YouSaid · the spoken record

Simon Lack

lines on the record: 140
first: 2017-03-10
most recent: 2017-03-10
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“So you could ask your investment advisor, do you push products that are the subject of an SEC investor alert? And if yes, why? That would be a fair question. That”
2017-03-10 · Masters in Business · Interview With Simon Lack: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“No suitability issues. They're fair suitability. But basically they're public securities. But because they're not publicly traded, they don't draw any research because there's no commissions. And so, if you're going to design a security that really does fleece investors, you don't want sell side research to write about it. So if it's not traded, there's no commissions, there's no incentive to write research about it. So you can stay in the shadows. Because there's no money to be made being critical of non traded risks.”
2017-03-10 · Masters in Business · Interview With Simon Lack: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think I don't know the answer, but I believe that they are sort of arbitraging the regulatory system because non-traded REITs are registered securities. When they're registered, they could be sold to anybody.”
2017-03-10 · Masters in Business · Interview With Simon Lack: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“So even though a REIT is supposed to invest in real estate, they charge you additional fees to buy real estate to manage it and to sell it. There's extra incentive fees paid to the management. There's granting of extra shares to the management. I mean, it's a utterly, anybody who has sold non-traded REITs honestly should not feel that good about what they've been doing.”
2017-03-10 · Masters in Business · Interview With Simon Lack: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“For your own good. That's hilarious. And then, of course, littered with conflicts of interest. And it seems to be that if you tell investors how many ways you're going to screw them, it's okay to go and screw them.”
2017-03-10 · Masters in Business · Interview With Simon Lack: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“My house has no volatility because it doesn't trade every day. So, yeah. So this fellow said that the illiquidity of non-traded REITs benefited the long-term investor because it prevents you from making an impulsive and self-destructive decision to sell it because you can. And it's so stupid. I mean, it's so self-serving. I couldn't believe that this fellow would even put that. It's much less volatile.”
2017-03-10 · Masters in Business · Interview With Simon Lack: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's a disgusting product. It really, I mean, that might be the worst investment that could ever be sold to retail clients. Really? So the fees, 15 points. I mean, if you think hedge funds are expensive, 15 points of upfront fees.”
2017-03-10 · Masters in Business · Interview With Simon Lack: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, absolutely. Absolutely. I mean, like you, I've got a lot of friends in the business, right? These are honest people. I mean, it's not that the industry is dishonest. You get some bad actors and you get, I think, complexity and insufficient research by investors. And you get people being charged too much for things or inappropriate products.”
2017-03-10 · Masters in Business · Interview With Simon Lack: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think General has been well received. I mean, Wall Street's got mostly honest people, but not everybody. And it's certainly a very expensive place to do business at its worst. And so the goal of that book was to try and educate the clients not to get Wall Street to change what it's doing, but make the clients better educated so they can be more discriminating and ask better questions about what they're paying for.”
2017-03-10 · Masters in Business · Interview With Simon Lack: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean, so investors, they're investing in funds where only two-thirds of the return goes back to them. And I can tell you the vast majority don't even realize that they're subject to this tax. And it just shows that they don't read the prospectuses.”
2017-03-10 · Masters in Business · Interview With Simon Lack: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's absolutely right. I mean, a case in point is we specialize in energy infrastructure. And there's $50 billion of mutual funds and ETFs that are taxed as corporations. And so only 65% of the return on those assets goes to the class. Why not an ML?”
2017-03-10 · Masters in Business · Interview With Simon Lack: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“And so the disclosure can always be better, but also investors have a responsibility to invest the time to understand that. I mean, it doesn't have to be that expensive to invest money, and you don't have to be paying 12B1 fees or loads. You know, we run a mutual fund in my business, and you can access it very cheaply through Schwab and Fidelity, with iShares, with no upfront fees, or you can access it through a financial advisor where there'll be some fees. And so it really, it's up to the investor to decide, do I want to go into this fund through an advisor and pay for him for the advice? And that may be justified, or am I happy doing my own research? And I think that... The vast majority of retail investors don't do enough hard work.”
2017-03-10 · Masters in Business · Interview With Simon Lack: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean, maybe it would say my responsibility is to act as an agent of the company I work for. Some wording non-fiduciary might be an emotion. You're telling me that wouldn't be.”
2017-03-10 · Masters in Business · Interview With Simon Lack: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“That's absolutely right. And in my business, I'm a fiduciary, and it's dead simple. You just do what's right for the client. As you say, the broker-dealer model where you have the lower standard, there's so much potential for conflict, so there's so many more rules and regulations around it.”
