Reda Farran: Retail Investing, AI & Market Truths

In this episode of The Blunt Dollar, I'm joined by Reda Farran, a seasoned finance professional with over 12 years of experience in the industry. 

From his early days as a sell-side analyst to his current role at Finimize, where he simplifies complex financial concepts for retail investors, Reda has seen firsthand how markets and investing have evolved.

We dive deep into:

1) The democratization of finance and how retail investors are reshaping markets.

2) How to filter through financial noise on social media and find reliable investment insights.

3) The rise of AI in investing, how retail investors should use it, and what it means for the future of finance careers.

4) Is the CFA worth it? Reda shares his honest take on whether the credential is still valuable.

5) One career and one investing lesson Reda has learned over the years.

Plus, we get into the role of soft skills in finance, why simple investment strategies often outperform, and whether investing apps should use confetti animations (you don't want to miss that one).

If you're into markets, investing, and finance career insights, this episode is packed with golden nuggets. 

Tune in now!

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

New episodes drop every week on your favourite podcast platforms!

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!

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):
People overestimate in the short run a technology's
disruption, but underestimateits potential in the long run.

Speaker 2 (00:07):
How can you, as a retail investor, filter
actionable, high-qualityinformation?

Speaker 1 (00:11):
Go beyond kind of first-level reading to what's
called, you know, second-levelreading.
Read the article and askyourself okay, what are the
market implications of thisthing?

Speaker 2 (00:19):
In which part of the research process do you
incorporate all?

Speaker 1 (00:23):
this information.
The name of the game ininvesting is not to be correct
100% of the time, because that'simpossible to achieve.
The aim of the game is to beright more often than you're
wrong, having a good investmentprocess and sticking to it.

Speaker 2 (00:35):
What will our role be in the financial industry?
Like 5, 10, 20 years down theroad For the vast majority of
jobs.

Speaker 1 (00:41):
It's going to be there as a tool to try to make
you better and more efficient inyour job.
It's your intern.

Speaker 2 (00:47):
What's one lesson that you've learned in your
career?

Speaker 1 (00:51):
People think we're these nerds that just construct
Excel models all day.
But there's a big aspect ofcommunication.

Speaker 2 (00:57):
What are the steps that our listeners should have
in mind?

Speaker 1 (00:59):
It's a very good question, because if you ask me,
ignacio, what's the secret toinvesting?
And in my humble opinion, it's.

Speaker 2 (01:13):
This is the Blunt Dollar with Ignacio Ramirez.
Hello everyone, welcome to thisnew episode of the Blunt Dollar

(01:33):
Today.
I'm super excited to have RedaFarhan on the podcast.
Reda has over 12 years ofexperience in the finance
industry.
He started as a sell-sideanalyst before moving into
investment consultancy, helpinginstitutional investors with
portfolio allocation andoptimization.
After that, he spent four yearsat Fidelity as an equity
analyst, researching stocksacross different sectors,
including grid energy andutilities two sectors more

(01:57):
relevant than ever today.
And these days he's at Finimise, where he's focusing on
empowering retail investors bysimplifying financial concepts
and helping them make smarterinvestment decisions.
If you're trying to navigatefinancial markets via finance
apps or different news outlets,there's a really good chance
you've read some of his work orseen him in action, because he's

(02:19):
a regular guest on Bloombergand on CNBC and he shares his
insights on markets there.
Beyond that, reda is a verynice guy and he's giving back to
the community through hisInvesting you Academy, mentoring
students and helping the nextgeneration of students to break
into finance.
Reda, welcome to the show.
I can't wait to hear your story.

Speaker 1 (02:41):
Ignacio, thank you so much for having me.
I'm really excited to be hereand I'm looking forward to our
discussion.

Speaker 2 (02:46):
Yeah, me too, and what you guys don't know.
Like Reda is extra nice becausewe've just recorded like half
an hour of conversation only torealize that it didn't go
through, so we're starting overthe whole thing.
So, reda, I owe you a big one.
Sorry about that.
The tech sometimes playsagainst us, okay, so let's go.

(03:09):
So, retta, you work at Finimiseand, of course, a lot of the
conversation today is going toturn around retail investors and
the whole democratization offinance.
So, to start things off, I'dlike to ask you what is it that
you folks are doing at Finimizeand what is the democratization
of finance exactly?

Speaker 1 (03:27):
Yeah, I mean it's a very good question.
So, look, I think if you lookhistorically at the finance
industry and the private wealthmanagement industry and
investing industry, historicallya lot of kind of smaller retail
individuals have been kind ofleft out of that.
A lot of it has been tailored towealthy individuals who can
afford a private wealth managersimply because they had a high

(03:51):
enough net wealth.
Now what we're trying to do atFidemise is basically trying to
kind of get rid of all of thatand say, look, it doesn't matter
if you're a small or a biginvestor, and particularly if
you're a small investor, that'sinvestor.
And particularly if you're asmall investor, that's going to
be overlooked by the privatewealth management industry
because you don't have a highenough net worth and you cannot

(04:12):
go and afford to get your ownprivate wealth manager.
Okay, we are going to empoweryou to become your own wealth
advisor, your own financialadvisor.
So we're going to empower youwith the right kind of mindset,
knowledge and toolkits tobasically take your own

(04:33):
investment decisions and you nolonger have to go and rely on a
private wealth manager,especially if you don't meet
their very high threshold of networth before they even kind of
consider taking you on.

Speaker 2 (04:41):
And so obviously, this democratization of finance
has empowered a lot of returninvestors.
But there's a lot of concernsabout the quality of the
information they consume, right,because they're looking at
social media, newsletters, atdifferent finance influencers.
So how can you, as a returninvestor, filter really the

(05:02):
noise from what is fullyreliable and actionable,
high-quality information?

Speaker 1 (05:08):
Yeah, and I think what's really also interesting
embedded in that question isjust how much access to
information has shifted overtime in the investment industry.
So if you looked a few decadesago, before the advent of the
internet and so on, evenprofessional equity analysts
were searching for some kind ofinformational edge to take

(05:30):
investment decisions which couldhave ended up leading to kind
of strong investment returns.
You hear about these anecdotesof professional equity analysts
kind of sitting outside Macy'sover Christmas keeping a tally
of customers going in and out,trying to figure out if Macy's
was Christmas, keeping a tallyof customers going in and out
trying to figure out if Macy'swas going to have a good quarter
a very essential quarter duringthe holiday season or not.

