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HomeInvestingTranscript: Joel Tillinghast, Fidelity - The Big Picture

Transcript: Joel Tillinghast, Fidelity – The Big Picture


 

The transcript from this week’s, MiB: Joel Tillinghast, Fidelity’s Legendary Fund Manager, is below.

You can stream and download our full conversation, including any podcast extras, on Apple Podcasts, SpotifyYouTube, and Bloomberg. All of our earlier podcasts on your favorite pod hosts can be found here.

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This is Masters in business with Barry Ritholtz on Bloomberg Radio.

Barry Ritholtz:  This week on the podcast, not only do I have an extra special guest, but I have a mutual fund Legends Fidelity Low price stock fund manager, Joel Tillinghast has been there pretty much since inception in 1989. He has absolutely crushed his benchmark over that period. The s and p 500 has underperformed his fund by 3.7% a year since 1989. He’s crushed the Russell 2000, whatever benchmark you want to talk about. The low price stock fund now runs about $25 billion. So this isn’t a small fund that managed to eke out a couple of basis points. Being 370 basis points over the s and p 500 with that pile of money is no small feat. Morningstar named him the domestic Fund manager of the year. Peter Lynch has called him the best stock picker he’s ever known. He’s just a legend. Has a fascinating career and a fascinating approach to managing a fund. I found this conversation to be one of a kind, and I think you will also, with no further ado, my interview with Fidelities Joel Tillinghast. Let, let’s start with your background. You fell in love with investing as an 8-year-old. Tell us about that.

Joel Tillinghast: Well, okay, G, when he was six, my grandfather, who was a bookkeeper accountant at a textile mill died and my grandmother was a second string violin at the Providence Symphony Orchestra, which didn’t pay well then, and I suspect didn’t pay well now. So grandma realized that she would have to live on survivor’s benefits and some dividends from stocks. Grandpa had purchased, he had 25 or 50 shares, mostly 25 of 20 or 24 stocks, and he had done research. He kept the annual reports of the companies in a library. And he also used a thing called Value Line. So my grandmother realizing that this was her source of income, wanted to be sure she had the right stocks, and she got a trial subscription for 29 bucks for 13 weeks of the value line. And I was a math nerd as a kid. It was the kind who thought it’s cool that 1, 2, 3, 4, 5, 6, 7, 8, 9 times eight is roughly 9, 8, 7, 6, 5, 4, 3, 2, 1. And the value line has all these statistical patterns. And because my mother and grandmother were looking at these trying to figure out what was going on, I was curious about the sea of numbers. Also,

Barry Ritholtz: 00:03:06 [Speaker Changed] She brings you in as an 8-year-old to help her out.

Joel Tillinghast: 00:03:09 [Speaker Changed] No, she, she left the value lines around because she was studying them and know, and so I wanted to study them. So the first two stocks that I bought were Beckman Instruments and Central Maine Power. Beckman Instruments was founded by a guy, Arnold Beckman, who was sort of a tech genius of the time. He made instruments that simplified lab tests and processing. And my dad, who was a biologist, was very attracted to their chromatography equipment, but they made tests that were not possible possible. So I bought two shares of that, I think when I was 10 and four shares of Central Maine Power. And Beckman Instruments got acquired by Smith Klein, which got acquired by Glaxo, but they also did a spinoff of Beckman Instruments. So again, so it came back out to the market and it held on to all the pieces except Danaher. But the Glaxo Share now have a dividend that’s a multiple of the original purchase costs. Many years ago. Wait,

Barry Ritholtz: 00:04:28 [Speaker Changed] Wait, wait. You, you bought this half a century ago. Don’t tell me you’re still long.

Joel Tillinghast:  00:04:32 [Speaker Changed] Yep.

Barry Ritholtz: 00:04:34 [Speaker Changed] That’s impressive. Holding period.

Joel Tillinghast: 00:04:36 [Speaker Changed] Hey, for, for those, set it and forget it. I guess on a compounded rate, it’s less impressive that the quarterly dividends, it’s, it exceed the purchase price because yeah, there’s 50 something years Wow. In, in the interim.

Barry Ritholtz: 00:04:51 [Speaker Changed] So, so let’s fast forward to 1980. Your, your first job is at Value Line. Tell us a little bit about that experience.

Joel Tillinghast: 00:04:59 [Speaker Changed] I had wanted to go to business school, but Harvard saw no need for me. And so did all of the others except for Kellogg, Northwestern, which would admit me in a year. I hurriedly sent out resumes all over the place, dozens of them and didn’t get anything good. But in the New York Times, there was an advertisement that the value line investment survey needed analysts. And I thought, I know this job, I know this company. And if you ever are looking for a job, they’d say, yeah, I know this company. That’s a good sign. So I aced the interview and instead of getting started at 13,000, they started me at 14,000. I think I wrote up Mary Kay Cosmetics, which was on a tear then. ’cause everybody wanted a pink Cadillac. But that lasted for a year. And then he went on to Kellogg for business school.

Barry Ritholtz: 00:06:01 [Speaker Changed] You, you come outta business school, you end up at Drexel, also in Chicago.

Joel Tillinghast: 00:06:05 [Speaker Changed] So in the summer, I got a job with Drexel in their institutional financial futures division, headed by a brilliant man, Richard Sandor, who some people called the Father of Financial Futures. He developed the Ginnie Mae contract, which at one time was a big thing in treasury bond contract. Very inventive and creative person. At the end of the summer, he said, would you like to stay? And so I did stay, but I had to take the full-time course load at Northwestern at night classes and work full-time. Drexel, the good thing was we had a 6 45 morning meeting. ’cause we were trying to connect London and Singapore.

Barry Ritholtz: 00:06:55 [Speaker Changed] That was the only time that worked.

Joel Tillinghast: 00:06:57 [Speaker Changed] Yeah. And, and so the sort of early-ish start to the day meant that full-time kind of meshed well with evening classes. So I finished up business school and started working full time.

Barry Ritholtz: 00:07:12 [Speaker Changed] So, so let’s talk about how you end up at Fidelity. The, the, okay, so the, the urban legend is that you, you cold called Peter Lynch. Is this right?

