Charles Schwab Liz Ann Sonders: Masters in Business (Audio)

a studio in Englewood, New Jersey. Not the big, giant modern studio that you know today, but it was really kind of a small office park. And I had showed up, probably a little early because of traffic getting there from Manhattan. And while I was in the green room waiting to

go on the air, it was live to tape. Over the course of an hour, I started drinking diet coke and the next thing you know, I finish two cans of soda and I get up to go to the bathroom when the producer comes in and says, Okay, let's go, it's live. But I have to no, no, it's now, it's live. So I'm hyper caffeinated. I'm sitting at this round table. There's Larry Cudlow to my left, which is an unusual place for him to be because he's usually

to everybody's right. And they're directly across from me is liz Ane Sanders. And a friend who had been doing television for a long time gave me a little bit of advice. He had said, pick something to focus on, and don't dart your eyes, and don't look nervous. Just focus on that one thing. And liz Anne began speaking, and she had the whitest teeth I had ever seen. She explains how her teeth cut so white during our interview. The secret is no coffee. But anyway, during the show,

I just fixated on this. Oh my god, look at those white choppers. She's so articulate, she's so beautiful, and her teeth are so damn white. It's it's incredible. So that was my first experience doing television. I managed not to throw up on the glass table, which was a genuine possibility. I know these days, Uh, many of your favorite TV pundits looked so comfortable and casual on screen. The first time you do it, it's kind of a nerve wracking experience. Anyway, I had a great time chatting

with Liz. She has an amazing background, from Marty's Wide who was a legend on Wall Street, to Lewis Ruth Kaiser, now to Charlie Schwab. I mean talk about being blessed with working with amazing people. She has had just an unusual background and not what you typically expects. Never really ran into the old boys club, never really ran into the sort of stereotypical, misogynistic Wall Street ways that we've

heard about over the years. She considers itself very fortunate, and there have been several of our other female guests who have referenced her as you know, a a um, one of the pioneers who basically cleared a path for them to become strategists and analysts and others. So, without any further ado or me babbling on, here's my conversation with Charles Schwab's liz An Saunders. This is Masters in Business with Barry Ridholts on Bloomberg Radio. My special guest

this week is liz An Saunders. She is the chief investment strategist at Charles Schwab. Liz, Welcome to Bloomberg thanks very so, Liz, and I go way back. In fact, the very first television appearance I ever did, you're the other guest with Larry Cudlow about a hundred years ago, was was it Cudlow and Company? Or with that it's like Cudlo and Kramer. No, it was Cudlow and Clock. So which which was before Cudlow Report? Right? Was that?

The thin after? I think it went Cudlo and Kramer, Cudlow and Company, and then the Cudlow report that they were changing it constantly. Before we digress too far, let me give you a little bit of background as to whom my guess is. She was named Smart Money's Power thirty list of most influential people on Wall Street, one of the most one of the twenty five most powerful women in finance by American Banker, and she was a regular panelist and actually was a guest host on PBSS

Wall Street Week with Louis Rukaiser. Thank you so much for joining us, Thanks for having me. So let's start with the real basics. How did you get into the financial services industry? You know, it was a little bit of a fluke. I went to undergraduate school University of Delaware, go Hens, Blue Hens, Colue, Hens, home of Flacco and Gannon and some other notables, and I had a well.

I started with what was effectively a double major in economics and political science, which ultimately became a major in international relations, not that I had any idea what I wanted to do at the time. With that thought about going to graduate school right after undergraduate little from political science. But then I thought, I took my g R E S and I thought, what am I doing? Um, Why am I going to full time to school again? Not knowing what I want to do. So I put that

on hold. I said, let me let me go up to New York. I knew I wanted to live in and be in New York, and just hit the pavement. So I had grandparents living at the time, my families from Brooklyn. So went up lived with my grandfather for a couple of weeks and reached out to a couple of head hunters that we knew that did entry level positions and interviewed at every variety of firm marketing firms,

at agencies, Wall Street firms. And there's something just clicked about this interview I had with those Avatar organization, and I had developed some familiarity with Marty's Wage during my college years, so I was a little bit star struck. Really like the people, like the size of the firm, like their willingness and interest in the past at promoting from within. So I started there and and I was there for thirteen years and went to business school at night.

So let's talk a little bit about Marty's Wig for the young uns who are listening who may not know who he was. Zwig was really a legend on Wall legend, truly a legend. And and I I was introduced to Marty and then interestingly Lewis Ruckiser and Wall Street Week during college when one of my tas for I think a macro economics course suggested watching Wall Street Week on Friday nights as a good way half hour before going out at night, before starting to drink, to get a

recap of what happened that week. So in other words, you would you would watch Ruckeiser and then you would have to get a drink, and then I would, now, well, then I would go out and uh and have a differ and kind of fun to do what college students. And Marty had been a regular panelist really from the

show's inception in the early nineteen seventies. So that was how I became familiar with Marty and then joined in nineteen eighty six, which to your point, he was he was already godlike in the business, had one best selling book under his belt, was writing those wage forecasts, which Hulbert had ranked the number one newsletter. He had wagged him into Partners, was one of the first hedge funds. He had branded mutual funds, and he was he was

really iconic even at that point. And for people who still may not know who he is, go to YouTube and google Marty's wage ru Kaiser seven oct a week before the crib Friday, before we before the broadcast Friday, but it was recorded record that day and and he basically explains why, after being fairly constructive all year, pretty much flipped and said, I'm really concerned about the state of this market, and I think it's set up for a serious, serious correction. He said crash. Did he say crash?

Is that what it was? And then on Monday it was Black Monday, And and not only did he suggest that the crash was coming, he laid out very precisely what he thought. The next few days thereafter would look like the retest of the lows and then a massive rebound. And you know, we were a tactical asset allocation for a market timing firm, and we had been effectively fully invested in equities leading into the peak in August and

then started to trim back exposure. We're only about invested on the eve of the crash, and then the day after the crash we started buying. So here I am twenty two years old, brand new in the business, thinking, well, what's the big deal? You just figure out before when it's going to crash, get out, and then everything goes on sale, get back in, done? What could be? What are all these people complaining about? My naivete assumed that that was something many could do easily, and we know

that's something that's that's so fascinating. You know. Dave Rosenberg, who I know, you know, tells the story of his first day in the private sector after having been a government economist, was essentially that Monday, and he just walked around astonished at at the sheer turmoil and panic. It was really incredible. But you had a very different experience. We had a different experience because we weren't facing massive losses and client portfolios. We weren't looking at the potential

demise of the firm. Quite the contrary. You know, we had so nailed it. And I love to use the term week now as if I had anything to do with it at twenty two years old. But it was such, it was such a boom for everything Marty did and and the success of our firm and performance that year, that I had a very different perspective than a lot of people, to say the least. We're speaking with liz