(05:51):
So they were trying to capturesome kind of informational edge
and base investment decisionsoff that which back in the day,
when information was not asfreely available, that actually
gave investors an edge and youcould have probably generated
some interesting investmentreturns doing that.
Fast forward to today andthings have gone, in my opinion,

(06:11):
the other extreme.
Not only do we have a lot ofaccess to information, I'd argue
, we have access to too muchinformation.
So it's kind of an overload.
You've got everything fromnewsletters to financial news
websites and then more recently,as you alluded, to, forums,
social media and a whole lot ofother things, and it's a very

(06:34):
good question.
So how do you go aboutfiltering the noise from what's
real or not?
I think, particularly as itpertains to social media and
forums, where these posts are,at the end of the day, done by
specific individuals, I thinkit's really worth kind of taking
a step back and asking yourselfwho is this particular
individual and are theyqualified, you know, to be

(06:57):
writing about investing, to give, you know, almost like be
giving financial advice thesedays, which is kind of blurring,
you know, the line between youknow, regulated financial advice
these days, which is kind ofblurring, the line between
regulated financial adviceversus people kind of writing
things on, let's say, linkedinor on Forbes.
So I think it's really worthkind of taking a step back
before accepting someone's postsor opinions as face value, but

(07:18):
trying to actually dig into thisparticular person, look at
their previous posts, theirtrack record and so on, and are
to actually, you know, dig intothis particular person, look at
their previous posts, theirtrack record and so on, and are
they actually legit and should Ibe trusting them or not.
Okay, there's a big differencebetween you know someone who has
, you know, 100,000 followers onTikTok, because you know they

(07:39):
were posting funny videos, andnow suddenly they said look, I'm
gonna start to talk aboutstocks, you know, versus someone
you know a LinkedIn that maybehas only 1000 followers, but,
you know, has been working inthe investment industry for 20
years, as probably a lot morereputable.
I think that probably the bestthing you can do, though, is
basically, you know, armingyourself with the tools to try

(08:01):
to filter out what is legit andwhat is not.
And how do you do that?
I think try to, first of all,rely on very objective sources
of information.
So I'm talking about veryreputable financial news
websites Bloomberg, financialTimes, wall Street Journal, cnbc
, et cetera, et cetera.
Focus on those, and then try toformulate your own opinions and

(08:26):
your own views based on whatyou're reading.
Okay, so go beyond kind of firstlevel reading to what's called,
you know, second level reading.
So, instead of you know justkind of reading it and reading
an article and kind of taking astep back, read the article and
ask yourself okay, what are themarket implications of this
thing?
So, let's say you read a reportthat inflation shot up higher

(08:46):
than expected in the US.
Okay, ask yourself after youread the article what are the
market implications?
What does it mean?
How does this flare up ininflation, affect interest rate
cuts or heights?
What does that mean for thebond market, for the stock
market, for gold, for crypto,whatever, whatever?
So the more you kind of readthe subjective news, the more

(09:08):
you try to take things a stepfurther, try to understand how
this particular piece of newsaffects markets, affects the
economy and so on, the moreyou're going to be arming
yourself with the rightknowledge to try to formulate
your own opinions.
And I think forming your ownopinions is important.
But also, if you reach thatkind of level of proficiency,

(09:29):
you can also use that to assessinfluencers, because you can
start to filter out who istalking things that actually
make sense and who is kind oftalking, saying things that are
kind of lower quality butperhaps clickbaity, trying to
gather a lot of impressions ontheir posts and so on.

Speaker 2 (09:47):
Yeah, so many things to unpack there, like, first of
all, I love the second levelthinking concept.
So really trying to figure outthe second derivative of
everything you read and form aline of thought that makes sense
to you and test it andchallenge it by seeking
contrarian views and I meanthere's no secret On my side, as
a practitioner, I noticed thatwhat helps is just doing it over

(10:11):
and over again Read something,think about it, share it with
others, incorporate their otherviews, challenge your own views,
pitch it and start over.
Not only that way you willstick better within your mind,
but also your whole story willbecome a lot more robust.
And the other thing that youmade me think about is when

(10:33):
reading content online,particularly from social media
and different creators, is whatRay Dalio defines in his
principles book as thevelibability concept, which is
how credible this person isreally.
So if someone is talking aboutESG, probably someone that has
25 years as an ESG analyst has alot more things to say or is

(10:58):
going to be more believable thansomeone that is just starting
to look at the topic.
That doesn't mean that there'sbig experts on certain areas
just because it's a certain areaof expertise for them, and they
don't necessarily work there orhaven't spent as many years in
the industry looking at it, butgenerally speaking, it's a good
shortcut, I would say, lookingat that believability factor.

(11:21):
And since we're touching onsocial media, obviously Reddit,
twitter, have become primarysources of information for a lot
of investors, particularly forretail investors.
So, yeah, if you had to singleout the one thing that you look
in this type of creators as partof your research process to
identify which ones are goodfrom bad, what is it?
Years of experience, depth ofthe analysis, and second

(11:45):
question related to that is inwhich part of the research
process do you incorporate allthis information you're
consuming in social media?

Speaker 1 (11:53):
Yeah, I don't think you know.
Look, years of experience isdefinitely important.
I wouldn't say it's the singlemost important kind of factor.
Most important kind of factorIf you are basically looking at
someone's particular posts,whether they're on a forum or

(12:15):
LinkedIn or whatever, becauseyou're relying on that
information, I think it's worthreally assessing the quality of
that particular information.
So, within the post itself, askyourself does this line of
reasoning make sense?
Is it logical, is it intuitiveand so on.
And then why not cross examinesome previous posts that that
particular person has made inthe past?

(12:36):
I can kind of you know theinteresting thing, or you know
good or bad, but in theinvesting world, the stock
market etc.
It kind of tells you after sometime if you were right or wrong
.
Right, so if someone was makingpredictions for the past two
years, hey, the market is goingto crash, the market is going to
crash, and he's been makingthat prediction for two years

(12:56):
and the market never crashed.
And then you're like, okay,interesting.
So you can kind of have a lookat someone's previous sort of
posts and so on and try to kindof gauge things that way.
But you know, bearing in mindthat even the best investors in
the world.
A lot of times, to be honest,get things wrong right, and the
name of the game in investing isnot to be correct 100% of the

(13:17):
time, because that's impossibleto achieve.
The aim of the game is to beright more often than you're
wrong, and when you're right youmake bigger gains versus
smaller losses when you're wrong.
So when you're wrong, swallowyour pride, you exit the
investment at a small loss andthen, when you're right, you
know you make you make a killing.
So I think that's definitelythe first thing.
And then, in terms of where toincorporate this in your

(13:40):
investment process, I thinkthat's a really good question,
ignacio.
Investment process I thinkthat's a really good question,
ignacio, because personally forme, I view social media, forums,
newsletters and so on as kindof lying in the very first step
of the investment process, whichis idea generation.
So I find all these kind oftools and social media and
forums and so on as a good wayto get potential investment

(14:05):
ideas.
That kind of get me excited.
But something really really keyis you cannot go from that step
you know, you read about someinteresting stock.
Someone touched on Reddit youcannot go from there immediately
to execution, where you justpull the trigger and buy the
particular stock in question.

(14:25):
There's a huge gap in themiddle in the investment process
.
That relies on your own research, on your own due diligence.
That should never be skipped,no matter how good or reputable
the particular person is thatfirst posted that.
You need to do your ownresearch.
So use these.

(14:46):
You know online tools likeforums, newsletters, linkedin,
social media and so on as a goodway to get potential investment
ideas.
But then what's super crucialis you take that particular idea
and you dig into it yourself.
You study it yourself, researchit before you execute it.

