# Conviction Investing: Masters in Business with Bill Miller IV

An episode of [Masters in Business](https://invisiblenetwork.ai/podcast/730188152), 20 Mar 2026, 59 min.

Audio: https://podtrac.com/pts/redirect.mp3/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/4e4cd910-40a1-4619-a5f3-ae2b0012ffff/515b9e55-f958-4f19-8ee4-b41301564660/audio.mp3?utm_source=Podcast&in_playlist=5873a3cb-298f-40bc-b71f-ae2b0013000d

Barry speaks with Bill Miller IV, Chief Investment Officer and the Portfolio Manager for the Miller Value Fund about his start in investing. They discuss the rise of bitcoin, and how it may mirror technology in general. They also discuss his firm's approach to high concentration and conviction investing. See omnystudio.com/listener for privacy information.

## Transcript

[0:02] Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. This is Masters in
[0:12] Speaker 1: Business with Barry Ritholts on Bloomberg Radio.
[0:16] Speaker 2: This week on the podcast, I have yet another extra
[0:19] Speaker 2: special guest, Miller Value Funds, Bill Miller the fourth. He
[0:23] Speaker 2: is the son of Bill Miller, the third, fascinating investor,
[0:28] Speaker 2: portfolio manager, and World Series of poker player. They have
[0:35] Speaker 2: a very unique approach to value. It's not your traditional
[0:38] Speaker 2: just buy him cheap. I thought this conversation was fascinating
[0:42] Speaker 2: and I think you will also with no further ado,
[0:45] Speaker 2: my conversation with Miller Value Funds.
[0:48] Speaker 3: Bill Miller, thanks for having me. It's great to be here.
[0:51] Speaker 2: So I want to talk about your investment philosophy, what
[0:55] Speaker 2: you're doing at Miller Value today. But let's roll back
[0:58] Speaker 2: a little bit. Beforehand. You get a degree in economics
[1:02] Speaker 2: from Toughts and then an MBA from Dartmouth Talk School
[1:05] Speaker 2: of Business. Was investing the original career plan.
[1:10] Speaker 3: No, it wasn't the original career plan. You know. When
[1:13] Speaker 3: I was growing up went to a small private boys
[1:16] Speaker 3: school in Baltimore, Maryland. Never really knew what I wanted
[1:19] Speaker 3: to be when I grew up. But when I pointed
[1:22] Speaker 3: out to my parents. They said, we'll just consider school
[1:25] Speaker 3: as your job, and the harder you study, the more
[1:28] Speaker 3: options you'll have down the line, and it'll help you
[1:30] Speaker 3: figure it out.
[1:31] Speaker 2: So that sounds like pretty good advice.
[1:33] Speaker 3: I followed it. It did well academically in school. So
[1:38] Speaker 3: when I went to Toughts, I think the primary concern
[1:40] Speaker 3: was somewhere where I could actually play baseball. So growing
[1:42] Speaker 3: up with a huge Orioles fan, that was something that
[1:44] Speaker 3: my dad and I often did together. He was my
[1:47] Speaker 3: coach and little league something I'm doing now today for
[1:50] Speaker 3: my son. Sports teach you a lot about being on
[1:54] Speaker 3: a team, about how to operate, how to internalize which
[1:59] Speaker 3: you can and control what you can and not focus
[2:01] Speaker 3: on the rest. So learned a lot from that.
[2:03] Speaker 2: Did you play baseball in college?
[2:05] Speaker 3: Yeah, but I wasn't very good, so I learned that
[2:07] Speaker 3: pretty quickly. I played.
[2:09] Speaker 2: Difference between the guys who are good and really good
[2:13] Speaker 2: is so tiny, Just like a little wood on the
[2:16] Speaker 2: bat once or twice more a week and you're in
[2:19] Speaker 2: a different tier exactly, Right's fascinating.
[2:22] Speaker 3: Yeah, And you know, I probably deluded myself for a
[2:26] Speaker 3: while about how good I could be. But I also
[2:28] Speaker 3: probably didn't focus on the right things, and knowing what
[2:31] Speaker 3: I know now about how to get better and improve
[2:32] Speaker 3: with things, I could have been much more systematic about
[2:34] Speaker 3: it than I was.
[2:35] Speaker 2: Huh, So you start your career at Mackenzie Why consulting?
[2:40] Speaker 2: What led to that?
[2:42] Speaker 3: Yeah? Well, so I interned for my dad's group in college,
[2:48] Speaker 3: loved it, learned a lot. But then you know, on campus,
[2:53] Speaker 3: scrooting came along and McKinsey was one of the names,
[2:55] Speaker 3: and I just applied to it, did a little work
[2:58] Speaker 3: on it, and made it through that interview process. It's
[3:01] Speaker 3: pretty rigorous, and I got an offer from McKenzie and
[3:05] Speaker 3: I said, hey, Dad, I love being with your group.
[3:08] Speaker 3: Investing is a lot of fun. You know, what would
[3:10] Speaker 3: you do if you were me? And he said, well,
[3:12] Speaker 3: you can always tell McKenzie you can always come back
[3:15] Speaker 3: and work for me. But if you tell Mackenzie no,
[3:16] Speaker 3: you'll never have a chance to work there again. So
[3:19] Speaker 3: it was this concept of optionality again. And also there
[3:21] Speaker 3: was he knew and I didn't know at the time,
[3:23] Speaker 3: but they placed an immense amount of focus on professional development,
[3:29] Speaker 3: and so that was a really valuable place to spend
[3:31] Speaker 3: the first three years of my career. So I was
[3:34] Speaker 3: working on a huge variety of consulting projects, mainly Actually
[3:37] Speaker 3: the job I had there now I don't know if
[3:39] Speaker 3: it exists because of AI. So what I was doing
[3:42] Speaker 3: was remotely supporting teams on research efforts and deep dives
[3:45] Speaker 3: on stuff which now you just ask chat GBT about
[3:48] Speaker 3: and he probably does a better job summarizing everything I
[3:50] Speaker 3: could possibly do.
[3:51] Speaker 2: And you know, assuming it's accurate, which is always a
[3:53] Speaker 2: little bit of an ef.
[3:54] Speaker 3: Right, that is a big if for sure. Yeah, focusing
[3:57] Speaker 3: on primary sources is still a critical skill that I
[4:00] Speaker 3: think a lot of people under emphasis.
[4:01] Speaker 2: What you take from your years consulting that showed up
[4:07] Speaker 2: and as helpful as an investor.
[4:10] Speaker 3: You know. One of the things this might surprise you
[4:13] Speaker 3: less so about the data driven nature, because my dad's
[4:15] Speaker 3: a data driven thinker and thinking quantitatively has always been
[4:18] Speaker 3: in my wheelhouse. But the thing that I learned in
[4:21] Speaker 3: McKenzie more than anywhere else with me to focus on
[4:23] Speaker 3: client service and how to interact with people, how to
[4:28] Speaker 3: do the subtle things that show you know somebody else
[4:30] Speaker 3: as the client. In finance, you know, when you're managing money,
[4:33] Speaker 3: it's very hard to differentiate yourself and that you know
[4:37] Speaker 3: Ken French, who was a professor of mine at.
[4:40] Speaker 2: Famous Farm of French Factor model at Dartmouth.
[4:42] Speaker 3: Sure you got exactly. One of the things he imparted
[4:44] Speaker 3: on us was how long does it take to know
[4:46] Speaker 3: if a money manager is actually any good? And the
[4:49] Speaker 3: answer is from us, a statistically significant basis longer than
[4:52] Speaker 3: any money manager's career.
[4:53] Speaker 2: Right, So I'm going to say ten years, twenty.
[4:55] Speaker 3: Years, it's twenty plus for to see if it's statistically significant, right,
[4:59] Speaker 3: So you have to be doing other things. It's like
[5:01] Speaker 3: we were talking about before we came in here. Content's
[5:03] Speaker 3: a big focus, right, That's a way to differentiate yourself,
[5:06] Speaker 3: the way you communicate with clients, getting back to them quickly.
[5:09] Speaker 3: All of these things are really important. And I learned
[5:11] Speaker 3: those at Mackenzie. And I'm not sure I would have
[5:12] Speaker 3: learned those to the same extent if I had just
[5:15] Speaker 3: directly joined my dad's firm. So that might be a
[5:17] Speaker 3: surprising answer, but it is a no.
[5:18] Speaker 2: It's really really interesting. So Mackenzie was a solid place
[5:23] Speaker 2: to get grounded. What led to the pivot to investing
[5:27] Speaker 2: LADO seven?
[5:28] Speaker 3: Wait? Yeah, so in Mackenzie we were effectively handing over
[5:33] Speaker 3: analyses to clients and then leaving and moving on to
[5:36] Speaker 3: the next analysis. And it occurred to me that if
[5:39] Speaker 3: you actually wanted to build any equity in your analysis
[5:42] Speaker 3: and what you were doing, you had to actually take
[5:43] Speaker 3: a real stake in something. And so that made me think, Okay,
[5:47] Speaker 3: you know this is it'd be a great time to
[5:49] Speaker 3: pivot from what I was doing at Mackenzie to my
[5:52] Speaker 3: dad's side of things, where that's exactly what you're doing
[5:55] Speaker 3: all day, every day, excuse me. And then I also
[5:58] Speaker 3: during college I a liking to poker and so played
[6:03] Speaker 3: a lot in no limit hold and back then Poker
[6:04] Speaker 3: Stars was kind of an a legal gray area, and
[6:06] Speaker 3: so I played a lot online and I saw a
[6:09] Speaker 3: lot of similarities between what my dad did poker analytical
[6:14] Speaker 3: edge in terms of thinking quantitatively at Mackenzie, and it
[6:18] Speaker 3: all kind of came around to moving in that direction.
