CIO Greatest Hits: Endowments – Andy Golden (Princo)

29:15So what are examples of those? Any black box, any trading strategy where someone's just got a market feel. Someone may have also flipped heads 100 times in a row up to that point. And now they've just done tails. So as you espouse the goals for the pool of capital, I was surprised to see a very high return goal, at least in these market conditions. And the reports say the annual report of print coast is above 10 % a year. and then you want to generate high returns, beat market indexes, beat your peers. How do you set up your asset allocation to try to get at those goals? Yeah, although the above 10 % is shorthand.

29:56It's, you know, we think about things in real return space and then we're assuming, you know, a reasonable level of inflation. And this is a conversation I think we all need to be sensitive to in both the recent market but also going forward is you got to be consistent in what you're saying. If you think inflation is going to be low, then your nominal return is going to be low. But that's not so bad. I would sign up for that any day. If I can make 5 % or 6 % real compounding forever, I would sign that. And what's approximately the spending of the university? Well, the spending is probably going to average a little north of 5%.

30:355 % nominal or 5 %? 5%. Well, in any given year, it's nominal, but it grows. You know, so to correct what I'm saying, if someone said, devil walks in and says, here's a contract, you can earn exactly 5 % real. I'm not sure I would do that. We'd have to readjust our spending approach. But if they said something closer to the six, you for sure you would do that. So your asset allocation question, we think about asset allocation a little bit differently. I'll give you the answer I would have given to you three years ago, and then I'll give you the answer today. The answer three years ago would have been, we think about asset allocation a little bit differently.

31:16We very explicitly and intentionally divide our asset allocation decisions up into two buckets. The longest horizon bucket is called our policy portfolio, and it's constructed in a valuation-independent framework. That means we're not looking around at what looks particularly good right now or bad. We're saying, what are the kind of core beliefs about investing the way asset classes perform and what are their characteristics and what are our distinctive circumstances, including our objectives as an investor, and create this default position, this neutral position that addresses that. I think a lot of investors fail to recognize that there is no one right portfolio.

32:02It's right for what you're trying to achieve. Princeton should have a very different portfolio than my 89-year-old mother should have for so many reasons. Even though they're both going to live forever. Apparently.

32:18Mom, if you're listening, I want that to happen. So, you know, so you think about things like how much illiquidity can you tolerate, et cetera, and you create that base level positioning. It's then in step two that we say, is there anything unusual going on either in the world or with ourselves that suggests that we need to recognize a midterm target that's different from our long-term target? And so that's the three years ago framework. Right. And I don't know if it's varied that much, but that baseline long-term independent of market conditions asset allocation, what does that look like roughly?

32:57We have to earn a lot of money, so it's equity biased. If we just kind of go around the pie chart, it's 10 % dedicated to domestic equity long-only managers, 6 % to other developed markets long-ish only managers, 10 % to emerging market public equity managers, 25 % in the category we call independent return, subset of what the world calls hedge funds, what many others call absolute return. 25 % in private equity as a long-term target, that's venture and buyout. 19 % in real assets, that's real estate, energy, timber, some other things in public and private format. And then if I said that right, at least 5 % in fixed income.

33:45You know, the midterm allocation is quite different from that. For the first half of the 22 years, those differences were all intentional. we could see there were such dislocations in markets that even we felt confident in swinging hard at them. Give an example of that from back. You know, decrease your domestic equity exposure as much as you can tolerate in general and against the tech sector in particular and move it into emerging within domestic, put as much as you possibly can into value. And so we did well coming you know at least relative base coming out of the bubble because of that you know what's going on for close to the second half of that 22 year period was this we developed unintentionally an extreme overweight to private equity through the crisis yeah yeah and even leading up to it we were steering that without that boat was moving pretty fast for us and uh and so then it became a well, given that you are overweight that and given that there's no way that you are interested in, at least in kind of correcting that quickly, then why don't you be very deliberate and intentional about how you offset that?