(15:07):
You know some.
Perhaps halfway through thatprocess you figure out.
Actually, you know what.
Maybe I don't agree with thisperson on that particular
investment, and that'scompletely fine.
You know there is no, you know,full consensus.
At the end of the day, you knowyou're going to come across
investment ideas you disagreewith.
You're going to and you'regoing to have particular
investment ideas and investmentthoughts that others are going

(15:27):
to disagree with as well.
But that's again the name ofthe game.
I think that's something thatmakes investing really beautiful
is that you can have these veryconstructive debates with other
investment professionals.

Speaker 2 (15:40):
You can get challenged on your ideas and so
on, and there is this, no kindof universal consensus on a
particular idea what are thesteps that you follow as a
research analyst, from the ideageneration phase that you just

(16:08):
alluded to to the actualimplementation, the execution?
What are the steps that ourlisteners should have in mind?
Hey there, quick favor to askIf you enjoy the blunt dollar,
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 If you do, I'll keep bringing you honest

(16:32):
conversations, freshperspectives and the kind of
finance talk that's engaging,insightful and worth your time.

Speaker 1 (16:39):
Thanks so much for being here and let's keep these
great finance conversationsgoing it's a very good question
because if you ask me, ignacio,what's the secret to investing?
And in my humble opinion it'shaving a good investment process
and sticking to it.
These are two separate things,but both are really crucial.

(17:01):
A good investment process isone that sounds well thought out
and makes sense and considerseverything that needs to be
considered, including the risks.
There's a lot of people focuson potential upside, but not
enough people pay attention topotential downside.
But then the second tough partis sticking to it, because they

(17:23):
say, your worst enemy ininvesting is yourself, because
your own behavioral biases, yourown psychology takes over and
you start to create thesemistakes that basically don't
allow you to stick to yourinvestment process.
So I think for me what theprocess looks like and it really
depends on what I'm investingin if it's a particular stock,

(17:44):
if it's a high level ETF, ifit's a commodity or whatever but
going from idea generation andthen really trying to properly
understand let's say it's astock trying to properly
understand the particularcompany in question.
So I'm a fundamental analyst,like I'm a fundamental investor,
like from the get go.
I don't purely trade based oncharts or things like that.

(18:05):
I like to understand thecompany in question.
I tried to formulate aparticular investment thesis, so
can I summarize in three pointswhat are the main reasons why I
think this particularinvestment is a particular stock
, is a good buy.
I need to take some kind ofview on valuation because, you
know, a great company doesn'tnecessarily mean it's a great

(18:29):
investment, because you have tofactor in what price you're
paying for that particularcompany and if you end up
overpaying for a very goodcompany, you're probably going
to end up losing money and viceversa, and then definitely need
to consider the risk.
So what could go wrong withthis particular investment?
Like I said, a lot of people, Ithink, overlook that Everyone's

(18:49):
trying to find, you know, thenext NVIDIA, but you know people
don't think too much about thedownside, like what could
potentially kind of go wrong.
And then, if all these kind oftick the box, I think the last
part of the process is, you know, trying to figure out how much
to wait this particularinvestment in my portfolio.
And that's really a function oftwo things a function of how

(19:11):
does this position relate toeverything else in my portfolio?
So, for example, if myportfolio is heavily weighted in
tech stocks and I'm about toadd another tech stock.
You know that tells me I shouldnot invest heavily in this one
because I'm being overlyconcentrated in a particular
sector.
And another function is myconviction level.
So risk and conviction isultimately what determines my

(19:33):
investment position.
So a very risky stock where Ihave low conviction about will
have a super low weight to myportfolio, whereas a low risk
stock where I have a lot ofconviction on the thesis will
probably have a much higherweight.
And then you need to constantly, even after you pull the
trigger and you invest.
I think something that's reallyimportant is constantly testing

(19:55):
your investment thesis.
So if the news or the situationchanges in that particular
company and your investmentthesis breaks down let's say you
bought it for XYZ, but XYZ areno longer valid I think
something that's really crucialis to basically swallow your
pride, sell the stock inquestion, take the hit.

(20:15):
That's much better than hangingonto it with the hope that it's
going to recover at some pointin the future.

Speaker 2 (20:22):
Yeah, I think you said something at the beginning
there is that really resonateswith me is that each person has
their own process right, and youneed to find your way of doing
things.
Obviously, you can inspireyourself from others, but
personally I find that where Ispend most of my time really is
in the idea generation phase,because I like looking at
markets, testing my hypothesis,seek contrarian views to avoid

(20:46):
confirmation bias, and that'swhat I like to do.
But again, each person is superdifferent one from the other,
absolutely.

Speaker 1 (20:53):
I think that's super crucial because, remember, I
said, good investment processand sticking to it and the only
way you can stick to yourinvestment process if it's a
process suited to you, to yourpersonality, to your style of
investing, if I try to becomfortable with it, yeah.
Exactly.
You need to be comfortable withit.
If you happen to be ashort-term day trader, that's

(21:13):
because maybe that's kind of inline with your personality and
that's what you're comfortablewith.
So be it.
Focus on that and try to becomereally good at that.
You cannot take someone likethat and then try to enforce a
long-term fundamental process onthem because it's not their
style, it's not what theyresonate with.
If it's not something theyresonate with, that means
they're going to abandon ithalfway through the process,

(21:36):
which is a much worse outcome,especially when things get
complicated and you start seeinga little bit of red in your
portfolio.
That's where you start gettingnervous and challenging your
beliefs, and that's going tohappen.
There are always going to bedays you're going to open up
whatever tool you use, andyou're going to see a sea of red
.

Speaker 2 (21:54):
That's going to happen.

Speaker 1 (21:55):
That's guaranteed to happen in markets.

Speaker 2 (21:58):
So yeah, this was kind of a side comment, but,
coming back to the social mediapart, something that I wanted to
highlight is actually, the CFAInstitute published a very
interesting report aboutinfluencers and what retail
investors should watch out for,and at the end of the report
there's some recommendations,and there's one I really agree
with, which is that they saythat regulators across the globe

(22:20):
financial regulators should tryto sit together around the
table and coordinate some sortof set of rules for anyone
wishing to publish financialcontent on social media, so that
they are aware of what they areallowed to do and what not,
because a lot of people areproviding, for example,
financial advice without evenrealizing it's illegal in most

(22:42):
instances under that format.
Yeah, I think there should be alittle bit more coordination and
transparency overall to have ahealthier market really.
Something else that comes tomind, obviously talking about
social media and returninvestors and specifically
Reddit, is obviously the wholeGameStop saga that happened at

(23:04):
the end of 2020, early 2021, andthe bouts of volatility 2020,
early 2021, and the bouts ofvolatility, and a lot of people
are arguing that the increasingparticipation of retail
investors in markets is, in someinstances, creating unnecessary
volatility, and I wanted to askyou?
Do you see this increasedparticipation as a temporary

(23:25):
trend, or are we witnessing afundamental change in how
markets are going to continueoperating in the future?

