Citi Wealth Chief Investment Officer Kate Moore on Macro Investing

Barry speaks with Kate Moore, chief investment officer at Citi Wealth. They discuss Kate's extensive and diverse career which saw her as Head of Thematic Strategy and a portfolio manager for the Global Allocation Fund at BlackRock, and includes stops at JP Morgan, Bank of America Merrill Lynch, Moore Capital and Morgan Stanley in senior investment positions. She also holds a degree in political and social thought from the University of Virginia. 

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Episode Transcript

Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts Radio News. This week on the podcast,
yet another extra special guest. Wow, what a fascinating career
Kate Moore is having. Her background is everything from Morgan
Stanley to more Capital to Bank America, Merrill Lynch to

(00:25):
JP Morgan to Blackrock. She is now Chief Investment Officer
of City Bank's City Wealth, which runs you know, something
like a trillion dollars. The breadth and depth of her
experience makes her uniquely situated to be a chief investment officer.
She's had you know, just about every job on the

(00:47):
Byside and South Side, including portfolio manager, consultant to LBOs
and m and as. She's just done so much stuff.
It's so interesting that she really brings just this union
nique set of experiences to City. I thought this conversation
was really interesting, and I think you will also with

(01:07):
no further ado my conversation with cities Kate.

Speaker 2 (01:11):
Moore, Thanks so much, Barry. I'm psyched to be having
this conversation.

Speaker 1 (01:14):
Well overdue. We've been like ships in the night. I'm
so glad I finally got you here. Let's start a
little bit with your academic background, which is kind of
surprise me bachelor's and Political and Social Thought from the
University of Virginia, a master's in political economy from University
of Chicago. What was the original career plan?

Speaker 2 (01:38):
I mean, I think Barry underlying your question was like, Kate,
you sound kind of nerdy, but not as nerdy as
some of the folks who have like triple degrees in statistics.
But so, where did this political and social thought and
political economy stuff come from? So at University of Virginia.
This PST program is interdisciplinary, and that was really attractive.
You also applied during your sex an year, so you

(02:00):
have a chance, to, like sen it kind of sample
some different disciplines before you do it. And it's an
incredible seminar program, so you're working with some really amazing
professors throughout the way. I loved being able to take
classes in economics, in politics, in theory, and philosophy. I
also took a lot of studio art classes and stuff

(02:22):
as an undergrad, but I was able to combine all
of this stuff together. So I loved that. And then
I worked for a couple of years and I decided,
you know, hey, what I really am good at and
what I love is academics, and I want to be
a professor. This was my idea. I'm going to go
back to school and get my PhD and be a professor.
I had this whole vision for myself that involved, like,

(02:45):
you know, writing books. In this summer, I would be
doing cool research. I have a pack of golden retrievers,
and you know, I'd like rock climb on the side.
This is whole vision of my academic life. So I
applied to PhD programs and I went to University of
Chicago Political economy, so this intersection of policy and politics,
you know, international theory and you know economics. And I

(03:08):
found once i was there, honestly that many people in
my program are taking eight to ten years to get
through their PhD and becoming so specialized in very arcaane topics.
And it was like not appealing to me since I
had already worked and everything. So I left after my masters.
But I did my work on you know, this intersection

(03:29):
of economics and policy with a focus on emerging markets
and China. So I was ahead of my time.

Speaker 1 (03:34):
It's so interesting that you talk about how specialized some
people become. It's pretty clear, at least historically, many of
the greatest investors in history had a very broad set
of interests and a broad set of skills. Few of
them were an inch wide and a mile deep. They
weren't a mile wide and an inch deep, but they

(03:56):
were broad enough that they were able to pull in
things from other fields that applied to investing. Did you
find something similar when you're studying political science and economics
to how did that shape your investing philosophy?

Speaker 2 (04:09):
Absolutely? I think you know, the best macro investors are
able to pull in, you know, different inputs from policy
and politics. It's also really helpful, I think, to understand
human behavior. So if you're taking an interdisciplinary approach to
your academics and your investing life, I think you're well
set up. So in this I mean I took a

(04:30):
bunch of courses on game theory and stuff as in
my graduate work, and understanding payoffs and incentives, doing some
work on behavioral economics. All of that combines really well.
And my experience too was that the best investors that
I worked for over the course of my career also
took in all of these different inputs. And we're constantly

(04:51):
trying to solve a puzzle, right It wasn't just, you know,
a two variable puzzle. It was a multi variable puzzle.
Understanding that every day you wake up and you have
to do it a new.

Speaker 1 (05:01):
Yeah, no doubt about it. It's so funny you mentioned incentives.
Whenever I see a situation that I find completely perplexing
and can figure it out, what usually leads to the
answer is what are the incentives that led to this situation?
And once you get work backwards from that. So let's
talk a little bit about the strategy and consulting side

(05:23):
you begin your career Mitchell Madison and Silver Oak Partners.
Is that right? Those shops tell us a little bit
about what you did for them and the sort of
work and problem solving you did for those firms.

Speaker 2 (05:34):
Okay, so both Mitchell Madison Silver Oak no longer exists.
For the record, Mitchell Madison was formed out of a
spinoff of a bunch of McKinsey Partners, and it was
taking kind of a new way or new approach frankly
to some of the similar types of clients as McKenzie had,
But it had this very entrepreneurial kind of environment because

(05:57):
it was a breakoff, but it was still really large
and global I did bunch of like strategy consulting projects
things you would expect, including some cool stuff in the
media space, just at the time where the Internet was
becoming popular and some of these websites like Amazon that
we take for granted were getting launched. So I learned
a lot about media and e commerce in those early

(06:20):
stages at Mitchell Madison. But Mitchell Madison, for those of
you who may recognize it, went through a merger with
us web CCS, which was a technology consulting firm Gaull.
The combined Energy got rebranded as March first, which was
the date that the deal was inked. Kind Of a
weird marketing decision on that part, but you know, the

(06:44):
business started to change and a number of the partners
like broke off and started Silver Oak, which focused on
leverage biot firms. Now here's what was really cool. I
wasn't doing work for let's say, the LBO and master Form,
but rather like a collection of the companies in the
portfolio at the same time trying to find synergies. There
were things that are traditional around sourcing, but things that

(07:05):
were maybe less traditional around finding strategic combinations. And I
had a great opportunity to get exposed to a lot
of different industries, you know, from traditional manufacturers to telecom companies,
financial services, and everything in between. And I have to say, Barry,
that experience, you know, working for these kind of small

(07:25):
and mid sized LBO owned companies really set me up
well for understanding and investing in a broad array of equities.

Speaker 1 (07:34):
So let's talk about the investing side. Your next stop
is Morgan Stanley, obviously a legendary and giant cell side firm.
Tell us your about your experiences at Morgan Stanley.

Speaker 2 (07:46):
Yeah, so how I got to Morgan Stanley Investment Management
is perhaps kind of interesting. So we were just talking
about my academic background and I was doing this you know,
political economy degree at the University of Chicago, and I
had had this sort of moment where I realized I
wasn't going to pursue the PhD. So I, you know,
made an appointment with my advisor and I said, you know,

(08:06):
Professor Herrigel, I'm not sure I want to do the PhD.
And he starts laughing. And we're sitting in his office.
He said, Kate, I've been waiting for this conversation for
six months. Wow, I said, oh, my gosh, like, do
you know, do you think I'm screwing up here? He said, no,
you're top of the class. What I do recognize, though,
is because you've worked before for a number of years
before coming into a PhD program, you have a different

(08:28):
skill set and you're approaching this differently. He's like, I
think you can finish your PhD later and you know,
do the masters and whatever. So I had this in
my mind, and so I started to put out a
couple of feelers, but I wasn't really committed to what
I would do post you know, getting my master's.

Speaker 1 (08:43):
Great, and this is out of Chicago.