[6:21] Speaker 2: So, speaking of your father, how did growing up in
[6:26] Speaker 2: the Bill Miller household influence how you look at risk
[6:31] Speaker 2: and reward at investing at how big of an influence
[6:36] Speaker 2: was he on your initial philosophy?
[6:39] Speaker 3: I think he's most of it. It's hard for me
[6:42] Speaker 3: to specifically say A, B and C because it was
[6:45] Speaker 3: as much learning from watching him and how he operated.
[6:49] Speaker 3: So Number one, he was always always had a stack
[6:51] Speaker 3: of research and was always going through content, always looking
[6:54] Speaker 3: for new perspectives. He's a relentless truth seeker. And I
[6:58] Speaker 3: think that's ultimately what we're doing his investors is trying
[7:01] Speaker 3: to separate where the truth is from where the perception
[7:04] Speaker 3: is around what's going to happen. And the bigger the gap,
[7:06] Speaker 3: the where you want to place a bet.
[7:08] Speaker 2: That variant perception is really important, is it exactly, especially
[7:12] Speaker 2: when that gap gets bigger and bigger.
[7:14] Speaker 3: Yeah, and especially if there's a you know, a margin
[7:16] Speaker 3: of safety there to protect you on the downside. So
[7:20] Speaker 3: relentless truth seeking. And the other thing is, you know,
[7:22] Speaker 3: there were no shortcuts for him. There's no there's no
[7:26] Speaker 3: substitute for actually putting in the time to going through
[7:29] Speaker 3: that content all the time and being in front of
[7:31] Speaker 3: your machine all day and just time is the ultimate
[7:36] Speaker 3: resource and constraint for everyone. And so thinking in blocks
[7:41] Speaker 3: of time and thinking how to maximize your productivity per
[7:43] Speaker 3: unit of time, I think is something that I took
[7:47] Speaker 3: away from.
[7:47] Speaker 2: Him really really interesting. So going back to the family business,
[7:52] Speaker 2: that's a pretty loaded concept for a lot of people.
[7:56] Speaker 2: What was it like first going back to work with
[7:59] Speaker 2: your father and then becoming the controlling owner of Miller
[8:03] Speaker 2: Value Partners.
[8:05] Speaker 3: It was fantastic because we were a small group at
[8:09] Speaker 3: LEG for a good period of time, probably from twenty
[8:12] Speaker 3: thirteen or twenty fourteen until we split off and went independent,
[8:15] Speaker 3: and I think it was twenty nineteen or so. So
[8:19] Speaker 3: got to work with my dad very closely a lot,
[8:24] Speaker 3: you know. But at the same time, one of the
[8:25] Speaker 3: things I love about it is the market doesn't really
[8:28] Speaker 3: care what he did or didn't do, and ultimately, now
[8:32] Speaker 3: that I'm in charge of the portfolios, it'll hinge upon
[8:34] Speaker 3: my decision making more so than what he did, and
[8:38] Speaker 3: so it's on me to now take everything I've learned
[8:41] Speaker 3: and run with it and do what we can do.
[8:44] Speaker 2: Was your father a poker player? How did you find
[8:46] Speaker 2: your way into that?
[8:49] Speaker 3: No, he wasn't a poker player. It was when Chris
[8:51] Speaker 3: Moneymaker won the World Series. I don't know if you remember, sure,
[8:54] Speaker 3: I think it was maybe two or.
[8:56] Speaker 2: Three big funny glasses.
[8:58] Speaker 3: And he was an accountant actually, and so you know,
[9:01] Speaker 3: he stressed a lot of quantitative decision making and the
[9:04] Speaker 3: other thing I actually looked at coming out of tuck
[9:08] Speaker 3: was baseball operation stuff, because moneyball was a you know,
[9:12] Speaker 3: the whole analytical side was just coming around then. And
[9:16] Speaker 3: you know, I know you like to talk about mistakes,
[9:18] Speaker 3: but I think of specifically that recruiting process, my attitude
[9:22] Speaker 3: towards it, and just some mistakes I made there.
[9:26] Speaker 2: So well, we seem to learn more from our failures
[9:30] Speaker 2: than we do from our successes because we don't know
[9:33] Speaker 2: if our successes were the result of good fortune or skill.
[9:37] Speaker 2: If it takes twenty years to figure out which it is,
[9:40] Speaker 2: you're going to obviously learn more from the errors. Hey,
[9:43] Speaker 2: we know this was a bad choice, that's right, Or
[9:45] Speaker 2: was it a good choice with a bad outcome?
[9:48] Speaker 3: Well, I think in this case it was a you know,
[9:49] Speaker 3: the outcome was good because it was ultimately where I
[9:52] Speaker 3: was probably looking to wind up. But at that time
[9:54] Speaker 3: I was thinking, I want to do baseball. Baseball baseball,
[9:56] Speaker 3: you know I mentioned earlier I wasn't good enough to play.
[9:59] Speaker 3: I wanted to sort of use my analytical talents to
[10:02] Speaker 3: our talents, my analytical background and training to go into
[10:07] Speaker 3: the analytical side. And as I went through the recruiting process,
[10:10] Speaker 3: it became very clear that I was jumping through hoops
[10:12] Speaker 3: waiting for callbacks, and it was a very intense process,
[10:16] Speaker 3: and I realized that I was probably gonna be charting
[10:18] Speaker 3: pitches in Topeka at the end of it, which to
[10:21] Speaker 3: me didn't seem all that exciting. But in retrospect, if
[10:24] Speaker 3: you want to be in baseball operations, you should do
[10:25] Speaker 3: anything you possibly can to get your foot in the
[10:28] Speaker 3: door of these competitive businesses.
[10:29] Speaker 2: Let me point out a little over a decade ago
[10:32] Speaker 2: a kid became an intern in the NFL and he
[10:36] Speaker 2: just won the Super Bowl as head coach. So if
[10:39] Speaker 2: you really love it that much and you that committed,
[10:42] Speaker 2: I'm with you. I can't count pitches in Topeka.
[10:44] Speaker 3: I just right.
[10:46] Speaker 2: I mean yes, especially because you have how many other
[10:51] Speaker 2: people were in turns and they didn't head coach the
[10:54] Speaker 2: Super Bowl winner.
[10:55] Speaker 3: But it's funny because now I see that on the
[10:56] Speaker 3: other side, right, So I get LinkedIn's and messages all
[11:00] Speaker 3: the time. Hey, I'm a really good software analyst. I
[11:03] Speaker 3: want to come and work for you and be a
[11:05] Speaker 3: software analyst. And I'm like, we don't need a software
[11:07] Speaker 3: analyst right now. We need somebody that can go get
[11:09] Speaker 3: me a sandwich at lunchtime, you know, like so, But
[11:13] Speaker 3: I understand the perspective too. It's just that I think
[11:16] Speaker 3: if you want to become a member of a team,
[11:18] Speaker 3: you have to understand what the team needs and where
[11:20] Speaker 3: you can genuinely help, and it may not always necessarily
[11:23] Speaker 3: align with what you want to do. And I think
[11:25] Speaker 3: that's important to keep in mind.
[11:26] Speaker 2: Huh really really very interesting. So as long as we're
[11:31] Speaker 2: talking about all these career choices, if you were starting
[11:35] Speaker 2: out today, would you follow this a similar path to
[11:39] Speaker 2: what you did previously? Would you go a different rap?
[11:45] Speaker 3: I really like what I'm doing now, and I want
[11:46] Speaker 3: to do it indefinitely, so it's hard for me to
[11:49] Speaker 3: go back and say I would do something differently because
[11:51] Speaker 3: I'm where I want to be for the long term.
[11:54] Speaker 3: I do think one of the lesser considered paths that
[11:58] Speaker 3: a lot of undergrads don't think about would be actually
[12:02] Speaker 3: going into something entrepreneurial. H And I don't mean like
[12:06] Speaker 3: starting a startup that you're trying to scale from zero
[12:08] Speaker 3: to gajillion dollars over the next year, right, But that's
[12:11] Speaker 3: what people tend to think of because that's where all
[12:13] Speaker 3: the returns look like they are In reality, I think
[12:16] Speaker 3: potentially scaling a small services business, you know, whether that's powerwashing,
[12:21] Speaker 3: home cleaning, just things that where you can get your
[12:24] Speaker 3: arm around the fundamental service and scale that and make
[12:27] Speaker 3: it bigger is potentially a more a safer risk adjusted
[12:30] Speaker 3: way to a big outcome than people consider.
[12:33] Speaker 2: Just because you're learning a business from the ground up
[12:36] Speaker 2: and customer relations and all those other things.
[12:39] Speaker 3: Yeah. Well, you know, even in our business, it takes
[12:41] Speaker 3: time to build a track record, it takes time to
[12:44] Speaker 3: build the assets, and so anything you do where you're
[12:46] Speaker 3: gonna have a good outcome in the long run just
[12:48] Speaker 3: takes repetitive effort and the right focus. And so sometimes
[12:53] Speaker 3: the learning around something that you can get your arms
[12:56] Speaker 3: around can be easier than the learning around to software
[13:00] Speaker 3: development or you know, scaling a big fund or things
[13:03] Speaker 3: like that.
[13:04] Speaker 2: So really really interesting. Coming up, we continue our conversation
[13:09] Speaker 2: with Bill Miller, the Fourth Miller Value Fund's chief investment officer,
[13:14] Speaker 2: talking about his investment philosophy.
[13:18] Speaker 3: I'm Barry Dults.
[13:19] Speaker 2: You're listening to Masters in Business on Bloomberg Radio. I'm
[13:34] Speaker 2: Barry Ridults. You're listening to Masters in Business on Bloomberg Radio.