Speaker 1 (23:33):
Yeah, absolutely.
I think just quickly on yourcomment about you know what the
CHFA Institute is saying.
I think that's really, you know, something I advocate for,
because there has to be somekind of global framework,
because, at the end of the day,social media posts, forum posts,
are global.
Right, your LinkedIn posts,ignacio, are being read all over

(23:54):
the world and I think that'ssomething really key for people
who are posting on social mediaetc.
Especially if they're blurringthe lines between, you know,
financial advice and opinion.
So I'm looking forward to somekind of framework like that.
I'm also looking forward to,you know, having people disclose
a position in a particular,let's say, stock or something

(24:14):
that they own, if they'reposting about it.
I think that's something.
Also, you know that everyoneshould really be doing so.
If you're writing something aforum post or LinkedIn post
about a particular investmentand you own it, I think that's
you know something.
Really, people should beflagging, at the very least from
an ethical point of view,because there's obviously a
conflict of interest there.
Right, if you own a particularinvestment, you want to paint

(24:38):
that investment in the bestlight possible, because the hope
is other people buy it and thenwe can kind of increase the
value of the investment andbenefit you.
So, going to the meme thoughtmania, I think you know, I think
things kind of went, you know,spiked and then dipped and kind
of remained sort of as they are.

(24:58):
So we're at a higher levelcompared to, you know, 2020.
But we've definitely come downfrom the peak that we saw in
2020.
Well, I think you gotta, youknow, look back and try to ask
yourself how did this happen inthe first place?
And a lot of it is related tothe pandemic.
So people were locked up athome, you know, bored, in many
cases out of a job, and wantedsome kind of way to pass the

(25:22):
time and perhaps make some money, because, you know, they
suddenly lost their jobs.
Plus, they were given a lot of,you know, of government
stimulus checks.
They felt like, hey, let mejust take this money and try to
play around within the market.
And then you saw that massivekind of spike.
Obviously that happened withGameStop and a whole bunch of
other names.
But now, as we stand now,retail participation in the

(25:46):
market, like from a volumeperspective, is definitely
higher than before the pandemic,but it has definitely come down
from the highs we saw at thepeak of the May.
Personally, I am very in favorof access and retail
participation in markets.
If it's done sensibly and ifmore retail investors are

(26:07):
participating in the market andthat leads to some higher
volatility, why should we stopthat?
I mean in the stock markets.
People understand the risks ofthe stock market and part of the
risk is that it's volatile.
I don't think if more peopleare investing in it and it
suddenly leaves the stock marketbecoming a little bit more

(26:28):
volatile, that's something weshould try to fix.
At the end of the day, thestock market is there, offering
you the potential for higherlong-term returns to compensate
you for the fact that it'svolatile and it's risky.
If you didn't want volatility,go play in the money market
funds, right.
Go play in that market Cash,say if you generate low interest
.
So I don't think, personally,higher volatility is something

(26:52):
we should kind of try to fixbecause you know more retail
investors are suddenly investingin the stock market.
To me that's not a particularissue.
I think if you have you knowthings that are, you know, like
a bunch of retail investors kindof ganging up and then trying
to, you know, manipulate themarket in a certain way, then I

(27:15):
think that's a whole kind ofdifferent issue.
I think, generally speaking,more people are now investing in
the stock market and the stockmarket becomes, you know, a bit
more volatile.
So be it.
I think also kind of last thingrelated to this is does it
impact market efficiency?
And there are two ways I cansee this going.
So what I mean by marketefficiency for those who don't

(27:36):
know is do the prices, theunderlying prices of the stocks
and so on, do they reflect theunderlying fundamentals?
So a perfectly efficient marketis one where stock prices
always fully reflect fundamentalinformation.
An inefficient market is onewhere you have a lot of
mispriced.

(27:56):
So I think one question I'mkind of asking myself and I
don't know the answer to this,maybe, ignacio you know is does
increased retail participationlead to more market efficiency
or inefficiency?
And this can kind of go twoways.
I think, on one hand, if youhave a lot more people
participating in the market,looking for underpriced stocks

(28:18):
to buy, or overpriced stocks toshort or, at the very least, to
avoid, there's an argument to bemade that perhaps that
increases market efficiency,because now you have more and
more investors looking at themarket, looking at stocks,
stocks buying things they thinkare undervalued, selling things
yeah, better price discovery andso on, better price discovery
and so on.

(28:38):
On the other hand, there's anargument to be made that if this
influx of retail investors arenot fully informed and are not,
you know, acting rationally,that perhaps that leads to more
inefficient markets.
Historically speaking, justlooking at what happened with
GameStop, you can argue thatthat was an example of an
inefficient market, becausethere's no way GameStop was

(29:00):
fundamentally priced at $2 andsuddenly was correctly priced at
$100, only to fall back to kindof $30, right.
So that was kind of an exampleof a big, perhaps, inefficiency.
That happened in a short matterof time.
So I don't know how this isgoing to go in the future.
I think, as more retailinvestors kind of participate
and if we you know me, you andother people in the finance

(29:22):
industry do our job properly tokind of educate people on how to
invest properly, then perhapsthat leads the market to
becoming more efficient overtime.
But the jury's out and we won'tknow.

Speaker 2 (29:33):
Just yet I tend to be in camp number one, probably.
I mean, I think, the larger thenumber of market participants,
informed investors at least, nomatter what their views are,
because obviously you know,there's people that are always
going to have more bearish viewsand some more bullish views,
but as long as you know there'smore participants doing, you
know, informed decisions, Ithink that's a sign of a

(29:55):
healthier market.
The problem I have, though, iswhen there's investors that are
not really investing but aregambling raises a whole
different set of questions intothe equation, which are the
ethical concerns of mainly thefintech platforms and the
trading platforms and the accessthat they've created for many

(30:17):
of these investors.
As you know, there's been a lotof debates around the
gamification of investing andhow some platforms have
encouraged excessive risk-takingamongst inexperienced investors
, and obviously the wholeconfetti animation thing comes
into mind here.
So I guess my question isspecifically what do you think

(30:40):
of confettis in tradingapplications, reta, and, more
broadly and more seriously, doyou think investing platforms
have a moral responsibility todiscourage risky behavior
amongst retail investors, or notat all?

Speaker 1 (30:53):
Yeah, so to answer your two questions quickly.
I hate the confetti and Idefinitely think trading
platforms have a moralresponsibility to protect their
clients.
Look, I hate the gamificationof investing and trading.
I don't think it should be likethat at all.
I think like what are youtrying to do at the end of the

(31:13):
day?
You know, as a broker, you'retrying to encourage people to
trade more because that benefitsyou.
Does it benefit them?
No, it doesn't right.
There are so many studies outthere, academic studies out
there, that show excessivetrading leads to worse
investment outcomes.
Even if you are trading with abroker that doesn't charge you

(31:34):
commissions per trade, you arestill implicitly paying a little
bit of a fee, just by virtue ofthe bid-ask spread.
That's when you basically buysomething at a higher price than
you sell it for, when you'redealing with a particular market
.
Just think about when you go toyour foreign exchange shop and
you want to exchange dollars toeuros right, they always have

(31:55):
two prices printed and you wantto buy euros, you will always
buy euros at a higher price thanwhat you will sell it to them,
right To your local currencyshop.
It's the exact same thing inthe stock market.
There's a bid-ask spread theycall it, and this spread becomes
more pronounced the smaller thestock and the less liquid or
the less frequently the stocktrades.

