23 December 2023

In this rare, in-depth interview, William Green chats with super investor Rick Rieder, who oversees about $2.6 trillion at BlackRock, the world’s largest asset manager. Rick, who probably manages more money than any other investor on Earth, has an enormous range of responsibilities: he’s BlackRock’s chief investment officer of Global Fixed Income, head of the firm’s Global Allocation Investment Team, and chairman of the firm-wide BlackRock investment council. A true titan of the investing world, he recently won Morningstar’s 2023 award for Outstanding Portfolio Manager.

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  • What Rick Rieder learned from a disastrous early investment.
  • Why he focuses relentlessly on leverage, liquidity, & cashflow.
  • How access to vast amounts of data gives him an edge.
  • How he distinguishes meaningful news from meaningless noise.
  • Why he gets grumpy in bull markets & relishes periods of dislocation.
  • What great investors like Ray Dalio & David Tepper have in common.
  • How Rick views the current economic outlook.
  • How to take advantage of the “incredible blessing” of high bond yields.
  • How he operates on 4 ½ hours of sleep.
  • Why he loves to trade in the middle of the night.
  • How he handles extreme levels of stress & responsibility. 
  • How he’s maintained a happy family life, despite a fanatical work ethic.
  • Why his hero is Cal Ripken, the Iron Man of baseball.


Disclaimer: The transcript that follows has been generated using artificial intelligence. We strive to be as accurate as possible, but minor errors and slightly off timestamps may be present due to platform differences.

[00:00:03] William Green: Hi there. Welcome back to The Richer, Wiser, Happier podcast. Today’s episode is a special treat. Our guest is Rick Rieder, who’s one of the world’s most important investors. Rick is responsible for a staggering 2.6 trillion dollars in assets at BlackRock, which means that he might actually be managing more money than any other investor on earth.

[00:00:24] William Green: He has an enormous range of responsibilities at BlackRock, which is the world’s largest asset manager. Among other things, he’s the firm’s Chief Investment Officer of Global Fixed Income, overseeing a team of something like 350 people. He’s also head of the firm’s Global Allocation Investment Team. He’s a member of BlackRock’s Global Executive Committee, and he’s chairman of the firm wide BlackRock Investment Council.

[00:00:48] William Green: He also manages some colossal funds, including the 18 billion total return fund and the 36 billion strategic income opportunities fund. In case you’re wondering, his investment performance has been so strong that Morningstar recently awarded him its 2023 Outstanding Portfolio Manager Award. What kind of person could actually handle this amount of responsibility and pressure and stay on top of it all?

[00:01:15] William Green: Well, as you’ll hear in this conversation, Rick is extraordinarily intense, even by the standards of the world’s most successful investors. After something like 36 years of working on Wall Street, his level of energy and his sheer will to succeed are as strong as ever for this is a guy who, as you’ll hear, prides himself on getting up at 3:45 am every day. He loves trading in the middle of the night when his peers are still fast asleep. He hits the gym at 4:45 am every morning before he heads to the office so that his regular workday can begin. Like I said, he’s intense.

[00:01:52] William Green: In my book, Richer, Wiser, Happier, I wrote that I think of the best investors as mental athletes. These are people who strive constantly for an intellectual advantage, more information, better information, faster information, or simply a more nuanced interpretation of information that’s already out there for everyone to see. When I think of Rick in these terms, it strikes me that he’s possibly the most extreme mental athlete I’ve ever met.

[00:02:20] William Green: One aspect of this conversation that fascinates me is that we get an unusually vivid, up close, and personal sense of what it’s like to operate at the very pinnacle of this game. Where this kind of intensity and competitive drive may be required, I think you’ll see how Rick has managed to give himself an edge through a combination of incredibly hard work, robust investing principles, and an ability to distill massive amounts of data and interpret what it means so that he can distinguish the news from the noise.

[00:02:54] William Green: As you’ll hear, he’s also exceptionally thoughtful about what it takes to succeed over the long run as an investor. Managing risk so you can survive through thick and thin, whatever the financial markets throw at you. In any case, I hope you enjoy our conversation and that you learn as much from it as I did. Thanks so much for joining us.

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[00:03:18] Intro: You’re listening to the Richer, Wiser, Happier podcast, where your host, William Green, interviews the world’s greatest investors and explores how to win in markets and life.

[00:03:37] William Green: Hi folks, I’m absolutely thrilled to welcome today’s guest, Rick Rieder, who’s one of the world’s most important investors. Rick is responsible for about 2.6 trillion in assets at BlackRock, which is itself the world’s largest asset manager. He also recently won Morningstar’s 2023 award for Outstanding Portfolio Manager. So Rick, it’s wonderful to see you. Thanks so much for speaking with us.

[00:04:02] Rick Rieder: Thanks for doing this. I appreciate it. It’s fun.

[00:04:04] William Green: I also want to point out that Rick just dialed in from an airport, I think in Atlanta, where he’s stopping off. And can you explain to us what you did over the last few minutes, Rick? Because it gives a good insight into the context in which we’re having this conversation and also your personality.

[00:04:20] Rick Rieder: Yes, sir. So, part of my personality is, I can’t sit still and I do a bunch of things at once and my wife doesn’t really love that at dinner when I’ve got the phone out all the time doing 12 different things.

[00:04:29] Rick Rieder: But no, I’m we’re markets are moving quite a bit and the yield curve’s moving quite a bit. So I know I’m just involved in a, what is a curve flattener trade that we’re putting on that long of the yield curves doing extremely well and so we’re reducing some of the long end exposure to buy some more in what we call the belly of the yield curve. So, trying to execute that, as usual while doing something else.

[00:04:52] William Green: So what’s funny is that before we started, usually I did with Rick what I usually do with all of our guests, which is I kind of explain some of the ground rules and I say, look, if suddenly something happens, like your kid calls or you have to go trade pork bellies or something, it’s not a disaster for us to stop.

[00:05:08] William Green: And Rick was the first guest I’ve ever had who said, actually, it would be great if I could just do a trade right now. So I had to sort of. Sit here quietly for a couple minutes while you trade it. So I thought that was a very nice insight into who you are.

[00:05:22] Rick Rieder: Into my persistent stress level for during when the when markets are open.

[00:05:26] William Green: Yeah, exactly. We’ll get to that later. So Rick also said for people who are watching the video, which is usually a minority is it okay if I keep one eye on the market while we’re talking? So my challenge is to keep Rick undistracted so that he can sort of, I guess it’s to allow you both to trade simultaneously and to give us wise answers to my thorny questions.

[00:05:47] Rick Rieder: That sounds great. That was great. Only one eye, I promise.

[00:05:50] William Green: Okay. So Rick, I’d like to start by asking you about your very early formative experiences as a bond trader, which I think really shaped the type of investor you’ve become. And just to give our listeners a little bit of background as I recall, you graduated from Wharton with an MBA back in 1987 and then joined E. F. Hutton as a trainee, and then, as we might get to later, E. F. Hutton got absorbed into Lehman Brothers after Black Monday in 1987 when the market went kaput and E. F. Hutton demised. If that’s a word and so you ended up at Lehman working with a very important mentor named Bart McDade.

[00:06:25] William Green: And I wonder if you could give us a sense of what that early period of working as a trader was like and what you learned from working with Bart, who was a not that well known to a lot of our listeners, but was a very gifted trader who I think eventually went on to become a president and COO briefly of Lehman.

[00:06:43] Rick Rieder: Yeah. So that’s a great question. And Bart, Bart, first of all, I became president too late, and they yeah, I mean I learned a ton, I mean I, I got super lucky, I mean there were a couple people in the training program at FIATA who came to Lehman, and I was unbelievably fortunate, I talk about nodes in your life that are, create a set of branches off of it.

[00:07:00] Rick Rieder: And I got to learn from somebody who, trained me quite a bit in terms of how to think about markets, how to think about, research analysis. And one of the things, I would say, the few, gosh, there’s so many things that I learned from him and from the team I work with. I, by the way, I lost a lot of money on a trade earlier in my career.

[00:07:16] Rick Rieder: And it taught me a ton about, you know, Bart and others about how to manage the risk and I forget about this a lot. We’re not in the business of being right, we’re in the business of generating return. And you know what I learned at the time was I thought I was right on the position and, usually you do well in school, you’re trying to do well in school by studying, I was convinced I was right.

[00:07:35] Rick Rieder: And I’d studied it. I knew the technical of fundamentals. One of the other things I learned from Bart was reading indentures. Most people in the markets just look at tips of the waves and like to be in the hot sector. And I learned a lot about doing research, analyzing something. And if you analyze it more times than not, you’re going to be, you’re going to be right.

[00:07:52] Rick Rieder: Cause most people don’t really study these indentures and go really deep and understand there was and this bond had a lot of convexity. It’s a call option. I know I thought it was right. I could buy in it. And then all of a sudden, I realized whether I was right or not. Markets didn’t think I was right.

[00:08:06] Rick Rieder: And all of a sudden, I started owning all of them and it doesn’t matter whether you’re right, you could be right six months hence or two years hence. We’re in the business of generating return and if people think you’re wrong and or you own them all, you’re going to lose money. And so it taught me, manage your size and your position, take the loss when you need to.

[00:08:22] Rick Rieder: Don’t double, don’t double, triple your position, and I also believe in this idea while that time wasn’t necessarily the case, like make sure you do your research because ultimately. The analysis you do are going to win out more times than not. Like I say, most people in this business, want to chase momentum and chase, chase whatever the hot thing is.

[00:08:38] Rick Rieder: There’s only social media today. It’s like, I got to get on this train. I got to get on that train. So that taught me a lot. I know, I can say one last thing. It’s never been so long an answer. I’ve learned a lot from people and Bart was one of those people, Cory Booker, somebody who I got to know really in my life, who was a the way you treat people and how you think about teams and your partnerships has really stayed with me for a long time, in part with somebody who treated everybody well, was incredibly how do I describe this, supportive of team, of his teammates, et cetera, and liked to have the right Quality of people, culture of people around them.

[00:09:10] Rick Rieder: Cory Booker learned the same thing, like when I saw him outside of the public arena, I watched the way I sat on the board of what’s called North Star schools. There was one school, now fourteen schools and I watch how we treat people end up with, and I watch how people treat with service people, how they treat them with respect, how they treat people the right way.

[00:09:27] Rick Rieder: And I learned a ton and I think I’m a crazy fortunate. I have people that work with me that worked with me for 35 years, 30 years, 25 years, a bunch of people. And they, and I think it’s, I think it’s this idea of like, you can’t do everything in markets despite, like I said, being distracted. You need to have people who are really thoughtful about different ideas that are, willing to challenge you.

[00:09:47] Rick Rieder: And I don’t I, to me it was a really big deal. We had a great team and today I’m unbelievably fortunate that I’ve worked with a ton of these people for a long time. But anyway, that was a really big deal. I really think people underestimate. Like the quality of the person, what their intentions are, this industry is made up a lot of people like are out for them, out to make money for themselves and say, no, how do I make money fast? And I don’t know, I really believe in this idea of the right culture and philosophy.

[00:10:15] William Green: And to go back to this very formative experience with this bond, I think it was, if I remember correctly, it was a Canadian bond issued by Hydro Quebec, this utility company in Canada, that I think was yielding something like that.

[00:10:28] William Green: So it looked very attractive, and I mean, you were only about two years into your career as a trader, if I remember rightly. Why was it so traumatic? I mean, viscerally and emotionally, why is it helpful in a way to go through something like that? In a way like Ray Dalio’s early experience where he almost, and I know you and Ray are friends, where he almost destroyed his career and had to borrow 4,000 bucks, I think, from his dad.

[00:10:54] William Green: Why are these early experiences that are just so searing really formative in that way and kind of shape you for the rest of your career?

[00:11:03] Rick Rieder: Yeah, so by the way, I’ve learned this from tech and technology people, et cetera. It’s almost a badge of honor to lose money early on or have a failure and like I’ve had been blown them, people like be confident, I win and I win.

