Ep731: Robin Wigglesworth – You Can’t Outsmart the Markets

Andrew Stotz 00:01
Hello fellow risk takers and welcome to my worst investment ever stories of loss to keep you winning in our community. We know that to win an investing, you must take risk but to win big, you've got to reduce it. Ladies and gentlemen, I'm on a mission to help 1 million people reduce risk in their lives. And I want to thank you for joining that mission today. Fellow risk takers this is your worst podcast host Andrew Stotz, from a Stotz Academy, and I'm here with featured guests, Robin Wigglesworth Robin, are you ready to join them with mission?

Robin Wigglesworth 00:35
I am very much

Andrew Stotz 00:38
I suspect you'll have a story to tell. And at least you should be able to tell it very well. From your background. Let me introduce you to the audience. Robin is the editor of Alphaville, the Financial Times financial blog from Oslo, Norway, he leads a team of writers that dig into anything deeply nerdy or plain delightful that they spot in the markets, business or the global economy. He's also the author of trillions, a book on the past, present, and future of passive investing, and how it is reshaping financial markets. Robin, take a minute and tell us about the unique value you are bringing to this wonderful world?

Robin Wigglesworth 01:20
Well, that's a good question. I don't think it's unique at all. Because I think it'd be very hubristic to think so. But I love to learn. I mean, I was like, my dream job was just being a student. And I love jobs where you basically get paid to learn. And that's what you do when you're a journalist. So you know, I've met people, many people smarter than me, I wanted to be a physicist, initially, actually, they realize anything smart enough to be mediocre physicist. But I love to learn. So you know, if you work hard and love to learn, then generally speaking, journalism is a fun profession for you. And I tried to basically mix a little bit of my nerdy history interests, and everything I've learned about the global economy and finance and investing in markets and put it all together, ideally, into the big picture of mind as well. So you can dive deep, and go really niche, but also keep an eye on the big picture. Because sometimes that, you know, like the proverbial forest for the trees, it can get lost.

Andrew Stotz 02:23
You know, one thing about your business that is a little bit like when I was an analyst on the sell side, it's a machine, there's deadlines, you got to hit them. And I tell you, I really enjoyed that pressure for 20 years. And then, and then I didn't. And then I left. I was kind of like Forrest Gump. I just stopped running just stopped. But how do you like for people that don't know your business, and that, you know, the deadline, focus and all that, tell us a little bit about how you respond to that and what it's like for you? Well,

Robin Wigglesworth 03:01
it's always been fine for me, and maybe I will get the point where I also like Forrest Gump and you stop running but I like the pressure a little bit, because it forces you to find out a little bit how you do under it. So there are times when in journalism, especially financial journalists, when it's fairly slow, and essentially the job sometimes, or at least when I was younger, luckily, I don't have to do this anymore. You write about stocks go up, stocks go down and essentially, Fed says this Fed says that. But there are so these moments in time where everything breaks. And that can be relentless. So for me most recently, it was during COVID, of course, my wife was a nurse. So she was out at work and you know, having your own troubles at work. I had the kids at home, and I suddenly had to basically do two jobs, two, three jobs at the FT while still trying to keep the kids vaguely fed and clothed. And but it was just so much fun. It is like I rolled out of bed at 6am Every morning, check my phone, what is breaking their check all my messages from panicky context by the financial system was collapsing. People don't realize how close we actually came to full blown financial crisis on top of the economic and health crisis we were facing. And then you know, you work through the day you work until midnight, and then you can go to bed and get maybe six hours sleep if you're lucky. And it was just fun. And you do have to produce you have to write the stuff you find out. And a lot of the pressure I feel is less about deadlines. But about what you don't cover that you have a finite number of minutes in any given day. And the hardest choice I think in my job but also frankly in many jobs is what do you not do? Because that is an active choice as well. And sometimes, you know, I regret stories I didn't write more than any stories I have written. Because sometimes I've decided look that is really interesting, but that is going to be a two day job or a two week job is needed. regret something else. And quite often I think I get those allocation decisions, right. But sometimes, you know, I know of at least one story in the last few years, that would have been just a killer story if I just stuck at it. And they ended up being a killer story for somebody else. And, you know, those are the things I feel more than the actual, the weight of the deadlines themselves.

