YouSaid · the spoken record

Steven Galbraith

lines on the record: 98
first: 2017-04-13
most recent: 2017-04-13
sittings or episodes: 1
sources: podcast

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“Some of it is hindsight. I probably spend more time with friends. I mean, because it is getting back to our earlier conversation, I've probably spent too much time at work. Not probably I have. I've been too much. I work. I've always spent a lot of time working. Now, part of it's because I like it. So selfishly, it's like it's an interesting thing. If I did look back, it's like, you know what? Cut it short. You don't need to take that meaning. You don't need to do this. You don't need to do that. And I think if you ask most people on Wall Street, that would be, you'd get a reply along those lines. Maybe not, but a lot of my friends. We've got more philosophical old age, and I think that is one of the things I'm aware of.”
2017-04-13 · Capital Allocators · Steven Galbraith – Five Tool Player (Capital Allocators, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source
“Success that when you do go through the rough patch, I just had a brutal string of stuff happen last year. I was just like, oh my God. And then, you know, it's a year later and I'm happy as a clam and things are going great.”
2017-04-13 · Capital Allocators · Steven Galbraith – Five Tool Player (Capital Allocators, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source
“You know what? It'll all be okay. I think we all suffer from, I got to be hyper achieving right now. And if I go through a rough patch, it's I'm doomed or I'm suddenly going to lose status or whatever. And, you know, it kind of does work out. And I've talked about this before, but, you know, after September 11th, it was one of the most poignant moments in my life because Morgan Stanley had been the largest tenant in that building. And we got up for the morning meeting and it was Phil Purcell let it off. He was the CEO of Morgan Stanley. And then Barton got up there. And that's all he said. I think we're going to be okay. And I'm like, that's it. But, you know, with time and passage of time, it was like, that was the right thing to say. And so I don't know. I think there was a sense we're also hyper competitive and we demand.”
2017-04-13 · Capital Allocators · Steven Galbraith – Five Tool Player (Capital Allocators, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source
“Talk about. It was a Red Sox. I mean, I cried. I mean, and I'll never forget it because game six, we had a Maverick, it was the day before the Maverick Annual Meeting, and we actually brought a TV to a restaurant. We need, and then game seven, I think we were down in Dallas. And it was interesting because it wasn't even the World Series. It was when Damon went deep and hit the home run. Yeah, yeah. Okay, we can stop talking about this.”
2017-04-13 · Capital Allocators · Steven Galbraith – Five Tool Player (Capital Allocators, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source
“And even subtle stuff like that, I think, can be very helpful. And so I see it with this family office. I think one of the most thoughtful guys on the board, he's running a company. And so he just asks questions differently than the rest of us. And oftentimes they're very, very insightful. And so take the road less traveled. But it's always easier said than done.”
2017-04-13 · Capital Allocators · Steven Galbraith – Five Tool Player (Capital Allocators, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I couldn't agree more. And I think that's what really ultimately, and look, there are others nuances to it. So I met with David a couple months back. And one of the interesting things he talked to me about with his investment committee was getting non-financial people involved on the committee. And I think there's huge value in that. Like at Tufts, we have CEOs of a couple large Pfizer, Bristol Myers, DuPont. We've had these people involved. They should be on the investment committee, actually. Instead, you tend to populate it with the Wall Street guys.”
2017-04-13 · Capital Allocators · Steven Galbraith – Five Tool Player (Capital Allocators, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source
“We ignore it. It's so challenging. I was having a conversation last week with someone about this who had asked me what were one of some of my biggest mistakes. And part of it training from David Swenson at Yale, I followed through a systematic bias to hold on too long at times. So the flip side of being patient if someone's underperforming is that In a competitive world, you think the market doesn't know what stocks you own. But when you're not doing well, sometimes the market does and they just keep pummeling you. So it's really, really hard. And for me, I've had that increasing appreciation over the years for what my mentors at Yale have continued to do because you see how incredibly hard it is, even when you're aware of everything going on around you.”
