E304: Co-CIO of Multi-Asset at Neuberger Berman on Mistakes Smart Investors Make

19:02David Weisburd:Well, I agree with you. I think it gets back to drawdown being more important than volatility. Volatility is an interesting measure. We care about our cumulative returns that we earned on an investment. And so Let me put it this way. Investment A and investment B. If we have investment A generates a cumulative annual return of 15 percent and it might be in this volatility protected concept that's being discussed in a private shell. And volatility B has full daily liquidity every day, but it gives you a cumulative return of 12 percent. I don't care what the assumptions are on how you marked A versus B.

19:34David Weisburd:A lot of investors will say, I want A because it's higher returning. And that is economically proven because when I invested in it day one, I gave this amount of money and now 15 years have gone by and I have 15 percent per year more to my name versus if I had done it in a liquid equity construct, I'd have 12 percent per year more to my name. Now, let's say A and B are the same where they're both giving you 12 percent per year. And A, you only get your capital back after 15 years goes by. And B, you can have it tomorrow. of course, I'll take investment B then, right? Like I would rather have the transparent, fully liquid investment if they give me identical returns.

20:12David Weisburd:And I think that's where Cliff's point is fair. But the premise should be that privates are giving you a material multiple percentage point per year advantage in return that you should earn. And that is measurable. So the volatility, we don't really worry so much about. We measure cash on cash. We measure how over the lifetime of the private investments, did it fare against a comparable public market equivalent, a PME, as we call it? I guess you should really ask the second order effects of volatility.

20:40Jeff Blazek:You don't want volatility, an uncontroversial statement, but why? Two different answers. One is you don't want to take the wrong action at the exact wrong time. So I don't know many people that care about upwards volatility. When it goes up 70%, they're not giving a call and complaining. But when it does go down, do they take the exact wrong action at the exact wrong time, especially in the current market cycle where you have more of a V-shaped recovery? So selling could cut off your returns by 10, 20%. The second is, I guess there's this tail risk of a risk of ruin. If it's too volatile, it could literally go down to zero.

21:19Jeff Blazek:That's another function of too much volatility is that it's, if like crypto, it could go up 10x and then the next morning be down to X. Yeah.

21:27David Weisburd:And by the way, if you're getting excessive volatility, some of it could be the underlying asset you own, like equities or speculative equities. A lot of it is probably leverage. And leverage is a different type of volatility ingredient that can be dangerous because it can take you to zero. Straight linear equities, unlevered. There's really very little evidence that if you bought it, even if it's a bubble or it might be overvalued and there might be a two year window where you regret it. There's not going to be a 20 year window where you regret it. Equities are anchored to economic growth. As long as it's diversified and sensibly managed and unlevered, you're going to be fine.

22:05David Weisburd:But if you ramp up your volatility or your portfolio efficiency under these assumptions of introducing leverage, I think that's where you can get yourself in trouble. And that's where your point you're making about volatility. If you have a 10 percent fall asset class that you levered a 30 percent fall, there's scenarios where you can get wiped out pretty quickly.

22:25Jeff Blazek:And oftentimes clients come to you with these constraints, some max drawdown. Maybe you mentioned 20 % in privates. Let's say somebody came to you unconstrained, single family office with no liquidity needs. I know it's an unusual case, but what would be your ideal portfolio allocation today based on private and public markets?

22:43David Weisburd:And that is an endowment-like portfolio. I do think it should embrace equity orientation. So we will benchmark success of this portfolio, 80 % equities, 20 % bonds. And that 80%, we have a lot to play with. But what I would probably do is 30 % in privates and 50 % in public equities actively managed or a blend of active and passive. But we're going to be doing a lot to earn and maximize returns. But that will be a volatile portfolio. So for the other 20%, we're going to have uncorrelated liquid diversifiers of about 10%. And then another 10 % in T-bills, cash, and treasuries to keep it liquid, to help us provide liquidity for rebalancing purposes going forward.

23:25David Weisburd:I think that is a great overall framework. And of course, the proof's in the pudding after that. So suddenly you hear, oh, I have 30 % of private equity to play with. I have 50 % of public equities. That's where you can roll up your sleeves and find a lot of interesting strategies and sub-strategies.