Anne Saunders of Charles Schwab. When we continue our conversation, we'll disc us the role these days of women on Wall Street. You're listening to Masters in Business with Barry rid Holts on Bloomberg Radio. I'm Barry rid Holts. You're listening to Masters in Business on Bloomberg Radio. My special guest today is liz Anne Saunders. She is the chief investment strategist at Charles Schwab, which these days is running

how much money? Well, we have client assets of about two and a half trillion, not too shabby, not too shabby, and um, you also have a number of divisions where you're managing money directly yourself. So yes, personally. We made acquisition about four years ago of what at the time

was called Windward Investments, now called Windhaven Investments. It's a global tactical asset allocation firm managing via e t f S model driven and uh I joined the team as chair of the Investment committee last June in addition to my chief investment strategist role at SCHWAB. So does the

experience with Marty help you? It does. In fact, when when we were in the early stages of of disseminating the change and the information about me joining the team, there was this assumption that the main reason why I was tapped for this role was because I was known in the retail world, certainly among our investors, and that it would be an easy transition without a lot of people realizing that my background through my thirteen years at

swy Avatar was in tactical ascid allocation model driven. In fact, the founder of of wind Haven, Steve Kokierrow, when putting together the model many many many years ago and writing the white paper associated with how the model looks at asset classes it makes its decisions, he actually cited Marty in a couple of occasions, particularly the famous line of Marty's the phrase he coined, which is don't fight the Fed. Don't fight the Fed. And there have been people fighting

the Fed this entire cycle. I can't begin to count how often I see an email about the FEDS doing this and that, and well, okay, but the market's up two. So what you're saying is this hasn't happened yet. Is what you're fearing certainly hasn't happened. And the response is always just you wait, well it's six years. It's anybody who listened to your advice has either lost their money or been fired. You you can't as a professional, you just can't ignore that sort of move. You can't now.

I'm also, though, I guess, in a in a bit of a middle camp in that absolutely don't fight the FED and their provision of liquidity and monetary conditions absolutely as always an important driver behind moves in in the equity market. But I also am not in the camp that believes it's only been three rounds of quantitative easy and exert that has been the support under the stock market.

I think many of the other traditional fundamentals have also been supports, So I don't know they would have gotten this same power and magnitude of gain and consistency of performance had it not been at the FED. But it's one of many conditions that have allowed the market to do what it's So let's let's go over some of those. As long as as as we're going down this path, let's talk a little bit about earnings. Right, we saw

an absolute earnings collapse, they came snapping back. Are earning supportive of this sort of Earnings are up very consistent with what the appreciation and the market has been looking at past cycles, and you've had valuation expansion off of the you know, the epic low in invaluations this time actually post stated at the two thousand and nine low. You ultimately got the low in pe s in two

thousand and ten. Just because the earning cycle doesn't always match the market cycle, earnings accelerated at that point faster than the market. So despite a rally, PE ratios actually fell. Markets went up and made stocks look cheaper, which is not only that, but corporations have been such huge buyers

of their own stocks too. I often get the question because I talked a lot about investor trends and investor sentiment and the persistent skepticism by individual investors, and the lack of interest in the market and very weak mutual fund flows, all of those facets that we look at all the time. Then I get asked, Okay, well, it's obviously hasn't been the individual that's been the big buyer. Hasn't been the hedge funds, hasn't been big institutions where

you're not seeing that in droves either. Hedge fund that long exposure has not gone stratospheric really during this entire bowl market, and we've seen that. We've seen that in hedge fund performance grammatically underperformed, specifically because they didn't have enough US equity and specifically in the last couple of years.

So even this many years into a rip roaring bull market, there has been this pervasive skepticism where we have seen consistent buying and has been the most powerful buyer supporting this bull market has been companies themselves buying backgrounds. So so do you track the number of shares or the dollar amount? How significant is corporate share buy backs to to the underlying rally. I think it's been. It's certainly not the entire piece of it, but I think it

in terms of buying interest in the market. If you look at the various faction traditional pension funds, um other you know, mutual funds, hedge funds, even high frequency trading firms they're in and at all the time. Or the big wammy the individual investor. By far, its corporations that have been the most consistent buyer. My colleague Josh Brown calls that the relentless bid the combination of acid allocation models which just buy every time money flows in the

share buy biocks that are going out there. And you know, people forget, you've still been in a relentless bond bull market and every time there's a rebalance, that's money that flows out of bonds into equities. It's been amazing, It has been amazing. So so let's let's continue along this this path. Before we get into, um the role of women on Wall Street, maybe we'll save that for a little later. Let's talk a little bit about E t

F s versus passive investing. I know Schwab has a number of different funds they men how significant is this move towards passive and e t F s. So I think what we're seeing at Schwab probably is fairly consistent with the broader industry. I think we represent obviously a good chunk of the of the industry. But at the end of last year, e t f s that were custodied at Schwab amounted to about two thirty billion dollars, but traditional mutual funds were one point one trillion dollars,

So they're still big. Yes, Now the growth rate of e t f s is much higher than the growth rate of mutual funds. There's still positive growth rates, but the growth rate is greatly exceeded in ETFs than than than mutual funds. But mutual funds aren't going away anytime soon. And I think the shift between active and passive to some degree tracks a market cycle. When you're in a fairly consistent, low drama equity US centric equity bowl market like we've been in the last several years, that tends

to have investor shift more toward passive strategies. And we actually think that there is a home for both in portfolios that a lot of investors probably should be taking a more passive approach UH indexing to UH whatever the you know, whether it's brought market into caes or if they want to take more of an endowment approach their portfolios and have asset allocation across asset classes that historically

we're not that accessible. E t F s allow them that. However, when you get into a less highly correlated, more volatile market period, like I would argue we are in the beginning of now, that's when you start to see some active strategies start to do a little bit better. I'm Barry Ridhults. You're listening to Masters in Business on Bloomberg Radio.

My special guest this week is liz An Saunders. She is the chief strategist at Charles Schwab and when we were talking earlier, I mentioned that you had been named one of the twenty five most powerful women in Finance by American Banker because of how you bench press room, or maybe because us is that is it? It sometimes

feels that way, It sometimes feels. So I'm gonna give you a quote that I really liked from Michelle Myers, one of the other few women we've had on the show, uh and the first being Shiela Bear of the FDI C. But Michelle Myers said had cited the quote lack of women at the top of the industry as a challenge for women in finance. Do you agree with that? So my view has always been from my perspective and the career path I have chosen in this business, being a

woman has actually been a huge advantage. But my chosen career path was not ultimately to be the CEO of a major investment bank. So I think if if I was trying to climb a ladder to that type of senior management position, I probably would have a lot of bruises on my head from the glass ceiling. It's just not something I have encountered. And that's what I try

to impart to young women who I speak with. Just in the last week, I've spoken at to universities my alma mater graduate school as well as my son's current college right now, spoke to two groups of of women there and have encouraged them that there are great opportunities

for women on Wall Street. And I think the reason why it's increasingly important going forward is that very soon we are going to cross the point where women control more of the wealth in this country than men do, and they more often than not like to work with with other women. So are you referring to the transition

that's taking place amongst the baby boomers. As that wealth trans there's two wealth transfers that are going to take place, on average, and I'm only speaking statistically on average, the husband dies first. Men have a shorter lifespan. At that point, the wife will end up holding all those assets, and then those assets will eventually pass, much of them will

pass to the next generation. So and that next generation there's more women graduating from college and graduate school than there are men, so to the extent that that has a tie to career and financial success, that that next generation is likely to have a little bit of a female bias as well amongst people in the industry or just amongst whoever is inheriting those is ever inheriting those assets.