Joel Tillinghast: 00:07:21 [Speaker Changed] Yeah. So why, why did I end up at Fidelity? Sandor was fantastic, really like Michael Milken, despite having limited exposure. But Sandor did work some with him and he did go out to Beverly Hills to see them. But by 1986 they had huge legal problems. And Bank of America called me and said, would you like to be director of research and strategy? Yeah. So I took that. But sort of a week after I started, they announced quarterly earnings, which was the same days as the booze crews to inaugurate new employees. They announced a $640 million loss and ouch. In 1986. That was real money. Real money. And the division that I was in was below plan. And I realized I wanna work with people who are superb like Richard Sandor, but I also want to work for a company that’s not going to have some kind of financial or legal blow up. So I said, unlike my first job hunt, I was going to focus strictly on five people that I thought were at the top of their game. Peter Lynch, Mario Gelli, Michael Price, Michael Steinhardt, and George Soros.

Barry Ritholtz: 00:08:52 [Speaker Changed] That, that’s a hell of a list right there.

Joel Tillinghast: 00:08:53 [Speaker Changed] Yeah. They have stood up pretty well and have not blown up in any sort of public way. Peter Lynch was famous for the two minute drill where he’ll listen to any idea for two minutes, he’ll shut you down at two minutes. But I think the, what I said in two minutes was compelling enough that it went on further. And I did have to come into Boston to get seen by everyone and for them to finalize the offer. And even though maybe the decision was made at that phone call, I didn’t actually know until after the interview, you know, that, that I had done it. But when I went to Peter Lynch’s office, they dropped me there at two o’clock and there was all this busyness, mayhem, people coming into the office to quickly tell him about what was going on. And I loved the openness to ideas that Peter had and willingness to consider alternative possibilities. I pitched him San Francisco Federal Savings and Chrysler, and I suspect he knows so much more than I did. But those were two of my pitches.

Barry Ritholtz: 00:10:18 [Speaker Changed] Did you get the job because of the stock pitches or did you get the job because of what he thought about your analytic skillsets and ability to grow?

Joel Tillinghast: 00:10:27 [Speaker Changed] I think he always wants people who can grow. ’cause the, my, my assumption when I’m in the hiring position is you don’t necessarily have the developed skills. If you’ve gotten through the initial filters, you’re probably really smart, really hardworking, and either have a degree from a classy school or you have very high grades, less famous school.

Barry Ritholtz: 00:10:55 [Speaker Changed] But those are just table stakes. Yeah. What gets you to the next level

Joel Tillinghast: 00:10:59 [Speaker Changed] And what you want is curiosity. What you want is open-mindedness. I, I think, I’ve never met Ray Dalio, but I would submit that Peter Lynch is more open-minded than Ray Dalio. Although both aim to be, I think, completely willing to change their opinion when the facts change. And

Barry Ritholtz: 00:11:21 [Speaker Changed] Huh, real, really interesting. So, so let’s talk a little bit about stock picking. I mentioned the Fidelity low price stock fund that you’ve been running. Is that since inception in 1989? Yes. Let’s just talk a little bit about the performance. You, you beat the s and p by 3.7% a year for almost 35 years. It’s, I started in 89. So what is this? You’re 34th, you’re retiring after 34 years and you trounce what’s really the more appropriate benchmark, I would assume the Russell 2000.

So, you beat the & P by 3.7% and you’ve beaten the Russell by almost 4.7%. Much better. So it leads to the question, what’s the secret to this longstanding outperformance against all benchmarks and, and all passive measures?

Joel Tillinghast: 00:12:15 [Speaker Changed] I don’t think there are any secrets, but I think there’s probably five things. The first is knowing yourself and knowing what method works for you. What are you doing that can add alpha. And sometimes the answer is nothing. In that case, I highly suggest an index fund and a different career. And for me that’s comparing price with value. There are three broad categories of process. There’s momentum where the decision rule is, is it getting better right now? Right? What’s the most current data point that may not have filtered into the market? Then there’s growth where you’re trying to look out five years and say, can this company grow at an above average rate with above average visibility? And a third approach is compare price with the present value of future cash flows from here to eternity. And I’d say I have one and a half processes and a value investor, but I do look at where do I see the opportunity for above average earnings growth?

Where do I see higher visibility? Because you shouldn’t say the present value is the same for everything. If you’ve got a undifferentiated, crappy retailer and you’re saying it’s going to have $5 of free cash flow in five years, and you’ve got Visa, MasterCard, most of the magnificent seven, and you say that’s $5, they’re not the same. You have so much more certainty. ’cause bad things can happen to undifferentiated retailers. There are barriers to entry, there are monopolies for the second set of companies. And so you’ve got to separate them into those. And so the growth part filters into it. Things get worse at one of the companies that I’ve invested in. And I look for facts that confirm my bias, that it was undervalued. Second set of things sticking to a circle of competence. There were industries that I just can’t look out five years and see very well, biotech or internet, the whole phase one, phase two, phase three commerciality. For me, that’s just imm impossible to handicap. Right? Mercifully, fidelity has a brilliant lady, Irene Opolis, who can do that. I can’t reproduce her thought process. I, I can say that definitely works, but it doesn’t work for me. And so part of success in investing is to stick to things that work for you and

Barry Ritholtz: 00:15:19 [Speaker Changed] Stay within your, your circle of confidence. Yeah. So, you know, Peter Lynch hires you, he, he, he mentors you. He’s known as a growth investor. You’ve come to be known as as a value investor. Was it that same thought process? Hey, I’m comfortable with value, I don’t want to dabble in growth, or, or did you pick up any of the growth strategies from Lynch?

Joel Tillinghast: 00:15:45 [Speaker Changed] Well, that, that, that’s what I’m saying about one and a half processes

Barry Ritholtz: 00:15:50 [Speaker Changed] Your value with a little bit of Lynch’s growth from it.

Joel Tillinghast: 00:15:53 [Speaker Changed] Yeah. Saying the present value of future cash flows depends on future growth. And of course, you want companies whose future earnings and cash flow are gonna surprise on the upside five years out.

Barry Ritholtz: 00:16:07 [Speaker Changed] So it would be wrong to categorize you as a pure value investor.

Joel Tillinghast: 00:16:12 [Speaker Changed] No, I, I, the, the growth is part of the value. I want the lowest multiple on earnings five years out. And one of the ways that I tried to illustrate that was looking at some of Warren Buffett’s biggest hits, and from the time he bought Geico and going out five years, it was two times earnings. He paid two times earnings five years later and

Barry Ritholtz: 00:16:40 [Speaker Changed] Stole it.

Joel Tillinghast: 00:16:41 [Speaker Changed] Yeah. And Washington Post another single digit multiple and most of his big hits, Wells Fargo, it’s like, wow. He, he got the earnings growing dynamically, or at least above average. And it’s the PE five years out that, that I think is more helpful than spot PE or EV to EBITDA today.

