My morning reads:

​• Something Is Shifting in the Inflation Picture: Claudia Sahm on why she moved from hold to hike ahead of next week’s Fed meeting — a division no single CPI print will resolve. (Stay-At-Home Macro)

​• Netanyahu Got an Explicit Warning Before Oct. 7. He Didn’t Brief Security Chiefs: In September ’23, UAE President bin Zayed called Netanyahu directly in September 2023 to deliver a harsh warning — something big was coming from Hamas — and Netanyahu did nothing. An extensive investigation, conducted for a new book, reveals the PM’s failures surrounding Oct. 7.  (Haaretz) see also Making Sense of That Big Story Saying Netanyahu Was Warned About Oct 7: Josh Marshall on the 45-minute call, with Israeli elections set for October 27. (Talking Points Memo)

​• Dead Malls Dot America. Why Not Get Rid of Them?: M. Nolan Gray on the decades-old agreements with former anchor tenants that keep dead malls locked up. (Washington Post)

• The American Dream Is Alive. And It’s Minting Millionaires. Meet the ‘Everywhere Millionaires’ proving that elite degrees aren’t a prerequisite for building massive wealth. Dick Portillo opened a hot-dog stand in 1963 without knowing how to cook a hot dog; half a century later he sold the company for $1 billion and moored a 130-foot yacht named Top Dog. (Wall Street Journal)

​• An A.I. Giant Made an Enemy of Record Labels. Can It Play Nice?: Ben Sisario on Suno, sued by the majors over copyright, now releasing a version of its music generator trained in partnership with Warner Music. (New York Times)

• The complicated implications of the spectacular ‘Apollo premium’ And when you isolate Apollo? The firm, according to Buccola and Nini, pays a staggering 100 basis point premium merely for being Apollo, despite their deals boasting below-average leverage and credit contracts that are not particularly loose by modern standards. ​ New research finds Apollo pays a staggering 100-basis-point premium merely for being Apollo — despite below-average leverage and credit contracts that aren’t particularly loose.  (Financial Times)

• How Williamsburg Lost Its Swag: A new generation of gentrifiers is gentrifying the old gentrifiers. (Slate)

​• This Tiny E-Reader Is the Single Best Piece of Technology in Years: The Power Broker weighs as much as a brick at 1,344 pages — some readers cut it apart at the spine. The Atlantic tries something else. The $70 Xteink X3 puts Silicon Valley to shame. (The Atlantic)

​• The Human-Origin Story Is Being Radically Revised: Ross Andersen on the modern humans who wandered into Ice Age Europe 50,000 years ago — and the Neanderthals who’d been living among the glaciers all along. New secrets from our past have been coming out in droves. (The Atlantic) see also Scientists Find More Than 1,000 Genetic Variants Linked to Personality: More than one million genomes helped identify DNA variants linked to extroversion, agreeableness, neuroticism and more. Researchers measured how those traits influenced how people lived. Emily Baumgaertner Nunn on the study of more than a million genomes tying DNA variants to extroversion, agreeableness, neuroticism, and more. (New York Times)

• She Also Found It at the Movies: The Hedgehog Review on Pauline Kael, whose film reviews were truly something else. I don’t read Pauline Kael to track my sensibility with hers on an aesthetic oscilloscope. I read her because I think she—more than any writer I know, including Agee—brings the whole of herself to writing about movies. And so the best way to think about Kael’s writing is not as movie film criticism; that would be a category error. She wrote in a known genre, but not that genre, whether she knew it or not. (Hedgehog Review)

Video of the day: The Economics of Music Labels

Be sure to check out our Masters in Business next week with Seth Bernstein, CEO of AllianceBernstein and Head of Asset Management of Equitable Holdings, the 69% owner AB. The firm manages $905.5B. Previously, he spent 32 years at JPMorgan Chase, where he eventually became the Global Head of Managed Solutions & Strategy at JPAM, responsible for all discretionary assets for Private Banking clients, and Global Head of Fixed Income & Currency. He eventually became CFO of JPM’s Investment Management & Private Banking division.

Oil hits $100 for the first time since July

Source: Financial Times

 

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At The Money: Considering a Career Change? How About FINFLUENCER? With Tyler Gardner (September 9, 2026)

Ever think of a career change? Have you thought about becoming a “finfluencer” on TikTok, Insta, or YouTube? It could be both interesting AND lucrative.

Full transcript below.

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About this week’s guest:

Tyler Gardner is a former financial adviser and portfolio manager who pivoted to a financial-media business, reaching more than six million followers.  His book “Real Wealth: Make Money Work for You” arrives Dec 1, 2026

For more info, see:

Professional/Personal website

YouTube

LinkedIn

Newsletter

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Find all of the previous At the Money episodes here, and in the MiB feed on Apple Podcasts, YouTube, Spotify, and Bloomberg. And find the entire musical playlist of all the songs I have used on At the Money on Spotify

 

 

 

 

TRANSCRIPT: At the Money Becoming a Financial Influencer, with Tyler Gardner
Host: Barry Ritholtz  |  Bloomberg Audio Studios

 

BARRY RITHOLTZ: Ever think of becoming an influencer, shifting your career to TikTok, Instagram, or YouTube? It could be both interesting and lucrative. To help us unpack this and what it might mean for your career, let’s bring in Tyler Gardner. He taught economics, eventually becoming a financial advisor and portfolio manager, but then he pivoted to a financial media business, eventually reaching more than 6 million followers. His book, Real Wealth: Make Money Work For You, arrives December 1st, 2026.

So, Tyler, let’s start in the beginning of your career. What pulled you out of education and into finance?

TYLER GARDNER: Oh, I think the easiest way to sum it up is I’ve never been pulled out of education. There was a point — I remember the meeting specifically — it was with our faculty at a school in Connecticut where we had a representative from TIAA-CREF who came to talk about retirement funds. And not one colleague of mine could understand what this person was talking about when they were saying expense ratios or target date funds. And I left saying, there’s a big problem if 110 truly educated adults in this world cannot understand a basic concept of expense ratio.

And so I wanted to add education to the financial component. And I realized at some point along the educational career in high school, I liked talking to my colleagues a little more about money than I liked talking about semicolons in class to 15-year-olds. I didn’t try to eliminate it. I just started to have this vision that becoming a financial advisor or portfolio manager would be education for finance. And I’d get to go teach these things and learn these things. So that was the initial inspiration for the pivot.

BARRY RITHOLTZ: You know, some people would say the complexity and impenetrable jargon is a feature, not a bug, because hey, if you don’t understand what financial people are saying — or for that matter, contractors or doctors or lawyers, what have you — well then you have to pay them for their expertise. But let’s leave that cynicism aside. You eventually become both a financial advisor and a portfolio manager. What surprised you about how wealth management actually operated as an industry?

TYLER GARDNER: Phenomenal question, because that’s all it was. It was a big surprise. I worked with great people, I’ll start with this. It was a small RIA in Vermont. And the reason I was drawn to that specific RIA is that unlike some of the bigger corporate wealth management firms, they really struck me as valuing education. So again, I got brought into this world thinking — I had this real ideal vision that I’d move back to Vermont, I’d get to educate people in my own hometown when I came back. And the biggest surprise was that the majority of people who wanted us to manage their wealth didn’t want to be educated on managing their wealth. They wanted us to manage their wealth.

And there was a great irony in the fact that so many people, particularly high net worth individuals, wanted to give the assets and say, “Don’t call me. I’ll call you. We’re all set. I’m paying for the convenience.” Right. And that surprised me. I was really looking forward to a scenario in which I had a daily class with people or a daily coffee where people would flock to wanting to learn more about index funds and low-cost investing. It didn’t quite work like that.

BARRY RITHOLTZ: So how did the social media experiment begin? You’re a natural teacher. What led you to say, well, if my clients aren’t asking me to educate them, I’m just gonna educate everybody else? How did that really start?

TYLER GARDNER: Yeah, well, I think, again, to give credit to the initial RIA for which I worked, they noticed very quickly just what you just said — they noticed and were drawn to the fact that I loved to educate. And so they brought their marketing team in and we started doing some short-form videos. They, as a firm, said, look, this is a really powerful way to reach an abundance of people beyond a very small state in New England, and we want to get the message out. So we started doing videos, we just weren’t positioning them correctly.

And when I say correctly, I mean, I think we were putting the majority of them on our firm’s website and maybe every now and then putting some on LinkedIn. And they just weren’t going anywhere. There was no real reach or power. And so when I first really saw the power of TikTok and Instagram and Facebook, I go, this is the disconnect. But they knew early on that education combined with the considerable reach of these platforms was very powerful. We just never could hone it as well as I know we all wanted to.

BARRY RITHOLTZ: There are lots and lots of stories of people putting stuff on LinkedIn and Facebook and TikTok and YouTube, and, you know, it doesn’t really generate a response. Doesn’t get a whole lot of follows, a whole lot of likes. At what point was there a specific video or a post that persuaded you, hey, there might be a real audience here?

TYLER GARDNER: Yeah, the number one reason. So I came home after doing — we had probably done 10 videos as a firm. And I came home and my wife was actually scrolling TikTok and she said, you gotta look at this person. They’re talking about a Roth IRA and it’s really funny. And I looked at the video and it was funny, it was engaging, and the person didn’t know what a Roth IRA was. So I look at this, I said, hon, this isn’t actually how a Roth IRA works. And so I started going down the rabbit hole, because there had been 2 million views on this video, and it was complete misinformation. So when I delved a little bit more into the rabbit hole, I found there were a lot of people on these platforms who were very engaging and could speak very confidently and articulately, and they were just flat out wrong.

And then the people who were really accurate and data-driven and who had done all the work, or who had actually been PMs or financial advisors for 20 years, some of them didn’t quite know how to engage. So I looked at it and said, just from a business standpoint, there’s a real gap in social media of someone who actually can educate in a simple way. Somebody who’s used to taking very complex ideas and trying to make them digestible in 30 seconds or less, and is able to also actually bring data points in. And so I almost took it as a big challenge initially of, how can we do this? And I look at it as an art form of how can you package something that most of the world doesn’t want to think about on a daily basis — finance, investing — and make it something fun. So was there a specific video early? No, it was more the gap in the marketplace that made me want to pursue it.

BARRY RITHOLTZ: You know, everybody I’ve dealt with over the years who is both at a regulated shop — be it SEC or FINRA or state regs — and is a creator, blogger, videographer, podcaster, whatever, runs into some issues with their firm. Way back when, some of the big wirehouses, when Twitter first came out, would give their advisors a list of approved tweets, like, here, choose from this menu. You know, that’s gonna get no pickup at all.

I got really lucky. My general counsel back in ’02, ’03 — before that, nobody knew. Nobody understood, nobody cared. I was on GeoCities and then TypePad, and nobody said a word, ’cause what the hell is social media? What the hell is blogging? But I was lucky to have a general counsel who said, listen, about all these posts you’re doing, you could talk about the market, the economy, sectors, whatever you want. You cannot say buy Microsoft. You cannot say sell Dell. No buys or sells and you’re good. I learned that was really lucky. What was your experience like with legal and compliance?

TYLER GARDNER: I won’t say it was quite as loose, and I envy what you just said, because man, do I want to come work for that firm. And I might’ve stuck around a lot longer had we appreciated — or had counsel appreciated — the flexibility of what we might be able to do. But even before I answer that question, just to be fair, I remember when I was studying for both the Series 65 and the CFA, they would always have a section — and this was probably six years back, seven years back — on social media, and exactly what you’re saying: what is the regulation behind social media right now? The punchline every time was, we don’t know yet. We don’t know what this is. We don’t know what to regulate. We’re gonna have to come up with these rules on the fly. Is this person a registered advisor? Is this person a representative? Are they a solicitor? And so the initial draw to produce it obviously was the power that it had. The initial challenge was both on a state level and on a federal level.

We as a small RIA wanted to be very, very careful about what we said and how we said it. And even though, yes, at the end of the day it was probably just a, hey, don’t recommend buying or selling individual securities, we took it so far on the prudent level of just saying, look, let’s make this very, very educational. Don’t ever name specific funds. Don’t ever name specific drawdown rates, because you never wanted to conflate any of this with potential advice. And so I think that the real future for anybody in this space — and again, this is wide open; I mean, there’s only a handful of us who have actually made it to a big platform here — the future is basically anyone who is able to say, I know what to say within limits, I know this is not against regulations, and I’m gonna market myself and how I think. There’s still so much room there to grow.

BARRY RITHOLTZ: No doubt about it. So you began your career as a teacher. I’m curious, what did you learn in the classroom that ultimately made you a better communicator of complex finance ideas?

TYLER GARDNER: Sure. Nobody wanted to be in the classroom. Inherently, I’ll start with that. Other than a handful of students, the beauty of starting, I think, any career as a teacher is that you’re fighting — I won’t say a losing battle — but you’re fighting against a group of people who collectively want their attention to be elsewhere. Which is actually very different, obviously, from social media, because people self-select to go onto social media and to be in a place. And if they’re watching, they want to.

But initially the challenge was, how can I get a room of 18-year-old students who would literally rather be doing anything other than sitting in this chair on this May day in gorgeous rural Connecticut — how can I get them to engage with an essay by Virginia Woolf? And again, it always was a game to me, it always was a challenge and an art of, what can I say and how can I say it? Not just to capture their attention, but to get them to feel like they have some sort of stake in what this is. And that was where it was: once you were implicated — if I could communicate to someone, you are implicated in this class, you have a stake here — then I would find obviously more ownership going forward. But as far as communication goes, it was again just a matter of we had a very scarce resource, which was time, and how do I get as much into this time as possible?

BARRY RITHOLTZ: At what point did you find posting financial content morphed from a side hustle to, hey, this could actually be a real career?

TYLER GARDNER: Yeah, I mean, I’d say the easiest way to say it is when I started making enough money for it to be a real career and when I could actually pay the bills. But when I first pivoted, I left my W-2 job and I took a leap of faith two years ago. And the reason I took a leap of faith is that at that point I had opened up an educational one-on-one coaching option. You could come talk to me for an hour about how to invest, types of investments — never advice, all obviously education, always as general as possible.