Andrew Stotz 05:23
Yeah, that's, it's interesting, because if you don't have a business that's got that, that daily deadline, you also have the risk that you drag yourself into so many things and you don't cut off. I know, when you're writing under a deadline, you always have like, Nope, can't do that. Well, I'd like to do that. But can't maybe I'll look at that next. But I've got to stay focused on you know, what am I going to bring out? That's, you know, that's meeting the topic and just for people who haven't, that don't haven't visited or read what you do, let me just highlight its FTE the financial times.com Alpha slash Alphaville. And the description here. Here is the FT markets and finance blog. We love financial plumbing, debt crises, balance sheets, margin calls, economic pawns and snark. And I'm looking at some of the articles like Masa Son IP o FTA. V is further reading, you got crypto currencies, pension fund protection, Sri Lanka, you know, another friendly Sri Lankan intervention, you got NF T's, you got us banking reforms going backwards, I mean, it's like quite a collection of stuff, maybe you can just just introduce that for anybody that that doesn't know that, you know, where they can find out more and enjoy it.

Robin Wigglesworth 06:41
Well, so ft.com is our website for the Financial Times. And frankly, one of the good things about least where I work is that the FT has had a very successful digital transition, we are primarily a vibrant digital business. Now, actually, we might make money so I didn't have to go around worrying about my job, like, you know, sadly, quite a lot of other people in my professional do. And it's obviously a very high quality, very serious paper, and it's where I spent most of my life now, and I was a reader before I was a journalist. So I still have to pinch myself occasionally with from the chip prior to working there. But Alphaville was always designed to be a little bit different than that, like it was, it was set up to be a blog in spirit and form and substance. So it's quicker, sharper, snarky, more conversational. And also, for me, the attraction has always been why I used to casing contribute the old posts for it even before I became the editor, is because sometimes the strictures of journalism, good journalism has a structure like this is how you structure a news story. This is how you structure a feature story. This is how you do a profile. And those rules are good, and they're there for a reason that guardrails. But sometimes those guardrails can constrict you, like essentially, you have to fit the story into the structure rather than fit into the substance of the story. So with Alphaville, we can write, first of all, whatever we want, as long as it is broadly within finance, economics, business, markets, investing and so on, is money related. But we can also write it in any way we want to write it. So that means we can overweight by the stuff that we just think is fun and interesting. We can say this is interesting and fun. So I always say we are not a blog of opinion posts. We don't want to write our opinions like what Robin Wigglesworth thinks about x or y. But we are allowed to have opinions we can say, this is what I know. This is what I think and this is what I have no clue about. But love are brilliant smart readers to help out. Because frankly, the readers of the ft and Alphaville are, frankly many, far smarter than I am. So it makes sense to kind of involve them a little bit and use it quite often they say you know, you've got this horrifically wrong. And I can do an update. And I think that's actually good accountable journalism. So I love that a blog like Alphaville gives us, frankly, although it for some people, it seems lower quality because we use stupid memes and puns and we can make jokes and even occasionally swear, I actually think the freedom and flexibility of it gives us the ability to do high quality journalism. In substance we can it's easy to do nuance and say clearly what we know what we don't know what we'd like to find out what we're planning to investigate and showing our work. And also, just because we don't need to be tied to whatever's going on on any given day, like, for example, when the Federal Reserve makes a decision. Obviously, it's a huge thing for markets. But that is very well covered by my main ft colleagues, CNBC, Bloomberg, Dow Jones, the whole works, right? So we can focus on the stuff that other people ignore. And that's why you know, or find an angle into something that everybody else is wrong, but that we think is more interesting. So, bank regulation. I mean, you know, this far better than I do. bank regulation is really boring. For a lot of people, but it's massively important, hugely important. And it kind of gets underplayed sometimes by mainstream financial organization or financial news organizations. But it really, really matters in ways that you don't always appreciate until it bites you in the ass.

Andrew Stotz 10:16
Well, I mean, just one little thing, I was just looking at the US banking sector, and I was looking at the cash as a percent of total assets. And I was looking at the securities as a percent of total assets. And, of course, banks used to have a small amount of cash in the US, but not was, you know, who wants unproductive money. And they, you know, didn't have that much securities, particularly government securities. And then after 2008, cash exploded. And then we had a peak time where you had cash and government debt at like, almost 60% of the total size of the balance sheet. And you just realize now that came down, but still, regulation keeps it at some minimum, that's still pretty high. And then the behavior of the banks and the fact that there's not a lot of buyers for US Treasuries, so banks end up holding treasuries on their books. And then you realize like, these, they're not the bank they used to be, they're in a very, very different situation.