Barry Ritholtz: 00:17:07 [Speaker Changed] Huh. Real, really interesting. So you began in 89. I’m curious how your investing philosophy has evolved over, over the past 30 plus years.

Joel Tillinghast: 00:17:20 [Speaker Changed] I got the black lung assignment as an analyst at Fidelity. Got

Barry Ritholtz: 00:17:26 [Speaker Changed] You. Meaning covering coal or Tibacco?

Joel Tillinghast: 00:17:28 [Speaker Changed] I got, I got assigned the coal industry and I got assigned the tobacco industry, you know, ne neither of which anybody was beating down the door. Coal was suffering then because Longwall Mines and other productivity improvements had come in in the eighties. And so productivity was growing really dynamically. Like 8% a year. The price of coal was falling. And because who needs 8% more? Coal and demand is flat. Right. Or inching up that, that we’re still installing coal power plants, but not 8% a year. So the price was falling, whereas the tobacco companies were a oligopoly of a possibly addictive and at least habituating product. Both industries made me wince, which goes to ESG. But your visibility into the tobacco earnings was so much clearer. So if they were both at 10 times earnings, you qualitatively wanted the place where there’s, and no Harvard Business School grad is going to say, I wanna go into the tobacco business. They don’t wanna go into the coal business either. But that’s a barrier to entry. It’s an oligopoly. There’s licensure, there’s lots of regulations around tobacco. So you have a relatively stable oligopoly. And that’s incredibly valuable, which has to be offset by the thought the, ever since the surgeon general’s warning unit consumption of cigarettes per capita until the Covid era had pretty much dropped 3% a year forever since 1965 or whenever the surgeon general’s warning was. It, it, it’s been on a down trend, but the pricing power could more than make up for it. Huh.

Barry Ritholtz: 00:19:34 [Speaker Changed] Really interesting. So, so let’s talk a little bit about how Fidelity thinks about active management and how the low price stock fund came about. There are lots and lots of small cap funds. What led to a low price stock fund

Joel Tillinghast: 00:19:50 [Speaker Changed] At the time there was a standard and Poors low price stock index, and it was considered a technical indicator of speculation. It’s what the much maligned retail investor was doing. Low price stocks were beating the s and p 500. They’d say it’s a crap market. People are buying junk. The the meme investor is nothing new. Right. Or Meme Trader also was seeing that Fidelity had the largest buy-side research analyst drew, and we could cover those smaller stocks and the, they were mispriced. I also was influenced by a business school professor Rolf Bonds, who did one of those studies of small cap stocks outperform. Right. For the period that he studied. It did. And it’s gone intermittently missing for many of the last decades since the studies were published.

Barry Ritholtz:  00:21:01 [Speaker Changed] You guys at Fidelity had lots of analysts. Yeah. That covered this. So you’re implying that A, there’s a market inefficiency. Yeah. And B, you had an adva an advantage that allowed you to swim in those waters that no one else seemed to do very well in. Yeah.

Joel Tillinghast: 00:21:19 [Speaker Changed] At some point you’ll beat me up for the number of holdings that I have and

Barry Ritholtz: 00:21:25 [Speaker Changed] 800, 900 I, I don’t think something, I don’t have a problem with that. It it, but

Joel Tillinghast: 00:21:30 [Speaker Changed] It was going to start with Peter Lynch had more, Magellan had more than 900.  Magellan had more than that. And the assets under management were smaller. Although the market, the cap of the market was smaller, but he had more than that. And Peter just, it was unforgivable not to have or get a update on a stock that Peter was interested in. And so I’m thinking Will Danoff probably intermittently covered over a hundred stock retail stocks, you know, when he was an analyst and I covered not just the tobacco majors in the US but also the international British, American and Imperial and the Canadian companies and the leaf growers. And so had a full understanding of the international competitive dynamics, but also the supply chain. And that was what Peter wanted. And that was what I thought Fidelity had a competitive advantage because we were doing research on those smaller companies.

Barry Ritholtz: 00:22:52 [Speaker Changed] So, so how does this lead to nearly a thousand holdings in, in a mutual fund

Joel Tillinghast: 00:22:57 [Speaker Changed] Or 800 in my case, go and over a thousand for Peter?

Barry Ritholtz: 00:23:03 [Speaker Changed] BHby the way, be I, I’m not gonna beat you, you or Peter up over this ’cause whatever people think about, Hey, that’s way too many stocks. The answer is well just look at the performance. It’s obviously not too many stocks. Peter, one of the greatest managers of all time your track record, one of the greatest of all time. What does having 800 stocks do for you Okay. In that fund?

00:23:26 [Speaker Changed] So, so I, I think Peter felt like if you think a business is interesting enough that you want to keep in touch, it’s bad for ’em to go to zero. And I sort of feel like the same thing. You, you want to keep in touch with management and if you don’t have huge conviction, you wanna have a tiny possession. And if you’ve got a wildly diverse industry like banks or savings and loans,

00:24:03 [Speaker Changed] You wanna own a few to

00:24:04 [Speaker Changed] Keep track

00:24:05 [Speaker Changed] As a benchmark for the sector.

00:24:08 [Speaker Changed] You, you want to do a preliminary sort and say, what would a good looking bank look like? What would a well-managed savings and loan look like? And you wanna get to a preliminary answer that says, yeah, the this 25 savings and loans look like the best of the bunch. And I see it as taking a business card and trying to keep in touch so that you can develop a relationship with management and can understand what is your strategy. And it’s harder to have a differentiated strategy in banks and savings and loans other than we’re gonna go crazy with risk, which is not the alternative strategy that you want.

00:25:04 [Speaker Changed] So, so if, if you or Peter own a few hundred of a particular sector, I’m assuming these are very tiny pieces, you’re, you’re sub 1% holdings and it’s just a way of keeping track of Yeah. Or watching a sector. If, if, if, and if something starts to work out, that’s when you begin to pyramid and add to the position.

00:25:23 [Speaker Changed] Yeah. And, and I do that in, in steps, right? I don’t think I’ve ever gone from a zero waiting to a 50 basis point waiting on, on IPOs. Sometimes you have to do it that way. But otherwise it, it always takes steps where you want to meet with management a few times, see if they’re consistent. You want to see if the financial results continue to be consistent. And compare and contrast are, are these really the superior banks or am I just getting an index of, of banks?

00:26:03 [Speaker Changed] So, so you mentioned index. When we look at active equity, generally speaking tends to underperform the index. But active bond managers tend to outperform their index ’cause they eliminate the worst of the holdings. They eliminate the poor credit, the the bad risk reward relationships. And it makes me ask a question about your alpha. Is it primarily coming from identifying the winners or are you almost like a bound manager where you’re eliminating the worst potential members of, of your benchmark?