What stuck out to me is I couldn’t open up enough slots to fill the immediate demand, and I couldn’t raise my prices high enough, quickly enough to kill that initial demand or to temper it, if you will. So instantly you see, oh my gosh, there is a massive amount of people here who want this type of information and they’re willing to pay a lot of money for it. They’re willing to be present with it. I got out of the consulting part very quickly because, again, back to the regulatory component, I didn’t love it — it seemed like way too much of a gray area. And no matter how many contracts somebody signed saying this isn’t advice, I’m not your advisor, I did not feel comfortable having someone ever leave a conversation thinking that they might be getting advice from somebody. But that was exactly the time when I said, look, this platform — wherever we go and whatever we sell — this platform has so much power now that I’m comfortable leaving the hundred-thousand-dollar-a-year W-2 to really see what we can do with this.

BARRY RITHOLTZ: So you left not one but two very stable, relatively safe, pretty comfortable jobs to sort of jump into something that is risky, and there was no guarantee that it was gonna work. What did your friends, family, colleagues think, and what was your own biggest fear?

TYLER GARDNER: I think now — now that I’ve allowed myself to believe that the endeavor is quasi-successful — now I’ve actually gotten the truth from people about how they felt two years ago when I first made this pivot. And almost everybody thought it wasn’t gonna work, that this was a fad, that the attention economy is so cyclical that you might be the Internet’s favorite person for a week and then fail miserably. And that was obviously the challenge, was trying to think about sustainability and consistency.

But early on they made fun of it. And I think every single person who either considers themself an influencer, or somebody else considers them an influencer, you have to go through what we all call the cringe phase, where you are producing terrible content because you’re just not good yet. Just like anything else, you’ve gotta learn how to do it through trial by error. And most people don’t want to go through that phase. Your friends all make fun of you and they laugh, and it’s very easy in that moment to say, I want to quit. And then all of a sudden things start to shift when you start getting some of the deals. But those don’t come for six months to a year of daily torture and ridicule from the friends, the family. And it’s not that they doubt you as a person, they just kind of doubt that this is a thing that a lot of people are capable of — that if you really just sit down and say, look, we can make this happen — because it doesn’t happen to everybody, you know?

BARRY RITHOLTZ: Yeah, it’s fascinating. Doug DeMuro of Cars and Bids and his own YouTube channel — I think his YouTube channel is six or 7 million subscribers. He’s talked about the first few years of doing video, he had very little pickup, and he was also writing a column and occasionally doing a video review on a column. And one day a reader wrote in and said, Doug, the video reviews are the most interesting part. I don’t wanna read the column. Why don’t you do more of that? And an entire business was born.

Did you have a moment like that where it became clear, oh, if I emphasize this, this will work out? Or was it really just a grind to build those numbers up to a quarter million, half million? At what point is it clear this is a viable, sustainable business? Is it a million subscribers, a half a million subscribers? Where do you hit that number?

TYLER GARDNER: Yeah, I mean, well, just like money — and I think you and anyone listening will understand this as well as anyone — your follower count very quickly becomes identical to your bank account. It’s never enough, Barry. You think you want to hit a million and that will somehow give you that little endorphin hit and you’ll be satisfied. That’s not enough. Once you’re at one, you wanna be at 10. Once you’re at 10, you wanna be better than that competitor who you have always been going after. So as far as, is it enough, what was the moment? There’s never a moment.

And the algorithms now too, just to get a little technical about it — ultimately, on most of these channels, it doesn’t actually matter how many followers you have anymore as far as the reach potential. This is where I’d like to inspire anyone to try it. You can create a TikTok account tomorrow. Your video has an equal chance to go viral as mine. And as you mentioned, I have millions of followers across these platforms, but it’s the best immediate feedback system in the entire world. It beats every type of job I’ve ever had. If you produce crap, you don’t get reach. It’s not a matter of millions of followers. It’s if you don’t make something entertaining and of value and engaging for those 60 seconds — if you don’t earn someone’s 30 to 60 seconds — it doesn’t go anywhere. So it’s kind of a self-selecting process, again, of you’re either good or you’re not. But the people with millions of followers obviously have in some way honed the skill. You don’t get to that level without honing the skill to begin with.

BARRY RITHOLTZ: So let’s talk about that algorithm for a moment. What attracted me to your videos was you weren’t doing anything clickbaity or sexy or outrageous to garner clicks. In fact, you’re very much a salmon swimming upstream against the tide of that sort of stuff. How do you preserve accuracy and nuance when all of these platforms reward speed, oversimplification, outrage? Hey, if you could make somebody furious and angry by manipulating their emotions, you’re much more likely to go viral than by saying, and here’s how you do a Roth IRA conversion correctly. Correct?

TYLER GARDNER: I mean, first of all, you just summed it up flawlessly, absolutely flawlessly. And anyone who’s been doing this for a little while who claims they don’t know that is lying. If I go on and I make a video that just pokes at people a little bit, or nudges people or alienates something, you’re gonna get more attention. Or if you say something that you know is a little bit less than nuanced and is lacking a little information, you know what you’re doing. How I look at it — and I would say how I justify some of the videos in which I know dang well I don’t do due diligence and go down as far as I could on the complexity of this — A, again, it’s a limited resource of 30 to 60 seconds. B, my goal at this point is all social media — from TikTok, Facebook, YouTube Shorts — that’s all top of funnel for me. So even if someone thinks I’m a complete ding-dong who doesn’t do due diligence on TikTok, my goal is to get them to read my newsletter. On the newsletter, I don’t cut corners, because now I’ve got someone who has self-selected into a system where they’re willing to read that nuance and they want that.

So you invite that. That to me is where I try to build more credibility. Same with the podcast, right? So both of those longer form — I just want to get the attention on the short form to get them to a place where I say, look, now can you trust that I didn’t really think that Social Security was something you should decide in 30 seconds after listening to me talk about it and poke you, like everyone should take it at 62. I do want to go through this. But again, if you try to provide nuance in the short form, you’re not going anywhere. So it’s almost like a line I heard in Yellowstone the other day, where they’re talking about politics, and the game of politics before you get the position is you kind of have to poke and alienate and unfortunately be — maybe, I won’t say a lesser version of your moral self than you want to be, but there are corners you have to cut to get the attention that the video will attract, to get where people want to go. Once they’re there, then I think you have the responsibility to say, look, now that I earned a little bit of your attention, trust me, I’ll reward you with real information and not clickbait nonsense.

BARRY RITHOLTZ: What I’m hearing is that you have to adapt your message to each format and make it fit into that in order to work your way down the funnel. So let’s talk about that funnel. You start with short-form videos, eventually a newsletter, a podcast, and now a forthcoming book. Was that a very purposeful, conscious set of decisions to keep the focus on the in-depth education? Or did it just evolve organically?

TYLER GARDNER: It evolves. I’d be creating a narrative where none exists if I pretended that any of this was according to some grand master plan. I heard a great line years back: your choices are half chance, so are everybody else’s. And where this has gone — if you had asked me two years ago, I was creating monthly reflections on where I wanted the business to go. And for one year I would look at my notes and it said, don’t ever do a newsletter, because a newsletter is stupid and it’s a joke. And then I remember reading something from Tim Ferriss where he said, you’re a joke if you don’t do a newsletter, because it’s the only place where you gather the asset of the email address and they can’t take it away from you.

And so when TikTok went through its little temporary 24-hour ban — it actually really shut down in the US for one day, there was no TikTok — instantaneously I went from having built two years of this slightly credible platform that had good reach to nothing, and I had no control. They just shut down the system. And I said, look, if I don’t diversify these digital assets, I’m being just as much of an idiot as I say people are with money when they don’t diversify their assets in an account, in an IRA or a 401(k).

BARRY RITHOLTZ: You have to own your own content. You have to own your own platform. You have to use these other platforms to drive the traffic to something that can’t be taken away. I mean, years ago I was on Six Apart’s platform, Movable Type, and eventually, years after I moved to WordPress, they shut it down. We’ve seen GeoCities shut down. We’ve seen all sorts of changes to different algorithms. If you’re ultimately not driving people to something that you own, that’s it. You are at the mercy of these giant technology corporations, and they could care less about you.

You know, I saw a video of yours recently where you discuss the concept of using your time, and wealth is really about how much time you have to yourself, but you make the case that it’s really knowing what to do with your time that is the big value. And I want to add something to the concept of building your own business, which is agency: the ability to control what you do, how you do it, who you do it with, and how you spend your time and when you do different things. Talk a little bit about how this pivot to social media and content creation has really given you much more agency over your time and your work.

TYLER GARDNER: Sure. I think just building on exactly what you just said, I don’t believe that humans hate work. I don’t buy it. I don’t think I ever will. I think humans don’t like being told what to do and working with people they don’t respect. The second you can get out of that and have your own agency or your own authorship or autonomy — call it whatever you will — instantaneously you now have the capacity to go work with other people that you say, ooh, I really do respect this person, or I’m really drawn to this person’s energy. And then your energy goes up. And again, this is entrepreneurship 101: once you have control over your time, you say, wait a minute, I do wanna be engaged in these projects. And you hear over and over again the people that exit businesses at, let’s say, 35 or 40, and they come into the windfall of a couple tens of million bucks. They don’t go sit on a beach for the next 40 years. Within one year they’re looking for another project. Everybody I know goes through a nice honeymoon where they think they made it, and then they’re looking for another project.

So for me, when I switched to this, the heaven on earth that I created was, again, just being able to wake up and say, if I wanna work on a great podcast script today, I can do that for 10 hours. If I wanna go film 20 videos today, I can do that. And our minds, as we all know — some days we’re on and some days we’re not on. And so when we have our own agency, when I think I’m really on and the energy’s good and I’ve had good positive interactions, I can go out — and I do go out into the woods, and that’s when I film my videos. But just like everybody else, I have very crappy days. And if you’re the W-2 employee, unfortunately, you have a crappy day, you’re still showing up for that same type of work. If you have your own agency, I can say this is a down day. I’m not putting myself out there today. I’m gonna write some more today or think about a chapter today. So really, it’s the greatest gift I’ve ever had — the agency to choose when I work and with what energy.

BARRY RITHOLTZ: Huh, really fascinating. Last question. So someone who’s considering a career change — they wanna become a creator, an influencer, they wanna move from something safe to something risky. What sort of advice do you have for those people?

TYLER GARDNER: Sure. And I think — I know you know this because I’ve read a piece where you talk about this — but a lot of people don’t, in my mind, think about risk in the way that they say they think about risk. So you just set up the polar concept that if I go to a job like this, it’s more risky than if I don’t. Whereas I always try to push people just a little bit to say, look, the biggest risk is you sit in the current job you have for 20 years as a safe W-2 employee. And that’s fine, I get it. You got the bills to pay, but your upside is so capped, you have no idea. And I would just say that the two things I value most in life at this point — obviously the clichéd one is owning my time. But because I own my time, I have the ability to focus on a daily basis on anything I want to focus on. And so the risk to me is that you get your one life taken away for 20 to 30 years and you are not focusing on a daily basis on the things you want to focus on.

And just with the entrepreneurial spirit, I would tell anyone who wants it, the concept of risk is way more applicable in my mind to losing out on what you could have done than if you go try something. And if it doesn’t work out after a year, after two years, after a real effort — what I don’t think enough people understand — you can go back. I trust that you can go back to whatever you were currently hired for. Maybe not at that company, but I trust that you can find another stable type of position where you say, I’m back in W-2 land. But you’d never know unless you went out there. And now the upside is insane. As you know, once you start your own business, I’m blown away with where the upside goes — not just on a monetary level, but also just with time and decisions, and the fact that I get to make these decisions now.

So I’d tell everybody, you gotta try it for at least six months. You gotta get through that initial phase where everybody wants to quit and everybody does quit. Everybody I know who wants to start social media and says, ooh, I could do this too — it’s just like the New Year’s resolution of going to the gym in January. You quit within two weeks because you didn’t immediately get a million followers. And I’ll just say this has been a trek for four years now to get to this point. So none of this is easy, none of this is overnight. Any story about viral sensations and someone just blows up — that’s not how it works. You grind and you grind every day and you learn and you get there, but it has been worth every second. And I would tell anybody, with the power of these platforms and the fact that it’s free — it’s a hundred percent free to market yourself and your brand however you want — if you’re not trying this with your business, you’re missing out on an incredible opportunity that might not be there in 10 years.

BARRY RITHOLTZ: Really fascinating. So to wrap up: if you are in a job where perhaps you’re not being challenged, or you are a little bored, or lack the sort of agency and enthusiasm that you’d like to have, and you are creative and a good communicator and have the ability to educate or inform or entertain people, consider adding social media influencer to part of your repertoire. Who knows, it might become a new career.

I’m Barry Ritholtz. This is Bloomberg’s At the Money.

 

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Find our entire music playlist for At the Money on Spotify.

 

The post At The Money: Becoming a “FinFluencer” appeared first on The Big Picture.