[13:38] Speaker 2: My extra special guest today is Bill Miller. He is
[13:42] Speaker 2: the chief investment officer and portfolio manager of Miller Value Fund,
[13:47] Speaker 2: where he works with his famous father, Bill Miller the Third.
[13:51] Speaker 2: So let's talk about your investment philosophy separate from your dad's,
[13:58] Speaker 2: starting with how do you defe f value in a
[14:02] Speaker 2: world where a lot of the traditional metrics like price
[14:05] Speaker 2: to earnings or price to book seem to have been
[14:10] Speaker 2: downgraded somewhat, perhaps they don't fully capture modern intellectual property
[14:17] Speaker 2: based business models. How do you think about those?
[14:20] Speaker 3: Yeah, I think you have to have a flexible definition
[14:22] Speaker 3: of value and that if it's just based on accounting figures,
[14:26] Speaker 3: you're probably not going to do very well over the
[14:28] Speaker 3: long run. Because if you look at some of the
[14:30] Speaker 3: best performing assets stocks of all time, they never look
[14:33] Speaker 3: cheap just because they have such a right tail and
[14:36] Speaker 3: they compound with very you know, they're investing all their
[14:39] Speaker 3: earnings and they're constantly seeking to grow that edge, and
[14:42] Speaker 3: so solely focusing on accounting factors is not a great
[14:45] Speaker 3: way to capture long term value or outperformers, although it
[14:49] Speaker 3: can be. You know, we have a strategy where whereby
[14:51] Speaker 3: by business partner Dan Leisac has this collection of ten
[14:54] Speaker 3: or twelve names that look insanely cheap on these metrics,
[14:57] Speaker 3: So you can do there's a lot of different ways
[14:58] Speaker 3: to skin the cat.
[15:00] Speaker 2: So what are the different thought processs around defining value?
[15:05] Speaker 2: So cheap but not broken is obviously what your partner
[15:10] Speaker 2: is focusing on. How do you contextualize things like Amazon
[15:16] Speaker 2: or in Video or Google which have looked expensive for
[15:20] Speaker 2: ten years and have just shot the lights out.
[15:23] Speaker 3: Yeah. Well, in the case of Amazon, they started with
[15:26] Speaker 3: a very small idea around just selling books online and
[15:29] Speaker 3: it was you know, it ended up being this retail
[15:33] Speaker 3: juggernaut just because if you look at now that the
[15:35] Speaker 3: distribution logistics networks that they've used to fulfill their orders,
[15:39] Speaker 3: it's just a it's a network that can't be touched, right,
[15:42] Speaker 3: and it's everything store And it depends on the actual scenario. So,
[15:46] Speaker 3: you know, one of the things that I've been vocal
[15:48] Speaker 3: about now for probably ten years is our view the
[15:52] Speaker 3: bitcoin is still a massively undervalue technology. And so that
[15:58] Speaker 3: would be one where you probably say, well, it has
[16:00] Speaker 3: no cash flows, it's you know, speculative, it's based upon
[16:06] Speaker 3: other people's beliefs, and I'd say that's exactly right. It
[16:08] Speaker 3: is based upon other people's beliefs, but other people don't
[16:10] Speaker 3: haven't yet come around to the view that it is
[16:11] Speaker 3: a functionally superior technology to gold. It's a form of
[16:16] Speaker 3: capital governance. I think it requires a lot of different lenses.
[16:20] Speaker 3: Right when we say we have flexible definition of value,
[16:23] Speaker 3: you have to approach things from a variety of different perspectives.
[16:25] Speaker 3: In this case, one of the reasons I think bitcoin
[16:27] Speaker 3: is so interesting and compelling seventeen years in you know,
[16:31] Speaker 3: it's gone from this weird technology on the Internet that
[16:33] Speaker 3: only criminals used to now it's collateral for loans in
[16:37] Speaker 3: our modern day financial system, right, And so what explains that, well,
[16:41] Speaker 3: markets explained it to an extent, and that people are
[16:44] Speaker 3: increasingly coming around to view it as an interesting place
[16:47] Speaker 3: to put money in, an interesting capital governance system. It's
[16:51] Speaker 3: totally separate from the fiat systems that everyone has known
[16:55] Speaker 3: for their entire lifetimes in multiple centuries before us. It
[16:58] Speaker 3: wasn't possible prior to nine or twenty ten when the
[17:01] Speaker 3: White Paper came out, And so now you've got this
[17:04] Speaker 3: new emerging system of capital governance that I think it's
[17:07] Speaker 3: one of the most dynamic areas of finance in general,
[17:10] Speaker 3: as a matter of fact. So it's an area I'm
[17:12] Speaker 3: very optimistic about over the long term bounce around. It'll
[17:15] Speaker 3: be volatile, but I think it's headed to much bigger places.
[17:19] Speaker 2: So we're recording this the day after it briefly broke
[17:23] Speaker 2: sixty thousand. Are you a buyer of bitcoin at these prices.
[17:28] Speaker 3: Yes, So it's a big part of my personal financial situation.
[17:32] Speaker 3: In one of our MVPA it's roughly or digital assets
[17:35] Speaker 3: collectively are about ten percent of that fund.
[17:39] Speaker 2: So we'll talk more about state of markets in a
[17:43] Speaker 2: little bit. Let's stay with the concept of Philosophically, this
[17:47] Speaker 2: is an interesting technology. I've described this as stop thinking
[17:52] Speaker 2: as a unique asset class. I think of it as hey,
[17:55] Speaker 2: it's somewhere between Facebook and Google, between Meta and Alphabet
[18:00] Speaker 2: as a technology company, which gives it a little more perspective.
[18:04] Speaker 2: But at the same time, it came out around the
[18:07] Speaker 2: same time as an iPhone, and I would never give
[18:11] Speaker 2: up my iPhone. I don't know how I would my
[18:14] Speaker 2: train tickets, my plane tickets, my communication, my portfolio, everything
[18:17] Speaker 2: I do I do on this. If bitcoin were to
[18:20] Speaker 2: disappear tomorrow, it wouldn't affect my life in the least
[18:24] Speaker 2: why is it that seventeen years in we're still waiting
[18:29] Speaker 2: for this to gain broad usefulness. I'm still waiting for
[18:34] Speaker 2: smart tickets that cut out stub hub and those guys,
[18:39] Speaker 2: and all sorts of technological uses that I heard about
[18:43] Speaker 2: five ten years ago but still haven't happened. What's the
[18:47] Speaker 2: response to the skeptics?
[18:49] Speaker 3: Well, so, if you look at the introduction of running
[18:51] Speaker 3: water in households, it took one hundred years for it
[18:55] Speaker 3: to go from possibility to ubiquitous, okay, and that was
[18:59] Speaker 3: a clearly better technology than using an out house or
[19:02] Speaker 3: boiling water to put it on unite or whatever. So
[19:07] Speaker 3: this this is an entirely new idea. And again from
[19:09] Speaker 3: my perspective, it's a capital denominator. It's not a numerator,
[19:13] Speaker 3: it's a capital denominator. So it's Bitcoin is a denominator
[19:16] Speaker 3: for capital. And the reason I think it's so superior
[19:18] Speaker 3: to what we've known before is that money the way
[19:22] Speaker 3: it works right now, it's ultimately backed by this the
[19:25] Speaker 3: threat of state ordered.
[19:27] Speaker 2: Violence, standing army and a set of laws.
[19:31] Speaker 3: Right, that's right, you know you don't pay your taxes,
[19:32] Speaker 3: We'll throw it in a box and lock the key away.
[19:34] Speaker 3: I'll throw the key away. But this and if you
[19:39] Speaker 3: think about actually around the world, the countries you want
[19:42] Speaker 3: to visit, most of them are going to have stability
[19:45] Speaker 3: of process and rule of law, right, And the places
[19:48] Speaker 3: where that's not the case, there's a much there's a
[19:51] Speaker 3: much less distinct, much less a distinction between who controls
[19:56] Speaker 3: the ledger and who controls the guns. So the farther
[19:59] Speaker 3: apart those two things are the better. So in this case,
[20:02] Speaker 3: we now have a distinct ledger entirely apart from any state,
[20:06] Speaker 3: and its units can't be controlled by anyone, right in
[20:09] Speaker 3: that they're controlled by actual energy. So you need to
[20:12] Speaker 3: have energy to crank out a new bitcoin, because that's
[20:15] Speaker 3: what the whole mining process is about, right, You verify
[20:18] Speaker 3: a transaction. Takes a lot of energy to do that,
[20:21] Speaker 3: and in exchange for expending that energy, you get more bitcoin.
[20:24] Speaker 3: That's a minor reward, right right. So this is a
[20:27] Speaker 3: capital denominator whereby energy input is actually required to create
[20:31] Speaker 3: new units. What happens now. What happens now is somebody,
[20:35] Speaker 3: you know, a bunch of congress people sign something fed
[20:38] Speaker 3: goes and prints money to keep roughly rates roughly in
[20:41] Speaker 3: line prices roughly stable, employment, roughly full, and so it's
[20:48] Speaker 3: it's there's still some issues with that from a process perspective, right,
[20:54] Speaker 3: so they're trying to control the money supply to come,
[20:56] Speaker 3: engineer outcomes as opposed to having a fair set of
[21:00] Speaker 3: value that we all agree upon. Right, this is a
[21:03] Speaker 3: valuable thing because it takes energy to produce and having
[21:06] Speaker 3: that be the arbiter of value. And so if you
[21:09] Speaker 3: look at the political process today, it's a process issue
[21:13] Speaker 3: more than anything else, and that oftentimes the least accountable
[21:17] Speaker 3: party ends up winning an office because of all the
[21:19] Speaker 3: promises they make and what happens then, well more units
[21:23] Speaker 3: get printed, right, and they just get printed and printed
[21:26] Speaker 3: over time, and that's what ultimately causes inflation. And it's
[21:29] Speaker 3: you know, it's not a red issue or blue issue.
