Francois Trahan: You’re Getting Markets Wrong, And Here’s Why.

In this episode of The Blunt Dollar, I sit down with François Trahan, one of the most respected macro strategists on Wall Street.

François is a Hall of Fame-ranked Institutional Investor strategist, former head of macro research at Bernstein, BCA, and Wolfe Research, and founder of the Macro Research Institute, a program training investors to understand real-world macroeconomics.

But this isn’t just about big calls and big titles. This is a conversation about conviction, cycles, and the brutal honesty required to get markets right.

We dive into the moments that made (and nearly unmade) his career, and unpack the lessons behind both his best and worst calls. From the dot-com crash to the GFC, and the behavioral traps that trip up even the smartest investors.

We cover:
📉 Why macro is more relevant today than ever
📚 How history and psychology shaped his biggest insights
🧠 The power (and limits) of AI in understanding markets
📈 What macro can (and can’t) predict about the future
🤝 The surprising truth about how he got hired on Wall Street
🎯 Why so many strategists still get it wrong
🧪 The importance of applied thinking in a theory-heavy world
💡 And why “this time is different” usually isn’t

Whether you're a macro nerd, a strategist in training, or just want to understand what really drives the market under the surface, this episode is pure signal.

Oh, and if you haven't already... subscribe to The Blunt Dollar for more raw and honest finance conversations.

New episodes drop every other week! Available on Spotify, Apple Podcasts, and wherever you get your podcasts.

And last, but not least, don't forget to follow me on LinkedIn: https://www.linkedin.com/in/ignacio-ramirez-moreno-cfa/

Enjoy the episode!

Disclaimer: This podcast is for informational and educational purposes only. It does not constitute financial, investment, or legal advice. Listeners should consult a qualified financial professional before making any financial decisions.

Episode Transcript

Speaker 1 (00:00):
And you know, in the late 90s, even early 2000s, you
know, the West Coast, you know,was all about picking the right
stocks, that sort of stuff.
It's the GFC that put me on themap.
All of a sudden, markets becamevery macro influenced.
Most strategists did not have amacro based approach.

Speaker 2 (00:21):
Today's guest is François Trahan, one of the most
respected macro strategists inthe financial industry.
He was one of the few warningabout the 2008 financial crisis,
before it actually happened.

Speaker 1 (00:34):
I happen to have the right call, which helped.
The bulk of it centered aroundthe fact that the last stretch
of the tech bubble had beenfueled by circumstances outside
the US, and what I mean by thatis the Asian crisis.
The Russian default thattriggers LTCM forces the Fed to
inject liquidity into the USeconomy.

(00:55):
I feel like what's missing ineducation.
It's psychology, the influenceof behavior.
At the end of the day, the onecommonality between every asset
bubble is human beings.

Speaker 2 (01:07):
If you want to hear insights from a macro strategies
without the fluff, you are inthe right place.

(01:36):
This is the Blunt Dollar withIgnacio Ramirez.
Is the Blonde Dollar withIgnacio Ramirez upon as a
substitute for professionaladvice?
Always do your own research andconsult a qualified advisor
before making any financialdecisions.
All investments involve risk,including the potential loss of
capital.
And now let's get started withthe episode.
Hello everyone, and welcome toa new episode of the show.

(01:57):
Today's guest is François Trahan, one of the most respected
macro strategists in thefinancial industry.
If you follow markets, you'veprobably heard his name before.
He's a Hall of Fame-ranked WallStreet strategist, former head
of macro research at firms likeBernstein's, bca Research and
Wolf Research, and now, morerecently, he was the founder of

(02:24):
the Macro Research Institute,which is a study program that
prepares investors to invest inall types of macro backdrops.
François has been namedinstitution investors number one
strategies multiple times.
We'll be talking about that and, unlike a lot of macro
strategies out there that justtalk theory, he actually gets
markets right.
He's a real practitioner.

(02:45):
He was one of the few warningabout the 2008 financial crisis
before it actually happened, andhis 2011 book, the Era of
Uncertainty pretty much nailedhow markets would become way
more volatile in the years ahead.
In this conversation we willdeep dive into his career
journey, his biggest calls andmistakes and his blunt take on

(03:09):
why smart people still getmarkets wrong.
If you want to hear insightsfrom a macro strategist without
the fluff, you are in the rightplace.
François, welcome to the BluntDollar, thank you.
Thank you for having me.
Super excited to have you heretoday.
Of course, a lot of theconversation today is going to

(03:29):
turn around macroeconomics andstrategy, but before we dig into
that, can you drop us a line ortwo on what is it that you're
actually doing today in theMacro Research Institute?

Speaker 1 (03:49):
the Macro Research Institute.
So we basically designed astudy program, not unlike other
certifications CFA, CMT, thatsort of stuff that is built
around applied macro forfinancial markets, and so it's a
two-level program.
It's hosted on the Canvasplatform.
People can do it at their ownpace.
That's called the macrospecialist designation.

Speaker 2 (04:08):
Is it all online or in person?
How does it work?

Speaker 1 (04:11):
It's all online.
It's all there's.
You know it's all online.
We do like I host a monthly Q&Asession for the candidates that
are in the program, but otherthan that, it's all pre-recorded
videos it took years to make.
Not going to lie, some of themare now done with an avatar of

(04:33):
myself.
That makes my job a littleeasier.
But it's all online, designedto be completed at someone's own
pace and so you're not lockedinto.
You know, take an exam on aspecific date, you can set it
aside for a month for you knowany reason and just pick it up
after.

Speaker 2 (04:52):
Pretty, pretty big step from going from from
working in Wall Street banks toto teaching what.
What pushed you in thatdirection more recently?
So?

Speaker 1 (05:02):
that's.
That's not easy to answer.
Well, you have to.
You know, for the first part ofmy career, I've been publishing
macro research for 30 years.
Almost For the first almosthalf of my career, I was kind of
a you know, a unicorn, you know, on Wall Street, because most
strategists did not have amacro-based approach, and in the

(05:27):
late 90s, even early 2000s,there's places where I couldn't
go meet clients.
Clients wanted nothing to dowith me.
The West Coast was all aboutpicking the right stocks, that
sort of stuff, and so I feellike it's the GFC that put me on
the map, because, all of asudden, markets became very

(05:50):
macro influenced.
I happened to have the RightCall, which helped.
That was talking not just aboutmore volatile markets ahead,
but also how we would usher in acompletely new era where growth
, you know, would essentially bethe asset class to own.