2017-04-13 · Capital Allocators · Steven Galbraith – Five Tool Player (Capital Allocators, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source
“And yet that's a tough thing to kind of marshal through the various stakeholders. With this family office, it's been some of the same in the sense that we could take, it truly is permanent capital and they don't even really need a dividend of any note, right? So it's almost even better. And yet it still creeps into our discussions. And so I just think that, I don't know how some of these other folks deal with it, but I just think it's a natural outgoing business. And I'm disappointed in myself that I haven't been able to sway the boats enough towards, let's just ignore it. Let's just outlaw it. Now, you know, I don't think that'll necessarily work, but I do feel like we should almost have each of these different things I'm involved with where we don't even do quarterly reporting of the results. We ignore it.”
2017-04-13 · Capital Allocators · Steven Galbraith – Five Tool Player (Capital Allocators, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source
“The latter thing is the most challenging because even in a situation with tufts or family office where we're quasi-permanent capital, even we do focus how the core look. And we also have endowment envy. And not so much on the investment committee at Tufts, but if you think about stakeholders, how did Amherst do? How did Williams do? How did the other NASCAT guys do? And it's a natural question as opposed to how are we doing versus what Tufts needs. And as we've talked about this before, but Tufts is unfortunately quite under endowed versus its peers. So we're probably only 10% of 10 to 13% of the university's operating budget, whereas a Harvard or Yale would be a third. So that gives you a, and so in theory, We could actually take more risk because day to day were not as important to the university's P&L, if you will.”
2017-04-13 · Capital Allocators · Steven Galbraith – Five Tool Player (Capital Allocators, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source
“Would write these marvelous pieces such that everyone felt they knew him, but he just was so uncomfortable. So like I'm one of those guys, if I go to a cocktail party, I immediately go into the corner with a friend and just, I can't, I don't want to deal with it. And it is odd. So what I do wrestle with is this kind of because my prior role was in such a high profile thing, there's this assumption that I was somehow comfortable with it. When in fact, Really not. And it's a big joke with Lucy's friends because getting me out of the house is almost impossible. I'm reading stuff. I'd rather sit here and read a book or read a 10K or read whatever. But so I get that there's a conflicting message.”
2017-04-13 · Capital Allocators · Steven Galbraith – Five Tool Player (Capital Allocators, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source
“He defined the other end. He sure does. And so it's odd, and I appreciate it. It's funny because Barton was the same way, whereas Barton...”
2017-04-13 · Capital Allocators · Steven Galbraith – Five Tool Player (Capital Allocators, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's interesting. So I've clearly snowed you because I am one of the most socially awkward, and it comes out differently in a talk like this because I know you. But people that actually know me are stunned, A, because I can communicate pretty well and I can write okay, that is the fronting, but on this Maverick test, I was in the one percentile of most neurotically loner, you know, not requiring social norms. And in fact, it was almost too extreme that we were a little worried. There's something wrong with the test. It turns out there's anything wrong with you, Steve. It's just a test. And it was funny because we gave, and you know my former partner, John Jodka.”
2017-04-13 · Capital Allocators · Steven Galbraith – Five Tool Player (Capital Allocators, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source
“And then lastly, you know, her background is different enough. And as you well know from your experience, distressed investing, it can take like a week or a month to build a position because, you know, it's not an agency market. It's a principal market and the price discovery can be very tricky. Whereas unlike, we're wrong. Sell it. It's like, what do you mean? It's like, yeah, we're a nanoseconds volume in this thing. We don't know what we're talking about. It's time to move on. And so that's been funny just to have the back and forth dialogue about stuff like that.”
2017-04-13 · Capital Allocators · Steven Galbraith – Five Tool Player (Capital Allocators, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source
“Blow up, and it's embarrassing to blow. It's like, oh, Lou, you know, so we own our R Donnelly and it's down 12% today. And I'm like, this is my idea. And am I not going to get dinner tonight? Or, you know, am I going to have to buy dinner tonight or whatever? And so the day-to-day vagaries of stock moves can be pretty, pretty funny.”