35:04So the conversations now are much more about which do you dislike least in terms of holding the smallest amount of that underweight. So that's been the gift that keeps on giving. Yeah. No. Yeah. Hurt me. You know, it's like we're really overweight, and that's part of why we've done better than we would have otherwise. It's still, you know, since 2009, the frustration has still been that not just zero return to diversification, there's been a cost to diversification, but there's also been a cost to hard work. S &P 500, right? Just show up, you know, the Woody Allen approach to investing. Yeah, it's about 20 years now that's worked.

35:44Well, let's walk through each asset class briefly. I'd love to hear your take and your particular spin on each. So U.S. equities is only 10%. Presumably that's not indexed. It's the opposite of indexed, yeah. So how have you approached sort of when you only have that much exposure to the U.S., what are you trying to accomplish and then how do you go about doing it? Well, it's quite different from what you might expect. So one of the things I should have said about the core belief and a tenet here, I'm going to steal a phrase that one of our managers uses that it's one team, one dream. So our whole decision process is structured in the hopes of moving closer and closer to that nirvana.

36:27Nirvana would be if every single investment truly competed against every other single investment. And by the way, we never really fully answered. The asset allocation process today is really bottom up and it's kind of we like this manager we like that manager we think it makes sense to have this much money with that one and that you know with that one and when we aggregate that all up is that a tolerable position you know we're not fully there yet but we're not we don't articulate it that way we think the construct is still helpful as a just a almost a trail markers but more often than not if there's a manager that we like but it would put us over the kind of allocation, that's when we talked to the board about changing the allocation.

37:12Do you change the allocation, or will you just port over the exposure, which is another sort of viable – so if you had a framework of an S allocation and you had too much in U.S. equity, you could either short out or swap it into development. Yeah, we do a little bit of that, but in the first instance, it's more like, well, that 10 % in domestic equity is an arbitrary number. Do we really think it's much better than 9 % or 11 %? Well, it depends how you make it up. So that gets us back to the one team, one dream. We try really hard to not think about these things as silos or make them justify themselves relative to just themselves.

37:55So within domestic equity, we've got 40 % of that 10%. Your listeners can do the math. It's about four points with just one manager. If you were running a domestic equity portfolio, if you were compensated on just how domestic equity did, you would never take that much tracking risk. But everyone who works here is just thinking about the overarching bottom line. I guess your bottom line should be underpinning. Your bottom line should be on the bottom, not on the top. And we want to kind of partner with great people, and then we figure out which bucket makes the most sense. So what type of manager, are they in a particular sector, or are they a broad U.S.

38:38equity manager that just happens to have a lot of conviction? No, wait for it. These guys, you know, many of our closest friends invest with them, do biotech stocks, fallen age old biotech stocks. So you're not just concentrating, you're concentrating on, you know, a sector that can be quite volatile, that is pretty distinctive. and by the way we got some exposure in that area in other parts of the you know portfolio there as well in the independent return and even in the venture space you know but i think most institutions are much more prone to over diversification or its cousin de-worsification as pierre lynch would say uh than they are the opposite issue and that's where a lot of this again all is a piece if you've built up confidence in yourself your own team but also you've inspired kind of confidence from the governance structure you can do those things you can do those things and you feel like well if i do have an advantage that others don't have uh which is the possibility for a lessened agency issue drag the fact that others don't live with us day to day and so So we can do things, you know, they might be concerned that we'd be doing things that they wouldn't like.

40:03But when you build the confidence, then you can say, well, look, you know that we have this 4 % position. I bet you that in the next 10 years will be a time when we stand up and do that attribution I was talking about. We have to say, and a large share of it was due to, you know, this outside position. Oh, well, you know, remember all the good that did up to that point. We're going to take a quick break in the action to tell you about SRS Aquium. Want to make sure your M &A processes aren't stuck in the past? Partner with a company that's been defining the future of dealmaking for nearly two decades instead.

