Who Says Bonds Are Boring?

Wealthy Behavior: Who Says Bonds Are Boring?
This automated transcript may contain grammatical errors.

00:00:10 – 00:05:11
Welcome to Wealthy Behavior, talking money and wealth with Heritage Financial. The podcast that digs into topics strategies and behaviors that help busy successful people build and protect their personal wealth. I’m your host, Sammy Azzouz president of Heritage Financial, a Boston based wealth management firm working with business owners, executives and retirees for longer than 25 years. Now, let’s talk about the wealthy behaviors that are key to a rich life.

This week on the podcast, we have an extra special guest, Mary Childs, author of The Bond King, which shares the inside story of PIMCO and its legendary founder Bill Gross, dubbed The Bond King for creating the bond management industry and outperforming in that space for so long. Welcome to Wealthy Behavior, Mary. Thank you for having me, I’m happy to be here. Absolutely. Thank you. We really enjoyed your book here at the office, The Bond King, and read it a couple of times, members of our investment team have too. And I think there’s a lot of interesting things obviously Bill Gross is a fascinating character. He’s been ubiquitous in the industry for as long as I’ve been in it. I think there’s also a lot of lessons for individual investors to learn. When you were thinking about writing this book, how did you explain it to people outside the industry, friends or family? Why you wanted to write it, who Bill Gross was like, how would you introduce Bill Gross and the idea of this book to the world? It’s a funny question because I feel like I was very bad at answering it for a long time because it was sort of overwhelmingly enormous and the project itself, I’m like, I’m going to tell everybody about the bond market who doesn’t already know and then I’m also going to have cool secrets for people who do know the bond market. And I will say that, you know, initially I was like, oh, you know, this is part of sprung from my day job at Bloomberg news, so people were kind of used to me yapping about what they perceived to be boring things, but I would try to sell them on it. So I was like, yeah it’s about the bond market and the guy who created it and it’s so cool and they’re like, all right, all right. And then over the years, Bill kind of inadvertently made my job easier by making headlines. So there was definitely a moment in 2014 people were like, oh, I think I kind of heard about that. And then in 2018, they were like, is that the guy who had that really bad divorce? And I’m like, uh huh. And then now it’s the Gilligan’s island thing with his neighbor. So every time he got in the news, it actually, I was like, yeah, yeah, yeah, it’s that guy. And that made my pitch easier to kind of lay people. But you know, bond market people were like, you’re writing the book about Bill – very excited and kind of a natural audience there. Yeah, he kind of did some advanced publicity for you. He did. His career, yes. Really nice of him, yes. And he wrote his own book. And published it two weeks before mine, which I very much appreciate. Did you really? Did that help or did that did you feel that kind of cannibalized things? I mean, you know, you think about the theory behind market cannibalization and there are studies that show that when Starbucks opens a Starbucks across from another Starbucks, it boosts sales. And I have to think he did that for me. I don’t think that was his end goal. But I do think that, you know, I think he was trying to have his own narrative, which like more power to him, he absolutely should and I’m glad that he did that for himself. As well as I’m pretty sure it helped my case. Great. So let’s look at the positive part of his career, Bill Gross as you explained it really well, he really pioneered bond trading and active bond management as we know it. From how you describe it in the book as starting pretty small at a job where the work wasn’t that stimulating. So how did he get to being the Bond King by 2002? Yeah, so the market when he began was this sleepy kind of safe and stable place. You know, the only way you could really lose money was if you lent money to a company that then defaulted and could not pay that money back to you, which life happens, that’s not unheard of, but the world that Bill Gross helped to create was one where you traded bonds where you thought, okay, this bond, I don’t like this company as much as I used to or this yield isn’t high enough for me to hold it. I’m going to swap it with my friend over here in Indiana and they’re going to give me a new bond, they have something that I like better, or I’m just going to go to market and get a new bond at issue. Whatever it may be. And that introduced this dynamic that’s much more volatile of making this a full and robust secondary market. And all of the kind of dynamics that go with that of now there’s distressed debt investing, now there’s the bond vigilantes of all the different generations putting pressure on governments for their fiscal strategies and their budgets. And I think that Bill’s influence in that market does spring from his being so early and being so foundational to the creation of it. And his talent. You know, he was an incredible trader. And very good at kind of translating to a certain extent the mechanics of the bond market and what he saw in the feds, you know, the fed’s mechanics in the market and the dynamics that would cause all of this stuff he was pretty good at packaging and translating for lay people and did that on Wall Street week.