2017-04-13 · Capital Allocators · Steven Galbraith – Five Tool Player (Capital Allocators, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source
“So the things that work is we actually work together at Chase from day one. We work together at Morgan Stanley in different roles. And Lucy had been a distressed investor with some success on some notable success on her own. So our dinner time conversation tended to be very boring as it was. Like, oh, can you believe this? Or, you know, so there's been a long history of discussing. So that part has actually been seamless and easy. And I think actually quite, quite productive. And it's interesting when I tell friends or even colleagues or folks that know me this setup, 90% of them say you're crazy and then 10%, oh my God, that's my dream. Like I'm working with my best friend and someone I respect and trust. And so far, it's been the 10%. The challenge is you are wrong and stocks.”
2017-04-13 · Capital Allocators · Steven Galbraith – Five Tool Player (Capital Allocators, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source
“And it'll ring awful to an educator. But effectively, we've set up an operating company holding company strategy. We're at the network board where I sit with Joel and Eva, we do all the administrative stuff. So ordering the lunches, getting the janitorial things, changing the light bulbs, all of that, all of that is done at the holding company. You got it. And then the principals and the teachers are allowed to teach. They're not spending a second on who's ordering the paper or the pencils or whatever.”
2017-04-13 · Capital Allocators · Steven Galbraith – Five Tool Player (Capital Allocators, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source
“and take care of, you know, they'd do that part of it. And fourth and probably most controversial is the passion in energy of the teachers. If you look at our typical teacher, she and most of them are women, is a 26-year-old with almost no experience at all. And this is not a dig at traditional teachers. That's not what I'm trying to get at here. The energy level and passion these young women are devoting to these kids is crazy. And we teach, we treat them like professionals. They get iPhones, they get business cards, they get all the resources they need. And then the final thing we've done, Ted, and this is kind of success as Secret Sauce is.”
2017-04-13 · Capital Allocators · Steven Galbraith – Five Tool Player (Capital Allocators, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's so basic. It's almost preposterous. Number one, time in school. One of the things you'll know from lower socioeconomic strata, a lot of learning is lost in the summer. And so our school year, the kids basically only get about two or three weeks off a year. They're in the classroom about an hour or two a day longer than the typical. So just pure effort. The second big bucket, I would argue is what we're teaching. We teach them science and chess starting in kindergarten. So we're teaching them stems type stuff at an incredibly early age. Three is insisting that the parents are involved in care. I don't know if it's still true, but when it was in the early days, the parents actually had to sign a contract that they would read to the kid every night.”
2017-04-13 · Capital Allocators · Steven Galbraith – Five Tool Player (Capital Allocators, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source
“That it influences the whole pie. Obviously, we're doing it with success proper, but it'll start impacting other schools where they've got to compete. They've got to compete with us.”
2017-04-13 · Capital Allocators · Steven Galbraith – Five Tool Player (Capital Allocators, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source
“are typically in the bottom 10% of wealth. In fact, you know my wife Lucy and I sponsored Bronx Success too. So we actually rolled out one of the schools and the principal is this wonderful woman, Vanessa Bangser. They actually were in, I believe, the second lowest socioeconomic zip code in the entire country. And they finished second in math. So the outcomes, Ted are spectacular. They're doing it at scale now. And what we think is going to happen is, and it's kicking and screaming because we've had the de Blasio administration has been a foe throughout the whole period. Bloomberg was a huge supporter of ours. But we think we're getting close to the tipping point. And this was John.”