[00:11:15] Rick Rieder: Actually it’s actually the losses that galvanize how you learn more and how you think about things differently. So that bond was, at the time, it was, I mean, you talk about it being blazing in my mind. It was Hydro Quebec, ten and three quarters of six fifteen ten. I remember the maturity, the coupon, the whole thing.

[00:11:31] Rick Rieder: Because, I mean, it really hurt me. But I don’t know why, it really got me thinking about by the way, 6, 15, 10, with a 1995, sorry to believe this, 1995 call option, I’ll show you how old I am. But it but anyway, it, it got me, really thinking about things, and how do I unwind this position, and what are the technicals, and how do I get out, and then the other thing was, I had developed some relationships on the client side and it’d be also caught me.

[00:11:55] Rick Rieder: My clients can be really good partners with you. And so there are a couple of clients I called, what am I doing wrong and what do you think about this? And they were varying levels. They were willing to buy some and I was able to start to, people got a sense that there was distribution happening in this position.

[00:12:11] Rick Rieder: I started to work my way out of what was a deep hole and but I learned a ton from taking that loss. And I, I watched some of the most successful investors in the world and it is usually, they usually had a tough go at one point. And then I truly think it changes the way you think you don’t learn it. Like I, I don’t remember the coupon immaturity of bonds that I traded 30 years ago that I made money on. It’s the ones that cost me cost me a fortune.

[00:12:37] William Green: I remember you once also saying that the geniuses don’t necessarily make the best investors and you saw this also with the guys from long term capital management who blew up while you were at Lehman and you were having to deal with the impact of their unraveling and it seems like part of what made this such a helpful lesson for you in terms of survival, which is a big part of what we’ll talk about today, the importance of actually surviving as an investor. It seems like part of what you learned was just the dangers of overconfidence.

[00:13:05] Rick Rieder: I used to when early in my career when I’d hire people, I was always blown away by resume and I was blown away. I didn’t go. I guess I went to business school in Ivy league, but I didn’t undergrad.

[00:13:16] Rick Rieder: And I was always blown away by boy, if somebody went to this school or that school, they must be incredible. And that would definitionally be a great investor trader. And then you realize there’s something way more to it. Obviously, intellectual acumen is pretty darn important, but there’s also savvy.

[00:13:32] Rick Rieder: There’s also how you communicate. There’s also how you how you partner with people and you work in an atmosphere. And so what I’ve watched over time is the smartest people become convinced they’re right. And then they get similar to what I had, become convinced that they’re right, so they build a position bigger, and that the markets will figure out why they’re so smart, and then they end up hurting themselves, or end up losing money, and so what I’ve learned over my career when I look at resumes, I look at people I hire, it’s actually, I look more for, you A desire, an ability to succeed in whatever they attempt, and that could be anything as a swimmer, as an artist or what have you, but that ability and that passion to figure out how to win and how to succeed and that, because people, I’ve hired so many people into the wrong jobs, but if you hire them and they’re and they’ve have that knack for I don’t know, sort of a street sense or like what it takes, either to work harder or to figure some out or understand the technicals.

[00:14:29] Rick Rieder: Those people tend to do pretty well and so, to me that, that has become, again, you have to have a base level of intellectual acumen, which most people in the industry have. And then, beyond that it’s, a whole series of other things that I think, make some of the great investors I’ve seen out there really good.

[00:14:44] Rick Rieder: When I was studying you over the last few days it, it actually, it pushed me to look up a quote. I hate to quote myself but I was happy actually that I was, it was pretty good sentence that I looked up a quote in my book where I had this revelation where I was writing about some of these super intense, very successful investors, and I think I, I ended up writing something to the effect of, so sometimes the secret of success is nothing more mysterious than an, than the unflagging fervency of a person’s desire.

[00:15:12] Rick Rieder: And that struck me with you and the people you hire, there’s this unflagging fervency in terms of the desire, just, it’s almost like you can’t bear not to succeed, or you almost can’t bear to fail, to put it in a negative way.

[00:15:25] Rick Rieder: I watch a lot of sports and you watch some of these athletes who are not always the necessarily the most gifted athletes, but they figure out, they’re really crafty or they figure out like, what is their opponents Achilles heel or what is, where is.

[00:15:41] Rick Rieder: The opportunities and you watch teams that like win the Super Bowl, World Series. I was like, wow, like, how did they do it? And by the way, oftentimes it was culture and it was, the disorientation of teamwork that I think was really powerful, but I think when I say, I think it’s such, such a big deal in terms of people that I find that are really good investors.

[00:15:59] Rick Rieder: Some of the people that I look up to, that have that incredible knack for figuring things out. And it’s an insatiable appetite and, for figuring things out, oftentimes I’m always blown away by people in this industry who’ve done really well. And like, why don’t they just retire?

[00:16:15] Rick Rieder: But there is, I think, in a lot of those people that I have tons of respect for, they, I think it’s the intellectual pursuit and the challenge of, trying to get it right. I saw stat the other day that 50 that the top world tennis players only win 54% of the points that they play. I thought it was an incredible stat. I was like, how could that be right? And then the more you think about it, it’s similar to what we do is like, you just got to keep trying to get it right more often than not. And just doing a multiply that as many times as you can. And I think there is this innate desire from a lot of the people I’ve respected that are really been, become great investors. It’s just, that it’s an incredibly exciting and dynamic pursuit and which I think motivates, motivates people.

[00:16:57] William Green: It’s interesting, because in some ways, when I studied your early life, it seemed like you were a little bit of a slacker, you were a little bit lost in a drift, and I was reading about how, you went to school, I think, not far from where I live now, you went to school in Scarsdale, I think, which is sort of a posh place, and Your parents were business people, although your father had lots of ups and downs, so, so you were from a privileged family, then had tough times, I guess, but then you were at high school, and you sort of didn’t do very well, and then you went to Hobart College, which is not, it’s not Harvard, right?

[00:17:27] William Green: I mean, it’s not like you were destined for greatness and you seem sort of a little bit lost in college, can you talk about the moment when things turned around, when I remember hearing about your experiences where you suddenly were getting terrible grades and you were like, Oh my God, tell us that story, because I think It’s a very interesting sort of turning point in your life in a way.

[00:17:49] Rick Rieder: Yeah. So my, by the way, my dad, it was interesting because we had, we didn’t have a lot of money and then my dad did really well in this business and it was an office products company called American Unfix that was actually, I think it’s his fraternity brother invented created Xerox and my dad, my, it was typewriter ribbons and things that became correction fluid for typing, et cetera.

[00:18:07] Rick Rieder: And then it became, quickly antiquated. But anyway, it was an up and down period. But I, but that, taught me a lot about innovation technology and about, gosh, you got to be cutting edge. You got to be front footed about what they said. That was, but your point about, I don’t know, I didn’t, particularly in high school, as you got into some of the classes in history and in college, philosophy, sociology, it’s like, I just, it didn’t sink into me.

[00:18:33] Rick Rieder: I mean, it wasn’t, it didn’t come naturally and I didn’t, so I wasn’t intrigued by it. And I found that human culture is really interesting in that, something motivates you you’ll you can really attach to it and I actually took a typing class in high school like, wow, that’s pretty cool.

[00:18:48] Rick Rieder: And then not knowing computers, but then accounting and like, wow, I understood debit and credit. It was logical. It was intuitive to me. And then I transferred to Emory University and I took business classes and I just, I think my parents were both entrepreneurs and I understood business and to this day, I mean, I, I love looking at what drives cashflow and why do people spend on R and D or what drives employment trends and inventory levels?

[00:19:10] Rick Rieder: I don’t know, but that all makes a ton of sense to me. But it’s funny, like if you get on and I set us in on some of the things I do with school within the schools or analysts that we bring in. Like, if you get in the right train, like the human being is pretty incredible around if you’re motivated by something your willingness and desire to work at it, I’ve always said that, like Sunday nights, I’m so pumped up and like I could, get to go and do it again.

[00:19:32] Rick Rieder: And if you’re motivated that way, as opposed to it’s a job or you’re motivated, but I, I had a tough time early, early on and, academia that by the way, I hope that’s a great, for Phil, for liberal arts. It’s a great tool. In fact, one of my closest senior partners, graduated there and he’s extraordinary.

[00:19:48] Rick Rieder: And he thinks of things in a big picture way that is, people can succeed from that. It just didn’t, it didn’t click in for me. So. Until I got, the ball started, the snowball started rolling downhill and something that I found intriguing, I had a hard time being motivated and it was something literally my roommate had we transferred together and my roommate, said, well, we got to move on.

[00:20:08] Rick Rieder: Like we, what we were doing was hanging out in the gym and Night watching movies and so anyway, he said, we, we got to move on. And so we, he found the school Emory and they business classes. And I, so I, and I don’t know when I had to like to be the trough of my grades my freshman year, middle of my freshman year, and I worried of my dad’s reaction to it, the I said, gosh, I got to change my life. But in a bunch of different ways. I was, my weight was getting high and so on. It’s like, it’s amazing how like something kicked in and then the ball started rolling downhill, so.

[00:20:38] William Green: Yeah, I have this great image of you that I think you told once of you kind of sitting on a rock on a golf course in Scarsdale for about four hours, scared of going back and talking to your dad. And then deciding, all right, I’m going to turn things around.

[00:20:52] Rick Rieder: Yes, sir and yeah, no, that was, I don’t know, I like, I’ve, I don’t know that people in their life have something, but that was, you talk about a catalyzing event. That was that was it. And I, it was it. And you really started, I mean, I sat there for a long time and just started thinking about life and thinking about, well, you know what, where I was going and, thankfully my wife always talks about it, like, and we transferred, I met my wife and I’ve had great kids and well, I thank God for, I wouldn’t certainly encourage anybody to have really bad grades to create a catalyzing event, but it was certainly a motivating event for me.

[00:21:20] William Green: It somehow worked for you. And I think if I remember rightly, you came third in your class at Emory and your wife came first a couple of years later so.

[00:21:28] Rick Rieder: She reminds me of that regularly.

[00:21:29] William Green: Yeah. She’s the one we really ought to be investing with.

[00:21:31] Rick Rieder: Totally, totally. A hundred percent. She is more in marketing and I’m more in finance but she’s clearly smarter.

[00:21:32] William Green: So another important early experience that you had that relates to some of what we talked about, I think, was while you were at Wharton, where you had this CEO from, I think, the Golden Nugget Casino come through, Can you talk about that because it also relates to this to really to the philosophy that you’ve had as an investor that stood you in very good stead for the last 35, 36 years.

[00:22:02] Rick Rieder: Yeah, I mean, even, I was in elementary school. Yeah, I’m a sports nut. I love, I started like, I think I was probably date me, but I think I had like a 25 cents for my lunch money or and I used to bet it on oftentimes, which made me hungry at times, but bet it on.

[00:22:18] Rick Rieder: Chiefs Raiders game, or what have you, and the and So I was always intrigued by taking risks and then by the way, I would do this research on like how they played on turf and versus otherwise, I don’t know why so, but then then somebody came in and spoke at Wharton and I learned a ton at Wharton.

[00:22:32] Rick Rieder: I learned a lot about dealing with people and people from international [Inaudible] and anyway, but somebody came in and they spoke about, he said, well, how do we make money in casinos? And I raised my hand, and I said, well, the odds are in your favor, and I gave them all the raptor versus the statistics of what the odds, and he said, actually not.

[00:22:46] Rick Rieder: He said people come, the odds aren’t that much other than slot machines. People come with 200 in their pocket, and when they lose the 200, they leave. And I, like, I kept resonating with me because what happens is you think about how, similar to way markets they oscillate up and down.

[00:23:01] Rick Rieder: And I thought about, gosh, when you oscillate, you hit the down, you hit the down 200, you leave. So almost, statistically, you’re always going to hit the down 200 if you stay there long enough. And Morant hit me about, about investing. It’s like, there’s going to be something exogenous, whether it’s geopolitical, whether it’s some, like, company’s fraud or something, there’s always going to be something exogenous that’s going to have you hit the down button, and so I always try and think about what are the things that prevent me from doing that, and then, because markets oscillate, try and be, I mean, it sounds cliche, but try and, sell when it’s going up and others are buying advice and vice versa, and take your profits along the way.