Robin Wigglesworth 11:11
Now, exactly. I mean, it's been fascinating to see. I mean, it's amazing to me that 15 years after the birth of quantitative easing, or at least the birth of quantitative easing in the US, and Japan, they've always been dabbling with this for longer, that we're still kind of arguing what impact it had on why it had an impact, or why it didn't have an impact, we just don't know is the honest answer. Although there are tons of academic and economic papers written about this, but I think one of the impacts, you can clearly see if flooded the banking system with money, and actually means that they have more cash on hand securities, they have to place it somewhere, and government securities became an obvious place to do it. Because they just, they obviously after oh nine, they did not go on a massive lending spree. So it's gonna be interesting. See, I think this is also one of the reasons why we had more of an inflationary kind of ketchup bottle effect after COVID than we did after 2008, not just the scale of the monetary intervention, and the fiscal intervention, because obviously, we had a far stronger fiscal impulse this time. But I think the main thing is that, you know, money wasn't quite as bottled up in the banking sector, this time, as it was, in a way, because after Oh, eight banks were in repair mode for decades, but when COVID hit, actually, the banks are in pretty good shape overall, that meant that once they had all this money, what's the kind of things returned a little bit to normal? You know, we, you know, you've had this ketchup effect. But I bank regulations, I mean, I won't spend a very happy day, being kind of going through an entire lecture of like, some Basel three, lecture, and it's like, this is not for everybody. But I like learning stuff, even if it is nerdy and weird.

Andrew Stotz 12:52
Yeah, I mean, I covered banks for the first 10 years of my career. And one of the things I do now is I don't invest in banks. And people ask why. And I say, because, first of all, they're simply an arm of the government. Now, they would not own the instruments of government, financial, or fiscal or monetary policy, but also the hidden regulations behind the scenes of their compliance, related to, you know, suspicious behavior and stuff that these banks are just doing the bidding of the government, they don't have a choice. The second thing is that they it's very, it's a commodity type business, it's very hard to innovate in that business and say, bank is gonna go up by 10 times and share price, whereas all the others only went up by one or two times, you know, over the next five years, it's just very difficult to do because it is so commoditized. So, and then when you correlate the movement of the bank index relative to the overall index, you find that it's pretty closely correlated, and therefore, it doesn't even add, like a diversification element. And you're almost guaranteed, you're not going to get a huge, so I always say that you're gonna get a huge upside in any one bank. So I always view it as kind of a exploit market exposure. And in countries like Thailand, it could give you exposure to a broad economy, that you may not be able to get if you invest in the overall market, but still, I think twice before I, before I go into banks these days.

Robin Wigglesworth 14:23
No, I get it. I mean, for me, I think the biggest factor would be not that I'm really allowed to make many investments to journalists, and certainly in banks, but it's the complexity of the business that I mean, all businesses are complex these days. And the reality is that most of us use a TV without being able to explain how TV works, and that's fine. But for me, the real the single event for me was when JP Morgan had that CDs debacle, I think in 2012 when even Jamie Dimon came out and said look, this is a storm in a teacup was the words he used and actually ended up costing the $5 billion As of Jamie Dimon is you know, the generational talent of banking. I mean, he is the modern day John Pierpont Morgan. And even he did not have a handle on the risks of his own bank. And this is one of the best run banks in the world with one of the best bank CEOs in the world. And even he doesn't understand what's lurking beneath the balance sheet. Or isn't that it makes me think that modern day banking had its there's too much complexity there for me to feel entirely comfortable with it. Because I see smart people screw this up all the time. I just look at Credit Suisse. brilliant people that work there. But it was basically a complete debacle or a series that the buckles for close to a decade until it finally kind of keeled over. So yeah, banks. I mean, I find them fascinating. And they're hugely important, this Wilson, one of the dominant engines of capitalism. But yeah, as an investor, I'd also be a little bit weary with him, I think.

Andrew Stotz 15:57
Let's, let's talk a little bit about your book, trillions. Tell us why did you write this book and just tell us a little bit about what the reader will get when they read it.