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41:55of how much money to give each manager. One of our strengths, again, is we've got a great set of bosses or partners. I prefer to think of them, but they're managing partners. They can fire me. I can't fire them. And these are people who come with a lot of experience in investing, but most of them come with experience investing in one particular area as opposed to, say, the fund-to-fund framework. And this is just one example of why I like still the top-down terminology. And so if you come and you're used to investing in buyouts, liquid buyouts, you might look and say, you're less familiar with real estate.

42:44And you say, boy, that real estate performance has not been nearly as good as buyouts. Why are we doing any of that? And if you have the language of portfolio theory, you can explain, well, because it still plays a role. And it's cyclical. Yeah. And it's time will come. But remember that ex ante, we did not think it was going to be competing against any one particular category. It's whether or not the thing as a whole makes sense. Right. Where's a pure bottom-up model? you can see how you can get into those natural habitats of people's knowledge, experience, base. Yeah. Yeah. Yeah. Let's turn a little bit to independent return.

43:28I know that's an area where you started off many years ago at Yale, focusing when, at least in the hedge fund area, absolute return at Yale, there were, I remember you had a sheet of paper that listed all the hedge funds. I think it might've been two sides, maybe one and a half. The ones in the world, not just in the world. In the world. Yeah. Quite a bit different today. How are you thinking about it in your portfolio? How do we think about the role? The role and the area, fees, all the relevant issues. Yeah. You know, if we were condemned to produce the median return of the hedge fund space, I don't think we'd have any allocation.

44:12So it's a little bit of the act of confidence. some might say arrogance, that our opinion of the asset class is quite different, if you want to call it an asset class. The opinion of that collection of managers is quite different from the opinion of our 15 or so relationships that we have there. So, wow, 15 relationships, and it's 25 % of the pool. So, if you start doing the math, that's a lot of money with each manager. On average. Yeah, on average. It's a barbell approach like a lot of things that we do here. Some are very big numbers and some are much smaller. And the ones that are big, have those tended to be really long relationships?

44:59Yeah, we don't step up and say, here, here's 4 % of the endowment. We've never met you before, but you seem like a nice chap, so nice gal. Well, you know, let's, yeah, so in part because a lot of them have grown to that size the old-fashioned way. You know, they've earned it. They have. They have. You know, many of these go back, you know, the relationship predates my coming to Princeton. You know, there's folks I've done business with for. So a lot of those firms, both through organic compounding and then some of them through growth and acquiring assets, are much, much bigger today than they were 10 years ago.

45:37certainly 20 but it's really the last say 15 years where there's been a tremendous amount of growth how do you think about that whole notion of balancing size is the enemy's performance as these guys grow can they extract that much return in dollars from the markets and and at what point in time do you say huh boy they're awfully big you know we probably wouldn't give money to that fund if we hadn't had money with them for a long time to get to this point Yeah, so you'll hear me talk a lot about vectors, things that push a decision one way or the other. And obviously, there are a lot of things that should make one skeptical about ballooning assets.

46:18You know, on the other hand, the world's a lot more complicated. And there are certain strategies where the size actually helps. Now, those strategies bring with them a different kind of risk and a different kind of calculus. You know, there are some who have been very successful at keeping a war chest through long periods of time so that when there's a highly motivated seller who really needs help with a problem, the fund can step forward and write a billion dollar check. So whether or not that's a approach that is attractive depends upon some implicit calculations that you're making. the drag of that dry powder versus how often and how big is it going to be.

47:05And even if it's not dry powder per se, it's not amazingly great investments while they're wading. So this is where you get to the... There are several different ways that the cat can be skinned. Several different ways that we're interested in backing. But those ways have to make sense when viewed as a whole with everything else that's going on. So some firms scale a lot better than other firms. And I think it's one of the key challenges of investing is how does a firm develop, how does it grow? Because it's not just asset size, it's evolution of strategy. And there's a natural tension. There's a lot to be said for sticking with your knitting and doing the thing that got you there.