[00:23:38] Rick Rieder: But the big deal for me was thinking about, markets tend to move in trends and they tend to move in trends around a trend line, but they oscillate and based on noise and news, et cetera, but then just make sure you don’t hit. And like, what are you, what are your stop gaps around your position?

[00:23:56] Rick Rieder: What are your hedges that so that I don’t want to be that person that that hits the down button, particularly, I mean, clients, I’ve had, I mean, like I said, I’ve taken losses over my career and I just want to make sure that I’m trying to insulate from that, but it’s just emblazoned in my mind, the philosophy around, the random walk alongside of a trend, And just make sure you’re being thoughtful about optimizing it versus being on the wrong side of it.

[00:24:21] William Green: Yeah, it seems like a huge part of your process is or your success is simply this avoidance of catastrophe. The fact that you’ve managed to stay in the game. Whereas A lot of very talented traders, very talented investors have just blown themselves up. I remember you once saying you would watch a great trader who’d get three, three bets right and then would blow themselves up on the fourth trade. Can you talk about that? Like what, I mean, what’s happening just in human terms that people Temperamentally, as Ben Graham would say, we’re our own worst enemy as investors.

[00:24:54] Rick Rieder: So I’ll say the first thing. I really don’t regard myself when you say successful. Like, I always think that part of what motivates me is I don’t really regard it.

[00:25:01] Rick Rieder: I think it’s a constant challenge. Like, I, I look back and I say, like, there are things I should have done or things that. Like I, I think part of what motivates people to, to, not be in that, where you blow up, it’s like, like, I don’t, I don’t think I figured it out. Like, I don’t think I’m, I think we do some good things and you get some, recognition for doing some good things, but.

[00:25:19] Rick Rieder: I think what happens is, and I studied this and it was really cool. We did some things on to look at, who succeeds. And it’s interesting in in, in, and it happens to be more in males, that there is this dynamic around where you build a confidence level. And I’ll never forget this study that showed tennis players.

[00:25:35] Rick Rieder: I’m not sure I talk about tennis. I prefer golf, but tennis players, when they’re a setup, how men tend to try and go for it. And when they’re ahead, they tend to go for it. And I see this all the time is people who get three out of four trades, right? And then they’re down money because they got their confidence levels too big.

[00:25:51] Rick Rieder: Their positions got too big. And then the fourth position hurt them. And, or the fourth position wasn’t scaled to the, what is the downside versus the upside. And I think that is such a big deal is, part of my philosophy around in fixed income, in bonds mature at par or they go down. And so I always say make a little bit of money a lot of times, make a lot of relative value decisions, try not to have that one trade blow up to three because in, in bonds, if you’re wrong, they go down to 80 points and you’re hoping to get a par or 100 cents on the dollar.

[00:26:20] Rick Rieder: So, this idea of don’t get overconfident, don’t have one because even though it’s working. don’t get overconfident and I see it all the time. I mean, all the time with investors, traders that you see the confidence levels growing, I just had a good trade, another one, and then they ended up getting, they ended up getting hurt, but that, but I think it’s a really big deal around investing or trading.

[00:26:40] William Green: I really want to emphasize for our listeners the importance of that line that Rick just mentioned, which is kind of a mantra or motto of his, which is let’s make a little bit of money a lot of times, because it’s so central to Rick’s approach of really not so much swinging for the fences as diversifying thoughtfully, trying to survive, trying to get relatively consistent returns without huge downside, I think that’s really important.

[00:27:05] William Green: But in a way, it’s curious to me, Rick, because it’s sort of, it’s the opposite in some ways of the approach of someone like a Charlie Munger, who read about a lot in the last week, and who I’ve interviewed in the past, and who just passed away a few days ago, because Charlie would talk about being a spear fisherman, who would sit by the side of the stream, and just wait for one big, fat, juicy salmon, and would then spear it, and then go back to doing nothing, So in a way, he was a great advocate of, at least if you really know what you’re doing, having a very concentrated approach, where because you don’t know that many things, you wait for something that’s a really great opportunity.

[00:27:38] William Green: And otherwise, you just don’t do that much. And you in a way, I mean, there are so many different pods up the mountain, but I wonder if you could unpack for me the difference, because there’s something very different philosophically and temperamentally going on here that you embody.

[00:27:52] Rick Rieder: So, I’d say a couple of things. The first one is, I think equity and debt is, and bonds are very different. I believe in equity and similar to the description you had. In equities, you should concentrate more because they are convex to the upside. So you think about companies throw off return on equity, whatever the numbers are, and particularly tech companies.

[00:28:13] Rick Rieder: Venture companies, you can, if you’re in the right zone, you can multiply your profits, multiply your revenues. And so, in equities, I actually believe in concentration, scaling your positions the right way and if you really believe in something, you can grow it. But bonds are different, and because of, they are convex to the downside, so in bonds, I feel like this make a little bit of money a lot of times to diversify, but I like in equities, I actually like scaling, so some of the companies, they’re invested over the years that I really like.

[00:28:40] Rick Rieder: Including today. I mean, we take bigger positions and I think, and not only take bigger positions, but we also use options to try and amplify the upside of it. So I think that is one part of it. Second is, I think it depends on who you are and what your objectives are as well in terms of, are we’re managing money for clients and, whether it’s policemen, firemen, teachers, et cetera.

[00:29:00] Rick Rieder: And I take it quite seriously that, it’s where their retirement, it’s their wellbeing. And this idea that I’m going to swing it and, what I’m trying to protect is, grow their, grow their retirement pool in a deliberate, efficient way, without that big downside.

[00:29:17] Rick Rieder: I mean, if you’re managing your own money or you’re managing your own, whether your own specific you’re willing to take risks because you’re willing to take your own personal downside. I think that’s a very different framework. I, I also think a little bit different, but Berkshire is a pretty unique place.

[00:29:30] Rick Rieder: But it also depends on the scale that you’re operating in. We’re, we run a lot of assets and, the scale, the idea of we’re going to get out if we’ve made a big risky decision, pretty darn hard. And, I think, if you’re an insurance company, you have long dated liabilities, your holding period can be 20 years.

[00:29:48] Rick Rieder: We get measured, our clients, depending on who the clients are. We have some that are in very liquid funds. Look at the returns almost every day. And so, do you have the ability to hold on for 20 years? So, what is your investment objective? I tend to think of most of our portfolios tend to think of things in six month increments. It varies. If it’s a private investment, I’ve got a longer throw it if it’s, something like treasuries or duration, on shorter. So it depends on, who are you investing for, what’s your objectives set? How big is your, what’s your scaling? Is it debt versus equity? And so I think all of that goes into the equation.

[00:30:24] William Green: I think also what you just said about the ability to hold on is really important and I was very struck by a quote of yours that I’d read where you said I’ve always found when I’ve invested in credit or equities or anything, there are only three things that matter for investing and they are leverage, liquidity and cash flow.

[00:30:40] William Green: And you talked about how if your leverage is high but you got plenty of liquidity and your cash flow is high, you’re okay, you can survive. But so you said it’s all about how you can service my debt, and in a way, it goes back to that very early experience where you got blown up on that Canadian bond.

[00:30:55] Rick Rieder: Yeah, no, I mean, it’s quite an honor that, we learned these things, and looked at these things, so, I think the I think there’s, I literally think there’s only three things that matter, leverage, liquidity, cash flow, and, I’ve learned that you can run a lot of leverage, and by the way, I think this is an acute problem for the U.S. government today. You can run a lot of leverage as long as your cash flow exceed, as long as you have a liquidity, if it, if you run out of liquidity, it’s over. And then, so you got to know deep down, what is your liquidity and what can disrupt your liquidity because it’s game over if that.

[00:31:24] Rick Rieder: So that is, so to put that aside, then it’s your cash flow versus your leverage. You can run, like US government, you can run a lot of leverage as long as your cash flow your tax stream or your revenue stream is high enough. And your cost of the debt is, meaning your cash flow exceeds your costs of the debts, your cash flow is high.

[00:31:40] Rick Rieder: And, I think for the U. S. government, it’s a really big deal. If we’re funding the country at five and a half percent, it’s different than when we were funding at zero or one percent for a long time. So, and to me, that is the whole deal. And I look at everything, whether it’s an equity, whether it’s a bond, whether it’s a piece of real estate, leveraged liquidity, cash flow, and it can, different forms, how much emphasis you put on each of them.

[00:31:59] Rick Rieder: But those are the three things. On every single asset, I want to challenge people, like, I can, I’m an illiterate, not that I necessarily have it figured out, but I feel like I can put those, I can take everything and put, and figure out those buckets, and then say, even if it’s a sophisticated, trenched, CLO, The real estate securitization and you’ve got super senior down to equity and medicine. I just want to know those three metrics. And then where are you in that spectrum of, are you at the top of the stack at the bottom of the stack in terms of how your cashflow gets to you? And I don’t know, I’d feel, I really feel like you can isolate any investment that way.

[00:32:32] William Green: And I remember as a very naive, I mean I’m still pretty naive, but I was even more naive in my early twenties.

[00:32:38] William Green: My brother and I bought an apartment in New York because he wanted to be nearer to this girl he was dating and I didn’t want him to get rich without me. So I bought a small stake in the apartment and then it was the late eighties and the property market kind of collapsed. And we were so naive.

[00:32:52] William Green: We had an adjustable rate mortgage and interest rates went something crazy. Like I think we were paying something like 14 percent or something crazy. And I was a young writer. I didn’t have much of an income. And I remember the terror of having lots of money going out and not that much money coming in, and I think in the same way as your early experience with the Canadian bond that went wrong, I just never wanted to be in a position ever again where I was caught short, where I was at risk of just finding. So I’ve just always lived within my means that I’ve never had much debt and I think it was just such a, that, so, so when I read you talking about just the importance of liquidity, it just deeply resonated with me personally, I think.

[00:33:34] Rick Rieder: So, I find it like, I look at a lot of companies in venture space and, in, They grow, some of them are very pragmatic about how they grow and they, because they’ve got a, usually they burn a lot of cash because you’re building the business, you got to spend on R and D and CapEx and hire people and you just got to grow and you, and so oftentimes you see where they grow too fast and they’re not managing their liquidity effectively enough and you could have the greatest business model that will explode and then it doesn’t, and then all of a sudden, like, something happened, exogenous, and your liquidity dries up and that this unbelievable business model goes away. And I think it is, yeah, I think you have to understand that that, when you think about in real estate, like I’ve made some sales of like you were describing, early on where, like the market went down and like, I didn’t have any money.

[00:34:23] Rick Rieder: And so you like you’ve got a seller, you’ve got to figure out something or you sell at a price that you don’t want to sell at. And so I think you just got to make sure the liquidity, like that to me is the first thing. And every day we’re looking at new investments, particularly when you’re looking at equity or venture or more speculative investments and like, have they thought through contingent liquidity?

[00:34:45] Rick Rieder: It didn’t, there’s a lot of things you can do around bank revolvers and things about what is your contingent liquidity if X hits the fan. And to me, that’s such a big deal.

[00:34:55] William Green: I also think it’s worth emphasizing the degree to which you’ve seen chaos on Wall Street and you’ve managed to survive and navigate it through a mixture of smarts and good fortune because you joined, and there was a very significant amount of good fortune because you joined EF Hutton, if I remember correctly, in July 1987 and then October 19th, 87, we had Black Monday and the Dow fell 22.6 percent in a day, so this firm that had been founded in 1904, is suddenly forced into the arms of Lehman Brothers for less than a billion dollars. So you then move to Lehman’s training program and then you work at Lehman basically for the next 19 or so years. And then you leave Lehman right before Lehman goes under.

