that's completely foreign to everything they've ever heard of? It just doesn't make sense.”

    2017-04-13 · Masters in Business · Charles D. Ellis Interview (Replay):Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  12. “Barry, let's be realistic. Investment management, active investment management, competing with everybody else is great fun.”

    2017-04-13 · Masters in Business · Charles D. Ellis Interview (Replay):Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  13. “The market is priced by investors. fifty years ago those investors were individuals who bought and sold once every year or two. They honestly didn't know an awful lot, and so they made a lot of errors. Today, the market is entirely priced by professionals. They are very much on top of what's going on. And while they're never always dead right, they're so close to being right compared to anybody else. It's the old joke about the two guys and the bear. And one guy's putting on his sneakers, and the other guy says, God, you can't stop to put on your sneakers.”

    2017-04-13 · Masters in Business · Charles D. Ellis Interview (Replay):Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  14. “All true is the same thing in driving an automobile on the highway. It's the same thing in virtually every dimension of our lives. Try to figure out who you are and what you want to accomplish and focus on that.”

    2017-04-13 · Masters in Business · Charles D. Ellis Interview (Replay):Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  15. “If they're competing with professionals, now it's an accurate description for professionals competing with professionals. And individuals should not be investing in mutual funds without being aware of how tough it is to be a successful mutual fund manager if you're an active investor. It's hard.”

    2017-04-13 · Masters in Business · Charles D. Ellis Interview (Replay):Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  16. “Years ago, I didn't think it was fair for dad to say that because it was hard to come up with solutions sometimes. But he was right. And so if you put out the losers game, this is a tough place to play and be successful. Then the question obviously is okay, what would you do? And the answer is don't play the detailed transactions game. Play the long term policy game of getting in the right direction. And I don't back to driving. I don't care how fast you drive going to Chicago. Just be sure you're not headed towards Miami.”

    2017-04-13 · Masters in Business · Charles D. Ellis Interview (Replay):Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  17. “Absolutely. And the real questions are all about long, long, long term. It's to me it's the father in law question? Man has got a beautiful daughter, she's bright, she's interesting, she's got a wonderful future ahead of her. She is introducing a guy. Does he care whether he's got blue eyes or brown eyes? Does he care whether he's got a wonderful sense of humor? Does he care whether the guy is tall or a good dancer? No, none of those things. What he wants to do is one single thing. Is this going to be a good friend for my daughter 10 years from now, 20 years from now, 30 years from now, 40 years from now? Will she be in a good, happy position?”

    2017-04-13 · Masters in Business · Charles D. Ellis Interview (Replay):Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  18. “Every magician knows if you want to be able to pull off a good trick, distract your audience so they don't notice what you're actually doing. The same thing is true of everybody's having an illicit affair. Tract your audience, and they won't find out what you're doing. Same thing is all kinds of different problems. You get people to focus on the wrong thing. In investing, most people get focused on day-in, day out stock prices. And how'd you do this quarter this year? Maybe the less two years. This was this week.”

    2017-04-13 · Masters in Business · Charles D. Ellis Interview (Replay):Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  19. “At the age of 10. And it's not to brag about it, it's just the reality. I ought to address that reality if I did the normal thing and say, hey, you're about 80, you probably ought to have at least 60%, maybe 70% in fixed income. I look at it and say, that's crazy. I'm investing on behalf of my grandchildren. Okay”

    2017-04-13 · Masters in Business · Charles D. Ellis Interview (Replay):Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  20. “Chicago Well, I can't give you a straight answer except in generalities because of each of us is unique. But start with how much money do you have? Are you saving money or spending money? How many years do you have before you need to cover your retirement or pay for your kids going to college or whatever is your objective? How much wealth do you have? How much income are you creating? Take all those things you can work out in investment strategy that makes good sense. Let me give you an example. I'm 79. Most people would say, in that age, you must have a lot of bonds. I have no bonds. Really? Why? Well, I still enjoy working and I'm able to keep earning enough to cover my operating costs. And secondly, I look at my investments and I say, who are you investing for? I'm actually investing for my grandchildren.”

    2017-04-13 · Masters in Business · Charles D. Ellis Interview (Replay):Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  21. “Very powerful. On the long, long, long term, if you aim in the right direction, you got a good chance of getting there. You want to go to Chicago? Don't head south towards Florida.”

    2017-04-13 · Masters in Business · Charles D. Ellis Interview (Replay):Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  22. “There are two kinds of problems in investing. One is the long term policy problem, the other is the operational problem. People all of us are guilty of Almost all the time of doing things that aren't really brilliant decisions. So we make mistakes that we really shouldn't have made. If we had it to do over again, a lot of us wouldn't make those mistakes. And reality is we do because we're human beings. The other kind of mistake is we're aiming in the wrong direction. I'll come back to that later if you want to. But day in, day out, people buying and selling stocks are prone to getting caught having made an error in their judgment on the price.”

    2017-04-13 · Masters in Business · Charles D. Ellis Interview (Replay):Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  23. “Maybe even at the same club, but we play a completely different game. The game we play is a game not to lose. Were the control of the game is in the hands not of the winner, but of the loser.”