(32:15):
So, implicitly, you're paying alittle bit of a cost.
Even if you're trading with acommission free broker, you're
still paying a little bitthrough the bid-ask spread every
time you trade a stock.
I think the other bigger, widerproblem is the more you trade,
the more prone you're going tobe to making behavioral mistakes
.
So if you're trying to day trade, you're trying to buy something
at the low and sell at the high.

(32:37):
You're essentially trying totime the market.
That's impossible.
It's impossible to time themarket.
It's extremely difficult.
Even the best investors can'tdo it.
And one of my favorite sayingsis time in the market beats
timing the market.
So don't try to time the market.
Don't try to day trade and tryto buy on the day's low and sell

(32:59):
on the high, and so on.
Build yourself a sensible,diversified portfolio and just
keep on holding it for a very,very long time.
You don't need to trade sofrequently.
Maybe rebalance it once a month, once a quarter or something
like that.
But you surely do not needConfetti to try to encourage you
to trade that portfoliounnecessarily and I mean, yeah,

(33:22):
do they have a moralresponsibility?
Absolutely, I don't think youshould be encouraging excessive
trading, because it's a factExcessive trading leads to worse
investment outcomes.
So if you genuinely have yourclient's interests at heart and
not your own business interestsat heart, you should not be
encouraging excessive trading.

Speaker 2 (33:43):
So I have a mixed feeling about this one.
I kind of disagree and disagreewith you.
So I 100% agree with the factthat investing is not a game.
I think we should all agree onthat.
It's very serious.
We shouldn't be gambling withour or other people's money.
Now, what I find these platformsdid, which I kind of agree with

(34:06):
, is they did simplify theinvestment process and the whole
journey Because, as you said atthe beginning, with information
, we came from a world whereinformation was barely
accessible to a world where it'sdemocratized and trading is the
same.
A few years ago, it was close toimpossible as a retail investor

(34:28):
, to do the things we can dotoday, especially if you wanted
to get into a little bit morecomplex asset classes and so on,
and I think that's part of ahealthier market having broader
access and simplifying the rulesof the game in order to be able
to operate.
Now, of course, you know, Ithink in some instances this has
been overdone and someinvestors have.

(34:51):
Indeed, with all thisgamification of what trading and
investing is really about andthe dangers associated with it,
because that's the thing whenyou think it's a game, you think
there's no real consequences.
But there's real consequences,and there's been some tragic
stories of people losing theirlife savings and so on, and
that's where I have a problem.
So, yeah, 100% in for makingthings a little bit easier,

(35:17):
modernize platforms andincreasing the access and so on,
but definitely not on making itlook trivial trivial um, you
can, you can do things.

Speaker 1 (35:32):
I think you know you can do certain things that you
know that you don't have toreward every time someone does a
trade.
For example, let's say someoneopens up a platform and they buy
their very first stock.
They buy whatever it is there.
Okay, show them a littleconfetti congratulations, you
have officially bought the firststock.
Like you are now a stockinvestor.
But then that's it.
Like you don't have to keep ongiving them confetti and
champagne virtual champagneemojis every time they do a

(35:54):
trade, because I think that'staking things too far.
I think buying your first stockin my opinion, that is a nice
achievement, it's a nice feeling.

Speaker 2 (36:00):
You know, I remember the first time I bought my first
stock I was like your heart isbeating as if, if you know you
were about to change your wholelife, even if it's for five
bucks, right.

Speaker 1 (36:11):
I think $3 at the time but yeah, but you know what
I mean.
Something like that I canunderstand, I can agree with.
Or perhaps, if you want peopleto participate, some platforms
they do this thing where you buysomething on your bank card,
they round up to the nearestdollar and then they
automatically invest that in anETF.
You know, I think somethinglike that is sensible because

(36:33):
you're encouraging people tojust, you know, in small amounts
, add gradually to an ETF thattracks a broad market and to
kind of hold on to it.
I think, to me, something likethat is a lot more sensible, so
you can still do things is a lotmore sensible, so you can still
do things.
I'm not against, you know,making things more fun because
you know you're not going tostick to investing if you're

(36:56):
going to find it extremely,extremely boring.
You know you do need someelement of fun and that's
something I really enjoy aboutinvesting, because I get to
learn a lot about differentindustries, different
technologies and things likethat, and that really excites me
.
I histories differenttechnologies and things like
that, and that really excites me.
I think there should be anelement of fun and investing,
but I think, yeah, just thedegree of which, and trying to
incentivize excessive trading, Idon't think that's something I

(37:18):
personally agree with.

Speaker 2 (37:19):
Yeah.
So obviously, these platforms,these modern trading platforms,
have been able to come intoexistence thanks to the
development of tech.
So I'd like to spend now a bitof time talking about tech, and
particularly about AI, which Ithink it's a topic that is very
close to both of our hearts.
So my first question is I mean,we've seen a proliferation of

(37:44):
AI tools to assist you in theinvestment journey.
How do you think retailinvestors are using these tools
at the moment, and how do youthink they should be using it
when it comes to their investingjourney?
Hey there, quick ad break.
Do you work in the financeindustry and have a genuinely
interesting story to share?

(38:04):
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.
Please put us in touch.
You can reach out to medirectly via LinkedIn.
I'd love to hear from you.

Speaker 1 (38:21):
And now back to the show, so it's hard to say how
retail investors are currentlyusing it.
I mean, I don't have some kindof you know, informational edge
on how people are using these AItools with their investing.
I have seen a lot of anecdotesand so on, but in terms of how
they should be using, of course,I have a view there.

(38:42):
I think, with any exciting newtechnology, I think you know you
should really put a consciouseffort to try to learn how to
use it, especially something asfundamental as AI.
You hear these anecdotes ofpeople where their jobs are a
bit at risk because of AI andthen they have this kind of

(39:02):
personal vendetta against thetechnology and I'm going to
refuse to learn AI.
I think that's a very wrongapproach.
From a career perspective and awider kind of life perspective,
I think if there's a bigtechnological disruption
happening, I think you shouldreally put a conscious effort to
try to learn.
Ok, at the end of the day, aiis it will replace some jobs,

(39:23):
but I think, for the vastmajority of jobs is going to be
there as a tool to try to makeyou better and more efficient in
your job, and that could beyour professional job or in
investing, as we're talkingabout today, ignacio, and that's
what I view AI as a really goodtool to help make your
investment life easier.
Again, going back to that thingI was describing earlier, where

(39:44):
you had idea generation fromsocial media and newsletters and
so on, and then, at the veryfar right, you have execution,
and then you have this huge kindof process in between, which is
conducting your own research.
I think now the beauty about AIis that you know what used to
take you perhaps a really longamount.
A large amount of time can nowbe shortened quite a lot.