My mid-week morning reads:

• It’s a Concentrated World: The top 10 stocks in the S&P 500 make up almost 40% of the index. Each of the companies in the top 10 sport a market cap of $1 trillion or more. In fact, as of this writing, the 12 biggest companies all have market caps of $1 trillion or more.1 As recently at 2015, the top 10 made up just 17% of the S&P 500. Ben Carlson on twelve of the biggest names now above $1 trillion. (A Wealth of Common Sense)

• Did we make it too hard to get a mortgage after 2008? A new report says yes. Some say the pendulum has swung too far since the 2008 housing crisis. Others warn that looser standards once led to disaster.​ A Pew report givces the details. (Washington Post)

• The Fed’s Credibility Depends on Resisting Politics, Not Playing It: Kenneth Rogoff advised the Fed to delay its rate decision until after the midterms to preserve its independence from President Donald Trump’s attacks. Rogoff’s own 1983 research paper showed that central bank credibility matters, and that the head of the central bank should be more averse to inflation than the average person. (Bloomberg free)

• The 24-Year-Old Who Lost Billions: Leo Aschenbrenner claimed to know the future of AI. The implosion of Aschenbrenner’s AI hedge fund, Situational Awareness, over the course of a few days in late July was by any standard remarkable, and not just for the enormous sums involved. Aschenbrenner was the valedictorian of his Columbia University class at age 19. He worked for OpenAI before being fired amid murky circumstances, at which point he published a viral 165-page essay (also called “Situational Awareness”) that predicted the arrival of artificial general intelligence—an AI so advanced that it would meet or exceed all human capabilities—by 2027.  (The Atlantic)

• Hollywood’s Box Office Boom Comes With 248 Million Missing Tickets: Hollywood’s summer — by its accounting — was a triumph for the ages. Ticket revenue was not only the highest since 2013, but the second highest of all time. Brooks Barnes on the summer’s “second highest of all time” revenue claim — which holds up only if you never adjust for ticket prices. (New York Times)

​• He Earns $33 an Hour as a Costco Cashier. Now He’s a Millionaire: Inside Costco’s retention machine — maximum hourly pay raised to $32.90, bigger bonuses, and “culture coach” roles for long-tenured workers. Long-tenured workers like cashier Tony Barzar are reliable, experienced and able to speed shoppers through a checkout line. Costco is willing to pay to keep them around. (Wall Street Journal)

• FBI Probes Service Selling 153M+ Drivers Licenses: A new identity theft service launched on the dark web this week is selling digital scans of more than 153 million drivers licenses from people in the United States and Canada. Based on interviews with individuals whose licenses are available for purchase on this service, it appears to be siphoning images collected by a widely-used identity verification company based in Louisiana. KrebsOnSecurity also has learned that the New Orleans field office of the Federal Bureau of Investigation (FBI) today launched an official inquiry into the source of the images. Brian Krebs on the dark-web identity-theft service siphoning license scans. (Krebs on Security)

• ​Without New Landers or Rovers, It’s Helicopters or Bust for NASA’s Mars Program: Stephen Clark on the $2.1 billion SR-1 Freedom estimate — which doesn’t include the helicopters. NASA’s cost estimate for SR-1 Freedom is $2.1 billion, but that doesn’t include the helicopters. (Ars Technica)

​• The MAGA Right Is Only Pretending to Be Censored: Anne Applebaum on the State Department operation that spent a year and a half combing old files and civil servants’ personal emails to build its case. The conspiracy theory that persists even though no evidence supports it (The Atlantic)

• MapQuest is No. 1 on the App Store after refusing to change Lake Ontario’s name: Usage of MapQuest was 50x the normal level last week because MapQuest refused to change the name of Lake Ontario. The dial-up-era mapping service is having a comeback moment after declining to adopt “Lake America.” (CNN Business)

Video of the day: OnlyFans: How an $8B Cash Machine Got Stripped Bare

Be sure to check out our Master’s in Business this week with William McNabb, former CEO and Chairman of the Vanguard Group from 2007-17. He is also an advisor to Venrock, and was an investor and advisor to Altruist, which was just sold to VG for $2 billion.

Since the Fed Started Hiking, Multiple Expansion Has Nearly Vanished as a Source of PE Value

Source: Apollo

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From 2008 through 2022, the 10-year Treasury yield was never above 3.25%; it spent nearly all of 2019–21 under 2%, while the 30-year bottomed at ~1% in March 2020.

What an amazing opportunity to refinance debt at ultra-low rates!

But not every institutional debtor is that savvy. Torsten Slok reminds us how much savvier Corporate America was than the US Government, including Congress, the Treasury Department, and even many “think” tanks.

As Slok observes:

“Corporate net interest payments have fallen to 0.4% of GDP because firms locked in record-low fixed rates during the pandemic. The US government did not extend the maturity of its debt outstanding when interest rates were close to zero and now pays 3.6% of GDP in net interest (chart below).”

This has been one of my biggest pet peeves for the past few decades. 

When presented with a once-in-a-generation opportunity, there was an array of truly ignorant, foolish, or just outright false reasons not to make the carrying costs of long-term debt much cheaper. Treasury nominally lengthened the term of its debt, post-GFC and post-COVID. But it ignored the opportunity to issue 30-, 50-, or 100-year debt. That kind of long-term fixed-rate funding at historic lows only comes along once or twice in a generation.

Treasury did make some minor extensions of duration: The weighted average maturity (WAM) went from ~48 months in 2008 to ~64 months in 2012; by 2019, it was ~70 months — the longest duration since 2001. But issuing truly long-term debt, such as the 30-year or, heaven forbid, the 50/100 year — was off the table.

Why?

Some of the excuses were laughable then, but these three are downright silly now:

– “We do not time the market”
(Geithner, Yellen, Ramanathan, GAO, Office of Debt Management)

– “There isn’t enough demand”
(Mnuchin, Yellen, Lew, Treasury Borrowing Advisory Committee)

– “Rates will stay low”
(Summers, Blanchard, Furman and Mnuchin)

It was apparent then to anyone who looked closely; today, it’s an utterly obvious missed opportunity.

 

 

Again, this is not hindsight  bias. As the list below, starting in 2013, shows, this was an obvious opportunity –one that was blown by all the usual fools.

 

 

Refinancing America’s Debt:
Fix infrastructure on the cheap while you still can (July 12, 2013)

Do We Need a 50-Year Bond? (May 12, 2014)

The Bonds That Can Cure America’s Ills (March 19, 2015)

Time for a 50-Year U.S. Treasury Bond (May 19, 2016)

Cost of Financing US Deficits Falls (December 18, 2020)

The Greatest Missed Opportunity of Our Lifetimes (October 23, 2023)

A Historic Missed Opportunity (June 3, 2025)

What’s Upsetting the Bond Market? (August 25, 2026)

 

Sources:
A Missed Opportunity: The Treasury Did Not Term Out Its Debt When Interest Rates Were Near Zero
Torsten Slok
Apollo, September 07, 2026

The Federal Government’s Debt Is Growing Faster Than the Economy. What Does that Mean for You?
GAO, June 11, 2026.

 

The post Corporate vs Treasury Debt Duration appeared first on The Big Picture.

My Two-for-Tuesday morning reads:

• Little Tobacco Moment Meta Wins. Our “Big Tobacco moment” ended with Meta’s shareholders richer, competitors weaker, and its business model intact. We’ve been played, again. ​Scott Galloway on the Meta settlement — 47 states and DC, up to $17.1 billion in penalties, no admission of wrongdoing. “We’ve been played, again.” (Scott Galloway)

​• For Many Individual Traders, Prediction Markets Are Hot — and Crypto Is Not: Traders are leaving crypto — bitcoin recently around $79,000 — to bet on sports, elections, and Fed rate decisions instead. Traders are spending more time and money betting on sports, elections and the Federal Reserve’s rate decisions (Wall Street Journal)

• Why We Can’t Get Enough Juicy Art Heist Stories. In these kinds of stories, the main characters usually have some abstract motive to distinguish them from common crooks. Mine was a question that’s been bothering me more than usual of late: How can a country that’s world famous for philistinism care so much about possessing art—care to the point where the people are willing to spend billions of dollars on beautiful objects and billions more on entertainment about stealingthem? It’s as though a nation of teetotalers chooses, year after year, to hang out in bars. ​(Art In America)

Spain Got a Head Start on Renewables — Now It Needs a Battery Revolution. Today, renewables account for about 60% of electricity on the Spanish grid, compared with about 50% across the European Union and one-third globally. That bold bet has lowered Spain’s power bills — which are now cheaper than they were before the latest Middle East conflict or the invasion of Ukraine — and put the country on track to meet its 2030 renewable targets. Spain is both ahead of the clean-power curve and the fastest-growing major economy in Europe, proof that deploying green energy at massive scale isn’t at odds with growth. Bloomberg on the country whose wind industry was once so low-tech that a broken turbine blade meant calling in a repairman — and what its grid needs next. (Bloomberg)

​• Tech Websites Remove Articles After Failing to Verify Journalists Exist: Rob Waugh on the prolific crypto writers who appear not to be people. Press Gazette raises questions about four more profilic tech writers who cover world of crypto. (Press Gazette)

• A Start-Up Called Nothing Has Raised $450 Million. It’s Coming for the iPhone. AI dollars have crowded out consumer tech — VC deals in the category have been cut in half since the 2021 peak near 3,000 — but one phone maker is still swinging. It’s Coming for the iPhone. Venture capital funding for consumer tech has stalled as funds shift to artificial intelligence. That makes the story of Nothing, a start-up maker of phones and audio gear, all the more surprising. (Barron’s) see also Why does it even matter if SoftBank’s an investment holding company? Toby Nangle on the classification question with real consequences. (Financial Times)

• This company has built a solar car. I took it for a drive. Test-driving a car coated in solar panels gave me a preview of a future without gas pumps or charging cables. Michael J. Coren test-drives the Aptera along the California coast, passing gas stations while the sun fills his tank for free. (Washington Post)

​• Maria Bartiromo’s Downfall at an Increasingly Cautious Fox News: Benjamin Mullin on the network pulling one of the last hosts whose Dominion coverage drew the expensive defamation suit. The network this week took Maria Bartiromo off the air, pulling one of the last hosts whose coverage of Dominion Voting Systems drew an expensive defamation lawsuit. (New York Times)

• ‘I don’t chase the dollar. I never did’: the astonishing hidden life of Mr T. He grew up in the ghetto, became a global superstar – then gave it all up. Why did he step away from the spotlight?  Simon Hattenstone meets the 74-year-old ahead of a new Netflix documentary — late, but making clear this is not an apology: “God comes first in all my life.” He grew up in the ghetto, became a global superstar – then gave it all up. Why did he step away from the spotlight? (The Guardian)

• The Pro Tennis Wage Gap, Explained: The history of tennis is the history of wealth — in 2025 the average US Open ticket ran $529, up 18% in a year, for the privilege of watching two Rolex ambassadors volley. How the wealthy perception of tennis has masked the exploitative pay practices of its players for decades. (Strung)

Video of the day: The ‘Ghost’ Creators Hijacking YouTube’s Algorithm & America’s Divided Politics

 

Be sure to check out our Master’s in Business this week with William McNabb, former CEO and Chairman of the Vanguard Group from 2007-17. He is also an advisor to Venrock, and was an investor and advisor to Altruist, which was just sold to VG for $2 billion.

Private Equity’s Zombie Problem

Source: Pitchbook

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The transcript from this week’s, MiB: Bill McNabb, Vanguard former Chairman and CEO, is below.