00:26:39 [Speaker Changed] Yeah. Adding value by subtraction, you add value by subtracting the stocks that are going to play against your bad behavioral habits. You add alpha by subtracting the industries that you don’t understand as well as the market. You add alpha by avoiding businesses that are run by crooks. You add alpha by avoiding businesses that are run by idiots that have bad capital allocation or no business strategy.

00:27:18 [Speaker Changed] So addition through subtraction sounds like. Yeah. And you’re really getting rid of the worst of the worst.

00:27:22 [Speaker Changed] You’re, and that’s particularly important in the Russell it’s important in junk bonds. I would not want to have a index in junk bonds because the ones with the biggest weight are the most heavily indebted. Right. Wow.

00:27:42 [Speaker Changed] Market cap weighting does not work on the fixed income side for that exact reason.

00:27:47 [Speaker Changed] Especially in

00:27:48 [Speaker Changed] High

00:27:49 [Speaker Changed] Yield. In high yield. Yeah. But yeah, I think, I think it’s problematic in fixed income. And it’s also true in Russell 2000 where 40% of the companies are unprofitable. And

00:28:03 [Speaker Changed] That’s an amazing number.

00:28:05 [Speaker Changed] And and the, the ones that I will consider are the ones where it’s just a temporary visitor to being unprofitable. If it’s a cyclical low Yeah. May maybe that’s a buy. But if, if it has a history of not being profitable, you you really want to exclude that. And

00:28:32 [Speaker Changed] Eventually the historically unprofitable companies will disappoint. Yeah. Like there’s only so many years in a row you could do a one-off and and call it a non-recurring expense. Yeah. If it’s, if it’s year after year.

00:28:46 [Speaker Changed] Yeah. And the fourth point was to eliminate the companies that are not resilient, which we sort of covered in the last couple of minutes.

00:28:56 [Speaker Changed] So, so let’s talk a little bit about your sell discipline. Lots of academic studies have shown stock pickers do much better when it comes to buying than they do when they’re selling. Tell us a little bit about your cell discipline.

00:29:11 [Speaker Changed] If you go in thinking about it as marriage, as the Pope would have it, where you’re thinking, I don’t intend to trade out of this, you’re going to make a much better decision about that. But facts do change as Peter Lynch would immediately remind me if the facts have changed, if the barriers to entry have fallen, if they’ve made a stupid capital allocation decision that that can be a sell. If they seem more crooked than we realized, or more promotional, I guess that’s the polite word. That’s, that’s a sell. But it’s always a compare. One opportunity against another despite having a long tail of tiny holdings. Low price stock has historically had some very large concentrated positions. And those concentrated positions happen because they have high conviction that they’re in that group where it’s not stupid to think about where earnings will be 10 years out.