(06:12):
There's a lot of mistakes inthat book as well, but you know
we got the main thing, the mainthing, correct.
So, to answer your question, inNovember 2016,.
So every year, I would havethis ritual with my team around
Thanksgiving in the US where wewould try to think about what

(06:33):
can we do differently next year.
What can we try, you know, tonot to reinvent ourselves, but
to just stay fresh.
A frat, and, you know, whenyou're in the role of a
portfolio strategist, you tendto have a lot of interaction
with CIOs, directors of research, portfolio managers, and I

(06:53):
covered, you know, that fieldvery well.
We wanted to reach the youngergeneration, and so I put
together in 2017, a string of,you know one day macro seminars.
I forgot the exact title, but itwas, you know, very lengthy
introductory principles of macrofor financial markets,

(07:16):
something, something like that.
I did not know if anybody wouldshow up, you know, so I rented
a room in new york and I think143 people showed up, which
surprised me pretty good.
Yeah, yeah, um, I want to say,half the audience were faces I
recognized, um, you know, butthe other half were clearly

(07:38):
younger and people that I didnot know, uh, and so, um, you
know, that was new york injanuary, and then I did Toronto,
chicago, san Francisco, boston,and the last one was London.
So I did one a month in thefirst half of the year, and
that's basically what made merealize that, you know, there

(07:58):
was a tremendous amount ofappetite for macro education,
appetite for, uh, for macroeducation.
So I want to say that it'saround then that I started
thinking, uh, about this project.
But it's not until the pandemictook hold that I decided to,
you know, dive headfirst into itto give it a shot and you never
look back.

Speaker 2 (08:18):
It's pretty rewarding .
I can imagine no oh yeah, it'sfantastic.

Speaker 1 (08:22):
I I want to say it's probably the most rewarding
thing I've done in my career,the most fulfilling thing I've
done in my career nice.

Speaker 2 (08:29):
I think we're gonna go back to to that, to your, the
, the teaching part of yourcareer, but I want to start from
the beginning.
Uh, many questions already.
You alluded a few seconds agoto, to a call that you made, uh,
that that proved to be rightand that put you a bit in the
radar, because obviously everyvery successful person in

(08:50):
finance, at least on thestrategies high, tends to have
this big moment, a trade, a call, a report that put them on the
map.
And I wanted to ask you whatwas the first time your market
call call really made waves?
What was it?

Speaker 1 (09:07):
uh well, the first time my call was correct, or the
first time that it made waves.

Speaker 2 (09:12):
The first one correct .

Speaker 1 (09:13):
The one that was correct, oh um, I think in uh,
so I'm on a very small platform.
This is like may of 2000 and,um, you know, I've been in new y
York for a few years and Iwrote a report.
It was something like sellsemiconductors by home builders
or something like that.

(09:34):
So it wasn't a great title, butthe message in it was that tech
was vulnerable.
I don't think it made waves,ignacio, because again I didn't
have a big footprint, uh, in theindustry.
But when I think of the thingsI got right for the right
reasons, you know, sometimesthey get lucky also Um, you know

(09:56):
there would be that call, andwhich?
Which date was that?
Uh, so that's May of 2000.
I think I still have a printedcopy of it somewhere so pretty
good timing before the 2001whole dot com.
Uh yeah, explosion yeah, I hadalready been, um, you know,
writing about how you know techwas gonna end, but it's the uh,

(10:20):
because I remember verycontentious meetings.
Uh, back then, you know, I'm alot younger, I'm not established
, and so it was harder to havecredibility, particularly with
very well-seasoned investors atthe time.
But officially I put the flagin the ground and it was May of

(10:42):
2000 or thereabouts, and whatwas it that raised red?

Speaker 2 (10:44):
flags for you.
Was it the canary in the coal?
And it was may of 2000 orthereabouts, and and what was it
that?
Uh, raised red flags for you.

Speaker 1 (10:47):
Or was the canary in the coal, mine kind of thing
where you were like okay,something is wrong here yeah, so
um, I would say the bulk of mythesis back then, with a couple
things um, but the bulk of itcentered around the fact that,
you know, the last stretch ofthe tech bubble had been fueled

(11:10):
by circumstances outside the US,and what I mean by that is the
Asian crisis.
The Russian default thattriggers LTCM forces the Fed to
inject liquidity into the USeconomy at a time where the
economy was doing great, andthat's what created this blow
off in the bubble.

(11:31):
And the Fed reverses that inshort order.
And so we went from having allthe juice that came from these
emergency rate cuts to, all of asudden, we were taking back
liquidity, and so it was merelyfocused on.
You know, the Fed is nowtightening policy.
At some point.
It takes a while.
The lead lags are always hardto explain to people, but at

(11:52):
some point they will start toslow growth, and you know tech
stocks of the day were notimmune to that.
It was a tremendous amount ofrisk taking, and that's the
first thing that starts tochange at the margin when the
Fed starts raising rates.

Speaker 2 (12:08):
Wow, Very interesting .
I want to touch upon now theopposite question, because you
were asking the best or theworst goal, what was one of the
worst?

Speaker 1 (12:21):
market calls that you've ever made.
And how did you bounce backfrom that?
Yeah well, there's a lot ofthem, you know.
So I just talked about a greatcall with regards to timing Fast

(12:41):
forward a year to 2001,.
Fast forward a year to 2001,.
And leading indicators want tocall it the tech bubble, but,

(13:14):
you know, would revive techstocks, and so that ended up
being pretty dreadful.
So I looked phenomenal, youknow, and kind of blew it a year
later by, completely, you know,misunderstanding what was
happening.

Speaker 2 (13:23):
So the paradox of of of Francois and tech stocks in
2000 and 2001,.
They, they brought you into thespotlight and they, they took
you down again.
Yeah, yeah, wow, okay.
So I, I want to go back to thebeginning now.
Um, like, uh.
I mean, you grew up surroundedby numbers.

(13:43):
Your dad had a PhD in math andyour mom was an accountant.
You were probably doing yieldcalculations in your head before
most kids even know how todivide.
And what's interesting is that,despite being, I think, a quant
, or at least someone thatreally likes numbers at heart,
you've said that you laterrealized numbers alone don't

(14:05):
always tell the full story.
There's behavioral finance,there's history, there's
psychology that ended up maybeplaying a bigger role in how you
see markets today.
So my question for you islooking back, what's the one
thing you wish you had studiedearlier in your career?
That would have made you aneven better macro strategist?

Speaker 1 (14:27):
Yeah, that's a really good question.
So, for the record, I was not agreat student.
I was exceptional at one thing,which was math, and I was
pretty lousy at everything else.
And I didn't appreciate that, Ithink.
I think sometimes, just, youknow, they say like the children

(14:49):
of lawyers end up making betterlawyers than others, and so I
didn't appreciate how mybackground, you know, even
unconsciously, played a role inall this.
I also, you know, went to schoolat a place that had a very
empirical approach.
You know, we did a lot ofeconometrics, that sort of stuff
.
So the answer to me is prettysimple.

(15:12):
You know, I feel like what'smissing in education, even while
macro is a big part of what'smissing and how we train people,
but it's psychology and theinfluence of behavior.
At the end of the day, the onecommonality between every asset
bubble, back to tulips inHolland in the 1630s, is human

(15:34):
beings.
They're the ones that aremaking these decisions, and we
seem know these patterns timeand time again.
And so psychology would havebeen a big thing.
And then history is the other.
I think that one I could.
You know I wasn't knowledgeableenough in school to understand

(15:57):
how important history is, but tome.
Those are the two big thingsthat you know that I would tell
someone currently in school totry to take something related to
behavioral finance, even ifit's not called that.
And you know history ofeconomics and financial markets
is really, really important.

Speaker 2 (16:17):
Yeah, I think, at least when I was in school,
there was nothing close tobehavioral finance but history
for sure, and unfortunately,when you're in school at least
in my case it wasn't the mostsexy of topics.
But when you work in financeand in markets, indeed, you have
this tendency to realize thathistory doesn't repeat itself,
as they say, but it has thistendency to rhyme right.