23:41Jeff Blazek:And is that behavioral, the 20 % in the defense? Is that to keep people from their own worst enemies themselves? and again, selling in the worst time. Let's say the person goes into, they're frozen, they're cryogenically frozen and they're going to wake up in 15 years. Would you still use that same portfolio?

23:57David Weisburd:Yeah, I would. I mean, I think the cryogenically frozen person could very well be in 100 % in equity assets and be okay.

24:04Jeff Blazek:Which is not realistic.

24:05David Weisburd:Yeah, I would like to think that even with this 20%, and I would call, it's kind of like the motor oil you're putting in the engine to lubricate the portfolio because there are going to be times in March 2020, you would have had that drawdown we were talking about. Equities fell 30 % or 35%. Man, it would be great to rebalance toward target or go overweight equities at that point. If you're already 100 % in equities, you can't rebalance. By definition, you're already in. So that's when you tap that 20 % into equities that attract the values. And then you take that money off the table at times of frothiness.

24:37David Weisburd:And again, this part of the diversifiers in particular, liquid, uncorrelated diversifiers that can generate high single digit returns with very little correlation to other markets, that adds a lot of value and balance to the portfolio too.

24:50Jeff Blazek:And the key term there is liquid. If it has a quarterly gate or a yearly gate where you can't redeem it until the next quarter, then these market fluctuations, you can't be opportunistic.

25:00David Weisburd:Yes, liquid. And I would say uncorrelated is just as important a term. So it does you little good to have something that is a 0.4 beta to the S &P. That's not really a diversifier. But if you have something where independent of what's happening in rates or equities. And it's still cranking out solid returns based on fundamentals. We do have macro strategies that we implement where we're agonizing over risk and managing it accordingly in this strategy to make sure that while it's taking specific bets in currencies or rates or equities, it's hedged and stress tested to make, in an aggregate, it has no correlation to the equity market.

25:36David Weisburd:And if that's capable of generating an eight to 10 % return, that's where I would agree with Asmus again. like a low volatility strategy, really in a diversifying construct can be quite valuable.

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26:54Jeff Blazek:That's S-Q-U-A-R-E dot com slash go slash how I invest. With Square, you get all the tools to run your business with none of the contracts or complexity. Run your business smarter with Square. Get started today. Now we go on the 80%. You said 50 % in Publix, 30 % in private equity. My intuition would be the exact opposite, which is 50%, you get the liquidity premium, you get all the good stuff. I've had Professor Steve Kaplan that showed that 300 to 500 extra basis points of being in private equity and venture capital over a long enough period. Why not have more concentration in the private side versus on the public side?

27:35David Weisburd:It's a great question. And I think there is a fair amount of gap between 30 to 50. Maybe the right answer is somewhere in between. But let's take 50 plus and just talk about what goes wrong with that. And that's where imagine having that allocation at the end of 2021 and how it's gone. And I do think the denominator effects, you can go from 50 to 60 fairly quickly. And you have a different portfolio then. You don't have a portfolio. You have a problem. You're now managing existing commitments, figuring out how to reach in the couch cushions to find the change to put in the machine to feed the commitment cycle.

28:09David Weisburd:Because the majority of your portfolio, you cannot control anymore. It is at the GP's control. And it's being marked in a very different way. I just feel like you now have a portfolio that is not manageable. It is going to be anchored by commitments and decisions that you made possibly five to seven years ago. And you might be in a position where you have to make some difficult decisions about doing a secondary sale because you're just not able to manage the current economic environment accordingly. So my opinion is to have a private portfolio that is more than a majority of your overall asset allocation.

28:45David Weisburd:A lot of endowments do try to do that. But if you talk to them right now, they're struggling with managing that in a lot of cases doing secondary sales because they feel like it's no longer optimal and it's become an albatross.

28:55Jeff Blazek:So if you have to make that secondary sale, let's say even you get a 10 % discount once every five years, you're now giving up that 200 basis points. You might have gained 300, now you have 200 and you have a headache.