00:05:12 – 00:10:00
The PBS show. And that ended up I think helping him be the face of the bond market and just like ride that growth and kind of be able to put all of that kind of like that became part of his persona. As an investor, how did he achieve that initial success? I mean, what was his kind of pioneering ideas or approaches that hadn’t happened yet? I think he was super early to a lot of different asset classes and products. For example, mortgages was a big one. Pimco was just enthusiastic about mortgages where many other buy side in particular institutions, you know, you read Michael Lewis, you know all about the sell side stuff, but on the buy side Bill and Pimco were really early and really just into it. You know, there’s a complexity to mortgages. There’s kind of like they enjoy, I think, having a lot of different levers to pull and having a lot of different maneuverability and they found that in mortgages. And the fact that they were early and understood them gave them an edge for decades. And that was also true I think there were early in EM, they were early in using derivatives and options and credit default swaps and kind of embracing those as well. There’s this one part in my book where they literally lobby their clients to allow them to use derivatives because there’s this extremely wonderful trade that’s just sitting there that they can effectuate, but they have to get that permission first. And everyone’s like, I don’t know I’m a pension, you know? It’s the early 80s I am uncomfortable, but because they opened the door to that, it really allowed them to do a lot more than a lot of other buy side institutions were able. So do you think that edge being really bright being early on asset classes – Do you think if he was starting out today he would still have that type of edge and that type of success or are we in a more efficient marketplace and it may not have been possible to discover many new things? So I think that he would bring the same spirit of innovation and of course the landscape is wildly different. And yes, we were in a much more efficient time. But I feel like he’d be a web three guy, you know? I think he’s not not. And he’s on the other side of his career. And he’s already like, I bought Bitcoin. You know, he gets it. So I think he would bring that same spirit to the landscape that we have today. Yes, he would absolutely find fun things to do. So, you know, there’s one thing that I found really fascinating about your book is looking at the great financial crisis and the 2008 crash through the eyes of a bond manager and I’d obviously been working with clients back then and coming out of it I tried to devour every single book about that time period that I could. I eventually ran out of steam, but I think yours is the only one that I recall that looked at it through the lens of a bond manager and a bond team that saw the crash coming and made their clients money out of it. Talk to me a little bit about that. I think as early as 2002 they had people at pimco warning about the shadow banking crisis and these guys in 2006 were putting out pieces, hey, something bad is coming. How did they know that? And what benefit did it have for their clients? Oh yeah, it was enormous. The thing you’re citing in 2002, Paul Macaulay was aware of this economist Hyman Minsky, who at the time was kind of a deep cut. I feel like people know more about him now, but it was this idea that the further we get from the last recession, the more and more and more we reach for yield, basically. You and I know this concept well now, but I think it’s this, there comes a point when we’re all reaching for yield because we forgot that the last crisis was so bad and we are losing the kind of muscle memory or scarring from that. And thinking, what’s a little bit more risk? A little bit more risk. And eventually there comes a point in that cycle where some catalyst happens or just the amount of risk itself is too much for the system to bear. And there’s a Minsky moment is what Macaulay called it. And it’s this moment where the system can’t handle it anymore and things start to turn and you get a market crash. And that thinking, that framework, was pretty powerful and relevant in the round to the financial crisis. No, that was exactly what happened. And Macaulay also spotted, as you say, the shadow banking system and was able to see it for what it was in a way that regulators did not, and a lot of other market participants did not. And I think, you know, that mortgage familiarity also gave them a leg up in seeing the crisis coming. You know, this was a mortgage. Because there was a crisis. Exactly. So they lived in the space already, where this thing was going to go down. So I think they were super early to that, but you’ve hit on something that I love where it is such a different perspective from the stock market where you’re kind of on a roller coaster in the stock market.