(16:38):
So I want to go back to whenyou were named as Institution
Investors' number one strategist.
It has happened multiple timesand you even got inducted into
their famous Hall of Fame.
For those of you that don'tknow it, institution Investors
is a leading internationalbusiness to business publisher.

(17:00):
Very well known.
They focus primarily oninternational finance and they
cover markets.
Very, very well known.
They focus primarily oninternational finance and they
cover markets very, very well.
So it's a must read for many ofus working in the industry.
So my question for you is whatdo you think separated you from
the thousands of other analystsand strategies that never made

(17:23):
it into that famous hall of fame?

Speaker 1 (17:27):
um, well, it's a lot of things in, including a lot of
hard work, but including luck,uh, I think, at the end of the
day.
So, um, uh, you know, I get toum new york, I think in 98 or
thereabouts, and I'm working ona small platform In 2002, I

(17:50):
joined Bear Stearns, which Ithink was like the fifth biggest
bank at the time, but it waskind of the hot one for a while,
and that's when I started toappreciate the importance of the
II rankings and I realized veryquickly that anybody that was

(18:10):
ranked II, I don't want to saycould get away with things, but
they had a different status thanme, and anybody who was ranked
II, number one was basically thegolden child of the place.

Speaker 2 (18:23):
Superstar status yeah .

Speaker 1 (18:25):
And you know, I think the industry back in those days
viewed it as a good proxy forinvestor interest.
I think back there, you know,back then it was, and so you
know they had a dedicated teamthat would help you understand
AI.
I understood nothing of it.

(18:46):
Um, you know, and um, and whereyou needed to, after a few
years you know what they woulddo is they would say, okay, you
did really well in the northeast, you know, here is where you
know you're not getting anytraction and uh, what they would
hope you would do is spend moretime in that territory in the
following year.
So it helped me understand alot of things.

(19:07):
So I think to rank AI you firsthave to take it seriously.
But it's very difficult to rankAI if you're not adding value
for clients at the end of theday.
And remember, in those years,one of the few people you know
working for a big bank years,one of the few people you know
working for a big bank at leastthat has a top-down approach,

(19:30):
that is doing macro work, andwhat that had forced me to do
was spend a lot of time writingabout sector positioning.
So my bread and butter in thoseyears is always about which
sector to emphasize, whichsector to de-emphasize.
I've never been a guy thatmakes big market calls.
Ignacio.
To be perfectly honest, I gotaway with years without even

(19:53):
having an S&P target somehow,but the bulk of my work was
identifying risks, obviously,but how to position your
portfolio for them, and so asmuch as I want to say it's the
fact that I was kind of the onlyperson competing doing macro.
I think it was really the factthat I was doing something that

(20:14):
was super helpful for portfoliomanagers by writing week in and
week out about sector dynamicsand how the macro backdrop would
feed uh into that.
Um, you know, and I think myfirst year I ranked sixth in
2002 which, um, you know,there's maybe 20 some people you

(20:36):
know that are dissipating inthe survey.
Um, and I remember bear stearnsbeing very happy with uh.
With six uh at first it'spretty good already I think I
had matched their best result inportfolio strategy there, and
then and then, I think, thefollowing year, I got to rank

(20:58):
number two and then eventuallynumber one.

Speaker 2 (21:00):
It's funny, because hearing you talk and how you try
to understand their methodologyon top of, obviously, their
delivering value to your clients, of course made me a little bit
think about the algos in socialmedia, because I didn't mention
this at the beginning, butFrancois also is very active on
social media.
He has a huge following acrossdifferent platforms.
So did you kind of adopt thesame approach to become big in

(21:24):
the finance social media world,or it just happened a bit
randomly?

Speaker 1 (21:30):
No, Well, you know, but that's a good point that you
raise, right, I basically, youknow, with regards to historical
investor, I had to firstunderstand the mechanics behind
it and I realized very quicklythat if you're at a small
platform, your odds of rankingin the AI survey are minuscule

(21:53):
because you just don't haveenough potential accounts.
You know that can vote for you.
You know, and so it is it.
It is skewed towards, you know,the very big banks at the end
of the day.
So, with social media, ignacio,I'm not even on Facebook, and
so my team coached me for a longtime to get on, and I think I

(22:19):
got on LinkedIn about four yearsago, reluctantly, I want to say
at first, four years ago,reluctantly, I want to say at
first.
You know, and I kind of viewedit as a bit of a running blog
for my clients, if you will, youknow.
So a lot of the stuff that Iput on, there is something that
didn't make it into one of ourreports.

(22:40):
You know, for one reason oranother.
You know we publish a 10, 11,12 page report every week.
Um, you know, we probably havethree times the material that we
can fit in there, and so that'sthe stuff that, uh, I end up
putting online.
I do other things, but I wouldsay mainly that was the impetus
behind it.
I viewed it as a you know,running blog for, uh, my clients

(23:03):
uh, you know, running blog formy clients.
You know, obviously, a lot ofother people you know like the
content, but I wasn't trying tobe a big you know, social media
influencer or anything like that.
It was really targeted.
It's, I don't want to say byaccident, but a little bit.
You know that I ended up, youknow, getting a pretty healthy

(23:23):
following.

Speaker 2 (23:25):
Plus, I mean, you already had a huge following and
great reputation in real life,so that obviously helps a lot.
But yeah, if you are notfollowing Francois on social
media, please check it out.
Check him on LinkedIn, forexample, because he has great
and very insightful posts.
I want to go back, before weget to the whole Bear Stearns

(23:46):
era, to your upbringing, becauseyou are Canadian, right.
So you didn't come from an IvyLeague school.
You studied at University ofMontreal and you built a name
for yourself, and this was backthen, when finance was even more
cliquish than it is today.
You said in the past thattalking very good English helped

(24:09):
, but obviously speaking Englishis not enough to you get into
the inner circle of Wall Streetsuperstar strategists, apart

(24:29):
from the hard work that youalluded to before.

Speaker 1 (24:33):
Well, I wouldn't downplay knowing how to speak
English, because my generationback home was not bilingual.
There was a few kids that spoke.
Few kids that you know spokeEnglish.
But it's different now, I think, with social media and the
internet.
But back then, you know, itwasn't obvious and I remember,

(24:56):
in fact, I go to theintroductory meeting.
This is in the economicsdepartment at the university of
montreal.
So, uh, for my undergrad and,um, the head of the department,
so there's like 300 people inthe room, uh, and the head of
the department says if you don'tvery bluntly, if you don't

(25:18):
speak english, get out like, oh,um, you know, and his whole
thing thing was English is thelanguage of science.
Every book we will use here,even though this is a French
speaking university, is going tobe in English.
And so if you don't have acommand of the English language,
you know, go do that and thencome back because you will

(25:41):
struggle immensely.
So I do think you know beingperfectly bilingual.
You know my mother moved to theUS when I was very young and so
I spent my summers there.
I learned English.
I was eight years old in onesummer just playing with the you

(26:01):
know, the kids in theneighborhood, so I don't have
much of an accent, um, you know,and so I think that definitely
uh helped.
Um, you know you told me to nottalk about hard work, but uh, I
, uh, particularly when I got tonew york, you know, I realized
that I didn't come from a bigfamily or I didn't have the

(26:23):
network of someone that camefrom an Ivy League school.
So I did feel like, you know,the one way I could compete was
by working harder than anyoneelse, and for a while that
became my mantra.
You know, I would try to findwho is the one person that
everybody thinks is the hardestworker, and that's the person

(26:43):
that I would always try tooutwork, if you will.
So in those early years, youknow that's, you know that's the
feature that I think makes mestand out a bit, but there's a
lot of luck, you know, involved.
You know I don't want todiminish ranking II and all that
stuff, but at the end of theday, you know, bear Stearns was

(27:06):
a big moment for me because youknow they hired people like me
that didn't have, you know,necessarily the Ivy League
pedigree, and at a time whenother firms didn't do that.
And so when I think about mycareer and what gave me you a
big footprint very quickly.
That was a.
That was a seminal moment forme.