29:06David Weisburd:That's right. And by the way, in venture and growth equity, I'm not sure a 10 % discount is realistic. I think it could be 20 % or 30%, which makes the math even harder. So a secondary sale, which we like secondaries growing as a market. We think GP-led, LP-led, these are all compelling areas. It helps lubricate the private system. So we're believers in that space. But if you're using secondaries as a seller perpetually to manage your portfolio because it got misallocated, the headwind that you will encounter from performance adversity in that will be substantial. And by the way, a lot of secondary sales, interestingly, are initiated when there's a new regime.

29:42David Weisburd:When a new chief investment officer comes in, they look at what they call the quote unquote legacy privates. They get to kind of take the hit because it wasn't their doing. Move on. They want the ability to redeploy the portfolio. But I think that speaks to the fact that a secondary for a lot of endowments and other investors like pensions is a tool of last resort because it can be so problematic.

30:05Jeff Blazek:And it's not just ego. They want to make their own mark on their portfolio. The incentives are so misaligned because if they start with a lower mark for the entire portfolio and they're getting a percentage of the upside, they're actually almost incentivized to sell at a discount.

30:19David Weisburd:That's right. They are. It's kind of like, you know, I mean, we see the same thing in public equities with management teams. There's a new management team. Is it not surprising that the write offs happen in the first year of the new management? I mean, that's natural. And by the way, it's probably fair. I mean, a new CIO should be empowered to put their mark on the portfolio. But secondary sales do come at great cost if you're not careful. And hopefully we're talking about a fairly small part of the portfolio. And in most cases, that's what we see. We don't see endowments out there selling half of their privates in the secondary market.

30:47David Weisburd:They're doing more targeted exposures that they're trying to really peel off. But that's why when I say, if I craft this perfect unconstrained portfolio, it's a lot easier to work with privates when they're 30 to 35 % of your portfolio, not 50, 60, or 70%.

31:02Jeff Blazek:There's almost a volatility of the strategy, if not literally in the portfolio, but from having this illiquid investment on the books, there's many different things that could happen to it that could hurt the overall portfolio.

31:14David Weisburd:That's right.

31:15Jeff Blazek:So continuing with this unconstrained portfolio, let's say it came with$10 billion cash, so either a new endowment or a high net worth individual getting a very large liquidity. How would you practically go implementing this 80-20 portfolio?

31:31David Weisburd:That's an interesting question because there's a lot of discussion about ramp up. This is a new portfolio that has not benefited at all from the prior strength of the inequities we've seen over the last 10, 20 years. And so the worst case that this new family with their wealth would think about is that you put it all into equities tomorrow.

31:55Jeff Blazek:And that's when we get the bear market finally comes.

31:59David Weisburd:So I do think a phased implementation is appropriate. If you're coming from cash and you're going into a risky portfolio, balancing the entry is appropriate. And we do see often a progressive asset allocation target done in advance, though. That's what I'd say is like, let's make clear, get the committee or whoever's in charge to say, look, we think rounding it in over three years gradually is appropriate for liquidity purposes, for equity entry purposes. That would that would be a fair way to do it. And a lot of our clients, too, if they're only now getting involved in a meaningful equity allocation, we do see a gradual ramp up or in privates by necessity, because privates take years to build up.

32:39David Weisburd:You have to have kind of an interim asset allocation before you get to your permanent asset allocation.

32:44Jeff Blazek:To play devil's advocate, isn't that a principal agent thing in that if the expected value every day in the market is 0.1%, you want to be invested in the market? Yes, to your point, it might go down 20 % the day after, but on average, it's going to go up 0.1 % and being invested overall is smarter than not. Yeah.

33:04David Weisburd:Well, let's look at it another way, which is you could have easily made this decision in April 2000. And I worry about the down for down on the mat for three years. I mean, that would look like a very dumb portfolio for three years where it's going to be underwater on equities by 40 or 50 percent people staring at it. And this I mean, look, the way I think about it this way, if I were involved in the equity market in 95 through 2005. I had three or four years of just unbelievable equity gains, 30 or 40 % per year. And then I had three years of difficulty and then two years of kind of more sideways markets.