00:30:32 It doesn’t help you to trade from Visa because the stock is a high multiple and you think might be overvalued into that crappy retailer that I mentioned. You want to only limit your sell of that type of company to trade into something of equivalent visibility into the future. But if it’s a low barrier to entry or if it’s somewhat homogenous, can you get me to sell a bank that’s selling for 12 times earnings? If you can show me an equivalent bank that’s at an eight pe of course you can. They, they probably are approximately the same. And so I’ll I’ll be pretty fickle with, with those.
00:31:27 [Speaker Changed] So, so it sounds like you start out planning on holding to these stocks for a long time. Yeah. If they disappoint you or if there is a better opportunity that comes along and, and you’re not necessarily thrilled with the holding, you’ll, you’ll use that as a reason to get out. What about purely, purely on price and value.
00:31:48 [Speaker Changed] When you think about selling a stock like UnitedHealthcare, which I think has very high visibility and good quality management and unbeatable market position in some places, do you have the same confidence in the thing you’re moving it to? It’s a bad trade if you sell that and say, I’m going to move it from United Health to GoodRx, where I’ll stipulate that I don’t have the same confidence in the outlook 10 years out. Huh.
00:32:26 [Speaker Changed] What about one of your, your biggest winners was Monster Beverage. Yep. Which, which was started out relatively
00:32:34 [Speaker Changed] Tiny,
00:32:34 [Speaker Changed] Tiny and, and not wildly overpriced. And the growth rate was astounding. The visibility on earnings they grew but they stayed profitable as, as they grew. What, what allowed you to stay with that company so long? The typical manager would’ve taken the three x or the five x or the 10 x and left a ton of money on the table.
00:32:59 [Speaker Changed] What kept me in there was the price going in was 10 or 11 times earnings. It was debt free, it had a differentiated product. I loved the ambition of the management team who were a couple of South African expatriates five years after I bought it. The earnings per share were the same as the purchase price. So wow. If you’ve done that once, maybe you can do it again unless you think the market is saturated. So,
00:33:35 [Speaker Changed] And they kept doing it for quite a
00:33:36 [Speaker Changed] While and they kept doing it and are still doing it at an above average rate for a consumer staple having 5% unit growth in consumer staples, that’s sustainable. That’s amazing.
00:33:52 [Speaker Changed] How long did you hold onto Monster Beverage for
00:33:54 [Speaker Changed] I the fund still holds it
00:33:56 [Speaker Changed] Still so,
00:33:57 [Speaker Changed] So, so
00:33:57 [Speaker Changed] 12000% what, what sort of crazy numbers are are? Oh,
00:34:01 [Speaker Changed] It’s like, I’d, I’d have to look at it. It’s like a three or 4 cent purchase cost.
00:34:07 [Speaker Changed] Thousands of percent gain. Yeah. That’s amazing.
00:34:10 [Speaker Changed] A couple might be a hundred thousand percent gain or better.
00:34:14 [Speaker Changed] And and you still have confidence that you haven’t seen something that’s more interesting in this space. You wanna replace it with?
00:34:22 [Speaker Changed] I I don’t. And, and that’s, that’s the problem. And, and eagerly searching the market, but but not finding it yet. If, if, if you’ve got it, please, please do tell.
00:34:36 [Speaker Changed] I I’m not gonna be the guy that’s gonna give you something to swap out for a hundred thousand percent gainer that, that, that just at that point that there’s nothing you could do. But, but I could do, but, but make it worse. So, so all of this leads to the question, how did you come about to the idea, let’s focus on stocks price less than $35. What, what was the thinking? ’cause we’re not just talking about market capitalization ’cause you’re, you, you play in different ponds in terms of market cap, but it was the actual price. What, what other than the Dow there really isn’t anything that’s a price-based index.
00:35:17 [Speaker Changed] When they started the fund, there was the standard and Poors low price stock Index. Index. Okay. Which they got rid of because they were peeved the, we and Royce were using it for a mutual fund. We thought it was free advertising for their index, but I guess guess they thought that their index was pre advertising for our fund or something. Well,
00:35:40 [Speaker Changed] The SP gets,
00:35:40 [Speaker Changed] Or, or, or maybe the retail market chains. So low price stocks were no longer a great indicator of speculation or public involvement in, in the market. Well, well
00:35:54 [Speaker Changed] It was one of many odd lots went away and put to call ratio went away. Like a lot of things that people used to look at as a measure of speculation seems to have fallen out outta favor and yet the low price stock approach continues to be successful after all these years. But what was the thinking? Was it market inefficiency or It,
00:36:16 [Speaker Changed] It, it was, the small cap stocks were covered better by fidelity, but it was also looking at Peter Lynch’s, some of his big hits Chrysler and Fannie Mae, which despite its history in the financial crisis was a spectacular stock in the late eighties that made bundles of money for Magellan Fund. And they saw the, a lot of those were at the start under $10, under $15. And you know, as the fund grew, the $15 got raised to $25 and to $35. And
00:37:04 [Speaker Changed] Is that where it stopped? 35. That,
00:37:06 [Speaker Changed] That’s where it stopped.
00:37:07 [Speaker Changed] Huh. Really, really quite fascinating. So let’s, let’s talk a little bit about the exclusive club that you’re a member of. Long-term successful active managers. There aren’t many of you. Why is that such an exclusive club?
00:37:24 [Speaker Changed] First I’d say why did he use one of the, and looking at Fidelity? Well, Lynch is awesome, but Will Danoff, who actually started within months of when I did, has added more dollars of value than any single fund manager, including hedge fund managers.
00:37:50 [Speaker Changed] Amazing track record. Just amazing.
00:37:52 [Speaker Changed] Yeah. So Fidelity has a strong tradition
00:37:56 [Speaker Changed] Of active managers who have, who have delivered Alpha, not just occasionally, but for decades at a time. What makes it so hard?
00:38:05 [Speaker Changed] It is a very hard game because most people know most things. And do you have proprietary information and are you focusing on that proprietary information? I think Will is thinking very directly about what is the standout winner, the best in class in a growing industry. And those are all he wants. And I I’ve learned from Will the, yeah. If I am excited about artificial intelligence and say, what have I got in small cap, super micro is not the same bet as Nvidia. Sure. Unfortunately, if if, if you think the artificial intelligence will win and I’m unable to make such a decision, then you want to go with Nvidia and not super micro. It’s hard because information travels fast. And I think at the one hand, can you be faster to react to information? All the bots and automation mean that active managers who are trying to do that have been out competed by Renaissance Technology or Deisha or whoever. Because I, I talked to a employee at one of the quant shops who would have to kill me and the employee if, if I said where it was, you know, but he said that at one time most of their investments were driven by a thesis where they tried to find data to support it, but they’ve now gone to just pure data mining where if SSRI Lanka butter production correlates with the s and p, then they will buy
00:40:10 [Speaker Changed] It. It doesn’t matter as long as there’s a, it
00:40:12 [Speaker Changed] Doesn’t ma And, and he being roughly my age, we’re a little younger, doesn’t like that. But that’s the direction that artificial intelligence is, is going. It’s, and so I think it’s very hard at the fast data, and there’s also so much data that people say the amount of data is growing by whatever rapid rate per year, but most of it is until it gets interpreted by something like artificial intelligence. And that’s a problem for people who are on the momentum part of the growth market.