2017-03-10 · Masters in Business · Interview With Simon Lack: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Right, but disclosure doesn't mean that it's buried in a document. Disclosure means it's on your business card. Oh, really? I mean, really, it should be really clear.”
2017-03-10 · Masters in Business · Interview With Simon Lack: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's complicated for people to understand. And so it's a very, very highly regulated industry barrier, as you know. And it's hard for me to believe that even more regulations, the answer, it should be just explained clearly to people. You're in favor of trade.”
2017-03-10 · Masters in Business · Interview With Simon Lack: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I mean, it's a fair question. I think that a lot of investors think they are dealing with a fiduciary when they're really not. And I think that the easier solution is to just ensure fair disclosure. That if you're not a fiduciary, that your business guide says, I'm not a fiduciary, because there's also a big segment of the investor market who perceives that dealing with a fiduciary is more expensive because a fidusha is going to charge an asset fee. And there's a lot of investors who say, look, I don't want to just pay you a fee every quarter just for my money certain now. I want to pay you a fee when I do a transaction, which is the non-fiduciary model. And I think that the regulations should be flexible enough to allow both of those to exist.”
2017-03-10 · Masters in Business · Interview With Simon Lack: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“And so it's a huge problem, and it's unlikely to be a crisis because it unfolds over time. But it's to the cost of taxpayers in any state, including New Jersey where I live, who have that.”
2017-03-10 · Masters in Business · Interview With Simon Lack: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“It would drive up their expected return because cash is a drag, and that higher expected return would translate into a lower present value of their obligations. And so they'd actually look as if they're in better shape, even after destroying some of the assets that they would use to meet those obligations. And it's obviously an unrealistic example. But the math is what it is. You put in an asset with a high expected return. It makes your funny position look better regardless of how those assets do.”
2017-03-10 · Masters in Business · Interview With Simon Lack: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, the accounting is totally wrong. And in fact, the other end of that is if a pension fund owned treasury bills, which they wouldn't, but if they did and they pay, what a quarter percent. And that affects their expected return and the discount rate on their liabilities. If they burned the cash that was in those treasury bills, as opposed to keep”
2017-03-10 · Masters in Business · Interview With Simon Lack: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“That's entirely correct. And so taking hedge funds out would cause their unfunded position to be worse And put more pressure on the governor to add, you know, to raise taxes.”
2017-03-10 · Masters in Business · Interview With Simon Lack: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes, it's an estimate, right? And that's the Akhani standards that government entities have to use. And the result is it biases them towards hedge funds because of their historic performance.”
2017-03-10 · Masters in Business · Interview With Simon Lack: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's a problem with the accounting treatment that public pension plans use, and it's a little bit of an obscure issue. But basically, with a pension fund normally, you use a corporate bond rate to figure out what your liabilities are. Pension plans use the expected return on their investment portfolio.”
2017-03-10 · Masters in Business · Interview With Simon Lack: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“What's the takeaway from this? I think you get better value for money, Tarco Bell. There's no question about that given the choice I'd pick the Taco Bell.”
2017-03-10 · Masters in Business · Interview With Simon Lack: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Hedge funds are mean reverting investments. This is never going to be a good combination. They're always buying what worked yesterday and it's actually less likely to work tomorrow, but generally institutional investors in hedge funds are not that sophisticated in my experience.”
2017-03-10 · Masters in Business · Interview With Simon Lack: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean, the problem is that it's very hard to forecast who's going to do well. You know, ahead of time. So there's always going to be happy clients and there's always going to be hedge funds that do well. But hedge fund performance is mean reverting. And so you have a set of investors who very largely look at performance to decide where to invest. I mean, I sat in so many meetings with hedge fund managers and you have the whole discussion about security selection and portfolio construction and so on. Manager leaves your caucus and we talk about it. And then somebody says, yeah, no, what? He was up 15% last year. Yeah, he's pretty good. Yeah, I like him. He's pretty good. Right. As opposed to anyone down 50%.”
2017-03-10 · Masters in Business · Interview With Simon Lack: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“And so they miss the obvious third step, which is that a small hedge fund industry was better than a big one. And I would challenge any institutional investor in hedge funds today to ask themselves, what's the optimal size of the hedge fund industry? And generally those investors don't even contemplate the question. They don't think of it in terms of any sort of finite pool of arbitrage type profits to be exploited. And it's a huge disconnect. It's a huge error and they're getting the results that they deserve for such shallow analysis.”