33:42David Weisburd:But when I look at that 10-year period, I would feel more than happy with the way that result went. Whereas if I got involved in 2000 to 2010 and I put all, you know, I was sitting in cash watching everyone else make money for five years before. suddenly I decided to not only dip my toe, but throw every dollar I have into a huge equity risk portfolio, just put it in. I would have five to eight years of a lot of just asking questions like, what the hell have we done here? I think going from cash to equities, phasing it in is a natural and logical way to do it. And by the way, with our 401ks, we as individual investors, what's great about having 6 % of your paycheck put in every month is this is the true dollar cost averaging, where you get a methodical, gradual ramp up in your wealth into equities.

34:31David Weisburd:I think it's a very different, there's just a lot more entry risk if you do something from cash to equities at a given point in time. But even if you do that, then 10, 15, 20 years from now, it'll still be a good decision. Let's just make that first five years a lot easier.

34:44Jeff Blazek:There's a behavioral aspect too. If you're literally starting a family office or an endowment, you don't want the institutional baggage of being too much in privates and being maybe 40 to 50 % privates early on, you catch a bad year. And now you're like, we don't do privates. There's these downstream behavioral consequences to being overweighted versus if you're 30 to 35%, it dips by 10%. There's not this institutional baggage that develops internally.

35:08David Weisburd:Yeah. It's a sequence of returns. Even though we know, given we're very mathematical, in the long run, it shouldn't matter. The sequence of returns does matter.

35:17Jeff Blazek:We're still humans. Tactically, when you have this$10 billion and you want to enter the market sequentially. Are you literally keeping these in treasuries or is it a hyper diversified portfolio? What's the best practice when it comes to having money that's on the sideline that's not yet deployed optimally?

35:33David Weisburd:There are other options in terms of lower risk, lower equity orientation strategies driven more by yield, as well as liquid diversifiers that can give you returns that exceed treasuries, where you can study the interaction of these, understand their risks because they're not without risk, but they have a different type of risk than equity risk. And you can diversify these exposures in a way where you can earn a return superior to treasuries. I do think treasuries should still be a key component of it. But yeah, I mean, this should not be a plain vanilla treasury ladder portfolio day one. You can do other things that are lower equity risk, but still decent returning strategies.

36:14David Weisburd:Double click on that.

36:15Jeff Blazek:Purely simplistically, it seems like money in treasuries is lost returns. Why is that not true?

36:22David Weisburd:Well, yeah, that's why I think that you want to keep some treasuries for liquidity purposes, but I do agree with you. I think that you would want to be doing some other yield enhancement strategies to try to beat treasuries. I do think treasuries as a allocation by themselves, they are doomed to underperform inflation. They're not going to give you a very good return. Yes, real yields are higher now than they have been from five or six years ago, but it's still a tough starting point. So yeah, I agree with you. I think that in this hypothetical$10 billion, and let's say that we've made the determination, we're going to put one third of the money to work in equities.

36:58Jeff Blazek:So we've got 600 million or so to play with that we want to be more stable, but we still want to be earning a decent return.

37:05David Weisburd:Let's keep a hundred billion or a billion of it in treasuries and high grade credit liquidity assets that we know will be very cash-like, will be that stability.

37:17Jeff Blazek:And put the rest of it in a diversified portfolio

37:20David Weisburd:of enhanced strategies, liquid diversifiers, macro hedge funds. I mean, there are a lot of things you can do in a diversified way that you could have a decent confidence that you could get a 7 % return.

37:33Jeff Blazek:Now, financial advice, these are very sophisticated instruments that you want to hire a professional. In terms of this, it's Q1, 2026. What asset classes today are overvalued and which asset classes are undervalued in your opinion?

37:50David Weisburd:Well, I'm going to start with undervalued because I'm an optimist at heart, and then I'll come back to the overvalued. And to make clear, we are leaning into risk assets. We upgraded equities about a year ago. We think that when you look at what is going right, there's a lot going right. We have the Fed easing. We have earnings growing in the low teens. We have a capital cycle that's only getting started. GDP growth that has navigated tariff uncertainty accelerating. So we see top line revenue growth ahead. We see bottom line earnings growth ahead and valuations while elevated. we don't worry about evaluation evaluations as much when we're aligning with growth.