00:40:53 [Speaker Changed] So, so let’s stay with that. There’s a quote of yours. I I like a lot of data, even a lot of the analysis is trivial and ephemeral. Explain what you mean by that. You, you, you seem to be saying some of this data isn’t really useful
00:41:09 [Speaker Changed] For what I’m doing. It’s trivial for the people who’ve got it. It’s got a shorter life than fresh fish on refrigerated. Right. Where it’s glorious today, but it’s, it’s gone tomorrow. And the, the opportunity is very quick and machines are very quick to, to reflect those. Whatever you’re thinking about, I think Kahneman said at any particular time is less important than you think it is. Right. But, but it’s got your attention
00:41:43 [Speaker Changed] And that’s the nature of that ephemeral data. Yeah. Huh. Really interesting. So we’re, we were talking earlier about active versus passive. Ironically, fidelity runs some of the largest passive indexes in the world. What’s it like having to compete with your own firm?
00:42:03 [Speaker Changed] If we can’t beat the indexes, I’d say we’re serving our customers better by, by doing that. And if we consistently lag, we, we should shut down the funds and, you know, move them all to indexes. But it’s really more about customer choice. We Fidelity strives to be customer driven. We want to offer whatever serves the interests of our customers best.
00:42:34 [Speaker Changed] And and you certainly haven’t lagged you’ve, you’ve been beating your benchmarks consistently over time. Let’s talk a little bit about how you define a value stock. What is it that makes a company undervalued and attractive to you?
00:42:51 [Speaker Changed] So value is the present value of future cash flows. Where you’re saying the cash flows 10 years out are a fantasy. Sometimes they’re realistic fantasies. But when I think about the Kathy Wood universe, I, Kathy Wood may differ, can look out for fast changing industries and say 10 years from now, this is what cash flows will be approximately. This will be free cash flows in, in an order of magnitude. So present value of future cash flows where you really believe the cash flow’s, reliability. And personally I think most terminal values are bss and that you should discount as far out as you feel comfortable. And the fact that you’re trying to bundle it up into a terminal value in, unless the assets are cash or convert to cash. That’s the value that I am looking for.
00:43:52 [Speaker Changed] So since you mentioned arc, let, let’s talk about overpaying for, for companies that you said it’s so important not to overpay regardless of how good any business or company might be. Tell us a little bit about that safe margin of safety that not overpaying creates.
00:44:11 [Speaker Changed] Kathy would may have her own valuation, so, but I can’t replicate it myself.
00:44:19 [Speaker Changed] Well, it doesn’t look like she can either. ’cause and, and this isn’t a, a beat obsession on arc, but since in inception she’s underperformed the s and p 500, including one year, I think it was 2020 where she was up something like 168%. If you’re up that much in one year and you’re still, you’re
00:44:40 [Speaker Changed] Gonna pay it back sometime.
00:44:41 [Speaker Changed] It, it seems that, that if you’re still underperforming despite that, that may raises a question, are you overpaying for those assets?
00:44:50 [Speaker Changed] Yeah. So the question of overpaying Yeah, it’s, it’s why you have to think about how will I react in a tough situation? And if you’re a growth investor and you’re in a bear market and you bought a stock that is, you think worth a hundred dollars and it’s selling for 80 a value investor would say, yeah, that’s interesting upside. You wanna be sure there isn’t something greater than that. But you get some bad news and the value drops to 90, but the stock drops to 40. Right. And there’s some growth investors who will say, let’s destroy the evidence, let’s sell out when it’s 40. And if you’re one of those investors, know that about yourself. A value investor can feel like I have to deal with all the clients who say, why are you losing me all this money because the stock has gone from 80 to 40, but I feel cheerier because it’s from $40 to a $90 value. That’s a much better upside. That’s a huge upside. Whereas from 80 to a hundred, that’s good upside, but it’s not amazing. And it helps me keep an even keel in a situation where I’m feeling the same pain that every other manager is. Where clients are saying, why did you lose me all that money?
00:46:25 [Speaker Changed] So, so let’s talk about making mistakes. I love this quote of yours. You’ve got to be cruel to yourself so you don’t do it again. Tell us about being cruel to yourself.
00:46:37 [Speaker Changed] My we’re stuck in, in dollars ever was Health South Rehab. It had bought the stock in the teens and it looked like a cheap stock on adjusted analyst earnings. It had something like a buck 29 of analyst adjusted earnings, but it had 12 cents of gap earnings.
00:47:00 [Speaker Changed] And that’s a big difference. That
00:47:02 [Speaker Changed] Is a big difference.
00:47:04 [Speaker Changed] That doesn’t sound like your type of stock,
00:47:07 [Speaker Changed] Not what’s become my type of stock. They had a dispute with the government where the government claimed that they were overbilling on some cases. And Richard Scrushy, the CEO was a very,
00:47:25 [Speaker Changed] I
00:47:25 [Speaker Changed] Remember showy
00:47:26 [Speaker Changed] I remember that name.
00:47:27 [Speaker Changed] Sure. Yeah. And, and their investor relations guy had been an actor on the Wonder Years, which was a TV show I think in the eighties.
00:47:36 [Speaker Changed] That’s a red flag, isn’t that
00:47:39 [Speaker Changed] It? It’s sort of become one. But I paid in the mid-teens and sold it out for less than a dollar.
00:47:46 [Speaker Changed] Wow. So big loss. And, and and that’s a big loss on a percentage basis
00:47:50 [Speaker Changed] Being cr and it was a lot of shares. It had complete wipeouts, but they are mostly those one basis point positions where it didn’t do the full research and didn’t have much confidence behind it. But, but thought it was interesting. So be cruel to yourself. What I didn’t do was look at free cash flow. And I think that was part of how my changing, I, I had already realized from the tobacco companies that the magic of their financial model was the huge amount of free cash flow and that they were producing the gap earnings versus the analyst adjusted. The lack of free cash flow was confirming that gap was probably closer. It turned out that they were cheating the government and that there were some accounting restatements necessary and there weren’t really good financials and the assets were growing faster than the sales. And so, which
00:48:58 [Speaker Changed] Doesn’t make any sense. Yeah. And and so you’re, you beat yourself up on this. You’re, you’re cruel to yourself and you’re
00:49:04 [Speaker Changed] Cruel to myself to say, going forward, I’m going to look at free cash flow and take it seriously. I’m going to be skeptical about analyst adjusted earnings and look to free cash flow is a confirming, but, but I also wanna see, is it one of those cases where the analyst adjustments are economically realistic or are they excuses?
00:49:28 [Speaker Changed] What year was this?
00:49:30 [Speaker Changed] I bought it around 2000 and it crashed around 2002. 2003. Right,
00:49:37 [Speaker Changed] Right in the middle of the.com cla crash. So you could definitely bury that. Although a 99% drop is, is never fun. How big a position was this? ’cause
00:49:47 [Speaker Changed] It, it, it, it it was material and the
00:49:50 [Speaker Changed] Even with 800 other stocks,
00:49:52 [Speaker Changed] This was one of my medium concentrated was probably position number 30. Okay. And and
00:50:02 [Speaker Changed] That’s a percent or two, right? That’s all that is.
00:50:06 [Speaker Changed] Yeah.
00:50:06 [Speaker Changed] No one’s happy
00:50:07 [Speaker Changed] About it. A 99% loss on 1.1% could be a percent. Yeah. And
00:50:14 [Speaker Changed] So meaningful to annual performance.