Robin Wigglesworth 16:07
So I was the US markets editor for The Financial Times in New York. So I kind of led the financial coverage out there. And, you know, we don't have the staffing of a Bloomberg or a Wall Street Journal. And suddenly, the Wall Street Journal was like dominantly, in the same way that we are in the UK and in Europe. So you have to pick your battles, you have to be a little bit more laser focus and find out what is hugely important, that is being under covered or uncovered at all. So I had to cover the Fed and the Treasury market, these are kind of essential things you have to do. But for me, the area that was clearly having a huge and growing impact on markets was the role of systematic investing, rules based investing, quantitative investing, whatever you want to call it, you know, big pot shops like renaissance and two sigma or trading firms like vertue, and Jump Street and a jump and Jane Street. And, you know, part of that was index funds, index funds, like are often not thought of as like mini Renaissance or the shores, but they are inherently just an investment algorithm that says buy all the stocks in the s&p 500 According to the market weighting. And, you know, you can't interview or you can interview the portfolio manager for the s&p 500 index fund the Vanguard, but it's not exciting. He got to tell you what he thinks the markets going to do, what he's going to buy and sell. So journalists tend to gravitate towards big Imperial portfolio managers, hedge fund titans like Ken Griffin and Ray Dalio can say, I think the market is going up or down, or I think banks look terrible. I think China looks interesting. And so you know, they are our celebrities. And sometimes we end up being celebrity journalists as well, we just have, you know, we don't write about Kardashian, we write about Ken Griffin. But index fund I just thought was really fascinating. So I started covering index funds and passive investing, how it was changing markets, both from the microstructure and from a macro level, and some things I think, would be massively overdone. I don't think index funds are actually having a huge sort of effect. But I think there are other ways that we should definitely be worried about. And then I started digging into the origin story. And it turned out that although index funds don't have these interesting portfolio managers in the present, per se, it has this incredible, rich backstory of fascinating people that helped build it. And really, if you think of the index fund is just kind of like a financial technology. And that's really what it was. He was the first marriage of computers and Wall Street, like the first quants, the first people that started using data and computer, the Wall Street, the first product they came up with was the index fund. And they were just really interesting. And obviously, they also everybody hated them. They were figuratively, and in one case, I had literally spat upon by their Wall Street, friends and colleagues arrivals. So it's just a great narrative arc of this underdog invention that everybody hates and laughs at. And then it kind of finally kind of triumphs and kind of takes over the world. And now, we're really talking about just how big this sucker is going to be rather than whether it's going to survive, which was, frankly, the debate for the first 1020, almost 30 years. So that's the story I wanted to try and tell because it was, you know, both important, and just fun and colorful and interesting. And I think that's a good combo for a book, I hope at least

Andrew Stotz 19:31
Yeah, when I started in the stock market in 1983, you know, if you wanted to have a really diversified portfolio, you pretty much had to build it, you know, I mean, you could, you know, invest in some mutual funds, for sure. But I remember when index funds came along, it just really was an innovation that allowed people to do something that would have been much more expensive and much more difficult to do. I'm just curious like that There's a lot of things going on in the index world, like one of the things that I see is some people are thinking that the index funds are taking over the world because they now find that the index funds are the top shareholders in almost every stock in the world. And I have to talk to some of my friends and tell them no, no, no, that's just a passive holding. It's not like they're taking over the world. There's, you know, one thing there, then you got this other part, you know, I was an analyst, so I'm an active type of investor, and that, you know, if index funds take over the world, then maybe things are gonna get mispriced. And then, you know, then there's a space for analyst again. And then of course, there's the whole ESG agenda that could be getting implemented in positive or negative or nefarious or other ways through index funds. But I'm just curious, like, what is the most, you know, contentious part of index funds that you saw as you dug deep into it? Yeah, I