38:29David Weisburd:And so because of that, we like equities, especially outside the U.S. And we think that leaning into private equity, private real estate, public equity, these are all overweights in the portfolio. The area that's more challenged to us that can help fund some of these overweights is in fixed income, more importantly, in U.S. fixed income. So we have tight credit spreads. We have interest rates that are, you know, they're higher than they were three years ago, but lower than a year ago, particularly on the front end. So we would be, by leaning into risk assets, we think you could probably go underweight your fixed income allocation a bit to fund some of those overweights.

39:09Jeff Blazek:And you look at a lot of these asset classes and first principles. From the outside, it seems to me that fixed income and private credit are in ways related or serve similar purposes. To what extent is that true? And to what extent are they truly different asset classes?

39:24David Weisburd:Well, fixed income and private credit have the same overarching exposure of being creditors. So you're ultimately owning an obligation. I think they're dramatically different in terms of how they should fit in your portfolio. So private credit, we do measure it relative to traditional fixed income. But when you invest in private credit, you should not be thinking of this at all as a liquid asset class. And your expectations should be geared accordingly around that. but you should expect to earn 9, 10, 11 % returns. So this is an example of something that might be of interest to our new family office.

40:02David Weisburd:They may want to put a decent amount day one into private credit because that's going to give them some really interesting returns and they have the illiquidity tolerance to handle that. But if I compare that to the role that traditional fixed income should serve, those are night and day in two ways. One, the traditional fixed income is ready for me by the end of the day if I need it for a capital call. or to pay a bill that comes in. Like it is readily liquid, tradable, and it settles T plus one. And private credit will never be able to do that. The other thing that traditional fixed income will do is if you go into a recessionary trade or a deflationary economic cycle, traditional fixed income that's tied to high quality debt, particularly treasuries, has the ability to go up in value 10 or 20 percent, depending on the duration or interest rate sensitivity you've bought.

40:48David Weisburd:Private credit could be having its own challenges in that environment. It may push out the liquidity when you'll get it back, and it may have an impairment in the credit quality of the companies. So, you know, look, I do think a lot of investors that have the ability to take on less than liquidity, like pensions and insurance companies and some endowments, I think it's appropriate that they're shifting money into private credit. But they're still doing a lot of work to make sure they have the liquidity they need and still keep some decent amount of traditional fixed income to serve that valuable role in the portfolio.

41:20Jeff Blazek:What's one key philosophy you've changed over the last 12 months?

41:25David Weisburd:I'll give you one over the last 12 months, and then I might give you one over the last 12 years. A philosophy that I go back to was don't undersell the ability of economic incentives and humanity to navigate a challenge. And I'm talking 12 months ago. It was nine months ago we had Liberation Day. And when President Trump held the posters that showed the new punitive tariffs, that if we took literally, that would have raised the average tariff rate in the U.S. to over 20 percent. And you did the math on that. It would result in an immediate recession, a contraction in profits, inflation skyrocketing to 5 percent.

42:06David Weisburd:all of these assumptions that, and we know that there was negotiation to come, but even so, I think our initial reaction and my own reaction was, wow, this is a pretty dire scenario. And, you know, it could really cause a growth shock until you start to see the response. The fact that negotiations are available, replacement, onshoring, or just inventory management and ultimately to be able to grow through that crash. I do think it's informed the resilience of industries to be able to manage manufacturing and services in a complex global economy. And so I think it's just a reminder that when you do the math of a shock, apply a fair amount of judgment to the human impulse to do better than the adversity would suggest.

42:57The

42:58David Weisburd:The lesson I would say over the last 12 years is if we were having this podcast in the year 2013, I would have told you I was a value investor, that I like price earnings ratios to be cheap in my portfolios. And over the next five to 10 years, I did become more of a core investor, which is paying equal attention to growth and value because you get what you pay for. I think that, you know, I've been an allocator for over 25 years. And when you look at the ability of a cheap price book company to outperform Google, they're not really the same investments. They both can serve a valuable role in your portfolio.

43:37David Weisburd:But I think a lot of us have had to learn that a value investor is going to be challenged if you don't have high quality businesses that are capable of growing. And if you have high quality businesses that are capable of growing, they're probably not value businesses anymore. The market will have an increasing awareness of that, discover it and buy it. So I think you have to look through valuation as only one tool. Look at growth, look at quality of earnings, look at return on equity. There's a lot of other metrics you need to look at. Be a quality investor.

