YouSaid · the spoken record

Eric Balchunas

lines on the record: 162
first: 2022-08-26
most recent: 2022-08-26
sittings or episodes: 1
sources: podcast

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“I guess I would go with compounding. When I was in my 20s, I withdrew a lot of my 401k because I just wanted money to hang out with and So I actually took money out of my 41 count Get Idiot. And I just didn't know that much about it. And I wish compounding is probably the single most important word in investing in my opinion. Compounding also, I think, sort of, it shows you the end, which helps you in the now and helps you just relax because just like, you know, let it grow. It's like watching it tree grow. It's not like running. The action, it helps you take less action. I think compounding is something I would immediately learn about, whether it's compound interest or the investing. I think that term is really powerful. I mean, that's not a great answer, but I can't say I knew a lot about that.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“I would get out there and do it, write for the school paper, go intern somewhere. That's how I, you know, I did not get a CFA, although I would recommend that too. If I could go back, I might take at least CFA one because sometimes I would be, I would find things that were logical and James would be like, oh yeah, that's in the CFA. I'm like, oh, okay. So I definitely would recommend though getting out and doing it and being as social as possible. I think, you know. Being able to work with people, being likable, and also it can help with your longevity. You don't burn bridges, you end up getting into an industry. And the ETF industry is great. I feel like it's a scene. And I would encourage getting into a scene.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“Isn't it interesting 94 is that that much. And it's his words. I found that And then when I told my dad, he's like, I never heard of it. I'm like, that seems weird to me given how much he loves that guy.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“I just got this book that Hunter Horsley of Bitwise recommended to me. I got it because I sent it to my dad. I knew my dad would love this. It's Winston Churchill. And it's a book of all his takes on different figures. So it's like all his notes and writings on all these different figures in history, FDR, Charlie Chaplin, Hitler. And I find Churchill kind of fascinating. My dad's really in love with him. So I sent my dad the book. I got the book. And so now I'm reading that. Churchill's also interesting because he wrote, what's the name of the book? Winston, great contemporaries.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, and I'm a Gen Xer. I didn't grow up with Bob Dylan, but I can't. Sometimes I can't believe how good his albums are when he wrote when he was 21, 22. I'm like, way beyond his years. It's interesting is Scorsese did a documentary called No Direction Home. That's also very good.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“Different things together in a stew and how to do that. And for anybody who writes or does anything creative, it's just a fascinating read. And clearly this guy was ahead of his time and a very interesting figure. So I would recommend that to anybody.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“Beatles, the Rolling Stone. It would have been, I want to hold your hand if it wasn't for Bob Dylan. Jimi Hendrix worshipped him. I mean, this dude is like a walking Smithsonian Institute, right? So I was like, I got to read his book. His book is fascinating because he writes about his childhood up until 1963. And 60 to 63, he's sort of just like sleeping on couches in Manhattan. But he's starting to read books on people's shelves. And he's starting to go into art exhibits. And he's taking the books and the art. And then he's taking his Woody Guthrie love and he's merging it all together. You really get an idea for how creativity happens in his books. And then when 63 happens, he has the big album. The book stops. And then it starts again in 1980 when he's in a slump. And he tries to figure out like he's lost. And it goes in how he found his groove again and his inspiration. So I find that to be so Bob Dylan. None of the book is about his popularity, the big albums he wrote, nothing. It's all about finding the spark, finding the creativity, putting together.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, he only wrote one book. But I got into Bob Dylan late, but I really got into him, and I find him fascinating. He's still alive. It took my mom to see him. Can't understand a word he's saying singing, but I never could.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“They have zero tolerance for bullet points on a power. You got to show me a picture. That's funny, and then explain to me, you know, the data behind it. Like, that's the, it's our team really pays attention to this. We think it's very important. Otherwise, you're going to just fade into oblivion.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“Over time. This doesn't have to suck. And that's what I thought with Dave and Matt and my first Inside ETF conference. This doesn't have to suck. These guys had a lot of fun up there with their PowerPoint And I find that with you guys. This stuff can actually be fun, interesting, and I really try to apply that to my world. It doesn't have to be boring and stayed and just the dull let's fall asleep. So I think I'd say those two people for now.