00:10:01 – 00:15:02
It’s up, it’s down. Like you can go all the way down. It’s a little bit more unusual. You’re going to go to zero in the bond market. But the thing that I like the most about the way they played the crisis trade was, you know, you think about the big short type of trades that we know and love and popular culture. And there are so risky, you know, they’re like, oh, I think that the market’s going to crash right now. Not tomorrow right now. And oh my God. That is a terrifying thing to try to call, like, Howard marks would not want you to be doing that. Like you’re not supposed to try to call it, right? That’s like reckless. And pimco on the other side, you know, they’re like, we don’t really know when, you know, they were a little early to call it. They sat there for like a long time underperforming waiting for this thing to happen. But because they had pulled back on risk, they were able to capitalize when the markets did crash. And that’s a much more informed trade, right? That’s a much more, I don’t know, risk off risk. You’re just actually taking informed risk and you’re able to stretch that over more quarters too. You’re not making $1 billion in like one minute and then it’s over. You know, you have a longer runway for your trade to work out because you’ve managed to position yourself in a way that you can jump on all of those extreme deals when everyone else is doing a fire sale because they’re panicking. Sure. But also less upside than the people who are gambling that they’ve got it right that exact moment. Exactly. They’re doing it through equities and things that could go to zero. Exactly. For every Michael Burry that we know of, there are probably, I don’t know, based on conversations I’ve had in the aftermath of the crisis, 100 other Michael Burry’s were like, I saw it coming, I just couldn’t time it. Like, I know. That’s the thing that you probably shouldn’t try to time it. So you have up until this point, Bill Gross is managing pimco total return. I believe it’s the largest bond fund. They have this call. They’ve had tremendous outperformance for an extensive period of time. It’s literally on everybody’s 401k plan investment option. And they start to underperform a little bit, waiting for what they’re seeing. At that point, did their investors hang in with them and wait it out? They did. Yes. In part because, you know, total return had done so well for so long, and they weren’t, you know, it was an enormous bond fund, but it was like the beloved by pensions beloved, but like the people that were clients were sticky. They’re not the kind of people that are trading in and out. They didn’t just arrive on the scene. They didn’t hear about pimco on the news. They were like, you know, in it to win it. I feel like maybe they did hear about it on the news, because of course Bill was sort of that face. But I just think it was a different type of fame and clientele where they were just sticky, and they were like, okay, I hear you. You have a call. You’re not doing that bad. It was not great, but it wasn’t that bad. And if you have that kind of enormously long track record of having delivered outperformance, your clients are going to be a little stickier. Yeah, no, understood. And I look at kind of pimco and Gross this fund in three eras through your book. One is the one that we just talked about. And then the next era is a little bit of still doing well, but with a little controversy attached to it, maybe some of the pushing the certain trades on CNBC, forcing the government to basically make explicit the guarantees for GSEs. Things of that nature, still outperforming, but still, you know, just a little bit more hair on the story, I guess. I don’t know how else to describe it. I don’t want to put words in your mouth, but what’s that few years like where they’re coming out of the crisis, but they’re still doing well and gathering more national attention for what they’re doing. So this is an interesting period where you have a little bit of a lag in their perception and what the experience is, right? So they are on the national stage in a way that they’d never been before. And they’re loving it, right? They’re on top of the world. They’re so influential. As we were saying, the mortgage market is where all this happened. They had the expertise so in many ways, the government had to call them for advice for ideas for what to do. And also the government didn’t have to call them because as you say, they were on CNBC making very well known what they think should happen in this market and in that. And that’s a lovely place to be, Bill Gross had long sought this kind of influence but more so fame and being that household name is exactly what he wanted. So we’re so happy to be here. This is we’re riding high. But of course, any time you’re kind of at this kind of pinnacle, I think the seeds of the downfall are already being sewn, right? Yep. And in this case, it is, it is this moment where, you know, you have Muhammad El-Erian come in as co-CEO and then eventually just sole CEO. And it’s a different kind of management, you know, like if you have a place that’s very bottoms up and does investment analysis and bond by bond, just trying to get through the documents and know all of the all this stuff. And then you also have this bottom, the kind of top down. So that’s the pimco always talks about this dichotomy, bottoms up and tops down.