Speaker 2 (27:29):
So okay, now we, we gotta talk about bernstern's, um
.
So let's, let's, let's rewindto the early 2000s, uh, so you,
you're working there and, veryinterestingly, you left before
the financial crisis hit.
So you've joked in the past thatthis wasn't some type of

(27:51):
Nostradamus move, that it wasjust lucky timing, but, given
that you were one of the fewstrategies raising alarm bells
on the housing market, was therea moment, was there ever a
moment when you were there,where you thought maybe I should
get out before this whole thingstarts shaking?
Hey there, quick favor to askIf you enjoy the blunt dollar,

(28:13):
the unfiltered takes, thestories and the laughs.
The easiest way to support theshow is by tapping that
subscribe button right now,while you're listening.
And here's my promise right now, while you're listening, and
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finance talk that's engaging,insightful and worth your time.
Thanks so much for being hereand let's keep these great

(28:35):
finance conversations going.

Speaker 1 (28:39):
Uh, no.
So this is where you know theexpression better lucky than
smart comes in.
So I get to Bear Stearns in2002.
And again, I'm a little naiveabout how Wall Street works and
I don't understand how II worksand all that stuff.
Um, uh, but for me it was a, itwas a, uh, a big break, and um,

(29:05):
bear in those days had aterrible reputation as a place
to work at.
Um, for me it was fantastic, um, but you know, to the outside
world it was viewed as beingsometimes, you know, very
competitive internally withsharp elbows.
Um, you know, I didn't havethat experience.

(29:26):
I, I absolutely thought it wasthe best job in the world, uh,
so, uh, that starts to change.
In 2006, excuse me, I publish areport, um, on the housing
bubble and how it's going to end, and that did not make me very

(29:47):
popular with my colleagues andyou know, and upper management
at the time there's now a lot oflawyers you know that work with

(30:07):
management at all the big banksand um, once you submit a
report into the system, you knowthey can't pull it, and so
you're the only person that canpull it, and at the end of each
report it says these are, youknow my thoughts not influenced,
blah, blah, blah.
And so it was.
You know I submitted to.
Editing was a long process.
When you publish at a, at a bigbank, and I get pulled aside,

(30:29):
you know, and just asked Are yousure you want to publish that?
You know, do you not understandwhere you work at and how we
make money?
You know, and so you know, totheir credit, the report gets
published.
And clients weren't happy either.
I want to say at the time,because you know, it's never

(30:50):
popular to tell people you'vemade a ton of money, it's been
great, you know.
Here's why things are going tochange and you know, I think
that changed my relationshipwith management a bit.
To be perfectly honest, whatsaved me, ignacio, is that,
unbeknownst to me, there was ateam that I think was in the

(31:13):
Philadelphia office of BearStearns and they were called
something like the new productsteam, and so they would take
reports of different analystsand they would turn them into
some sort of financialinstrument.
They would take the themeproducts team, and so they would
take reports of differentanalysts and they would turn
them into some sort of financialinstrument.
They would take the theme fromit and, unbeknownst to me.
Somebody took my report andthey created a note that allowed

(31:35):
you to bet against housing andraise a ton of money overnight
in it.

Speaker 2 (31:44):
And you didn't know about it.
No, it just happened in thebackground.

Speaker 1 (31:47):
Didn't know at all.

Speaker 2 (31:48):
Wow.

Speaker 1 (31:48):
All I know is that I'm getting a lot of dirty looks
and all of a sudden, I havethis box delivered to my office,
and it was this mug that I haveit right up there.
As a matter of fact, it saysyou know, mr Housing Bubble, if

(32:10):
I pop, you're screwed.
And in the back of the mug arethe details of the note.
You know, so they were usingthis as a marketing tool, you
know, sending it to differentclients, and so that's when I
find out about this.

Speaker 2 (32:22):
Oh, my God.

Speaker 1 (32:23):
Yeah, and that's what put me back into the good
graces of management a littlebit, because, oh well, trahan's
generating money, but I thinkdeep down it had still caused a
little bit of tension.
Now I didn't leave Bear Stearnsbecause of any of that or

(33:00):
because I had some great insightas to what was going to happen.
I understood housing was abubble.
It's not like I knew BearStearns would disappear.
I didn't understand that partat all.
So you know, it's kind of weirdsometimes how circumstances pan
out.
But in September of 06, I'm atwork and I'm doing a conference
call and I have like 800 clientson the line and I have this
excruciating pain in my lowerabdomen.

(33:22):
You know I'm on a conferencecall, nobody can see me, I'm not
on video, but I knew somethingwas wrong.
My appendix basically ruptured.
So fortunately it's like minute55.
And so, you know, ended thecall a bit abruptly and I mean

(33:47):
you did ask how this happened.
Um, I end up in surgery veryquickly and, um, because I had,
uh, my appendix ruptured.
You know I had to have the fullsurgery, not just laparoscopic
stuff where you're back home thesame day and, uh, back at work
very quickly.
You know, I had like the fullscar and a drain in for a couple
of days.
So I wasn't able to travel.
And you know, in those days I'mon the road every week.

(34:09):
And so now, all of a sudden,you know, I'm landlocked in New
York.
I can get to work, but I haveto take a car.
But there's no way I can go ona marketing trip, visit clients.
And so I'm just, you know, atthe office and I get a call from

(34:29):
someone at ISI that says EdHyman would love to meet you.
You know, would you be able tocome in for a cup of coffee?
And under normal circumstancesmy travel schedule would have
made that four months later.
All of a sudden, I have nothingto do something like that.

(34:50):
You know I had many othermeetings with them and you know

(35:13):
that's ultimately what leads meto leave Bear Stearns.
But again, I didn't have anygreat insight.
Everybody thought I was alittle crazy.
You know like.
I shared it with my family andthey were like wait a minute,
you're the chief strategist atBear Stearns and you're going to
go work for who?
A little shop that has 100employees.
But you have to remember inwhat I did, you know, in the was

(35:43):
um more about that than uhanything else.
Um you know, I was very luckybasically.