2017-04-13 · Capital Allocators · Steven Galbraith – Five Tool Player (Capital Allocators, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's necessary but not sufficient. In other words, too many of the charters historically had one great school and it was terrific and that was great and so in that little part of the community it was spectacular whereas we kind of are they I'm on the board but all credit to them came up with the idea is you needed the pedagogy and an ability such that you could replicate it at massive scale and to do that and it's similar to investing if you think about it you need a framework These are the things we got to do and you check the boxes a, b c and then you roll it out, roll it out, roll it out and for those who don't know success had I think something like five or six of the top 10 schools in the entire state of New York last year and the demographics of our population”
2017-04-13 · Capital Allocators · Steven Galbraith – Five Tool Player (Capital Allocators, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source
“First of all, thank you for asking. I'm having fun. This is actually really great. God knows if it'll turn into anything. A couple of things out of success. First, Joel Greenblatt is not only brilliant investor, he's a hero. And Eva's obviously here as well. But let me step back. So Sess Academy, when I got involved, it's been almost a decade ago now, only had one school and we were educating about 250 people. We're going to have something in the 40s in terms of the number of schools. Within the next decade, we'll be teaching 100,000 kids. I mean, Ted, it's just unbelievable. And Joel and Eva's basic premise was you need to find a way of replicating. The educational problem in this country is such that you can't just have beacons of excellence.”
2017-04-13 · Capital Allocators · Steven Galbraith – Five Tool Player (Capital Allocators, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source
“Basically contributing 130% of the P&L. And while that's okay, it's not necessarily a sustainable enterprise, which proved to be quite correct in hindsight. But it's a real challenge. You know, I think it's underestimated, and I was a pretty experienced guy. I'd worked with dozens of people report to me through the years. And yet it was challenging here, probably because I gave people too much rope. And that's a tough thing to overcome.”
2017-04-13 · Capital Allocators · Steven Galbraith – Five Tool Player (Capital Allocators, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source
“We weren't getting it done. And again, it's all on me because I made the initial hire and all stuff like that. But when they were repeating consistently mistakes analytically in their judgments, how do you deal with that? Do you deal with it quickly? And you actually gave me great advice early on. You said they're not going to get better. Like if it's truly not a fit, move on. And I'm too much of a wimp to my detriment. We kept some people on too long and it impacted performance. And in hindsight, what I should have done is just kept virtually all of the capital with myself and one other person at the firm who was also an experienced guy who had work with, who was moneymaker. And so if you statistically looked at our performance,”
2017-04-13 · Capital Allocators · Steven Galbraith – Five Tool Player (Capital Allocators, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so this is where I get into the self flagellation part of the interview because in hindsight, I made a lot of mistakes. But one of the ones that was most prominent was that issue of culture and investment. What I do feel good about is we invested a lot in building out the quantitative infrastructure and having the discipline. And to this day, that lives on here at the family office. And we're actually commercializing that into a separate enterprise. And so that whole part of the build out was terrific and it was very costly, but I felt if I wanted to manage outside capital, in other words, if I wanted to manage your money, I owed that to my outside investors to have that infrastructure. What I struggled with more, Ted, was at the very human level when God”
2017-04-13 · Capital Allocators · Steven Galbraith – Five Tool Player (Capital Allocators, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source
“Right. And so in another instance, we turn one of the analysts who was really bright, he was exceptionally smart, but he just wasn't getting it done as kind of a sector head. And we turned him into kind of a macro statistician. And he's done spectacular in that role. And that's a challenge because most organizations will just say, you're gone. And that's the easier path in some ways. But you've made this investment in the person, getting to your other questioning earlier culturally, some of these people are very additive. You saw something originally in hiring them. If you're a vibrant enterprise, can't you reposition them? And Maverick was pretty good at that, I have to say. They did do that.”
2017-04-13 · Capital Allocators · Steven Galbraith – Five Tool Player (Capital Allocators, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source
“He had been an analyst, and he's one of my favorite people in the world. He's a great sense of humor, very bright, just a wonderful guy. But he wasn't killing it as an analyst. And we put him in charge of the fund of funds business at Maverick. And they've done great. I mean, and he's absolutely killed it.”
2017-04-13 · Capital Allocators · Steven Galbraith – Five Tool Player (Capital Allocators, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source
“And so, as an organization, did you and Lee, and that's Lee Ainsley, for those who don't know who founded Maverick, did you then take that and look at almost people reallocations based on it? Maybe you take the person that was the fraternity guy that's running a portfolio and say maybe we should move him to the client-facing side of the business. Was there any of that?”