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

~~~

Masters in Business Bill McNabb, former Chairman and CEO, The Vanguard Group
Host: Barry Ritholtz  |  Bloomberg Radio

(00:00:02) Bloomberg Audio Studios, podcasts, radio, news. This is Masters in Business with Barry Ritholtz on Bloomberg Radio.

BARRY RITHOLTZ (00:00:16): This week on the podcast, another extra, extra special guest. Bill McNabb was CEO and chairman at the Vanguard Group. He had been with the firm for 30 years, helping to take them up to trillions of dollars. We’ve spoken to him a couple of times in the past.

He discusses his post-Vanguard career, the boards he’s sitting on, all the fintech startups and venture capital he’s working with. I thought this conversation was fascinating, and I think you will also. With no further ado, my sit-down with William McNabb. Bill McNabb, welcome back to Bloomberg.

BILL McNABB (00:00:55): Oh, thanks, Barry. It’s great to be here.

BARRY RITHOLTZ (00:00:57): So the last two times you were here, you were running Vanguard Group. I’m curious, how does a guy who rowed at Dartmouth, taught Latin and coached at the Haverford School end up running the world’s largest mutual fund company?

BILL McNABB (00:01:16): So there’s an old saying that it’s better to be lucky than smart.

BARRY RITHOLTZ (00:01:21): My mom used to say that to me all the time.

BILL McNABB (00:01:23): And that really did apply. I got very lucky, Barry, in terms of just opportunities that happened to come my way. And I had incredible mentors who sort of helped take those opportunities and make more of them than maybe they would’ve been otherwise. And one thing led to another.

BARRY RITHOLTZ (00:01:43): Huh. Really interesting. So teaching Latin and coaching, what does that teach somebody like you about leadership that you were able to apply across three decades at Vanguard?

BILL McNABB (00:01:56): Yeah, I think there were two big things, and I was very fortunate to work for somebody at Vanguard who really lived this, and I’ll come back to that in a second. But the power of “we” versus “I.” I was coaching a rowing team, and no matter how good the individual athletes were, if they didn’t really exist in order to make the boat go faster, you weren’t going to win. And we had to really get that across to people, and that collective drive for success actually is incredibly applicable in the business world. I think the other thing, maybe a little more subtle, is you lead by example. Some of the people who talk about it, they theorize, and all these fancy sayings.

I’d rather just watch somebody do what they do really well. And if they’re building good teams, just that example of how they do it is really worth emulating. I worked for Jack Brennan, as you know, and I think you’ve had Jack on here before as well. And Jack really lived that. For me, when I got to Vanguard, the “we” versus “I” was very apparent in how he was driving the firm, and no one led by example better than Jack.

And when you’ve grown up in that world as a coach and an athlete, and then you get it reinforced professionally early in your career, it becomes a way of thinking.

BARRY RITHOLTZ (00:03:24): Yeah. Big fan of Jack Brennan. Loved what he did. When you joined Vanguard in ’86, it was obviously a fraction of where it is today.

It was far less than a trillion dollars. And even in the mid-eighties, I mean, that was the beginning of the bull market that started in ’82. You had Peter Lynch and the Fidelity Magellan Fund. Berkshire Hathaway was on the rise, stock picking was on the rise.

I guess I could say indexing was a fringe idea. What did the firm look like back in the mid-eighties? Did you have any idea what was coming your way over the next couple of decades?

BILL McNABB (00:04:05): This is why I said it’s really better to be lucky than smart. I did not see this incredible explosion coming. What attracted me to Vanguard was I was working here in New York for what’s now JPMorgan Chase, and was getting a little frustrated with a lot of things and decided it was probably time to go. And again, one of my mentors said to me, go find a place where the values match your own.

And when I went in and interviewed with Jack Brennan and then Jack Bogle, I found, it was like, wow, this is so different. And there was tremendous appeal. And so I did it really based on gut and intuition at the time. And so when I interviewed with Jack Bogle, the funny story was, he had data pulled out, a bunch of stuff, and he’s like, we just crossed $15 billion under management and I have no idea how we’re going to get to 20.

So I don’t know why you would come here. You’re doing big things on Wall Street. And I didn’t even really have a response. And then he went on, he goes, but of course, and for the next hour and a half, I got a lecture about everything that needed to change in the asset management business.

I go home and my wife says to me, how’d it go? I said, I don’t know. I didn’t say anything. But she goes, well, what are you going to do?

And I said, well, if he offers me the job, I’m going. Because there was just something there, the passion and the drive and the really contrarian view. So the early days, look, we paid as much attention to active management as Fidelity did. So Fidelity had Peter Lynch in the Magellan Fund.

We had John Neff in the Windsor Fund. Arguably one of the two or three greatest value investors in history. And Jack himself was very much making sure that we were competitive.

Money market funds were just taking off. And we got into the money market fund wars. It’s hard for people to imagine today, but yields were 17, 18% at different times.

And Dreyfus, Fidelity and Vanguard were the three money market fund giants. We each had a couple billion dollars, but everybody was comparing yields. And so active management and the yield on the money market fund in the early days, those were like the big drivers.

BARRY RITHOLTZ (00:06:22): So my pet thesis, to put this into context: $15 billion in the early eighties, just about $15 trillion today. That’s just a crazy thousand-fold increase. That’s just an insane run. My theory is the late nineties, the scandals, the crashes, the analyst scandal, the accounting scandal, the IPO scandal, all one after another.

I think a lot of people just threw their hands up and said, you know what, just buy me the whole market. Let me know when I have enough to retire. Is that oversimplifying what happened?

Or is that a real factor?

BILL McNABB (00:07:00): So I would say that’s the psychological part of it. There was also the math part of it, which is on an after-tax basis, index funds beat 90% of active equities over any rolling ten-year period.

BARRY RITHOLTZ (00:07:15): Anything more than a decade.

BILL McNABB (00:07:16): Anything more than a decade. So if you were a long-term investor and you wanted to win, you indexed. And so it was interesting to me, as a participant in the market, I’d listen to our competitors and they’d talk, well, indexing’s having its moment, but it’s going to cycle out, and stock picking will be back any day. And the math was just overwhelming. And the real reason, and this was Jack Bogle’s, again, oversimplified discussion, but essentially if you have two big parts of the market, one that’s actively managed and one that’s passively managed, they have to add up to the market.

So the average on the active side’s going to be the market, because the index side’s going to be the market. And then you take costs into account, and all of a sudden you’ve got arithmetic working in your favor. So for us, there was this: it’s simple.

It’s easy, it’s low cost, and it works. And I think that was such a powerful thing. And our shareholders, Barry, as you know, because you’ve been a student of the game for so long, they stayed with us way longer than other investors stayed with their firms. On average, I think it was three x.

So the average duration of a relationship was three x that of the industry. That’s an incredible advantage in terms of just how you think about your business.

BARRY RITHOLTZ (00:08:43): So you become CEO in August ’08. Two weeks later, Lehman Brothers goes kaput. Remind us what was happening in that era. What was that transition like, stepping into the lead role just as it looks like the world is going to hell, and what was that experience like?

BILL McNABB (00:09:05): Yeah, so look, in the darkest days, I mean, everyone was questioning whether the system would survive. So different than other crises we’ve seen. People really looked at it like, will the market actually survive this? And we had a deep-seated belief it would. And so we kind of had this bifurcated way of looking at the world. Each and every day, what were we doing to better assure our investors that somewhere down the road things would get better and they had to stay the course? Like, the worst thing you could do was to panic, unless you really believed the world was going to end.

So we met twice a day, every morning and every afternoon. And we went through transaction by transaction, fund performance, everything you needed to try to assure our investors. At the same time, we knew that the world was going to be different. Regulation was going to be different, the competitive landscape was going to change, and maybe even some of the business models were going to change. And so we started laying the groundwork for all those changes.

And just to give you a couple of tangible examples, the role of advisors. So at that point in time, the independent advisor channel, which again, you’ve lived this, was a really tiny fraction of advisors. Most of it was the big brokerage firms. And they were primarily commission driven.

BARRY RITHOLTZ (00:10:41): Right. All transaction based.

BILL McNABB (00:10:42): All transaction based and essentially conflicted. Because the more you trade, the more money they make, and the more you trade, the more you lose from a performance standpoint. So we believed this would accelerate the move to asset-based fees and that it would be a very different model. The other one for us, we really thought this would accelerate indexing, for all the reasons that you cited earlier in terms of just, hey, it’s safe.

It’s just buy the market. And again, the math was overwhelming. Even during a downturn, stock pickers did not outperform the index.

BARRY RITHOLTZ (00:11:19): Which is the claim before, right? Just wait till the next downturn and you’ll see how well stock pickers have done.

BILL McNABB (00:11:25): So we started to make moves around those changes. We knew the regulations were going to change a lot. And we also knew the competitive landscape. And frankly, we didn’t get that all right.

We knew somebody would end up with iShares because Barclays Bank was under such duress. I didn’t see BlackRock doing it. I just didn’t anticipate that.

BARRY RITHOLTZ (00:11:50): What a great buy for them.

BILL McNABB (00:11:51): It was spectacular. It was phenomenal. One of the stories we don’t talk much about, we actually were a serious bidder on it until the regulators came in and changed the game. And then we had to back away.

BARRY RITHOLTZ (00:12:03): Really? How come BlackRock would be allowed and Vanguard wouldn’t?

BILL McNABB (00:12:07): We were allowed, but they wanted to pair their institutional business with the iShares franchise. We didn’t want anything to do with that institutional business, because we were all mutual fund, retail based. And again, all the credit in the world to Larry Fink and his team and BlackRock for what they did.

But it was interesting. I had a director come to me after all this, and he says, so you’re six months in the job and you come to us about doing our first acquisition ever. It’s a very large check. And over a beer sometime I can tell you about all the nuances that went into it.

BARRY RITHOLTZ (00:12:28): I’m looking forward to it.

BILL McNABB (00:12:46): It was pretty cool. Yeah. So what does that tell you about ETFs and this advisor channel? And we took that back, and that’s when we really went all in on ETFs and all in on really serving advisors better.

And that was a huge change.

BARRY RITHOLTZ (00:13:03): I want to circle back to advice and target date funds, and just stay with ’08-’09 for another moment. The first time you were on, you told a story about how you had figured out how nervous your employees were. Do you recall what I’m talking about?

Remind us of what that environment was, how it was affecting clients and staff, and what your solution to it was.

BILL McNABB (00:13:32): So all of our competitors were laying people off left and right, because transaction volumes had just gone away.

BARRY RITHOLTZ (00:13:40): Other than selling.

BILL McNABB (00:13:42): Other than selling, you’re right. The classic mutual fund company in those days was probably 65, 70% equity. And the equity market, peak to trough, was down 50%. So your revenue was down 35%.

BARRY RITHOLTZ (00:13:57): I think it was 57, 56, something like that.

BILL McNABB (00:14:00): I think like March 9th, if I recall.

BARRY RITHOLTZ (00:14:01): That’s what I recall, exactly right. It was identical to ’73-’74 in terms of the drawdown.

BILL McNABB (00:14:07): So our people were incredibly nervous. People were wondering. So we went to our people, and we got our board’s blessing to do this, and said, there will be no redundancies, no layoffs. All we want you to do is be flexible, and we may need you to move from one role to another, wherever the client demand is and whatever the need is. So we ended up doubling down on service and doubling down on fixing problems. Everybody has service issues.

If we had excess people, we turned them loose on those problems. And the theory was you couldn’t cut your way out of this. And if you had people nervous about their own jobs, how are they going to reassure clients that the world’s not ending? They were going to feel conflicted.

And I think it really worked.

BARRY RITHOLTZ (00:15:02): Everybody exhaled. Everybody took a deep breath.

BILL McNABB (00:15:05): And we went all in on educating our clients and people. Our service levels were incredible. We got a lot of positive reinforcement back from the clients. So I think strategically it was one of the most important things we did during that period.

BARRY RITHOLTZ (00:15:23): And then out of the depths of the financial crisis, you guys leaned hard into the advisor channel, into building your own advisor space, and then target date funds, which I believe came out of an offsite meeting around the crisis. Tell us a little bit about that redirection, expansion, and the new post-crisis direction for Vanguard.

BILL McNABB (00:15:48): So it really was, we did this very existential exercise with Jim Collins, the great business writer.

BARRY RITHOLTZ (00:15:59): Good to Great, is that right?

BILL McNABB (00:16:00): Good to Great. He had done the two books that were really influential on our thinking: Built to Last, how do you build a company that can be a leading company for a hundred years, and then Good to Great. And so we asked ourselves, in order to be great, we thought the first step was, what’s our why? Why do we exist?

We had a mission statement, and it was very long and a lot of adjectives and adverbs. And we took a team, and we mixed the team. It was a couple senior people, but all the way down to the front lines. And we said, come back with why. Why do we exist?

Why do we have a right to exist? And it was really simple. It was: take a stand for investors, treat them fairly, and give them the best chance for investment success. And that latter one in particular, target date funds. You do the math, we could demonstrably show that investors who went in target date funds did better than those who didn’t. Doing our own advice program, low-cost advice that’s tax sensitive, really focused on asset allocation, and very disciplined in rebalancing and not letting people, in a sense, harm themselves.

That’s where advisors add tremendous value. So build that. So these things, Barry, were in a sense logical outcomes. And the target date thing was interesting.

We had people arguing about, well, it doesn’t really take risk into account, just setting a date. And we’re like, every risk quiz I’ve ever seen gets the same answer: moderate.

BARRY RITHOLTZ (00:17:44): My experience has been, when you do the risk tolerance surveys with investors, what you really find out is what’s been going on in the market for the past six months. So if it’s doing great, they’re much less risk averse. And when it’s in the crapper, suddenly, no, no, I’m not an adventurous investor, I’m a low-risk investor.

BILL McNABB (00:18:02): So when we really looked at the math, those quizzes were adding no value in terms of the asset allocation decisions we were making. So we were like, just take it out, make it simple. Tell us when you’re going to retire, and that’s the fund we’re going to put you in. And again, you track all this, the performance of those funds versus unmanaged accounts in 401(k)s, it’s superior.

BARRY RITHOLTZ (00:18:22): There’s a reason that has become the default holding in 401(k)s. Because before that Richard Thaler-driven behavioral change was made, people would just leave money in cash, and when the market would run away, geez.

BILL McNABB (00:18:38): Guaranteed investment contracts and money market funds were the default options of choice. And I started out as guaranteed investment contract product manager at Vanguard. So I knew this world really well. And it’s funny you mentioned Thaler.

So Shlomo Benartzi and Dick Thaler did all of the seminal work on applying behavioral finance to 401(k) plans. We sponsored a lot of their research. And we actually worked with them.

And that really helped us think about automatic enrollment into 401(k) plans, automatic escalation of your contribution.

BARRY RITHOLTZ (00:19:10): As your salary increases.

BILL McNABB (00:19:11): As your salary increases. And then the default option being a target date fund.

BARRY RITHOLTZ (00:19:15): The more you can automate a process, the less opportunity there is for human bad decision making. And poor intervention.