Speaker 2 (35:50):
I mean it's funny because I haven't counted the
amount of times you mentionedthe word luck in this
conversation, but it appearsquite regularly.
So my question for you is howmuch of a strategy success is
about seeing things early andhow much is it just about being
at the right place at the righttime and having a little bit of

(36:11):
luck?

Speaker 1 (36:12):
yeah, well, I think if you don't have, if you're not
adding value for clients,you're not gonna have uh,
success, um, and so that'snumber one.
Um, but there is luck involvedat the end of the day, not
necessarily luck in terms ofyour market calls, but, you know
, sometimes it's lifecircumstances.
You know, as I was mentioning,if I'd never had, you know, I I

(36:33):
keep thinking back I turnedright when I should have turned
right.
I turned left when I shouldhave turned left.
You know, if I hadn't, if I'dnever had appendicitis, I don't
think I ever would have ended upat ISI, um, you know, which,
for me, set the ground for otherthings in my career.
Um, and I would say, you know,I consider Ed Hyman to have been

(36:56):
one of my mentors.
Um, you know, and so that'swhat I mean by um luck, it's not
so much, you know, looking likeyou're lucky with your market
call, as much as it was lifecircumstances at times that made
some things possible.

Speaker 2 (37:13):
Okay, wow, that's interesting.
Yeah, I guess like it's a mixof circumstances.
At the end of the day, luckalways comes to those that work
the hardest for some reason, andyeah, it looks like you had
both.
You said that you were workingharder than the hardest working
person in the room, and allthose great things happened to

(37:33):
you afterwards.

Speaker 1 (37:34):
So now I'd like to ask you a little bit more about
macro as a strategy, predictablecycles were over and that we
were entering a period of boomsand busts and a lot of the

(38:11):
people at the time dismissed it,but now it looks pretty spot on
.

Speaker 2 (38:16):
So my question for you is what's the biggest
misconception people still haveabout macro and how it works
today versus how it was in thepre-2008 world?

Speaker 1 (38:28):
Yeah, well, before the GFC.
So in the pre-2008 world we areat the tail end of the great
moderation, which is a periodthat spans the early 80s to
basically up to the GFC.
That spans the early 80s tobasically up to the GFC.

(38:49):
That was a phenomenal periodoverall for the stock market,
but it was, you know, largelyattributable to macro events.
It was a weird confluence ofevents that you know made it
possible that, you know,basically restrained inflation
continuously, and so I'm goingto use the word luck again.
But the US was very lucky inthat time frame because we have

(39:16):
just-in-time inventory systemsthat are starting to be applied
more broadly, and so that bringsdown inflation, raises profits.
The end of the Cold War saw allthe former Soviet republics dump
commodities on a global scale,you know, weighed down on
inflation.
And the free trade agreementsthat are put in place you know,

(39:39):
the first one in 86 with Israel,the second one with Canada in
89 that becomes NASDAQ withMexico, you know they start to
also be disinflationary,deflationary if you will, and so
it was a confluence of a lot ofthings.
You know what the book wasabout was talking about how some

(39:59):
of these things you know wereno longer in place, and you know
, so it was really.
You know, the era ofuncertainty is what I dubbed
what lied ahead, but what I wasdescribing was a world that was
no longer the great moderation,and you know where, in an
integrated world, other people'sproblems could become our own.

(40:23):
You know, like the debt crisisin Europe, you know, spain,
portugal, cyprus and then Greece, finally, in 2015.
You know, peak investment inChina around the same time frame
weighs on commodity prices.
You know, all the while we havezero rates in the US, and so we
don't have, you know, all thewhile we have zero rates in the
US, and so we don't have, youknow, some sort of barometer

(40:46):
that can influence the economyback and forth.
So it did give us a lot of theselittle boom busts cycle, but
ultimately, what I wasdescribing, you know, was a
world where you know steady eddyassets would win the race.
You know steady eddy assetswould win the race, and you know

(41:06):
growth is the best compromisebetween cyclicals and defensives
.
Um, you know, and so it usheredin this phenomenal period for
for growth stocks.
Um, you know when, when youhave, uh, uncertainty, uh, or
you know, or lack of visibilityas to what lies ahead.
Um, you know you're going tohave more.
You're going to be less willingto, you know, own something

(41:30):
that has tremendous operatingleverage, like cyclical
companies, and you're going towant something that has some
sort of structural story andthat's you know where the growth
stocks are at the end of theday.
You know where the growthstocks are at the end of the day
.
So you know, I would argue thatwe're still in the era of
uncertainty.
It has evolved, you know, and Ithink we're in a world that is

(41:53):
now, in the US, structurallyinflationary, and so you know.
For me, what the pandemicreally taught us is that, even
in the 2010s, there are thingsthat are changing beneath the
surface.
So demographic trends in the USare slowing, not having an

(42:14):
impact.
Then you know, but caught up tous in the pandemic when you
know, there were just noavailable workers and we're in a
similar place today.
That, I believe, is structural.
And so the world of the greatmoderation, where inflation did
this for almost 30 years, itwould go up periodically here

(42:36):
and there.

Speaker 2 (42:58):
It was an issue at times, you know, I think, is the
world is flat, I think it wascalled which basically the
underlying premise, I think wassimilar to what you just said
that other countries and otherpeople's problems all of a
sudden also become your problemsbecause the world is a lot more
connected than than it used tobe.

Speaker 1 (43:18):
Um, and I guess there's some parallels between
that and and what you wrote inin your book um, yeah, you know,
and um, and even for, uh,portfolio managers in the us, if
you're benchmarked to an indexlike the s&p 500, a third of
your revenues are generatedelsewhere, you know?

(43:39):
And so when we say the world isconnected, I don't believe you
can have a view of the US stockmarket without understanding
what is happening globally, andthat was a painful lesson for me
, ignacio.
And you're asking me what aresome of your worst calls.
You know we do get a decouplingof sorts between the US economy

(44:17):
and the rest of the world.
You know that never used tohappen and it happened a couple
times, in the 2010s, forinstance, and I would argue,
longer.
In sync between central banks,we start the taper in the US.
Under Bernanke, europe isdealing with the after effects
of the GFC debt, and so they'restimulating like crazy.

(44:37):
That's an unusual phenomenon wehaven't seen that often in the
modern era, and it creates a lotof funky relationships within
the markets.

Speaker 2 (44:47):
So, talking about trends and global trends, I
think we cannot have aconversation without alluding to
AI.
So you've built your career onmacro research and obviously
you've also acknowledged some ofits limitations.
But now, in this world ofAI-driven quant models and

(45:08):
factor investing and so on, somepeople are arguing that maybe
macro calls don't matter as muchas they used to, maybe during
all those years when you becameso famous.
So my question for you is doyou think macro strategy is
becoming less relevant intoday's markets, or is it still

(45:28):
the key driver that everyoneshould be looking at?
Hey there, quick ad break.
Do you work in the financeindustry and have a genuinely
interesting story to share?
I'm always on the hunt forgreat guests who bring raw,
unfiltered insights to the table.
Or maybe you know someone witha story worth telling.

(45:48):
Please put us in touch.
You can reach out to medirectly via LinkedIn.
I'd love to hear from you.
And now back to the show.