So there there's going to be control majority control of the investible assets in this country by women within the next several years. But isn't that true statistically for many different things that involve women, that they're going to be greater in numbers they're graduating college and greater numbers grad school. Go down the list of things that were once frowned upon within society that that really seems to be changing.

So the question for you is Joe's a woman starting out in this industry still encounter the same sort of obstacles that you did when you began, or you you might have but got fortunate. A lot of it was, Um, I was in the right place at the right time and doing the right things in terms of the early stages of my career. And of course I'm twenty nine years in the business now, so I don't have direct experience with what it's like today for women coming into

the business. I do think it's probably a little bit easier. I just think the approach to gender differentiation on Wall Street generically has changed from kind of the go go days of the early eights the right when you when you look at some of the more popular movies or shows about that era of Wall Street, it is concentrated

in that era exaggerated, no question about that. But I think that being a woman in this business, number one, you're a minority, which has a negative tone to it, that word, but it also means you're a little bit different. And I think being a little bit different relative to I don't know called the middle aged white guy that dominates Wall Street is not necessarily a bad thing. It it gives you that level of differentiation right out of

the blocks, before you've done anything or said anything. And I I I hope that women do consider this as an industry. To the point about women controlling more assets, they like to work with other women. It's why I think in the r i A space independent investment advisors, there's a lot more women owned investment advisors and they're very popular with other women investors because they like that camaraderie. There tends to be more women are I A s.

Than there are female traders or female brokers. It's just more conducive to that one on one RelA and I to your point, I think that's the pocket of the business that is still very very male dominated and probably hard to infiltrate, which is trading desks and sales trading,

a position trading. And I'm not sure that changes in in my career lifetime, but that wasn't an area I was ever involved in, so it never hit me personally, but I've certainly watched, you know, friends and colleagues have a much more difficult time trying to infant infiltrate what is still probably a boy's network. I started on a training's desk, it was very rough and tumble, of a lot of sharp elbows, And I don't know if that is as much mail as it was just generally a

different philosophical approach the world. I'm Barry Ridholt. You're listening to Masters in Business on Bloomberg Radio. My guest today is liz Ane Saunders. She is the chief investment strategist at Charles Schwab, managing two point something trillion dollars? Is that right? You gonna have trillion? But I wouldn't managing yes, incline, I don't think anybody is really managed trillion dollars that

at least not not that we're aware of. Um. So let's talk a little bit about where we are in the cycle and what you see as things that investors are doing right and things that are are investors are doing wrong. Let's let's start with the first question. When when you look at an investment, how do you go about evaluating that? What's your process? Like? Well, depends on the investment. Most of my work that I do, uh in my in my role as strategists at Schwab is

very top down foot view. So unlike my y Avatar days when I was actually picking stock on a day to day basis, that's largely not what I do right now, so I'm looking at at major macro trends. But I would say that the thing that I look for most, whether it's at the industry level, the sector level, the

asset class level, is inflection points. And I think that is one of the things that trips investors up more than anything else, is not understanding the power of inflection points and the fact that the market, the stock market as a leading indicator, is going to often have its best performance when it launches off one of those inflection points.

But if you think about it, if you think about how the stock market relates to the economy, an inflection point on the downside is the bottom of the V, so when the data has stopped getting worse, but it's only starting to get better. But by definition, the bottom of an inflection point, that point at the V where things turn. That's when the data is most ugly in an absolute sense. You you don't have the benefit of

looking ahead to say, okay, we're at the bottom. We know it's moving forward, but the market's job is to find that point and move higher. And I think that's what investors missed quite often as they because there's so much emotional tie to our money that they want to feel good about the data that surrounds them, the economic data, the earnings data, all the broad fundamental data that they

miss off. They missed those opportunities because they want that confirmation to come from the data that isn't going to confirm until it's largely well into the process. So let's use the last cycle as an example. Market bottomed in March o nine. The recession officially ended when June nine, Juno and we didn't learn that from the nb R until it was I think months later, it was September. So if you waited to find out that the old clear whistle had been blown, you probably missed or so absolutely.

And I remember I had an interesting appearance on Good Morning America in May of two thousand and nine, and it was one Diane Sawyer was still hosting the show, and she did the pre interview with me that i'd be war and I was scheduled to come on to talk not about the recession of the market, but really about the A b c's of credit to fault swaps. I was coming on to attempt to explain to their more broad audience what these derivatives were, that we're causing

so much trouble. Yet at the end of our conversation the night before, she said, so, do you think this thing will ever end? And I said, well, I think the bear market's already over, and I think the recession is ending. I think it's probably over now, maybe a month from now, maybe two months from now. So unbeknounts to me. The next morning, I go on air and she introduces me by saying, Liz Anna is here to

declare the recession officially over. And I laughed. I said, well, last time I checked, I had no official capacity to declare recessions. Um, you know, having started her over, I got so much hate mail from that appearance, from people saying everything from your an idiot two. Isn't it easy for you to say things are getting better because you have a job and you're employed, And but the point I was trying to make was I think things have stopped getting but at the point they stopped getting worse,

they are at their most brutal point in time. It still looks horrible. You know. The funny thing is about the pushback you get. I did a piece some time ago and it was not supposed to be a market call. It was simply, hey, let's do an evaluation of the dow and figure out where it was. And this was later oh six or early o seven, and and basically you come up with a number, housing and banking all the stuff, and you come up with a number about hundred.