00:15:02 – 00:20:02
And the macroeconomic stuff was always kind of an aesthetic choice. They were always kind of like, yeah, yeah, this is our macro call, it just was less what they did and less kind of how they thought about it. But they’re so big. They’re buying so many bonds. They have this enormously macro person at the helm. And this is the era in which my sources told me that they started to eat their own cooking, where they started to kind of believe their own hype and say, you know, we are these thought leaders, we really see around corners, and you could maybe say it’s hubristic, you could say that this is where we’re starting to fly too close to the sun. This is when we, you know, Bill Gross makes his big famous treasury call where he’s not only sells entirely out of treasuries, which is just really off market, really enormous, as a call, but he also goes short. So he’s effectively betting, it’s just so kind of unfathomable. Like no one does this. And it is just to back up treasuries are a huge portion of the benchmark that they compare themselves to. And every other fund is going to have at least a treasury. It’s just unfathomable to have no treasuries. So yeah, and I think it’s funny because Bill has spent decades at this point building a reputation as a risk manager saying, oh I played poker and I learned how to play the system and went to bed just enough how to bet just enough at a given time when you know the odds are in your favor. Yada yada. That’s like his legend and then all of a sudden he’s like, yeah, I’m going to zero actually negative treasuries in the world’s biggest bond fund. It’ll be fine. Like that is such a deviation from robust risk management and informed risk – you know what I mean? So I think that’s a moment where you start to see we’re getting off course a bit. And you mentioned wanting to be famous and in your book there’s a segment where that’s like his favorite interview question for potential new employees to stumble. Is it would you rather be famous rich or what was the third one? Power? Yeah. Power. Okay. And his answer was fame. Was fame. Yeah, which is funny, ’cause why’d you pick money management, bro? But that’s where he thrived. That was his skill set. It was going to work in bonds. So this was the vehicle that would get him to do destination of fame. And I think that, you know, he likes the question because it made people uncomfortable. You know, they’re like, oh, what am I supposed to say? Like, I don’t know, I want money, I guess. And that’s the normal, I guess, financial market answer, but Bill, you know, you can see this motivation throughout his career. And he was very open about it, which is also kind of remarkable that he was self aware enough to know that this was the thing motivating him. And would tell you all about it. So this starts kind of we kicked it off a little bit. This third era where there is some underperformance, there are some cultural issues that pimco. It’s basically the downfall. I was thinking about it in this terms that basically, this was the peak. Once they started their new normal call, which turned out not to be correct and they’re fighting over, you know, who came up with it. I should have trademarked it, yeah. Yeah, it’s kind of hilarious. What do you think drove that? I mean, as I look at it from my lens, you know, when you pick a manager or you pick a mutual fund, you pick a product. You want some kind of repeatable process. You want to understand how managing money and that it can be replicated and is it the fact that they basically had one guy making calls and that’s not very repeatable or is it deeper than that? I think it’s kind of deeper than that. I think it is, you know, they had a very clear delineation of staying out of each other’s lanes. You had a lane as Bill Gross was CIO, Bill Thompson for ages was CEO, and nobody interpreted with anybody else. And that kind of, you know, they divided that up. There was a client services pod. And the fact that you’re able more than at other places, I think, able to just focus on what you’re doing, like the client services people do client services, and they can explain stuff really well, but they aren’t trading. And the traders don’t really have to meet with. And that was by design that’s like partially reflective of Bill’s personality and some of the other founders as well. And that starts to fall apart, right? And I think the lack of with the kind of what they call a three legged stool of those client, business, and trading. Bill was coming up with the other two, the two founders that were with him. And when they left, I do think that there was kind of a dearth of people who’d be like, hey, Bill, this is a bad idea. Hey Bill this isn’t going to work. Okay. You need that kind of classically if you’re surrounded by yes-men your worst ideas are going to take up all your time because you’re excited about your dumb idea and you’re going to pour money into it and it’s just not going to work. And to some extent, Muhammad El-Erian came in to expand the offerings, to help him go expand into other asset classes, and other products.

