YouSaid · the spoken record

Jay Bowen

lines on the record: 112
first: 2024-09-01
most recent: 2024-09-01
sittings or episodes: 1
sources: podcast

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“Risk taking capital formation congruent with price stability on the monetary side. Greenspan really let the economy run. I can remember like it was yesterday, his Humphrey Hawkins testimony where he basically took a shot at the Phillips curve and indicated that we can grow the economy above trend rates with price stability, which was really music to my ears. He let it let it run. And you had these. Of course, back then it was internet related, whereas now it's AI related. You know, the Netscape IPO was 1995. And we all know eventually where that led in terms of the bubble situation. But you did have a lot of innovation in capital formation and risk-taking. And of course, you had the four horsemen back then, which was Dell and Microsoft and Intel and Cisco.”
2024-09-01 · We Study Billionaires · RWH049: Crushing The Market Over 50 Years w/ Jay Bowen · IDENTIFIED FROM THE TRANSCRIPT
“Drug discovery, gene editing, genomics, all it just touches healthcare. It touches the industrial side, the material side. It just has a wide-ranging, I think, implications in terms of what it might mean for a variety of different companies and industries. But in addition to AI, there are other really fascinating innovations going on also, industrial automation, for instance, in the industrial area, what's going on there. You got different areas of technology that have nanotechnology, for instance, what's going on there. 3D printing. There are just a lot of high-tech innovations that reminds me a little bit of the mid to late 90s where you had just a wonderful period innovation.”
2024-09-01 · We Study Billionaires · RWH049: Crushing The Market Over 50 Years w/ Jay Bowen · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I think it does touch a variety of industries. And of course, it's anchored as we've seen the last year or two by AI, I think is kind of the anchor of this fourth industrial revelation. And basically what I'm talking about is on the heels of the computer revolution, the third industrial revolution, which was anchored by computers. This is kind of the follow under that in terms of the digital more of the digital revolution that's going to from a technology just incredible technological innovation in terms of what it might mean to different industries and sectors. And as you say, I think it touches just the artificial intelligence theme alone. I mean, when you hear these CEOs, I heard the CEO of Mettronic a couple of weeks ago talking about what it might mean for them from a medical device standpoint.”
2024-09-01 · We Study Billionaires · RWH049: Crushing The Market Over 50 Years w/ Jay Bowen · IDENTIFIED FROM THE TRANSCRIPT
“Issues and so on and so on. And again, you look at those numbers and just the hundreds of millions of dollars it made, the difference that one switch. So even in a multi-billion dollar portfolio, one stock, one position, and again, listen, I've gotten plenty of them wrong and I've been wrong twice, plenty of times, which is the stock you sell moves up and the stock you buy moves down. I've done that numerous times. If you can get some of them right, just that one investment decision can really make a big difference for individuals.”
2024-09-01 · We Study Billionaires · RWH049: Crushing The Market Over 50 Years w/ Jay Bowen · IDENTIFIED FROM THE TRANSCRIPT
“But the apple became worth $550 million. So just that one investment decision, just that one top-down idea, well, wow, we really, I really like, I'm intrigued with Apple. And, okay, well, how are we going to fund the purchase? Well, let's look at some of these consumer companies that maybe the outlook is not as bright as it once was. And so that's, I think, for individual investors. I mean, just one decision like that can, I mean, another one recently was the decision to sell Jay and J four or five years ago and buy Eli Lilly. Again, it was based on some top-down work and the emphasis that Lily has on what now is, of course, a lot of blockbuster. It was really the pipeline. They really had the pipeline. And J&J was struggling under a lot of litigation.”
2024-09-01 · We Study Billionaires · RWH049: Crushing The Market Over 50 Years w/ Jay Bowen · IDENTIFIED FROM THE TRANSCRIPT
“So, in a way, you're switching from one consumer company to another. I mean, different industries, different companies. Okay, just say that back then we were building $25 million positions in each stock. Okay, the Coke over the ensuing 13 years through 2024 through June 30, I was looking at some numbers. The compacted annualized at 8%. Apple compounded annualized at 25%. So if we had capped the Coke, it would have been worth $75 million.”
2024-09-01 · We Study Billionaires · RWH049: Crushing The Market Over 50 Years w/ Jay Bowen · IDENTIFIED FROM THE TRANSCRIPT
“We have to sell something. The money just doesn't magically appear. We've got to, if we want to establish a new position, we've got to sell something. And so I think this is a good example of how just one decision can make a huge difference in a portfolio. And I'm not going to get them all right. And I've gotten plenty of them wrong. But you think about the Coca-Cola that was liquidated in 2011. That's when we decided to establish a position in Apple. And basically the idea, from a top down thematic standpoint, that the Coca-Cola was what I viewed as a kind of a 20th century company operating in a 21st century whole foods world type situation. And I felt like their global consumer footprint might be decreasing. Whereas Apple, as we speak now, I think they're global consumer footprint is something like 2 billion people.”