And at the time, I want to say the dow was twelve thousand or thirteen thousand, and the pushback is oh my, And and then within the piece it was and by the way, if we break ten thousand on the way to hundred, hey, who knows? You could see sixty eight hundred. It was like buried. It was not the piece was in, Hey, we're going to down sixty hundred. It's hey, let's figure out what the look at. And so for two years all I heard was your perma bear,

you hate to you asked you. Hey. So around the same time we had the bullish call, it was just every indicator we tracked was pinned all the way, like the VU meters. For you kids, that's an analog meter on the old stereos and for you younger kids, that's how people used to listen to music. But um, but at that point suddenly I'm a perma bowl and it dawned on me. It's like, oh, these people don't care

anything about what I'm saying. They're seeing the world through a pained, money losing perspective of whatever is going on is hurting their portfolio, and therefore it's Liz and Sander's fault, right. So so I I've learned. I've learned to use that as a you know, a bit of confirmation. When when you were out on a limb and you know, Herb Greenberg used to call it, the hate ometer was spinning out of control. That's usually a good sign that you're

onto something. You know, Sir Baron Rothschild, by when there's by, when there's blood in the street, even if it's your own, any number of Warren Buffett quotes, I want to buy when everybody else is selling. There's a reason why the great investors have coined phrases like that. They're trying to get the heart of what we're talking about. Let me tell you one other absolutely dead true story, and I won't name names to protect the not so innocent at

the time. Now I'm not saying names. The weekend, the literally the weekend before the bottom in March of oh nine, which was March nine was the bottom. So whatever, whatever the Friday or Saturday night date was. My husband and I are at a cocktail party and we live in Dairy in Connecticut, which had the lovely distinction in two thousand and eight of being named made the cover of Business Week as the number one town in the country most affected by the financial crisis based on a certain

population in below. So I'm surrounded by Wall Street people. Our entire circle of friends are Wall Street people. So the conversation, naturally at that time was about what was going on. And one of my friends who has been in the business thirty five years, said, las Anne, I

I don't envy you. I think there's no reason ever again why an individual investor would want to be in the market, and it has to make you wonder about the sustainability of schwab and I I sort of looked at him, and my husband looked at me kind of funny, and I said, well, I you know, I beg to differ um. In fact, I think that the conditions are starting to look pretty interesting. We get in the car and my husband looked at me. He said, did you hear it, and I knew immediately what he meant. I said,

you mean the bell ringing? He said, I knew you were thinking that as soon as he said it. Which we all know the phrase they never ring a bell at tops and bottoms, but that was one of those. Okay, the last man standing is down. There's just no one else left. And that's what bottoms feel like. See, I've always learned that they don't ring a bell at the top, but the bottom. You know, if it's not a bell, when your bell has been wrong more than you could

possibly take, that's more often than not the bottom. There is a visceral panic on the streets. Like I know, Manhattan isn't America. Manhattan is a small island off the east coast of America. But you could walk down the streets in February and March of oh nine and it was palpa. There was genuine fear and angst and dare I say panic. It was out there, and if you were tuned to it, it was really just a question of when do you you're gonna risk being a little early.

You could break it up into four pieces, put a little to work now, a little to work next week, next month, but at that point that was pretty much you know, that sensation of ringing a bell. A handful more people claim to have heard it today than actually heard it. Everybody is fantastic in hindsight, myself included. Hindsight bias is the greatest thing. But there's no doubt that you walked around and it it was. It was visceral. So so let's talk a little bit about here we are.

We're in year six of a bull market. We're up over two on the SMP five hundred. We've had prior guests like Ralph at Kampora and Las law Borrini and Jeff's out. I know, you know most of these gentlemen who are in the secular bull market camp Dittoh. So that was the question, is I think we're I think I think what we we started a secular bull market. No. Nine, there's there's no Investipdia definition for a secular bowl market.

You can it's it's it's more I can do well if it walks like a duck and quacks like a duck. So you have to look at what ultimately were the various characteristics of the three big secular bowl market markets we've had. In the post so the nineteen twenties, the mid forties to mid sixties, and then the Big one eight two to two thousand, and you had negative real interest rates at their beginning. You actually had a very high,

sort of secular high unemployment rate. In other words, you know epic economic problem that that ultimately finally came to a head with a double digit unemployment rate um and secular low kind of valuations which many argue that we didn't quite have this time, because you're really only very

quickly dipped into single digit territory at the lows. The difference, though, is that versus two, when I think the PE got down to around six, is you had runaway inflation and double digging interest rates, which risk for huge downward pressure on valuation. Risk free rate of return in eight two is like twelve percent. Why would I want? I can get twelve percent with no risk from Uncle Sam? Why on earth where I want to buy equities as opposed

to getting three from Uncle Sam? All right, I'll take Hey, I get a three percent dividend yields and I have potential upside. That's why you never saw that same. But I think a nine PE was certainly low enough in that kind of background to suggest that those conditions are places. And now just look at the six years of returns that we have had. Uh, you know, pretty much straight shot up and uh, and that just does not happen

if we were still in a secular bear market. We've been speaking with liz Anne Saunders, chief investment strategist at Charles Schwab. If people want to find your writings or follow you, what's the best way for them to dot com? You don't have to be a client. You just on the public site and it's all there for people to read the insights section. Yep, it's not hard to find. If you've enjoyed this conversation, be sure and listen to all of our podcast extras where we let the tape

run and continue chatting. You can check out my daily column on Bloomberg View dot com or follow me on Twitter at Ridhults. I'm Barry Ridhoults. You're listening to Masters in Business on Bloomberg Radio. Welcome back to the show. This is the podcast portion where we basically kick off our shoes. Relax. I'm gonna take my headphones off because my engineer doesn't need to tell me how much time is left in this segment. If if the buildings on

fire or something, just jump up and down. So a few let's get a few things um out of the way before we go. I didn't get your Twitter handle mentioned on the radio at liz Ane Saunders. How's anyone gonna remember though? At l I Z A N N NO E S O N D E R S not Sanders, not Sanders. If you google your name, it comes up. And that about the fourth thing you just have to start. You just have to put Lizanne in. And so let

me ask you. We weren't planning on talking about this, and I don't even know what you're about to talk about Twitter. Let's talk. We were just talking during the break. We're talking about new, brand new on Twitter. So how long have you been on Twitter? All right? A couple of months ago, Morgan Stanley came out or some other big house I don't remember, might not have been Morgan Stanley,

I think it was. But before I throw them under the bus, some big wirehouse came out with a set of guidelines for Twitter and they basically create a list of pre approved tweets that anybody who works for them, and it was really kind of absurd. So my question for you is, how do you have a lot of room to well? At this stage everything does have to be pre approved, but I have yet to get told I could not tweet something that I suggested I wanted

to everything's been approved. How much are you tweeting, like, hey, here's my weekly? Not as often as I will probably when I don't have to go through the process. We're very soon at the point where we won't have to get pre approval to tweet links to things we've done, or radio appearances or TV appearances that will basically happen

whenever we want. You're kind of a live wire. Are they're afraid you're gonna be you know, you're a you're a bomb throw are They're afraid you're gonna really cause them.