2017-04-13 · Capital Allocators · Steven Galbraith – Five Tool Player (Capital Allocators, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source
“A very social guy in the sense when you meet him, he's incredibly engaging. On the other hand, you can tell he's a very insular man. Like there's nothing he'd rather do than kind of look through annual reports or whatever. Whereas, you know, the president of the fraternity guy needs the affirmation. And so temperamentally, it's kind of Donald Trump versus whomever, you know, I think that is something in terms of the key to successful investing.”
2017-04-13 · Capital Allocators · Steven Galbraith – Five Tool Player (Capital Allocators, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source
“To see that data live was great. And then the third thing, and this might be interesting to the folks that are listening to this, we spent a decent amount of time with psychometric testing. So we gave tests to people that measured pure horsepower. And look, not everyone was immense subject there, but in general, I think our folks were above average IQ. But we also looked for dispositional screening. And what was interesting was, and then we look at who had success at the firm. And what was interesting is the most successful people actually tended to be loners. It was people that didn't require social affirmation. And that kind of makes sense too. And if you look at the HBO documentary on Buffett, or you know him, I mean, he's a...”
2017-04-13 · Capital Allocators · Steven Galbraith – Five Tool Player (Capital Allocators, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source
“how and why we made money. And I kind of knew this intuitively, Ted, or I thought I did. And because Maverick had been around for so long, we made money, you know, our best analysts were right probably 55 or 60% of the time. Like our real rock star guys. And I think the lay investor doesn't really understand that. Like there's this perception that, oh, my guy or, you know, Whoever is right, 80 or 90 percent of that, it's not that way at all. And then the other thing, we've talked about this in the past. That said, there's also a cohort of our investors that in fact might have been right 45% of the time, but they were big money makers. And by that, I mean, when they were right, they were getting two, three baggers. And they're wrong, investments were very low.”
2017-04-13 · Capital Allocators · Steven Galbraith – Five Tool Player (Capital Allocators, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source
“Which is an interesting topic because I'm on the board of Tufts and I'm chair of the investment committee now. One of the things I've spent time with Sally on and we're going to start doing is actually tracking the performance of people we've redeemed from to see in fact if we're making good decisions and there is some accountability look you don't want to overly focus on they're no longer in the portfolio but I do think if you track these types of things you're apt to have maybe a slightly more patient environment. So that was number one. The second thing that was a positive surprise was maybe not surprise, but we were deeply analytical about”
2017-04-13 · Capital Allocators · Steven Galbraith – Five Tool Player (Capital Allocators, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source
“I was talking to Patrick O'Shaughnessy on his Investing The Best podcast, and he had asked about a book that I might write that hasn't been written. And I said it should be called Chasing Returns, that we should all have a Bible of all of the stories, some of which you hear about in different organizations, but it seems like every time you turn around, there's another story of exactly that behavior. And it happens, I'm sure corporate executives feel the same way about their shareholders managers certainly feel the same way about allocators. And these days, my guess is the CIOs of Endowments and Foundations feel that way about their boards.”
2017-04-13 · Capital Allocators · Steven Galbraith – Five Tool Player (Capital Allocators, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source
“Pattern of behavior. It was just like, what the heck is going? Like, what are these, you spend all this time getting to know us. You give us, we had one investor that came in, and I won't name him, but they came in. I think they were $100, $200 million, and they'd spent all this time with us. And we had a lousy quarter or two. And they redeemed. And I was completely mystified.”
2017-04-13 · Capital Allocators · Steven Galbraith – Five Tool Player (Capital Allocators, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source
“Now, that's not fair in the sense that we had, and they still do have, a pocket of folks that genuinely they bought into what we were doing. I don't want you drifting. This is what you're going to do. We're behind you. And that was a big slug of the dollars. Interestingly, on a numbers basis, though, it was their high net worth investors that ended up being the most loyal that really bought into the culture. But there was this constant ebb and flow of what I'll call ankle biters. People would come in when you're doing well, and then they'd immediately leave. And, I mean, this was and is one of the, you know, really well-run businesses. And I was just astonished by that kind of...”