Totally. So last two Vanguard questions before we move on. So Jack Bogle was at Vanguard pretty much your entire tenure.

What was your relationship like with him? I know he wasn’t necessarily a big fan of things like ETFs or overseas investing. Tell us a little bit about what it was like to work with Jack for 30 years.

BILL McNABB (00:19:48): Jack. I chuckle because I learned so much. One of my early roles, it was my second role at Vanguard, I sort of fell into running product development, which was really: whatever Jack thought up as a new investment product, you went and did the homework and then went and executed. So I got to work with him a lot in those early days.

He was incredibly demanding. Very fair, but incredibly demanding. And I had my share of, do I need to get my resume in order? Because he had, a lot of pen marks on a paper or whatever. But when I became CEO, I got a nice note from him right away.

And then a few months later I got like a 20-page series of things we should be thinking about. And I’d say all well thought out, about half of which I said, nah, we’re going to do something different. But he certainly was not shy. And so you’re right.

ETFs, global funds, international investing in general, he was not a huge fan. However, I had a couple of great people on my staff who just constantly went to see him and talked to him and really took his wisdom. And in the end, if you watch some of his last interviews on ETFs, he’d say, unless you do it like Vanguard does it. And he slowly moved there. I think the other thing, in international, the team in Australia, which was our biggest international presence when I retired, and I think it still is, Jack made a visit there after he’d retired, but he was still running the Bogle Research Center, and it was epic.

They talk about it still to this day, about how impactful it was to have the founder there. And he was so proud that the message was going beyond our borders.

And so, again, there was still—

BARRY RITHOLTZ (00:22:12): Still no real traction in Europe, starting to lean that way. They have just such a different, I don’t know if it’s the fact that their retirements are more or less covered.

BILL McNABB (00:22:25): State driven, and the banks control everything there for the most part. Although in the UK, we’ve had a lot of success.

BARRY RITHOLTZ (00:22:32): The UK, yeah. It’s shifting there before everywhere else. So last Vanguard question. I recall just at the tail end of the financial crisis, you guys crossed a trillion dollars, then $2 trillion. By the time you retire, I don’t know if it was four or $5 trillion. It’s a little over five, $5 trillion. My question for you was, your first day of retirement, what was it like waking up saying, I’m not responsible for millions of investors and trillions of dollars?

BILL McNABB (00:23:05): It was big mixed emotion, Barry. So much of my career was spent in front of clients. I helped build our 401(k) business in the early days. So I got out to see employee groups on behalf of the plan sponsors.

So I probably had more direct interaction than anyone had ever had. I missed that a lot. I just had so many incredible experiences and relationships, and I missed our people. One of the great things, both Jack Bogle and Jack Brennan were so good at this, they did not like hierarchy. We didn’t have executive dining rooms and special parking places and all that kind of stuff, because we believed everybody’s job was really important.

And we all used to love to walk the floors and see what people were up to and talk to them. So I missed that, and I missed the clients. But at the same time, the team that was there, I’d worked with most of them for 25 years. I felt good about that team, and it was like, go knock it out of the park.

BARRY RITHOLTZ (00:24:20): You left the place in good shape. Coming up, we continue our conversation with Bill McNabb, former CEO and chairman of the Vanguard Group, talking about his new roles in the boardroom and working with startups. I’m Barry Ritholtz. You’re listening to Masters in Business on Bloomberg Radio.

I am Barry Ritholtz. You are listening to Masters in Business on Bloomberg Radio. My extra special guest this week is Bill McNabb. He is the former CEO and chairman of Vanguard. The firm now runs, I don’t know, is it $14 trillion?

Some wild number. So you step down as CEO at 60 with the firm pretty much running on all cylinders, doing great, great team.

As someone who just went through the process of succession planning, I have to ask you, how did you know it was time to step down? How do you think about doing succession correctly? There are so many examples of firms that get it wrong.

BILL McNABB (00:25:31): So one of the things about this, again, I had a great mentor on this, my predecessor Jack Brennan. Jack retired when he was, I think, 54.

BARRY RITHOLTZ (00:25:44): But he stayed as chairman for a few years, right?

BILL McNABB (00:25:46): Just a year. But he had run the firm for 12 years. And I couldn’t believe it when he told me he was going to do this and I was going to succeed him. And I asked him why, and he said, look, somewhere in that 10 to 12 year range, if you’ve done a decent job, people stop pushing you and they stop questioning you, because you’ve been right more than you’ve been wrong.

And he goes, that’s not healthy. And the ability to reinvent the firm or to really push for innovation gets harder, because you really need a collective wisdom to do that. And that’s where the art is, Barry. But I felt like the team was really strong.

I was seeing signs. We’d had a lot of success. So I was seeing some of those signs, and it was, okay, time to let a new generation see what they can do, and leave the place in a good spot. And then go.

BARRY RITHOLTZ (00:26:40): Did you set up like a detailed plan as to your retirement? Or was it just evolving organically?

BILL McNABB (00:26:47): So, a detailed plan as to how we were going to do the transition at Vanguard, and we worked really closely with our board on that. In terms of my own thing, I didn’t want to think about it. I thought I’d wait until I was out.

I had a year where I was board chair still, and I’d originally said I would do that for as long as three years. But after a year it became clear, like, the firm’s really doing great, there’s no need for this. But that year I did a ton of travel for us, all around the world, seeing clients, regulators, whomever. And I also did a lot down in DC, because there was a lot of regulatory stuff going on.

And so I had a lot of travel time. That’s when I started to think about, okay, what am I going to do at this next phase? And I describe this phase as, there’s like three parts to it. There’s family and fun, there’s governance, and then there’s what I call pay it forward: mentoring and helping develop a new cadre of leaders and so forth. And I’ve been, I won’t say systematic, but I’ve tried to be careful.

I’ve probably overcommitted a couple times in different things. But you try to feel your way through that. And the family and fun stuff are the passion things. The governance for me, I had an opportunity to co-write a book on governance with Ram Charan.

And we did the book and we talked to everybody. It was so much fun, talking to Warren Buffett about how does he think about governance. Just incredible. And Dennis Carey was the third co-author, by the way.

So I did that, and that led to co-leading the NACD’s Blue Ribbon Commission on the future of the American boardroom. And I do work with CECP, which is CEOs for Corporate Purpose, Daryl Brewster’s organization, which does incredible work on governance as well. So I had this whole sort of academic thing around governance going on, and then got the opportunity to serve on two very large public boards, where you’re on the other side.

BARRY RITHOLTZ (00:29:18): So let’s talk about those boards. IBM and UnitedHealth Group, two giant companies, so different, and each going through very different transformations.

How do you shift from being a CEO to being a director, and what can a board actually accomplish other than just responding to crises as they come along?

BILL McNABB (00:29:43): I think there are sort of three broad categories that the board has to lean in on. The hardest thing being an ex-CEO is you’re used to running things, and you can’t do that. There’s a line between management and governance for a reason. And so you try to be very aware of that.

But I think where you can lean in is, if you think about it at the highest level, what you’re doing is you’re allocating capital, and you’re allocating financial capital and human capital. So for us, the way we phrased it, and we did this in our book by the way, we said, look, focus on talent, focus on strategy, focus on risk. And from a governance standpoint, it all sort of boils up to those three things. And how do you help the company think through talent and culture?

Do you have the right people to execute the strategy? Most boards want to go right to strategy, but I think you’ve got to really help the CEO and the C-suite team think about that culture and think about talent. Now, the best companies do this really well. Strategy has really evolved. It used to be, I can remember doing this with the Vanguard board early in my career.

You do a strategic plan, a five-year plan, and it was all written down, and okay, this is what we’re going to do. I mean, you’ve got to be so much more agile now.

BARRY RITHOLTZ (00:31:25): That’s the great Mike Tyson quote: everybody has a strategy until they’re punched in the nose. It’s got to be applicable to big corporations as well.

BILL McNABB (00:31:34): So in talking about my Vanguard experience, I got it firsthand two weeks in, in 2008. Because we had a plan, and that plan, we just threw it out. And that plan was one of the coolest sets of objectives and things we were going to do differently. Completely off.

Because the world changed. The world totally changed. And so I’ve tried to bring that mentality into the boardroom. And again, I’m very lucky that the two boards I serve on think that way.

IBM has gone through a lot of transformation. Our current CEO, Arvind, he’s really brought a strategic agility into the company. And if you look at the progress the firm has made since he became CEO, it’s really very gratifying. Look, we had a big sell-off last week or two, but we’ll talk about what’s happening in the markets. I think in the long run, what we’re doing strategically makes a ton of sense.

And again, we’re trying to remain very agile.

BARRY RITHOLTZ (00:32:42): So let’s stay with IBM, which began as a typewriter company, right? People don’t realize how often IBM, one of the few companies that has successfully pivoted time and again, to mainframes, to PCs, and so now the pivot is to hybrid cloud, AI. When you think about all the different things they’re doing, how do you help oversee this giant business model that’s being rebuilt from the ground up?

BILL McNABB (00:33:16): Look, you try to bring what experiences you have, and you try to ask really good questions. And our board has got a breadth. When you look at the breadth in the board, different people bring different perspectives. So I think when I first came on the board, the idea was, oh, you’re going to bring a shareholder perspective, just the shareholder voice in the room.

And that’s true, but I’m also doing all this work now in the venture world. And so I’m living the AI life big time. I’m seeing the pluses and minuses and everything else. So you try to bring some of that experience.

We’ve got other people who are deep, deep, deep in different elements of technology. We’ve got other people who are really deep in terms of financial services, which is a huge part of our customer base. We’ve got some people who will push on the science. We have a former president of a major university, but her whole background was computer science.

And so when we start talking quantum, her eyes light up, and she can go toe to toe with the research team on the quantum stuff. We’re never going to know as much as the management team and the people on the ground. But if you can ask the right questions, I think that becomes really important.

BARRY RITHOLTZ (00:34:39): Let’s talk about your other big company board seat, UnitedHealth. I don’t know any company that’s gone through a rougher stretch due to outside forces. The CEO gets murdered, then there was the guidance issue, big leadership change, the former CEO comes back, Stephen Hemsley, and now they’re in the midst of a turnaround. What is the board’s job in an environment where it’s just one crisis after another?

And nothing that the company has necessarily done. It seems to be almost all random externalities.

BILL McNABB (00:35:16): So this is again going back to that agility thing. A lot of business writers have talked about the need for management teams to have a more venture, more startup mentality, be quick to pivot. Boards now have to be quicker to pivot. So we’ve had to pivot. We’ve had to think about leadership differently. Steve coming back, huge blessing for us that he’s ready and able and willing to do that.

One of the greatest CEOs of our time. Most people don’t know his name, but his ability to see around corners and make hard decisions and then go and execute, it’s incredible. But that wasn’t in the plan, Barry. We had to adjust pretty quickly.

And what you try to do is you try to ask the right questions. You try to probe, you try to be supportive where you need to be supportive, and you try to be challenging where you need to be challenging.

BARRY RITHOLTZ (00:36:19): So it’s so fascinating to me that you’re on these two giant publicly traded companies’ boards. Vanguard is mutual. They have no outside shareholders. All their mutual fund investors are effectively the owners.

There’s no stock price to worry about. How different is it stepping into this world of public company directors? It seems like such a giant shift.

BILL McNABB (00:36:48): Yeah, it is. And look, I think there are people who in a lot of ways are way more qualified than I am. And you try to be as helpful as you can be. I think the one thing that Vanguard actually really trained me well for was to think long term.

And yet at the same time, our performance was measured every day, every week, every month. So we had this ability to do both. And again, Jack Brennan, Jack Bogle really drilled that into us. And I think our team did it exceptionally well.

The biggest aha is the pressure on the quarter, right? You’re giving guidance. You’re really thinking hard about your earnings calls and so forth. That was a new thing for me.

Because again, I never had to do that. But the analogy is, long-term performance is made up of a lot of short-term performance. So I paid a lot of attention to short-term performance. I didn’t obsess over it, but I paid a lot of attention to it, because cumulatively it leads to long-term.

So I’ve had to bring that same mentality, and I’ve had to learn that here it’s a little bit different, but how to be very focused on quarter by quarter by quarter and what we’re doing and executing. But also the one part I do try to push is, let’s not forget the long term.

BARRY RITHOLTZ (00:38:18): So I don’t know anybody that’s either on a board or is an investor that is remotely enthusiastic about, let’s stop reporting quarterly numbers. It seems kind of absurd. But at the same time, there’s an increasing number of companies that say, we don’t know the future. We’re not going to give you guidance. That’s your job as an analyst. Our job is to run the company. Reconcile those two with us.

BILL McNABB (00:38:49): So I think the move away from quarterly reporting is, frankly, a false move. It does not accomplish anything.

BARRY RITHOLTZ (00:38:58): I know they tried it in the UK and it did nothing.

BILL McNABB (00:39:01): Did nothing. Could you simplify reporting? Sure. There’s things we do that don’t add any value to the investment community, and simplify it.

I actually think quarterly reporting is very important. I think transparency about what’s happening is incredibly critical. If the regulators were really serious about the issue, guidance is where they would go. They would say, okay, we’re not going to allow guidance.

What’s interesting is, and I would’ve been in that camp 10 years ago. I went into probably a hundred boardrooms my last couple years at Vanguard, because we were the largest shareholder. And people would ask, should we give guidance or not? I’d say, no, you don’t need to give guidance. What you do see, though, is there are situations where the Street gets it so wrong that you’re giving guidance to actually protect yourself from the Street getting it so wrong.

And that’s the part that I’ve had to sort of balance in my own head, because I never really understood that until I was in the boardroom. And then you see the conclusions some of the sell side in particular come to, and you’re like, whoa, that’s not even remotely true. And then you have to guide them. But look, to me, the single biggest thing we could do, whether you give guidance or not, would be to really hold companies accountable for providing long-term outlook.

So what if you took one earnings call a year? I’m making this up, but we’ve talked about this at CECP quite a bit. And you report on the quarter, but you devote it to, here’s where we are against our five-year aspirations, or our 10-year aspirations, whatever the right timeframe is. Here’s how we’re doing.

Here’s, by the way, we told you last year that five years from now we want to do X. The world’s changed a little bit. We’ve got to pivot. So we’re not going to do X, we’re going to do two X. That, to me, would be a lot more productive in terms of getting people to think long term.

BARRY RITHOLTZ (00:41:14): Hmm. Really interesting. Last question on the boardroom. Are you ever in a meeting where somebody that’s on the board realizes, oh my God, this is the former CEO of Vanguard.

Hey Bill, I got a question on my 401(k). How often does that come up?

BILL McNABB (00:41:33): Actually, it happened a couple times. A couple of my colleagues on different boards were actually big 401(k) clients. So we did have good chats about that, but most of these guys are pretty sophisticated.