[21:32] Speaker 3: Most of the time, Republicans are cutting taxes in a
[21:35] Speaker 3: way that probably doesn't make sense from a systemic perspective.
[21:38] Speaker 3: At the other side of the equation, oftentimes the blue
[21:42] Speaker 3: side of the aisle increases in titlements right without an offset,
[21:47] Speaker 3: and so both of those are bad things for the
[21:50] Speaker 3: for the overall medium through which we transact over time.
[21:53] Speaker 3: And so now you've got a system that offers a
[21:56] Speaker 3: promise of effectively cutting that whole. The clown show is
[21:59] Speaker 3: like sometimes out entirely, so you look like you're not
[22:04] Speaker 3: believing it.
[22:05] Speaker 2: Well, you know, I don't care about deficits. Since the
[22:09] Speaker 2: past fifty years, I've been hearing about the problem with
[22:12] Speaker 2: printing money, and everything that we were warned against didn't happen.
[22:16] Speaker 2: The dollar hasn't devalued, we haven't had hyperinflation, we haven't
[22:20] Speaker 2: crowded out private capital, and you could still lend money
[22:24] Speaker 2: to Uncle Sam at historically low rates if you want
[22:29] Speaker 2: three and a half four percent as a yield. So
[22:31] Speaker 2: all the warnings about printing money and deficits have been
[22:35] Speaker 2: you know, the boy who crolled cried wolf for half
[22:38] Speaker 2: a century. So there's that, and then there's okay, So
[22:44] Speaker 2: here's an idea that we can what do we limit
[22:46] Speaker 2: it to twenty four million twenty one million coins?
[22:50] Speaker 1: And that.
[22:53] Speaker 2: Scarcity creates value. I understand it's virtual. I understand the
[23:01] Speaker 2: advantages of having things be purely digital from conception forward.
[23:08] Speaker 2: I have a hard time getting past the criminality and
[23:12] Speaker 2: the pig butchering and the blackmail. That that's a little
[23:16] Speaker 2: problematic and it's sort of like democracy, all the other
[23:20] Speaker 2: you know, it's the worst system except all the others. Well,
[23:23] Speaker 2: a central bank and a government that make sure we're
[23:28] Speaker 2: doing something within reason is better than just opening it
[23:34] Speaker 2: up to the wild west, which is what this seems
[23:37] Speaker 2: to have been for a long time. The US did
[23:41] Speaker 2: was pretty aggressive in embracing it, especially this administration, and
[23:46] Speaker 2: it seems to have speculatively run up in anticipation from that.
[23:51] Speaker 2: And you know, once it was all in the price,
[23:54] Speaker 2: you know, we got cut in half. It's when you're
[23:57] Speaker 2: talking about stability. Yeah, the US dollar was down nine
[24:01] Speaker 2: percent in twenty twenty five, not cut in half. This
[24:04] Speaker 2: is a giant whack in you know, less than six months.
[24:09] Speaker 2: So I have a hard time just wrapping my head around, Oh,
[24:12] Speaker 2: the source of stability is something with no fundamental value
[24:16] Speaker 2: but swinging wildly up and down. So I'm I'm not
[24:22] Speaker 2: as negative about it as a lot of people are.
[24:24] Speaker 2: I was really negative about the NFTs and Mike, which, wait,
[24:29] Speaker 2: you want to take something with literally no value and
[24:33] Speaker 2: totally reproducible, and like I understood the idea of hey,
[24:37] Speaker 2: you're gonna buy a ten thousand dollars burken bag, and
[24:40] Speaker 2: here's a unique identifier on the blockchain. All right, that
[24:43] Speaker 2: made some sense, but not sixty eight million dollars. This
[24:49] Speaker 2: is sort of crazy prices he's traded at. So there
[24:52] Speaker 2: seems to be a lot of speculative excess that get
[24:56] Speaker 2: in the way of the technological story underneath.
[25:01] Speaker 3: Yeah, and you think you bring up a good point
[25:03] Speaker 3: with regard to the United States and the depths. It's
[25:05] Speaker 3: not making a big impact, and that's because we are
[25:08] Speaker 3: the best house in a bad neighborhood. From a fiat perspective,
[25:11] Speaker 3: I mean, we have the reason that America is the
[25:14] Speaker 3: most desire place to be. From an immigration perspective, I
[25:17] Speaker 3: think we have four time multiples the number of immigrants
[25:21] Speaker 3: as the next fore closest countries combined. Again, that comes
[25:24] Speaker 3: down to stability of process, rule of law, and property rights.
[25:28] Speaker 3: And so if there's now a form of currency that
[25:31] Speaker 3: wasn't possible fifty twenty years ago, call it that has
[25:35] Speaker 3: more stability a process and more certainty around property rights
[25:38] Speaker 3: over the long term. I think it's an education issue
[25:42] Speaker 3: as much as anything else interesting, and people may not
[25:46] Speaker 3: come around to that view, But from my perspective, the
[25:49] Speaker 3: quantitative inevitability of the technology is pretty compelling when you
[25:53] Speaker 3: look at just the Bitcoin versus gold. Right, Gold's done
[25:56] Speaker 3: amazing in the past year. I get it, it's a
[25:58] Speaker 3: deep part of the debasement, tit. Bitcoin hasn't. But when
[26:02] Speaker 3: you think about you know, if gold is the predominant
[26:05] Speaker 3: check and balance on Fiat, fiat's a lack of accountability.
[26:10] Speaker 3: And then you look at the functional attributes of bitcoin,
[26:14] Speaker 3: it's so far superior to gold.
[26:16] Speaker 2: So you join, like Mason in eight, pretty much right
[26:19] Speaker 2: in the middle of the financial crisis. How did that
[26:22] Speaker 2: experience shape your perspective on investing and in particular on value.
[26:30] Speaker 3: Wow's start with a hard hitting question here. So that
[26:33] Speaker 3: was a as you point out, I joined right at
[26:35] Speaker 3: the top. I think when I joined Capital Management there
[26:39] Speaker 3: were roughly one hundred and fifty people working there, and
[26:42] Speaker 3: then by the time you know, Capital Management merged with Clearbridge,
[26:50] Speaker 3: there were a substantially fewer number of people working there,
[26:53] Speaker 3: just because assets flew out the door, performance struggled, and
[26:59] Speaker 3: you know, it could be a pretty ugly compounding effect
[27:02] Speaker 3: on an asset manager.
[27:02] Speaker 2: So for sure, by the way, that story was pretty
[27:06] Speaker 2: much ubiquitous throughout finance.
[27:09] Speaker 3: Yeah, and so I think that taught me you know,
[27:12] Speaker 3: you to run one of these businesses, you obviously want
[27:14] Speaker 3: to have some extra gas in the tank. You know,
[27:18] Speaker 3: at all times you want to you don't want to
[27:21] Speaker 3: run it too thin from an operating capital perspective, if
[27:25] Speaker 3: you want to build it for the long term. And
[27:29] Speaker 3: so it's a good idea to keep those fixed costs
[27:31] Speaker 3: lower than you might even anticipate.
[27:34] Speaker 2: So let's talk about building on that. You come out
[27:37] Speaker 2: of the financial crisis, you get your CFA soon after
[27:41] Speaker 2: twenty eleven, something like that, that sounds right, and then
[27:45] Speaker 2: become a Chartered market technician in twenty eighteen. Unusual combination.
[27:50] Speaker 2: Tell us why you went that route.
[27:53] Speaker 3: Yeah, So the analogy I make is if the CFA
[27:57] Speaker 3: teaches you to play your cards on the poker table,
[28:00] Speaker 3: CMT teaches you to play the other players at the
[28:02] Speaker 3: poker table, and that one of the interesting things about
[28:06] Speaker 3: the CMT is number one, it takes a lot less
[28:08] Speaker 3: time than the CFA. But number two, I use that
[28:12] Speaker 3: in that some of the teachings from that more often
[28:14] Speaker 3: now than I use the CFA.
[28:16] Speaker 2: It's funny the way you described it. I always thought
[28:19] Speaker 2: the difference was financial analysts tell you what to buy.
[28:24] Speaker 2: Technicians tell you when to buy.
[28:26] Speaker 3: Well, I think that's accurate as well. Yeah, and so
[28:29] Speaker 3: one of the things that it's very easy to do
[28:31] Speaker 3: as a value investor to see multiples coming down and
[28:33] Speaker 3: a stock going down, you go, why this is way
[28:35] Speaker 3: too cheap, and reality is that it could just keep
[28:38] Speaker 3: going down because it's going down and people are selling it,
[28:40] Speaker 3: and you have to be able to read that on
[28:42] Speaker 3: the chart and when the volumes change and when the
[28:45] Speaker 3: investor behavior changes. So it teaches you to look at
[28:48] Speaker 3: investor behavior. It teaches you how to figure out what
[28:51] Speaker 3: other investors are thinking based upon price trends, in action,
[28:55] Speaker 3: and volume, and it's been a really valuable skill set
[28:59] Speaker 3: and compliment the CFA.
[29:01] Speaker 2: So walk us through your process from I DEA generation
[29:05] Speaker 2: to execution and position sizing. What sort of steps do
[29:09] Speaker 2: you have to work your way through?
[29:11] Speaker 3: Well, I think a lot of it starts with the
[29:13] Speaker 3: appreciation that most assets are efficiently priced. Right, so we
[29:16] Speaker 3: have a portfolio of things that we believe are undervalued,
[29:20] Speaker 3: and so all day, every day, we're constantly running through screens.