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“Just use the phone, pick up the phone, call the people, go to the thing. And I thought that was, he was a good mentor. I'll say my dad as well. My dad was a highway or is a, where he retired, but he would go around and try to get contracts to pave highways. He go to like the New Jersey Transportation, and I saw him present a couple times, and it was, I liked his style. He would present on like hot mix. Boring topic, right? Like mutual funds. But he would have them rolling. He'd have little dry jokes here and there. You could tell he curated this”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“At 8 30, you're going to hear Aldamado's office. How can I help you? Oh, yeah, sure, whatever. Click. So he also had this like,”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“I've heard that over and over again. The first meeting at that company, Tom Lamont is sitting there, and you remember Al D'Amato was senator at the time? Sure. Yeah. He's like, listen, you got to get to work early. You got to get there before the gatekeepers and the secretary show up. That's what they called them back then. Assistance is the word now. He's like, you get there at 7 a.m. You call Al Damado. You're going to hear D'Amato.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean, I never had one real mentor. I guess, you know, institutional investor Tom Lamont ran the show there, and he was sort of this gruff old editor guy. And he was really about fact-checking, checking everything 13 times, and it hurt, but that was a good lesson. By the way, I”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“Thriller that's 90 plus critic, 70 audience. Or I want a comedy that's 50 critic, 90 audience. And I want to set these parameters so I can totally pinpoint what I want. I cannot believe that hasn't happened yet.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“So, you need a search term. And so a lot of times go to Google and put in pg13 scary or something specific. What I really want them to have is a Netflix.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, it was pretty good. Colin Farrell's in it. He's so underrated. Everything he's in is pretty good. So sometimes I'll do that. I'll take an actor like. And I'll just start going through some of their work that I haven't heard of. Because if you just go to Amazon Primer or Netflix now, you end up scrolling forever.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“I don't know. I mean, cars is okay. But now that he's, you know, we both, I think, equally enjoy Stranger Things. Of these movies that we some are better than others, but that's sort of where I've been probably a bad person to ask. I did see the 13 lives on Amazon Prime about the cave rescue in Thailand. Ron Howard mov”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean, I have an 11 year old son, so we've really enjoyed Stranger Things. That's probably an obvious answer. Another thing we do is I'll go to Google. He likes scary kind of stuff, right? So I'll go. PG 13 scary. And we'll just go through these movies I never heard of. Like right now, we're watching Escape Room and Escape Room 2. And he loves them, and they're good enough for me that I can, like, you know, when he was young, he would want to watch Pixar movies. And they're like a little dull for an adult. But now we're getting to.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“Try to tell people this book whether you're crypto or you're building a business. I think a lot of people can learn from some of these guys, some of what this guy did, how he did it, and maybe find some comfort in how long it took. And then when it finally kicked in, how much change it actually forced.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“Vanguard 25 years to get the 10% market share. He's like, you just made my day Because he's also sort of an operating out of the system guy. Same content.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“Look, every industry is evolving. You know, I compare the ETF and the index fund to the MP3, just like music. The MP3 really changed that industry Uber completely revolutionized the taxi industry. And some of these industries are caught a little flat-footed. There's nothing, this is the story, I think it's not just the mutual funds. It's a business story. It's a story about disruption. And I think if you're, and also it's a story about patients, one of the people I interview was Brad Kutsuyama of IEX, the Flashboys guy. Sure. And I was like, when I told him it took...”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“So, I think mutual funds, there's possible some spaces. It might make sense. Maybe some less liquid spaces. An active mutual fund still has some value. Fixed income, they do pretty well. But I think overall, if a mutual fund came out today, I think it would be something akin to a compact disc coming out today. Like if you invented CDs right now and said, oh, take this disc, go stick it into your computer or your TV and watch this movie and be like, why would I do that? So I do think.