47:59But it turns out that the world may not reward that the same way. And so it isn't a question of are you evolving. The question is are you evolving smartly in a way that inspires that confidence. And on the private equity side, let's talk a little bit about the buyout portion of the equation. Rates have been low. It's given buyout firms chance to have cheap leverage for a long time. Returns have been great. On the hedge fund world for the last 10 years, returns haven't been great. Now you're seeing particularly probably starting with the later movers, the public pensions, a lot of fee scrutiny.

48:35And it makes sense, right? If returns are mid-teens, you can extract more in fees than when they're mid-single digits. Private equity world, people are starting to wake up to, huh, that's a deal fee and that's a monitoring fee and that's an exit fee and, oh, there's a management fee. But the returns have still been high enough that the capital is still strong. What's happening now in the sort of GPLP relationship with private equity firms? And what are the types of firms that you embrace as you look forward for the next 10 years? On the specific point about fees, we believe it's important to optimize fees, not minimize fees.

49:12And we want to make sure that the firms actually have revenues to the principles that are enough to make them silly rich without having to find some other way to justify themselves like garnering assets beyond the point of being able to execute their strategy where it no longer makes sense as a whole what they're trying to do. So we're a little bit less hawkish on some of these things than others are. But we still care a lot. And there's this idea that even the low end of the fee scale only makes sense if the firm is really capable of returning excess return. right it's like if they're not capable of that then the chances are you could cut the fees you know by a very nice haircut and it still wouldn't make sense you know one of the things that i think we found useful is to kind of reframe some of the ways others talk about this and talk not so much about alignment of interest although that's important but there feels like there should be a better word than interest.

50:26That feels like there's a contractual element of it. And I've been test driving this phrasing of alignment of appetites. I want to make sure that the natural inclination, the appetite of the managers fits well with our own appetites. And, you know, so we're looking for managers who are competitive folks, but they're competing on producing the best possible returns subject to making themselves, as I said, silly rich, as opposed to just trying to make themselves as rich as possible subject to producing good enough returns that that happens. And if you can find folks who are motivated that way naturally, not by contract, then you can start talking about some contractual things that do help to align the interests at that point over the horizon of the contract, you can agree that base level fees really should not be the source of major wealth.

51:27We should understand what the compensation market is, the labor market is, to get a talented person and tell them that you're going to be unleashed in this wonderful place that's going to get to do what you think makes sense and create a lot of value and be proud of that value created. how much do you have to pay that person to show up to work each day, given that if things do break the way they would expect them to, then they will get that lucre raining down on them. So on the fee side, you mentioned this kind of layering and opacity of where money's going. Again, it's a kind of, does this system make sense?

52:11We certainly want to have disclosure, but we need to understand it to make sense if a firm is providing a lot of value creation services to a company that would otherwise have to be shopped out well let's see does that compensation make sense you know in some cases it does in some cases oh you want a fee for selling a company you know because you've minimally used an investment banker i don't know you know you're already getting your incentive fee slice of that, that feels a little funnier, right? As opposed to, oh, you did this consulting study that said, you know, here's who your customer should be.

52:54Let's talk a little bit about your team here. Where have you found the people on your team and how are they structured? I tend to find them under their desks. That's most days. Yeah, yeah, yeah. You know, definitely blessed by having a lot of great colleagues. And where we have found them is not necessarily where we think we'll be finding them going forward. Another core belief was that we do a whole lot better by growing our own talent. But when you're at certain stages, you can't wait. You can't plant the vines and wait for the grapes and then age the, you know, so if you look at people who are here, you know, we're marked by some pretty long tenured people.