[29:24] Speaker 3: We're reading research, we're looking at price movements, we're looking
[29:28] Speaker 3: at insider action. A lot of the time, whether insiders
[29:31] Speaker 3: are buying or selling to potentially point something out to us,
[29:37] Speaker 3: But then we have to then once we identify something
[29:39] Speaker 3: that looks interesting, it has to then be better than
[29:42] Speaker 3: what else we have in the portfolio. So we have
[29:46] Speaker 3: a group of things that we own and like, but
[29:48] Speaker 3: at the same time, we're constantly comparing new ideas to
[29:51] Speaker 3: see if it can be a fit coming to the portfolio.
[29:54] Speaker 3: And so how we make changes is going to be
[29:57] Speaker 3: obviously directly relevant to that thesis. In some cases, we'll
[30:01] Speaker 3: have a name that the investment these has completely changed
[30:04] Speaker 3: with the latest earnings report or something went out the window,
[30:07] Speaker 3: and then we'll have an ability to either add something
[30:09] Speaker 3: new or bump something up. But it's always about constantly
[30:13] Speaker 3: looking for new ideas that could be undervalued and then
[30:15] Speaker 3: trying to figure out the right way to wait them.
[30:17] Speaker 3: Because there's unconstrained investors. All of our torque isn't a
[30:20] Speaker 3: position sizing in the weights. So you know, we made
[30:25] Speaker 3: a lot of mistakes, and oftentimes the answer to those
[30:28] Speaker 3: mistakes is sitting right in our portfolio. You know, it
[30:30] Speaker 3: almost always is we should done more of that and
[30:32] Speaker 3: less of that, And so I spent a lot of
[30:34] Speaker 3: time just going through the portfolio and figuring out where
[30:37] Speaker 3: the relative weights should be. But I would say at
[30:39] Speaker 3: a high level, probabilistic fundamental value.
[30:44] Speaker 2: Probabilistic fundamental value, all right, I like that phrase. When
[30:48] Speaker 2: you're looking at fundamental values, how do you distinguish between
[30:52] Speaker 2: something that's only temporarily out of favor, temporarily hated to Oh,
[30:58] Speaker 2: this business model is structurally broken. How do you avoid
[31:01] Speaker 2: the classic value traps?
[31:03] Speaker 3: Well, we don't always unfortunately, you know, and just because
[31:09] Speaker 3: something is undervalue doesn't mean that other people are going
[31:12] Speaker 3: to agree that it's undervalue. So I think that's an
[31:14] Speaker 3: important thing to keep in mind too. And it's important
[31:17] Speaker 3: to use the markets to help you figure out how
[31:20] Speaker 3: to change your position sizes. Sometimes you start legging into
[31:23] Speaker 3: something and it just keeps going down. You should probably
[31:27] Speaker 3: heed the markets feedback a lot of the time relative
[31:30] Speaker 3: to your own positions in their sizes. So one of
[31:33] Speaker 3: the key reports that my dad looked at every day
[31:36] Speaker 3: I still look at every day is our daily Performance report,
[31:39] Speaker 3: And basically it just has the entire portfolio ranked by weight,
[31:43] Speaker 3: and then how it's done over the past day, how
[31:46] Speaker 3: each name has done over the past day, week, month, quarter,
[31:51] Speaker 3: six months a year.
[31:52] Speaker 2: What about the reverse? When something's working out, do you
[31:55] Speaker 2: pyramid and add to the position as it runs?
[31:58] Speaker 3: It depends? So I mean we just you know, I
[32:00] Speaker 3: know you don't like to talk about short term stuff
[32:02] Speaker 3: and market related things, but we just eliminated our Google
[32:04] Speaker 3: position a few days ago, right, So.
[32:06] Speaker 2: We mean that had a great twenty twenty five.
[32:09] Speaker 3: It did, and we actually got the I think the
[32:11] Speaker 3: investment thesis right. Hopefully we got the exit right, but
[32:15] Speaker 3: you know, the thesis there was, Okay, here's Google, this
[32:18] Speaker 3: is this should be a huge AI winner. Everyone was
[32:22] Speaker 3: concerned about their search business at the time and AI
[32:24] Speaker 3: replacing search. And you know our position was hold on
[32:27] Speaker 3: This trades at a massive discount to the mag seven.
[32:29] Speaker 3: It trades at a discount to the market on an
[32:31] Speaker 3: earnings and cash flow basis. Yet it has all the
[32:34] Speaker 3: distribution mechanisms for AI. You know, they're in seven out
[32:36] Speaker 3: of ten phones globally.
[32:39] Speaker 2: And all the technology capability to implement AI. I mean,
[32:44] Speaker 2: they're a giant tech brain trust.
[32:46] Speaker 3: Right exactly. And they had a ton of funding to
[32:48] Speaker 3: build it with, so and you know Waymo and all
[32:51] Speaker 3: these other you know, YouTube, all these other insane businesses
[32:54] Speaker 3: and was trading at a discount to the market. It
[32:56] Speaker 3: just didn't make any sense, so we bought that. That's
[32:58] Speaker 3: probably fairly valued today, I think, you know, and obviously
[33:01] Speaker 3: one of the classic mistakes is selling things too early.
[33:05] Speaker 3: Could it continue to compound? Yes, But if you look
[33:08] Speaker 3: at why the whole mag seven hyper scalers have done
[33:11] Speaker 3: so well over the past two to three years, the
[33:13] Speaker 3: answer has been, well, they're number one, growing faster than
[33:16] Speaker 3: everything else, and number two, they've got these huge incremental
[33:19] Speaker 3: free cash flow margins. But what's been going on recently
[33:23] Speaker 3: they don't really have big incremental free cash flow margins
[33:25] Speaker 3: anymore because they're dumping so much money into the AI
[33:29] Speaker 3: space that there really is no free cash flow and
[33:32] Speaker 3: now you're betting on it materializing down the line. So
[33:35] Speaker 3: where we take the other side on the AI situation
[33:37] Speaker 3: is if you actually look at the dollars required to
[33:41] Speaker 3: be found in revenues five years out, they're so substantial.
[33:46] Speaker 3: The number one, they're bigger than the entire software as
[33:48] Speaker 3: a service business right now globally around the world. Okay,
[33:52] Speaker 3: and number one number two, the total revenues that are
[33:55] Speaker 3: required to justify all the investment that's gone in is
[33:58] Speaker 3: bigger than the combined of mag seven today. And those
[34:01] Speaker 3: companies have been scaling for thirty to forty fifty years
[34:04] Speaker 3: in some cases, and so you've got to find that
[34:06] Speaker 3: in five years to make all this investment worth it.
[34:09] Speaker 3: And if you think about the structural the way it works,
[34:12] Speaker 3: it's all this capex investment upfront and then it's very
[34:15] Speaker 3: little marginal costs. Right, So you potentially have a race
[34:17] Speaker 3: to the bottom on pricing on the top line in
[34:20] Speaker 3: a few years as well. So that gives us a
[34:22] Speaker 3: little bit of pause whether or not it's right, Who knows, huh.
[34:25] Speaker 2: So what I'm hearing is that there's a probabilistic quantitative discipline.
[34:31] Speaker 2: You're looking at value, you're looking at growth rate, you're
[34:34] Speaker 2: looking at risk, combined with a qualitative judgment about management
[34:39] Speaker 2: and sounds like specific industry and whether these moonshots are
[34:44] Speaker 2: going to pay off or not. How do you balance
[34:46] Speaker 2: between the squishy qualitative side and the more quantitative mathematical side.
[34:54] Speaker 3: Well, I think there always has to be a quantitative
[34:55] Speaker 3: value perspective, and anything we're buying and thinking about often
[35:00] Speaker 3: from a total addressable market perspectives versus the current valuation.
[35:07] Speaker 3: One of the big themes for us also is alignment.
[35:10] Speaker 3: So we want to see managers, you know, actually using
[35:14] Speaker 3: their capit So it's capital allocation and alignment. So are
[35:17] Speaker 3: they using their capital in ways that align with our
[35:19] Speaker 3: view of the stock? You know, are they buying back
[35:22] Speaker 3: a lot of shares if it's mispriced hopefully yes? Are
[35:26] Speaker 3: they aligned with you as a manager of the company,
[35:29] Speaker 3: you know, principal agent conflict is one of the biggest
[35:31] Speaker 3: sources of value destruction you can possibly imagine, and so
[35:34] Speaker 3: that's important to us as managers. We are the biggest
[35:38] Speaker 3: investors in our own funds as well, so it really.
[35:39] Speaker 2: Is very interesting.
[35:41] Speaker 3: Yeah, but it's you know, it's a first principles based approach.
[35:45] Speaker 3: So one of the things we pay special attention to,
[35:49] Speaker 3: I think more so than most and can be opportunistic
[35:51] Speaker 3: about moving on, is insider activity. So when you see
[35:53] Speaker 3: a big insider buy, if you can then reverse engineer
[35:56] Speaker 3: a quantitative value perspective into that insider buy, that makes
[36:01] Speaker 3: a lot of sense. That can be a really compelling.
[36:04] Speaker 2: I just saw a big Wall Street Journal piece on
[36:08] Speaker 2: to insider buyers indicate future performance, and I saved it.
[36:13] Speaker 2: I haven't read it yet, what's your take. I mean,
[36:16] Speaker 2: the assumption is insiders, there's a million reasons to sell
[36:20] Speaker 2: a stock if you need liquidity, there's only one reason
[36:22] Speaker 2: to buy a stock. You stay with that conclusion. Insider
[36:28] Speaker 2: buying is indicative of positive things to come.
[36:32] Speaker 3: I think it's a potentially high signal source of information.