2024-09-01 · We Study Billionaires · RWH049: Crushing The Market Over 50 Years w/ Jay Bowen · IDENTIFIED FROM THE TRANSCRIPT
“David Cody, or some of these unsung heroes that run some incredible companies, boy, in keeping with that, how much of a difference one stock selection can make? And just to give you a small example, this is not exact, but we, and this was very painful because it had been a long-term holding, but I decided back in around 2011 to get out of our Coca-Cola position. It represented about, I think the cost basis was something like one and a half. And so it's a tough decision. You never want to become another lesson from my father. You never want to become emotionally attached to these companies if you feel like there's a, no matter how good it's been, you just want to make sure where it's going. And for us, to us, because of our limits on how much we can invest on the stock side, if we want to establish a new position,”
2024-09-01 · We Study Billionaires · RWH049: Crushing The Market Over 50 Years w/ Jay Bowen · IDENTIFIED FROM THE TRANSCRIPT
“Even after taking a lot of profits, that can certainly happen. I think that's a good discipline to have. I mean, yeah, you might miss some upside, which we have. We miss some upside by taking these profits. But I just think it allows you to sleep a little better at night knowing that you've scaled back. You've taken all the cost out, this idea that if the stock goes to zero, it was still not a loser, not a losing investment. That's all somewhat comforting. Typically, like you say, we'll own 40 to 50 names in Tampa. And something else that I think is important when I analyze the Tampa situation over the years, just as one person can make a big difference in terms of whether it's Jack Welch or Ruben Mark or Steve Jobs or Dave.”
2024-09-01 · We Study Billionaires · RWH049: Crushing The Market Over 50 Years w/ Jay Bowen · IDENTIFIED FROM THE TRANSCRIPT
“It was becoming 4 and 5 percent of the portfolio again every day, and we took, we've taken more profits in the stock than the current position. And it's still our largest home. I mean, that's how well it's done. So it could go to zero and it would still have been a moneymaker for us. So I think taking on the really taking cost out of it. And again, you know, this is brings up a point I mentioned earlier as a defined benefit as managing retirement money for a municipal fund. I just think we need to err on the side of caution. And if we were a hedge fund or some private entity where we could really swing for the fences and we could let the position run to 10, 20, 30 percent, that'd be fine. But with taxpayer money, I just think it's prudent to kind of keep your eye on it if a position becomes four or five.”
2024-09-01 · We Study Billionaires · RWH049: Crushing The Market Over 50 Years w/ Jay Bowen · IDENTIFIED FROM THE TRANSCRIPT
“That's a great. I'm really glad you asked that because it allows me to mention a couple things that I think are important. Number one, my favorite thing to do when we establish a position is if I'm lucky enough to have made a good investment is to take the cost out of it, to take profits so you have no cost in the stock. So in theory, the stock could go to zero and it was, you didn't lose money. I mean, that's just a instinctively comforting feeling when you've taken all the cost out through profits and everything else is just gravy, so to speak. That's really, really like that type of situation. And we've been faced with that recently through our, again, top-down work mainly focused on the fourth industrial revolution. We ended up with a very large position in NVIDIA. And I mean, every time we turn around.”
2024-09-01 · We Study Billionaires · RWH049: Crushing The Market Over 50 Years w/ Jay Bowen · IDENTIFIED FROM THE TRANSCRIPT
“You never know what the day is going to bring over short time periods. I mean, I didn't want to see half of her assets evaporate because we had some event, you know, exogenous shock. So, I mean, depending on your age, yes, I mean, that's got to be a factor in terms of whether you want to, I mean, at some point, you need to, depending on what your income requirements are and what your financial situation is, depending on your age, you're certainly going to want to dial it back. Absolutely. Yeah, I should have mentioned that. What I'm mainly focused on are these in perpetuity. Municipal pension fines where it really doesn't matter”
2024-09-01 · We Study Billionaires · RWH049: Crushing The Market Over 50 Years w/ Jay Bowen · IDENTIFIED FROM THE TRANSCRIPT
“Well, I will say this. I mean, I should have mentioned this in my comments on it. Your age does play a factor. I mean, I could, like one of the ladies that work for our firm for 45 years, she had a nice stake in our profit sharing plan, and she was about to retire by me.”