Robin Wigglesworth 21:01
mean, this was basically the last third of the book because I think even fans of indexing like me, should not be blind or blind ourselves or ignore potential. negative externalities are side effects from new inventions. We've seen everything that has a positive impact on the world also inevitably does have a negative one. I think most of the concerns are either overblown or completely wrongheaded. So for example, I don't think they make markets less efficient, which is the one that you hear a lot. And I don't think there is a magic tipping point that will bring back active because I think, on average, every year, it is the you know, if we're being completely honest, the very unlucky or the mediocre portfolio managers and investors that lose their jobs, and the new people that come into the market are better and better trained. So when you started your job, you know, having a CFA would have been considered like a huge edge, right? These days. I mean, you throw a rock on Wall Street, you're headed CFA sim with PhDs, I remember talking to Burton Malkiel, and Charlie Ellis, who these are pioneers in this world. And you know, they got PhDs in economics in the 60s. And that was just considered just, I mean, alien light. And even they said, it was really hard then. And these days, again, you know, if you talk to any even mediocre portfolio management shop, you know, they will have PhDs on staff, they'll have data scientists, they'll have computer scientists. So it's just getting harder and harder. I think index funds actually, in a weird way, I'm helping make the markets more efficient by raising the bar for everybody. Like suddenly you have this cheap, perfectly okay rival, so it raises the bar for everybody. And actually, that's, I think one of the reason why we actually see active performance get worse on average, I mean, it goes up and down depending a little bit on how much dispersion of the kind of the qualities of the market in a given year. But broadly speaking, active performance is actually being trending or sloppily falling down rather than rising as passive eats more and more. But I do think there are corners that smart traders and investors can definitely identify but it happens less in the large cap US equity space, it'll be you know the impact on over time when ETF on that market, or micro cap gold stocks and things like that. I think you do your research, you can find areas I talked about some of them in my book, but I do think this kind of take over the world is the big issue. And not because I see there's so many conspiracy theories around this I see this going around the internet all the time people like oh my god Blackrock controls the world and Larry Fink and it's so easy to construct, frankly, stupid asst and conspiracy theories around this. But it is true that index funds are taking over more and more the ownership of big companies. Now, is that bad? Actually, I don't think it is bad in the narrative. I'm gonna have looked at it. And I don't think like active managers were great shareholder owners. Anyway, I don't think there was a golden era of corporate governance, just look at the lumbering conglomerates or the 60s 50s and 60s. So I think it's always tempting to think everything was better before but I just don't believe it. And I think as these companies like Vanguard, Blackrock have kind of been shamed into not just being passive investors, but passive owners. They are taking more of a starts and that is our ESG comes in, frankly, look, I'm a cynic. I think it's marketing. I think it was good marketing, certainly in Europe. It was good marketing in the US, but obviously there's in the US everything becomes political. Everything's up front and the culture wars drives me crazy, but that's that's the way it is. So I think, you know, people like Larry Fink of Blackrock kind of regret that they kind of waded into this here. It's too much of a headache for them. Now, what was kind of looked like a marketing win is now just an annoyance. But broadly speaking, we want these owners to be actively engaged after a reason that And I cannot shake off this kind of sense of unease about not just where we are today, but where we're going to be in 20 years time because the economics of indexing of index funds means that basically, you know, Vanguard, BlackRock and state through its index funds are exactly identical, they just match the s&p 500. The s&p 500 index funds, they have many of them. So you just gravitate to the cheapest one, there's no product difference, really. So it just means that the big become bigger and bigger and bigger, because they're able to create these index funds because of economies of scale cheaper and cheaper. And the natural end point here is not just that Vanguard and BlackRock and State Street own collectively, sort of 15% 1050 and 5% of the market, depending on what market segment you look at. But they could conceivably within our lifetimes, own 50% of most listed companies. And again, I don't think they're evil loathing taking over the world. But that kind of concentration of corporate power. I don't feel entirely comfortable with that. I saw great. There's a great new book from another academic in this article, Professor John coats at Yale, no Harvard Law. And he had this phrase, I thought maybe, because all the solutions to this are actually kind of make everything worse, and we don't abandon index funds. They are actually in huge societal good. But he said maybe this is not a problem we can solve. But the problem, a conundrum we didn't need to manage. I think it's a good way of we just need to be aware of this and manage this. And I think, actually, I used to feel this was under debated when I started writing my book. Now, maybe my book helped a little bit in some areas. But I think now it is very much front and center, whether you talk to regulators, index fund providers, index providers, politicians even I think it's, it's getting the appropriate attention now, thankfully.

Andrew Stotz 26:59
So for the listeners out there, it's called trillions how a band of Wall Street Renegades invented the index fund and changed finance forever. You can get it on Amazon. There's also the audible or audiobook version of it hardcover, or Kindle. And I'll have links to that in the show notes. So feel free to check it out. And now it's time to share your worst investment ever. And since no one goes into their worst investment thinking will be tell us a bit about the circumstances leading up to then tell us your story.