    2017-04-13 · Masters in Business · Charles D. Ellis Interview (Replay):Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  24. “Sure was, and he must have had a wonderful life. And along the way, he decided to write this little bity book, which is the best guide to how you could do better in tennis I've ever heard of, but it also included a Definition that was very, very helpful to me said there's a whole lot of people that play tennis. Of them play a kind of tennis that's completely different from everybody else. They play winners' tennis. They are absolutely fabulous. The shots are always right near the line. They never hit in the net. They never hit it out to speak of. Their placements are terrific. Their strategies are brilliant. They are wonderful. Most of the rest of us play a different game. Yeah, I know. Same rules, same scoring, same clothes, same court, same facilities.”

    2017-04-13 · Masters in Business · Charles D. Ellis Interview (Replay):Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  25. “The hero of the story is really a brilliant guy named Simon Ramo, who was the founder of what was called Thompson Ramo Woldridge and then was called TRW and is in fact the organization that helped America with its entire space program. He was a gifted amateur athlete and he also is a gifted musician. He used to play in a quartet with three members of the Los Angeles professional symphony orchestra.”

    2017-04-13 · Masters in Business · Charles D. Ellis Interview (Replay):Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  26. “They're normal human beings. That's what human beings do. If it works out well, I was smart. If it doesn't work out well, I was unlucky”

    2017-04-13 · Masters in Business · Charles D. Ellis Interview (Replay):Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  27. “I know it had a huge impact on my life. I doubt it had anywhere near that big an impact on most of the other people that have been around. But anybody who has been in the investment management area for the last 50 years doesn't think that was really lucky. Either kidding himself or kidding you.”

    2017-04-13 · Masters in Business · Charles D. Ellis Interview (Replay):Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  28. “Much, much better. And you'll find that those who've been around for a long time, it's all luck. Those that are around only recently, they're paying attention how much you can get paid because it is the best paid line of work in the world.”

    2017-04-13 · Masters in Business · Charles D. Ellis Interview (Replay):Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  29. “I learned a lot, number one is that most people have not thought through what they ought to be doing with their investments over the long term and they have not settled on a policy that really makes sense to them individually. Second, there's a lot of information, and if you don't have that information, you're in trouble. And third, that investment management is a wonderful, interesting, fascinating, exciting, and filled with all kinds of experiences, wonderful place to work.”

    2017-04-13 · Masters in Business · Charles D. Ellis Interview (Replay):Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  30. “Totally true, but they didn't actually offer the job. They had it printed on a piece of paper. And I'm looking at it realizing, you know, dad always thought Goldman Sachs was a great firm. I'd love to go with a great firm, but I need to earn at least $6,000 so I can pay off my wife's loans for going to college. She'd gone to college on a scholarship and a loan package, and I needed to pay that off so I had figured I could save a thousand dollars out of six thousand. I can't take a job for $4,800. Never occurred to me. You might get a raise. Never occurred to me. You might earn a bonus.”

    2017-04-13 · Masters in Business · Charles D. Ellis Interview (Replay):Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  31. “Job, and I got a start an interview with a guy, and I realized this man is really smart. He knows a lot. And I need to learn a lot. I could learn a lot with him. I better go there because I don't know enough.”

    2017-04-13 · Masters in Business · Charles D. Ellis Interview (Replay):Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  32. “I was looking for a job, and a friend of mine's father was looking for somebody to come and work in a junior position. And so I thought it would be a really interesting conversation. I thought that he was hard for the Rockefeller Foundation. It turned out he was talking about the Rockefeller family office, a tiny little investment team that managed investments for the family and also for some of their great philanthropic institutions like Rockefeller University, Rockefeller Brothers Fund, stuff like that.”

    2017-04-13 · Masters in Business · Charles D. Ellis Interview (Replay):Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  33. “Out of my class at Harvard Business School in 1963, only three of us went into investment management and I got into it accidentally.”

    2017-04-13 · Masters in Business · Charles D. Ellis Interview (Replay):Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  34. “In the 1950s? No, it wasn't 1940s. It certainly wasn't. 1930s was terrible. Nobody went into investment management in those days.”

    2017-04-13 · Masters in Business · Charles D. Ellis Interview (Replay):Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  35. “Well, a profession is defined by the service by the experts on behalf of individuals who don't happen to know very much about what the experts are expert in. That's why law is a profession, that's why medicine is a profession, and investment management used to be entirely a profession. It didn't pay very well, but you could do some really nice work for individual people and help them through the solution to the various problems they might face.”

    2017-04-13 · Masters in Business · Charles D. Ellis Interview (Replay):Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  36. “Drop back to really serious negotiations. There are three parties at interest the government, the mayor, the governor, mayor, whoever it was. The public, The workers. The workers are represented by a union. The union guys are pretty smart. They've studied this stuff for years. They pay a lot of attention. The political people are focused on the next election, and they're pretty good at that sort of thing. The party that's going to have to pay up any difference doesn't get to come to the meetings.”