2024-09-01 · We Study Billionaires · RWH049: Crushing The Market Over 50 Years w/ Jay Bowen · IDENTIFIED FROM THE TRANSCRIPT
“Wasn't that great because inflation was double digits, but the nominal return on these bonds was 16-17%. I mean, so there are, you know, there are going to be certain periods where it might make sense. But to me, I've said for quite a while, I mean, if I could, if I were the municipal fund emperor, I would say no bonds. Long-term 20-year approach in all stocks.”
2024-09-01 · We Study Billionaires · RWH049: Crushing The Market Over 50 Years w/ Jay Bowen · IDENTIFIED FROM THE TRANSCRIPT
“And it's always state by state, municipality by municipality. You've got these rigorous asset allocation rules and they all include a fairly hefty allocation to fixed income. And the reason they do it is because it can really make you look good over short term time periods when you have the bear market, the inevitable beer market. Typically, the bond portfolio is going to give you a cushion and your total return is going to be better than your stock return. But to me, if you can focus on the long term, which these plans should be focused on the long term, there is not a, there just isn't a case to own bonds now. Granted, you're going to have periods like in the early 80s when you could nail down some extremely attractive rates, interest rates in the bond market. Of course, where your real return”
2024-09-01 · We Study Billionaires · RWH049: Crushing The Market Over 50 Years w/ Jay Bowen · IDENTIFIED FROM THE TRANSCRIPT
“competency of your manager i mean a lot of managers can look great in a bull market and a lot of managers can look great in a beer market if they're positioned correctly but to me the the way to see how you're to really look at how your manager is doing from a comprehensive standpoint is to look at their 20 year rolling performance and not only did i look at tampa's 20 year rolling performance how the stocks did how the total fund did relative to these unmanaged indexes but i also looked at I'm going all the way back to 1926 how all of these asset classes did for these rolling 20-year periods and it's just what you're saying you just scratch your head and you say wait a second why are these defined benefit pension why do they own bonds they would their performance if they can take a long-term approach there would be no unfunded liability crisis you know you just”
2024-09-01 · We Study Billionaires · RWH049: Crushing The Market Over 50 Years w/ Jay Bowen · IDENTIFIED FROM THE TRANSCRIPT
“You're on it. You got it. That's it. Nobody. Really? I've said forever, municipal funds should not own bonds. They should not own bonds. It's just the overwhelming, the data is so overwhelming. And listen, these municipal funds are in perpetuity. They're long term. They actually loves the 20, we take a 20-year approach, and the actuary loves the 20-year approach because it matches up to the obligation. That's kind of the average life of a career of a fireman or policeman. And so the data is so overwhelming. I like looking at I'm really starting to sing my teeth into this about 10 years ago. I did a study. And I looked at every 20 year rolling period in our financial history. And there wasn't a 20-year period that did not include a bull market and a bear market and a speculative bubble and a war and a recession. So, you know, you got 10-year periods that didn't include all that, but you could never find a 20-year period that didn't include all of these variables. So to me, that was such a great period in terms of measuring.”
2024-09-01 · We Study Billionaires · RWH049: Crushing The Market Over 50 Years w/ Jay Bowen · IDENTIFIED FROM THE TRANSCRIPT
“CEOs that get all the attention, but there are also some really unsung heroes out there that have just built maybe with smaller companies that you haven't heard of that have just built tremendous records. But I've never forgotten that period, and particularly the Welch, Jack Welch, and Reuben Mark, that really taught me that, boy, when you're looking at these organizations and at these companies, man, I mean, one person can make a tremendous difference.”
2024-09-01 · We Study Billionaires · RWH049: Crushing The Market Over 50 Years w/ Jay Bowen · IDENTIFIED FROM THE TRANSCRIPT
“And he showed me this article in Ruben Mark, who was the CEO of Colgate, had a great run at Colgate, I think, from the early 80s to the 2000s. And again, this is an example of how one person can make such a difference. Colgate back in the early 90s, believe it or not, it was better known in Asia than it was known in the US. I mean, it had a great exposure to these global markets and a lot of these companies had 50, 60, even 70% of the revenue is coming from overseas. And so that's another one on the consumer side that we focused on. But I think it really taught me how important one person can be, you know, that has the vision, the strategy, the tactics, whether it's Jack Welch or Reuben Mark in the 90s or whether it's somebody like David Cody at Honeywell in the 2000s or Steve Jobs and Tim Cook, you know, there are a lot of heads.”