BARRY RITHOLTZ (00:41:47): I can imagine.

BILL McNABB (00:41:48): They don’t need my help.

@BR 00:41:49

Coming up, we continue our conversation with Bill McNabb, former CEO and chairman of the Vanguard Group, talking about startups and the future of advice. I’m Barry Ritholtz. You’re listening to Masters in Business on Bloomberg Radio. I am Barry Ritholtz. You are listening to Masters in Business on Bloomberg Radio.

My extra special guest this week is Bill McNabb, former CEO and chairman at the Vanguard Group, now sitting on a few boards and advising private equity, venture capital and startup firms, which is really quite the pivot, from a mutual fund guy to a VC and PE sort of guy. What attracted you to those fields and some of the younger companies that you’re advising?

BILL McNABB (00:42:49): So two things I would say. One, I had no experience in the private markets. Private markets are growing dramatically. And I just felt like I need to understand this better.

And for me that was the chance to learn something new and hopefully help while you’re doing it. But selfishly, I thought I was going to learn a lot, and I’ve been overwhelmed by how much I’ve learned and how much more I have to learn. Second, during my last couple years at Vanguard, we established a research group, and we began to talk about doing some venture investing ourselves. Not about making money or on behalf of our clients, but more just being in the ecosystem. And that all came about because we did a trip to Silicon Valley, took the whole leadership team, met with every large VC there, a bunch of their portfolio companies, and we walked away blown away by what we didn’t know about our own business and what the future might look like.

And so to me, no matter where you are in the investment arc, if you will, understanding what goes on in the startup world is, I think, just important to understanding the bigger picture. And then the last thing I’d say, and this is just a passion play. Our mission, if you boiled everything down at Vanguard, we wanted to make the world a better place for investors. I mean, we got up every morning and afternoon. I’m lucky I get to do that.

And the startups I’m working with, I believe very deeply that they have the potential to make the world a better place for investors. And if I can keep doing that for the next 20 years, I’m going to be really happy.

BARRY RITHOLTZ (00:44:35): So you’re a senior advisor to Venrock. Are you helping them vet startups or ideas or founders? What’s your role with a fairly well-known venture fund like that?

BILL McNABB (00:44:50): So the partner with whom I work the most is this guy named Nick Beim. He’s incredible. He just sees around corners. He’s got 25 years of experience doing this.

I learn something every time I talk to him. So Nick will get approached by a lot of different people. He will meet a lot of different people. When he gets something that’s interesting, I often get a call and it’s like, hey, would you talk to these guys and see what you think? And so you and I both have good connections with Jason Wenk at Altruist, and that’s how my—

BARRY RITHOLTZ (00:45:28): A recent guest, and full disclosure, by the way, Ritholtz Wealth Management uses Altruist as a custodian. The firm’s venture arm is an investor in it. I personally am an investor in it.

I always like to get those disclosures out so nobody misunderstands what we’re talking about.

BILL McNABB (00:45:46): And I’m an investor there too. So Nick calls me after we first met and he says, there’s this guy I want you to meet, and just tell me what you think. He goes, we’ve invested. So Venrock had actually already invested in this case.

So I meet Jason and I’m like, he had me at hello, right?

BARRY RITHOLTZ (00:46:05): Super impressive, right?

BILL McNABB (00:46:06): Incredibly impressive. So in the early days it was Nick, Jason, and me in the boardroom. And I would say my role there was really twofold. One was just, Jason was a student of Vanguard, and like, what did we get right?

What did we not get right? How did we think about scaling? So I tried to bring that to the discussions in the boardroom. And then very importantly, over time, Jason particularly asked me, can you just talk to some of my senior team on a regular basis?

And so I do. And that’s the mentoring part. And I think that’s a big part of what, in a sense, I’m there for. I’ve made a lot of mistakes. I’ve sort of lived a lot of different movies that they’re now going to watch and live through, and where is it relevant and where is it not relevant?

There are situations where new ideas get presented, and then I will be part of the vetting process as well. So Vanilla, which is a software product to help with estate planning. There’s Steve Lockshin, who, personally, is an incredibly brilliant planner around all this. And it’s like, let’s take his brain and codify it.

BARRY RITHOLTZ (00:47:35): Turn it into software.

BILL McNABB (00:47:36): Turn it into software. And I got a chance to interact. And we knew Steve a little bit from Vanguard and serving him through the investment side. We started an RIA from scratch.

So I don’t know if we’ll ever be able to compete with you, but—

BARRY RITHOLTZ (00:47:56): We’re still under $10 billion, which I have to explain to family members is walking-around cash. It’s not real money.

BILL McNABB (00:48:04): It’s real money. You guys have done a great job. But what if you had a blank sheet of paper and could create a firm from scratch? So we’re going to do that.

And we’re in the process. It’s called Arca. You may have seen some of the press releases on it. I got a chance to work with two co-founders of three. There are three co-founders of the firm. Finny.

Finny’s a little different, because what Finny’s trying to do is really help firms do a better job matching prospects and clients, and turning the right prospects into the right clients. This is a huge problem in the RIA space.

BARRY RITHOLTZ (00:48:45): People don’t understand how important fit is. And we’ve been fortunate to build that into our process. Because it’s disruptive for someone to come in.

They’re the wrong fit, they transfer everything in. It’s so much time and effort, it’s such a lift. And then six months later everybody realizes, oh, we’ve made a mistake. And then it’s a divorce, and it’s disruptive on the way out.

BILL McNABB (00:49:09): We actually were really strict on client selection in my time at Vanguard. And so when I met two of the co-founders in particular, I talked to them a lot, and they’re describing this to me, I’m like, oh my God, I love this stuff. This is exactly how, it’s one of the most important things you learn in terms of building a great business, is that fit.

And they were thinking about things from a technology standpoint that were way beyond me. I mean, they’re a bunch of AI engineers. It didn’t exist 15 years ago, 10 years ago even. And so watching that, watching their thinking on that.

But very importantly, one of the cool things, and again, I’m getting tactical here with Finny, but it’s just interesting to me, because they developed a way, they’re going to price this in a way that aligns outcomes, much more structurally sound. So at Vanguard, one of the cool things we did was where we had active equity, for example, every active equity manager was on an incentive scheme where if they outperformed over a long period of time, we would actually pay more, and the expense ratio would go up. But we were happy with that. And, by the way, if they didn’t—

BARRY RITHOLTZ (00:50:30): It goes the other way.

BILL McNABB (00:50:30): They went the other way. We’re the only firm who did that across every active equity portfolio. And we did that very early. Finny’s doing a similar concept, an analogous concept with, like, we’re not going to be your traditional SaaS company where we charge these really big seat licenses and we’re negotiating on who’s using what.

We’re going to do it all on success. If you get the right clients, we will earn more money. And if you don’t, that’s on us. That’s a really cool concept.

And so again, I got tactical there, but it makes a point that, what you’re really looking for: if they get it right, it changes the industry in a really positive way. Altruist gets it right, it changes the industry in a really positive way.

BARRY RITHOLTZ (00:51:18): So let’s dive down into that a little deeper, for each of those. I had always been told, hey, custody is razor-thin margins, there’s nothing you can do there. And besides Schwab and Fidelity, the giants in that space, no one’s going to take them on.

You have to be a little crazy to say, I’m going to take on the two behemoths. But Altruist has become the third largest custodian for RIAs, at least if we’re going by advisors served. I don’t know how it looks by dollar amount. What did you see when you first started talking to Jason Wenk about what has always been such a challenging, low-margin business?

BILL McNABB (00:52:06): Jason had this vision that the legacy players do a fine job, at a level. But in a sense, these businesses had become, I hate the term cash cow, but there’s not a lot of innovation, not a lot of new technology being brought to bear.

BARRY RITHOLTZ (00:52:25): I want to say two years ago, and I hope I’m not getting this wrong, I think it was Schwab was generating 57% of their revenue just from the cash sweep that they’re paying a few bips on, but earning three, 4% on spread.

BILL McNABB (00:52:41): Spread’s everything there. That’s exactly right. So he had this passion, and he had been an advisor. And so he’s like, what do I really want?

And so the way we thought about it was, yes, there’s custody, and we can digitize it and we can make it much more efficient. We can make it much better, lower cost, frankly, for the advisor so they can pass on value to the client. You can, though, actually make it a platform that’s more than just custody. So we introduced Hazel, which is this great tax planning capability, as you know, AI driven, and it’s taken the—

BARRY RITHOLTZ (00:53:23): Everybody in my firm loves it. And PS, Jason was more than an advisor. He’s an engineer.

So he brings sort of that coder mentality to how can we use technology to make this faster, better, cheaper.

BILL McNABB (00:53:36): So the way I always envisioned the direction we’d go was, this is going to be the platform of the future for advisors, and we will make it so much easier for them to do what they need to do. And Jason’s got that engineering mentality, he’s got that drive. He’s incredibly passionate. If you look at the Altruist flywheel, it looks a lot like the Vanguard flywheel did, in terms of just this, if it works, this self-reinforcing perpetual improvement, perpetual driver of good outcomes has been created.

BARRY RITHOLTZ (00:54:19): What’s the old line? I think this was Jeff Bezos. Your margin is my opportunity.

That seems to be what’s happening there. Tell us a little more about Vanilla. What are they doing, and where is the disruptive opportunity there?

BILL McNABB (00:54:34): So with Vanilla, if you think about the high net worth and ultra high net worth, which is a significant amount of assets in the industry, we talk about asset allocation, we talk about cost. And at Vanguard we really talk about cost a lot. The single biggest opportunity for value add is in estate planning. I mean, you can save people millions of dollars. There’s no other category that can do that.

And Vanilla changes the experience dramatically for the advisor providing that estate planning. Rather than whiteboards and stickies and hand-drawn flow diagrams, it just gives you this incredible automated output. And I got a chance to be kind of an early pilot, because Vanguard was actually an investor in Vanilla.

BARRY RITHOLTZ (00:55:30): Vanguard itself. Oh, really?

BILL McNABB (00:55:32): Yep. And they were running pilots. So I raised my hand. It was the best conversation I’ve ever had with the advice team that does our family. By far.

Because it built this whole balance sheet in one place. All the family trees, if you will, were all right there, all done in an automated fashion.

BARRY RITHOLTZ (00:56:01): And Vanilla is a product that is not necessarily for the end investor, but the advisor in between.

It’s a little complex for the average person to just log on on their own.

BILL McNABB (00:56:12): The whole estate planning process. It really is a business. It’s really being sold to advisors.

So you’re seeing wealth management firms adopt it. So the Vanguards of the world and other big firms you would know well, bringing it in and saying, this is going to be the platform where we do estate planning.

BARRY RITHOLTZ (00:56:31): So I’m hearing a very consistent theme, which is all of the disruptive fintech that you’re involved with, Finny, Altruist, Vanilla, seems to be all marketed to the advisor, which is so different from what you’re doing on the board seats. Any other startups or other technologies you’re looking at, either to the advisory community or anywhere else?

BILL McNABB (00:56:59): Yeah, so I’ve been involved in a couple of others. One, there’s a company called Moment, which is some ex-Citadel guys who really are reinventing the way fixed income gets traded. And I’m not an investor there, but I like to think of myself as a friend of the firm, and Venrock is an investor there.

And so I have those conversations. Again, the theme is not dissimilar in that you’re making the world better, because they’re doing things with fixed income trading that have been done on the equity side for years. Fractional trading of bonds. They make it like that, and they’re really having a pretty significant impact.

There’s one that we’re involved in, again, I’m not an investor in this one either, but I talk to them a lot, around litigation. So that’s a little bit different. It’s my one non-investment-oriented thing.

BARRY RITHOLTZ (00:58:03): What’s the name of that firm?

BILL McNABB (00:58:05): Syllo.

BARRY RITHOLTZ (00:58:05): Okay.

BILL McNABB (00:58:06): And again, what’s really cool about them is it’s a marriage of incredible legal talent with an engineering mindset. So imagine the Jason Wenk of litigation lawyers. This is people who write code but have deep litigation experience.

BARRY RITHOLTZ (00:58:26): There have been a handful of funds over the past few years that literally are making investments based on litigation outcomes, class action outcomes. And they’re truly non-correlated, because the outcomes have nothing to do with the market or the economy.

It’s a really interesting space.

BILL McNABB (00:58:45): And this company will do things that, this is going to disrupt this industry as much as anything we’ve talked about. So for me, the fun part is all these entrepreneurs. You’re getting a chance to work with some of the brightest minds in the country. They’re all super passionate about what they do, and they’re incredibly talented. And you’re not going to get it all right, and some of them are going to be more successful than others.

But if you can sort of help them along a little bit with lessons learned and whatnot, it’s incredibly gratifying.

BARRY RITHOLTZ (00:59:28): You give them the best chance for future success. So the future of advice going forward. You’ve mentioned some of the robo-advisors like Betterment and Wealthfront, and in fact, the robo-advisor that Vanguard set up under your leadership quickly scaled up to a hundred billion plus and then kept going.

Now, by far the biggest robo in the world. But it doesn’t sound like you think that the future of advice is just going to be automated or technology. What does the future of advice look like, for both the average mom-and-pop investor who needs some help planning their retirement or paying for kids’ college, or the higher net worth that’s thinking about what am I going to do with this extra capital in terms of philanthropy or generational wealth, straight up to the multifamily offices and big numbers?

BILL McNABB (01:00:31): Look, I think there’s going to be a spectrum. I do think there will be people who go the automated way, fully automated, the original Wealthfront model, if you will. But increasingly, I’m pretty convinced that the bulk of the people, investors, are going to go with advisors where there’s a human touch. I think that human touch is incredibly important.

And so all the technological advances that we’re seeing, whether it’s Vanilla’s software planning, whether it’s the platform that Altruist is developing, whether it’s Finny’s ability to help you grow your business more effectively and organically, those things free up the advisor to do the personal stuff. And so I don’t know at Ritholtz what your average number of clients per advisor is, but let’s just say it’s a hundred, which in the industry is kind of a norm. I see no reason why somebody can’t serve 300 more effectively than they serve the hundred today with the technology that’s coming. And the reason I think it’s important to have that person is I think that the really thoughtful advisor can really prevent you from getting off the reservation.

The automated programs are great, but people can opt out of them pretty quickly. And we do see that. And again, you said the last six months are always indicative. One of the things that we didn’t talk about, but it’s incredibly troubling to me, is the over-gamification of investing that’s going on right now, and the amount of day trading. We’re back to day trading.

BARRY RITHOLTZ (01:02:15): I started in the nineties when that was going on. I remember the E-Trade commercials and the tow truck driver who owned an island, he just likes to help people who get flat tires. So he’s still doing it.

And it’s full circle, between the prediction markets and then all the gambling apps. We’re right back to where—

BILL McNABB (01:02:39): And you actually see it in trading volumes.

BARRY RITHOLTZ (01:02:43): End-of-day options, single-day options.

BILL McNABB (01:02:46): It’s not all being done by algos and hedge funds. There’s a retail element now that’s incredible. You take an S&P 100 stock that might have traded 10 million shares a day. Now it’s trading 50, 60, 70 million shares a day.