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“The government almost should, like, I'm surprised the ICI hasn't lobbied the government to remove that and put them on a level playing field with ETFs because they might do a little better. But I also think mutual funds generally, a lot of their costs are internalized. ETF externalize a lot of costs. You trade on your own, you bought on your own, your tax bills on your own. And people like that. It's much more of a fair deal, I think people think.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“That's the thing. I almost feel like ETFs are the way it should be done. You sell, you pay. Mutual funds where you're sitting there as a good soldier, by the way, and you get a tax bill.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes, cut, exactly. But this was part of the challenge of what Bogle had, that's why it took a long time, I think also, was that he had to really explain some of these concepts and also, again, show compounding. Compounding is such a powerful concept. And if you compound at 7% versus 5%, in 50 years. The gap is enormous, and I think some people don't look at a percent or bips as a big deal. Because they don't write checks. Well, and a bull mark comes out of their assets.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes, once you view it as a table, you realize, oh, yeah, half the people will win, but after cost, only like two win. Or, you know, you start to really latch on to this concept. After”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“That's all we're doing here, and also the idea of the zero sum game I think some people think of the stock market like they don't really view it as people in a circle trading. Once you view it”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“Also, I have a chapter on looking at all the ways Bogle had to sort of explain that indexing wasn't, quote, average, because he had to sort of sell a concept that's un-American. It is. Average is not, we're America, right? We want number one, yeah, top gun, whatever. Like, you know, indexing seems like middle of the road and almost like Marxist, as you said. So I think one of the ways he did that was to look at the long-term compounding effect of indexing, but also just explain that what are we doing here? We're investing in companies that everybody goes through work every day, creates value. There's cash flow there, there's dividends. That's what you're buying, right? And over the decades, that investment returns pretty stable. It's the speculative return that can be a smokescreen, but that's just, you know, people making the PE go up a lot, and then there's a crash, and then up. But investment returns have been pretty stable throughout the decades. And he just try to get people to understand that.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“This is why I think books written on behavior and psychology need to give Vanguard's index funds and Bogle way more credit than they do. They don't even mention them really But I'm like, try behaving in a 2008 without this as an option.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“That's their business model. So, I do think maybe somebody would have come out gimmicky style and done, oh, free index funds. But I think ultimately people would have been like, oh, you're just trying to upsell me on this or your pay-for-order flow or you're taking my money and getting more interest on it somewhere else. There would have been something that would have soured people and it would have then gotten a bad name. Low cost is a good reputation because it was done the hard way. And so we go back to 1993 when Spy was 20 and Vanguard was 20. What people don't realize is that Vanguard started at 45, 46 basis points. They came down like one or two a year. So it wasn't until the 90s they were even 20. And then in the last decade, now they're three, four across the board pretty much.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“But by the way, some people are like, no, I think somebody would come out and just put zero fee. You know how like Robin Hood came out? We'll do free trading. Like somebody would have come out just all like, but I was like, the problem with that premise of like somebody who isn't Bogle in a for-profit asset manager to do this as a loss leader is ultimately they would have the curtain would have come up at some point and you would have figured out, oh my God, here's how they're screwing me over here. In other words, if you put something out there for that cheap, you're almost going to always look to make money somewhere else. That's what makes Vanguard unique. There is no curtain to pull. It's just that cheap because it's that cheap.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“I think my point on the Cabernet lane was even beyond that index fund example into ETFs where you just get to know somebody, they sell you on the narrative of this story, and maybe they decide to put some money into your dividend fund. That might be 30, 50 basis points more than Vanguard one. But you could say to yourself, well, this strategy is better. But in your case of the index fund, you're right. There'd be no fiduciary reason to go to the 60s. So like I said, it's probably all loads or sort of captive assets somehow.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“There's still a huge market out there for whining and dining advisors, your friends, and your golf buddies. People still will hook you up. I'll buy your index fund. I know it's 60 basis points, but it's my friend. There is still a lot of that going on. And that happens in every business, but there's still a decent cabernet lane in asset management where that could be.