Name the most noticeable generational divide in investment style between sub-40-year-old investors and baby boomers.
Understanding how asset pricing will function if we ever enter a rising interest rate environment. Baby boomers are better equipped to understand how correlations and valuations will react.
Your least favorite part of being an asset owner is...?
Two things: 1) Compared to when I worked at a fund manager, it’s harder to eat your own cooking at the foundation because we cannot invest in our underlying funds; 2) We get less interaction with corporate management teams.
The manager you don’t currently work with whose brain you’d most like to pick for an hour is...?
The father of hedge funds, Alfred Winslow Jones. I would love to know what he would think about the modern-day alternative investment management industry he helped create.
... and where would that meeting take place?
He was born in Australia, so perhaps in Melbourne.
Describe the weirdest interaction you’ve had with an asset manager.
One manager in Asia brought 13 people to the meeting. It was really awkward.
What asset class or investment troubles you most right now—and why?
Peer-to-peer lending simply because of the unbelievable growth, variability of underwriting, and proliferation of players.
Name your favorite food and drink.
Chinese food and FIJI water, as the latter brings back good memories of a trip I took to Fiji during college.
What’s the wildest institutional portfolio you’ve seen?
Our own portfolio back in the ’70s and ’80s. The Robert Wood Johnson Foundation was almost exclusively invested in one stock: Johnson & Johnson. We began to diversify in the ’90s, and accelerated when our CIO Brian O’Neil joined in 2003. The exposure fell from nearly two-thirds of the portfolio to currently around 10%.
Name a cultural aspect of asset management that gets under your skin.
The tendency to not acknowledge luck and call all outperformance skill.
Donald Trump is ________.
Emblematic of Americans’ frustration with our current elected officials.
Name your four-member investment dream team for your own family office.
I’d appoint someone like Charlie Munger (Berkshire Hathaway), one psychologist, perhaps Daniel Kahneman, and a behavioral investor such as Michael Mauboussin (Credit Suisse). Then I would add legendary football coach Bill Parcells to keep the team motivated and in line.
What’s the biggest investment or career misstep you’ve made?
Failure to acknowledge loss aversion… It’s happened both professionally and personally. You have to remain unemotional and disciplined whether an investment is in the green or red.
What should be an investment trend, but isn’t (yet)?
Shorting levered and volatility futures exchange-traded funds (VIXY/VXX), given the structural issues these funds face. Compounding and the forward curve lead to atrocious results. The problem is hedging your risk.