Speaker 1 (46:03):
Yeah, I think it's more relevant than it's ever
been in my career.
And you know, a big part ofthat has to do with our industry
itself.
You know, back in the 1960s,where a lot of the academic
curriculum that is used todaywas developed.

(46:24):
Um, uh, you know, the averageholding period for stocks is
eight years.
And so if you're going to holda stock for eight years, whether
the economy is going into aslowdown or recovery not going
to matter a whole lot becauseodds are you're going to get a
few cycles in there.
Um, the quality of managementthat will matter, potential

(46:46):
acquisitions over eight yearsthat will matter.
And so you know that was aworld where fundamental research
was absolutely critical.
I would argue it still is.
But when I think of what hasmagnified the impact of macro,
it's the fact that the averageholding period for stocks now is
down to about six months.
It's the fact that the averageholding period for stocks now is

(47:07):
down to about six months.
And so if you're going to holdsomething for six months, so you

(47:29):
buy a defensive because it hasa great fundamental story, but
you're buying it at a time whenleading indicators are the
economy is about to slow.
You're ignoring the macro notgoing to work super well, or
you're buying growth stocks injanuary 2022.
You know that are verysensitive to interest rates,
just as the fed is about toraise rates aggressively.
So I think it's the shorterholding periods that have
magnified the influence of macro.
You know it doesn't mean thatfundamental research doesn't

(47:53):
matter.
It absolutely does,particularly in a recovery.
You know where stockcorrelations come down.
You know that's where stockpicking and I would argue that,
you know, to me that's a prettygood description of 2025, in my
opinion.
But I think macro matters morethan it has.
You know, some people point torelationships that broke down in

(48:17):
the pandemic recovery.
You can find that in everycycle at the end of the day, and
so it's not macro that didn'twork.
It's that you always have toput this stuff, you know, in
context and you know we justwent through the most unusual,
you know, period in the last,you know, basically since the

(48:39):
1970s, if you will, you know,and so context, you know, was
absolutely critical.
So, with regards to AI, I wouldsay that I'm a believer in AI
overall.
I don't know that it makes ahuge difference cyclically, you
know, for the next year, but Iabsolutely believe in it.

(49:02):
Believe in it.
I'm not a believer that it willtake over macro and financial
markets because, at the end ofthe day, it's using the inputs
that are available and there'sso many misleading.
You know things out there.
When it comes to macro, youknow, I would argue LinkedIn has

(49:22):
a lot to offer in regards aswell.
You know, and I've also seen inmy career.
You know, I've also seen want,and so let's think of it as a
proxy for AI come in and out offavor.
You know, in a trending market,everybody thinks they're super
smart because they're usingmomentum, you know, to pick

(49:45):
stocks and they'll tell you theyhave this sophisticated quant
model.
You know, we have this algo.
You know where momentum is like80% of the story, and then
leadership changes, you know,and all of that era fades, and
that's happened, I want to say,like every five years or so.

(50:06):
You know, and some have been.
I remember January of 2016,where leading indicators turned
the corner and all the stuffthat had worked great.
You know.
Graders, yeah, you know, andthat's the issue with momentum
is that when it fails, it tendsto fail spectacularly, and that
tends to happen when there's achange in leadership in the

(50:29):
market, excuse me and so macrois going to play a huge role in
that, in determining theinfluence of, you know, on even
which factors work, and so I'mnot a believer that you, you
know that the human component isgoing away in financial markets

(50:50):
because the best model wouldn'tknow how to handle something
like 9-11 or, you know, thepandemic in 2020.
Black swans, um yeah, and thereality is they're not supposed
to happen often, but there'sbeen an awful lot of them in my
career.

Speaker 2 (51:07):
Yeah, so yeah, because it's funny what you're
saying, because a lot of peoplethink that macro strategy is
just about crunching numbers,but at the end of the day, it's
a lot about those things youwere talking about at the
beginning behavioral finance,history, understanding the
bigger picture, connecting thedots, spotting things that maybe
models have missed.

(51:27):
And, yeah, at the end of theday, I think there's some stuff
that a model, an AI model, mightnot be able to replace, which
is human intuition.
So, yeah, it's a hard questionthat I like to ask my guests,
but basically, in your view,then, does macro research get

(51:51):
better with AI or is theresomething about human judgment
that machines will never be ableto replace?
And basically, this is as goodas it gets.

Speaker 1 (52:06):
I think it's a little bit of both.
Um, you know, where I think aiwill help is that it will help
get a broad understanding of themain drivers of um.
You know the business cycle, um, which I would tell you isn't,
you know, the biggest one ismonetary policy.
That will get you 80 of thestory.
Um, you know, you know thebiggest one is monetary policy.

(52:27):
That will get you 80% of thestory.
You know.
Then you have to put it incontext.
Fiscal stimulus inside canalter the trajectory of the

(52:55):
economy at times, you know.
And so I think if the onlything that AI does is that it
gets that broad knowledge to beaccepted, then people don't have
to spend so much time on thatmystery or what is perceived.
I don't think it's AI that'sgoing to answer them.
It's humans doing the research,because it requires sometimes
historical context, it requiressometimes behavioral finance.
But if we have more time tofocus on that, then I think we

(53:18):
are advancing macro.

Speaker 2 (53:21):
Good, so you're an optimist, an optimist by nature,
so you're an optimist, anoptimist by nature.

Speaker 1 (53:26):
Well, people have the perception that it's the
opposite, but that's because,when you're in my role and you
do macro, I kind of view my roleas I'm trying to highlight risk
and opportunities that peopledon't necessarily appreciate.

(53:47):
And because equity investorstend to be a glasshouse full
crowd, you know, more often thannot I'm pointing to risk rather
than opportunities, if you will.
So you know.
When you were asking me what isyour best call, what is your
worst call, my best calls arebullish calls.

(54:08):
Nobody remembers them becauseyou know they feel like they
only need a macro person whenyou know the economy is not
doing well and there's a lot ofrisks the minute that things
start to take off, you know my,my readership goes like this um,
and so you know my myreadership goes like this Um,

(54:28):
and so you know, march of 09, uh, is a phenomenal call for me,
um, two weeks off from the stockmarket, low after nailing the
bear market, you know.
And so I look great.
Nobody remembers that part.
Uh, you know, and um, not aneasy period.
But I remember doing a piece ofresearch where I was trying to

(54:52):
see what are the events thatinvestors have been confronted
with in the last century thatthey had never experienced
before, and I was trying to findcorollaries, for you know what

(55:40):
was happening with COVID-19.
And the.
With hindsight to me, thatended up what it does when it
gets stimulus, money supplyexploded, leading indicators
recovered and the market bouncedback.
So you know I tend to beremembered for the bearish calls
and I've messed up.
You know a bunch of those too.

(56:00):
But at the end of the day youknow it's risks and
opportunities.
But when you do macro, you'regoing to be associated with the
risk part more than theopportunity part.

Speaker 2 (56:19):
I get that.
You've seen the GFC, the COVIDcrash, inflation spikes, you've
seen Fed pivot and obviously, asa strategist, you build this
reputation of building, makingsense out of all these scales.
But sometimes, you know itbetter than anyone else, markets

(56:43):
play by rules that don't make alot of sense, and sometimes
macro models don't work,correlations break and it's hard
to interpret what's going on.
So, out of all the marketcycles you've experienced, which
one was the absolute hardest tomake sense of.