00:20:03 – 00:25:05
And Pimco had and never really succeeded that hard at, say, equities. They just don’t have the institutional stance. They just aren’t, it’s just not fertile ground for equities to thrive. And they kept trying. And it was obviously a great time. You know, if you wanted to launch an equity business in March 2009, like literally congratulations, you would have done amazing. Or you should have. And they just kind of didn’t. And I think that this confusing half-baked approach to it and it’s really weird. Bill was talking down stocks during that time. Bless his heart. I know. Yeah, he never really loved stocks. He would occasionally get into it, but then he would always be like, oh, they’re terrible, and they’re going to zero. Animal spirits are dead forever. And you’re like, oh, okay. He does the same to the bond market, but I think given the insecure status of equities at pimco, it was a little bit more harmful for that equities business. So yeah, like in this period, he starts to kind of, I don’t want to say get distracted, but there’s a deviation from what had always made them so successful. You know, in my mind, I always really like his framing of structural alpha. It’s what he called the ways in which he was able to outperform, and they were to your point, replicable. There were things that you could just keep doing forever. Only in a falling rate environment, maybe a little bit, but you know, I think you could pick your spots in a more volatile situation. But, you know, moving away from that kind of replicable and lower risk, at least informed risk strategy to let me sell all of my treasuries, you do have not only a firm that’s like struggling to find its footing and struggling to get that balance of power right. And I think Bill didn’t notice the shift in the balance of power. But also just, what are we doing here? This is not what we, you know, this is not like the history of the firm it is not the thing that had built the firm. Yeah, so you’re really attributing it to more of the culture around him and some of the stronger voices who receded. And that makes a lot of sense. I mean, at one point, I was very surprised reading about the culture, I guess, at one point there was somebody, I don’t know if it was a joke or they were saying, you know, one of our interview questions should basically be where you abused as a child and did you like it. They kind of had a tough 2022 culture at pimco. It was not 2022. I think that’s fair. And I’m a little embarrassed to report that the response I’ve gotten is like, oh, so much worse than this. Oh, wow. Okay. I know I’m like, dear God. I mean, I know that there are things that I left out in part because sometimes narratively you don’t want to just open a door to a whole thing because it’s like, here’s a little rabbit hole. let’s go down. You know, if it’s not serving the gist of the story, it doesn’t really make sense to distract everyone, but it’s also like, I heard an anecdote after publication where someone was interviewing for a job as a trade assistant on the floor and it was like a hiring agency and the hiring agency person was like, um, so this is great you’re a resume looks great. Thanks so much. How do you feel about abuse? Emotional and mental. And I was like, I mean, the guy who said that in the 90s that you’re quoting from the book, I guess I assumed this isn’t like the 2000s, and I guess I assumed that it got less explicit, like it got less literal, and yet you have a hiring a hiring agency saying exactly the same thing. I’m like, okay, so you know, I think it’s probably a better now because legally they would have to be. So and do you think the culture contributed to some of the downfall, the challenges, you know, Bill’s exit, just things not working out towards the end? Yes, absolutely. So he had built a culture where you’re as good as your last trade. And if you can’t defend yourself, like you’re out, you’re done. And I think that that came back to bite him. That just, you know, it undermines your power almost entirely. Even if you were the founder. There’s also the kind of cruelty of the culture. I think the difference between the Bill Gross of every day, you know, everyday pimco on the trade floor, getting ideas from people. Versus the mediagenic sort of eccentric oddball, but very charming and endearing guy on television. I think the distance between those two things was really deleterious. When those stories started to come out, not only was it horrible PR that pimco had to recover from, I think Bill was really ill equipped to recover from it. I think he, I think it just started this spiral and he’s so sensitive to that media image. And so cares about what people see. Like he didn’t actually want fame. He wanted adoration, you know? And I think that you can never get that. First of all, we all know that. And I think Bill knew that rationally. But once that story started to change and people were like, oh my God, I thought he was this cute guy on TV, talking about the Phillips curve or whatever. And you’re like, no, it’s a little different. It’s a little the day to today experience of Bill is not that guy.