[36:35] Speaker 3: So in the aggregate doesn't necessarily guarantee it. No, But
[36:40] Speaker 3: if you can contextualize and say, Okay, this CEO is
[36:44] Speaker 3: really smart, He's done this sort of thing in the past.
[36:47] Speaker 3: He has a plan for this company, here's what it's
[36:49] Speaker 3: looking like, and you just put a huge amount of
[36:51] Speaker 3: personal capital in, that can be a really good sis.
[36:55] Speaker 2: So it's not binary. There are other factors that have
[36:58] Speaker 2: to be It's a little more nuanced than the way
[37:00] Speaker 2: we typically think of it.
[37:01] Speaker 3: Context matters always really interesting.
[37:04] Speaker 2: Coming up, we continue our conversation with Bill Miller, the
[37:07] Speaker 2: fourth chief investment officer at Miller Value Fund, talking about
[37:12] Speaker 2: today's market environment. I'm Barry Ridlts. You're listening to Masters
[37:16] Speaker 2: your Business on Bloomberg Radio. I'm Barry rid Halts. You're
[37:33] Speaker 2: listening to Masters in Business on Bloomberg Radio or watching
[37:37] Speaker 2: us on YouTube television I'm speaking with Bill Miller the fourth.
[37:41] Speaker 2: He's Miller Value Fund's chief investment officer and portfolio manager.
[37:47] Speaker 2: He works with his father, Bill Miller the third, the
[37:50] Speaker 2: famous value investor. So let's talk about what's going on
[37:55] Speaker 2: in the current environment. If you look at today's markets,
[37:58] Speaker 2: where do you see things that are very much mispriced,
[38:02] Speaker 2: either by asset class, sector, geography, factor, whatever. What's out
[38:08] Speaker 2: there that's not fully priced, or what's out there that's overpriced.
[38:14] Speaker 3: Yeah, I think aspects of the current environment remind us
[38:17] Speaker 3: of nineteen ninety nine. Right. So You've had a narrative
[38:21] Speaker 3: driven performance led by AI. You have a very narrow
[38:26] Speaker 3: market for the most part, with mag seven leading huge
[38:29] Speaker 3: returns to momentum momentum factor last year. But then if
[38:34] Speaker 3: you look at the actual macroeconomic backdrop, you're seeing deregulation,
[38:39] Speaker 3: you are seeing weaker dollar, and you're seeing economic acceleration
[38:46] Speaker 3: potentially in the US. And so when you think about
[38:50] Speaker 3: all those things combined and you look at what happened
[38:53] Speaker 3: between call it nineteen ninety nine, two thousand, all the
[38:56] Speaker 3: way until six oh seven, you had the market go
[39:00] Speaker 3: effectively nowhere for seven years. I mean, it went down
[39:02] Speaker 3: and bounced around, right, because I think valuation heading into
[39:05] Speaker 3: that period was very high. But what did really well
[39:08] Speaker 3: during that period actually small MidCap value. And if you
[39:12] Speaker 3: look at the relative valuation discrepancies today between smid value
[39:17] Speaker 3: and large growth, they're right at the same sort of
[39:21] Speaker 3: extremes that occurred in nineteen ninety nine. And so you
[39:24] Speaker 3: have same valuation extremes, you have compelling valuations and a
[39:29] Speaker 3: lot of the small MidCap value space, and you have
[39:33] Speaker 3: an economic acceleration backdrop. So that means that a lot
[39:38] Speaker 3: of more cyclically oriented things, value oriented names that are
[39:44] Speaker 3: care more about what's going on in the economy. There's
[39:47] Speaker 3: a much lower hurdle rate for those guys to exceed
[39:50] Speaker 3: the expectations embedded in the valuations right over the next
[39:53] Speaker 3: five to seven years than there are in the massive
[39:55] Speaker 3: AI space.
[39:57] Speaker 2: So let's talk a little bit about small and MidCap value.
[40:00] Speaker 2: Last year we only saw two that's twenty twenty five.
[40:04] Speaker 2: We only saw two of the seven mag seven outperform
[40:08] Speaker 2: the S and P five hundred, which tends to suggest, hey,
[40:12] Speaker 2: maybe this is broadening out. We're going to see more
[40:14] Speaker 2: mid caps and more small caps. The value skeptics are
[40:19] Speaker 2: going to say Hey, we've had so many false starts
[40:21] Speaker 2: in value. It's been fifteen years of growth winning. How
[40:25] Speaker 2: do you respond to that?
[40:27] Speaker 3: Yeah, I think that those snapbacks can be violent. Right.
[40:30] Speaker 3: We actually had one of our research providers recently called
[40:33] Speaker 3: MidCap value quote unquote inferior asset class. I mean that
[40:36] Speaker 3: sounds like capitulation to me. There's a lot of underloved
[40:41] Speaker 3: stuff out there that's really interesting. So energy sectors. Energy
[40:45] Speaker 3: is interesting right now. You know, if you look at
[40:47] Speaker 3: its weight in the market, it's three or four percent,
[40:49] Speaker 3: But if you look at its free cash flow contribution
[40:52] Speaker 3: over the next year to the market, it's going to
[40:54] Speaker 3: be ten to twelve percent most likely.
[40:55] Speaker 2: What's that historic relationship look like.
[40:58] Speaker 3: I don't know if it's that large, to be honest,
[41:00] Speaker 3: that gap, and so, you know, energy is under love.
[41:04] Speaker 3: It's underperformed for so long. It's not the best industry
[41:08] Speaker 3: from a capital allocation alignment perspective, but it's gotten a
[41:11] Speaker 3: lot better over the past few years. And I think
[41:14] Speaker 3: you can see those types of stocks do really well.
[41:17] Speaker 3: You know, sadly, I do think it's a really cheap
[41:18] Speaker 3: coll option on global strife. Right now, Energy prices, you know,
[41:22] Speaker 3: they're pretty bouncing pretty close to the marginal cost of production, which.
[41:26] Speaker 2: Is shocking when you think about Russia and Ukraine and
[41:30] Speaker 2: Gaza and Israel and what's going on in Venezuela and
[41:34] Speaker 2: who knows what's going to happen. By the time this
[41:37] Speaker 2: comes out, we can own Greenland. So given given all
[41:41] Speaker 2: of that, what does it What does it mean to
[41:45] Speaker 2: see despite all this geopolitical turmoil, energy prices are almost reasonable.
[41:52] Speaker 3: Yeah they are. They've started to turn up, and energy
[41:55] Speaker 3: has done well over the past few weeks. It could
[41:57] Speaker 3: continue to do really well. So that's why we're overweight energy.
[42:01] Speaker 2: What other sectors do you like?
[42:04] Speaker 3: You know, financials, we're still overweight. I think you're going
[42:07] Speaker 3: to continue to see curve steeping and that should be
[42:10] Speaker 3: a decent earnings growth in those. I think utilities are
[42:14] Speaker 3: finally attractively valued again at you know, ten to thirteen
[42:18] Speaker 3: times earnings in a lot of cases with very clear
[42:21] Speaker 3: growth pathways, and I'd say little risk. You know, we
[42:24] Speaker 3: don't have enough energy in the country, and utilities are
[42:27] Speaker 3: pretty attractive.
[42:27] Speaker 2: Here, especially as AI and data centers continue to come online.
[42:33] Speaker 2: You take very concentrated position, at least compared to traditional
[42:39] Speaker 2: value managers. How do you what's the framework for thinking
[42:41] Speaker 2: about this? How do you position size these? Is this
[42:45] Speaker 2: just strictly a function of Hey, we're not closet indexers.
[42:49] Speaker 2: We have a high active share, and when we have
[42:52] Speaker 2: high conviction, we really we go all in to follow
[42:56] Speaker 2: the poker analogy.
[42:58] Speaker 3: Yeah, that's a good way of putting it. I mean,
[43:00] Speaker 3: if you consider that most stocks underperformed the index for
[43:05] Speaker 3: their lifetime in it, it's an interesting exercise to come
[43:11] Speaker 3: at it from the entire other side and just say, okay,
[43:13] Speaker 3: what are the ten to fifteen names that you think
[43:16] Speaker 3: have the highest probability of actually outperforming instead of effectively.
[43:21] Speaker 3: What most active managers do is they have these risk
[43:23] Speaker 3: constraints and they can only overweight certain sectors a little
[43:26] Speaker 3: bit or so. You know, the closer you are to
[43:31] Speaker 3: the benchmark, the more likely you are to underperforming, right,
[43:34] Speaker 3: because you're just layering higher fees on something that looks
[43:36] Speaker 3: more like the benchmark. So, you know, we're very comfortable
[43:40] Speaker 3: taking bets entirely outside of the index, with the obvious
[43:46] Speaker 3: caveat that there are going to be period when we're
[43:47] Speaker 3: going to underperform meaningfully just because we're taking entirely different
[43:51] Speaker 3: risks and there'll be some periods to reoutperform by a lot.
[43:53] Speaker 3: So I think that's really the only way to.
[43:55] Speaker 2: Do it is to not be a closet in essentially.
[44:01] Speaker 3: Yeah, and you have to match the investment process to
[44:03] Speaker 3: your IP. So you know, for us, thinking that the
[44:08] Speaker 3: edge is on the thirty seventh page of the Excel
[44:10] Speaker 3: spreadsheets just not realistic, right. Or if your fidelity and
[44:13] Speaker 3: you've got a guy that's been following a certain industry
[44:15] Speaker 3: for a long period of time and really understands the
[44:17] Speaker 3: nuances of every single company and what could change, you know,
[44:21] Speaker 3: that might make sense. But it just depends on what
[44:23] Speaker 3: you're trying to do, and you have to match up
[44:24] Speaker 3: those two things.