(40:05):
It will still take you time,but you can shorten that amount.
For example, very easy use case, right, if you're considering
investing in a store, I thinkyou should spend a lot of time
reading the annual report,because the annual report tells
you what the business does.
Management literally risks, allthe risks that could face the
company.
There's the managementdiscussion that tell you why

(40:28):
revenues went up, why profitmargins went down, et cetera, et
cetera, and you should bespending a lot of time reading
that.
But now you can just go to anAI tool, upload the PDFs and
start to have a chat.
You can like summarize thecompany's business model,
summarize the key risks, etcetera, et cetera.

Speaker 2 (40:44):
So it's a really great way and it's so easy in
chat gp like it takes you likeliterally five seconds to do
that absolutely, absolutely, andI think that's to me that's
where, like, the power of aicomes in.

Speaker 1 (40:56):
It's its ability to do things, maybe not to
perfection or to the level of ahuman, but it can do a wide
range of tasks much quicker thana human speed.
And and again, if you're goingfrom this idea generation stage,
it's like a filtering process.
Not every single idea is goingto end up in execution, but if

(41:17):
you have 10 potential ideas,it's going to take you a lot of
time to research 10 differentinvestments if you don't have AI
.
But suddenly, if you have AI,you can use this as a really
powerful tool to do quickresearch and quick understanding
of the different kind ofpotential investments.
And then you shorten that maybeto two and then you can start
to do more in depth.

(41:38):
So I'm all for using AI.
It's a great tool.
It's there to make your lifeeasier.
It's your intern, it's your ownpersonal intern, a team of
interns, a team of interns,personal intern At the end of
the day, a team of interns.

Speaker 2 (41:52):
A team of interns.

Speaker 1 (41:52):
And you know very cheaply.
Like what is it?
$20 a month for the paidversion.
You know the medium tier nowchallenges.
It's the cheapest intern you'reever going to hire.
You might as well use it, and Ithink people should be using it
.
There are many different waysto use it.
I've written a lot about thisAffinimize.
You can use it to summarizefinancial statements.
You can use it to conduct aSWOT analysis on particular

(42:16):
companies.
You can use it to backtestcertain trading signals on the
particular stock price, forexample.
Understand the competitors.
There are just.
There's no limits to how youcan use it.
The only limit is yourcreativity.
Yeah.

Speaker 2 (42:29):
I remember you had a viral post on LinkedIn you or
one of your colleagues inFinimize yeah a year ago, where
you were explaining how to useChatGPT.

Speaker 1 (42:37):
Yeah, that was me.
It was you right, that wasreally cool.

Speaker 2 (42:41):
So I mean you and I have talked about this in the
past and our concerns about howfast AI is moving and the
dangers it represents for ourjobs.
Obviously, you spend a lot oftime writing content, generating
content that all these toolsare now making a lot easier to
do.
On my side, I'm a fixed incomeadvisor and I do see the

(43:04):
potential for a lot of my day today tasks to get automated to a
certain extent in upcomingyears.
So I guess my question for youis will Reda and Ignacio of the
future survive in this futureand what will our role be in the

(43:25):
financial industry like 5, 10,20 years down the road?

Speaker 1 (43:29):
Wow, I didn't think about it until you asked me,
ignacio, I don't know.
You know, I think it was BillGates that once famously said
people overestimate in the shortrun a technology's disruption,
but underestimate its potentialin the long run.
So, in the sense that perhapspeople are, like you know,

(43:49):
overly excited now and so on,but then, kind of taking the
internet example, you know wehad the dot-com bubble.
Everyone was extremely excitedand the whole thing collapsed,
but then in the long run, theinternet completely changed our
lives, right?
I think something similar couldbe happening with AI at the
moment, where maybe we areunderestimating its long runrun

(44:10):
potential.
I mean, this technology hasbeen out for what?
Just over two, three years now,and already the rate of change
that we've seen is phenomenal.
Is it at a stage now where itcan do my job?
No, and I'm not trying to heysay I'm great at my job, it's
the simple truth is, you know,I've tried, I've tried to

(44:31):
replicate it to do, you know, myjob.
I tried to create a rather GPTyou know and it wasn't there.
10 years from now, maybe, maybe,maybe you can take over the
written content that you and Ido, ignacio, but can it really
take over the intuitive thinking, critical thinking that you and

(44:54):
I do about markets, the makingthe connections?
I think time will tell.
I think AI is really good atdoing kind of specialized tasks,
but I think one thing, andthat's the distinction people
are making between AI andartificial general intelligence,
because AI at the moment, ifyou think about it, is really
good at doing specific tasks,but the end goal of AI and this

(45:16):
is OpenAI's mission is to createartificial general intelligence
where it's not just really goodat certain things, it's really
good at everything.
I think that's whatdifferentiates humans between AI
at the moment is that we'regood at many different things.
We can make those connections,which is really important in the
context of markets andinvesting, because nothing is

(45:38):
isolated in investing.
Even me, when I spent four yearsas an equity analyst, as a
stock analyst, I made it a pointto understand what's happening
in the bond market, what'shappening in commodities and so
on, because everything isinterconnected.
I used to look at utilitiesUtility stocks because they pay
high dividend yields.
People think of them as bonds,so bond yields used to impact

(46:01):
utility stocks.
I had to understand the bondmarket Because these utilities
burn natural gas to generatepower.
I had to understand the naturalgas market and commodities.
I guess what I'm trying to sayis everything is interconnected
and that's something we do wellin the industry, because we've
been looking at markets for avery long time.
That at the moment is hard toreplicate with AI.

(46:24):
To answer your question in 10years, what will our role be?
I honestly don't have an answer.
Ignacio, where do you think wewill be in 10?

Speaker 2 (46:32):
years.
I have a great answer to thatquestion, actually.
So I mean, first of all, I'm anoptimist about AI.
I tend to look at life glasshalf full, so I see everything
as an opportunity.
That's my disclaimer.
So there is a book I think theauthor is Peter Covey and the
name of the book is Humans AreUnderrated, and there's a theory

(46:53):
in there which says that, ananecdote which explains that I'm
the best chess player ever.
I'm not a chess player, but Iread that in the book.
So the best chess player is nota human and is not a machine.
Apparently, it's what it'scalled in the chess world as a
centaur, and a centaur is agroup of humans that have the

(47:14):
support of several machines, andapparently that's the best
chess player that has everexisted.
If I'm making this up, by theway, or someone disagrees after
listening to the podcast thatknows all about chess, please
let me know, because I did readthis in the book and it really
resonated with me and I realizedoh my God, maybe we're going to
become centers in the future.