53:34And some of those longest tenured senior people were lateral or lateral-ish hires. But where we think the future of Prenko is is mostly, if not entirely, on our grow our own. And so we're hiring one to three or maybe more kids out of college, primarily Princeton, where we have some unfair recruiting advantages. And, you know, it's exciting to see them develop. It's another form of compensation. and what we're really looking for are first principal thinkers as opposed to learn a recipe and just use that recipe which is one of the reasons why it's often difficult to bring the lateral hire in because they've got a certain way of doing it and it's it's hard to know just through any kind of recruiting engagement whether or not they will be the type that will adapt to a somewhat different set of circumstances when appropriate, because all the stories are talking about what they've done in the past, you know, all made sense then, but we don't know if they'll make sense going forward.

54:42And then with this one firm, one goal, does that filter through to how you organize responsibilities of the people on the team as well? Yeah. So at the senior level, we've divvied up the asset categories so that there's someone who feels ownership that helps avoid cracks that stuff may fall through yet everything's a gang tackle and i'll explain that in a second i'll say at the junior level we've experimented with lots of different ways and they tend to change depending upon who the athletes are of giving people broad exposures not necessarily always cross-sectionally. Sometimes it's serially over time to try and give them the ability to compare and contrast ways of thinking, to make their lives more interesting.

55:32It helps recruit people when they feel that they're at less risk of being pigeonholed into something. But the gang tackling, for the major decisions, we had one this morning. It's all hands on deck. It's all 16 investment professionals sitting around the table. Everyone's gotten a packet for what we're calling the bull bear session. We've assigned not just proponents, but some people to play devil's advocate. And they go at it and kind of present opening arguments as to here's why we should and here's why we shouldn't do it. By the way, everyone walks in the room, the first thing they do is they get a ballot and they have to say what their vote is going into the meeting.

56:10And then at the end of the meeting, they write down what their vote is. And then that piece of paper is set aside. And then we all show our votes simultaneously through a set of hand signals. And then there's a super secret, not necessarily stable algorithm that's in my head as to how those votes get counted. So we're making the we have a summer intern here who is in her second day and she voted. It turns out that her vote doesn't have quite the same weight, you know, as as yours, perhaps. Well, maybe as much as mine, but not as much as my colleague John Erickson, who's been here for 19 years.

56:51And so that's that kind of one team, one dream gang tackle to process information efficiently. It's not everything we're doing is all the time, everyone involved. So you have to create a deal team. And that gets constructed. There are certain tendencies of people who do more work in a category. There'll be mostly representation of that, but there'll be someone else who is getting a visit into that world. That process, that kind of bull bear process, how long ago did you start thinking, hey, this might be a great way for us to enhance how we make decisions? Yeah. So that is directly connected to the GFC or the global freaking crisis, as we like to call it.

57:39And the warning is it's a process of that rotating assigned devil's advocate. It sounds a whole lot better than it actually is. We still haven't cracked the code as to how they're really implemented. But the reason I say it came out of the GFC is because when the dust hadn't settled by yet, but when I was emotionally capable of inward reflection, I remember this plane ride. I said, well, let's think about the 10 worst decisions, investment decisions. that you, Andy, or Pranko has made. And let's see if there's anything that we can figure out. And I was very careful to say, as always, to differentiate between bad decision and bad result.

58:21And I only got to about number seven or eight when I realized that more than half of them shared this characteristic of there was some kind of political element that, and I want to be careful what that word means, some kind of element in decision process that can be traced back to the old style where, you know, I was always the last line of defense. I still am, but I played the kind of skeptic, you know, I'm going to argue against you proponents. And I realized is that it was easy in that framework for there to be these kind of political or maybe some emotional elements to push back three times in a row on someone's idea creates a risk that they're going to get frustration that is incommensurate with the lack of quality of the idea.

59:18So you begin to say, well... That's balancing your judgment against being supportive. Yeah, you know, all right. I think this is probably a B plus, A minus. You know, if it's a B minus, forget it. We're not going to do it. But, you know, it's a B plus. Well, maybe it's an A minus. Okay, you know. I could be wrong. And it worked the other way as well. I wanted to do something my colleagues would say, gee, we think it's kind of like an A minus. And when they say that, they mean they think it's a B minus. And I would say, oh, these people, we are agreeing that there's this hair on this thing, there's this risk on this thing, but they're just too risk averse.