2024-09-01 · We Study Billionaires · RWH049: Crushing The Market Over 50 Years w/ Jay Bowen · IDENTIFIED FROM THE TRANSCRIPT
“That I never have forgotten on the consumer side. And this was more in the early 90s. I think our emphasis shifted a little more from a top-down standpoint. This is after the Berlin Wall came down. It really became apparent that we were entering an integrated, interrelated global economy. And these companies that had a good plan to exploit these emerging markets in other regions of the world, we thought really we're going to have it.”
2024-09-01 · We Study Billionaires · RWH049: Crushing The Market Over 50 Years w/ Jay Bowen · IDENTIFIED FROM THE TRANSCRIPT
“Stock. It was a very problematic company, particularly in the early 80s. I think Welch came on in the early to mid 80s. And I read the article and it was the classic, it almost, these guys almost remind me of military generals. I mean, it's vision, strategy, and tactics. I mean, how are they going to do it? How are they going to turn it around? What's their vision? What's their strategy? What's their tactics? How are they going to provide shareholders with a really good return? Both of us just thought, wow, we need to look at this company. And that ended up being one of our biggest holdings over the ensuing 20 years or so. I think the stock returned something like 4,000%. I mean, it was just, and that's one man with one vision. And that made me realize, again, how important one person can make. The other one, that's on the industrial side, the other one that impacts.”
2024-09-01 · We Study Billionaires · RWH049: Crushing The Market Over 50 Years w/ Jay Bowen · IDENTIFIED FROM THE TRANSCRIPT
“It really powered that portfolio for several decades. I mean, when you look at the cost basis of some of these positions he built back then, it was really something. And the other two companies I remember that had such an impact on me, some of this was top-down. Some of it was not as much top-down, but I can remember in the latter part of the 80s, he came in my office and dropped this fortune magazine on my desk and said, see what you think of this article. And it was, I think it was a cover story. It was on Jack Welch. And he said, I think that he really emphasized how important one person can be in an organization, how it can make a huge difference in terms of the direction of a company. And I remember him saying that I think this could be something, of course, this.”
2024-09-01 · We Study Billionaires · RWH049: Crushing The Market Over 50 Years w/ Jay Bowen · IDENTIFIED FROM THE TRANSCRIPT
“It's not a timing strategy based on interest rate anticipation. It's not a trading strategy, but just as there was some themes in the 80s on the stock side, on the bond side, that was such a wonderful time to put money to work in long-dated maturities on the bond side. So we really view the stock side of the portfolio for capital appreciation. And the bond side really is there for income instability. We're not trying to aggressively trade the bond portfolio. It's really there for income instability. But I think your point is Val, I mean, there are going to be times when the top-down work is more valid than at other times. I mean, just to give you another small example. As we moved into, and I'll say that the moves that my father made in the early and mid-80s, I mean,”
2024-09-01 · We Study Billionaires · RWH049: Crushing The Market Over 50 Years w/ Jay Bowen · IDENTIFIED FROM THE TRANSCRIPT
“It is. And my father would always warn me that look, in terms of political situation, you can forget trying to predict what the stock market is going to do based on an election because it can just go so many different ways. And there can be no rhyme or reason sometimes. But there's sure, I think, you know what? And I think you make a very valid point. And I think there's certain times where the top-down work is more valuable than other times. That was just, that's so seared in my mind, the 80s. because it was such a dramatic what I saw and what he saw going on on the monetary and physical front and what it meant to interest rates to long-term interest rates I mean this 40-year bull market in the bond market I mean that's the genesis of it was was back then what what that meant in terms of what kind of exposure you wanted in the bond market and the bond side we haven't talked about really the bond side of the portfolio that's viewed in Tampa that's viewed really for income instability”
2024-09-01 · We Study Billionaires · RWH049: Crushing The Market Over 50 Years w/ Jay Bowen · IDENTIFIED FROM THE TRANSCRIPT
“Really just took off because you can imagine what happens to their operating leverage when those margins are able to, when inflation comes down and their margins are able to expand, and my fuck with Juggy would come in my office because he would hear that Warren Buffett was taking a stake in Gillette and Cuggy's, oh, well, Warren Buffett's copying me again. I mean, we would laugh about that. But that's kind of a flavor of the top-down work in the 80s really focusing on this consumer staples sector because of what was going on on the inflation front and what that might mean to the profitability of those companies.”
2024-09-01 · We Study Billionaires · RWH049: Crushing The Market Over 50 Years w/ Jay Bowen · IDENTIFIED FROM THE TRANSCRIPT
“Look at this chart of Gillette. These are all staples, consumer staples companies, and they had just gone, I mean, absolutely just dead, dead, dead money. And he got a sense that because of what was going on on the monetary and fiscal fronts, that this was the time to really build big positions in these companies. And he did. He did. He built for Tampa. He built significant positions in Coca-Cola. I think his cost was a dollar and a half. Gillette, some foods, campbell soup. I mean, they had just flatlined. And let me tell you, the bull market started in August 1982. Coincidentally, it started when the, you know, the tax cuts were delayed for a couple years during that tax reform act of 1980. They phased them in, which we always felt was a mistake because it delayed people's behavior. But once they kicked in, that was it. I mean, the staples sector.”