Speaker 2 (08:45):
It's a Chicago. And then a strange thing happened. I
was back on the East Coast visiting my parents, and
I got a call from the career services people in
the University of Chicago. I was still, you know, enrolled
in school there, just getting my thesis graded, and uh,
they said, hey, we got an incoming call from the
chief investment officer of Morgan Stanley Investment Management. This guy's

(09:06):
name is Joe Mcalindon. Joe is looking to add to
his macro investing team on the by side, and specifically
is looking for candidates that are not MBAs. He wanted
people who had this understanding of politics and economics and
everything in between. And I said, hey, guys, I'm not
interested in going back into that form of finance. I'm

(09:28):
going to do something different. They said, do us this
favor and go on the interview.

Speaker 1 (09:33):
Just just meet with them.

Speaker 2 (09:35):
Yeah, like, let's put up a good candidate. You kind
of meet the criteria. If it's not your bag, it's
not your bag. And I went and met this team
at Morgan Stanley Investment Management of people who had economics
and history and philosophy degrees but were macro investors. And
I was like, okay, a these people are cool and
b I love how they're solving the problems. Two weeks later,
I accepted an offer I fell into investing Barry.

Speaker 1 (09:57):
Wow, that's really fascinating. And You've had a breath of
experiences beyond Morgan Stanley. You were a more capital a
well regarded hedge fund, Bank America, Merrill Lynch, JP Morgan,
You spent a lot of time at Blackrock. Tell us
what was fun? What did you learn at these other shops.

Speaker 2 (10:16):
So I've had a really cool career in the sense
that I've done a variety of different byside more traditional
mutual funds. But even when I was at EMSIM, we
launched the first internal hedge fund. This is before Morgan
Stanley bought front Point, and I worked at a big
macro hedge fund through the financial crisis. As you mentioned,
at more Capital, that was an adventure. I did a

(10:38):
few years on the cell side at BAA. Merrill as
global equity and emerging market strategist, and then I went
to JP Morgan managed the discretionary multi asset portfolios for
the private bank. Then I spent a long time at Blackrock,
most of it as a portfolio manager for global allocation,
kind of the flagship multi asset fund. I have to say,
I love the fact that I've experienced all sides of

(11:01):
the investing business, and it makes me understand what makes
investors tick a lot more than people who just stayed
in their lane. Like I get the retail side, the
institutional side, but fast money does what traders do, what
fundamental investors do, and I interpret all this sort of
sentiment and flow data as part of my process. As
a result of having this exposure to different parts of

(11:23):
the investment management business.

Speaker 1 (11:24):
Huh sounds really really interesting. So from all of these
different backgrounds, what finally brought you to city?

Speaker 2 (11:33):
Yeah? So I was at a bit of an interesting
inflection point, I would say in my career. Here I am.
I've loved being at Blackrock. I really enjoyed the work,
but I also recognized I was kind of ready to
take the next big step and I could continue to
be a portfolio manager at Blackrock and it's an amazing firm,

(11:55):
but I was kind of wondering what it would sort
of what I should do to take this next step.
And I looked around and said, where are the areas
of growth in the business? And traditional mutual funds, we
know are not a huge growth area for the business,
even if your performance is exceptional, you know, keeping your
assets can be a challenge. And I saw wealth as

(12:17):
an area of consistent growth. I think most people would
agree on that front for sure, and you know there's
some growth and alternatives, but it felt like just a
different flavor of the stuff I was doing. So I
was sort of intrigued by this idea of working in wealth,
especially because I've done a lot of asset allocation and
the multi asset discipline I come from, and I love

(12:39):
the challenge of helping people grow their money over time.
But I didn't have like a great idea in my
head of what I was going to do. This was
just sort of something that was a seed that was
planted and not yet out of the soil, if it were.
And in August of twenty twenty four, Andy c I'd

(13:00):
known in the business for like fifteen years or so,
never worked together directly, but you know, we'd met a
number of times, been on panels together, had good cordial relationship.
He called me and said, Kate, I have an idea
for you. And he had been at City for a
year then, as you know, CEO of Wealth, and I thought, okay,

(13:20):
this is interesting, but I need to turn it over
in my head a little bit. Is this going to
be the right pivot? And ultimately I got so excited
Barry because City was already in this massive transformation. Andy
is a really inspirational leader. I'm not just saying that
because he's my boss, but I think most people on
the street will agree. He has a vision he executes

(13:42):
and this was a new challenge for me. I'd be
flexing different muscles and I thought to myself, for this
next big push, in my career. I want to be
someplace where I can be entrepreneurial, where I'm going to
be supported by the overall platform, where you know, I
can continue to grow out my experience as an investor.
And so ultimately I made the tough decision to leave

(14:04):
a firm that I loved for a new and exciting challenge.

Speaker 1 (14:07):
Safe to say that this shift in career was the
biggest inflection point.

Speaker 2 (14:14):
It feels like it's the biggest inflection point in my career,
but it also feels cumulative. I don't know if that
makes sense, but perfect sense.

Speaker 1 (14:21):
I understand exactly what you're saying. All of these different
elements come together almost like a perfect storm, and suddenly
now we're off to the whole other level.

Speaker 2 (14:32):
Yeah, I've been building up these experiences over the course
of my career and kind of setting me up to
take on this new challenge. It does feel the largest,
in part because I've been so concentrated on being an
investor over the course of my career. And this is
a combination of strategy and business leadership and investing, and so,
as I said, I'm flexing a bunch of different muscles.

Speaker 1 (14:53):
So let's put some numbers, some flesh on the bone.
So the groups you lead, the wealth group at city,
what's the assets they're investing? And typically who were the clients?
Are they mom and pop investors? Are they institutional? A
little of both.

Speaker 2 (15:06):
Yeah, So I'll give you some numbers as an end
of twenty twenty four because everything else, of course, is.

Speaker 1 (15:12):
In't flex and we know that works.

Speaker 2 (15:16):
Yeah, I'm in the middle of studying for series sixty five.
What will be like my thirty ninth millionth of.

Speaker 1 (15:21):
Yeah, but that one you could do in your sleep.
It's not like the seven which is or the options? Yeah,
I forgot which one was the options? That was a
giant Like, wait, I need to learn about Gamma one totally.

Speaker 2 (15:31):
I've taken the options one too.

Speaker 1 (15:33):
What I will tell you is twenty years ago.

Speaker 2 (15:34):
The one thing that's a little bit annoying on the
economic section of the series sixty five is that you know,
I don't always agree.

Speaker 1 (15:40):
I was gonna say the answers are wrong. Once you
have passed that, the test is really easy.

Speaker 2 (15:45):
For example, was like, you know, are payrolls of leading
lagging or coincident indicator?

Speaker 1 (15:50):
Barry, it's lagging butt lagging, Couse it's two months.

Speaker 2 (15:54):
Old, totally, and like.

Speaker 1 (15:59):
Totally, yeah, it's it's just there. I remember having in
this is, by the way, thirty something years ago, twenty
something years ago, I remember calling up and yelling at
somebody like, just so you know, I didn't get any
of these answers wrong, and the three you marked wrong,
you're wrong. And let me explain why totally. How can payrolls,

(16:19):
which are a model that uses one to three month
old data, be anything other than a legging.

Speaker 2 (16:26):
And that get totally restated every two years and then.

Speaker 1 (16:30):
But the subsequent monthly revisions, I mean, by the time
you get to the actual number, it's like half a decade.
All it's nonsense.

Speaker 2 (16:39):
And yet of course the market moves a lot on
payrolls days, and we have to pretend that matters in
the moment.

Speaker 1 (16:43):
But you know, we have to pretend.

Speaker 2 (16:45):
Yeah, we have to pretend. Okay, where were we going before?

Speaker 1 (16:48):
I have no idea, But I just love the fact
that you're studying for the sixty five I know, studying
in air quotes.

Speaker 2 (16:53):
Studying in air quotes, I get to whizz through the
equity and hedge fund and everything sort of sections of it.
But I have to memorize their answer. Second, if it was.

Speaker 1 (17:01):
An embarrassing to fail, I would say, you can wing
it and you'll do just fine. I think seventy is
a passing. You'll get like eighty, just off the top
of your head. But no one wants to go on
and fail, because.