59:56So to make that depersonalizes to say that you're playing an assigned role. Let's see how strong your argument can be, you colleagues, and take a little bit of the power dynamic out of it. You know, at the end of the day, I'm still counting the votes. So, you know, I'm still that last line of defense. But, you know, it's definitely more helpful. As I said, it sounds like a great idea. When I've ever told you, he says, oh, yeah. It's just really hard to figure out how to execute it. You get these discussions that are orthogonal. Someone says, I believe A. And someone else says, I believe nine. Okay.

1:00:34I don't know how to weigh that. You're supposed to say bingo. Yeah. Yeah. A nine. So it's kind of always what level does the debate take place? There's been this explosion of data, usage of data, financial markets, companies, everything. How have you used data increasingly or have you used data increasingly in your process? There's a lot of information that's a whole lot easier to get. And so it means that you can kind of test the stories that the arguments that managers put forth because they no longer have the same kind or degree of information asymmetry that they used to have. or at least you can hone in on the edges that they do have in terms of just having more information.

1:01:27But I think it's not as important to the way we think about investing, the long-term horizon, investing in people. The issue is that, I say this as a recovering quant, you can't drive the ship. If the ship is to build a roster of managers, you can't get enough data to base a decision without running afoul of a key premise, which is that the engine that produced that is stable, right? And that nothing's changed. It's clearly not. Right. So, you know, it's something you throw into the mix, but if you think about how these judgments get made in a qualitatively focused, quantitatively facile group like ours, you know it's it's more of almost a bayesian calculation like you know here's my you know i believe this thing with this much probability this much certainty and this new bit of information comes in how much does that change it i mean i can't tell you the number of times when you know again just to kind of noodle on something i'll say to a relatively new colleague you know can you just regress do a little regression on on this information it'll help me think about it and And they'll come back and they'll say, well, that was a complete waste of time.

1:02:46You know, it didn't come close to a significant. I don't care. I need to see the number. Right. Because the significance, what I care about isn't the significance of that independent of other analyses, including these qualitative ones. I just want to throw it into the mix. And so I think there's still this judgment thing which goes beyond just cerebral stuff. There's a kind of emotional assessment being made as well that I don't say in a denigrating fashion. I believe that there's information. I think investing is a science, craft, and an art. And the important thing is to, A, be willing to use all three pathways.

1:03:34but B, make sure you know which pathway you're using at the time. There's this art to it, but you should really be very explicit declaring this is an art judgment, not a scientific judgment. And I get frustrated when people try and torture some scientific judgment to just justify their gut feeling. So are there opportunities in the market that you're particularly excited about today? I think there's probably two ways of answering that. You know, normally that question is, I should be able to tell you, oh, we really like timber or apartments in Brazil or something, you know, some asset-based thing.

1:04:11Again, our business is really about finding great people and partnering with them. We believe that who matters a whole lot more than when you invest and may even matter more than what they actually do. They're just some horses you want to hitch a wagon to. And, you know, some of the growing concerns of other customers in the hedge fund world create some opportunities. We are becoming a whole lot more attractive as people who are going to do the intense qualitative work. You know, the managers often have to choose between smart clients and rich clients. And rich clients are a lot easier to deal with, you know, until they're not.

1:04:54You know, so I think there's some firms that we're pretty excited about, and I'm not going to tell you about it because I don't want to create competition. I also don't want to let my other son know that this is my favorite son. Yeah, of course. You know, I think that it's a time, again, where it may be better prospects, a little bit more off the beaten path. I've felt that for a while now. 20 years? Yeah. You know, but certainly in 09, you didn't have to get cute. Right. Sure. That's when it was really good to be rich. And how about risks that you're concerned about in the markets? Yeah. In the markets, you know, there's the obvious one.