Speaker 1 (57:08):
There were four that I would list, as you know, being
, I don't want to say,non-traditional, but complicated
, and some I got right, some Ididn't.
I would say the tech bubble,you know, I didn't have the
knowledge back then that I havenow, um, and I think I would
have handled that, uh,differently.

(57:28):
Um, I got part of it right, Igot, you know, part of it uh
wrong, but, um, even back then Icould acknowledge that this
wasn't, you know, normal stuff.
Um, the vfc, even though youknow I look brilliant and to me
that's the highlight of mycareer.
It's being bearish at the righttime, being bullish at the

(57:49):
right time.
Um and um, you know, but it'snot like I understood every
moving part of it.
Uh, along the way, I understoodthe high level uh stuff, um,
you know when, um, you know whenthe markets, uh, you know,
completely froze, completelyfroze.
There's no precedent forsomething like that.

(58:13):
That's where human judgment hasto come in, you know the
commodity super cycle and, uh,what came in the wake of that
was hard to understand and, atthe end of the day, um, when I
think back upon it, it's historythat had all the answers.

(58:35):
And behavioral finance, becausewhat china did was, you know,
unprecedented.
We'd never seen an economy growinvestments to be 48% of GDP,
and if you look back 100 yearsand you try to find countries
that grew investments to 40% orhigher there's like a dozen at

(58:56):
most.
All of them end up in a crisisonce you hit peak investments,
or basically, once excesscapacity starts to set in, you
know it's the beginning of theend, if you will.
All of these countries end updoing the same thing.
Because their domestic economyis impaired, they rely on the

(59:18):
rest of the world, you know, tosave them, and what I mean by
that is that their currency isdevalued massively and they
relied on trade or exports, youknow, to basically buy
themselves time to absorb allthis excess capacity.
That was the best blueprint.
You know, china did it a littledifferently, because what they
did is they, you know, did onefiscal stimulus after another.

(59:41):
You know some of it is just toshore up, uh, banks and
provinces, but they'veaccumulated a ton of debt and,
um, you know, now they're leftwith less options than, I would
argue, they had 10 years ago.
Uh, so, um, you know, so thatwas a complicated one, but the
answers were there.
If you were able to avoid thepressures of everyone else

(01:00:04):
around you, um, you mightremember how, 10 years ago, how
dominant, you know, the chinatheme is.
Um, and then you know, obviouslythe pandemic was, uh, you know,
also an unprecedented, uh,event.
Um, there were answers, um, youknow, but it doesn't mean that,
um, you know, there wasn't atremendous amount of uncertainty

(01:00:27):
.
Regardless, there's things wejust didn't know.
So, you know, and, at the endof the day, when I think of how
the markets and the economyturned out in the pandemic, it
had a lot to do with trends thatwere already in place.
We just weren't recognizingthem.

(01:00:47):
But, you know, in the 2010s,most of the baby boomers start
to retire.
They were an unusually largecohort, and so, you know, there
are less available workers asthe decade progresses, and the
stimulus and the pandemic, youknow, created a surge in demand,
the economy being closed, youknow, pent up demand, etc.

(01:01:09):
At a time when the supply oflabor is not what it's been
historically, and so that had alot to do with the boom in
inflation.
You know, everybody wasobsessed with supply chain
issues in 2021, which were areal thing.
They are in every cycle, Iwould say, but usually when the

(01:01:29):
economy recovers, that stuffgoes away.
It was obviously to a greaterdegree, but it's the dynamic
that was happening in labormarkets that ultimately proved
to be the problem for inflation,and so that was a tricky one,
uh to to understand somethingcame to mind.

Speaker 2 (01:01:51):
Well was I was hearing you talk um.
How many times in your career,francois, have you heard the
words?

Speaker 1 (01:01:58):
this time is different I mean every cycle,
and you know, and I think that'sjust a normal human reflex.
I forgot when I did this,ignacio, but there's one time
where I went back and looked atevery cycle post-World War II

(01:02:19):
and I was always trying toidentify what is it at the time
that investors could have lookedat that would have made them
believe things were different.
And the reality is, you come upwith a list, you know, for
every cycle, and so I don'tthink what I've experienced in
my career, uh, you know, isunusual in that regards.
People believe that therecovery, you know, will last

(01:02:40):
forever because you know thetech bubble, because housing,
you know, and uh, people can are, are the, you know, the china
investment cycle, um, so I thinkthat's a normal human reflex
and the way it is usuallyexpressed, uh, to me is um, you

(01:03:00):
know, send tightening won'tmatter because it's different
this time and that works inreverse.
Scent easing won't help becauseit's different this time.
That's the big story in 2009, isthat the scent stimulus, you
know, won't work and you knowpeople had become insanely

(01:03:21):
bearish at the time and itturned out to be a pretty normal
cycle.
Leading indicators perked uppretty much on cue with their
historical relationship.
You know, and so people believethat at times, because of
circumstances, you know, to methat's just part of the
experience, you know, there'salways something that's going to

(01:03:43):
be unique.
Unique and macro is not acrystal ball, it's a tool, um,
you know.
It doesn't help you, uh,understand the markets, you know
.
Uh, to the day I would say youknow.
But it tends to help you setthe trends, um, you know, in
every cycle.
I feel like, demonstrates that,if he will, yeah, and always

(01:04:06):
reflecting on things afterwards.

Speaker 2 (01:04:10):
It's easier, right?
Because of this inside bias andbehavioral finance.
As we were saying, when youreflect on things that happened
in the past, you're always like,oh, but there was this sign and
this and that.
But obviously it's alwaysdifferent when you're leaving
things at the present instead ofanalyzing it in the past

(01:04:32):
environment, which is related topassive investing.
So, as we know, passiveinvesting has exploded.
Now ETFs and index fundscontrol a big part of the market
and a lot of the money peopleargue is just blindly flowing

(01:04:58):
into certain asset classeswithout people actually
analyzing valuations andfundamentals and things like
that.
So my question for you is doesmacro investing still work the
same way in a world dominated bypassive flows, or are
traditional signals gettingdrowned out?

Speaker 1 (01:05:21):
Well, I would argue that now you know, you have a
lot more investment tools, youknow that you can use as a macro
practitioner, and so for me,that's not a bad thing.
You know, when I hear you askthat question, one thing that I
think about, you know, it's notthe only force that helped

(01:05:46):
amplify passive investing,because that's, you know, been a
trend in place for a long time.
But coming out of the GFC, youknow, we come out from having
lived in a value world for 100years to, all of a sudden,
living in a growth world, andyou know we're still still

(01:06:06):
dealing with that.
I would argue, you know, in avalue world, you become
skeptical of anything that's gota lofty valuation.
In a growth world, it's a verydifferent story.
See, is that the percentage ofmoney managers underperforming

(01:06:29):
their benchmark in the USexplodes higher, and in the
2010s it stays in that range.
Writing that book in 2011 waspartially, I want to say,
inspired by that, but I knewthat my clients weren't doing
well overall.
Um, I'd also I did a survey ofmy client base around that time

(01:06:51):
and I asked them you know, ismanaging money easier, the same
or harder than it used to be?
And I think, like 90 saidharder, um, you know, and it it
was because people weren'treally trained, you know, to
invest in a world that was nowdominated by growth, and so you
know that's what I mean by it'smacro events that changed the

(01:07:15):
backdrop and you know, we'reeducating people for the value
world to this day.
I mean, now people haveobviously, you know, become
accustomed to growth stocksdoing well.
I mean, now people haveobviously, you know, become
accustomed to growth stocksdoing well, but you know, the
books that are used in financialeducation are still largely
value oriented and that wouldhave kept you out of.