They hope to get to the point very soon where they make the same assumption about me and other subject matter experts that they do when they allow us or send us off to do radio or TV, which every characters is essentially we're not right, We're not going to embarrass ourselves or or shame the firm, And but we're we're new at at the firm, in in being out there in there I give them credit for giving you some rope to give some rope, but you know, Schwab, part of our our our culture is to be on

top of things like this. And I think the reason why we came through the financial crisis relatively unscathed was because it's a it's a culture of honesty and integrity, and we want to maintain that and everything that we do. It's it's a conservative approach to all right, we'll get

involved in this, but we'll go a little slow. I didn't have My most fun tweet was actually just today because of well yeah, because I was in my office and I hadn't thought about tweeting it, and one of you know, many headlines today came across of the Duke win and I looked up and I realized, I looked on my shelf in my office, and there is my signed ball from Coach k from having I was a guest lecturer at Duke in two thousand and six, and the thank you was as signed ball that's in a

loose sight box. So I took a photo of it and and just said, uh, you know, I had the great pleasure of being a guest lecture a number of years ago. How cool is this gift now having gotten and that was obviously pre the thousandth win, So I don't know whether now between that having happened, the thousand win and now me tweeting it, I may have you get some money for it on eBay. Yeah, that's the sore. They're loosening up a little bit. In other words, and

it's been fun. Twitter is a is a lot of fun. Very close friend of mine is who you may know is Anthony Nodo who is the Sacks and now the UM. I don't know him, but I certainly Twitter. So he's our next door neighbor and close friends. I'll have to bring him in for the show. That would be fun. He would be an interesting he would be He would be great because he brought Twitter public when he was at Goldman and and then when one of the things I always ask guest says, hey, who do you think

would be good for the show. I think he'd be great. He's to the extent he's listening, He's probably gonna say what is she doing? But if you remember, before going back to Goldman, Sachs, he did a stint at the NFL as the CFO of the NFL under Roger Goodell,

he's got something. He's got some and no head injuries, no lasting problems, not as far as we can The CFOs were very different helmets than the rest of the players, and they got a player at Army, so he and he was an army ranger, so he might have had some. So he's a he's a serious thing. Yeah, he'd he'd be a good he'd be a good one for you know, that's really that's fascinating something I find myself as his

pitch pitch woman here right. It's um, well, you know, it's always very easy to just we all have a circle of contacts and friends, and I'm always looking to, you know, move outside of that comfort zone. I'm a little bit of a foodie. This I promise this is not fast food over here. But a few weeks ago we had Bobby Flag and it was a fascinating conversation. Down to earth New York or no BS sort of guy.

And it forces you to think, like you said earlier, as a woman in what's predominantly a male business, it kind of forces you to be a little different, think outside of the box, and force forces everybody else around you to to interact in a slightly different way. So I'm always saying what can we do? That's just not not that we've done a thousand of these and it's become boring. They're always interesting, They're always my engineer makes fun of me. Count how many times Barry says fascinating

during during the interview. Because I find this stuff fast, I agree. I think, first of all, this is this is a very cool conversation to have because it's it's real topics for in depth, in depth, full sentences, not sound bites. What's your favorite stock pick? Where's the market gonna be a year coming back? We'll you know, it's that sort of stuff I used, like what is the value to zero? Value to that? Right? And and a lot of people do so talking about really cool. You

worked for Marty's Wide for how long? Thirteen years? I mean, by the way, he passed away sadly two years ago, not too long ago. And I wrote a I wrote a tribute that and it I The title of it was a take on the book he recommended that I read when I first joined the firm, which is Reminiscences of a stock operator. So now is this true? So

let's let's there's a million digressions here. So I heard that that book was kind of a lost book until Marty's Wig started talking about it and it suddenly became a best set. It's very possible. And Laslow Barrini too, that's his baby. In fact, all his his weekly or monthly Pecity puts out his called reminiscences. He always has a quote from the book, so that I get it, and I view people from that eighties era that we're

real acolytes of that. I get Laslow stuff, and he was a guest on the show, and I never put together like you recognize reminiscence as a reminiscence of a stock stock operator or reminiscence of a trade role, however you want to describe it. But I didn't realize that that was his reference. That's really fascinating. So this this tribute that I wrote was Reminiscences of Marty's Wig, and it um is the number one most read report I have ever written in all my years. And that's amazing that.

So I get emails all the time on the show. A lot of kids in college, a lot of people in grad school, and the question that always comes up is how much is this contextualized for them relative to Who's Marty's Why? And you know the interesting thing about Google, which is a phenomenal company and Google as a search I showed some of the other day. You know, you can drag an image to Google search and you'll find similar or the source of Very often I have an

image and I'm like, where is this from? You drag it to the search box and it will show you where facial recognition. It's it's crazy. However, the one flaw that Google has is that stuff that predates the late nineties. You know, you search for Marty's Why, and you'll get the book and you'll get a couple of things. But he obviously didn't have a big Internet footprints because there

wasn't an Internet. There wasn't an Internet. So I think people who are you know, history didn't begin in nineteen two. It goes further back. So explain to people who maybe a little younger and may not be familiar with Marty's Wide. We talked a little bit about his phenomenal call on around the eighty seven crash, but that was really one in a series of really and it was and it was what what he looked at the way he analyzed

markets that allowed him to see what was happening. And I think we were already talked about the fact that he coined the phrase don't fight the Fed, just a little quip that became famous. It was his whole basis for thinking about the role of monetary liquidity in financial markets, which is what ultimately led to this cute little phrase,

But it was really what was underneath it. He also created the pot call ratio, which a lot of people don't realize what coal ratio meaning looking at the options, how many are bullish? How many embarrash? Ratio was invented

by by Marty. I didn't know. That's interesting. He was the creator of, and pioneer of, and and probably first user of many of the sentiment indicators that we all look at very regularly now, and and really believed that more than anything that crowd psychology that moved from fear

and greed so dominated many of the traditional fundamentals. In fact, he was often asked the question if you could pick one of your hundreds of indicators that you look at only one You had two time markets based on one single indicator, and his answer was always time and newsweek covers. We have. If you had a bull or a bear on both covers within a week, trouble trouble, well, the

opposite were typically happy. And that was to our point, pre Internet, pre all of the financial media and publications that we have right now, where you had a much smaller subset, and if on those two big popular national magazines you had double bulls, you know, watch out below or vice versa. Paul McCray Montgomery, who passed away last year, was the guy who literally invent of the magazine cover indicator. I want to say about thirty years ago. But he

would write about it in a very academic way. It wasn't oh look this is on the cover, We're going to hell. It was always there's actual research, right, here's the data. He also was the one who started looking at the length of women's skirts as a potential indicator. He looked at a lot of Super Bowl indicator guides, no, no, but, and the Super Bowl indicator turns out to be pretty

much nonsense, just a lot a lot of them. Um, So what else, uh did Marty look at in his So I'm going to a different question, So let me not beat around the bush and get to it. A line I've heard my whole career is hey, you know, there's no such thing as a wealthy technician. Marty kind of proves that to be. I think he did not prove that, but there was. It was not just technical indicators.