[00:35:38] William Green: And Lehman, this firm that was founded in 1850, suddenly implodes and is like the biggest bankruptcy. in US history and I think it went from basically being the fourth largest investment bank in the country with 25,000 employees, including a hell of a lot of really talented people to suddenly just being gone in the blink of an eye and I wonder if you could talk about what those experiences of actually seeing EF Hutton and Lehman, these two great kind of august institutions with plenty of flaws and plenty of human failures and the like. What impact that had on you in terms of understanding how we live in a world of entropy where things fall apart?

[00:36:19] Rick Rieder: You said something about, I think is people don’t realize, I mean, even at EF Hutton, I don’t remember that well, but I think about all the people at EF Hutton that have gone on to do some pretty incredible things today that are doing some pretty incredible things.

[00:36:31] Rick Rieder: People always, was just a trainee, I was, and I’ve had a lot of respect for, and a lot of them just unknowably. Well, and obviously Lehman the same. You can have a business that’s got an incredible number of talented people and innovators and, thoughtful practitioners.

[00:36:45] Rick Rieder: And then, you just got to think about, the business model all the time and what is, not to go back to that point again, but what is the business model? Are you managing your asset liability mix? So you’re managing your contingent liquidity, you’re managing for that, very tail scenario.

[00:36:57] Rick Rieder: And I watched some of the companies, that I think have been successful over the years. That have had they don’t have had, tough experiences, but you know, Apple’s a pretty incredible and pretty incredible story that we watch about, how Steve Jobs managed on the failures out of, but then he, had different ways to manage it and how he raised in Google as well and how they managed, through some more stressful periods.

[00:37:22] Rick Rieder: And thought about, you’ve got to evolve, you’ve got to innovate, you’ve got to change, and you have to think about the same point about, just don’t let the business model in a or your structure, your capitalization, your lack of liquidity, disrupt that. And yeah, no, it’s a pretty, even with the most talented people, you can certainly, if it’s not structured the right way, you can have like epic disruption that ends the game.

[00:37:43] William Green: It’s also quite striking the degree to which luck plays a role. Right. I mean, I remember Howard Marks once saying to me, it would sort of break his heart that he would see these people who got washed out at the age of 50 who were just really talented and they just got really unlucky with where they happened to be when things fell apart.

[00:38:01] William Green: Can you talk a bit about just luck? cause it seems to have played a huge role in, in, in your life and obviously you’re dealing constantly. with markets where things can just go against you that sort of undeservedly and can kind of hit you really painfully.

[00:38:21] Rick Rieder: So am I not, so first of all, I’d say funny, being lucky I’ve found is generally you usually put yourself hopefully in a position that, that is, more designed that, that is not just based on fortune, but I’ve had some pretty bad.

[00:38:34] Rick Rieder: I would say over my career, like you said, some things that have worked against that are just like surprising and bad luck are being so, but I think the only thing you can do is try and orient yourself in a place where that misfortune at any given point in time you’ve tried to anticipate In some way, how you would manage through it, but listen I think, I’ve always found like you see a lot of people in this industry who had like one good trade and they got, and I would say maybe a lot of some good work and a lot of luck and then they try and replicate it over time and they’re like, it doesn’t work the second time, the third time.

[00:39:04] Rick Rieder: And I found this with trades and investments, usually if you have a great trade, and you’re like, and then you think about, gosh, I remember that. That’s, that happened. And I’m seeing that again. It usually never is successful a second time of the same amplitude that the first time. And usually it doesn’t work.

[00:39:20] Rick Rieder: And so, you always, think about, like, if you’ve done your work and you’re trying to think about, like, there is, there’s a series of environmental conditions that are probably completely different from the last time you did something that worked and then just think through. What are these new environmental conditions that can make that successful or not?

[00:39:36] Rick Rieder: But I’m pretty blown away by, you see a lot of people that have one big hit and then it’s hard to replicate it. And then you see a very select few. I don’t, I wouldn’t necessarily consider myself in this. There are very select few that seem to get a, get lucky on their positioning of their ideas more often. And I tend to think that they’ve, through a lot of guile and work and, and thoughtful positioning got to that position.

[00:39:58] William Green: Well, we’ll talk about this some more because I think a lot of I, I want to talk about two things that I think have been really key to your enduring success, one of which is sheer intensity and drive.

[00:40:10] William Green: and one of which is an obsession with data. And it seems, we could start with either of them because it seems to me, they’re both so central to why you have actually survived in this business. I mean, part of it seems to be, I mean, I guess the good fortune that you ended up at Blackrock, right?

[00:40:25] William Green: Where you’d set up this hedge fund in May 08, right? A credit hedge fund, right? Right before Lehman went under and Lehman had a stake in it. Blackrock had a stake in it. So then you go with your team of about 42 when everything goes. Haywire in the bond market and the fun got clobbered. You go work at BlackRock.

[00:40:44] William Green: So you had enormous access to incredible amounts of data and human, human intelligence there. How is just the fact that you have enormous data resources really been kind of this, the central advantage, the central edge that you actually have these days?

[00:41:03] Rick Rieder: I mean, I think it’s all about, I mean, part of what, part of why I was so intrigued to come to BlackRock, I mean, we had a tough go, and then, then things were doing better in 09, and part of why I was so intrigued by coming to BlackRock is it was At the time, I thought, the epicenter could be the epicenter of finance and certainly it’ll be more so than I generally would have anticipated.

[00:41:22] Rick Rieder: But you know, risk management tools, analytics, you have a system called Aladdin that is pretty incredible. It allows me to stress test, scenario analyze, look at return attribution and like what’s daily, what’s going right, what’s going wrong. And that data is extraordinary and, your ability to like, you can make some bad calls.

[00:41:39] Rick Rieder: I do make a lot of bad calls. As long as I know, because I’ve stressed it, I’ve looked at the scenario analysis, as long as I know what’s my downside, how will it impact the rest of the portfolio, how does correlation work, so if I’m wrong on one thing, does it impact the other parts of the portfolio, or will other parts suffer at the same time?

[00:41:57] Rick Rieder: Like, that to me is like the whole gig. Like, if you have You know anticipating markets or the economy. So, I don’t understand top down investing at all. I don’t, I mean, I’m very much bottoms up and meaning like I, I study companies, like, I like people follow surveys, I think way too much to understand like, how are people leaning?

[00:42:16] Rick Rieder: And I think these surveys are crazy overstate in terms of influence, but if I can study why is the company spending on R and D or why are they laying off. People or why they have grown there, why their inventory levels up, like what has driven their inventory levels up. And then if you look at it across a series of companies and all of a sudden you can say, okay, now I understand why employment in the economy is starting to slow or what have you.

[00:42:39] Rick Rieder: But that’s the only thing I think works. Like, I think trying to do it from the top down I just don’t think it’s durable because you don’t understand the underlying catalysts or incidents to drive the economy or a certain sector of the economy. So I really believe you got to get. In fact, part of what AI is so exciting is the ability to do this at scale and it actually run models and run AI to say, home builders, what’s happening in home builders around what, how much have they had to provide in their own financing to drive their business.

[00:43:08] Rick Rieder: And if you do it over scale and look at different, it’s a fragmented industry off all of a sudden, I can look at the industry through AI plants, that’s pretty darn exciting. So I don’t know why I really believe in that, that you got to start from the bottom. And work your way up and, assimilating as much data into your process is a key to that.

[00:43:27] William Green: So you have access to more data than almost anybody, and in a way that puts you in a more extreme version of the challenge that most of us face, which is somehow distinguishing signal from noise, somehow figuring out, What actually is relevant and you do these kind of legendary monthly calls, right?

[00:43:46] William Green: I think over a thousand people sometimes call in for these calls to hear you opine about the markets and the direction of the economy and the like. And I wanted to get a sense of what your process is where you’re taking this immense amount of information, this immense amount of data, a lot of other people.

[00:44:01] William Green: I guess have access to some of it but you’re kind of somehow crunching and distilling and synthesizing it so that you can take a view, so that you can kind of point the ship in the right direction and then kind of trade within that framework. What’s the process and what can we learn from that about, how to distinguish real news from just noise.

[00:44:21] Rick Rieder: So, I mean, I think that’s one of the keys to investment, part of the great, the best I’ve seen is just the ability to actually isolate, that’s an important piece of news. So, the only way, and maybe it’s embarrassing, it’s somewhat archaic. Like, I look at, I brainstorm with my team and we say, I throw out some ideas, what about this, what about that, what about this?

[00:44:38] Rick Rieder: And now the team starts to pull a bunch of the data and put it on graphs and look at tables and what have you. And then. I literally spend like on a weekend, this is crazy, but I spend on Saturday. Saturday when I do these monthly calls, I mean, a good 10 hours and then Sunday probably about the same and then I try and literally put a, look at all the data and say, and then, you get these aha moments.

[00:44:59] Rick Rieder: And maybe it’s just like I say, archaic that that I, it takes a while to think of like, why is dollar yen doing what it’s doing? Why are two year swaps doing what they’re doing? What’s happening to the cross currency basis and like all of a sudden, and then you see like. Some things tend to like to come here like I got it and I got it and I think the only reason why I think so many people dial into these monthlies is, we try and take all this data and put together a somewhat cohesive pattern of this happening and that’s happening and that’s happening. The conclusions should be X, Y, and Z, which are not always right. But the idea of you take so much intense data to try and to try and come up with your set of conclusions. And I just haven’t figured out another way to do it. And like I say, AI is helping us get more of the information and the data.

[00:45:44] Rick Rieder: And I work with counterparties who helped me with a ton of it, who have, their own internal systems and or C flows or research. And then they help me and they send over a bunch of information based on, trying to go down a certain stream of investigation. And then, they’re like all put it together.

[00:45:59] Rick Rieder: And by the way, like 90 something percent of what you will, it’s like noise is garbage. I’m like, okay, this is happening because somebody was long or somebody was short and it’s driven the currency to a certain level and you’re trying to like, okay, that doesn’t make any sense. But all these pieces seem to have a cohesive stream to it that, you know, and so we, I tend to move my position around more around those.

[00:46:19] Rick Rieder: Thankfully they’re not weekly or I’d be divorced. But the thankfully my wife lets me spend one weekend a month. Socially isolated and they and the I was trying to put all these things together, but I found it’s like critical node to our to how we position and we manage it. But then I think, thankfully, I think a lot of, a lot of people have found them interesting.

[00:46:39] William Green: So if you were actually forced to focus on just a handful of pieces of data, if you were told, look, you can only have two or three pieces of data. and you just abandon everything else, just not available to you, when you’re trying to figure out the future direction of inflation and interest rates and bond yields and the like, if you really had to distill it down to the absolute essence of what’s most important to you, what do you pay attention to? What would be most valuable to you?

[00:47:07] Rick Rieder: Wow, that’s a good question. The so, how do I think through this? The I would throw out a lot of survey data because I think it’s noise and oftentimes, I shouldn’t say it’s all noise, like oftentimes how people are positioned is helpful and, it gives, tends to gives you some directional help at times around inflection points, but I find that most surveys predict nine out of three right events.

[00:47:30] Rick Rieder: So if you said to me, I can only use two or three pieces of information or data, I would always err on the side of looking at corporate activity and, look and reading too many documents around, what’s happening with companies and then, the consumer, consumer data, I mean, 70 percent of U.S. economy is consumption oriented or service oriented. And today, to me, I’m always amazed like people look at the, the same analogs for how the economy operated in the seventies and eighties and the economy is much more sophisticated, much more service oriented, much more mature technology oriented.

[00:48:01] Rick Rieder: And so I really like digging in terms of consumer service, what’s driving the service sector and that, that to me, it gives me a better, like, I still can’t believe that people spend so much time on some of the manufacturing activity. Which is, not what drives the economy today.

[00:48:17] Rick Rieder: Particularly in aging demography, it’s healthcare and education and service and technology. So I don’t know why those are the things I tend to focus more on, but it is definitely the hard data, really good, hard data. And oftentimes the big economic releases are an aggregated mess because they tell you, Oh, it’s up 0.2. Well, 0.2 means nothing because You have one sector that’s killing another sector that’s getting crushed. Like what is it telling you? Like I don’t even like, it’s that meaningful. The only thing is markets respond to it. So like I’ve learned like we can, you have to be respectful of your data markets, move on sentiment.