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“With that. That's it. I mean, that's the answer. There's just no natural reason for that. Look, we have a phrase we use in a team called the Cabernet”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“If there's no Vanguard, I think ETS probably would have been invented too, but they would have been 1% and 10 basis points as they are now.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“It's still cheap. Yeah, but this is in 1993. Why did it pick 20 basis points? I actually interviewed Steve Bloom, who for his Amex, who put out Spy with Nate most because that's what the Vanguard 500 index fund was. Okay. So think about that, and Bogel hated ETFs, but the dude had a profound positive influence on the whole industry because it started dirt cheap. I think SPY would have been 1%.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“This is a great thank you for asking this because this is one of the data points that drove me to write this book as well. SPY came out at 20 basis points.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“Because I think they would have come out with indexing, but you know, these firms are like, oh, we'll charge 80. We'll charge 75. Even if you get to 50, I still think you're not powerful enough to overwhelm. It's because it's under 10 that's when...”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“Here's the problem with your premise, though indexing never would have gotten low cost if Vanguard didn't do it. I promise you.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“Mark before the SP 500, you're living in a world where Vanguard has low cost active funds, but somebody has invented indexing.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, yeah. They're still seeing inflows or no outflows. And so I try to explain to them that the Vanguard effect is actually that. And so that's why this book, again, it's not just index funds. Bogle, the BOGO effect, the way it's impacting active. It's impacting the wealth management industry. It's impacting trading. It's impacting behavior. That's how powerful this is. It's not just a mutual fund story. And that was what also made the book exciting.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“The idea of a little FOMO. I don't want to miss out on something like a crypto, Bitcoin, Arc, you know, some of these high-flying growth stocks because it's like a call option on the future. And I think those are why those funds not only sell, but have withstood this bear market. They haven't really seen the opportunity to think.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“She's like, well, people, index funds are a misallocation of capital. They're just putting money randomly. But I'm like, honestly, you can't, you can't, I would not bank my kids' college education money on a high growth manager. I just wouldn't do it. But I can understand.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“Totally, exactly. And I think Kathy has been a kind of negative on index funds. And I've told her privately in public, like, I really think you should team up. I think you should be explaining how you get frosting the case.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“I'm like, dude, you're hitting her from a fundamental stockpicker point of view. Your competition is an arc, it's Vanguard, dude. You're fighting the wrong enemy. She's competing with lottery tickets and crypto and stuff that would go on the outside of your portfolio. And I say, if you have Vanguard in the core, you want a little wild and crazy. You want somebody who's dreaming five years into the future just in case they're right. You don't want to miss out.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“Call options. They're going to play the trade. They might use Bitcoin or crypto. Basically, like hot sauce and otherwise dull meal to sort of distract them. And I think Active is going to get, ironically, way more active because of passive. And I think that maybe that's okay. So I think that's ultimately where we'll stand. And those active funds will shine enough consistently to make it that it's never fully passive. There will always be somebody who's going to figure it out for a little while. And they'll be used probably to complement passive. But I do not see a reversal where an 80 basis point growth manager from a legacy active shop replaces Vanguard. So that's why when people freak out about Kathy Wood and they're like, how can she have money?”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“Pushback on you. What's going to happen? So let me just finish the spot. And this is a chapter I have what's going to happen is Active won't die. It's just going to get crazier. So, what's going to happen is the core of a portfolio will be low cost passive vanilla. Check that box. Then people are going to decorate that with.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“But real quick, I think what we're going to find is passive is going to continue to grow. It's going to be the core of most people's portfolios because it's just too good of a deal.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“All he does is put bills that fail. Yeah, I mean, he talks a big game, but he doesn't get much done. I'm surprised Bernie isn't more in touch with that. That's a weird thing to me.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source