2024-09-01 · We Study Billionaires · RWH049: Crushing The Market Over 50 Years w/ Jay Bowen · IDENTIFIED FROM THE TRANSCRIPT
“If you've got price stability coming in on the monetary side and you've got higher after tax rates of return on the fiscal side because of tax reform in a more efficient economy with higher real growth rates, this could really, for certain, and I say top down, so you start by answering these broad questions about what's going on in the monetary world, in the fiscal world, regulatory world, what that might mean for different sectors and industries. And you break it down. And then when you focus on the industries and the sectors that you think might do relatively well, then it becomes more of a traditional valuation standpoint where you're using traditional valuation metrics. And I can remember my father, he would open up the value line, and this is in the mid-80s. And he would say, look at this chart of Campbell Soup. Look at this chart of Coca-Cola.”
2024-09-01 · We Study Billionaires · RWH049: Crushing The Market Over 50 Years w/ Jay Bowen · IDENTIFIED FROM THE TRANSCRIPT
“These transformational changes on the tax regulatory and monetary fronts that were coming when I say top down, that's what we were really looking at. Okay, what is this going to mean? What is Paul Volcker going to mean to financial assets? What's he going to mean to the bond market? What is Ronald Reagan's tax reform of 1982 and 1986 culminated with the tax reform act of 1986? What's that going to mean for financial assets, for the bond market? What's it going to mean the change in the regulatory structure that was going on in the 80s? And what I always remember is even before I was in the business, really, really talking to my father about what Volcker was doing that he was going to break the back of inflation. And I remember my father thinking, okay, this is really going to, if this happens,”
2024-09-01 · We Study Billionaires · RWH049: Crushing The Market Over 50 Years w/ Jay Bowen · IDENTIFIED FROM THE TRANSCRIPT
“the policy debate. I just found that fascinating, the monetary policy and what that meant for financial assets. And when you had periods of price stability, what that meant for stock returns, like the 1948 to 1966, when you had an incredible period from a price stability standpoint and the market compounded it, a strong double digit rates. And then you had this period from 66 to 81, 82, where you had negative real returns and you had the great inflation of the 70s. And so when I came in, I can remember even before I was, even when I was in college, I very much was drawn to the policy debate and what was going on. And I would talk to my father, you know, we spent a lot of time talking about the 1980 election and what that meant. And then the end of the 70s, what that meant when Alfred Khan was deregulating the airline industry and the trucking industry and then cartophot Volker in and then Reagan was elected.”
2024-09-01 · We Study Billionaires · RWH049: Crushing The Market Over 50 Years w/ Jay Bowen · IDENTIFIED FROM THE TRANSCRIPT
“I think that's right. I mean, the example I like to use is that when you look at some of these numbers, I mean, between 1966 and I think 82, the market really didn't go anywhere. I mean, it actually had a negative real return, I think negative 6%. And we always felt the reason for that was really bad policies, bad monetary policy, bad fiscal policy during the, you know, the great inflation of the 70s, really policy oriented. And so when I came along, and it's funny because I'm not a numbers person, I'm not a math person. I'm not, I mean, my father was much more oriented towards, his brain was much more mathy numbers. I come at it really the other way, much more, you know, my liberal arts background, and I'm not a math person at all, but I was completely captivated and drawn.”
2024-09-01 · We Study Billionaires · RWH049: Crushing The Market Over 50 Years w/ Jay Bowen · IDENTIFIED FROM THE TRANSCRIPT
“What do you mean by it for a start? And also, can you give us a sense of how this approach kind of grows out of your unusual experience and really out of your dad's unusual experience, right? He started in the 70s during a period of stagflation and stuff. So it was a time where actually you kind of needed to have some top-down understanding because otherwise you were really, really vulnerable.”