00:25:05 – 00:30:03
I think that really upset him. Yeah, and there’s one fascinating character in the book that I wanted to spend a couple minutes on with you. And that’s Muhammad El-Erian who you’ve already referenced. You know, and we work with individual investors at Heritage and, you know, a lot of times Muhammad is ubiquitous on CNBC, right? He’s on in the mornings. What should people watching him on CNBC know about Muhammad El-Erian? Who is he? And what type of investor is he? Yeah, so many things to know about Muhammad and it’s hard to, it’s hard to curate here because it’s a 300 page book, but I will try. So he’s an economist. He came up in kind of the academic world. He was aiming to be an academic at first and then some life events sort of changed his trajectory. And then he worked at pimco in the emerging markets desk and had a really great trade. Actually two really great trades, but I’ll spotlight the Argentina trade in the book, where everyone else had Argentina bonds and Muhammad El-Erian sold them and then Argentina went bankrupt, and Muhammad Larry looked really smart. Very straightforward. Makes sense, but very few people caught that or saw it coming. And then he went to Harvard to the endowment at Harvard. And then he came back to pimco as co-CEO co-CIO. And I think that there are a couple different things, but most notably to me here, the personality differences with Bill are so acute. So Muhammad is like polished and polite and diplomatic. His father was literally a diplomat. And Bill’s like direct and just wants to get to the bottom of what’s the trade. What’s the go? What are we doing here? And that just natural difference, I think, I don’t know if they could have served if they could have survived and succeeded. Just even with that, and I think this started to kind of manifest more acutely in 2013 in meetings where Muhammad’s saying economic things and Bill Gross is like, what do you mean? Like, what does that mean? When you have someone saying, oh, you know, the macro headwinds of this, you know, the Eurozone is struggling to get and you’re just and Bill’s just like, well, what’s the trade? So I think when you listen to Muhammad, you’re going to learn about these macro things, but to a trader like Bill Gross, that sounds like nothing. So I think that’s the big, to me that’s the curse of their relationship. They’re just, I think they never would have gotten over that. That’s a great summary of that because I watch him when I see him on CNBC I also think, boy, this guy’s kind of gloomy. He’s great at pointing out trends and things that aren’t really working out in the world. Never seems to be really fired up about an investing idea, a theme or a market. Is that just the environment we’re in or is he generally more that kind of, hey, here’s what’s wrong with the macro world and let me tell you about it. That’s funny you say that because I hadn’t clocked that, but now that you’ve mentioned it, it’s true that I don’t think I’ve ever heard him recommend like a trade. Maybe because that’s not really his job. You know, he’s always brought in as an economic, just like give me the big big picture here. But that being said, you know, you know, his book was like the only game in town about how the central banks around the world, and that’s absolutely true, right? So it’s not that his ideas are wrong by any stretch, but I do think that he’s really good at clocking the consensus and kind of packaging it really well and clearly. And that’s a huge skill, right? That’s something that that’s a very valuable skill. But yeah, it is like, it’s just not going to fly at pimco. It’s a different, it’s a different kind of approach, which isn’t to say that he couldn’t do those things. Obviously, the Argentina call was a trade. But I think, yeah, it’s harder to find those now. I don’t hear those as much now. What do you mean, sorry by clocking the consensus? Oh, just like, I don’t know. He keeps a good finger on the pulse. And the general, like if you took the average, he can tell you what everybody’s thinking. And he can he’ll communicate it really well. And if you have 50 economists that are saying this and that and this and that, he’ll be able to kind of distill it for you. And say that kind of, yeah, the average. Yeah, absolutely. And so as we wind down here, I’d love to know, did you enjoy writing the book? Do you think you want to do it again? Do you have ideas floating around or what are you nuts? I’m just enjoying the downtime for a while. That last part is it. The researching was kind of fun. You know, I learned about extremely fun trades in 1983. I love that stuff. The writing of it went in phases sometimes I was like, wow, this should never see the light of day. But that’s the process of writing, I think that’s universal. I don’t know, I think I certainly would everyone’s like you’re going to write a sequel. No. No. I’m also not going to worry about Jeffrey Gundlach. I’m not going to worry about Citadel. So I think I have some ideas for the next project, but I’m definitely taking some good long naps in the meantime.