Speaker 2 (17:13):
No, very like I've made my career off of being
a perfectionist, you know, in my analysis, and you know
I do not accept a barely passing grade. I do
not expect accept you know, index like performance. I'm always
seeking alpha, and I'm doing my best to do that

(17:34):
in the most risk adjusted way.

Speaker 1 (17:35):
Even in an examination that's past foul. And we know
objectively logically anything over a seventy one is wasted effort.

Speaker 2 (17:45):
But but I know exactly where you're coming at night.
I can't sleep at night if it's just good enough.
And that's also how I want to approach things for
my clients. Okay, we're talking about city here, and so
city has about a trillion dollar city wealth has a
trillion dollars in assets, like six hundred billion of that
is in investments, and there's other parts and deposits and

(18:07):
loans and things like that. And there are three main segments. Right,
there's a traditional kind of private bank ultra high net
worth service, there's City Gold, which is mass affluent, and
then there is a Wealth at Work which targets like
very specific segments like the law firm, population, et cetera.

Speaker 1 (18:25):
It makes a lot, makes a ton of sense.

Speaker 2 (18:27):
What I will say is City as a bank has
so many global customers and clients and people with long
standing relationships that haven't been tapped. You know, there's there
is an enormous amount of potential to grow the wealth
business just from existing City customers. And I think, as
you probably know, half of our business is outside of

(18:49):
the US, and it is it is it.

Speaker 1 (18:50):
Is it fifty, It's fully half. Yeah, that's amazing.

Speaker 2 (18:53):
Yeah. And the Asia business for us, and particularly our
legacy in China and surrounding areas is incredibly strong. And
that was something that was also very attractive to me,
to be honest with you, as someone who has been
an emerging markets investor at times and a student of China.
You know, the ability to get really deep into the
opportunity to grow wealth in multiple different areas was exciting.

Speaker 1 (19:16):
Huh, really really fascinating. So before we talk about City,
let's start a little bit with your time at Blackrock.
You join them almost a decade ago in twenty sixteen,
your chief Equity strategist tell us a little bit about
your initial role and how that played off of what
you had been doing previously.

Speaker 2 (19:36):
Yeah. So I joined Blackrock to be part of the
black Rock Investment Institute, which is kind of the internal
macro think tank. And the Institute has a couple of
different functions. There is a segment that is client facing,
but there's also a big function around bringing together the
investors across all the platforms in black Rock and convening

(19:57):
for you know, forums and symposiums around specific topics. And
although I was called chief Equity Strategist, I actually sat
on the equity platform with all the equity pms and
my job was to be basically embedded in all of
the equity portfolios as the macro. My team was the
macro resource for them and it was great, and you know,

(20:20):
I always knew that I would do that. For a
little while, they basically said can you do this and
helped to sort of change some of the equity culture
into having some macro inputs and then you can kind
of figure out where you want to sit, and ultimately,
you know, moving back to a multi asset fund made
the most sense for me because here's my joke, Barry, Like,
I think of myself as being a macro equity investor,

(20:40):
you know, combining macro stuff into equities. But the macro
people will say I'm equity, and the equity people will
say I'm macro. So a multi asset fund is a
good home for me.

Speaker 1 (20:50):
So twenty nineteen, you start working with the Thematic Strategy
and Portfolio Manager group. Yeah, tell us a little bit
about thematics that's become sort of an alternative to beta
and a lot of shops, Blackrock especially.

Speaker 2 (21:06):
Yeah. Well, let me say this actually started my career,
you know, at Morgan Stanley Investment Management, and the hedge
fund that my team launched at MSIM was a global
thematic hedge fund. This is way back, like over twenty
three years ago at this point, so we were ahead
of our times, right. So I've actually had this thematic approach, frankly,

(21:30):
in my investment approach throughout my entire career, and it's
just now becoming really popular to call everything at the matic.
So let me say this. I think there are three
ways at this time to approach the matics three different flavors,
if you will. The first is this kind of like
long duration slow bleed thematic, like, eventually we are going

(21:53):
to have reduce the amount of plastics in all of
our goods, and so we want to lean into companies
that are investing in that transition.

Speaker 1 (22:01):
You don't think microplastics accumulating in your lungs and bloodstream
is a bad thing.

Speaker 2 (22:06):
It is definitely a bad thing. I wonder if I'm
a little bit cooked when it comes to that already.
But this is kind of a set it and forget
its strategy, right where you identify companies that are making
these changes or facilitating the changes, and you buy a
basket of them, and you or an ETF then invest them,
and then you just set it. The second type of

(22:26):
thematics is what I would call like discontinuous change catalysts
driven thematics, And these are more tactical, like you know,
it could be a couple quarters, it could be up
to a year or two or even longer. But this
is kind of a more actively managed way to approach thematics,
right where so you identify the idea, you identify the catalysts,

(22:47):
you identify the players, and actually there's more of a
rotation in the names and the sizing of that expression
in the thematic. That's really exciting. It's also hard because
sometimes you look around and say, I don't see a
ton of catalysts here. There's nothing really jumping out.

Speaker 1 (23:02):
You got to get the theme right, the asset class right,
and the timing right.

Speaker 2 (23:05):
And the sizing you know, within that right. And so
that's not like by forty companies that are thinking about microplastics.
It is like four to eight names, a more concentrated
expression around a theme. You're taking some idiosyncratic risk and
you are continuing to invest around that. And then the
third type of thematic investing, I would say, is really

(23:27):
business cycle thematic. And a lot of people talk about this,
you know, today there's a you know, where are we
in the cycle? What are the companies, sectors or qualities
that perform well in that part of the cycle. I'm
thematically investing in inflation beneficiaries, et cetera. And I've always
liked to do those two kind of number two and
number three together, which is the catalyst driven and the

(23:51):
business cycle, and I think that together makes a nice portfolio.

Speaker 1 (23:54):
You know, I recall back in the day when we
were talking about sort of thematic cycle in business sycle investing,
it was used to go by the name sector rotation.

Speaker 2 (24:05):
Yeah.

Speaker 1 (24:06):
I don't know if anybody still does that sort of
stuff anymore, it seems.

Speaker 2 (24:10):
Or the investment clock. Do you remember the investment the clock? Sure,
everyone had an investment clock, which was like this two
dimensional representation of which sectors or which maybe style factors.
Once that became part of our lexicon, performed well in
different macro environment.

Speaker 1 (24:27):
It was always sort of a sign wave and here's
where we are and the sector here on the sector there. Yeah,
if it only were that easy.

Speaker 2 (24:34):
Yeah, you know, I won't call out names, but I
know some folks that like to chart where we are,
which quadrant we're in, you know, on a regular basis,
and instead of this nice round circle or an oval,
you know, it's very sort of spastic point to point
to point to point because the macro data is moving

(24:54):
so quickly and the positioning data, which also indicates you know,
investor risk appetite change so rapidly that we jump from
one quadrant to the other, sometimes month to month.

Speaker 1 (25:05):
So you mentioned removing plastic from the food supply or wherever.
What other trends have you looked at? Deglobalization, decarbonization, AI,
what gets you excited these days?

Speaker 2 (25:18):
Oh wait, you just said a hot button word for me,
which is deglobalization. Uh huh, And let me just say,
I don't believe in deglobalization.

Speaker 1 (25:24):
I'm with you, but I want to hear your reasons.