And it becomes this self-perpetuating thing. The more volatility there is, the more the day traders come in. The more they come in, the more volatility there is. And at the end of the day, you know that only the house wins there. The house will win.

BARRY RITHOLTZ (01:03:22): Same is true with the prediction markets, right? There’s a tiny percentage of consistent winners, and 90-something percent of people are making donations.

BILL McNABB (01:03:31): That’s right. So that’s why I think the person remains incredibly important. It was interesting, in a venture capital conference I was at, somebody asked the question, they said, do you think that all the AI and all the technology that’s coming is going to replace humans or enable humans? And I think there are places where you can say it’s replacement. It could be both.

Yeah, it could be both. I think here the majority of it’s going to be enable.

BARRY RITHOLTZ (01:03:58): So just to share a little bit of what we’ve been seeing, it’s not that we’re creating new information. We’re finding ways to take notes and keep a running dialogue of everything that’s going on with AI, but then access it and use it in a way that is just enormously helpful to clients. And very often, if you’re having a conversation with a client that’s an hour, you’re doing a year-end review, or maybe it’s a quarterly review or anything like that, lots of stuff goes by that you may not pick up in that moment. But if you have a tool taking notes and reviewing it and summarizing it and remembering that two years ago they said, we’d really like to buy a vacation property now that the kids are out of the house, but we’re not sure what we can afford. Hey, if you can access that and not forget it, if you have a permanent memory, not only can you successfully manage more clients, but you’re going to do a much better job of it.

And so the fear of all this job loss, I mean, it’s certainly not showing up in much of the data yet. You still have relatively low unemployment, and relatively low unemployment for people under 25, which usually runs about double the traditional U-3 unemployment. So I’m fascinated by this.

Do you recall in the mid-2010s, the assumption was, oh, these robo-advisors, they’re going to put all the humans out of business. Is this just an ongoing Luddite fear that every new technology leads to?

BILL McNABB (01:05:48): I think so. Because look, there is disruption. For sure.

BARRY RITHOLTZ (01:05:52): And certain jobs are going to go away.

BILL McNABB (01:05:54): Right. And when you’re in the middle of that, it’s overwhelming. But I do believe that the creation of new categories of jobs we can’t even imagine is going to continue.

I do think there are areas where the technology just allows you to do more, like you described. It’s interesting, we had an interesting thought experiment. So when the robos started, our idea was to take the best of Wealthfront technologically, but to have a certified financial planner at the end of the telephone or video screen to interface with the client. And my chief of staff, who was a twenty-something software engineer at the time, said, like, no, who needs a person?

And I said, well, how much? So we formed a little focus group. This is completely unscientific, but this is again, sometimes how I like to do things. And so we sat around and we said, so I give you $25,000, but you want a little bit of advice. They all wanted robo.

Like, I don’t want to talk to somebody. I said, it’s 150,000, which for them at the time was probably equal to a year’s pay. Four or five out of the six were like, I’ve got to have a person. Technology can be helpful, but I need to be able to talk to somebody for that amount of money.

And it really stuck with me. There is a comfort. And again, you’ve done a lot with Morgan Housel over the years. The psychology of that and that need for human interaction I think is very powerful.

BARRY RITHOLTZ (01:07:41): So I always hated the idea. Listen, I’m a middle-class kid from suburbia. I didn’t grow up with any money or any thoughts of an inheritance or anything like that. The idea of having a $10 million or even a $1 million minimum, I was never comfortable with. So we set up two digital platforms, one driven by Betterment, which is under a quarter million dollars.

And there is a group of advisors that come along with that. So if you are at $50,000 or $100,000 or $5,000, it doesn’t matter. There’s no minimum. If you are up to a quarter million dollars, the whole platform is digital.

Everything from the onboarding to the allocation. But there is a live human being there if you want to talk to somebody. And then the platform that we built from a quarter million to a million was based on buying BlackRock’s FutureAdvisor, which they figured out, oh, this isn’t the future of ETFs, we don’t need to own this. And so we ended up purchasing that from them.

Not only is that 250 to a million, but it also comes with a specific advisor. And as much as people say, I love the digital platform, I don’t need to deal with anybody, I just want to log on to the website or app and deal with it, as soon as there’s any volatility, they just want someone to talk them off the ledge and say, hey, it’ll be fine. We go through a 10% drawdown, I want to say it’s three times every two years, something like that.

So this is normal. And if you look at here’s how many drawdowns we’ve had over the past 20 years, they may not know that, they may not have access to that. But if a person says, hey, we can’t guarantee you that the market’s going to keep going up forever, but here’s what the history looks like, it’s just a huge comfort for people. And they can stay out of their own way.

BILL McNABB (01:09:43): Absolutely. So I think it’s really powerful. And again, thematically, certainly everything we’re working on in a lot of our startup land is exactly that. It’s taking that concept.

BARRY RITHOLTZ (01:09:57): Using the technology to make it faster, better, cheaper, but making sure a person is in the loop for that comfort level.

BILL McNABB (01:10:03): Faster, better, cheaper, way more personalized. Way more personalized.

BARRY RITHOLTZ (01:10:06): So we’ve covered so much stuff. Before I get to my favorite questions, is there anything we haven’t covered yet? I think we’re good. We touched a lot of stuff, so let’s jump to those questions.

And I’ve asked you these 10 years ago, but I want to circle back to them, see—

BILL McNABB (01:10:25): If I’m consistent.

BARRY RITHOLTZ (01:10:26): Right. Well, we’ll see what’s changed over the past decade. So I’m going to assume your mentors are all fairly much the same. Tell us, Jack Brennan clearly one of those people. Who were the mentors who shaped your career?

BILL McNABB (01:10:40): So Jack Brennan certainly, and I talked about that earlier, but lead by example and the power of “we” versus “I.” I had a rowing coach post-college, and his big thing to me when I was thinking about leaving New York and going to Vanguard was, find a place that matches your values and you’ll be happy. And I dedicated my last annual report at Vanguard, the Vanguard funds, a section of it to him, because that advice actually was what put me over the top in terms of, I’ve got to go to Vanguard. There were so many other mentors. One I’ll mention, though, we had a great board early in my career, and Charlie Ellis, the great author of Winning the Loser’s Game, Charlie was on our board. And Charlie was actually a real mentor to me, because when he was at Greenwich, he would come and present to us how we did competitively in the 401(k) market, and I was running that business.

So we developed a pretty good bond. Then when he came on the board, he just was always there to sort of push and prod a little bit and help shape me. And again, the way he thought about investing just absolutely resonated, obviously, with what we were doing.

BARRY RITHOLTZ (01:12:05): He just wrote a new book, just dropped a few months ago. He’s still active in his eighties.

BILL McNABB (01:12:10): It’s incredible. It’s incredible.

BARRY RITHOLTZ (01:12:13): Speaking of books, what are some of your favorites? What are you reading currently?

BILL McNABB (01:12:16): So right now I’m reading Jim Collins’ What to Make of a Life, which is very different for him. It’s not a business-oriented book. As I mentioned to you at other times, Good to Great and Built to Last, Jim Collins classics, they’re the first business books I go to. But this is, what he does is he takes lives of people we know in sort of pairs, and he just asks, what were the key events that made them do what they do?

So he uses, like, two football players from when I was growing up, Carl Eller and Alan Page, Minnesota Vikings. One of them went on to have a real drug problem and then become an incredible champion of rehabilitation and did so much for his community. The other one went on to be a Supreme Court justice in Minnesota.

BARRY RITHOLTZ (01:13:15): Wow.

BILL McNABB (01:13:16): And what were the key decisions? What allowed them to go from this great football career to a second act? So anyway, I’m reading that. I’m partway through it. It’s phenomenal.

And I always have a fun book or two I’m reading too. I’m still a big science fiction collector. So The Will of the Many and The Strength of the Few. It’s two parts, there’s a third one coming. Imagine ancient Rome meets The Matrix.

That’s all I’m going to say. Only a weird brain like mine could find that fascinating.

BARRY RITHOLTZ (01:13:48): That’s intriguing. I watched and read Project Hail Mary, written by the same author as The Martian, Andy Weir. Really fascinating book. He’s such a great writer.

BILL McNABB (01:14:01): He’s phenomenal. One of my favorites.

BARRY RITHOLTZ (01:14:05): Speaking of movies and videos or podcasts, what are you streaming, listening to, watching these days?

BILL McNABB (01:14:14): Not a ton. The most recent podcast was the Acquired podcast. They did a huge thing on Vanguard, mostly on Jack Bogle. It was great.

It was really, really worth doing. Ben Gilbert and his partner, they just did a fantastic job. Most of the other things, the streaming, I just rewatched, Netflix did this three-year series on the Tour de France, which I’m fascinated by as a sport, called Unchained.

And it’s really good. So that was sort of a fun one.

BARRY RITHOLTZ (01:14:51): Our final two questions. What sort of advice would you give to a recent college grad interested in a career in either financial advice, wealth management, or fintech startups?

BILL McNABB (01:15:06): Well, so on the latter, there’s never been a better time to start a company. With technology being as ubiquitous as it is and cheap, frankly, you can take an idea and you can build something pretty quickly without a ton of money. And then if it’s a really cool idea, there are people ready to help you and write a check. And so I’m encouraging people who have that entrepreneurial itch.

This is a great time to scratch it. Don’t wait. But think about what you’re trying to do. Don’t do it just because you want to, quote unquote, get rich. Do it because you have an idea that really matters.

And something I always apply, it’s a Jim Collins phrase, the hedgehog concept. What are you passionate about? What can you be great at? And I mean great.

And then how does it drive the economic engine? And so you want to have a passion, you want something that you truly believe you can be world class at, and economically, there’s got to be an engine that it drives. And today it’s just a great time to be doing that. If you’re going into the asset management, investment world, I think the two places that are going to be the most interesting, I continue to think the venture world’s really interesting, because, whatever anybody’s politics are, whatever, all this stuff—

BARRY RITHOLTZ (01:16:37): It’s cutting edge. It’s the latest and greatest.

BILL McNABB (01:16:39): There are so many cool things going on right now, and the chance to actually go explore that and invest in that is kind of fun. But I think wealth management, I think this advice thing has got a long way to run. And if I were a young grad, rather than going into traditional asset management, I would be thinking much more about individual wealth, and how to start my own advisory firm or how to be part of a Ritholtz Wealth or something like that.

BARRY RITHOLTZ (01:17:17): Our final question. What do you know about the world of investing today that might have been useful back in 1986 when you first joined Vanguard?

BILL McNABB (01:17:28): Well, so much. The long term really is the way to think about things. I think even though I joined a firm that was famous for it, I don’t think my own brain was set around long term. And the ability to sustain your beliefs and your discipline over the long run is a singular differentiator.

And I’ve had the privilege of being inside of a lot of different firms, and it’s amazing how many people still don’t actually get that. So I think that, and it took me a while before I got there, so I wish I’d had it right away. Second, for me, is really pay a lot of attention to things that nobody’s talking about. And this is much harder.

So, as you know, when you started The Big Picture, I actually started every morning with reading The Big Picture, because you did a really good job curating what was out there and getting rid of a lot of stuff.

BARRY RITHOLTZ (01:18:36): Right. There’s a long history there, which we will discuss offline. But when Brennan said to me, hey, I’ve been a reader of your stuff, when I first met him at some large conference room lunch 20 years ago, my head exploded.

BILL McNABB (01:18:56): I might’ve been one of the people who pushed it that way. But to me it was a really important thing. And I think, like today, people aren’t talking about leverage that much. And I worry about leverage. When you look at what the hyperscalers are doing in terms of the bond market right now, and a couple of them are not net cash flow positive because of all the infrastructure that they’re building, the leverage in the system. Private credit had its moment a year ago or whatever, six months ago, and that was one you could see coming.

I worry a lot about leverage. No one’s talking about it. When I first started out, that way of thinking, that contrarianness, was not part of how I had been trained or brought up. But again, this is where Jack Bogle, Jack Brennan, John Neff, the great value investor, they were really impactful.

BARRY RITHOLTZ (01:20:01): I was going through an old piece I was writing and never finished, and I found some notes, and I can’t figure out whose line this is. It feels like I’m stealing it from somebody. Equity crises bruise, debt crises maim. And I’ve been unable to track that down, and it doesn’t sound like something I would’ve written.

But anytime I use something from someone, I’m usually very, very fastidious about making sure the quote is attributed correctly. But it just reminds us that leverage kills. Look at what’s going on in Korea with their three x and five x funds as those unwind. Man, they’ve had a great run, and they’ve given a ton of it back.

Because of the leverage. Bill, I could talk to you for two more hours.

Thank you for being so generous with your time. This has been utterly fascinating. We have been speaking with Bill McNabb, former chairman and CEO of the Vanguard Group, board member at IBM and UnitedHealth, senior advisor to Venrock, as well as board member and advisor to so many startups. If you enjoy this conversation, well, check out any of the 654 we’ve done over the past 12 years.

You can find those at Apple Podcasts, Spotify, YouTube, Bloomberg, wherever you get your favorite podcasts from. I would be remiss if I didn’t thank the crack team that helps put these conversations together each week. My audio engineer is Alexis Noriega. Anna Luke is my producer. Sean Russo is my researcher.

I’m Barry Ritholtz. You’ve been listening to Masters in Business on Bloomberg Radio.

 

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My long weekend morning reads:

• This data has helped fight workplace discrimination for 60 years. The Trump administration plans to delete it: The move marks a fundamental shift for the Equal Employment Opportunity Commission (EEOC). Without this data, it will be much harder for the agency to identify widespread cases of discrimination in hiring and promotions, experts and former employees of the commission say. And, they warn, it will bring the Trump administration one step closer to reshaping the commission from an independent watchdog into an arm of the executive branch narrowly focused on advancing the political grievances of Donald Trump’s base. Amy Qin on the EEOC data experts say the agency can’t police hiring discrimination without. (The Guardian)

​• Labor Day on Track to Set Record at the Pump: The national average hits $4.14 — the highest ever for this time of year — with Strait of Hormuz volatility keeping crude around $90. (AAA) see also Imperialist Delusions and the Price of Fuel: Paul Krugman on the Venezuela adventure and what it’s doing at the pump. (Paul Krugman)

​• Should You Buy Alien Abduction Insurance?: Joseph Moore on the 100,000-plus Americans holding coverage — GEICO sold some, Lloyd’s underwrote 20,000, and two claims were paid. Behavioral economists would hardly be surprised. (Joseph Moore).

​• Paid Actors, AI Writing: How a New Kind of Video Business Cashed In on America’s Divided Politics: Max Tani on “William,” whose AI-scripted kitchen-table video — Mayor Mamdani Panics as Taylor Swift Triggers a $2.3 Billion Celebrity Exodus — racked up 474,000 views. (Semafor)

​• Humans Did Not Invent Art. It Was the Other Way Around: In 1940, four teenage boys chasing rumors of secret passageways near Montignac found chambers bejewelled with horses, elk, ibex, and bulls instead — Lascaux, almost perfectly preserved. (Aeon)

​• In Red States, Law-and-Order Republicans Turn Against Flock Cameras: David Ovalle on the governors of Texas and Florida moving to curtail license-plate readers, even as police say they help solve crime.. (New York Times)