[00:48:50] Rick Rieder: And if, you could know like what’s happening in inflation, we’ve studied the million prices and look at, but like the markets, market’s focused on the CPI report. If it’s up 0.4, up 0.3 or 0.2, it’s like that’s what the markets move on. So you got to have the good data, but then be really, thoughtful about if the markets are going to react. To, some pieces of news that are, less robust, you also have to consider that in your investment process.

[00:49:13] William Green: Yeah, I remember hearing you say at one point markets are all about turns in the data. And it was one of those things that is sort of so obvious and yet that I hadn’t really thought about that, that because I guess so many of the investors that I focus on the whole, are these much more long term investors and in a way, it goes back to the famous Ben Graham statement where he said in the In the short run, the market is a voting machine, but in the long run, it’s a weighing machine.

[00:49:39] William Green: And so most of the investors I look at, like, like the sort of Munger Buffett types, they’re working on the basis that they want the market to be their servant, and so they’re taking these very long they’re taking advantage of the short term volatility to place these kind of long term trades. You, in a way, are often doing something very different, right? Where you’re playing the part of Graham’s statement about the market being a voting machine.

[00:50:03] Rick Rieder: So, I’d say a couple things. First of all, I don’t really like bull markets. I get grumpy in bull markets. Because I think the opportunity set like, that to me levels the playing field, like everybody jumps on the drum, like we’re all buying together and you see this in some of the new issue markets, whether it’s the IPO market, the equity market or new issue market and credit, like everybody, everybody likes to hold hands, get a warm feeling around.

[00:50:23] Rick Rieder: We’re all buying together. It all feels good. And the consensus movement, right? I find that incredibly unfulfilling. And I don’t think there’s a lot of money in it because everybody is doing the same thing at the same time and probably getting along at the wrong time. I actually find fragmented, dislocated markets, and often those which are bear markets, are much more interesting and where there’s much more return to be generated because, you are, prices, people are, I always say this, markets are going to have five times faster than they go up.

[00:50:50] Rick Rieder: And it’s really the case that, markets iterate higher, people take profits. When they go down, people don’t like to lose money, and that’s where there’s real opportunity, and that’s where I think it becomes much more interesting, where you can use your research, use your analytics. And try and figure out, gosh, something is something is overdone.

[00:51:09] Rick Rieder: And that to me is a whole lot more interesting than just playing along. And by the way, sometimes you got to do this. Sometimes you got consensus can be right for a period of time, you just got to ride alongside of it. But I don’t find that nearly as fulfilling as markets that are dislocated, disjointed and where you can do your work and really.

[00:51:26] Rick Rieder: Try to isolate. Gosh, there’s some real value here and I think some of the, some of the people that I found that, that are, David Tepper at [inaudible] like, he’s unbelievable. It’s like when markets are broken like he goes to work. And I think that’s, I think that’s a very cool way to that’s where I think the real money is.

[00:51:43] William Green: When you look at friends of yours, like David Tepper or Ray Dalio or Paul Tudor Jones, or I guess Stanley Druckenmiller these legendary investors often kind of, kind of speculators in a way, traders, what do they have in common? I mean, what’s the. And does it in some way remind you of what you see, I know you’re a huge sports watcher, does it remind you of what you see in the great athletes, in a way?

[00:52:09] Rick Rieder: So, I mean, they all take a lot of risk. And they all like having, maybe to use that sports metaphor, they all like having the ball in their hand at the end of the game. And there, they’re pretty, they like being the decision maker.

[00:52:22] Rick Rieder: They like being the one who is at the inflection point, like to be the person, willing to take that risk. And I think all of those people have had to try, they’re very different in terms of how they create alpha or how they create returns, they’re very different philosophies and, but they’re all, I think they’re all pretty extraordinary in that they like taking risks.

[00:52:43] Rick Rieder: They like being, making the decision and they, and in very different ways. All of those are incredible students of the market and what they’re trying to, what they’re trying to do. And some are really good at technical. Some are really good at big picture where we are versus history.

[00:53:00] Rick Rieder: Some are really good at distress and understanding distress, but they’re incredible students. of the markets. And they’re willing to, they’re willing to take risk. I mean, they’re willing to say, okay, I’m willing to be talking to separate the news from the noise once they understand the news. And what’s a critical inflection point or the regime.

[00:53:20] Rick Rieder: And I spent a lot of time trying to think about regime and they’re really good in different ways of saying, okay, this is a regime evolution. Time to go. And I think they’re all pretty consistent around doing that.

[00:53:32] William Green: That seems also very central to your process this idea of regime identification of identifying the type of environment we’re in and then positioning yourself in a way that’s sympathetic to that kind of regime and then trading within that framework, given that’s something that’s so central to your approach when you look at where we are today, say with a six month view or a one year view, Where are we? What do you what’s your bet in terms of interest rates, inflation, bond yields, and the like, like is, if you had to distill it down to give you a picture of basically where we are in this sort of the pendulum swing of markets, where are we now?

[00:54:16] Rick Rieder: So, I actually don’t think, like I know in the media and in TV yesterday or other. They talk about a soft landing, hard landing, and I actually don’t think like a modern economy that is driven by services tends not to go through those epic cycles. It tends to be much more stable, and I think we’re in a period of we went through massive amounts of fiscal and monetary stimulus.

[00:54:39] Rick Rieder: And so what happens is the economy tends to follow the demographic curve with incredible consistency. Over the intermediate term, but then once you use policy aggressively, you come off the curve, but then you got to get back on the curve and over time you’re going to get back on the curve. And I think we’re in the process of getting back on the curve and we got to, and part of what I’m talking about, there’s too much debt on the US economy.

[00:55:00] Rick Rieder: So we was utilized to, to get off the curve because the pandemic was so brutal for the for the system. So, but now we got to get back on the curve, including. repaying some of the debt, including funding all this debt. And I think what’s happening is we’re getting back on the curve. And I and by the way, I don’t think it’s, you still have a consumer that’s got savings.

[00:55:19] Rick Rieder: You still have a wealth effect that’s reasonable on the backside of this epic monetary and fiscal stimulus. So you and you have corporate capex. That’s spending on technology and innovation, largely because you have to bring your costs down now because you can’t keep decreasing price anymore.

[00:55:34] Rick Rieder: I think price elasticity is coming back in. Like we’ve raised the price. Okay. We can’t raise the price again because the economy is moderating cut costs. What does that mean? I think inflation is moderating growth is going to, is coming down, but I think to a reasonable place that and by the way, the level of where the economy is after you grow nominal GDP at such high levels.

[00:55:56] Rick Rieder: You’re still in a pretty darn good economic condition that allows companies to throw off cash flow, et cetera. So, in a way I don’t, I think we’re in this period of moderation from being way above the curve. I don’t think it’s augers for deep recession, different in parts of Europe where you got to be, a bit careful.

[00:56:14] Rick Rieder: China got to be a bit careful, but I think the U. S. economy is much more of a, by the way, I think both of those will be fine as well. But I think we are moderating and I think the investment paradigm from here is create a lot of income because now we have this incredible blessing of this yields really high and you can create income at very attractive levels because of that and then try and marry that to an, to a stock market or, whether that’s a venture capital or others that You know, we’re going to be, just okay for a period of time. And so get a lot of income and then try and manage your return in beta or equity like investments for, what is less spectacular return from here.

[00:56:54] William Green: If you’re a regular investor and you, you’re not like hugely excited by bonds, but you’re aware that after they got crushed. In 2022, there’s, the environment is sort of changing a bit and there’s a little more opportunity there.

[00:57:07] William Green: I mean, you’re an expert on asset allocation within BlackRock. How should we be thinking about taking advantage of the opportunities if, say, we have a diversified portfolio and we want to reduce risk and get some generous yield. Say we want to make six or seven percent off bonds without crazy risk. What do you, what’s the simple way to do it without needing to be a bond expert?

[00:57:31] Rick Rieder: I mean, I think today, I mean, hey, there, there’s ETFs, there’s mutual funds that are, studying people’s style or what have you, that can get you six and a half, seven. And it’s, if rates come down, maybe the, maybe that is six, five and a half, six, but I think we have some time.

[00:57:47] Rick Rieder: I think the central banks. He will still keep rates. They want to make sure they put a stake in inflation and, but boy, I, by the way, treasuries work, things like high quality assets like agency mortgages, investment grade credit, and there’s some ETFs, there’s some funds that get you that, and you don’t, I mean, this is one of these unique points in time where, gosh, you can buy high quality assets and clip a lot of yield.

[00:58:10] Rick Rieder: And so it doesn’t mean, no, there are points in time you got to use like the emerging markets. Do you want to buy Brazil versus Argentina? That gets really complex. You want to buy, tranche, complex commercial mortgage security hard, hard to do. There’s some funds that I think do it well. Hopefully we have some of those that do well at it.

[00:58:25] Rick Rieder: And but otherwise today we’re in an environment like, gosh, treasuries. pretty attractive mortgages, investment grade. So buying high quality yielding assets through funds, ETFs or outright, like this is a pretty good time to get income. Is it, even an investor that’s not deep into it every day.

[00:58:41] William Green: And you’ve said before that actually, unlike in the stock market, it’s actually much easier to beat the indexes when it comes to bonds. Why is that?

[00:58:53] Rick Rieder: So there are a couple of things. First of all, the, it’s interesting. You would never buy a company that puts on more and more leverage. And, but you think about the indexes for fixed income, the more debt you put on, the bigger you are on the index.

[00:59:04] Rick Rieder: And it’s different, different than the equity markets, the most, it’s almost counterintuitive in the equity market, if the company’s doing well and the market cap is high, there are a lot of things they could do. In bonds, the more debt you put on, the more you’re in the index.

[00:59:15] Rick Rieder: Why would you ever want to buy that? And so the idea of being first, get the, who is over levered. And by the way, where are you not getting paid for it? They’re parts of the index and they’re 68, 000 securities and fixed income is different than the S& P 500. They’re 60 at that. So there are so many assets that trade too rich because central banks, reserve managers have to own them and like, get rid of them.

[00:59:38] Rick Rieder: They don’t give you any yield. They don’t do anything for you. So kick those out. And I think those, can you create, 25 base ones or 50 base ones of alpha and kick out all the stuff that’s not worth it. And then, use research or analysis, et cetera, that and think through where you are optimizing return versus you versus your risk allocation.

[00:59:58] Rick Rieder: And then, we do a lot of bespoke financing that is, it’s hard Triple A or CLO. I Can never in my personal account do that, but gosh, if I can understand the collateral, the structure of the manager, et cetera, like, boy, they trade pretty cheap relative to other AAA assets.

[01:00:14] Rick Rieder: And so, your ability to tap into a bunch of those is, by the way, not just we for sure, but I think it’s something like 85% of fixed income managers outperform over, over time. The indices and then I think it’s because of the structure of the index and so many securities you can tap into that allow you to do it.

[01:00:33] Rick Rieder: And by the way, I’ve learned over my career. income wins. And if you can manage your income, and I like it’s the secret sauce or for fixed income, if you can run a higher level of income and just manage your downside, carry wins. It compounds beautifully. And you see this and like, why is the high yield market over time do Pretty darn well, even relative to equities.

[01:00:53] Rick Rieder: Coupon income wins, and so, it’s a part of the, I think the secret sauce in fixed income is get a, get as much income as you can in, and then try and manage the downside of that.

[01:01:04] William Green: We talked a bit about one of your key competitive advantages. Which is just the sheer amount of data that you have and your ability to analyze it and get a picture of where you stand and it strikes me, just studying your life and your career, that the other huge advantage that you have is a more personal and temperamental one, which is, The sheer fanaticism of your drive and your work ethic. And I wonder if you could start by talking a bit about your typical day, when it starts, what you do, cause it’s unusual and, I remember that Larry Fink had a great quote, the CEO of BlackRock, who said, his particular strength is his headfirst approach to everything he does.