Robin Wigglesworth 27:31
Well, I guess my worst decision investment decision was not becoming a mediocre physics system was working on Wall Street. I think, you know, there are lots of mediocre physicists there and some excellent ones that make very good living certainly better than what any journalist makes. But the worst of direct investment decision I made was in after the financial crisis, I was a Middle East correspondent for The Financial Times at the time. And you know, the crisis hit later there because of the oil price boom, run up, up until basically the collapse of Lehman. So the Gulf was just partying essentially until late 2008 2008. And it was very clear what was happening. But I was very impressed with how quickly central banks reacted in some of the second last quarter of 2008 after Lehman collapse. I think they realize there's no more half measures, go bazooka, every Central Bank, every government went bazooka China went crazy on this stimulus. And look, as a journalist, first of all, I can't make investments in any company I ever cover even sectors. I mean, we have very strict rules around this. Anything I do make, even if it's a broad index fund, I have to report it centrally. And I'm not allowed to basically cover that. But because I was in the Middle East, a lot of this stuff I didn't cover, and I am from Oslo, Norway originally and I used to cover Norway for Bloomberg News. And Norway, the kroner just got brutalized in 2008 because oil prices crash and it's a small currency to everyone is going into the dollar. And the krona crashed. The Oslo Stock Exchange crashed it's very oil oriented exchange. And but I was working in the Gulf where the Derome is pegged to the dollar so the Derome was suddenly worth a lot more and I didn't have a lot of money but I had banked the odd few special payments we do these little special reports for the FT that we get paid it's a freelancer so I took that money after I was like actually no I mean I didn't time the low end oh nine at all. I waited a few months but I thought it look even if things take another turn for the worse. Norway is going to be fine. It's it's super power to oil and being boring and vaguely competent, basically everything. So I did take my accumulated money and put it in an ETF that follows the also stock exchange, a consumer durables company called orca that makes frozen pizzas Isn't soap and lots of random things, and a fertilizer company called Yarra? And that was actually a brilliant decision. Because the Cronus snapback, the Oslo Stock Exchange snapback, these companies did incredibly well. But my stupid decision, and this is a classic thing that I'm sure you've seen a million times is that I panicked. I reacted to short term headlines when the European crisis started erupting. I was like, Oh my God, this looks very bad. I'm gonna get the hell out of dodge. So I sold out. And, you know, and ironically, also, I kept era because I thought fertilize food. You know, we need fertilizers to grid food, but Yara got embroiled in a corruption scandal. Turns out, somebody's been bribing somebody somewhere, I can't remember exact details. But it goes to show that even in seemingly good well run companies, you know, your investment can blow up because of externalities you cannot foresee. And also, it taught me about the psychology of how panicky we humans are. And we know that, you know, the average investor in a mutual fund, or an index fund actually does radically worse than the performance on that fund. Because they buy when it's gone up a lot, and they sell when it's dropped a lot, which is very bad investors, humans, and frankly, even professionals do this badly. Like market timing is the ultimate Original Sin of every amateur and professional investor. And I fell into that, and I still did okay, out of that investment. But when I think of like, had, I just kept that small pot of money running until like, through the European crisis, through the shale oil crisis through COVID, through everything, and today, you know, I would have had, you know, a far larger, a small pot of money would have been a far largest pot of money. So, that was stupid, and I regret