Speaker 2 (25:26):
Why. Yeah, I don't believe in deglobalization because even if,
let's say, hypothetically, the US and China continue to separate,
And by hypothetical, I was making a joke for all
the listeners. Of course, the US and China are going
to continue to separate. That doesn't mean the relationships between
each of these countries and other trading partners or allies

(25:46):
is not going to deepen. Maybe we call it reglobalization
instead of deglobalization, but a shifting of some other relationships.
But I have spent a lot of my time, like
a lot of folks, frankly, looking at themes in and
around technology. I mentioned the microplastics, It's actually not a
theme I've invested in the only couple companies I've really
seen who are here towards that are private and so

(26:09):
it's harder to access. But around technology, you know, a
few areas I've been pretty excited about for a good
considerable amount of time has been you know, have been
in software, and one of those areas is cybersecurity. This
was a major theme for me in the portfolio at
Global Allocation at black Rock, and basically every time I

(26:30):
was thinking that I want to either shift out of
the theme or reduce it, there was another event on
the horizon or something happening that led to increased spend
in this space. I've now come to believe that investment
in security software is existential for companies right and while
there's room to rotate you know, names, based on capabilities,

(26:51):
et cetera, I believe it's a core part of a portfolio.

Speaker 1 (26:55):
Long standing secular trend that's going to be ongoing.

Speaker 2 (26:57):
Absolutely. But I first put on this investment in January
of twenty twenty, okay, when I was at Blackrock, and
that was before the pandemic, and it was basically based
on geopolitical risk, and of course the pandemic that increased
the risk from all this data for many different companies.
So we saw a big uptick and span as they said,

(27:17):
it's been a rolling series of catalysts over the last
five and a half years and makes it more of
a secular theme than a shorter term catalyst driven theme.

Speaker 1 (27:25):
So let's drill down a little bit to your core
investment philosophy. You've mentioned thematics, you've mentioned pursuing alpha tell us.
What is Kate Moore's investment philosophy.

Speaker 2 (27:37):
Yeah, I think it's really important to have three pillars
to your decision making and one pillar that's off to
the side that's controversial. So I think you have to
start with a macro view. I think you need to
understand politics, policy, the major economic data. You need to
understand government behaviors because so much of that dictates the

(27:59):
environment for different industries, and some people just sort of
brush it off. By the way, I love my equity
colleagues and friends, but nothing makes the hair on the
back of my neck go up more and kind of
me bristle than to hear I don't pay attention to
macro because I just pick good companies. Well good, you'll
be out of business. You don't have a choice in
this environment. You can't set it and forget it for

(28:20):
the next three years. And not focus on what's happening
in the business cycle and policy and how that may
impact the interest and desire to own your asset class.
So I think macro is critical and a good starting point.
I also like to get into the fundamentals of things,
right like where are the fundamental thematically like who's growing,

(28:41):
what technology has come out? Where do we think about,
you know, changes in consumer behavior, changes in supply chains,
and where are the real kind of fundamental opportunities. What
are the companies doing well. I think that's not controversial either.
But the third stage, and it's really important to me.
I mean it's grown in importance over the course of
my career is the positioning, sentiment and technicals. And this

(29:04):
has become really, really, really important for defining your entry
and exit points, even if you are a long term investor,
because markets move really quickly and you need to be
really thoughtful about how you enter an exit. So I
pay attention to flows, hedge fund mutual fund, positioning, introduction

(29:24):
of new instruments, you know, a million things we kind
of look at at our dashboard, and then this is
the one I was saying, the pillar off to the side.
Valuation is a nice to know, but it is not
a driving force of my investment process. And people might
kind of cringe when I say that.

Speaker 1 (29:40):
You know, let me jump in here, and I won't
explore that because I don't disagree with any of that.
People kind of forget that bull markets that run ten
twenty years. Valuations tend to start on the lower end
and they tend to end on the higher ends. But
if you decide, oh, we're above the average valuation of

(30:02):
the past cycle, you're missing a lot upside, aren't.

Speaker 2 (30:05):
You a ton of upside? Well, there's also this assumption
that underpins this view on valuations that there is some
sort of mean reversion right tomorrow.

Speaker 1 (30:14):
We're gonna snap back. Look at the CAPE as my
favorite example. Yeah, the Schiller cyclically adjusted PE ratio. You
would have been out like since nineteen ninety one hundred.
You followed that. It's it's kind of wild.

Speaker 2 (30:26):
Yeah, for sure, you would absolutely have not taken advantage
of an incredible run in equities. Like, just to make
this point and underscore it, I say, evaluation is a
starting point for your investment decision, what you're screening for
and entry exit points. You would never own US Tech
and you would be long Russia, you know, and anyone

(30:47):
who wants to take that trade, God bless, but you'll
be out of business.

Speaker 1 (30:50):
Right, Russia's been cheap. But some stocks are cheap for
a reason.

Speaker 2 (30:54):
They are European banks cheap for reason, and we know
that kind of over the medium term, this I'll define
as kind of three years. You know, stocks can stay
quote unquote expensive, or the way I like to say it,
be valued at a higher end of the market range
because they are superior businesses, and they can stay at

(31:16):
those levels for multiple years, sometimes much longer and continue
to re rate, and stuff can look like it's a
discount to the rest of the market, but be structurally
impaired and therefore deserve the discount. The other problem I
have when people do these kind of like mean reversion,
you know, valuation trades, as they say, like, oh, we
need to go back to some historical period where S

(31:39):
and P was at fourteen times why. I mean, the
market composition from a sector perspective completely different, the balance
sheets of these companies completely different, the cash profiles and
free cash generation of these companies completely different. The regulatory environment,
the politics, the behavior, the market technicals. I can go
on and on and on. It is literally the laziest

(32:01):
piece of analysis I have ever seen.

Speaker 1 (32:04):
When you look at last century companies like US Steel
or even General Motors, you know, the expression was men
in material they need tons of capital, giant factories. Today,
two people with a laptop and Amazon web servers, you
could do as much business as any startup from any

(32:26):
decade previously.

Speaker 2 (32:27):
Totally. I mean. Another example I like to use, like
near and dear to our hearts in terms of the
investment landscape, is you know, how many analysts do I
really need to cover all different sorts of sectors, you know,
And there was a time where I needed everyone to
be an expert on a different industry or a different sector,
and to be very siloed and deeply specialized. But right

(32:48):
now I can be in a meeting, sitting across the
table from a CEO or CFO, and they may be
talking about a business that I only know fifty percent about.
Right and in real time, I can use my AI tools.
I can pull up what their competitors have said in
recent earnings calls or you know, in the social media.
I can look up terminology, I can pull up data.

(33:11):
I am one hundred times more informed. I don't need
to be brief for three hours from an analyst before
I walk into that meeting. You know, just by understanding
the types of questions to ask and having this data
at my fingertips, I'm a faster and better investor.

Speaker 1 (33:26):
So here's the challenge. And we could talk about AI
as a theme and a little bit, but the challenge
is you've gone through that whole process over the past
ten twenty years, where you've you know, done the reps,
put in the heavy lifting. Yeah, how is the next
generation going to become the Kate Moore in twenty five

(33:47):
years if they don't get to go through that process?
And AI seems to the phrase I heard recently was
removing the bottom rung on the career ladder? Is this
Is this a genuine concern?

Speaker 2 (33:59):
It is somhat of a concern, And I think it's
more of a concern for kids who are going through
school and are incredibly specialized about what they're studying, and
this is kind of a flag. Frankly, I would say
to people, you don't want to just take courses in
one discipline your job as an undergrad. And I would
also argue, even in grad school, even in an MBA

(34:21):
program is to learn how to think and learn how
to ask questions, to get exposed to as many different
disciplines as possible. So I tell like young folks like
you got to study philosophy, you should also study things
like art history because there's context behind it. You should
study things like you know, hard sciences because you know

(34:41):
it gives you a discipline in terms of the way
that you're thinking. You should take a music theory class.
I mean, do all of this. You want your brain
to be flexible and pliant. You want to be able
to approach the problem by using these tools in unique ways.
And people who are only point and shoot, only have
one specific the way of approaching an investment problem are

(35:03):
often wrong.

Speaker 1 (35:04):
Huh really really interesting. So you're brought to city specifically
to focus on the wealth business there, what's your strategy
for breathing life into that space?

Speaker 2 (35:18):
So I think there are a couple of things. We
have a lot of amazing raw material at city in
terms of human capital and of course our clients. But
thinking about how to invest in a different way than
perhaps my other wealth competitors invest is one of the
greatest challenges and opportunities and here's what I will say.