[01:01:47] William Green: He does everything with an incredible passion and he said I tend to like passionate people and he said more than 50 percent of what attracted me to Rick and having him come to Blackrock was his personal being and his character. So passion and intensity is central to, to the Rick Reader kind of modus operandi. So tell us about your typical day.

[01:02:06] Rick Rieder: So yeah, no, I’m a, so first of all, I have signs all over my house. That’s why I have two, two, two common philosophies. One is work hard, play hard, give back, reboot. Like I run a really simple and the other one is life is not a dress rehearsal. Like I’m in it, I have a very simple life, I have my friends, my family, and they yeah, I know I have my job, and then and then, I like sports and but I have a really simple, the three sports teams that I’m super passionate about, and they but I, it’s a really simple life, I get up early, I get up crazy early, I get up 345 in the morning, and, I look at markets, I oftentimes trade early in the morning, and I work out, and then and I go on a pretty intense all day And I really believe in this idea, work hard, play hard, get back, reboot, and then like, you got one shot at it, and like, I want, I think the life affords you the affords you this, opportunity to take advantage and do a bunch of different things to, hopefully contribute, and so I’m pretty intense about it.

[01:02:54] Rick Rieder: I go, like, my meeting date, and I know there’s a bad, there’s a, CEO Larry says this all the time that, you got to take time off in space in your day to think, I schedule meetings like 15 minutes and strategy sessions and research sessions. Like every 15 minute quadrant is taken up and it’s probably the wrong, but I, anyway, I really believe there’s so much we could do that.

[01:03:14] Rick Rieder: I don’t like to do it. I know, I haven’t said like, there’s a lot of things that I don’t, I’ve just determined maybe I was just getting older. They’re just certain things that I’m not going to do in life, but I, but I believe in, I like doing what I like to do and I believe in putting a lot of intensity to it.

[01:03:27] William Green: So part of it, part of the strategy, and I’d like to break this down more because I think it’s both very idiosyncratic, but also it points us towards the sort of an understanding of the extreme end of high performance. So if we break this down a little bit, part of it is did you absolutely love what you’re doing so you so it’s not that burdensome for you to spend 20 hours at the weekend once every four weeks studying the market that’s oh yeah and you read a lot other weekends as well just maybe not 20 hours is that fair to say that just there are those people who actually loving it is kind of at the heart of this.

[01:04:04] Rick Rieder: Totally. My wife always says to me like on vacation I’m reading work stuff, and she’s like, what are you doing? And I was like I, if I read Apple’s earnings report and I could understand like why are the peripherals doing, doing what they’re doing? Why is, why they’re sold so many iPhones?

[01:04:18] Rick Rieder: Are they selling it into India versus China? Like, to me, that’s the coolest thing. I mean, I find it incredibly intriguing. And I know I enjoy it. I’ve it’s just like, you can’t keep up with the amount of stuff that that’s out there. And so, yeah, no I, it’s like a, it’s literally, I imagine it’s like, if you’re a treasure hunter.

[01:04:34] Rick Rieder: Reading a 10K for, I think for most people wouldn’t be that exciting, but like when you read through it, like all of a sudden you realize like, wow, now I realize their cashflow is driven because they’ve been cutting costs as opposed to reinvesting in their business. Like, I, I think I found something that, I thought I found that like a challenge and I find it super fun.

[01:04:52] Rick Rieder: So, but if you didn’t have that, if it wasn’t interesting to you. Yeah, I know that it would be work and I don’t, I find it, like I said, the business is fascinating. I mean, there are not many businesses like this that are so dynamic and so, ever changing that that become intriguing.

[01:05:06] Rick Rieder: It’s part of, it’s very akin, like you were saying with sports, like what’s so cool about sports is like, you’re just watching a constant dynamism taking place and the score changing and like what happens and how do you react and how do you react on the fly? Markets are quite similar to that, markets, economies, businesses are quite similar to that.

[01:05:23] William Green: I remember Peter Lynch saying to Bill Miller early in Bill’s career that Bill said, can you ever slow down? And he said, not really. He said, they’re really two gears, either full speed ahead or stop. And Bill said to me, yeah, that’s actually about right. Do you think that’s true that to play a game at this kind of level?

[01:05:41] William Green: The sort of game that you’re playing, you actually can’t slow down because you would lose your sort of total mark, because in a sense, you’re having to carry all of this market information, economic information in your head at once.

[01:05:53] Rick Rieder: No, my wife will tell you, I have to say it all the time, there is only, there are only two calibrations on the dial, it’s ten or zero.

[01:06:00] Rick Rieder: And, when I, when, I collapse at night, we run the engine really hard, and but I really think that, it’s so hard, and I’ve watched a number of, it’s so hard, I mean, the intensity they have to bring to it. And I think you’re either all in or you’re not.

[01:06:13] Rick Rieder: And I think it’s so hard to do it in a peripheral way. And by the way, not to say that some people aren’t hugely successful in what they’re trying to achieve and looking at slices of the market or slices of, anyway, there are, and there are obviously very varying levels of success around that. Well, you know how you want to achieve what you’re trying to achieve, but yeah and I think there’s an intensity to, I mean, same thing with playing golf and etc. I feel like, whatever, whether it’s right or wrong, I feel like it’s either a 10 or a 0 and I don’t, like doing this at 6.

[01:06:42] William Green: And when you get to the end of the day and it goes down to a 0 and you’re watching sports, I know you like the Baltimore Orioles and New Jersey Devils and people like that, You kind of, you, when do you fall asleep, when do you, like, what’s the evening like when it’s sundown time?

[01:06:58] Rick Rieder: I said as soon as I sit down. The yeah, no, it literally, I mean, I, it’s all of a sudden, I sit and I turn, depending on the game, I know you turn it on or you turn on whatever show you’re watching or reading or what have you. It’s pretty, as soon as I as soon as you sit on the couch, it pretty much, it’s almost instantaneous that the , so I, by the way, I do a lot of work and a lot of research at night, and I try and try and not sit down, or I try and do it in a way that I can’t fall asleep.

[01:07:22] Rick Rieder: But yeah, no, at the end of the day, it and by the way, I, I don’t, I tend to recharge really quickly and I do now I study out these W band. that I think is incredible because it, shows you your strain. It shows you how you’re sleeping. I get in a really deep and REM sleep, whether that’s because you run the engine so hard early, during the day, but I tend to sleep intensely.

[01:07:42] Rick Rieder: And by the way, it’s happened where, we’ve had like something happens in the house or like, it’s a loud and like, I don’t even hear it because I’m so, deep in the sleep. But I tend to, I get like really deep REM and deep sleep and so I tend to recharge pretty quickly.

[01:07:57] William Green: And you’re just sleeping about four hours or what?

[01:08:01] Rick Rieder: Yes, sir. So I take four and a half night. And I’d like to say, because I think you get into, get in a really deep sleep quickly, then I tend to be like, I don’t wake up. tired. I got, and there was an interesting thing that we did, we tested our stress and I’ll never forget this.

[01:08:18] Rick Rieder: They said to me They tested the using this different form of the wound band, but they said anything, your stress level peaks. And I said 1130 at night, I said, no, I get it. And I, and they said, when you, they comes down, I said, they said at about three 45 in the morning, and I said, why do you think that is?

[01:08:34] Rick Rieder: I said, no way. That is because I tell you, when I’m in, I’m in control and I can see the markets. And it’s a very different paradigm than when I go to some, I have to put my phone down and by the way, they tested this during the time that China was really volatile and was driving the markets, but I know, like, I don’t like that feeling of not seeing what’s happening in the markets moving around when I’m critical, not in the market.

[01:08:56] Rick Rieder: Not in control of our, trajectory around our po, our positioning. And so it I don’t know, I human mind is pretty crazy that way that you liked it as long as you’re in control. You can see the markets, even on vacation. Like I checked the markets nonstop and I feel better.

[01:09:10] Rick Rieder: I feel more relaxed if I can do that. Like, I don’t, I really don’t like the feeling of like, people say, put your phone away. Like, I feel much more relaxed if I can at least peer at it periodically to understand, that things are okay and so.

[01:09:25] William Green: So I wonder if part of it is actually just knowing what type of weirdo we are. Like you, you have to be a really great operator of the machine called Rick Rieder. Right? So, you operate on different amount of sleep than most people and I mean, it’s just, like it seems like there’s something kind of anomalous about the way you operate.

[01:09:47] Rick Rieder: Yeah, no, I’m, yeah, and I say, pretty intense level, but you know, it’s interesting, like we, we’re talking about earlier, like, if you’re not motivated to do what you’re doing, like, I just wouldn’t. And now I feel like I’m you’re so energized by what you’re doing, not just at work, but whether it’s family stuff or philanthropic stuff or, sports stuff that I follow. I’m so energized by what I’m, by what I’m doing. I feel like, I just want to get up and do it and or participate in it so.

[01:10:12] William Green: Well, I had this really interesting image of you doing nighttime trading, right? Where you would get up at 3:45, you kind of check Twitter and the like and check the markets. And then my sense is that you’re doing a lot of trading between 4 am and 6:30 am, and you had this lovely phrase where you talked about the unchaperoned European trading hours, can you talk about what you’re doing during those hours, because it seems in some way To embody a lot of what you’re about, your love of the markets, the fact that you’re getting some kind of edge because you understand the meaning of the data that other people don’t necessarily understand that suddenly, where suddenly an event is happening and you’re not competing with that many people who understand what it means. Talk about those early hours.

[01:10:54] Rick Rieder: So it’s a hundred percent right. I mean, I, part of it, you’re saying this, the markets are on chaperone at those times, at that time, most of the time the markets in the 24 hour cycle, Asia’s open while the U.S is open or Europe’s open while Asia’s open, et cetera.

[01:11:07] Rick Rieder: And there are times where you just have a small set of traders. Generally that are operating and, I would say they tend to overreact to things and it tends to be more of a, I describe it more of a trading and they tend to overreact to nuanced pieces of data. That are just not that interested or not that meaningful.

[01:11:28] Rick Rieder: And so what happens is in those markets that tend to be pretty thin, that, there’ll be a piece of news and the markets will like grossly to overreact to it either way. And I find like being an almost, I would say 90 percent of the times that I trade in those hours, if the market’s up, I sell it and vice versa.

[01:11:44] Rick Rieder: And because it almost always. not always but it almost always overreacts because it’s a thin market and it reacts to superficial data. Some of us are like this. And similarly, it always found like you differentiated advantage or in markets for you to picking. The big liquid, the dollar euro.

[01:12:03] Rick Rieder: It’s hard because it’s big, it’s liquid, it’s got flows from non-economic players, corporates, sovereigns, central banks, but you know, the markets, if, we’re looking at a CLO that we may be the only one or two or three people and we could look at the structure and analyze it, what have you, the odds almost definitionally are much better. And so I tend to like those markets that are less efficient. That are there’re less people parsing out or eliminating the alpha that’s there.

[01:12:32] William Green: It seems like there’s such a simple but important lesson there about just playing games against weak players where you have an edge.

[01:12:42] Rick Rieder: And so I don’t, I mean, I, by the way, I, one thing I’ve always said, I always feel this like the competitors and people that are in there are not smarter than me or as smart as me by but, and so I don’t know the necessarily weaker players. I think there is. I would say fewer players that are in, that are, investigating a specific situation.

[01:13:02] Rick Rieder: It is a real estate transaction we’re involved with, they’re probably, we’re probably not competing against a thousand people that are doing it. And, if we can look at the mezzanine part of the structure or the equity, we’re probably one of few players that are going to do it.

[01:13:15] Rick Rieder: And so your economics tend to be better. So it’s definitely not the weaker players, but I just think if you have, the ability to tilt the odds a bit more in your favor versus where, most people in the markets like to be in the hot, really popular big areas and I just think. there are too many people and then it squeezes the alpha out of it.