Speaker 2 (01:07:42):
You know the tech sector.
You know basically for the last15 years.
Wow, good one, I love that one.
You weren't a straight Astudent, but yet you had one of

(01:08:07):
the most respected careers infinance from the ones I've heard
, at least on the marketstrategies front.
You've shared also anecdotes inthe past that you once offered
to help students find jobs ifthey sent you handwritten thingy
notes and only two out of 50, Ithink, did and you ended up
hiring them.

(01:08:28):
So you're obviously veryexperienced when it comes to
talking to young people and myquestion is what's the one piece
of advice that you'd give toyoung people today trying to
break into the finance industrythat they want to hear in career
workshops?

Speaker 1 (01:08:47):
industry that they want to hear in career workshops
.
Yeah, um, it's interesting, Ididn't know that.
You knew that stat um, so thestory behind that, and that will
help answer your question.
You know I have a a lot offormer clients.
You know that um retired andare now in the world of academia
and um, you know, one thingthey like to do for their
students is take them to NewYork.

(01:09:08):
You know, for three days We'llgo visit Stock Exchange.
We'll try to meet, you know,with people in the industry, and
so I've been asked countlesstimes you know, can you meet
with my students?
You know we'll be in town onthis day and I think the
students walk in expecting me togive them a handout and to talk

(01:09:28):
about, you know, portfoliostrategy.
But I usually give the audiencethe choice.
You know we can do that.
Or I can tell you how to find ajob, because you're all
graduating soon and usuallythat's what the conversation
turns to.
So the anecdote is one of thethings that I tell people is

(01:09:51):
that if you send me an email, Iget hundreds of emails each day.
Even if I have good intentions,I will not get to your email
because I have to deal with myclients and other things, and so
, uh, what I would say in thosemeetings is, if you send me a

(01:10:11):
handwritten thank you note, Iwill help you find a job.
And uh, and then one time itwas actually students from two
different uh universities thatuh were in our office there's
probably close to 50 people inthe room and that's the time
that I only got uh like two, wowand um, I think I ended up um,
uh, working with both eventually.

(01:10:33):
So, um, so, uh, one of thosethat sent sent me a thank you
note.
Um, uh, you know, kept in touch, and so this is a meeting that
takes place like marchish.
Um, I get a, uh, a phone call,which is the other thing.
I tell people to pick up thephone.
Nobody calls anymore.
And, um, you know, she tells meI'm in, uh, new york for the

(01:10:57):
training program at this bank.
Can I stop in for 20 minutes?
I just have a few questions.
And so I'm like absolutely I'mgenuine when I say you know I'll
help you.
And she came in with herquestions really well prepared
and you know that was it Went todo her internship.
You know, kept in touch everythree months or so, something

(01:11:18):
like that, and a year later Ihave an open position for an
associate and so, you know, Isaid, would this be of interest?
And you know, we ended upworking together for 10 years.
You know I have another personthat currently works for me that
came from one of those meetingsas well.
So staying in touch, building anetwork, is, to me, the really

(01:11:42):
valuable lesson.
You know, when I mentionedearlier, I think, the thing that
American universities do reallywell is that they do give you a
network of alumni.
You know, I didn't have thatcoming to the US.
I don't think I could havefound a single person you know,
from the University of Montrealback then.
Now there's a lot of them, andso building a network and

(01:12:05):
maintaining them so what I wouldtell these students is
everybody you met this week, youknow you should send a thank
you note to and do your best tostay in touch.
You know, because this might befive years from now, the person
that will give you your dreamjob.
You know you need to nurtureyour network, and that's not.
You know you need to nurture,uh, your network, um, and that's

(01:12:27):
not.
You know, in the days of socialmedia, I would argue it's
easier than ever, um, but Ithink it's not, um, it's not
innate to uh human beings to dothat, um, you know, and so um
yeah, I was.

Speaker 2 (01:12:45):
I was going to say it's easier and harder than ever
, I'd argue because it's easierthan ever to meet people.
But precisely because you meetso many people, to nurture those
relationships and to keep intouch also becomes harder and
harder, I guess.
So that's why also, it's, yeah,there's more value in nurturing
those relationships, butdefinitely good advice, but not

(01:13:08):
easy, true.
One last question for you.
You've worked with some of thesmartest people in the industry
economists, fund managers,sub-strategists but even the
best can overcomplicate thingsand miss the forest for the

(01:13:28):
trees sometimes.
So my question is what's theone mistake that you've seen
even the smartest people infinance keep making over and
over again?

Speaker 1 (01:13:43):
Well, it's different.
This time is one.
Well, it's different, this timeis one.

(01:14:06):
And sometimes it ends up beingtrue, but I see most of the
times when that doesn't punishyou, you just end up being right
, even though you didn'tunderstand everything.
That was, uh, that washappening, um, uh, you know I
would say that's a big one.
Um, you know, um, I've alwaystried to place an emphasis on
applied concepts, and so I don'tcare what the theory says if it
doesn't work in real life.
For me that's not super helpful.
Uh, so I've seen a lot ofpeople that are anchored to, you

(01:14:30):
know, theoretical concepts,which is mostly what you learn
in academia at the end of theday, and you know it's a painful
lesson.
You know it's a painful lessonwhen you're giving advice on
financial instruments, and soyou know I will not own that
stock because it's a painfullesson.
When you're giving advice onfinancial instruments, and so
you know I will not own thatstock because it's too expensive

(01:14:51):
.
You know, was the way to liveup until the GFC.
You know that's been very, verypainful since, since.
So you know being too rooted intheory.
You know, and history islittered with, you know, with I

(01:15:13):
mean LTCM, you know, litteredwith academics that try to give
it a go, you know, and itdoesn't work, you know, and so
that's the things that I wouldthink about in that regards.

Speaker 2 (01:15:27):
That's a great way of finishing this conversation,
francois.
It's been amazing to have youon board.
Thank you so much for the time.
For those of you again that arenot following Francois on
socials, please do, because he'ssharing incredibly insightful
posts.
And, francois, best of luck forthis new stage of your career
for teaching.

(01:15:47):
I hope you get many, many morestudents with your new venture
and I look forward to continuethe conversation with you this
year.
Thank you for coming to theBlunt Dollar.
Thank you, ignacio.
Thanks for having me.
The Blunt Dollar is written,produced, hosted and edited by
me, ignacio Ramirez.
Everything you hear concept,script, sound, design and

(01:16:08):
production comes straight frommy desk and, occasionally, my
kitchen table.
Thank you so much for listening, and join me in the next
episode of the Blunt Dollar formore raw, honest finance
conversations.