(35:39):
You know, I want to examine the way that we're
approaching discretionary multi asset class act allocation products. Right, just
to sort of set it and forget it, here's your stocks, bonds, cash.
I'm not sure is going to be the right path
moving forward. I mean, we want to think about what

(35:59):
is the right combination of both asset class and factor
exposures for clients and different risk profiles, and how do
we implement in an interesting way in that space. So
it's not just like, hey, we have a you know,
large cap stock fund and we have a you know,
mid duration bond fund, and this is what we're kind

(36:22):
of combining together. This is really about, you know, what
are the best expressions of each of those things. How
much of it should be beta, how much of it
should be alpha seeking, whether it's you know, sector specific
or thematic, what is the best implementation and alternatives, And
particularly as we get more liquid alternatives available, you know,
that sort of diversification in a portfolio is going to

(36:45):
be kind of democratized, and we're going to see more
and more of our clients across risk spectrum be able
to access that.

Speaker 1 (36:50):
So let's talk about the opportunities in the wealth business.
What's driving the growth here? Is it just the amount
of capital that's slash around? How big are demographics, the
move towards alternatives. There's so many different cross currents going
on that make that space so attractive. What do you
see as the key drivers?

Speaker 2 (37:12):
Yeah, there's a bunch of different drivers, Berry, I'd say,
you know, first of all, there's been an enormous amount
of wealth created. We know over the last you know,
ten years. It's longer than that, but let's just say
in the last.

Speaker 1 (37:23):
Ten years post financial crisis, post.

Speaker 2 (37:25):
Financial Crist run absolutely and big concentrations of wealth. And frankly,
a lot of very wealthy families have held a lot
of these this wealth in cash, you know, or in
cash equivalents, or have reinvested in their business. I think
there's now an understanding that they want to diversify, so
the investment opportunity sat for all this wealth creation is huge.

(37:48):
I'd say there's another trend, and I'm sure people have
talked about this before with you, which is like the
transfer of wealth that's going to happen from the boomer
generation to my generation and then ultimately to our you know,
younger generation, and the values and the interests on the
investing side change from generation to generation. You know, the
types of risk clients want to take, the types of

(38:12):
like bespoke opportunities and private stuff that they want to do.
Maybe it's around you know, environmental social governance stuff. Maybe
it's around specific geographies, mission aligned. I mean, I think
that the flavor of investing is changing, which also makes
us super exciting. And then finally I would say, can
you know the breadth of investment instruments that are available

(38:34):
to individual investors and into wealthy families is actually really
exciting because you can do cooler things than just a
sixty forty portfolio, which was kind of the way wealth
businesses ran in the past.

Speaker 1 (38:46):
So you had mentioned the role of behavioral finance in
some of your education and background. You were at University
of Chicago, which has become a hotbed of behavioral finance.
Stick sailor yeahs and recipient into of the Nobel tell us,
how you think about behavioral economics in your day job?
How do you help clients steer through some of this

(39:10):
year is a perfect example. A lot of volatility, a
lot of storm and drang and here we are above
where we were before Liberation Day? How do you guide
people through that?

Speaker 2 (39:22):
Yeah, this is such a tough one, Barry, because you know,
this is where understanding kind of the positioning, the technicals
and the biases really differentiate a good investor from maybe
a less good investor. One of the things I try
and pay close attention to are all of these sentiment indicators,
and like you know, the dashboard for sentiment indicators continues

(39:42):
to change. Right. Sometimes we look at, you know, historic filings,
but we know that mutual funds and hedge funds change
their positions really quickly. Sometimes we look at the volume
and the flow. I like to pay attention to more
kind of third party and you know, coincident, like what's
being discussed and different social media or on different message

(40:07):
boards or whatever, and to just try and understand what's
capturing the attention and energy from different client segments. But
I also pay really close attention to, frankly, how the
market responds to different types of news, and that gives
you a good sounse. You gotta have your finger on
that pulse, you know. I learned this from someone named

(40:30):
Ben Hunt, who you may be familiar with you Asolon theory.
So I learned this from Ben years ago, but he said,
you know, number one, the first order to getting things
right is like having a good forecast.

Speaker 1 (40:42):
Right.

Speaker 2 (40:42):
Let's just say you have a forecast for stock earnings.
The second order is to understand what consensus thinks, right
and comparing your number against that. But to get it
really right in the market, you need to understand what
consensus thinks.

Speaker 1 (40:57):
Consensus thinks it's a Cain's beauty contest.

Speaker 2 (41:02):
Absolutely, but kind of instilling that in my team is
really important because it's like, great, I'm so glad you
think we're going to have two hundred and sixty three
dollars of S and B earnings this year. If consensus
actually thinks it's to sixty seven, we should know that too.
But if the printed number is to sixty seven, but

(41:22):
everyone's just dragging their feet on cutting the numbers and
they're actually a two fifty five, that makes a difference
in terms of how people take risk and respond to
different news. And so, you know, kind of putting all
these pieces together, doing the work understanding what like written
or published consensus is, and then getting all these kind
of sentiment inputs to really evaluate what is the whisper

(41:44):
a real number versus what's published.

Speaker 1 (41:47):
So let me push back slightly on sentiment because I
want to get your take on this. So my experience
generally has been most day to day sentiment is kind
of noisy, and it really matters when it hits an extreme.
Least that's a trader's perspective. But the thing I really
want to push back on has been the University of

(42:07):
Michigan consumer sentiment data, which over the past couple of years,
it's been worse in the financial crisis, worse than the
beginning of the pandemic, worse than the two thousand and
one September eleventh attacks or the dot com implosion, worse
than the eighty seven crash. How do we figure out

(42:28):
what's going on in sentiment where it seems to have
just detached from consumer behavior. Hey, everything is terrible, but
we're going out and spend it totally.

Speaker 2 (42:38):
We're still going out to restaurants even though we think
the world is ending. Yeah, you're absolutely right. So any
single sentiment indicator or survey needs to be discounted, right,
We need to combine all these things and look at
it kind of on a moving average of a number
of prints. Another one that kind of flagged for me
was the Conference board confidence, which hit the lowest levels
from like September of twenty eleven last month. And that

(43:01):
was a crazy number, right because September of twenty eleven,
we had just gone through this debt fiasco, we were
going to Operation Twist.

Speaker 1 (43:10):
You know, there was like post flash crash, it had
gotten even crazy.

Speaker 2 (43:14):
Absolutely, so you know that that seemed really disconnected from reality.
So sometimes you have to discount all of these things,
but your point is well taken. There has been a
generalized sentiment deterioration. Another one I look at is that
what is now the Richmond FED but historically had been
the Duke Fuqua CFO Survey. And you've seen over the

(43:34):
past couple of years this massive decoupling between expectations for
own company over the next six months, where the CFOs
are going like things are pretty good actually, and expectations
for the economy where they're like economies in trouble.

Speaker 1 (43:46):
That's so funny you bring that up, because well, first
I had Tom Barkin and not too long ago. But
second we see that everywhere. My congressman's okay, but the
rest of Congress thinks my financial circumstances seemed to be
pretty good, but we think the economy is going lower.
Like that exact sort of sentiment split, What do you

(44:07):
imagine as driving people to think, Hey, things aren't that
bad for me, but everywhere else it stinks.

Speaker 2 (44:14):
Yeah, I this is tough one, but I honestly think
the news flow, how media portrays recent events, the echo
chamber on social media, the fact that people are not
getting a broad based view. Do you see all these
you know, traditional news programs now that are trying to
dedicate one night a week or whatever the heck it

(44:34):
is to the good news, right, true?

Speaker 1 (44:37):
That's yeah, It's like, that's funny.

Speaker 2 (44:39):
There's a there's a local channel I've watched that will
do one good story after they've just reported a bunch
of like murders and you know, everything for the previous
twenty five minutes. The last story is like they're trying
to leave you on a positive note. I'm thinking, okay,
but the skew is definitely really negative.