[01:13:34] William Green: Talk to me about how you deal with just the sheer pressure of what you’re doing because one of the things that’s very distinctive about your position is just the incredible range and size of responsibilities, right? We mentioned that you’re overseeing about 2.6 trillion dollars. I think you have about 350 people in the fixed income team. You’re running various funds like the strategic income opportunities fund, which I think on its own is about 36 billion in assets. Maybe my numbers are outdated. Then you’ve got the firm wide BlackRock Investment Council that you’re the chairman of. So you have this enormous array of both management responsibilities and investment responsibilities. Do you ever get overwhelmed by it all? Are you, like, are there ways that you’re dealing with the pressure that are instructive for the rest of us? Because I think all of us are struggling on a no doubt smaller scale in most of our ways, but all of us are struggling, I think, with a sense of being kind of overwhelmed, not knowing quite how to juggle things in our lives.

[01:14:33] Rick Rieder: So it’s hard. I mean, I, I’d be lying if I said I figured it out or even have any sense of mastery over it. I think there is, listen, I think one of the things I always say is you try and put things into a box and try and think about, strategically, what it means. And then, you got. Definitionally all, I get bad news all day, like all day. Whenever, even though you this argument about tennis players, you get 54% of the points when 54%, like you’re getting 46% of the time you’re getting bad news.

[01:15:01] Rick Rieder: And so, I just think I, I know I’m any good or I, but you know, you try and like put it in a box and you recognize that statistically you’re going to get bad news. a lot. And that, but don’t let it overwhelm you or don’t let the stress overwhelm you. And then, statistically, by the way, and I will say like, there are days like you get three things in a row that go wrong in a significant way.

[01:15:23] Rick Rieder: And like, wow. And like, all of it, but you think about over 365 days, statistically, that’s always going to happen. And what I’ve learned is like, just, you got to respect the fact that is going to happen. And to have the highs not be too high and the lows are not too low. But I’d be lying if I didn’t say, like, when things are going awry, or you have those three things in a row that went wrong, or three days in a row that you lost money, I can’t say I’m not in a bad mood.

[01:15:46] Rick Rieder: Like it I think what part of what drives you is like how to correct when things aren’t going wrong. But listen, I’m an [Inaudible], I enjoy them and I. When I go to see the doctor and we were talking about it, I like stress. I like pressure.

[01:15:58] Rick Rieder: And I think I really believe this. So it keeps people going. And I think once you like eliminate all that, the intent, the stress. You tend to decline, I think. And but anyway, I like different people and different levels of that. But anyway, I like it. I like doing a lot of things at once.

[01:16:16] William Green: And you’re using the sense of pressure in the sense of stress in your body as a kind of as a signal in terms of your trading and the way that say Soros would talk about. Watching his back pain as a, as an indicator that something was wrong in his portfolio, or I remember Jeff Vinik, who ran the Magellan Fund in his early 30s, telling me that sometimes he would buy a stock that was so out of favor that he would literally feel nauseous, and that was he learned that was a really good sign. Like, how are you actually using your stress so that it helps you as a trader?

[01:16:52] Rick Rieder: So, come on, so by the way, it’s always nice to be even considerate of people like that because I have unbelievable respect for them. But I, so I think a couple of things. One, I’ve learned to walk around. And I feel like, like you can just stare at the markets and stare at every blip and like, I’ve learned, like, just walk around, get away and take a walk around the block and, you got to get away from, particularly when things aren’t going the way you expect them to go or want them to go, I’ve learned to like, just get away and, I’ve also learned there’s a really wild thing.

[01:17:19] Rick Rieder: Like, I find that Mondays and Fridays are less effective as an investor than the middle of the week, and I don’t know whether that is you’re just winding down, markets are less liquid on Fridays, or Monday, there’s a little bit of You’re just not the intensity isn’t there yet coming up a weekend, but it’s interesting that I find I try not to, particularly on a Friday, I try and maybe tone it down a little bit around, all the decisions you’re making and all the things you’re doing.

[01:17:46] Rick Rieder: And I, whether that is anecdotal or there’s a quantitative basis behind that, but I definitely find that is a case you need to take a bit of. A bit of a break, and I think, I think part of why whether it’s a vacation calendar or otherwise, that to try and try and step back from some of these things at times.

[01:18:02] Rick Rieder: I don’t know there’s a physical dynamic around it, other than I know I need to, like, when things aren’t going right, take a walk around and just rely, try and think about the big picture as opposed to the specifics.

[01:18:13] William Green: And are there things that you’re doing to manage your energy level? Because I know you’re wearing the whoop strap you’re wearing your Apple watch you love data in every area, whether it’s with your philanthropy or markets or with your health, like, what are you doing to make sure that you don’t crash during the day? Like, are you off sugar? Are you drinking tons of caffeine? Are you, do you meditate? Do you take naps? Do you have a personal trainer? Like, are there, is there anything distinctive about like how you’re actually managing your health and your energy?

[01:18:42] Rick Rieder: So I tried meditating, so Ray Dalio, I think he’s a genius, and he taught me about meditating, I can’t do it, I tried, I can’t do it, I don’t know, I just, I have to pick my phone up within 30 seconds, I can’t really do it, I tried, I understand, by the way, I got into it, when I did it, I tried, I totally understand the efficacy of it, I totally understand, but I don’t, what I would say I, so I’ll say one thing that is interesting, I don’t really, you go out to dinners with clients and you do things.

[01:19:05] Rick Rieder: I’m like, I don’t like to drink much because I, it’s incredible. If I follow it on a loop, like you realize, like if you have a couple of drinks, you don’t realize it, but how it changes your sleep patterns, how it changes you’re the deep, the intensity of your sleep, how you end up dreaming versus getting.

[01:19:20] Rick Rieder: So anyway, I try not to, just eat a bit better. And I try not to drink, particularly during the week of even. I’ll never have more than one drink during the week, even the weekends, I don’t drink much. So I find like I try and manage that. And then and then, then otherwise just, work out, a trainer workout almost seven days a week.

[01:19:39] Rick Rieder: And I feel like start trying to stay in shape and but I think all those things contributed and managed, manage the energy level, but I don’t know. I also feel like, I kind of feel like I have a lot of, I feel like at my age now, I have as much energy as I had 40 years ago. And like I said, I think a lot of its cause I really love, a lot of the things that are, I’m happy about my life.

[01:19:59] William Green: And you are, you were working out?

[01:20:00] Rick Rieder: And that’s alongside of it.

[01:20:02] William Green: Yeah, but you are working out at like 4:30 in the morning, right?

[01:20:05] Rick Rieder: Yes, sir. 4:40.

[01:20:07] William Green: Yeah. 4:40.

[01:20:07] Rick Rieder: Yeah. No, I, no, we go, go early and then but then it’s great and I can get to my desk and start the day. So. Yeah. No, it’s it is early. It’s usually not a line at the gym.

[01:20:16] William Green: And when you say we go earlier, are you going with a trainer to most of it?

[01:20:20] Rick Rieder: Yeah, generally half the week I work out, roughly three days a week I work out with a trainer. But otherwise I play golf or work out on my own, but yeah.

[01:20:30] William Green: So there are a few patterns here that I think are really interesting, one of which is Consistent exercise, doing something you’re passionate about, simplifying your life so that it’s, I mean, I, my sense is it revolves around family, friends, work, sports and exercise, right? I read somewhere you, you’re not a great fan of going to museums or movies and the like, like you’ve simplified and then philanthropy will, which we’ll get to in a minute if you don’t mind me asking you a few more questions before you catch your flight.

[01:20:57] Rick Rieder: That’s okay. All good. Yeah, All good. No, I’m sorry. We’ve been asked. [Crosstalk]

[01:21:00] William Green: I mean, is that right? That it’s a lot of it is down to simplicity, like the ability to actually simplify your life makes it possible to streamline it into a few buckets of things that are really the core focus of what you do that makes it manageable in a way this complexity of your life.

[01:21:17] Rick Rieder: I’ve totally realized there’s just certain things I’m not going to be any good at. And like you say, I tend not to watch a lot of watch a lot of movies. And I find that I find that if I can accomplish more things and do more things around what I, not to say that it is I’m growing necessarily by sitting and watching the Dolphins game, but I thoroughly enjoy it.

[01:21:37] Rick Rieder: And so, yeah, no I just have realized, like, this is what I’m going to do. And I’m pretty maniacal about those. Those are the things that take my time.

[01:21:45] William Green: And how have you managed to sustain a successful family life for all these years, because I, my sense is you got married about 36 years ago. I remember Charlie Munger, when he read my book, was like, yeah, one thing that struck me was just how many of us ended up getting divorced. And he said it kind of totally made sense because he said the game is so all consuming that we sort of neglected our partners. And I’m wondering, like, you, you have two adult daughters who my sense is you’re close to, like how do you manage to operate at a very high level without totally sacrificing family and friends. If you have, I don’t know.

[01:22:21] Rick Rieder: Yeah, no, not at all. I mean, I’ve made my family, we are like crazy close, and so I think a lot of it is, this idea of simplifying, like I, when I’m, with my family and friends, not to say I’m not looking at my phone, but the but you know, it’s a really good quality time.

[01:22:34] Rick Rieder: We love, I mean, we go to dinners, vacation and, we just like being with each other. I mean, literally gets to the table. Maybe we don’t even talk that much at the, at, whatever but just being together, I think it’s a really big thing. And I also think it’s having complimentary, so I think particularly my wife, I mean, we have very complimentary, she’s not in the markets at all.

[01:22:50] Rick Rieder: And I think having complimentary desires in terms of, what she likes to do when I like to do. And she’s very patient around, around the business life. But it’s when we do things together that, that are I think I’ve made it really good.

[01:23:03] Rick Rieder: And I think, we just like being with each other, even if I’m, even if I’m working, I like, being in the same room and so.

[01:23:09] William Green: And you have these two adult daughters, Danielle and Melanie, who both went to Emory’s business school, like you and your wife, Deborah, and you mentioned before two of your credos that you have around the house.

[01:23:22] William Green: One, life is not a dress rehearsal, and two, work hard, play hard, give back, reboot. Is there other advice that you’ve tried to share with your daughters that would be helpful to the rest of us? Whether in business or life, I mean, I know one of your daughters works at Walmart, I think. What do you try to share with them that could benefit the rest of us?

[01:23:44] Rick Rieder: So that’s a good question. I mean, I think there are a few things. One, I really believe in, treating people the right way. And my kids are unbelievable about, treat people the right way. And I think I sort of alluded to this earlier, like I watch how people treat service level people or people that are, there’s some people who feel like, you’re here to serve me and other people like, wow, those are really high quality people.

[01:24:05] Rick Rieder: That, you treat with respect. And I think my kids are unbelievable about, being respectful and polite and treating people the right way, I think is to me, number one thing. And I think that, this idea around, I also believe in this thesis that people bring stuff to you all the time.

[01:24:23] Rick Rieder: And I always say you got to go and get it as opposed to letting people, like, I find like the opportunities that have been. We’ve had with his investments or otherwise, oftentimes people bringing stuff to you. It’s not what you want to invest in or do or what have you. It’s what you actually go and get because oftentimes the things are brought to you.

[01:24:38] Rick Rieder: It’s because somebody else didn’t want it or they’re trying to sell it. And so I always feel like going, you got to be proactive versus reactive. And so we do, we talk a lot about that. And then, I, one of my idols, my big idol, my younger daughter’s named Callie, his middle name is Callie after Cal Ripken.

[01:24:55] Rick Rieder: And then, why do I love Cal Ripken? Why I was, I got to meet him and then we invested together in something that but anyway, he came to work every day. He was incredibly diligent. He did things the right way. He was culturally. I think morally incredibly sincere and I really believe in that. And they believe in you do the right thing and, you go to work every day and so anyway, that to me stands for a lot and so I. [ [Crosstalk]

[01:25:15] William Green: He’s the one who played something like 2,600 games in a row, right? So it’s very much that ethic of showing up, doing your work and hoping that over the long run, if you’re doing it right, if you do it right, lots of little times, I mean, in a way, it goes back to the casino lesson from the golden nugget.