He was not just a chartist. He was, but he also believed and I think he kind of co coined the phrase the trend is your friend with with our other friend ned Davis, who had worked with Marty many many years sharing research and schwab is still big clients of ned Davis and retired. Now he's still he's still relatively active. He still writes UM he's got a big, huge organization and the phenomenal They sold it last year to UM or two years ago? Was it Alliance Bernstein?

Somebody bought them. I don't remember who it was. I don't yes had a parent now, UM I know, as I s I sold to Avercre. Really luth Old is under a Weeden. So is ned Davis still independent of somebody? I don't know. That's a very good Quest's go to the Google machine. There you go. But you know, Marty so he certainly looked at a lot of technical factors, many of the traditional ones that we look at right now um sentiment indicators, but also to the point of

the trend is your friend? He he looked at momentum factors. But the biggest component, if you wanted to look us at the breakdown of the model, the biggest component was the monetary environment. Was was economic liquidity um which is in the seventies, eighties, nineties or across. Yes, yes, and yes. He looked at monetary policy. What the central we basically had monetary liquidity, investor liquidity, and momentum. Where the three categories of indicators, so monetary liquidity would be all the

interest rate fed policy indicators, monetary base, money supply. Do you remember the days when you would wait till Friday afternoon for the money supply? Isn't an incredible waves you go through in almost thirty years in the business of what are the hot popular indicators? You wait with bated breath together, I remember when it was a trade deficit. It really is amazing what sort of captures And in many cases it's because those are more market moving figures

at the time, but it is incredible. You're right, you look, nobody pays attention to that anymore. Yeah, fans got a four trillion dollar balance sheet, but so who cares about the weekly uh weekly factors? By the way, Ned davis majority stake purchased by Euromoney in June two thousand and eleven. So, and I also, they've they've been, they've kept I think a distance because I didn't even know that, and then I've been They're still running it independently from from all

indications to this user. Before this show launched, I did an interview with Ned Davis and it was really the format that set this show up. It was, I want to say, about two or three years ago, absolutely fascinating. Um. It was a privilege speaking to him. And I know his partner, Ed Mendel, who's also so I think one of the owners of the Atlanta Falcons also a delight, just invited me to a game. That really tell him. I said, hello, I hope to be able to work

it into my schedule. He he's a really interesting guy. Another see if I get him up here to sit down. He's like one of these guys that's a very insightful business person. It happens to be the business of finance, but it's still a business. But he understands the business better than you know. It's really is a great combination because because Ned understood the markets and and and ands

to the business and was really a great a great partnership. Um. But I remember was it big mo was the chart that everybody used to look at and I think, uh, and you are still present. It's well, as long as it's it's showing work, it works. So so tell us what life was like working on a daily basis with with his why what what was that? And I have to give credit to Marty's partner, Ned Babbitt to who

who is also a well known guy. Not no, not quite to the level of Marty because he his writings were a little bit more quiet and but a little bit um he was he was sort of he was a former broker and he a Futton broker, um, but

knew how to run the business. And then actually the third guy that I must give credit to the head of marketing effectively that that really grew both this wide side of the business and the avatar side of the business, which was the institutional side, was Bruce pollo Quin who was just got um was just made a member of the House of Representatives representing Mains, just got elected and then November, so he was sworn in and I guess January whenever they do that, Um, he's I think he's

on the House Financial uh Services whatever committee committee. Um, so he now gets quoted anytime there's discussion about the budget. So would you say these three guys were oh, oh absolutely, absolutely, And they were very different personalities. Bruce was a hyperactive Harvard Prep school kind of guy, looked at two with the horn room glasses and talked a million miles a minute and go, go, go, go go. And Ned was a little bit more quiet and reserved and um, and

Marty was Marty was was a character. He really was. He was um uh. Many people saw him as as fairly volatile and personality, um would you know, throw pencils and break stuff, but the biggest heart in in in the world. And he was known as a warrior. Um. But in the tribute I wrote to him, I said, he really was a warrior. He just he was so seeped in in markets and wanted to understand them and and was so engrossed in it. And he was just he was a really neat guy. They all were really

neat guys to to work for. And it was very much not the Wall Street Boys network. I think that was probably also what was intriguing to me and maybe why I had have the Hollis had the view that I have that being a woman in this business is a great thing because I wasn't ever jaded in my early years from being in an environment like that. Uh, there was not a chauvinistic bone in in any of them,

which was a special experience that that's really fascinating. And people may not realize this, but when Marty passed away, his I believe his wife put the apartment they lived in up for sale and it was known as the most expensive or most valuable apartment in New York City. Is a stunning apartment, really beautiful apartment. It's the top of the Pierre Um and really quite extraordinarily beautiful. And it's where Marty had some, though not all, of his

memorabilias well. It was also well known for being a memorabilia collector and he had he had them. He was the one that bought the Marilyn Monroe Happy Birthday dress. Oh really had the Harley Davidson from Easy Writer, that Fonda Road and you name it. Music memorabili and guitars and gold records and the original Terminator costume just really really cool uh stuff. So he was fun. He was a quirky, fun different guy. Not not the usual walls, not far from it, and I think that was always

part of his charm. So his tactical model, what was the thinking behind it? How did that? And I'm not asking for secrets, I'm asking generally speaking, how did the tactical model run? Again, it was I'm trying to remember the weights. It's now been so I I left in so that was a long time ago. But I think

it was economic liquidity, investor liquidity and percent momentum. What is investor liquidity that's basically sentiment, so measuring direct sentiment in the sense that you're actually looking at asset flows in cash levels that investors will have. And then the attitudinal measures of sentiment like the Pook call ratio, like AII or investors in intelligence, those types of measures that measure the attitudes of investors. So that was what we

called investor liquidity. And then fift was momentum, which is a lot of those shorter term technical in with the trend that type of those of indicators. So now let's let's get into some of the questions we missed earlier. I asked you what what it was like working um with Marty? What's a day in the life of liz An Sanders at Schwab Like, Oh, gosh, depends on the day. Can I tell you When people say to me, God, you're up so early. You could work so early every day?

What what's it like? My answer is always, Hey, it's different. Everything's different every which is what You're absolutely right. It's it's the thing I think that is most intriguing about this, this industry, certainly what you and I do, is it changes every day. I had a funny comment made of me, uh, or made to me. Uh. This is maybe about a year ago, and I was speaking at a large client event and an investor who had been there the last time I was in whatever city it was a couple

of years before, said something funny. He said, are you giving the same speech you gave two years ago? Which I didn't want to laugh in his face. But first of all, I don't write speeches. I speak off the cuff. I don't use notes, no bullet point. Now I have I have charts that I show, so I always have a PowerPoint presentation, so in effect, that serves as an outline. If I do the same thing and people said to me, you know you said, and I'm like, I don't know.