00:50:16 [Speaker Changed] So it’s very meaningful and I, I think it has a, you know, epiphany about concentration that you don’t wanna treat all of the companies the same. You really only want to concentrate in the very high conviction companies of really superior and clearly health South was not clear. And so it was beating myself up on this is how I need to change my analytical method. This is what’s wrong with concentrating in the wrong stocks.
00:50:49 [Speaker Changed] Not a lot of managers are nimble enough to make those adjustments. 10 years, 12 years into managing a fund. How did those changes affect your performance over the subsequent 20 plus years?
00:51:02 [Speaker Changed] I hope that they were positives
00:51:05 [Speaker Changed] For, for the better. Yeah. What whatever happened to squishy, by the way,
00:51:09 [Speaker Changed] I have stopped watching him. Like I stopped watching the winter years.
00:51:15 [Speaker Changed] That’s very funny. So, so let’s talk a little bit about picking international stocks as an asset class has done fairly poorly, but it’s nearly a third of your portfolio and, and you continue to outperform. What do you see in international stocks?
00:51:32 [Speaker Changed] Japan has more public companies than the United States.
00:51:37 [Speaker Changed] Hard to believe.
00:51:38 [Speaker Changed] Yeah. With a fraction of the population in the US it’s chic to be a private equity or a venture backed firm. Right. ’cause otherwise Yale is not interested in, in UK and whereas in Japan it is prestigious and
00:52:00 [Speaker Changed] To be public,
00:52:01 [Speaker Changed] To be public, to be listed on the TSC. And there are lots of companies that in Japan that are in single digit returns on equity. But you do not need to invest in them. There are lots of brain dead bureaucratic companies, but you don’t have to invest in them in Japan or Europe or the United States. And they’re, the addition by subtraction is particularly important. And it’s great that we have on the ground people and cur aid highlight Sam Ovitz, who’s taking over along with Morgan Peck from me, spent several years in the Tokyo office. And there are smaller entrepreneurial companies that are doing differentiated things. One, one of those big winners has been Cosmos Pharmaceutical, which is a discount drug store and food store and Southern Japan and
00:53:14 Their sg NA to sales, something like 14 or 15%. Walmart, which runs a tight ship, has sg and a to sales, I think of about 20%. So we’ve got a company that is more efficient than Walmart, which I think is impressive in itself. And they pass the savings on to the customers. And customers in the south tend to be poorer than the Tokyo metro area or have lower incomes. So they love the prices and it’s had double digit returns on equity and good growth. And that’s what I look for and what I think Sam and Morgan are looking for going forward.
00:54:10 [Speaker Changed] So, so when we look at international companies, they’ve been trading generally at a big discount to us and consistently for the past, I don’t know, 10, 15 years. Why is there such a spread between US domestic and overseas companies in terms of you’re a value investor in terms of straight up valuation?
00:54:32 [Speaker Changed] Some of it is the industry skew that there are not so many winner take all oligopolistic tech companies internationally as there are in the us China has Alibaba, but that has a governance constraint where Jack Mao is hanging out in Tokyo rather than China. And I don’t know whether it’s ’cause Tokyo’s a lovely place to be or ’cause he feared for his physical or financial safety.
00:55:09 [Speaker Changed] Not encouraging to, but, but
00:55:11 [Speaker Changed] Both of those, both of those are good, good reasons. But I, I don’t see any tech leaders that are global in a lot of the parts of the world. There are real governance differences in some of the places and the industry skew away from tech, you know, may be slower and more commodity. Like US antitrust policy has kind of gone missing except in weird spaces. And so US companies have a lot more market power that they can use.
00:55:47 [Speaker Changed] Huh, really interesting. So, so you set to retire as portfolio manager this year, you mentioned your two successors. Is the strategy gonna be the same or or are they gonna put their own spin on on the base that you’ve created over the past 34 years?
00:56:05 [Speaker Changed] They will absolutely put their own spin. Some of the largest holdings have come down in size because what’s high conviction for me might not be high conviction for them. And on the bullish side, I think research about the specific companies and coverage is better than it’s ever been for low price stock fund. ’cause Morgan and Sam are beating the bushes, getting analysts to study companies, call companies, visit companies. And so that information flow is better than it’s ever been.
00:56:44 [Speaker Changed] You’re gonna stay on as senior advisor. What do you hope to teach the next generation of Fidelity fund managers?
00:56:51 [Speaker Changed] Maybe I’m just hanging out so that they have an excuse to visit the London office and because I, I learned from them and, and I worry about my mind going soft because I’m not talking to them. I’m hoping I have something useful to, to tell them. But if the long awaited value boom doesn’t materialize, they may not wanna talk to me.
00:57:17 [Speaker Changed] So I want to throw one more quote at you before we get to some of our final questions. You had said when, when discussing what you learned from Peter Lynch, be skeptical enough to spot your own mistakes, be flexible enough to fix them quickly. There’s no shame in making mistakes as long as you recognize the mistakes and fix them. Tell tell us a little bit about the process of making mistakes as a fund manager. It sounds like you’re saying this is part of the process. There’s no avoiding error, it’s how you deal with it. Yeah,
00:57:54 [Speaker Changed] And, and that was what I meant to draw from the Health South example. The, i I think it did change my process as, as a result, the why do I emphasize free cash flow more than analyst adjusted earnings. It’s because that was so difficult. Why do I emphasize staying away from crooks and idiots? It’s because of Health South among others that were,
00:58:23 [Speaker Changed] They were both crooks and idiots, it seems. Yeah. So let me throw a couple of curve balls at you before we get to our favorite questions. One has to do with what managers describe as eating their own cooking. What are your thoughts on being invested in your own fund?
00:58:41 [Speaker Changed] I would ask whether the manager can be invested. I have Canadian funds that I cannot invest in because they are regulated under Canadian securities laws. Right. And so I cannot invest them.
00:58:57 [Speaker Changed] And the low price stock
00:58:58 [Speaker Changed] Fund, I I, I have the highest disclosable bracket of amount invested in both my personal brokerage account and in my retirement account.
00:59:11 [Speaker Changed] So, so you very much eat your own cooking. Yeah. And, and our last curve ball, before we get to our favorite questions, you were affected by your experience in an earthquake in Japan. Tell us about that.
00:59:25 [Speaker Changed] It was very scary. The conference that I was at went all week and on Tuesday before the big one, it was in a company meeting and, you know, it felt a tremor and the translator sort of percolate, said, oh, that was an earthquake. And thought, okay, if, if you’re chill about it, then so am I. And then a couple days later on Friday, I was in a meeting with a HomeGoods retailer at the Fidelity office and the tremors started and the T service started to slip around the table. And the company manager was CEO was looking more and more uncomfortable. Not
01:00:17 [Speaker Changed] Not chill about it,
01:00:18 [Speaker Changed] And not chill. And so I was thinking, oh, it’s not just every day for the Japanese. And so the meeting that was meant to go till four, we abandoned, went down the stairway, the coffee shop in the downstairs was kindly giving away free coffee. And my car ride to the hotel wasn’t scheduled to arrive until four, but it never arrived. Cell phone service had stopped. Wow. And so I had to walk to the hotel and Dave Jenkins or Fidelity Analyst and now portfolio manager had to walk home, which took a few hours.
01:01:05 [Speaker Changed] How, how bad of an earthquake was this?