Speaker 1 (44:55):
If it bleeds, it leads, that's always been the news.

Speaker 2 (44:58):
Then yeah, really, but now people are consuming more of that.

Speaker 1 (45:01):
I think you're definitely onto something.

Speaker 2 (45:04):
But so we do maybe need to za score the
sentiment right now, let's just put it that way. We
have to adjust for this declining overall sentiment. But when
I'm talking about sentiment, I also like I'm trying to
infer sentiment from price reactions to different news, right, And
that might be a better gauge in some of these
surveys where people can say, you know, the sky is falling,
but then just book a carnival cruise, right, like you

(45:25):
know the and you know, if a stock puts up
pretty good numbers in terms of earnings but doesn't beat
by huge margin and follows fifteen percent, you can tell
that like people are at the edge, right, And so
you know, you have to kind of correct your own
equity exposure for that type of behavior. But your point's
well taken. On you mish and on you know, all

(45:48):
of these other surveys. There's been a generalized decline. We
have to correct for that.

Speaker 1 (45:52):
Huh. Really interesting. So let's talk a little bit about
today's market environment. Twenty twenty five has been kind of
a volatile, wacky year. What's your current macro view on
the global economy, What's going on in markets? The FED,
yield inflation, tariffs, it all seems to be kind of

(46:13):
tumbling together at once.

Speaker 2 (46:15):
Yeah, I have to say twenty twenty five has been
a tough year for anyone, and it's also been a
tough year candidly for me to start a new job.
I like to say that every time I start a
new job there's some big volatility event. This one might
be the biggest and frankly totally self induced as opposed
to some kind of exogenous or external shock. So it's

(46:37):
been really difficult to navigate through this market. And yet,
you know, there are some things we can still anchor to,
paying attention to what companies are saying about their businesses,
this kind of sort of sentiment stuff we were talking
about a moment ago. Looking at the long term trends,
this all leads us to say, like, Okay, we can
still be invested, but I am deeply worried, barry about

(46:58):
what's going to happen to them over the summer and
into the beginning of twenty twenty six. We know that
companies have been operating more or less bau business as
usual despite all of the shocks on headlines around tariffs
and consumers may have pulled forward some demand, but they're
also kind of operating BAU. For the most part, there's

(47:21):
not been a significant change, and yet we know that
the introduction of these tariffs and the risk aversion that's
a result of these tariffs and changes in policy and
changes in expectations for global supply chains is going to
lead to some weakness and activity. The thing I just
want to point out is, like going into the end

(47:41):
of twenty twenty four, in the beginning of twenty five,
I was also like a little worried frankly that the
economy was slowing, not catastrophically, not recession style, but there
were enough cracks across the consumer and enough indications from
companies to basically suggest like this was not going to
be an accelerating year, even before these polices, the shocks,
and now I think despite some adjustments, you know, immediately

(48:05):
after the terrorf announcements, companies don't have an incentive to
do a bunch of different things, and that is engaged
in real capex. They'll spend what they need to to
stay in business or to maintain or things that are
absolutely necessary, but they're going to prioritize expansionary capex and
acquisitions I think are off the table. Number two on

(48:27):
the labor market. We've heard a lot of people talk
about it being frozen. Yes, there's still some hiring, but
when you look at kind of the composition of the hiring,
it's not as exciting as it might have otherwise been
in a policy risk free economy. And I think companies
have an incentive to kind of keep their labor force
where it is without really expanding because they don't know

(48:48):
if that's going to make sense for margins and stuff
going forward. And then the third thing I would say is,
you know, companies need to ask themselves what should my
supply chain, what should my corporate relations look like over
the course of the next couple of years, because the
truth of the matter is if they have to realign them,

(49:09):
it will be a significant cost. It will take a
ton of time and take a ton of energy. And
yet if there might be a policy shift, either at
the midterms or under a new administration, the incentive to
make these multi year investments is low. So I get
this sort of paralysis that's playing out in terms of
the market, in terms of corporate behavior, and so I'm
a little I wouldn't say worried about a recession, but

(49:32):
concerned about much slower activity in the second half of
the year.

Speaker 1 (49:36):
So that raises so many different issues. We keep hearing
from CFO CEOs about the lack of clarity. If you
don't know what the policy is going to be, how
do you relocate manufacturing plan a headquarter, how do you
plan to do any sort of expansionary hiring. So I'm
completely with you that, Hey, this seems to be this

(49:58):
self inflicted wound that's preventing the economy from accelerating. And
yet despite all that, the economy seems to be incredibly
resilient and not taking too big of a hit from
all of these on again, off again tariffs. Does that
just mean that this administration inherited a really robust economy.

Speaker 2 (50:23):
Yes, And I think there's another element to it. I
do think this administration inherited a resilient economy, one that
was perhaps underappreciated over the last couple of years because
not everyone was feeling that resilience in the same way,
or wealth creation wasn't as broad as some would have liked. Okay,

(50:44):
but I think there's another element to this too, And
this goes a little bit into kind of corporate behavior
and how investors react to corporate decisions, which is, you know,
if a company pulls back prematurely. Let's say they shed
a bunch of work for so they a lot of CAPEX,
and they really hunker down for a bad economic environment

(51:04):
and that doesn't actually show up for multiple quarters, and they.

Speaker 1 (51:08):
Kind of, like the past few years, have prety forecasting
recessions that never came, and.

Speaker 2 (51:12):
They lag their peer group and they look weak relative
to the rest of the industry. Wow, that makes people
lose confidence in that management team. So there's almost an
incentive for management teams to maybe have contingency plans, to
talk about that with their board and the rest of
their leadership, but not necessarily communicate that with the investment
community and keep operating with only a tiny bit of

(51:37):
defensive action because there's going to be a penalty on
their stock price, and frankly in the confidence people have
in the management team if it looks like they're being
too emotional and reactionary.

Speaker 1 (51:48):
This sounds like the game theory work you did at
UFC is coming.

Speaker 2 (51:51):
Into one hundred percent. It plays a huge part in
the way I think about this. So, you know, no
company has an incent to talk about how concerned. They
actually are publicly because the first one that does it
will be penalized.

Speaker 1 (52:05):
That's interesting. And and since you work at a giant bank,
we've seen bank earnings that are pretty strong across the board. Yeah,
that's kind of unexpected. Tell us a little bit about
what does that mean in light of this environment relatively
high rates really just more normalize than what we've seen

(52:27):
in the prior two decades. What's going on in the
banking sector.

Speaker 2 (52:31):
Yeah, well, I can talk a little bit about City
because we've had some pretty awesome operating performance and there
are a couple of things really driving that. Of course,
you know, there's been a real focus in terms of
cost and expense. This is not just City, this is
across the board at major financial institutions, and frankly, investment
investors really love this. They want to see that discipline continue.

(52:52):
Number two, like the mixshift has actually contributed to earnings,
and I think, as you well know, you know well,
has been a huge driver for many of the diversified
financial services companies. I expect it will continue and I'm
looking forward to wealth being an even bigger driver for
City over the next couple of years. And then I
think there's a you know, another element to which is

(53:13):
that the speed and sort of the facility that management
has in toggling between different types of business for different
parts of the cycle has significantly improved relative to how
people think about banks fifteen years ago. So we were
talking about valuations earlier, and you know, financial services and
kind of banks more specifically kind of dragged down overall

(53:34):
market multiples when they were a huge part of the
market cap for the US large cap indencies in the past.

Speaker 1 (53:39):
So let's talk a little bit about soft data. It's
kind of been negative when we're talking about sentiment and
things like that. This really hasn't translated into the hard
data yet. Tell us what you're looking at in that space.