    2017-04-13 · Masters in Business · Charles D. Ellis Interview (Replay):Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  37. “What's called an unfunded obligation. That's on paper. We've signed up for it, but it hasn't been paid in yet because we assume we're going to get a great rate of return. Now we're assuming we're going to get a much lower rate of return. How much do we have to put up? A lot.”

    2017-04-13 · Masters in Business · Charles D. Ellis Interview (Replay):Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  38. “Track it out over time, that's your pension. Now, what if somebody comes along and says, Barry, that was an unusual time period. Interest rates went from 13% to 2%. That changed everything, made everything look like a higher rate of return. You're not going to see that again. What are you going to see? Well, we've got 2%, 3% in fixed income, and it looks like 6%, 7% in equity investments. What's the mix blend 60-40%?”

    2017-04-13 · Masters in Business · Charles D. Ellis Interview (Replay):Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  39. “What I like to say, real Americans. These are the crowd of people who've put in a good long term serving the public. Okay, and where are they now? Their retirement depends on two things how much money has already been set aside. And how much money is going to be earned by the investment on that money that was set aside? You look through the 80s and 90s, people would have said, boy, you know, we can earn a lot. 10%, 12%, fourteen percent years came roaring through. We all had a great time. If you assume that's what you could earn, and you say, Well, I want to be conservative, so I'm only going to assume 8%.”

    2017-04-13 · Masters in Business · Charles D. Ellis Interview (Replay):Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  40. “Joe Six Pack, and you have been working along, and you look at your account and you say, Barry, I got more money I ever dreamed I would have. It's in my own name. I've got $110, $115,000 smackers. That's terrific. Right, you retired? Long, long, run”

    2017-04-13 · Masters in Business · Charles D. Ellis Interview (Replay):Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  41. “Well, it's not quite that bad. So it's a sucker bet. It looks like you got a lot of money. Imagine what it's like if you're a working guy.”

    2017-04-13 · Masters in Business · Charles D. Ellis Interview (Replay):Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  42. “Yeah, we could argue about the specific details. It doesn't matter. For people going into retirement With usually something like 20 years to go, one hundred, one hundred and ten, one hundred and twenty, even one hundred thirty thousand is no help at all to covering the costs that they're going to be living with.”

    2017-04-13 · Masters in Business · Charles D. Ellis Interview (Replay):Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  43. “Unless you're planning to die in your late 60s or early 70s, in which case you should take the money, but most people are not planning on that.”

    2017-04-13 · Masters in Business · Charles D. Ellis Interview (Replay):Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  44. “How are you going to do the investing? How are you going to do the distributions from your investments when you do retire? Start with just one of the most obvious things that drives me crazy. If you ask people broadly, ask people here at Bloomberg, ask people who really know quite a lot about investing, what is the delta? What is the difference between how much you get from Social Security if you claim as soon as you can, or you wait until you're 70 and a half when you have to claim? Well, it must be a lot. And I usually get somewhere between 20 and 30 percent as an increase. That is not true. If you don't claim at 62 and do claim defer until you get to 70.5, the increase every year for the rest of your life as long as you live and its inflation protected is an increase of 76%.”

    2017-04-13 · Masters in Business · Charles D. Ellis Interview (Replay):Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  45. “Then, if you say, well, let's look at the people who've got coverage. It used to be that we had defined benefit plans that. Company did everything. All you had to do was tell them what your address was so they could mail the checks. Now, virtually every decision has to be made by the individual. Many people are not well prepared for making those decisions. And you look at all the different decisions, are you going to be in the plan or not? Are you going to match the match? Are you going to escalate your contributions over time so that you're saving enough to actually cover your cost in retirement?”

    2017-04-13 · Masters in Business · Charles D. Ellis Interview (Replay):Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  46. “Which means people are going to be in retirement for more years than they might have actually been planning on. Secondly, a fairly large fraction. Half of any couple who are in their Late 60s, early 70s, half of them will need assisted living at some time. That's fairly expensive stuff. Sure. Particularly if you're not prepared for it. About a third of American workers have no retirement plan whatsoever.”

    2017-04-13 · Masters in Business · Charles D. Ellis Interview (Replay):Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  47. “It's a complex of several different items. Let's just pick out the really big ones. Number one, people are living longer than they used to live.”

    2017-04-13 · Masters in Business · Charles D. Ellis Interview (Replay):Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  48. “It's not all on the New York Stock Exchange. Some of it's off the board trading in New York Stock Exchange listed and honestly 5 million is an average. It varies up and down depending on what the machines are doing.”

    2017-04-13 · Masters in Business · Charles D. Ellis Interview (Replay):Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  49. “That's a giant sales load. That's a lot when you're offering, I'm going to give you average and I'm going to charge you a big entry fee to get started.”

    2017-04-13 · Masters in Business · Charles D. Ellis Interview (Replay):Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  50. “It wasn't a flop, it was a big flop. A whole bunch of different things. Number one, nobody knew anything about indexing to speak of. And the idea wasn't out. And everybody was looking for beat the market rates of return. That was big one. Second is there was a sales load in order to attract the sales force at the retail brokerage firms.”

    2017-04-13 · Masters in Business · Charles D. Ellis Interview (Replay):Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source