Andrew Stotz 31:52
how would you describe the lessons that you learned? I

Robin Wigglesworth 31:57
don't think you can outsmart the markets as a whole. I think like so I was despite having written a book about passive investing, I always am thinking it's the bee's knees. As they say, in the UK. I tried to stress I'm not the passive jihadist, as I put it, like, I don't believe that markets are efficient. But I think they are. And I think efficient is frankly, the wrong loaded word that we've ended up using for it. But I think they are efficient is a good shorthand for how they function, they are very hard to second guess, unless you happen to have crazy edge or very deep domain expertise in specific areas. So if you look at like the big hedge funds, I can do this can Derby outperform in the long run, they tend to be very specialized, or they have people are very specialized. So for example, I saw a delightful quote from somebody talking about Citadel or hedge fund, I've covered a fair bit in the past that said, like, they are literally the kind of people that will imply to the orthopedic surgeons dedicated to one one, we'll just do left knees and the other one, we'll just do right knees. And that's all they do is a grind is not big kind of godlike decision. They just have a process, they've discovered it inefficiency that they have found out, they just eke it and milk it year after year after year, until somebody else discovers it, it goes away. And they have to find something else. And I think that is really the secret of good investing is if you do want to trade, you have to find something that like what do you really know, that nobody else has discovered? And at least for me, and I think, frankly, for the vast majority of professional investors, that is actually you don't have any special sauce, there isn't any. So I have not touched and single stock ever since then. And my investments in the very minimum mostly levered long Norwegian property and UK property these days is yeah, it's passive broad, diversified cheap, and I never look at it, and I never think about it.

Andrew Stotz 34:05
And you'll probably win in the long run, because you won't damage your returns, like you say, you know, academic research shows that the typical investor, the average investor in America probably destroys 30 to 50% of the value that they could have captured in let's say, an index fund only simply because of their timing decisions. So you one of the things that you reminded me of my first boss in Thailand, a guy named John, he was a British guy originally went from England to Papa New Guinea, and then did some stuff there. Then he went to Hong Kong. And then he came to Thailand. And he worked for a broker here where he set up institutional part of the business was very successful at that. And but what I always remember, I remember him standing up when it was just like markets crashing and he's like, yep, yep, I'll buy that. Yep, I'll buy that. I'll buy that and he was just that kind of guy. He went to Vietnam. I'm set up, you know, started Vietnam's first investment bank called Dragon capital there, then. But the reason why I was thinking about this story was because I was trying to get a hold of him in like 2008 2009 about something. I just couldn't get him for like a month or two. And finally, he calls me back said, oh, sorry, I'm sorry, I couldn't get back to you. I was setting up the structures I needed to set up to buy these Icelandic bonds that were trading at an extreme discount. And I've now locked them in with a at a I don't know what the rate was. Maybe it was 15% that the Icelandic economy the Icelandic government had to issue them at plus the Icelandic currency had completely collapse because it wasn't part of the euro and all that. And so he said, I got that I've locked in basically a 20 year return of x plus the currency appreciation. I still like.

Robin Wigglesworth 35:57
That is incredible. No, I mean, it's so I think also, one thing that is underestimated is how many investing careers have really been made on one bet. So one of the famous one Warren Buffett and Ben Graham is mentor. It was Geico. Like that was actually a bet that Ben Graham made first I think, and then Warren just kind of took over and they kind of wrote it for a long time. But you know, recently because I was covering the sanctions against Russia and Russian bonds, and you know, Appaloosa, apparently, Tapper's big bet was like he literally bought a Russian bond that it was in default in 1998. That ended up getting repaid and like just was kept service. And basically, that was a solid like, that was like a major contributor to his firm's profit for the next 15 years. And because he bought it, he had was able to identify this one will probably be fine, or at least, the risk reward made it worth it, right. Because sometimes you don't know if it's gonna be fine. You just have to, you know, it's kind of worth it like, like John and the Icelandic bonds and the kroner, but it is incredible how many of those sort of careers and years have been made by a few very big decisions at the right time.

Andrew Stotz 37:07
And there's just a certain temperament of certain people and they just they see it, John always saw something coming in for most people, but he also had the guts and the resources to take advantage of it, which is, you know, it's first you got to be able to see the opportunity, then you've got to have cash, and the flexibility to invest in it at the bottom of market. Everybody's panicking Oh, I'm gonna lose my job, I'm gonna lose that. And then you got to have the guts to actually pull the trigger, and do it and let it ride. Yeah, yeah. And