2017-03-10 · Masters in Business · Interview With Simon Lack: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“And it's an extraordinary disconnect by generally public pension plans. I mean, those are the big source of capital today for hedge funds, not so much high net worth investors. And what they do is generally investors will understand that small hedge funds are better than big ones. I mean, it can be expensive to have a portfolio of small hedge funds. You need a lot of them. They also know that any big hedge fund they look at was better when it was smaller. That's why it's big today.”
2017-03-10 · Masters in Business · Interview With Simon Lack: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“And as in most things in investment, popularity is eventually going to kill it. And that's what happened over the last 10 to 15 years.”
2017-03-10 · Masters in Business · Interview With Simon Lack: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean, it was so cool because in the early 90s, that's when I first started investing in hedge funds sitting on that committee. And it was a very obscure backwater. And you'd go and see these very talented people in a small office with very complex strategies, with leverage and Cayman vehicle. And it all sounded quite risky. And banks were not doing that. I mean, we were really sort of pioneers in terms of allocating proprietary capital to that. And it was so cool. I mean, there's never a boring meeting with a hedge fund manager. Each one of them is interesting in their own way. And of course, the industry just completely took off. And in the early 90s, when we were doing that, the markets were very inefficient and you could make some very, very attractive returns.”
2017-03-10 · Masters in Business · Interview With Simon Lack: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“They're letting things roll off and they're not bidding at auctions the way they were. So it hasn't caused really any discernible disruption to this point. So I think that's true.”
2017-03-10 · Masters in Business · Interview With Simon Lack: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“It could be. I mean, you know, they've each got over a trillion dollars, and as a practical matter, it's hard to see how you could sell that sort of amount in a short period of time. But the Chinese, of course, have been reducing their holdings recently. I think part of much.”
2017-03-10 · Masters in Business · Interview With Simon Lack: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“You know what? I mean, it's not something that's at all on the horizon today, but my point is that the moral obligation to repay what's been borrowed with fair value is going to become more and more tenuous over time because the people who are repaying the debt are not the ones who made the decision to borrow. And I think you're going to see that connection weaken. And it's going to be at the expense of the people who own the debt.”
2017-03-10 · Masters in Business · Interview With Simon Lack: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“President Trump would say to those guys, and I think he'd say, hey, listen, if you want to keep selling bonds, I'm just going to cut the interest rate and half on what we pay you. How's that work?”
2017-03-10 · Masters in Business · Interview With Simon Lack: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“To get a fair return. And so I explore this idea of populism in the Barn book. And a couple years, the books a couple of years ago, way ahead of the curve. Hopefully ahead of the curve. And here's the thing, right? We've had this transfer of wealth from one generation to the next. The baby boomers have basically brought a lot of money to pay entitlements, and the next generation is going to be left to pay for that. So now we've got a new president and just suppose interest rates went to 10%. Just suppose the Chinese and the Japanese provided selling bonds. What do you suppose?”
2017-03-10 · Masters in Business · Interview With Simon Lack: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's possible. It's possible. We have a very bad indebted position. And under most forecasts, it's only going to get worse. And eventually, it's quite possible that other countries will decide what rates they'll lend us money at. But I think it's actually, although that's a possibility and it's something you're worried about, I think it's more likely that we'll continue to set rates and we'll continue to set rates lower than they really should be for the interests of the lenders. And, you know, I have.”
2017-03-10 · Masters in Business · Interview With Simon Lack: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Absolutely, absolutely. So I think that although, you know, in my book, I'm negative on bonds, it's not because we think bond yields are going to go up sharply. I think you're going to see rates lower than they should be from an investor standpoint for a long time. I mean, the return on bonds is just inadequate to justify putting money into them.”
2017-03-10 · Masters in Business · Interview With Simon Lack: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean to a large degree certainly impacts the emerging world and clearly sets its own rates and it's a great situation for the US to be because the financial crisis came about through too much debt. and the solution to too much debt is low rates. And I've often said to people that if Janet Yallen or Ben Bernanke before her had got up and given a speech and said, hey, listen, here's the deal. We've borrowed too much money and we're just going to keep rates really low and transfer real wealth from savers to borrowers. If they'd given that speech, monetary policy would have been as it's been. Haven't given the speech, but you've had the outcome that's consistent with that. Low rates are in our self interest.”
2017-03-10 · Masters in Business · Interview With Simon Lack: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“From the investment side, certainly, but obviously low rates stimulate demand, allow consumers to borrow money to buy things as well. So it's critical. I mean, it's probably the most important variable.”
2017-03-10 · Masters in Business · Interview With Simon Lack: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean, critical, right? I mean, maybe the most important economic variable out there is interest rates and people getting a fair return on their money.”
2017-03-10 · Masters in Business · Interview With Simon Lack: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source