2017-04-13 · Capital Allocators · Steven Galbraith – Five Tool Player (Capital Allocators, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source
“short. And really the value add was going to be security selection. And then when I met the people uniformly, they were of a high quality. And this sounds sappy, but they were genuinely for the most part quite nice people. And there was a family orientation. So from an outsider looking in, that was the appeal to me. The biggest misconceptions, I guess, I had was that asset allocators were long-term in their thinking.”
2017-04-13 · Capital Allocators · Steven Galbraith – Five Tool Player (Capital Allocators, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so stepping back after I had had a modest degree of success at Morgantown, I actually was getting interesting approaches. Janice had approached me about running the whole company, the Harvard Endowment had actually approached me after Jack Meyer had left. And so there were things on my plate, and I wasn't offered the Harvard job, but I mean, people were throwing things out to me and what was clear to me, Ted, was I didn't want to be a player coach. I wanted capital at risk. At some point, you want to, not everyone. Some people, you know, Byron continues to write very thoughtful pieces without actually managing money. I wanted to step across the divide. And when Lee approached me, I just thought what he had, his structure made so much sense to me. And that was not trying to predict the market. So it was almost a classic Jones model, a little more leverage. So we were 150 long, 100.”
2017-04-13 · Capital Allocators · Steven Galbraith – Five Tool Player (Capital Allocators, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source
“And can you talk a little bit about what you saw inside and broadly in terms of capital allocation, in terms of how decisions get made that might have been different from what you may have thought from just knowing Lee and knowing the people there?”
2017-04-13 · Capital Allocators · Steven Galbraith – Five Tool Player (Capital Allocators, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah. So you go from your strategy seat, you're at the top, you're the number one ranked strategist, and of course then you leave. Naturally, but you join Maverick, one of the great hedge funds at the time and a very senior seat.”
2017-04-13 · Capital Allocators · Steven Galbraith – Five Tool Player (Capital Allocators, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source
“So it'll change, and that in itself has information content, right? So think about a year and a half ago, we wrote, or I write a lot about the impact of what I viewed as artificially low rates and quantitative easing. So just how difficult that was. So it was, and that was informative, like, okay, macro's driving everything right now. And in hindsight, maybe I should have just caved in and said, why bother with value? Just go ahead, own Fang. throw in the towel, own Facebook, Amazon, Netflix, and Google and call it a day, you know. But that was the anomaly, right? And then right now, what's interesting with the change administrations and everything is you are getting daily moves based on tweets and things like that. And so my sense is there's too many people ringing hands.”
2017-04-13 · Capital Allocators · Steven Galbraith – Five Tool Player (Capital Allocators, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's one of the things where I do think I probably have to, we do have some outside investors, so I think I will re-engage, but I don't think you necessarily want to do it rote. In other words, why do it every quarter? Why not do it when it matters? Like, why not do it when, oh, God, things are really strange today. And so I think that's the approach we'll end up taking.”
2017-04-13 · Capital Allocators · Steven Galbraith – Five Tool Player (Capital Allocators, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source
“I found having to actually put my thoughts to paper was an unbelievably powerful way of just marshalling what the hell am I thinking about? Like what matters today? Whereas if you're not doing this, so even if you're just not a portfolio manager or not responsible to outside investors, I would still argue it's worthwhile writing down your thoughts on what you're doing because it just clarifies where true north is. And so what I found through the years, Ted, is sometimes there'll be a divergence between what I'm writing down and what's actually in the portfolio. And that's a time to step back and reflect, say, okay, which side of my brain's right? Is it the side that, you know, the poetic side or is it the quantitative side? And so I think it's almost, and we were talking about this earlier.”