44:04Jeff Blazek:How do you continue to evolve your investment philosophy and stay cutting edge in your approach to investing?

44:10David Weisburd:An exercise I try to do, having been an equity analyst and a credit analyst early in my career. So having those skills where you can take a complicated portfolio and drill down from a forest to one tree. I think this is a good exercise for any allocator. If you have access to a Bloomberg or a fact set or Aladdin, whatever your tool is, take the S &P 500 and look at the composition of it. We know the Magnificent Seven is 40 % of it. Maybe you can pick one of those companies. Maybe find like a, you know, I've been looking at Paramount because it's in the news for, you know, mergers discussions and it might be buying the assets of Warner Brothers.

44:49So you double click on Paramount and you'll see what sector does that roll up into?

44:53David Weisburd:How much is it weighted in the index? And you kind of quantify it that way. Look at the historical price. How has it done over the last two or three years? But then what I would encourage investors to do is look at the financials. Look at the last three or five years. How much money does it make? Not in earnings per share, but like in billions of dollars. How much debt and equity does it have? It has an enterprise value. How has that evolved? and you kind of study this one small company, see what's driven it up or down and the way that that is rolling up into a sector, it rolls up into a country, it rolls up into an index.

45:27David Weisburd:The S &P 500 is not just this blanket thing that we all look at and invest and allocate towards. It's a dynamic living, breathing index of 500 companies and you go outside the US, it's even more complicated than that. Understand bottom up what drives the top down. It's going to make you a better investor. It'll help you ask intelligent questions of your managers when they have their positions. And I think it will keep you relevant and help you understand five years from now, the types of sectors or trends and the pricing, how that will all work its way into a portfolio and keep you from being rusty.

46:01David Weisburd:To be what I'd call a lazy allocator that just kind of looks at beta's top down.

46:06Jeff Blazek:Benjamin Graham, who is Warren Buffett's mentor, said that the stock market in the short term is a voting machine and the long term is a weighing machine. Have you found that to be true? And when is that not true?

46:18David Weisburd:I totally find it to be true. And another thing I've learned over the last, I'd say, five to 10 years is not to question an individual stock that appears to be on fire and is increasing 10 times or 20 times. And I'm talking about NVIDIA. I did not question NVIDIA five years ago when it was beginning its ascent, because I thought, well, investors are smart. They're pricing in something about its future pipeline of revenue streams. And why we will want, we're going to scrutinize it. And the standard is high because when a stock does this well, if it fails to clear a barometer, it's going to get punished.

46:55David Weisburd:But if you think about it, NVIDIA, when it was hitting a$1 trillion capitalization,$2 trillion,$3 trillion, you could look at the revenue and see that it was delivering the exponential growth that was promised. And that's, I mean, we all make that assessment now. I think that's why we're looking so closely at the AI capital cycle. It's going to get quite challenging when we're talking about trillions of CapEx being deployed. But this was the ultimate weighing machine. If someone wanted to be rolling their eyes at NVIDIA just because it went up so much, or like, I don't know what that thing is.

47:26David Weisburd:It's worth$2 trillion. I really question it. Well, they look kind of silly now because it did prove out via the earnings. It gets back to my point. Double click, understand the earnings. see the revenue. Is it growing? Is it proving the economics that validated such a dramatic equity move? And equity investors are smart. They're going to price this two years in advance. I mean, that's why when you see something like that happen, watch it closely. We're looking a lot at what's happening in Korea equities because Korea is up 80 % this year. And we're going to have to see the validation. Will we see an 80 % increase in earnings?

47:57David Weisburd:Possibly. But investors are leading indicators and they're smart. Those that are gravitating towards the growth and trying to see the earnings I validated.

48:05Jeff Blazek:You mentioned AI, and a lot of people look at the AI stocks, which we could talk at length at. But one of the things that's perplexing to me is internally in my business, we're using AI all the time. We're getting economies of scale on every employee. We're using it from anything from CRM to production to hiring to everything. And for some reason, that AI efficiency, both today, but also just the increasing speed of AI efficiency doesn't seem to be priced into the stock market. Is that a naive outlook or what are your thoughts on this?