[44:25] Speaker 2: So we've been kind of dancing around AI throughout this conversation,
[44:30] Speaker 2: So let's let's talk about that a little bit. Are
[44:33] Speaker 2: you thinking of AI as its own investment entity? Are
[44:38] Speaker 2: you thinking of it as disrupting traditional business models? Are
[44:42] Speaker 2: you thinking of other businesses forget the Max seven, the
[44:46] Speaker 2: mag four ninety three as being the beneficiaries of AI
[44:50] Speaker 2: to be more productive, efficient, profitable? How are you thinking
[44:54] Speaker 2: about AI as an investor?
[44:56] Speaker 3: I think it's all of those things. Yeah, it's it's
[45:01] Speaker 3: all those things. So I use it all day every day.
[45:03] Speaker 2: Man, how do you that was really my next question,
[45:06] Speaker 2: how do you use AI throughout the day for your process,
[45:10] Speaker 2: both for selecting investments and just managing a large investment.
[45:15] Speaker 3: From Well, it's an enormous time saver, and it's not
[45:19] Speaker 3: necessarily always a time saver on the investment front, although
[45:22] Speaker 3: it often is. It can just be a timesaver personally,
[45:25] Speaker 3: Like if you have an interpersonal issue that is weighing
[45:28] Speaker 3: on you, sometimes you throw it into AI and you
[45:30] Speaker 3: get a better answer than you could have gotten from
[45:31] Speaker 3: asking your three closest friends and move on. So if
[45:35] Speaker 3: you're thinking in units of time, it's a huge time
[45:37] Speaker 3: saver for me personally. I think a lot of life
[45:39] Speaker 3: is about asking the right questions, and you got a
[45:41] Speaker 3: pretty good set of answers there, or method for answering
[45:45] Speaker 3: questions you point out earlier. It can be wrong often
[45:48] Speaker 3: and you have to consider that, but it's got a
[45:50] Speaker 3: lot of good perspectives in there that can bring to
[45:52] Speaker 3: bear on a lot of different things.
[45:53] Speaker 2: So what tools do you use? What's your favorite AI?
[45:57] Speaker 3: At the moment? We have Chat, GPT and Gemini going
[46:01] Speaker 3: for business, both for business, and then we're also adding
[46:04] Speaker 3: Claude here soon.
[46:06] Speaker 2: I just I just put Claude on a couple of
[46:08] Speaker 2: desktops and a laptop, and the coding side of it
[46:13] Speaker 2: is really fascinating, And I can see why people are
[46:19] Speaker 2: concerned that this could replace certain at least menial kind
[46:26] Speaker 2: of work, grinding work, Like, oh, it does this so
[46:28] Speaker 2: much faster and better than I could ever grind down
[46:31] Speaker 2: on my own. Yeah, Claud's kind especially Claude pro. It's
[46:35] Speaker 2: really kind of impressive. And the question is, is two
[46:38] Speaker 2: hundred a month a lot? Is that not a lot?
[46:41] Speaker 2: Is that a fair price? I think it sounds like
[46:44] Speaker 2: a lot of money compared to what is perplexity twenty
[46:47] Speaker 2: bucks a month. That seems like free practically for that
[46:51] Speaker 2: much power. So you're using it everywhere? Yeah, what are
[46:55] Speaker 2: you hearing from your peers? Is this the sort of
[46:57] Speaker 2: thing that everybody has gone all in on? Is the fear? Hey,
[47:01] Speaker 2: if we don't do this, our competitors are, so we
[47:03] Speaker 2: better step up.
[47:06] Speaker 3: I don't know if it's fear just as much as
[47:08] Speaker 3: the ability to cover so much more ground in the
[47:11] Speaker 3: same amount of time or less. You know, it's just
[47:15] Speaker 3: a super powerful technology. And we use it a lot.
[47:18] Speaker 2: Huh, really really interesting. So I want to get to
[47:24] Speaker 2: this question, and I forgot about it. So we're talking
[47:27] Speaker 2: about the current environment. AI is obviously a game changer,
[47:31] Speaker 2: but we've gone through a few decades of major regime changes.
[47:36] Speaker 2: We had the era of monetary policy, and then starting
[47:39] Speaker 2: in twenty twenty, we've had the era of fiscal policy.
[47:44] Speaker 2: When you're looking at central banks and the government higher
[47:48] Speaker 2: for longer, zero interest rates, all these different things. How
[47:53] Speaker 2: do these geopolitical variables affect how you think about putting
[47:59] Speaker 2: capital work, how you think about risk?
[48:03] Speaker 3: Well, I think one really big picture change sort of
[48:07] Speaker 3: going back over the past decade to today is coming
[48:11] Speaker 3: out of the financial crisis, capital effectively had no cost.
[48:16] Speaker 3: I mean, you saw the insane amount of money printing
[48:18] Speaker 3: that occurred, but that's because that was to offset a
[48:21] Speaker 3: huge hole in capex that had gone into housing that
[48:24] Speaker 3: wasn't necessarily needed, right, And we had to work that
[48:27] Speaker 3: out from a demand supply demand perspective. And we've now
[48:30] Speaker 3: done that. But if you go back and read what
[48:32] Speaker 3: the FED said, there was a study that came out
[48:35] Speaker 3: of I think the San Francisco FED where they used
[48:39] Speaker 3: computers to look at the language that was used in
[48:42] Speaker 3: meetings right about how to set rates, and what they
[48:45] Speaker 3: found was that the two percent inflation number, that's kind
[48:51] Speaker 3: of the bogie. It was supposed to be quote unquote
[48:53] Speaker 3: symmetrical goal. It wasn't symmetrical at all the way they
[48:56] Speaker 3: were setting rates for the between twenty ten roughly and
[48:58] Speaker 3: call it twenty twenty or so. And so that has
[49:01] Speaker 3: an enormous implication I think for the way all kinds
[49:03] Speaker 3: of different assets perform. And I think that's why massive
[49:06] Speaker 3: growth had the run it did over the past decade, right,
[49:09] Speaker 3: because when capital has no cost, you're willing to look
[49:11] Speaker 3: out a huge distance.
[49:12] Speaker 2: To brace more risk because what are you going to
[49:15] Speaker 2: get one and a half two percent? It doesn't make
[49:17] Speaker 2: sense otherwise exactly.
[49:18] Speaker 3: And so that's why huge growth had the run it
[49:20] Speaker 3: did because capital had no opportunity cost. And now if
[49:24] Speaker 3: you look at where we are with mortgages at six
[49:25] Speaker 3: percent and capital actually has a cost, again, it has
[49:30] Speaker 3: major implications for the kinds of assets that are likely
[49:33] Speaker 3: to do well in the future. And it comes back
[49:34] Speaker 3: to the whole theme we talked about earlier around smid
[49:37] Speaker 3: value more capital intensive things potentially having a better decade
[49:41] Speaker 3: now that capital has a cost again.
[49:43] Speaker 2: Let me share a favorite factoid with you. Former FED
[49:48] Speaker 2: Vice chair Roger Ferguson wrote a white paper on the
[49:53] Speaker 2: origination of the two percent target, and he traced it
[49:58] Speaker 2: back to some random time television interview in the nineteen
[50:02] Speaker 2: eighties in New Zealand where someone threw out two percent
[50:07] Speaker 2: and that was it. It just magically stuck and you
[50:10] Speaker 2: can find that. You can find that paper online. It's
[50:12] Speaker 2: pretty hilarious. It's just such a random number that doesn't like,
[50:18] Speaker 2: it's not there's no underlying thesis for why it's two
[50:23] Speaker 2: when not three or one. It's just it just seems like, yeah,
[50:27] Speaker 2: that sounds about right.
[50:28] Speaker 3: Well, I think it's got to actually be higher than
[50:30] Speaker 3: that if you think about it, because generally in an.
[50:32] Speaker 2: Era of fiscal rather than monetary stimulus, right, you're going
[50:35] Speaker 2: to just inherently have higher prices.
[50:38] Speaker 3: Right. Well, I mean if you think about the fact
[50:40] Speaker 3: that most consumers overwhelming saving vehicle is their home. Okay,
[50:47] Speaker 3: what's the blended rate on mortgages right now out there?
[50:50] Speaker 3: That's just in the stuff.
[50:52] Speaker 2: Yeah, Well, half the individually owned homes there are no mortgages,
[50:57] Speaker 2: and the remaining half. It's a crazy set of numbers
[51:00] Speaker 2: of two and a half, three, three and a half four.
[51:02] Speaker 2: Just everybody was smart locked in a fixed rate before
[51:05] Speaker 2: the pandemic.
[51:07] Speaker 3: Well, so if house prices in the aggregate don't appreciate
[51:10] Speaker 3: by more than that interest rate, right, people are going
[51:14] Speaker 3: broke in their primary savings vehicle. So housing actually does
[51:17] Speaker 3: need to increase in value over a long period of
[51:19] Speaker 3: time where people slowly go broke.
[51:22] Speaker 2: It makes a lot of sense.
[51:23] Speaker 3: Yeah, so I think the two percent is I know
[51:25] Speaker 3: it is thrown out there, but I think it actually
[51:27] Speaker 3: has to be higher over the long term to kind
[51:28] Speaker 3: of make the math work for most people.
[51:31] Speaker 2: I couldn't agree more. All Right, I only have you
[51:33] Speaker 2: for a limited amount of time. Let's jump to our
[51:35] Speaker 2: favorite questions, some of which I know the answers to.
[51:41] Speaker 2: Starting with who were your mentors who helped shape your career?
[51:46] Speaker 3: Wow? So mister Keeney was my dad's original business partner,
[51:52] Speaker 3: and he's a fascinating human worked until the day he
[51:55] Speaker 3: died ninety two. Wow, an incredibly nice human being. I
[52:00] Speaker 3: don't think I ever said a bad word about anyone.