1:05:37And this will make this very dated. You know, I assume that people will be listening to this podcast 30 years from now. Probably a safe assumption. Or as many people will be listening to it 30 years from now. That's tomorrow. You know, but wow, it feels like there's a lot of potential volatility in fundamentals in the world. And that doesn't really seem to be in a lot of prices. Prices make more sense if you just simply, in kind of your base case assumption, right? Interest rates are so low, so. Therefore, as the prices are high. Yeah. Sure. You know, again, cross-sectionally makes sense. But seriously, shouldn't there be some premium for the world waking up to some kind of shock?

1:06:30It seems that all the time people always feel that this is the most risky time, but you'll find someone who will say that. I'm not saying it's the most risky time, but I'm willing to say, oh, okay, there's some definitely, there's visible some risks that usually aren't visible. And I think that may be because they're usually not as prominent, as likely to. And do you do anything about that in managing the portfolio? As you know, we're pretty circumspect about top-down stuff. Even if you're really good, since you're not making a lot of bets, it's pretty easy to come up short, so to speak. That being said, we have some outsized exposures to things compared to most investors.

1:07:13and in some of those areas one can imagine that it's particularly risky. So we actually have had, unusual for us, hedge. We've got, if you were to dig deep enough, you would say, oh, I bet you they've got a lot of investment in China. Yeah, we do. And so maybe we want to take that RMB exposure down a little bit because that's something you could imagine having a real break. Well, let's turn to some closing questions. A mirror view. Yeah. Wow. Where'd you get that shirt? Golf course, I think. All right. What advice would you give your children early in their career? In fact, your kids are coming up to that point.

1:07:53My kids are certainly one that's in well past first inning. So I'm going to answer without the presumption that their career is investing. If you want, I can return to that. There's a cliche about following your passion. I feel that it's true except for I want to modify that and say follow your like the problem with telling someone follow your passion is it presupposes that they know what passion is and you know it's almost like a dating situation it's like saying well you should go out with the person that's going to be your spouse right like well I don't know that yet right and I don't want have to figure it out before I go out.

1:08:39And that's right, you should iterate on it. So I think you should really go down paths that have a real natural attraction to you. And not try and plan too far in advance. You heard my story. And I think it actually was a source of strength when I finally did get interested in investing. Having done things that I had liked along the way, had at least two advantages. One is I learned a lot about a lot of different things that I might not have otherwise learned if I had followed a straight and narrow. But the other issue is it enabled me to develop an ego that was, in the early years, quite detached from investing.

1:09:25So when I first got involved in investing, I could think of myself not as a person who's destined to be an investor, I could think of myself as a guy who was a guy, as a human being who happened to be doing investing now. And that meant that there was a bunch of emotional concerns that weren't necessarily there. If I ended up not doing well in that, well, you know, I'd already not done well in another career. It wouldn't have been new to me. You know, and I think that was an unfair advantage. It's frankly an advantage I don't have anymore because now my ego's pretty tied up in being an investor, a global financier.

1:10:06Indeed. What is your favorite thing to do that is a complete waste of time? There's a particular solitaire game called Spider Solitaire that is a guilty pleasure because every time I'm doing it, I'm thinking, oh my God, I don't know. There's no justification for this. And unlike the classic Klondike solder, whatever it's called, this one has a little bit more skill to it, emphasis on a little bit. I would choose that over some other activities because there's, you know, like I could say, I like stand-up paddleboarding. But that's not a waste of time. That is making me healthier. You are a stand-up guy.

1:10:50I am a stand-up guy. What phrase that your mother or father repeated to you over and over again most stuck with you? My parents would say, whatever you do, do well. And that unfortunately stuck with me because, again, it raises the stakes. And also, it turns out that not everything worth doing is worth doing really well. You kind of want to spend your effort budget wisely. Some things were good enough. It was actually good enough. So that probably stuck with me. What was your favorite sports moment as a participant or a fan? No one ever has mistaken me for an athlete. I remember that. Yeah. Softball team, yeah.