01:01:07 [Speaker Changed] This was seven fi it, it, it was a big one. You could see the hotel was near radio tower, an observatory tower. You could see it bending Really? And they were going to have a finale dinner on the top floor of the hotel, but decided to move it to the basement.
01:01:31 [Speaker Changed] Makes more sense.
01:01:32 [Speaker Changed] And one of our woman analysts was on the 21st floor, I think I was on the 22nd floor. And she went down there crying and they moved her to the second floor. And if I’m ever there again, I’m going to lose my dignity and start crying and say, move me to the second floor.
01:01:56 [Speaker Changed] It’s, it’s very disorienting to be for those of us
01:01:59 [Speaker Changed] And, and to have subways stop shut down, cell phone service, shut down, car service, shut down all of that stuff. And to see, oh my God, the radio tower is tilting. I can’t, my flight was cancel. Flight out was canceled.
01:02:16 [Speaker Changed] Very, very disorienting. Alright, let’s jump to our favorite questions that we ask all of our guests. Starting with what, what have you been watching? What have you been streaming? What’s kept you entertained these days?
01:02:30 [Speaker Changed] It’s a good thing that your podcasts have a shelf life because some of the stuff that I watch has a shelf life too. I recently watched The Pelican Brief and thought, you know, that was when I really loved Julia Roberts.
01:02:47 [Speaker Changed] That’s a fun movie.
01:02:48 [Speaker Changed] It’s a fun movie. Renfield Nick k It’s about Count Dracula’s assistant. So it’s lighthearted, maybe more Halloween type showing. But, but it, it’s fun. I like the Bosch series. I I,
01:03:06 [Speaker Changed] I like my wife loves that, watches that. Yeah.
01:03:08 [Speaker Changed] I like old movies. James Bond is, it may be Popcorn, but I like Popcorn. Love one with that, especially with the Sean Connery. There, there are definitely some bonds that I like better and I’m not quite ready. But, you know, hey, this, this is the new millennium. And so if his personal pronouns become she her than I’m fine with that.
01:03:33 [Speaker Changed] Don’t think, I don’t think we’re gonna see that with Bond. That that seems to be a
01:03:36 [Speaker Changed] Oh yeah, there, there was a rumor that
01:03:39 [Speaker Changed] I’ll take the other side of that trade. Okay. All right. If, especially I, I’m,
01:03:42 [Speaker Changed] I’m, I’m cool with it.
01:03:44 [Speaker Changed] I just don’t see that as a, a bond sort of thing. Let’s talk about your mentors. Obviously you’ve talked about Peter Lynch.
01:03:51 [Speaker Changed] Peter Peter Lynch was amazing. Richard Sandor, what a brilliant and curious and creative person at Fidelity. Bruce Johnstone doesn’t get as much press as Peter, but for finding ways to make more than a dividend yield out of dividend paying stocks. He, he was fantastic. He, he’s closer to a value investor than Peter.
01:04:23 [Speaker Changed] The, those are some pretty good mentors. Let, let’s talk about books. What are some of your favorites and what are you reading right now?
01:04:29 [Speaker Changed] Thinking Fast and Thinking Slow is one of my favorites. It’s a door stop and so,
01:04:38 [Speaker Changed] But it’s definitely worth plowing
01:04:39 [Speaker Changed] Throughout. It’s definitely worth p plowing through and took me, I think nine months to get through in, in that same category. The new addition of securities analysis is
01:04:52 [Speaker Changed] Benjamin Graham. Yeah,
01:04:53 [Speaker Changed] Graham Doug. But as edited by Seth Klarman with some new contributions on like endowment investing, which I am curious about because I’m thinking that if Swensen of Yale was around today, he, he might disagree with some of the things that are being done in, in his name, but I wish he was around to, to say I’m wrong. But yeah, so I’m always reading like half a dozen books. A friend last night suggested that I go back to structure of scientific revolutions and I’m in search of a social history of Jerusalem and the, the country that we now call Israel. ’cause it was Palestine under the Britts before that, it was the Ottoman Empire. Before that, it was an Egyptian empire for three centuries. So sort of curious his background to the horrible situation in Israel and Post.
01:05:59 [Speaker Changed] Have, have you found a book on the topic? The closest?
01:06:01 [Speaker Changed] I I, I have not dropped that in, in a podcast, if you find one.
01:06:06 [Speaker Changed] I’m trying to remember. Was it the Lexus and the Olive Tree? Was that about the history of that
01:06:12 [Speaker Changed] Region? I have not, but that might be what I’m looking for.
01:06:14 [Speaker Changed] Tom Tom Friedman. If you go way back, I could be completely wrong about that. My, my recollection is not what it once was. So our final two questions. What sort of advice would you give to a recent college graduate interested in a career in investing or fund management?
01:06:30 [Speaker Changed] If you’re interested in fund management, you should know that it works on an apprentice system. You do not start as a fund manager, you start as an analyst. I think that’s a good thing because it helps you develop a circle of competence. Peter Lynch always stayed an analyst. Will Danoff has stayed an analyst and
01:06:51 [Speaker Changed] Even as their fund managers,
01:06:52 [Speaker Changed] Even as their fund managers. The second is the, it’s a demanding job. And I don’t think I’ve had two consecutive days in the last 30 something years where I didn’t check stock prices or check email to see what the market was there. There’ve been days like when my dad passed where yeah, I,
01:07:20 [Speaker Changed] You, you missed a day.
01:07:21 [Speaker Changed] I, I missed a day, but I didn’t miss two days and in retirement, I’m looking forward to that. But if you’re at the start and you’re not ready for that, choose another highly paid, glamorous profession
01:07:36 [Speaker Changed] Requires a heavy commitment. You say
01:07:38 [Speaker Changed] It requires a heavy commitment. And, and, and think about what you think you might do. Think about whether you’re a value or a growth investor and think about what are my behavioral bad habits that, that are gonna hold me back from success.
01:07:54 [Speaker Changed] And our final question, what do you know about the world of investing today? You wish you knew 40 or so years ago when you were first starting out.
01:08:03 [Speaker Changed] Anything can happen.
01:08:05 [Speaker Changed] I love that.
01:08:06 [Speaker Changed] Yeah. Anything can happen sometimes in Fanta, sometimes you’ll be like me and get lucky and meet Hansen Naturals, which became Monster Beverage at a beverage service at a tech conference. Then I think of who, other than Bill Gates predicted the CO pandemic. Nobody of note was saying we’re gonna have a Covid pandemic. And Bill Gates did not predict that following that you would have massive fiscal stimulus and Right.
01:08:44 [Speaker Changed] Followed by inflation
01:08:45 [Speaker Changed] Interest rates. Right. He did not predict that. So he, he was a hundred percent on getting the covid, but he didn’t get that. And anything can happen. Huh? Nobody, nobody predicted both of those. Or at least of note.
01:08:59 [Speaker Changed] Huh. Quite fascinating. Joel, thank you for being so generous with your time. We have been speaking with Joel Tillinghast, manager of the Fidelity Low Price Stock Fund. If you enjoy this conversation, check out any of the 500 previous interviews we’ve done over the past nine years. You can find those at Apple Podcasts, Spotify, YouTube, wherever you find your favorite podcasts. Sign up for my daily reading list@results.com. Follow me on Twitter at ritholtz. Follow all of the Bloomberg family of podcasts on Twitter at podcast, and check out our brand new podcast at the Money where each week we share a quick investing insight with an expert. It’s now on Apple Premium Podcast and it’s coming everywhere in January, 2024. I would be remiss if I did not thank the crack team that helps put these conversations together. My audio engineer is Kaylee Lapper. My producer is Anna Luke Atika Valon is our project manager. Sean Russo is my researcher. I’m Barry Alz. You’ve been listening to Masters in Business on Bloomberg Radio.

 

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