2024-09-01 · We Study Billionaires · RWH049: Crushing The Market Over 50 Years w/ Jay Bowen · IDENTIFIED FROM THE TRANSCRIPT
“A top-down thematic approach. I know that's not for everybody and there are other managers who do it just the opposite. I remember Peter Lynch, who I'm a huge fan of Peter Lynch. I remember him saying that, well, gosh, I mean, five minutes spent on economic analysis is five minutes wasted. You know, he didn't care about that kind of thing. So they're different. There are all kinds of different ways to do it. We've just always been the most comfortable viewing it more as an art than a science. And my father really instilled that in me. Talk more about this idea of being a top-down thematic investor because, as you say, it is kind of unusual”
2024-09-01 · We Study Billionaires · RWH049: Crushing The Market Over 50 Years w/ Jay Bowen · IDENTIFIED FROM THE TRANSCRIPT
“And it's funny you said science. I mean, my father used to hammer away one of the early lessons he taught me. He would come in my office and he would say, look, this is not a science. It's an art. He would say, it's like painting a picture. You know, you got this portfolio and you're constructing it. And if you do it right, it's just like a beautiful picture. You know, he would always say that. He would really always emphasize that, look, it's not in his viewpoint that it's not a science. Now, having said that, I will say this. There are plenty of ways to manage money, and there are plenty of people who do it that have been much more successful than I, that do it otherwise. They might have a black box or they might have a formula or they might, it might be completely technical. And more power to them. We've just always felt the most comfortable viewing it more as an art than a science.”
2024-09-01 · We Study Billionaires · RWH049: Crushing The Market Over 50 Years w/ Jay Bowen · IDENTIFIED FROM THE TRANSCRIPT
“fund industry and it's just textbook classic you know you have a whatever a hundred million dollar plan or a billion dollar plan they're going to have 10 20 30 managers all different disciplines all different styles all based on this theory that you need to be diversified and it you know equating equating volatility with risk really which is what what it flows from And it's just to me when I look at the hard data, it's just been a prescription for mediocrity, really.”
2024-09-01 · We Study Billionaires · RWH049: Crushing The Market Over 50 Years w/ Jay Bowen · IDENTIFIED FROM THE TRANSCRIPT
“Literally, I mean, sometimes this was done every quarter, and here we are trying to take a 20 year approach, and it's just makes your head spin. Now, Tampa is unique. They've never bought into that. They've never bought into that, but all these other municipal plans, the consultant became the go-to entity, became more and more important as the years went by in terms of doing manager searches, doing asset allocation strategies, hiring and firing managers. producing the quarterly reports, assessing and evaluating the managers, telling the board when they need to do a manager search. And of course, there are a lot of perverse incentives with that model because it kind of encourages turnover and activity for a variety of reasons. So they just got stronger and stronger in terms of their grip on the municipal.”
2024-09-01 · We Study Billionaires · RWH049: Crushing The Market Over 50 Years w/ Jay Bowen · IDENTIFIED FROM THE TRANSCRIPT
“Bigger and bigger, and they became the go to fiduciary entity for all of these public plans. And what would happen is, and I've seen it over the decades, I've seen the booklets they produce. They come in every quarter, and it used to be really egregious. I mean, it was so painful the way it used to. It's gotten better in terms of the longer-term approach, but they would plop down this massive document. every quarter where they would analyze and critique all of the managers and what their sharp ratio was and what their beta was and what their alpha was and you know pick your Greek letter pick your modern portfolio theory term and they would do a rigorous analysis of each manager and which ones underperforming and which one's outperforming and okay now i think it's time to shift money from this manager to this manager because he's underperforming and”
2024-09-01 · We Study Billionaires · RWH049: Crushing The Market Over 50 Years w/ Jay Bowen · IDENTIFIED FROM THE TRANSCRIPT
“He always felt like Arissa, which dates back to 1974, I think it was the employee retirement income and security act, which was really designed for private pensions in terms of regulations and fiduciary responsibilities, that kind of thing. But what happened, my father always said, what happened was a lot of these public funds surrendered, the boards got spooked about being fiduciaries. And so they handed it off to the consultant. We're going to let the consultant do it. We're done with it. They got nervous, they got cold feet. So the consultant, and it became bigger and bigger and bigger and bigger that industry. And as you say, they're not. I mean, they're not bad people. They're genuinely trying to add value. I just think they're operating out of a flawed playbook, flawed modern portfolio theory playbook, but the industry got...”
2024-09-01 · We Study Billionaires · RWH049: Crushing The Market Over 50 Years w/ Jay Bowen · IDENTIFIED FROM THE TRANSCRIPT
“Right. And I'm glad you mentioned Warren Buffett and his, anybody who wants to just see some, I mean, nobody has written, nobody does it better in terms of, he usually talks about it in his annual report. And Charlie Munger used to also. Nobody, I think, has a more accurate critique of the consultant industry and modern portfolio theory situation than Warren Buffett. routinely writes about it in his annual letter, I think. And anybody who's interested in what he has to say about this should really go do a search and look at some of his writings on the consultant industry and modern portfolio theory because it's just priceless the way he articulates it. And, you know, I remember my father always, he always pinned it.”