(47:34):
Maybe the best financialadvisor in the future is not
going to be a human, is notgoing to be a machine, is going
to be a human counting with thesupport of a very strong machine
, and maybe Ignacio.
In the future, instead of beingjust Ignacio fixed income
advisor, looking at credit andrates and bond markets all day

(47:56):
long, I'm going to be able to dowhat I do for bonds, but across
all asset classes, and producemuch higher quality output and
much more quantity too.
The way I see it is yeah, thesetools, if we are proactive and
we do things right and educateourselves, are going to empower
us to become the best version ofourselves.

(48:17):
And there is also a sentence Ilove related to all of these,
which says AI won't replace you,but someone using AI will, and
I think that's 100% true,because you just can't compete.
I agree with you with the factthat a lot of AI tools are still
not there yet, but, first ofall, things are moving super

(48:39):
fast, so you're literally seeingprogress from one week to
another, and, secondly, thereare already some really good
tools, like ChatGPT and so on,that do help and provide a lot
of value added already, and I'veseen it first eye.
You just can compete.
I mean, you can upload aprospectus on ChatGPT or the

(49:02):
annual reports, as you weresaying, ask specific questions
and you're going to get fairlygood answers in seconds, and
that job would take you minutesor hours if you had to do it
yourself.
So I'm excited.
It's a little bit scary, I know,but I'm an optimist and I want
to be excited.
I think if we take time toeducate ourselves, we're going
to become a better versions ofourselves and better

(49:24):
professionals.
And yeah, and I can't wait tosee this whole revolution
happening.
Honestly, do you remember?

Speaker 1 (49:30):
ignacio discussion we were having a few months ago
about this, actually, and I toldyou, because you and I were
analysts, but we're also contentcreators, you know, because you
know I produce contentcinemized, you're producing
content on linkedin and so on,and I was telling you I I don't
know the answer to this, but thephilosophical question with AI
now generating so much content,so anyone can now open an

(49:52):
investing blog and ask ShajiPateet to write blog posts and
post them online, what is astock, what is a ball, what is
whatever, whatever?
And I was asking you do youthink this dilutes the value of
content just by virtue of havinga massive explosion in volume?
Or does that increase the valueof really good, differentiated,

(50:14):
well-researched, thoughtfulcontent?
Because in this sea ofAI-generated content, are we
that massive tuna fish thatsells for a million dollars in a
Tokyo fish market?
Because you can suddenly createreally differentiated content
and kind of stand out from allthis AI generated content?

(50:36):
Again, I don't know the answerto that, but I think if you do
want to create content thatstands out, you at the very
least need to be using AI,because AI can help you improve,
at the end of the day, yourcontent, your content, your
writing.
You can use it for editing, youcan use it to research ideas or

(50:58):
, you know, let's say I'mwriting a piece.
You know like three reasons whysomething like that.
I can ask you okay, give me allthe reasons you think of and
then like, oh, actually wait tooverlook this one, you know.
So it's a stool tool, it's acompanion to help make your life
better and easier and moreefficient.
I think everyone should beusing it one way or another.
100%.

Speaker 2 (51:16):
Amen to that.
So I want to go away now fromtechnology.
I want to go away from retailinvesting.
We have time for a couple morequestions, so I want to go back
to you actually, actually, andyour career, and I have two
questions.
So my first question is relatedto the CFA.
You're a CFA charterholder.
A lot of our listeners, I'mguessing, are either in the

(51:40):
process of becoming a CFAcharterholder or thinking about
it.
Obviously huge time commitment.
The unofficial rule says thatit's around 300 hours per level
and I wanted to ask you in allhonesty is it worth it and has
it helped you in your career tobe a charterholder?

Speaker 1 (52:00):
So for me, my situation is a little bit unique
, because I basically did mymajor, my undergraduate degree,
in finance, and then I did amaster's in finance, and then I
did a master's in finance andthen I did the CFA.
What I mean to say by that is,by the time I came to do the CFA
, I actually knew a lot of thematerial already.
So, from an incrementallearning perspective, I still

(52:24):
learned.
I think one thing the CFA doeswell is that it's quite broad,
in the sense that you learn alot, not just about stocks, but
you learn about fixed income,you learn about commodities I
think recently they includedcrypto correct me if I'm wrong.
I think so yeah, yeah and thenyou learn about investment
management and so on and so on.
So again, I think havingespecially when it comes to
markets and investing, I thinkhaving that kind of breadth,

(52:46):
even if you just have high levelunderstanding of different
markets, I think that's really,really important because markets
are all intertwined Incrementalknowledge that I gained I still
gained some, but wasn't huge,considering I've already done a
bachelor's and a master's infinance I think CSA becomes more
like a signaling tool.
You get those three letters, youadd them at the end of your

(53:08):
name and then when you'reapplying for jobs, it definitely
helps because it signals that ayou understand finance because
you know.
Hopefully you do.
After 300 times 3 900 hours ofstudying finance, I really hope
you 100 what did they say?
A thousand hours to become apro or and?

(53:28):
you know 10 000, okay, well,you're way off.
Then no, okay, but you're good,well on the way.
Well on the way you're, you'reon track, you're 10 percent
there.
Um, so you kind of signal that,a you know, you understand
finance.
B you're dedicated.
Because I think that I don'tthink the CFA personally is hard

(53:49):
.
Personally, in terms of thematerial itself.
It's not like you're doingstochastic calculus, you know,
which I had to do on my master's.
I think it just requires a lotof willpower and a lot of
commitment to sit down and studyit.
So I think that's somethingelse.
You signal to employers thathey, look, I'm dedicated, I can
sit down, put my head down andget work done.
Does it help?

(54:10):
I think it depends what you wantto do in this industry.
I think if you're just tryingto become a better investor and
you don't necessarily want towork in this industry
professionally, I definitelydon't think you need to do CFA.
You've got lots of learningmaterials freely available
online, lots of good people youcan learn from online courses
and so on.
If you want to work in theindustry, I think it kind of
depends what you want to do.
I think I get this question alot from some of the students

(54:33):
that invest in New Academy thatwe see people are interested in
joining the sell side.
They want to join investmentbanking and I tell them to be
honest, there's probably nopoint in doing a CFA, because
the CFA is really tailored moretowards the buy side of things
People who want to work atinvestment firms, hedge funds,
private wealth managers and soon and so on.
And if you do want to work inthose areas, I definitely do

(54:55):
think it helps.
Has its relevance gone down overtime?
I argue yes, but in absoluteterms, does it help?
Yes, even if it doesn't changethe odds of your application
being read, at the very leastyou learn.
You learn by doing the CFA.
So just having that knowledge,a lot of work, but you do learn

(55:18):
a lot.

Speaker 2 (55:32):
So on my side, I didn't study finance
specifically, I did business.
So I did cover a fair amount ofstuff from, probably from the
level one.
But what I enjoyed about theCFA despite the fact that it's a
long journey and it's painfulis, yeah, the amount of things
you learn, and it's stuff thatstays on the back of your mind.
So obviously, if someone askedme to do the calculation

(55:55):
manually on a piece of paper onthe pricing of an interest rate
swap, I would say, gosh, I don'tremember that, but I know I did
study that kind of stuff in myCFA.
I can go back to the materialsand I'm like, oh yeah, this is
it, you know, and I'm notcompletely lost anymore.
So in that sense I really likedit.
And secondly, I think being aCFA doesn't mean I mean it

(56:18):
doesn't mean that you're abetter investor or that you're
going to be more successful infinance, but I do think it
signals, at least for peoplethat don't know you, that you
have work, discipline and grit,because it takes a lot of effort
to do it.
Whenever you see those threeletters CFA on a CV, you know
already that person ishardworking, because you don't

(56:40):
get the material itself isnecessarily difficult.