Speaker 2 (53:54):
Yeah, of course, I mean I'm shaking my head as
you say that, because it's absolutely right. The soft data
into hard data in a normal period, you know, gets
translated over inconsistent time period. So if there's not like
a map that says like, hey, the soft data does X,
and then three quarters later or one month later, it
translates into something in the market or some other hard

(54:15):
data and economic activity. So it's always a bit of
an art interpreting the soft data into the hard data,
and yet it's really important to pay attention because it
may impact the marginal decision. Right now, the soft data
has went from catastrophic posts the April second to Tarif
announcements to really awful to maybe a hair better but

(54:38):
still pretty bombed out. And as we've talked about, the
economic data has stayed somewhat resilient. That doesn't mean that
the economic data will never show weakness. And again, I'm
expecting some soft pockets throughout the second half of the year,
not recessionary, but kind of like sub two percent, sub
one and a half percent growth. I think we should

(54:59):
buckle down for and that's where I expect more durable
earning stories, secular growth stories will outperform the rest of
the market.

Speaker 1 (55:07):
So it sounds like there are a couple of catalysts
in the pipeline and you're just waiting to see which
direction the majority of these go. Tell us a little
bit about what you see as upside and downsize catalysts.

Speaker 2 (55:18):
Okay, so around tariffs, any given day that we'd be
having this discussion, there's a new set of news. One
thing I do know is that we have a series
of deadlines over the course of the summer where people
are hoping for some level of resolution. And the way
I say talk about this, Barry is this is that
we may be past peak tariff shock, but we are
nowhere close to peak tariff pain. We don't really know

(55:44):
how bad it's going to be quite yet. And this
is why of horse companies have been reluctant to significantly
change their guidance and their earnings revision ratios have looked
better than some people expected. Here's what I will say.
Even if the reciprocal tariffs don't hold up and they
end up going to the Supreme Court, and that's a decision,
the sectoral tariffs, which take longer to implement, are much

(56:06):
stickier and frankly, have much longer, larger.

Speaker 1 (56:09):
When you say sectoral, like North America, Canada, No like
semis oh, okay.

Speaker 2 (56:14):
Gotcha, Urma copper steel. All of these sectoral tariffs are
much stickier and have much greater potential impact than the
country to country bilateral reciprocal tariffs.

Speaker 1 (56:28):
It's so interesting you mentioned that someone was from a
biomedical device company was having a conversation with me, so
I don't understand an iPhone is exempt from China tariffs.
But the pacemakers we make that save people's lives are
not And if we have to relocate this to wherever,
to Taiwan, to Vietnam, to Canada, the FDA process starts

(56:53):
over and it'll be eight years. So for about half
a decade or so, as the Chinese manufacturered pacemakers sell off,
but before the new ones come online, there's not going
to be enough pacemakers right there.

Speaker 2 (57:08):
We have a real risk of some of these important
raw materials and these important consumer goods and these important
medical goods, you know, not being adequately supplied, and so
we have to really watch this. So so I will
say this that the tariff side is not going to
be resolved over the course of the summer, and because
it's going to bleed out for longer, we may have

(57:29):
slower growth but not catastrophic, but eventually we'll have some
really big sectoral consumer and business impacts.

Speaker 1 (57:37):
Huh, really really interesting. You mentioned some of the news
stories and how things are affecting sentiment. How do you
see the role of narratives driving market responses. It seems
like there are different stories for different asset classes every
other week.

Speaker 2 (57:54):
Absolutely the narrative changes. It's sometimes it feels like on
thirty minute increments you used to be you'd have a
couple weeks of a narrative taking hold. I know many
people think about this, but the market can really only
focus on one thing at a time, one major narrative
at a time, you know, and that's where you end
up seeing the bulk of the price movement. For example,

(58:16):
is it around tariffs? Is it around inflation data? Is
it around FEDE expectations? Is it around the technology conflict
between the US and China? Is it around some geopolitical shock.
You know, it's but it's not going to be all
those things at once, even though I would argue all
of those things are happening concurrently, and I think the
market has become even more short attention span if we can,

(58:38):
you know, personified here, and as a result, the narratives
are shifting very quickly. This is why it's really important
that when you're thinking about portfolio construction, to anchor on
the right acid class in factor exposures, to layer it
with more medium term thematic alpha generating ideas, and then
offer some ballots to the portfolio, either in less core

(59:00):
releated assets or in expressions of the asset class or
factor that has a different duration.

Speaker 1 (59:08):
So let's talk about some of the quote unquote less
correlated asset classes. There has been a giant move into alternatives,
most especially private credit, private equity. What do you see
in that space? How is that evolving over the next
five to ten years.

Speaker 2 (59:25):
Yeah, let me answer that second part first. I think
the evolution of this broad bucket of alternatives is going
to be towards more liquid expressions.

Speaker 1 (59:34):
More liquid, yes, or at.

Speaker 2 (59:37):
Least more vehicles that allow for individual investors and you know,
family offices and things like that to invest in these
types of vehicles. Right, you don't have to set it
and forget it for like ten years. I think there's
going to be a lot of demand. Just as we've
seen say traditional mutual fund transfer into ETFs active ETFs,

(59:57):
the'll be more kind of combined vehicles. The challenge, I
think is that there's been so much money and we
know this, We've got great data around this chasing this
like a small number of deals, and it has become
so popular to think about alternatives as an asset class
that the returns that some of these strategies have been

(01:00:17):
able to achieve in the past. I think are much
more challenged in the future.

Speaker 1 (01:00:22):
Haven't we seen that in sort of venture capital land
Back in the eighties and nineties, VC numbers were spectacular
and post dot com implosion, yeah, not only you have
more companies staying private for longer. It just seems like
a ton of low hanging fruit were picked, you know,
decades ago.

Speaker 2 (01:00:39):
Yeah. The narrative is like eighty five percent of US
companies are actually still private, and so it's really important
to have all these vehicles to access them on the
equity on the credit side, I hear that, But there
are certain major differences. Of course, if you're a private company,
you may continue to need different types of funding. You
don't have to disclose to your shareholders on a regular basis.

(01:01:02):
Of course, that you don't have to deal with the
stock price fluctuation and all of that. What that might
mean for your employees, your paid and shares, But it
also creates a complicated environment where when you don't have
to disclose, when you don't have to report, you know,
you may make a different set of decisions. Some of

(01:01:22):
that might be good for the long term, and some
of it may be just like a poor allocation of capital,
because no one's calling you out on it because the
capital is already locked in. So it's I would say
this eighty five percent of companies that are still private
that the alternative managers are exciting about about giving you
exposure to, not all of them are the same quality
as the you know, publicly available, you know, large cap

(01:01:45):
megacap companies.

Speaker 1 (01:01:46):
It makes a lot of sense. I want to get
to my favorite questions, but before I do that, I
got to throw you at least one curve ball. You're
on the Resource Council for the Grand Teton National Park Foundation.

Speaker 2 (01:01:58):
Yeah, tell us about that. That sound random, do you there?

Speaker 1 (01:02:00):
Yeah, it sounds totally rare. I know you're a former
a ski bomb I am, so maybe there's some relationship
with that.

Speaker 2 (01:02:07):
Yeah. I actually split my time between New York City
and Jackson Hole, so I spend a lot of time
in the Jackson community. I'm super passionate about the conservation
and nature programs at Granteeton National Park and I've been
on the Resource Council now for about three years. It
is a kind of sub board of the board of
a Granteeton National Park Foundation, and we do some really

(01:02:29):
amazing things. One of the things I'm most passionate about
are some of these wildlife programs and the money that
we raise specifically for research that benefits some of the
biologists in the park and also that you know, all
of the visitors the park can take advantage of. My
favorite thing to do every summer, Barry is the wolf Watch,

(01:02:50):
which we do some days during August. We'll go up
with a biologist to this bluff and we will watch
a pack that lives in Grantee Down Nash Park and
learn all about wolf habitats, behaviors, and changes in their pattern.

Speaker 1 (01:03:04):
So this is part of the national park system, but
yet there's a private foundation that helps raise assets and
manage resources for the park.

Speaker 2 (01:03:14):
To tell us a little bit, almost all the national
parks have friends groups, and this granteed Don National Park
Foundation is the friends group for Grantee Don National Park.
We are a very large and successful one and we've
really helped a partner with the park on everything from
like visitors centers to you know, accessible options to the drivers,

(01:03:34):
to redoing the trail system, to sponsoring some of the biologists,
et cetera. The park is run by the park, but
the superintendent and the CEO Grantee Don National Park Foundation
are close partners, and I like to think, Yeah, we're
the best friends group out there.