00:30:03 – 00:35:00
Yeah. I wrote a book and somebody asked me, how did you find the time to do it? And I said, well, it took me 12 years so I’m pretty sure I didn’t find the time to do it. I think that’s the thing. Yeah. You make the time and it’s a little bit at a time. Correct. What lessons do you think individual investors can take away from the Bond king, from the book? I think the big thing for me was that I was elated to find a strategy that I felt like I could wrap my head around and that made sense to me as to what Bill Gross was actually doing. And that was in that structural alpha stuff. So, you know, I’ve written about a lot of fund managers over the years. And part of the orientation of journalism that I think is not great is that we’re like, oh my God, this guy has a thought. Oh my God, he thinks that you should buy apple or whatever. And maybe there’s a robust explanation behind it, but so much of that is timing is luck is completely random. Is not useful. And I have struggled because I’m like, how does this industry even work? Because this is dumb. There’s just something fundamentally I do not believe in stock picking, I guess. I don’t know. And but this is maybe an argument for factor investing or smart beta – God forbid. But the things that Bill identified, I’m like, oh, that makes sense, I see how that works and it works over time, and you can keep doing it, and that makes more money, like, okay, and I was just happy to find that. And the thing that I think is useful there, is it is possible to listen to an investment manager and be like, I think this guy’s not making sense. Or I think this guy is on to something. I think this person has an idea, has identified something real in the markets. And I’m going to follow them. I think that they’re going to, you know, you can actually discern for yourself to some extent. And I kind of thought that it was a lot of, you know, I was like an index fund person. I don’t know that I’m not anymore. No, I understand. And then if you’re going to do that, you need to be patient with them. Yes. But not blind because as you said. Exactly. You see things changing at their firm or warning signals. That’s an issue, but if you understand their call and it’s not immediately panning out, you can’t just jump ship. Yeah, that’s sometimes they won’t get the odds won’t be in their favor, and that’s normal. Absolutely. What’s one thing you would want people to take away about bond investing from our conversation? That it’s interesting. People think of it as boring. But some people they’re wrong. They’re wrong. Some people consider bonds the smart money in the market. Do you agree? Yes. How come? Yes, of course. I think part of it, I’ve been thinking a lot about this since the book came out, just having these kinds of conversations and a lot of people, like, to some extent, it’s the institutional stance of Bloomberg news. I grew up at Bloomberg and it’s a bond place fundamentally. You know what I mean? So I thought that I had this clever, you know, I’m like, oh, I’m so smart, I love bonds, but I think I just grew up at a place that loved bonds. But also, you know, our financial markets reflect what we value reflects what we think and that means like morality and what we want our society to look like and all of these choices not only are bound up in how we securitize things and how we build those structures – on purpose or not. But also it creates that, right? So it’s both causal and the effect. So I think the bond market is the most kind of overt place where you can see these levers of power expressed. And I think that’s like crucial to understand to exist in our world to understand what’s going on and if you want to have a shot at changing it, you have to know what’s going on and how it works. Awesome, where can people stay in touch with what you do and find you? I’m on planet money and PR’s economics podcast. I’m on Twitter, unfortunately, @MDC. I love it there. Yeah, and I have a subset that I update annually. All right, so since the name of our podcast is wealthy behavior, what’s one wealthy behavior you regularly practice that you would recommend to others? This is embarrassing, probably, but it’s like my environmental anxiety has caused me to, like, my climate anxiety has caused me to do so many different things that are also cost saving. Who needs paper towels? You don’t need a paper towel. You can just use a rag, you have towels, just use those, wash them. So they’re like a billion different, you know, I have a hybrid car and I play this little game where I try to get the highest miles per gallon. It tells me at the end of my trip, you know, do you want to guess my highest? No, I don’t. Okay, it’s 80. Oh, wow. Okay. So that made me sound, yeah, I’m glad I didn’t. I’m so proud of myself, but that’s very, very marginal daily practice, okay? But just things that are helping the environment, I hope I’m reducing those negative externalities that we forgot to price in. So you can’t even really measure that in our world. That’s awesome. We’ve been getting a lot of live below your means so that’s definitely one of the more interesting ones we’ve heard lately. Mary, thank you so much. Big fan of your book. I really enjoyed this conversation. This has been so fun. If you do decide to dive into another project, I will be eagerly awaiting it and wish you the best of luck. Thank you, I really appreciate that. All right, thanks, Mary.

Thank you for listening to Wealthy Behavior. If you found the conversation useful, please consider leaving us a review wherever you listen to your podcast and sharing this episode so those around you can live a rich life too. For more insights, subscribe to our weekly blog at heritagefinancial.net and follow heritage financial on Facebook, Twitter, and LinkedIn. Check out my personal finance blog at thebostonadvisor.com. Wealthy behavior is produced by Kristin Castner and Michele Caccamise. This educational podcast is brought to you by Heritage Financial Services, LLC located in the greater Boston area. The views and opinions expressed in this podcast are that of the speaker, are subject to change and do not constitute investment advice or a recommendation regarding any specific product or security. There is no guarantee that any investment or strategy discussed will be successful or will achieve any particular level of results. Investing involves risks including the potential loss of principle. *This automated transcript may contain grammatical errors.