Speaker 1 (56:43):
I think what the cfa at the end of the day, requires
is a lot of dedication and grit,like forcing yourself to lock
yourself up on a weekend to juststudy.

Speaker 2 (57:00):
I'm prouder of my cfa than than my master's degree.
I have two master's degrees,actually, and, and yeah, but the
reason for that is that when Igot my master's, I was a
full-time student and I had allmy day to go to the library and
go to class and hang out with myfriends and the CFA.
I had to do it in the eveningwhile I was working full-time in

(57:20):
finance, and that's not thesame thing have dinner and have
to sit down at 10 in the eveningfor a couple of hours for three
years because at the time youcould only take the exam once a
year.
Man, I mean, that was, that wastough, like I.
I don't even know how I didthat, yeah, yeah yeah, I fully
agree.

Speaker 1 (57:40):
I had to do exactly the same, so I did it in two
years because you could do thelevel one in december if you
remember like the two in juneand then three the next kind of
June, and yeah, those two yearswere miserable to your point,
like literally my first properjob in London and coming back
home.

Speaker 2 (58:00):
But it helps you to appreciate life Once you're done
with it.
You're like, oh my.
God look at all this free time Ihave.
So one last question for you, abit more philosophical, but I
want to ask you I mean, you have12 years in the industry
already, hopefully many, manymore to come, but I'd like you
to share, maybe a valuableinsight with our listeners
what's one lesson that you'velearned in your career, in your

(58:21):
finance careers, that you thinkcould help our listeners in
their finance career?
What's something that you wouldlike to share with them, a
piece of advice, a tip or justsomething in general that you
think could be of use?

Speaker 1 (58:33):
I'll give maybe two One is career related and maybe
one is investing related,because the two are intertwined.
Right, I have an investingcareer.
At the end of the day, I thinkthe career one, if I had to give
one kind of top tip, issomething maybe I
underappreciated in the past butnow I'm realizing is essential

(58:53):
and it's probably going to beeven more essential in an age of
AI, is the importance of softskills, the importance of
communication, the importance ofyou know teamwork, expressing
yourself, expressing your ideasand so on.
And a very good example I gaveor I gave that actually happened
to me is being an equityanalyst at Fidelity.

(59:15):
And people think equityanalysts sit down on their desk
all day researching companies,reading annual reports, building
complicated discounted cashflow models and so on, and then
their day is over.
That was half the job.
Once I did that and I concludeda particular stock was a good

(59:35):
investment, then the real jobstarted, which is trying to
convince my portfolio managersto actually buy it.
Storytelling, storytelling Iliterally because you know, at
fidelity I had many portfoliomanagers to report to, so I
would literally have to walk thedesks and like sit down with
them, tell you okay, guys, Ithink this is a really

(59:57):
interesting, you know, stockidea, investment idea and let me
tell you why, and so on and soon and so on.
And there's a big aspect ofcommunication.
Pitching, debating involves,you know, and not even just kind
of you know, doing it to myportfolio managers.
But even you know, we had theprivilege at Fidelity to meet
the management teams of thecompanies we invested in.

(01:00:17):
So I would run those meetingsand, you know, you'd ask them
questions and so on.
Part of the information you'dgather is what they're telling
you, but part of it was theirbody language.
You know, yeah, yeah, yeah,we're gonna hit guidance next
quarter or something.
Yeah, you know, like just justthe way they would talk about
their industry or something likethat, their body language can

(01:00:37):
kind of reveal a lot about, like, are they actually have a
positive outlook, negativeoutlook, etc.
So, but what is that that comesout to?
Kind of reading and trying tounderstand humans.
At the end of the day, I thinkthe importance of soft skills,
communication, dealing withpeople, debating, resolving
conflicts and so on is somethingreally underappreciated in the

(01:00:58):
finance industry.
People think we're these nerdsthat just construct Excel models
all day.
But there's a big aspect ofcommunication, especially if you
work in client-facing roles.
Let's say you're a financialadvisor.
Even if you're a portfoliomanager, you still have to deal
with the clients that areinvesting in your funds and so
on.
I think that's a reallyunderappreciated skill,
especially in the age of AI,because that soft skills is what
differentiates humans betweenAI, one of the things that

(01:01:21):
differentiates.
And I think the second kind oflesson on investing is a really,
really simple one, somethingyou know 12 years, well, more
years investing in the markets,because I started before I
started my career.
But just keep things simple,like start young and early.
Because of the power ofcompound interest and

(01:01:43):
compounding returns, the earlieryou start your investment
journey, the better off you'regoing to be when you retire, for
example.
So just start now with what youhave and keep things simple.
Buy an ETF that tracks globalstocks.
Buy an ETF that tracks globalbonds.
Adjust the mix based on yourrisk tolerance and just hold it.

(01:02:06):
Keep things simple.
Start now.
Harness the power of compoundinterest, which Albert Einstein
famously called the eighthwonder of the world.
Keep things simple and honestly.
You're going to be better offthan a lot of people who try to
select their own stocks.
Try to select the hottestthematic ETFs, try to day trade.
I bet you, if you just do thesethings and keep it simple,

(01:02:28):
you're going to beat the vastmajority of people who are
trying to be very clever withtheir investments.
Investing doesn't have to beoverly complicated.
Honestly, simple things lead tovery adequate and good outcomes
.

Speaker 2 (01:02:40):
You're talking to a fixed income guy, so the
compounding idea is music to myears.
Yeah, I love how we got two forthe price of one there.

Speaker 1 (01:02:50):
Thanks, for sharing those tips.

Speaker 2 (01:02:57):
Reda, it's been an absolute pleasure to have you on
the show.
I think you've shared many,many gold nuggets there.
For those of you that againdidn't know Reda before, make
sure to check him on socials andhis work on Finimise and Reda.
Thank you so much for being onthe show and, yeah, hope to see
you very soon again over here.

Speaker 1 (01:03:12):
Been an absolute pleasure.
Really enjoyed that.
Ignacio, thank you so much and,yeah, maybe I'll be back and
we'll have some more interestingdiscussions.

Speaker 2 (01:03:20):
My God, I forgot to press the record button again,
Reda.
You're joking I can see you'rerecording.
The Blunt Dollar is written,produced, hosted and edited by
me, Ignacio Ramirez.
Everything you hear concept,script, sound, design and
production come straight from mydesk and, occasionally, my
kitchen table.

(01:03:40):
Thank you so much for listeningand join me in the next episode
of the Blunt Dollar for moreraw, honest finance
conversations.