2024-09-01 · We Study Billionaires · RWH049: Crushing The Market Over 50 Years w/ Jay Bowen · IDENTIFIED FROM THE TRANSCRIPT
“Just don't question it. The numbers are so astounding just as we mentioned on the compounding power, how powerful that is. It's the same. It's the same side of the coin with fees over a long time periods. It might look minuscule, as you say, what's 25K? So my fees 50 basis points instead of 25 basis points. But good grief. Over long time periods, it can just be enormous. And yes, I think it's really critical for individual investors. I mean, as I tell my kids, it's all about aftertax. Doesn't matter what your pretext income is. If the marginal tax rate's 100%, it really doesn't matter what your pre-tax income is. I mean, you really need to look at it after fees. That's so important, particularly over long term. People get lulled, I think, and seduced into thinking maybe it doesn't matter, but just vital over long time periods.”
2024-09-01 · We Study Billionaires · RWH049: Crushing The Market Over 50 Years w/ Jay Bowen · IDENTIFIED FROM THE TRANSCRIPT
“But he always emphasized because it was defined benefit retirement money for public safety employees and it's taxpayer money basically. He really felt like we should err on the side of caution. And the reason I mention that is Think the results are actually on a risk adjusted basis a little bit better than they appear because it was done and is continuing and the other thing he made me realize it was done with a, and it still is done with a very high quality approach. And he always emphasized that it can be just fine. You can do what you need to do for this plan without swinging for the fences every day. You can take a very high quality long-term approach and it'll work out. That's been very important.”
2024-09-01 · We Study Billionaires · RWH049: Crushing The Market Over 50 Years w/ Jay Bowen · IDENTIFIED FROM THE TRANSCRIPT
“And the other thing that he always emphasized and made me realize is that, look, this is not just some blob, some fund that we're working with. These are people's, this is a retirement. I mean, they are entrusting us with the retirement. And so he always felt like it's taxpayer money. We want to provide a good retirement for these public safety employees. And he always emphasized airing on the side of caution and taking a really high quality approach. You know, the more adventuresome stuff, he was fine with it. These other managers, whatever the case may be, and depending on the client. He always felt like if it's private money, if it's a private endowment or a private foundation, go for it. You could take as much risk as you want.”
2024-09-01 · We Study Billionaires · RWH049: Crushing The Market Over 50 Years w/ Jay Bowen · IDENTIFIED FROM THE TRANSCRIPT
“I know my father decided back in the 80s, he just felt like, look, if we're going to have total management responsibility, we need to really be aggressive and competitive from a fee standpoint. And he just wanted to do a flat, flat 0.25. And he felt that was fair to everybody, particularly. And even today, when you look at the average, when you add it all up, and there's so many hidden fees in terms of these various layers, particularly with the poster child would be something like a cowper. So, I mean, when you go through the various layers of fees, I think it's easily 40 to 50 basis points, at least the average. So the fees are, I think, certainly competitive. And that was by design, by him. He really felt it was important. If they were going to entrust us with the entire fund, then we needed to have a very competitive fee.”
2024-09-01 · We Study Billionaires · RWH049: Crushing The Market Over 50 Years w/ Jay Bowen · IDENTIFIED FROM THE TRANSCRIPT
“Which is what these people I'm sure did. They thought they had it in the bag, you know, the mayor was with the former mayor was this firm and they thought it was just done. And the board voted down. And it's just everybody was slackjawed. I couldn't believe it that the board would do that. But of course, it was the exact wrong time to wade into these guaranteed investment contracts because it was on the eve of a really nasty period in terms of what was going on in the bond market in terms of interest rates and that kind of thing. So that's one story he liked to tell, but he was there were all kind of different challenges in terms of people trying to get their hooks into this thing.”
2024-09-01 · We Study Billionaires · RWH049: Crushing The Market Over 50 Years w/ Jay Bowen · IDENTIFIED FROM THE TRANSCRIPT
“There's some incredible stories about some of these original trustees when pressure was put on them to do certain things. He loved telling the story about this was in the early 80s. And the former mayor of Tampa had joined an insurance company out of New York. I'm not sure which company it was, but he had come down, he had brought the sales team down to try to sell the fund on guaranteed investment contracts that they needed to put at least half the assets into guaranteed investment contracts. And they brought all these fancy salesmen down from New York and their fancy suits, and they gave the presentation. And of course, they just, the other thing my father used to always say is everybody always underestimates these policemen and firemen. They underestimate their intelligence. They underestimate their common sense. They underestimate how savvy they are.”