[01:25:33] Rick Rieder: Yeah. No, I mean, it’s so you think about it, it’s almost it’s physically impossible, it’ll never happen again, that somebody could literally not, play sick, play hurt, and do it every same, I mean think about how extraordinary that is, I mean even just, you said it, but you have to have some good luck, so as you didn’t, crash into a player or what have you but, this idea that you could just, you could come in every day and operate at an incredibly high level is I mean, I think it’s extraordinary. I don’t think we’ll ever see that again. I mean, there are levels of it, but I don’t think we’ll, I don’t think we’ll ever see that again. But yeah, no that watching that guy for a long time was I thought amazing.

[01:26:08] Rick Rieder: Like, I thought that was historic to get to watch. I got to go to the game where he broke Luke Gary’s record. And I, I thought it was the greatest sporting event of all time. Like, how did this guy do that? And so it was very cool. Unbelievably emotional.

[01:26:20] William Green: And you have his jersey in your office, right?

[01:26:23] Rick Rieder: It is the epicenter of my office and they yeah, no, I have a signed jersey of his. And then, like I said, I got to know him and like I say, he bodies everything that I, I was believing. Like, I want to watch, even when you play golf, like how do you treat the people around you? And he, I got to do that with him. But yeah, no, I think he’s, I think it was pretty extraordinary.

[01:26:41] William Green: I have a friend who works for your firm, who is the guy who introduced us Thomas Muller Borgia, who I asked him about questions the other day, and I, that I should ask you. And one thing he mentioned. Since it’s nice and I’m sure he won’t mind me mentioning it to you. He said, you’re known as being really nice to the people in your team. Like you’re very approachable, very friendly. And one of the things he was saying to me is he’s really interested in your management style because given the intensity of what you have to do and the amount of responsibility, like, how did you come to that philosophy of like obviously you have to hold people to a high standard and yet you’re being very nice to them, you’re very approachable, like is that can you talk a little bit about like your management style?

[01:27:24] Rick Rieder: Yeah, hopefully I’ve tried to, particularly on weekends is trying to be somewhat respectful or very respectful of people’s time and that, everybody’s different and everybody works, work in different schedules. The nice thing about having a bunch of people on the team is like, somebody may be around on Saturday morning from 7 to 10 and somebody else may be around Sunday afternoon.

[01:27:42] Rick Rieder: So try and be respectful of their time and by the way, they have personal commitments, et cetera. But you know, I do believe in this idea that, this work hard thing and that if as long as the people have different schedules and those are providing them flexibility and as long as, varying levels of intensity, all I care about is that you’re, you’re proud of what you did and you’re proud of the work that you’re doing and that you’re, you’re contributing to it and I, I’m not, I’m just not great people produce stuff that, that is, not, not efficient not well done or not well researched, but so, but as long as I’m respectful of people’s time, but, when asked to whenever fits them, whenever asked to do it, appreciate the people put in, really excellent work and they are proud of them. You go to our client and, they’re, their money and how and what you’re doing for them is to me is like synchro sexuality. And you got to do things in a professional manner for them. So that’s all I ask of people.

[01:28:36] William Green: Do you think at a certain point, it sounds like. A lot of your career, particularly the early years, but maybe later as well, you were motivated by this kind of terror of failure and becoming mediocre and letting people down. I’m wondering if at a certain point that shifted for you ever, and it became more about serving people, or if you’re still really. In a way, motivated by that terror and fear of failure.

[01:29:02] Rick Rieder: No, I don’t. Even when you do, I do tons of, including tonight, tons of client presentations that, I think you got one shot and, I really am motivated by, if you give that presentation, I saw like today people say like, I was somebody said it was the best presentation I’ve ever seen, I don’t know whether it was, I don’t know, it may probably be a nice, but anyway, I really am motivated by that, like, I really like when people say, like, you put in the effort and the work product was awesome, and so anyway, I still don’t like, if I come out of a presentation and I sort of laid an egg, I find that incredibly disappointing. So no, I still I still feel like I’m going to get fired every day. And so I don’t know, I just, I don’t know that’s ever going to change.

[01:29:39] William Green: In the equation you talked about before, work hard, play hard, give back, reboot, obviously the giving back has actually been really central to your life and I know that for about 19 years you’ve been chair of the board of NorthStar Academy this system of what’s now 14 charter schools in New Jersey started out as just one school and it I was looking on their website last night and it’s, it says it’s New Jersey’s number one highest performing public charter school and it serves over five and a half thousand people and more than 99 percent of these NorthStar graduates have been accepted to college.

[01:30:14] William Green: It’s very formidable and I know it’s been important to you that you bring your children to their graduation ceremonies and you sign off on every check that the school writes and stuff. Can you talk about why this focus on urban education, both in Newark and also in, in Atlanta, where you’re very involved as well through Emory and this organization you set up there why this is the choice, like why it’s such an important part of your life?

[01:30:41] Rick Rieder: So, it goes back to, like we were talking about earlier, like, I had, we had, a tougher, I had a tougher upbringing socially or economically, I should say. And then and then, went well and then it went, then, declined a bit, I watched like the difference, like, I went to, went to different schools.

[01:30:56] Rick Rieder: And I watched the difference when I end up going to a high performing school, like everything is put in front of you and every, I didn’t really take advantage of it so much, but every advantage you could have, and it was almost you’re in this pipeline of going to college. and then getting to the next job and probably at a family relationship that got you into a right at a contact that got you into the right job.

[01:31:20] Rick Rieder: If you’re on the other side of it, you have no chance. And you don’t get all those benefits. You don’t get all those contacts. And it’s, I just, I’ve always felt it’s an extraordinary injustice. And there is, my schools in Newark and the dynamic around we’re, these kids are going to college and they’re succeeding and they’re going to, I, the top schools in the country and, I’ve hired a bunch of them and it’s unbelievable, what they are accomplished.

[01:31:43] Rick Rieder: Same thing in Atlanta, there are graduation generation program. it’s pretty extraordinary what, and I just think in this country, in the world, but certainly, what I focus on in this country is the ability to provide, these people the opportunity, and I think it, I think our education system in many ways is broken, and I think, whether it’s healthcare, social work, tutoring, that, a lot of these people don’t have, and if you give them the environment Around it, you can, there’s an incredible unlocked economic and social success that can come on the backside of it. And I just think quite frankly, I think it’s, I think your moral responsibility is to do that.

[01:32:19] William Green: If you’re being summoned. Is that because you’ve got to go to a plane?

[01:32:22] Rick Rieder: Yes. As a matter of fact.

[01:32:24] William Green: All right. Do you want to get that for a second?

[01:32:26] Rick Rieder: Can you give me just 1 quick second?

[01:32:28] William Green: Yeah. Go for it.

[01:32:29] Rick Rieder: One quick second.

[01:32:31] William Green: Are you okay for half a minute longer?

[01:32:33] Rick Rieder: Yes, sir. Yep.

[01:32:34] William Green: Okay. So we just had a very quick hiatus because Rick has to go get on a plane. Is there any, just to end, is there any specific story of someone where you’ve seen some kid whose life has just been transformed by this? That gives us a sense of why this is such a life enriching mission?

[01:32:52] Rick Rieder: Many. But I will tell you the one, I would say maybe the one experience That I’ve had is, so my in at North Star, when we have what’s called college signing day and we have all our kids, all our juniors come into the, into this huge arena, and they and the students and the juniors are all there supporting the seniors who are graduating and then all the parents and, related family or immediate families around in the arena.

[01:33:17] Rick Rieder: And these kids come up and they say, going to this university, full ride, and then the place goes crazy. And you realize that people haven’t had, many of them, this first generation that have gone to college, and they’re getting a full ride. Oftentimes getting a full ride or getting a lot of scholarship money.

[01:33:33] Rick Rieder: Like that is game changing. I’ve had my kids come to that. Like, that to me is like, it makes all I can’t, it’s hard emotionally to keep it together. When you see, when you watch this and it is, it’s pretty amazing. The extent that you feel like, gosh, you’re, maybe making some small contribution.

[01:33:47] Rick Rieder: That to me is like the greatest, the great. I, by the way, I don’t go anymore cause I can’t I have a reputation. And I can’t hold it together in those things. So I still go to graduate, I go to all our graduations, but I can’t go to that anymore because it’s an emotional disaster for me. But they’re very cool.

[01:34:02] Rick Rieder: And, to watch, watch these kids do what they’re doing and then, watch them succeed, whether, however you define success, which I would argue is not economically for a lot of people is emotionally or what they’re contributing to society, et cetera. But that to me is like the coolest thing that that, that I’ve won, I’ve gotten the chance to witness.

[01:34:19] William Green: Rick, that’s a beautiful note on which you ended. I don’t want to be the one who makes you miss your plane. So this has been an absolute delight and I hope it’s the first of multiple conversations. Cause it’s been a real joy to meet you and chat with you. Thank you.

[01:34:31] Rick Rieder: Thank you. Thanks for doing it. It’s a real honor. I appreciate that.

[01:34:34] William Green: Ah, it’s a great pleasure. I’ll let you go now. Take care. Thanks so much.

[01:34:38] Rick Rieder: Thank you.

[01:34:39] William Green: All right, folks. I hope you enjoyed this conversation with the remarkable Rick Rieder. If you’d like to learn more from Rick, it’s well worth following him on Twitter or X, where he posts a lot of helpful data and insights.

[01:34:51] William Green: You can also find some of his writings about the economy and markets on BlackRock’s website, including a recent blog that he wrote titled The Fixed Income Opportunity for 2024. I’ve included these and various other links in the show notes for this episode. I’ll be back very soon with some more fascinating guests, including an incredibly rich conversation that I recently had with Daniel Goleman who’s most famous as the author of a seminal book titled Emotional Intelligence. As you’ll hear, Dan and I talk in depth about his new book, Optimal, which is all about how to sustain excellence every day.

[01:35:26] William Green: In the meantime, please feel free to follow me on Twitter @WilliamGreen72 and do let me know how you’re enjoying the podcast. As we approach the end of another year, I really wanted to thank you all for listening to the podcast and for sending me so many kind and thoughtful messages about it.

[01:35:44] William Green: When I launched this podcast almost two years ago, I initially expected to record about six episodes or maybe twelve episodes and then call it a day. I thought of it really as a series of conversations that would be a follow up to my book, and then what I found to my surprise is that it’s just been such an enjoyable and life enriching experience for me that I kept going.

[01:36:06] William Green: So now we have an archive of 38 episodes and many more to come. One reason why I kept going is that it’s really been wonderful to receive so much warm feedback and support from you all. So thank you truly for joining me on this journey.

[01:36:23] William Green: As we draw to the end of 2023, I’d also like to say a really big thank you to the fantastic team helping to produce the podcast in the Philippines. Especially to Jedidiah Lampa and Kristine Romero who edit most of the episodes and do a terrific job.

[01:36:39] William Green: I’m also really grateful to the rest of the team at The Investor’s Podcast Network, including Cyril and Camille and Noel and Ana and Learich. Thank you all for making this podcast possible. And above all, a big thank you to my friend and co-host Stig Brodersen. I couldn’t have asked for a better partner.

[01:36:57] William Green: I wish everyone a very happy holiday season and a wonderful year in 2024. Here’s hoping that it’s a happy and healthy one and truly abundant in the broadest sense of the word. For now, take good care and stay well.

[01:37:12] Outro: Thank you for listening to TIP. Make sure to subscribe to we Study Billionaires by The Investor’s Podcast Network. Every Wednesday we teach you about Bitcoin, and every Saturday we study billionaires and the financial markets. To access our show notes, transcripts, or courses, go to This show is for entertainment purposes only. Before making any decision, consult a professional. This show is copyrighted by The Investor’s Podcast Network. Written permission must be granted before syndication or rebroadcasting.


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