• USPS ‘carefully reviewing’ whistleblower claim on plan for Trump’s mail in voting order: “USPS leadership, it appears, has discarded all best practices as they speed the project to be ready for a September 1 implementation — raising questions about whether catastrophic failure would be a feature rather than a bug,” said the disclosure, prepared by Whistleblower Aid, a nonprofit organization representing the anonymous federal government official with direct knowledge of the Postal Service’s development of the new system. ​Hansi Lo Wang on the disclosure warning that Postal Service leadership “discarded all best practices” racing to a September 1 launch — “raising questions about whether catastrophic failure would be a feature rather than a bug.”  (NPR)

​• More Than Half of Americans in Their 40s Are ‘Sandwiched’ Between an Aging Parent and Their Own Children: Juliana Menasce Horowitz with Pew’s numbers on the generation squeezed from both directions. (Pew Research)

​• Behind Closed Doors, John Fetterman Shows Little Interest in the Work of a Senator: Former staffers and lawmakers describe a light daily schedule, canceled constituent meetings, skipped hearings, and a focus on conservative media ties. Poised to be a possible swing vote in a divided Congress, he churns through staff as he dodges constituents, alienates fellow Democrats and courts Israel lobby (Wall Street Journal)

​• A Little League Coach’s Advice to His Team Went Viral. Anyone Can Appreciate the Message: Cory Edwards saw the fought-off tears and finger-pointing as his Henderson, Nevada team’s run ended — and didn’t want his players going out sullen. (The Athletic)

Video of the day: Aaron Sorkin on Why AI Will Fail, Facebook & The Future of America | What I’ve Learned

Be sure to check out our Master’s in Business this week with William McNabb, former CEO and Chairman of the Vanguard Group from 2007-17. He is also an advisor to Venrock, and was an investor and advisor to Altruist, which was just sold to VG for $2 billion.

More Americans Are Identifying as Democrats Ahead of Midterms

Source: New York Times

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Avert your eyes! My Sunday morning look at incompetency, corruption and policy failures:

​• I Rented a Car, and Within Hours, My Driver’s License Was for Sale: Dan Goodin on the breach unfolding in real time — his license is one of 153 million on a new dark-web site, with the FBI reportedly investigating. (Ars Technica)

• Allies Grumble That U.S. Is Hindering Global Economic Growth: At a summit meant to showcase President Trump’s economic policies as a model for the world, Europeans complained about tariffs and the war with Iran. (New York Times)

• Gambling Sweeps Across Another Industry. Welcome to the Future of Trading Cards. The Derek Jeter–founded Arena Club sees “a new era of collecting.” Some see yet another instance of gambling taking over an American tradition. (Barron’s)

​• Inside the Perimenopause Industrial Complex: Kate Knibbs on the alliance of tech startups, MAHA operatives, and actual medical experts that made millennial women the new face of hormone therapy. (Wired)

​• The Plot to Steal Venezuela’s Oil: Paul Krugman on America’s mostly well-deserved ugly reputation in Latin America — dictators supported, democracies overthrown, Marines sent in on behalf of corporations. (Paul Krugman)

​• The Rise and Fall of Agent Civilizations: The whole OpenAI/Hugging Face story in plain English. Dwarkesh Patel on the three consecutive secret AI civilizations that got started, got wiped out, and reemerged over three months at OpenAI. (Dwarkesh Patel.

• The Deadly Legacy of HIV Truthers. Even as the medical community reached a consensus that HIV caused AIDS, a counter-movement was emerging, claiming that HIV didn’t exist, or that the virus existed but was harmless. The symptoms of AIDS, according to some of these people, were actually caused by HIV therapies themselves. To this day, some people continue to believe that HIV is a hoax. Charlie Jane Anders on the counter-movement that claimed HIV didn’t exist or was harmless — and the people who believe it to this day. (Gizmodo)

• Trump Is in Open Revolt Against the Constitution. The president’s plot to subvert the integrity of the midterm elections looks like this. Issue a rule requiring states to give lists of mail-in voters to the Postal Service if their citizens hope to receive mail-in ballots. Knowing that this is a blatantly unconstitutional seizure of the states’ prerogative to run their own elections, count on a federal court to block the rule. Then challenge the injunction, arguing — under the Supreme Court’s “Purcell principle” — that it is too late to make any adjustments to voting procedures, and that the new rules should be treated as the status quo. Then hope that the Supreme Court accepts the argument that the new rules are the status quo and therefore can’t be blocked. ​ Jamelle Bouie traces the plot’s mechanics, down to the bet on the Supreme Court’s Purcell principle. (New York Times)

• The framing of Chris Duncan Part One: “You won’t believe the videotape we have.” Radley Balko begins a three-part series on the wrongful conviction of Jimmie “Chris” Duncan, drawing on 20 years of his own reporting and material cut from The Cadaver King and the Country Dentist. (The Watch)

• Navy not returning to damaged Bahrain base ‘anytime soon,’ top officer says: The Navy’s highest-ranking officer told sailors during a town hall on Monday that it would be a while before the service would return to its main logistics hub in the Middle East after it was heavily damaged early in the Iran war. (Navy Times)

Video of the day: Murdering 60 Minutes – Full Film

Be sure to check out our Master’s in Business next week with William McNabb, former CEO and Chairman of the Vanguard Group from 2007-17. He is also an advisor to Venrock, and was an investor and advisor to Altruist, which was just sold to VG for $2 billion.

 

In 2026, global investment in clean energy and related infrastructure reaches USD 2.2 trillion

Source: International Energy Agency

 

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This week, I speak with William “Bill” McNabb. He’s the former chairman and CEO of Vanguard and now sits on the board at UnitedHealth, IBM, Axiom, and Altruist. We discuss his 30+ years at Vanguard and his career after leaving the company, working in the boardroom and with startups in fintech and more.

He explains how Vanguard ran from under a trillion dollars before the financial crisis to over $13.3 trillion today. Bill also emphasizes the power of “We” versus “I” at the corporation level. We also discuss his corporate governance book, “Talent, Strategy, Risk: How Investors and Boards Are Redefining TSR.”

A list of his current reading/favorite books is here; A transcript of our conversation is available here Tuesday.

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

Be sure to check out our Masters in Business next week with Seth Bernstein, CEO of AllianceBernstein and Head of Asset Management of Equitable Holdings, the 69% owner AB. The firm manages $905.5B. Previously, he spent 32 years at JPMorgan Chase, where he eventually became the Global Head of Managed Solutions & Strategy at JPAM, responsible for all discretionary assets for Private Banking clients, and Global Head of Fixed Income & Currency. He eventually became CFO of JPM’s Investment Management & Private Banking division.

 

 

 

Current Reading/Favorite Books

 

Authored Book

 

 

Books Barry Mentioned

 

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Three-day weekend! Pour yourself a mug of Danish Blend coffee, grab a seat outside, and get ready for our longer-form weekend reads:

• How to build a cancer vaccine, and whether they will work this time: Typical cancer vaccines are vaccines given to you when you have cancer. These have been worked on for forty years, and have largely failed. But there is something in the air these days. If you really try, you can feel it too. There is optimism afoot in cancer vaccines. Really, there may be optimism afoot in cancer at large. ​Abhishaike Mahajan of Dyno Therapeutics with a deep dive on the intersection of machine learning and immunotherapy. (Seeds of Science)

• What if America Went Completely Dark? The power grid relies on thousands of aging, hand-built transformers. If enough fail, the blackout could last years. Jim Tankersley from the Asheville G-20, where a summit meant to showcase Trump’s economic policies as a model became a venue for European complaints about tariffs and the Iran war. (New York Times) see also Is This the Future of America? Massive AI infrastructure is being built out across the US. But if you want to know what the data center occupation looks like, visit Loudoun County, Virginia, where that future arrived 20 years ago. (The Verge)

​• Anthony Scaramucci Thinks He Can Save America. I Hopped in His Lamborghini to Hear Him Out.: Jack Holmes rides a Huracán past the Golden Pear in Southampton — home of the $22 breakfast burrito — while the Mooch holds forth. The former White House communications director says he wants to own his bad bets, from Donald Trump to Sam Bankman-Fried. At his summer house—and around town in his Huracán—Anthony Scaramucci makes his case to Vanity Fair for how to fix this country for the working class. (Vanity Fair)

• The ‘reverse Kindleberger Trap’: reasons to worry about the next financial crisis: A US crisis is very likely to be associated with a capital outflow, rather than a capital inflow, with the result that the dollar could weaken substantially against other currencies. (Chatham House)

• No Car? No Problem: An East Coast Odyssey by Train, Ferry and Bus: A self-described transit romantic set out to visit prime summer destinations using only public transportation. Would getting there really be half the fun? (New York Times)

• Using legal loopholes and executive power, Trump is remaking Washington The president’s ballroom and other projects are racing the courts and the clock, as the GOP-led Congress largely sits silent.  Dan Diamond on the ballroom exchange — “Sir, this is the White House, you’re the president of the United States. You can do anything you want.”  (Washington Post) ​see also Who Approves Trump’s Washington Makeover Projects?: Elena Shao on the green-lit ballroom and the projects still stalled. (New York Times)

• All Wired Up: Spurred on by this paper-induced memento mori—or maybe just in an attempt to avoid my collection being too entrenched in the ’70s—I recently picked up a complete 1995-1997 run of Wired magazine. While I’m a regular reader of present-day Wired, I knew very little about the magazine’s early years, as they coincided with my toddlerhood. What became clear after flipping through these older issues was that above all, 1990s Wired is an index fossil for a period when the science and techology industry was still culturally marginal—tech’s own toddlerhood, essentially. In these early years, the field was experimental and eccentric. It was a community of hackers and artists rather than multi-billionaires on super-villainous yachts; a moment when no one would ever think to describe themselves as a nerd aspirationally. (Casual Archivist)

​• What Makes the Most Expensive Paintings So Expensive?: Jackie Wullschläger on Klimt’s Lady in Gold, bought by Ronald Lauder for $135 million in 2006 — then the record for any painting — and bound for the Met in 2028. (Financial Times)

• A Mysterious Kidney Disease Has Arrived in Texas: The condition, linked to heat on a warming planet, is affecting immigrants from Central America and Mexico. As scientists race to track the growing epidemic, its victims have been driven further into the shadows. (Texas Monthly)

• The Plays of Shakespeare Rehabilitating Richard. We’ve gotten to know William Shakespeare’s Richard III pretty well by now. But who was the real Richard when he was at home? That question has been raising eyebrows and hackles for at least 400 years.  (Analog-Antiquarian)

Video of the day: Death Cab for Cutie: Tiny Desk Concert

Be sure to check out our Master’s in Business next week with William McNabb, former CEO and Chairman of the Vanguard Group from 2007-17. He is also an advisor to Venrock, and was an investor and advisor to Altruist, which was just sold to VG for $2 billion.

 

AI Data Centers & Our Communities

Source: Brockovich AI Data Center Reporting

 

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Heading out the door for the Labor Day weekend, with blue skies and 85° temperatures, I had to share a chart. It’s from the San Francisco Federal Reserve (via Torsten Slok of Apollo) and shows Wall Street expectations for Federal Reserve rate action.

It’s the perfect explainer for why forecasts tend to be so inaccurate.

As you can see, as recently as February 2026, market participants expected a series of ongoing rate hikes—a simple extrapolation from the prior trend.

Then the war began sending food and energy prices higher.

But the Middle Eastern adventure was promised to be short and indeed already over, so the next set of expectations were flat. A few months later, the “short military operation” turned into a war; inflation remained sticky, and expectations were for modestly higher rates.

Now we are six months into a war that shows no signs of ending, voters are angry, and a bad actor is in control of the Strait of Hormuz, with the likelihood of an ongoing tax on Middle Eastern oil. Once again, expectations were adjusted upwards, and now we see “higher for longer” as the consensus.

Unless, of course, something else unanticipated occurs…

Forecasts are for the most part simple extrapolations of the status quo or the current trend; they also fail to include random or unanticipated events – the kind that happens all the time in the economy, markets, and geopolitics.

When you stumble across a forecast that turned out to be more or less correct, it usually means nothing happened, and the extrapolation proved to be randomly correct.1 

But most of the time, $h*t happens: wars break out, Pandemics occur, terror attacks happen, new technology comes along and fails or succeeds, and governments fail to fund their annual budgets or wildly overspend their fiscal limits.

The parade of endless random events derails even the most thoughtful of predictions. A year is simply too short a time to guarantee that the dominant secular trend asserts itself, and too long a period to avoid random events.

 

 

 

Previously:
The Folly of Forecasting (June 7, 2005)

Nobody Knows Anything (Archive)

 

 

Source:
Productivity -Driven Growth Confronts Elevated Inflation
Huiyu Li
Federal Reserve Bank of San Francisco, September 3, 2026

 

__________

1. Please note that I said randomly correct — that is not he same as being prescient.

 

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My end-of-week morning reads:

​• Job Postings Show Early Signs of AI Automation Impact: The Dallas Fed finds the automation signal starting to show up in the listings data. (Dallas Fed)

• The Death of the Safe Haven: How to Fix Your Bond Strategy as Yields Rise: The rise in U.S. Treasury yields is creating opportunities—along with serious portfolio risks. (Barron’s)

• The Cost of Being Warren Buffett: He turned 96 years old a few days ago, on 30th August 2026. He bought his first stock at the age of 11, which means he has now spent about 85 years at this game, and at 96 he is still the man most of us in this business measure ourselves against. It felt like a good moment to sit down and think about him once more. ​Safal Niveshak on what the compounding machine gave up along the way.  (Safal Niveshak)

​• Data Center-Related Investments Available Across Most Asset Classes: Bailey McCann on the $580 billion invested in data centers in 2025 — set to be eclipsed by the $750 billion hyperscalers plan to spend this year — and the ways investors can participate. (Chief Investment Officer)

​• A $40 Billion ETF Shuffle Helps Foreign Investors Dodge US Taxes: Every three months like clockwork, investors pull $40 billion or more from a BlackRock ETF and park it in a near-identical twin — flipping funds to avoid dividends and the 30% tax that comes with them. (Bloomberg)

• Why the Flock Backlash Has Gotten So Intense: The sudden anger about these cameras seems to reflect more than just wariness about the surveillance system (The Atlantic)

• Who Approves Trump’s Washington Makeover Projects? The Supreme Court gave a green light to the new White House ballroom, but several of the president’s other Washington projects remain stalled .(New York Times)

​• This El Niño Will Be Unlike Any in the Past Eight Decades: Joshua Partlow on the box scientists have drawn in the middle of the Pacific — two-thirds the size of China — and the anomalies its buoys are recording. (The Atlantic) see also El Niño Is Now Stronger Than at Any Point in the Last 1,000 Years, Study Finds: Jacek Krywko on “one more warning sign of what we’re facing in a warmer world.” (Ars Technica)

• Why is it so hard to give away my dad’s brain? Scientists need fresh samples to research new treatments. But the donor process is an odyssey. ​Courtney E. Martin on the most emotionally taxing three-way call since junior high — navigating the urgency and bureaucracy of brain donation. (Vox)

​• By Dropping a Sledgehammer, Adam Silver Squares Off Against the NBA’s Richest Owner: He was a terribvle CEO; he is an even worse professional team owenr. Five takeaways from the league’s punishment of the Clippers over the Kawhi Leonard cap-circumvention scandal. (Yahoo Sports) see also Report of the Independent Investigators Concerning the LA Clippers and Kawhi Leonard: The full Wachtell Lipton summary report (PDF). (Wachtell Lipton).

Video of the day: What Happens When Everything Is for Sale?

Be sure to check out our Master’s in Business next week with William McNabb, former CEO and Chairman of the Vanguard Group from 2007-17. He is also an advisor to Venrock, and was an investor and advisor to Altruist, which was just sold to VG for $2 billion.

 

Hospital prices increased 3X overall inflation rates, closely followed by college costs and child care

Source: “How Much, Doc?”

 

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