I just the art comes up and I describe in context. But so you can use the same set of slides, but it's a different but even I might even use the same exact deck if you want to call it that. But it's an event and an evening event. And if the lunch event are advisors that are on Schwab's platform,

so they're professional money managers. And then I use the same charts talking to an audience of individual investors, are Retail on its same exact visuals, very different message, very different in terms of what I what I choose to explain, what I don't, the assumptions I make, Not that I'm dumbing it down, it's just but the funny comment back to the sky was number one. I don't write a speech and then recite it, but to suggest that I could be talking about the same things two years later.

No thing's changed. What's changed over to But that's what makes this this business and what we do so fascinating because it's something different every day and I I would say, but a day in the life of las Anne is I read, write, and talk, So read and talk. I like that. That's essentially that's what we do. We read, write and talk. When I'm on the road, which I travel every week, um um talking, traveled that much on

the road everywhere. Not Monday through Friday every week, but once a week at least, I'm going somewhere every week. I get a little reprieve in the August time frame because big events are not happening, typically in the dead of vacation season, and then I get a little reprieve in the December, you know, Thanksgiving. Usually beginning of December is still pretty big Z. But mid December to early January is a break, and then mid July to the end of August as a break. But other than that,

it's it's it's every week. So when I'm on the road, I'm talking, and when I'm not I'm reading and writing. So um I. Mondays are generally publishing days, so that's what I'm doing a lot of my writing. The Friday before and the weekend is a lot of prep and thinking and editing, writing notes and sending torturing. My research assistant with can you put this chart together? Can you get this data for me? And and then I read constantly. I haven't read a fun book in forever, but I

the day to day stuff I read constantly. They make fun of me in the office. I go on vacation like February, talking about February, and I'll bring a stack of eight books with me and they're all, it'll be seven unrelated finance books and then whatever Michael Lewis's last book is, and they're like, why would you bring that? Well, I'll read them on the way. Who reads it? You

can't read two books a day, flash boys. I start that after Breakfast on the Beach finished the same day, absolutely, And it was a fact the year, A couple of years before the big short started on. I actually saved it for Wednesday. I didn't want to peek too soon in my now, but you are you happened? That would be talking about somebody who's really cornered the market on business books that are also really really fun and enjoyable and fascinating to But there are lots of other books,

all right. So this last vacation and they were making fun of me because they're like, why are you slipping all these books, so Carrie always is the person who played Princess Brian. That's exactly right. So he has this book out that's charming and delightful about his experience making the movie, and it's just love it's lovely and my first date with my husband. Really, we've always loved that movie.

It's it's a lightful, delightful movie. Very different character for Robin Wright than the one she's playing now, to say the least. And she is just so gorgeous in that movie and everybody in mean, there are famous lines from that movie that we say sometimes and people look at I don't think that word means what what you think? Have fun storming the castle? We say that to people all the time. They're like, what are you what are you talking about? Um? But I finished that book before lunch.

That's not a heavy And then the third book I I actually one of the books I only got like halfway through. So some you could finish by lunch, some you could kill in a day. How to Be Less Wrong was by a mathematician that explains how do you statistics in everyday life? And it's really you know, it starts out with this wonderful anecdote of and I'm forgetting the gentleman's name, but he was a professor of Columbia. So the Army comes to him, and the Air Force

comes to him. There really wasn't an air force then it was the Army Air Corps comes to him during World War Two and says, we're trying to figure out the optimal place to add armor to our various bombers. And here's what we have coming back to us, and here's the dispersion pattern. Here's what's on the wings, and here's what on the fuselage, and here's what's on the tail and blow and he says, um, you don't have any planes coming back with holes in about the engine. Yeah,

that's adequately armored. And you know they're all He's like, no, no, no, you get hit there, you don't come back. You completely misunderstanding the whole statistics. This sample set is giving you information. You're just looking at it backwards. And the answer is you need more armor on your actual engines if you want those planes to come back as opposed to astray

you know, even a nick sending them down. So it was kind of as it got further along the book, it got a little heavy, are a little more in depth mathematics, and so you start to slow down. You're you're reading pace. But um, that's my only like you, that's my time. I'm not a big book reader. And there's so many I and I and I get them.

I get lovely gifts from people a good finance or generally generally I read constantly, But it's all the day to day stuff that right from all the research providers that I get, and your stuff and blogs and and so keeping up with that fire hose and stuff. It is totally drinking from a fire hose. So we had a conversation in our office, I want to say last year, and all of us made a commitment to read more finance related books stop and thinking about you have Marty

Zack's book. Here's a guy who's sitting on right, a legendary investor who basically says, I'm going to take a thousand hours out of my year to explain to you everything I've learned about markets over the past four decades. Now you could do that, or you could read a newspaper and watch television. Which do you think net net is going to have a longer lasting impact on you?

As an investor, so so we kind of all And I always have a giant queue of books and I'm always working my way through it, and I find finding interesting books that are not written by finance people but are applicable to finance is really fascinating. And whether it's about science and technology or just about ways of thinking. Have you read Abundance by Peter Diamonds. It's on my I haven't. I haven't read it cover to cover, like

a like a novel. It's dog eared, and I've probably read every word in various times and for different reasons. But I'll tell you if you want, if you are feeling at all pessimistic about the future of our world, the future of this country, that's a book you got

to read. It is it is such a He's the founder of the X Prize um, and it just talks about you never know where a brilliant idea is going to come from, and where where you're going to find creativity and innovation, and when you have two to three billion more people coming into the world of innovation and information, you just never know where a good idea is going to come from. He uses as an example one of

the more recent X prize was for anybody. You know, the Exerprize is about setting up a financial incentive for people to solve problems. And it might be a large could be could be for a you know, an individual in their garage just you know. X y Z company is sponsoring a twenty million dollar exerprize to figure out fill in the blank. And one of them was figure out how to contain an oil spill immediately after it's happened so that it doesn't spread. And he talks about

the fact that the winner of that was a tattoo artist. Oh, he said, the light bulb went on when he thought about how whatever chemicals are used to prevent the ink when it's applied from spreading and on the skin, and he adopted the same thinking and I think partnered up with with chemists and ultimately won the prize. So he just used as an example of you never know where the next great thing is going to come from. And uh, you know, don't don't don't assume that that the greatness

of us as innovators and creative people is diminishing. That's funny because I had a conversation with a reporter yesterday. A young gentleman at U n C who was asking, I'm sorry, that's wrong. It was a different reporter and it was UM, I think it was U S News and World Report about they had looked into something and I had written about in two thousand, Fortune did this, you know, ten stocks you know for the next ten years, and it was a debut, you know, it was Enron

and a bunch of others. It was just a horror show. And so now there was more recently and I remember who did it, UM thirty stocks for the next thirty years. And the person asked me, why is this a bad idea? And to your concept, I said, there is a kid today, he's fourteen. Right in thirteen years or so, he will be out of college at a grad school, twenty seven years old, at some startups somewhere, and I can't tell you what the hell this guy is going to invent,

but it's gonna cure cancer or change change batteries. So it's just an article of the day about, hey, if we swap aluminum for this, I odd this this diode in batteries, it's you know, lighter, last longer, and by the way, you could recharge a battery in thirty seconds. Nobody has the slightest clue where this next thing is going to go. So how are you going to pick thirty companies for thirty years? Go back thirty years ago?