[52:02] Speaker 3: One of the things that was so interesting to me
[52:04] Speaker 3: about mister keene is he didn't start his career at
[52:07] Speaker 3: leg Mason in research until he was fifty. Wow. So
[52:11] Speaker 3: you know a lot of people, young people think, oh, here,
[52:13] Speaker 3: I am unlocked in this career. Now there's always time
[52:15] Speaker 3: to switch. And then he hopped over at fifty to
[52:18] Speaker 3: start this role where he had a prolific career and
[52:22] Speaker 3: influenced a lot of people and did that for forty
[52:25] Speaker 3: something years.
[52:26] Speaker 1: Wow.
[52:26] Speaker 3: So he was a very smart guy, generous to a fault.
[52:31] Speaker 3: One of my favorite stories about him and him and
[52:33] Speaker 3: my dad were heading out for lunch one day downtown Baltimore,
[52:36] Speaker 3: and you know, some homeless person comes up and says,
[52:40] Speaker 3: starts with the story, you know, I haven't eaten in
[52:42] Speaker 3: this many days and blah blah blah, and mister Keeney's
[52:45] Speaker 3: sits there listening to it. He gets out of his
[52:47] Speaker 3: wallet and he gives her, you know, it was like
[52:49] Speaker 3: a fifty dollars bill, certainly inflation to justin. He says, oh, man, here,
[52:52] Speaker 3: just just go get yourself some hot soup. Take care
[52:56] Speaker 3: of yourself. And she looks to it, she looks back
[52:58] Speaker 3: at him, she looks at it. She goes to hell
[53:00] Speaker 3: a soup I'm gonna get me some whiskey. But yeah,
[53:05] Speaker 3: so he was incredibly generous human being, contributed a lot
[53:08] Speaker 3: to animal welfare stuff. I'm a big believer in welfare causes,
[53:14] Speaker 3: so he was an influence on me. I can also
[53:17] Speaker 3: think of a handful of times just from business school
[53:20] Speaker 3: that not necessarily an individual mentor, but just one liners
[53:24] Speaker 3: from business school that I remember over the years. So
[53:27] Speaker 3: that line I gave you earlier about Ken French and
[53:29] Speaker 3: how long it takes for a manager to prove whether
[53:31] Speaker 3: or not his work is statistically valuable or not. The
[53:35] Speaker 3: other one liner he told us is never pay a
[53:38] Speaker 3: load for a mutual fund. He said, if there's one
[53:39] Speaker 3: thing you take away from my classes, never pay a
[53:41] Speaker 3: load on an investment fund. And that's certainly still true today.
[53:44] Speaker 2: Yeah. Absolutely. Let's talk about books. What are some of
[53:47] Speaker 2: your favorites. What are you reading right now?
[53:49] Speaker 3: Yeah, right now I'm reading a book called The Mattering Instinct,
[53:54] Speaker 3: but I think it's Rebecca Goldstein. But it's a fascinating
[53:57] Speaker 3: book on mattering, the mattering instinct, and it's about people's
[54:02] Speaker 3: desire to matter and what that means. So there's a
[54:05] Speaker 3: lot of psychology unit there's a lot of philosophy in it.
[54:08] Speaker 3: The basic premise is that we're all just trying to
[54:11] Speaker 3: overcome entropy, so the tendency for disorder and systems to increase,
[54:16] Speaker 3: and we're all going to die eventually.
[54:17] Speaker 2: I was going to say it's a losing battle, but well,
[54:20] Speaker 2: we're here exactly.
[54:21] Speaker 3: Let's do something interesting, right, So that's what I'm reading now.
[54:25] Speaker 3: I just read prior to this, Let Them the mil
[54:29] Speaker 3: Robins book, so it's one of the I think it's
[54:31] Speaker 3: the best selling book last year, right, So I can
[54:35] Speaker 3: sum that one up pretty succinctly. And it's focus on
[54:39] Speaker 3: what you can control and don't let anything else get
[54:41] Speaker 3: to you.
[54:42] Speaker 2: Sounds like good advice.
[54:43] Speaker 3: It's good advice. And I mentioned that to my dad
[54:45] Speaker 3: because he sees me reading it, and he's like, haven't
[54:48] Speaker 3: you ever read Marcus Aurelius's Meditations? Is this is not
[54:51] Speaker 3: a new.
[54:51] Speaker 2: Ideaoicism created the idea of controlling what's within your control
[54:55] Speaker 2: three thousand and two thousand years.
[54:57] Speaker 3: Ago exactly, And I have read that, and that's a
[54:59] Speaker 3: phenomenal book as well. It's just good to have more
[55:01] Speaker 3: modern stories that you can relate to.
[55:04] Speaker 2: What's keeping you entertaining These days. What are you streaming,
[55:07] Speaker 2: either podcasts or or you know, Netflix or whatever.
[55:11] Speaker 3: That's one of my things. I don't really do.
[55:15] Speaker 2: Netflix. No.
[55:16] Speaker 3: I'll watch competitive events, I'll watch sports, I'll watch, you know,
[55:19] Speaker 3: an occasional stand up comedy show, but I don't watch
[55:21] Speaker 3: the series.
[55:22] Speaker 2: Did you see the Australian Open this year?
[55:24] Speaker 3: I did. I watched some of that. It was pretty awesome.
[55:26] Speaker 2: I have the finals d v R and I haven't.
[55:28] Speaker 2: I haven't watched it yet, but I know you're a
[55:31] Speaker 2: tennis guy.
[55:32] Speaker 3: Yep.
[55:33] Speaker 2: It's rare to find someone who can take Djokovic and
[55:37] Speaker 2: put them back on his heels.
[55:39] Speaker 3: Yeah. Well the Djokovic centermat which match was pretty awesome.
[55:42] Speaker 1: Yeah.
[55:42] Speaker 2: Yeah, I say these. I watched them like months later
[55:46] Speaker 2: when I get around to it.
[55:47] Speaker 3: Yeah. I do golf, so that's something I've just started taking.
[55:51] Speaker 3: I'm terrible, you know. I'm an eighteen handicap high variants
[55:54] Speaker 3: eighteen though, so I can have some pretty good days.
[55:57] Speaker 3: But it's interesting because there's a similarity to investing in golf,
[56:00] Speaker 3: which is golf. So you get better at golf by
[56:03] Speaker 3: narrowing your misses.
[56:04] Speaker 1: Huh.
[56:04] Speaker 3: And I think that's also true with investing. You start
[56:06] Speaker 3: narrowing the misses. It's a way to get better.
[56:08] Speaker 2: Charlie Allis made the same argument with tennis. Most tennis
[56:11] Speaker 2: players lose because they make all these unforced errors. Other
[56:15] Speaker 2: than the pros, most of us would be better off
[56:19] Speaker 2: being less bad rather than trying to be more good,
[56:23] Speaker 2: if that makes any sense.
[56:24] Speaker 3: Absolutely, you can shave a lot of strokes doing that.
[56:26] Speaker 1: Yeah.
[56:27] Speaker 3: Yeah.
[56:28] Speaker 2: Final two questions, what sort of advice would you give
[56:31] Speaker 2: to a recent college grad interested in a career in
[56:34] Speaker 2: either investing or value or what have you?
[56:39] Speaker 3: Choose?
[56:39] Speaker 2: Your dad, Well, that certainly helps. I love what your
[56:45] Speaker 2: father said to you in terms of create future optionality
[56:49] Speaker 2: by studying and doing well in school. I've never quite
[56:53] Speaker 2: heard it phrase that way, but that really sums up
[56:57] Speaker 2: why do I have to study algebra? Because you were
[57:00] Speaker 2: just creating optionality.
[57:02] Speaker 3: Investing is about optionality and creating more options for yourself
[57:06] Speaker 3: down the road, and so anytime you can invest in
[57:09] Speaker 3: yourself and create additional options is a good thing to do.
[57:13] Speaker 2: Yeah. Say the very least and our final question, what
[57:16] Speaker 2: do you know about the world of investing, valuations, portfolio
[57:21] Speaker 2: management today that would have been useful when you were
[57:25] Speaker 2: first getting started twenty years ago or so.
[57:28] Speaker 3: Well, you know, we were talking about books earlier. I
[57:31] Speaker 3: personally think that the best book on personal finance is
[57:36] Speaker 3: The Psychology of Money by Morgan Housels. So if you
[57:39] Speaker 3: haven't read that, anyone that gets a bank accounts should
[57:42] Speaker 3: be required to read that and just internalize the concepts.
[57:47] Speaker 3: I know, if you've been in the industry a while.
[57:48] Speaker 3: Not all of it's new, but it's a lot of
[57:50] Speaker 3: It's a really good reminder on how you should behave
[57:53] Speaker 3: to create wealth over the long term for yourself.
[57:55] Speaker 2: Absolutely, Bill, thank you for coming in and for being
[57:58] Speaker 2: so generous with your time. We have been speaking with
[58:01] Speaker 2: Bill Miller the fourth. He is the chief investment officer
[58:04] Speaker 2: and portfolio manager at Miller Value Funds. If you enjoy
[58:09] Speaker 2: this conversation, well check out any of the six hundred
[58:12] Speaker 2: we've done over the past twelve years. You can find
[58:15] Speaker 2: those wherever you find your favorite podcasts, iTunes, Spotify, Bloomberg YouTube.
[58:23] Speaker 2: I would be remiss if I didn't thank the Cracked
[58:25] Speaker 2: team that helps put these conversations together each week. I'm
[58:29] Speaker 2: Barry Ridults. You've been listening to Master's in Business on
[58:32] Speaker 2: Bloomberg Radio

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