48:41David Weisburd:I don't think it's naive. I think that if we talk about the key measures of AI efficiency and integration, we're still trying to discover that. And at Nubertor, we have the benefit of 30 dedicated equity analysts. And we get to hear every week about manufacturing sectors, industrials that are adopting and implementing AI and the use cases and the test cases. But I do think it's still early days. I think a year from now, we're going to have a much better sense and see that priced in. But a lot of it is we need to see verifiable margin enhancement or cost savings from these tools. And it's probably just too soon, but I'm with you.

49:19David Weisburd:It's changing quickly. Every day that I use AI in my workflows, the improvements are pretty notable.

49:25Jeff Blazek:It seems like one of these beliefs that GDP could only grow 3 % or whatever, but it doesn't seem to survive this first principle. Whereas if you're using AI to cut costs and also to accelerate revenue, which you're seeing in startups. So if you think of startups as a leading indicator to more mature companies, to me, it's like, why aren't equity markets up more? Or maybe this is the price stand. Maybe that's why we're having this bull run. Yeah.

49:51David Weisburd:And, you know, the GDP data, our view is, and it's one of our key themes for 2026, is that, yeah, AI will be a double edged sword. There's going to be some losers along with the winners. But it is a very real productivity boom that will be driving enhanced GDP growth and revenue growth. So, you know, we see it in the macro data, not as much in micro. But over time, I do think that we expect to see a meaningful uplift, probably about 2 % of incremental EPS growth from AI after we look back at this year.

50:20Jeff Blazek:What is one piece of timeless advice you would go back to when you started your career 25 years ago that would have either helped you accelerate your career or helped you avoid causing mistakes?

50:29David Weisburd:I had a tendency, and I suspect a lot of people listening to this feel the same, where you have a dream job or you put a position on a pedestal. And when you achieve that, sometimes it's not what you expected. And maybe if you would have focused more on the journey and not the destination, you would have felt maybe you would have made better decisions along the road. But, you know, one job I put on a pedestal quite early in my career was I want to be a Wall Street equity analyst. That's all I want to do. And I did that for two years. I'm grateful for what it gave me in terms of skill sets. But I realized it was quite in the weeds on a certain set of five stocks.

51:09David Weisburd:It was not macroeconomic at all. It was not very driven. I had friends that asked me what I thought about the stock market. And I said, I have no idea. I could tell you about beverages. if you care. And they didn't care. They didn't really care what Soda was doing that year.

51:24Jeff Blazek:It doesn't keep 99 % of people from opining on this topic.

51:27David Weisburd:No, that's true. But I realized I spent several years trying to interview. I got rejected. I got the job. I put my head down. And then one day I was kind of walking to work. I'm like, I don't love this. I don't think this was what I made it out to be. And I started to migrate into the buy side or fixed income and macro and other things. And that's just a, I think I would have probably made some better decisions about how I spent my time and what I was focused on if I had not gotten so anchored and put a certain role on a on a pistol. So that's what I would suggest is it's a journey. It's not the destination.

51:59David Weisburd:And you should always be re-underwriting what you define as your dream job or don't even put in those terms. What is your dream day? Like, how do you want to spend your time? What is added?

52:07Jeff Blazek:Yeah, it kind of goes back to this principle that you're saying that a stock is not just a ticker with just like, look at the quality of the earnings, look at what the business does. Look at the day-to-day performance of the business. Same with any career path. Okay. It might be a nice title. Maybe there's something with a worse title, but much more interesting and much more fulfilling.

52:24David Weisburd:Absolutely. That's well said.

52:26Jeff Blazek:Well, Jeff, this has been an absolute masterclass. Thanks so much for jumping on the podcast. Looking forward to continuing this conversation live.

52:32David Weisburd:Really enjoyed it, David.

52:33Jeff Blazek:That's it for today's episode of How to Invest. If this conversation gave you new insights or ideas, do me a quick favor. Share with one person in your network who'd find it valuable or leave a short review wherever you listen. This helps more investors discover the show and keeps us bringing you these conversations week after week. Thank you for your continued support.