1:11:36Yeah, but I went to an extremely small school, high school. And so I was able to compete in varsity sports. Where did you grow up? I grew up near here, near New Brunswick. I went to a very small private school where I wrestled and was also, there was a sport that no one knew about that only like a few schools in New Jersey played called lacrosse. Yeah, I remember those days. And, you know, it was like anybody, literally any body that would show up like we need you on the field. I have some memories on that that were pretty fun. I think I learned a lot about what it's like to actually be the weak player on the field and learn about teamwork in a different way.

1:12:21That, you know, there were times that even though I was likely to drop the ball if passed to me, it still made sense to pass it to me. And that helps. But I think there's been some Princeton basketball moments that have been pretty good. There's, you know, recently one that's pretty good. Back in the day, there were some Duke basketball moments. Pretty good. alum there. There's still full court pass that Christian Laettner called. 30 for 30. I hate Christian Laettner or something like that. Yeah, that was my year. That was pretty good. What's your favorite book? My favorite book of all time? Well, you know me.

1:13:01It's the good book. Sorry to offend. I think it's Richard Dawkins, the selfish gene concept. So that thought of, instead of thinking about genes as the way entities reproduce, as the way organisms reproduce, if you think about organisms as the survival mechanism for genes, that was a moment that blew my mind. Yeah, yeah. So what profession other than investing would you like to attempt? Yeah, I mean, I do have dreams of getting back on the professional shark wrestling circuit short and very short-lived career that was yeah yeah i am hoping that there is a way that i can exploit the lessons i've learned that don't relate so much to investing but relate to organizations and in particular what it feels like to be the leader of an organization, meaning I don't want to pretend I'm qualified to give any advice on leadership, but I do have one set of experiences about what it's like to be a leader and how to think about how you ask for help, when you ask for help, when it's an okay sign, when you're feeling a little overwhelmed and when it's a sign that, you know, it's not how to kind of more quickly get the confidence to defy, you know, some pressure and how to quickly get the confidence to go in the same direction as the pressure is pushing you because you don't have to prove that you can stand up to the pressure.

1:14:49Those would be great lessons to impart when you get the time. Yeah, so to be some kind of coach or a fantasy about being a really good board member to help a CEO who doesn't have that experience. Yeah, sure. What do you know about life today that you wish you knew 10 years ago? On the eve of the crisis. That Princeton would survive. I wish I knew for sure that Princeton would survive my misjudgments. it's hard to articulate. I think you get much more comfortable with the idea that there are multiple solutions. So when you're pressuring yourself to come up with the right way to fix something, one over time gets more comfortable realizing that you don't have to land on the perfect solution.

1:15:45You don't have to worry about the choice that seems to be the best choice not being the best choice. kind of just moving forward can be better. Don't let the perfect be the enemy of the good. But I think the real kick in life is they feel like there's lessons that you learn over and over again, but they're a little bit different. It's kind of like Bob Dylan singing one of his old songs. It's a little bit different. Listen to Jerry Garcia at age 50 versus 25. There's so much more there, even though it's the same lyrics. Same guitar riffs. I am intentionally trying to make this podcast stand out from some of the other ones.

1:16:32And you're doing it. We're sitting down, so we're not really standing out, but that's okay. It's your waning days. You are 98 years old, sitting in a rocking chair. Rosebud. That's what you love to do. What advice would you give yourself today? I would say that my advice would be that you should do 50 push-ups every day for the next 40 years. And if you do that, you'll make it to 98. You may make it to 98 other ways, but I mean, the idea of, first of all, you say 98 as if it's a good thing, like enough already. yeah uh yeah what advice i you know um you know enjoy your grandchildren uh i don't have grandchildren now but that's great andy thanks so much for taking the time really enjoyed the conversation thank you all right peace thanks for listening to the show to learn more hop on our website at capital allocators.com where you can join our mailing list access past shows learn about our gatherings, and sign up for premium content, including podcast transcripts, my investment portfolio, and a lot more.

1:17:48Have a good one, and see you next time.