Robin Wigglesworth 37:41
letting it ride. I mean, one of the worst other worst decisions I didn't make was, when I was a student, I remember that I bought the first iPod that ever came out in Norway. So my parents were architects, I've grown up with Macintosh as at home, they also use Macs. And I've always loved apple. But I remember when the iPod came back came out. And Nice Job says, but it had been steve jobs have been around back for a few years, then. And how can reinvigorate for the company. But the iPod was so radically better than anything I see. I was like, Holy shit, I don't believe in then I didn't believe by what, you know, the old kind of Peter Lynch saying, but I thought the iPod was obviously superior, though, like, this is incredible. So I almost took my student loan and dropped it in Apple stock. And in the end, I did it because like that, I thought that that would be irresponsible and stupid. But if I had done, holy cow, I mean, Apple was trading it I can't remember because it split splits. I mean, it's, I looked at it, but I think I would have made. I mean, it was an incredible, obscene amount of money as an AI that wouldn't be like the money I didn't make out of getting out of the stock market in 2011 12 was not meaningful, this wouldn't be meaningful money. But as you know, the reality is that I would have done that, and I would have gotten up out before today, you will don't let it ride. Even though you should always let your winners ride or that sort of thing. But you know, we cut out too early. We sell too early. I mean, it's, it's very hard. And like I said, I see I talk to people that do this for a living all day long. They are some of the smartest, most impressive women and men I've ever, you know, I've had the pleasure of speaking to, but they screw this up all the time themselves. So yeah, that's why you know, index index funds for the wind for me

Andrew Stotz 39:31
keep it simple. So what's the resource either of yours or any other resource that you'd recommend for the listeners?

Robin Wigglesworth 39:39
We all obviously my book is amazing, but it's not just me. But even like even people like Paul Singer who hates index funds. He's the head of Elliott Management. He's kindly said that, you know, his book of the year, and Milton Malkia liked it, but I didn't know I mean, I'll tell you a resource that I wish I had here in my office in Oslo is a Bloomberg terminal. They are egregiously expensive, comically tragic, comically expensive. But I worked briefly at Bloomberg many years ago and I still think it is the prime kit. But if you can't afford a Bloomberg then at least you can have more fun on Alphaville and we are unusually for the FTAs. Well, we are free you just need to register to read Alphaville. We are the free firm outward facing parts of the Financial Times empire. So the FT super expensive Alphaville more fun geeky nerdier and free as long as you register. So, yeah.

Andrew Stotz 40:35
Okay, great. Last question, what's your number one goal for the next 12 months?

Robin Wigglesworth 40:41
write another book. So I'm writing a book on the history of the bond market now. So I just got a contract with penguin who published trillions. And I'm very excited about that. Because like, bonds are my first love. I've always covered mostly fixed income markets, I think they get unfairly put in the shadow by the fattier stock market. But I think the bond market is fascinating. And frankly, it is now bigger than the bank's mark. So for basically banks and bonds, modern banking bonds, both emerged from Renaissance Italy, essentially a millennia ago or in Renaissance Italy. But now, for the first time in history bonds are actually bigger than bank loans. So they've kind of replaced and usurped banks as the dominant engine of credit in the global economy. And I think that this is huge consequences. So that's why I'm really looking forward to getting stuck into

Andrew Stotz 41:31
exciting, exciting, I think I'm noticing a pattern. I need something that seems like nobody's paying a big amount of attention. It's not so fancy and flashy, but I can find something there behind the scenes.

Robin Wigglesworth 41:44
Yeah. And it's fun because I like the equity might I like the index fund world, like the bond market has just riveting human stories like the first the guy that kind of invented the first bond in Italy in Venice, the doge of Venice got murdered by his own citizens for it. Yeah, people like Mike Milken and Lou Ranieri who meant it like junk bonds and securitization, I think they're just fascinating stories. And as much as people think the bond market sometimes feed seems sort of complex or unwelcoming or even boring. It really isn't. It's hugely cool and fun, and my favorite people will work in the bond market. So I'm really, really looking forward to getting stuck into this. That's exciting.

Andrew Stotz 42:25
Well, listeners, there you have it another story of loss to keep you winning. Remember, I'm on a mission to help 1 million people reduce risk in their lives. As we conclude, Robin, I want to thank you again for joining our mission and on behalf of a Stotz Academy, I hereby award you alumni status returning your worst investment ever into your best teaching moment. Do you have any parting words for the audience?

Robin Wigglesworth 42:49
No, just, you know, buy my book, buy index funds most of all, and stay boring. You know, I think keep it simple is the best thing. But thanks so much for having me on. Andrew. It's been a real pleasure.

Andrew Stotz 42:59
Yep. It's been great. And that's a wrap. On another great story to help us create, grow and protect our well fellow risk takers. Let's celebrate that. Today. We added one more person to our mission to help 1 million people reduce risk in their lives. This is your worst podcast host Andrew Stotz saying. I'll see you on the upside.