2017-04-13 · Capital Allocators · Steven Galbraith – Five Tool Player (Capital Allocators, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's funny, and it goes back to what we talked about with my college, where I was, not that I was torn, but to the extent I have any unique skills, it is somewhat unusual. I did exactly the same on my math and verbal SAT, which is somewhat unusual. And so wasn't completely left and right brain. You know, I had some on both sides. And so I always enjoyed writing at some level. But then when I became a quote-unquote serious investor,”
2017-04-13 · Capital Allocators · Steven Galbraith – Five Tool Player (Capital Allocators, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source
“So let's shift from numbers to the pen. We talked a little bit about writing. For those who don't know, you wrote the forward of my book. That was a conscious decision for me to get people interested. We'll get to this today. You're effectively managing a family office with your wife.”
2017-04-13 · Capital Allocators · Steven Galbraith – Five Tool Player (Capital Allocators, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source
“He said it's, you know, we do it the old fashioned way. We look through, we read through the documents. Now, they have a unique structure, an investor base and things like that. But I think at the end of the day, judgment will rule. You just don't want to go into battle unarmed. And so I think where the big data stuff can help you is helping you systematize your decisions. But I'm not a believer that the computers are going to take over the world. In fact, I think it's dangerous because I think, you know, you saw little snippets of it with a flash crash and some of these other things, 07, you'll remember well when you had that August when all the quants were betting. And now you've got the risk parity bets that people are making now. And I just, I think some of this stuff gets taken to extremists and the pendulum will swing the other way at some point.”
2017-04-13 · Capital Allocators · Steven Galbraith – Five Tool Player (Capital Allocators, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source
“See, I think we're, and this is a self-interested comment, I think we have to be naturally nearer to the end of it than the start of it, A, because it's on everybody's mind and everyone's talking about it. And intellectually, what I would argue is, you know, the overall industry, as Vanguard has shown, Had a massive fee problem. In aggregate, the industry is doomed to underperform by the extent of its fees. With the hedge fund side of the equation, because the fees were higher, it would be that much more magnified. And so, again, maybe I'm naive and I'm asserting this. There's no analytic proof behind it. But I come back to Omaha where they have like friggin' 20 people in the home office, right? And you know it better than anyone. And if you, one of my students, Todd Combs, actually works with Mr. Buffett.”
2017-04-13 · Capital Allocators · Steven Galbraith – Five Tool Player (Capital Allocators, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source
“Today with sort of increasing computing power, more availability of data, unlimited amount of data, you've had the large quantitative hedge funds have done really well in a period of time where most haven't. What do you think the limit is of this? If we look out 10 years, how much can computers replace what are today sort of people and research analytics and stock selection decisions and improving behavior? Where do you think this can go?”
2017-04-13 · Capital Allocators · Steven Galbraith – Five Tool Player (Capital Allocators, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source
“Figure out which companies are overearning in the underearning versus their stock price. But then also be acutely aware of the other stuff that goes into setting securities prices. And the purists might say, well, that's all short-term nonsense. But as I've seen too well, short-term can be investors are short-term. So you can't be wrong in this business. If you have the right investors, you can be wrong-quote wrong for a relatively long period of time, but investment horizons have shrunk to the point that running a commercial business and being wrong for 18 months is almost mutually exclusive.”
2017-04-13 · Capital Allocators · Steven Galbraith – Five Tool Player (Capital Allocators, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so look, at the end of the day, the crux of what you're trying to achieve, and this is what Bernstein was very good at, was having a disciplined, repeatable process by which you can select overvalued and undervalued securities. And Bernstein, and it sounds unbelievably naive today, but they were kind of the first firm to uniformly use a DDM, a dividend discount model. So everything was put through that black box. And so what I learned, and I've taken with me, and I'll take with me to my grave, I have a strong value orientation. In other words, I'm Scottish. I'm very cheap. I don't like overpaying for anything. And you can tell from my hair.”
2017-04-13 · Capital Allocators · Steven Galbraith – Five Tool Player (Capital Allocators, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source
“It back then Can you talk a little bit about what did you see that worked when you're blending the numbers, sort of data analysis and fundamentals, and what part might people be missing today that it's not just sort of the elixir to success?”
2017-04-13 · Capital Allocators · Steven Galbraith – Five Tool Player (Capital Allocators, EP.01) · IDENTIFIED FROM THE TRANSCRIPT · source