Speaker 1 (01:03:47):
Huh really really quite fascinating. Let's jump to our favorite
questions because I only I know, I only have you
for a few more moments. We'll make this our speed round,
starting with what's keeping entertain these days? What are you
watching or listening to?

Speaker 2 (01:04:03):
Okay, so I don't watch television at all, very infrequently.

Speaker 1 (01:04:07):
No Netflix, no Prime, no Apple TV, none of that.

Speaker 2 (01:04:10):
It's not really my jam.

Speaker 1 (01:04:12):
Wow, that's really interesting.

Speaker 2 (01:04:13):
Yeah, it's not really my jam. I do watch like
things sometimes, a news magazine or whatever, but for the
most part, I am just an avid reader.

Speaker 1 (01:04:21):
Uh huh.

Speaker 2 (01:04:21):
And I like to spend my time when I'm not
working reading, playing sports, listening to music. And I'm an
amateur artist, so I've been watching screens after being in
front of screens all day long is unappealing to me.

Speaker 1 (01:04:35):
Can I tell you that sounds shockingly healthy?

Speaker 2 (01:04:39):
Yeah? I try to be shockingly healthy. I also try
to put my devices down and be focused on other
things because I get enough screen time during the day.

Speaker 1 (01:04:46):
I totally get it. Tell us about your mentors who
helped shape your career.

Speaker 2 (01:04:52):
I don't know that I had a lot of official mentors.
I will tell you I had more peer mentors, if
that makes sense. You know, growing up in the business,
I was often the only woman in the room or
the only woman on the investment committee, and I built
really strong peer relationships with other investors of similar levels
around the street. And there are a lot of people

(01:05:13):
who have helped to influence my way of thinking or
have challenged me. But yeah, I mean, I try and
be a mentor to as many, especially young women as
I can in the business, since I didn't have that
available to me at the time. But I wish I
had a long list of mentors. But I would say
it's more my peer group that I've really linked arms
with and grown with that I think of as kind

(01:05:35):
of playing that role for me in my career.

Speaker 1 (01:05:38):
Interesting, So you mentioned you read a lot. Let's talk
about books. Yeah, what are some of your favorites? What
are you reading right now?

Speaker 2 (01:05:44):
Okay, I'm a giant sci fi and fantasy.

Speaker 1 (01:05:47):
Oh boy, were you talking to the right person?

Speaker 2 (01:05:49):
I mean, so on this theme of not watching screens
after I work, I like to really escape, like deep
in escape after a long day of Star Dar, I
get numbers and analyzing, you know, economics. So here's what
I will say. I'm in an amazing series right now,
the Murder Bot series by Martha Wells. I know it's

(01:06:11):
been made into a series. I will not watch it
because it will ruin the entise.

Speaker 1 (01:06:16):
It's gotten mixed reviews so far so far, but I
have that in my cue. The first murder book.

Speaker 2 (01:06:22):
Oh, it's so good. It's amazing, and you know, thinking
about this intersection between bots and AI and the future,
and there's a lot of inner dialogue in there that
I don't think will translate well into a series, but anyway,
neither here nor there. So I love to read that.
Before I I'm on book six now. Before I started that,
I read the latest from ton of French, which is

(01:06:44):
called The Searcher uh and and the Hunters and two
books together. It takes place in Ireland. She's one of
my favorite contemporary fiction authors. It's like these are mysteries
and so I love that. And yeah, I pretty much
gobble up anything that will make it onto the Hugo
or Nebula shortlists and try and geek out as much

(01:07:04):
as possible.

Speaker 1 (01:07:05):
I had no idea you were a geek. Any nonfiction
that crosses your transom.

Speaker 2 (01:07:10):
Well, the one that's really kind of stood out to
me and it was recommended by a former colleague of
mine from Black Rock is four thousand weeks.

Speaker 1 (01:07:17):
So good, so good.

Speaker 2 (01:07:19):
And as someone who's tried to optimize my life many
times in the past but have had a couple of
health setbacks and things like that, this was a great
reminder that getting through the to do list is not the.

Speaker 1 (01:07:31):
Goal, right Oliver Burke something like that. Yeah, the line
that I remember from that book was four thousand weeks
is about eighty years? Is human Life's man? Yeah, human
life is insultingly brief, And that phrase just stood out.

Speaker 2 (01:07:48):
Yeah, and this idea that we are all every day
approaching our death is actually empowering instead of discouraging. If
you know that you don't have infan time, you make
better decisions.

Speaker 1 (01:08:01):
Frankly, scarcity is an important economic.

Speaker 2 (01:08:04):
Thesis, absolutely, but you cut out the stuff that's not
important and you focus on the things and the people
and the experiences that are. And anyway, I love this book.

Speaker 1 (01:08:15):
Yeah, No, I totally agree. Final two questions, Yeah, what
sort of advice would you give to a recent college
grad interested in a career of Normally I would say
whatever the person's specific specialty is. But you've done so
much across consulting and strategy and buyside and sell side

(01:08:35):
and hedge funds and portfolio management, and now a chief
investment strategy. Someone interested in just finance or wealth management.

Speaker 2 (01:08:44):
Yeah, I would say the most important thing is to
keep an open mind. One of the most frustrating things,
you know young graduates and even young graduates from business
school or other graduate programs, is that they have like
a path in mind. You know in three or five years,
I expect to be here in ten years. And I
say keep an open mind because there's so much disruption
and so much change across these industries. You can't have

(01:09:07):
a mapped out plan. Your goal is to be a
sponge and to learn and learn and learn, and also
to be patient. Honestly, Barry, I'd say this a lot,
because you know, you get some like really smart twenty three,
twenty four, twenty eight year old who you know wants
to find out what's over the next hill, and I
want to remind them. You know, if the actuary tables
are even somewhat right, they have seventy more years of

(01:09:29):
life ahead of them, right, and they don't need to rush.
They can enjoy the moment of learning, enjoy the experience,
and understanding that not just they'll have the opportunity to pivot,
they'll have the mandate to pivot. As you know, industries
get disrupted and technology evolves.

Speaker 1 (01:09:43):
Fascinating and our final question, Yeah, what is it that
you know about the world of investing today? You wish
you knew twenty five thirty years ago when you were
first getting started.

Speaker 2 (01:09:54):
I thought there was a more systematic way to approach
investing when I first started, you know, close to three
day gates ago, And now I understand that true investing
is both art and science. Maybe that's the reason why
I think I'll stay in this business for the rest
of my life, because I'm constantly intellectually challenged to not
get frustrated if a model doesn't work out. In fact,

(01:10:15):
sometimes the process of going through creating a model or
a piece of analysis, or going down a rabbit hole
and research that doesn't yield anything this year may actually
be really helpful for me in three years, or help
to reframe my thought process so understanding that it's not
perfect and that it's art and science.

Speaker 1 (01:10:33):
Huh, really really interesting. Thanks Kate for being so generous
with your time. We have been speaking with Kate Moore.
She is the chief investment Officer at City Wealth, helping
to oversee over trillion dollars in assets. If you enjoy
this conversation, well check out any of the five hundred
and forty or so we've done over the past eleven years.

(01:10:57):
You can find those at iTunes, Spotify, Bloomberg YouTube, wherever
you find your favorite podcasts, and be sure and check
out my new book, How Not to Invest The ideas,
numbers and behaviors that destroy wealth and how to avoid
them How Not to Invest wherever you find your favorite books.

(01:11:19):
I would be remiss if I did not thank the
Cracked team that helps put these conversations together each week.
Steve Gonzalez is my audio engineer. Anna Luke is my producer.
Sean Russo is my researcher. Sage Bauman is the head
of podcasts here at Bloomberg. I'm Barry Rittolts. You've been
listening to Masters in Business on Bloomberg Radio