2024-09-01 · We Study Billionaires · RWH049: Crushing The Market Over 50 Years w/ Jay Bowen · IDENTIFIED FROM THE TRANSCRIPT
“Exactly. I mean, and the other thing about father had to deal with Really, desire for, I mean, the fun, even though it was whatever 25 million, 50 million, 100 million, 200 million, I mean, everybody want to get their hooks into it. And it was viewed, I think, as a fresh piece of red meat. You know, you had this one manager and it was like, wait a second, think of the fees that fund could generate for the consultant, for the brokers, and for the multi-managers and for the whatever the deal of the day is, you know, you just and the trustees, like you say they would go to these conferences and they would just be swarmed and they would be, particularly when he was responsible for it, they would really be criticized from a fiduciary standpoint for only having one manager. And there was just, he really had to fight the story. I remember one story he used to love to tell. And these trustees were selfless, dedicated. They often gave up promotions to do the right thing. I mean, there's a...”
2024-09-01 · We Study Billionaires · RWH049: Crushing The Market Over 50 Years w/ Jay Bowen · IDENTIFIED FROM THE TRANSCRIPT
“And he was really able to forge a very close, you know, not with all of them, but with a lot of the trustees, a very trusting relationship. And I think he felt it that it was incumbent on him to really educate the trustees in terms of what he was trying to do and why he was doing it. And when they would see what he said over particularly over long time periods come to fruition, I think it really helped embolden him with the trustees and they just completely bought in to what he was saying and they completely bought into the long-term approach and they had their eyes firmly set on the distant horizon in terms of what this plan was all about.”
2024-09-01 · We Study Billionaires · RWH049: Crushing The Market Over 50 Years w/ Jay Bowen · IDENTIFIED FROM THE TRANSCRIPT
“Educating these trustees because they were really dedicated. You had three policemen and still do, three policemen, three firemen, and then three city trustees at the mayor points. So it's nine trustees. And my father always said, it's really the police trustees and the fire trustees that they've got the majority. If there's ever a vote, they're the ones that are going to determine the fate of the plan. And so he really He forged these really terrific relationships and friendships. We just had a little 50th anniversary celebration down there in some of the trustees came that are retired now from the 1980s and 90s and they were just really good friends with them. There was a chairman, there was a chairman that was chairman for 12 years and a vice chairman that was a fireman and he was vice chairman for 10 years.”
2024-09-01 · We Study Billionaires · RWH049: Crushing The Market Over 50 Years w/ Jay Bowen · IDENTIFIED FROM THE TRANSCRIPT
“1980s, particularly, I mean, it was really, he had to really fight some fierce battles in terms of keeping the plan. He was under a lot more stress than I've had to deal with to try and keep the plan together. I mean, he was being attacked from all sides. Often, I mean, it was just really tough. And then you have the performance side of it where that was a lot of pressure. He forged a relationship with those board members and I can remember when I was little, third, fourth grade, my mother would say, well, your father's who had a Tampa again. And he would go every month. He would go every month and he forged this relationship. And I can remember he would tell me, you know, they would pick him up at the airport and they would go have breakfast or lunch. And I think he really took pride in.”
2024-09-01 · We Study Billionaires · RWH049: Crushing The Market Over 50 Years w/ Jay Bowen · IDENTIFIED FROM THE TRANSCRIPT
“I think that's exactly right. It's all about trust. And he built this trustful, they really respected him and they liked him. And I think the Marine Corps definitely played a role in terms of making him resilient and making him connect with some of these public safety officials. I don't think there's any question about it. When he forged the relationship, they just had enormous trust and respect for him. And that's why they called him back to make that presentation in 74 and he used to, it's funny. He needs to go down and again just he never gets enough credit. He really took the brunt of the early criticism and of they were, even though the funds a lot bigger back then, the fighting to get control, to get their hooks into that plan once it was started and then when it got bigger and bigger and bigger in the 1970s and the 1990s.”
2024-09-01 · We Study Billionaires · RWH049: Crushing The Market Over 50 Years w/ Jay Bowen · IDENTIFIED FROM THE TRANSCRIPT
“Conceivable time period, and yet it's feud with skepticism. It's like, wait, that can't be one manager. That's way too risky. You can't have one manager. We've got to. So I've always thought that was an interesting part of the story that it's so different and so unique. And I'm glad to be able to sink my teeth into the comparative databases because it makes the trustees feel good when they see the rankings because it's basically validating what they've been doing for 50 years.”
2024-09-01 · We Study Billionaires · RWH049: Crushing The Market Over 50 Years w/ Jay Bowen · IDENTIFIED FROM THE TRANSCRIPT