Most of them don't even don't even exist, you know, look at the nifty you know they by the way they NASA and its construction in two thousand relative to what it is right now. Does So you've been around long enough as have I to remember the nineties really vividly. Microsoft essentially bailed out Apple with a hundred and fifty million dollar investment, and my thesis at the time was, well, they wanted another operating system to keep the Justice Department

at Bay. Had Apple gone under, there would have been really the only oh yes, it would have been anti trust problem. If I would have said to you, by the way, that was a terrible mistake Microsoft made. Apple is going to come out with all these great products and they're just gonna kick Microsoft. But Microsoft is still

be a cash cow, right right. I got an email from a friend and her signature is typed on glass sent by Magic, which is really what an iPhone or iPad is, by the way, so we're not even talking a hundred years from that. We're talking fifteen years from now, Apple become the biggest market cap in the world. Microsoft will still be a cash cow, but they'll really have no waning influence on technology. You would have said, you've lost your mind. You're hallucinating that. Not only is that

not realistic, it's probably impossible. And that's like all of fifteen sixteen years ago. So now double that thirty years from now. Which of these companies. So whether it's you know, Moore's law with the speed with which things are changing and innovations kicking in grows exponentially and uh so that's you know, also that Peter Diamandous concept, and he named a university off of its singularity, And uh, I agree, I think that there is. I think that's beyond our lifetime,

the singularity. I'm hoping it's beyond lifetime. So when I had Byron ween on, he talked about he left a lot of money to Harvard, he gave a lot of money to all these different charities. He's very much a philanthropist. But he made a bunch of money investing in biotechs twenty five years ago. And he goes, I don't even look at my bought him, I put him a wife for twenty five years, and now they're worth millions and millions of dollars. People are just starting You had the

sixty minutes piece not too long ago. You had the vice piece not too long ago about the combination of genomics, immunalogy, and and there was one other factor where essentially cancer for the first time ever seems to be coming up on a potential cure, right, which I I think, not because I have any medical expertise, but maybe it's just hope is in our lifetime thing. I don't even think it's in our lifetime. I think it's somewhere in the

next five to ten years. So if you if you see the sixty minutes piece, showed them taking um polio vax polio virus, not even the vaccine, genetically alterning it and dripping it into the brain to kill what is normally and now granted it's only a fifty percent success rate, but that's huge. Fifty This was a fatal You get that that diagnosis, get your personal affairs in order and now and now we're giving it to people in order

to cure. So so I don't know when we're gonna there are some four hundred different types of cancer, and it's going to be a process before all of them are gotten. And maybe we don't get all of them, but we get some. But that has changed so rapidly. If I would have asked somebody five years ago, hey, what do you think about curing cancer? You have been hearing that my whole life. It's a century away. And

suddenly a couple of different technologies. You get the ability to manipulate DNA, you get all of the increases in technology that everything gets finer and finer. How does anyone have a clue where the next great idea is going to come from? I couldn't agree more. That's why I love the acronym brain, which is biotechnology, robotics, artificial intelligence, nanotechnology for what are just the whether you hear it reference to this is what kids should be studying, like

the STEM, which was science technology. Yeah, my son just called us about two months ago. He's a freshman at Indiana University, and part of the reason why he went there was the Kelly School of Business, which is a very very well round, world rounded business undergraduate business school. But he called a couple of months ago and said, um, I think I want a minor in business, but major

in math. That's a combat. That's an absolute comma. Even Wall Street firms are looking for math oriented, no doubt about it. Look if you if you look at the world of quantitative investing, if you say, let's put away the historic myths and the things that are unproven and just say, what do we know actually works mathematically, whether it's Jim O'Shaughnessy or rob or not. Or we had Cliff ass In this recently who basically laid out the the argument for value and momentum together is very much

an unbeatable combination. And the reason we know that is mathematics as opposed to all the specific myths. Uh. We see. So in the last couple of minutes we have you for I know we have to get you out of here eventually. Let's see if there's a handful of questions I want to come up with you. Well, one, I'm going to jump in and answer something you haven't asked me yet, because we've talked so much about mentors and

Martin um. But how how cool I'll sort of ask the sheer luck but bliss that I have had in my career going from working for Marty's wage to working for Charles Schwab, for Chuck the man, and people don't realize Charles Schwab is a real person. Chuck still is the chairman of the company right and and very active chairman that somebody else we should get it. Very active chairman. I'm going to have you extend and invite. Also, he's I think we could say he's a master of business.

He has certainly a master point something. He's about as iconic. He really he democratized investing for these So again for the young uns who don't understand this, there used to be fees that were set for everybody, and then there was a rule change that allowed competition by reducing fees, and Schwab essentially said, okay, let's go. We were the first disc out brokerage firm, first discount brokerage the early

seventy years ago. So we just last year celebrated and he really he he changed the business as we know it um and has been a pioneer all along the way. Um stepped back in a CEO a number of years ago and and then ultimately found his successor in Walt Bettinger, who is our CEO now. But he is still chairman of the board and a very active chairman, much to the thrill of all of us that get to still have him around on a day to day basis. And he's been in the business for more than four years.

How old was he when he started? Seventies seven now really so, yeah, he was in his thirty. He looks pretty good for seven. He looks fantastic. He stays in great shape. He's a ski or a golfer and no kidding, yeah, and he's uh, he's he's a prince among men. And so I have and then my my media part of what I do. I got to start on Wall Street week with Lewis Rukaiser. Really seriously you Marty's wide Lewis Ruckeiser, Chuck Schwab. That pinched me, you should be buying lottery

tickets every other week. Basic that I have, I have been very, very blessed. That's amazing. One of the questions I had asked you earlier, who else were some of your mentors? You actually guest hosted for ru Kaiser? Right, so, um, I was a regular. I was a guest initially in and then he right away I got asked to be a regular panelist. So my first show as a regular panelist was in early and then maybe it was two

or three years later. I don't remember exact time frame, but there was a small subset about three of us of panelists that Lou picked to stand in for him if he was on vacation or not feeling well. And so only one time, but um I got to play Lewis Ruckeiser. So I did the walk in, I did the monologue, I walked over to the table, sat down with the panelist, went an interview you a guest, and it was it was incredibly nerve wracking. You're a natural,

you know what I I don't. Fortunately, I don't get jitters either when I to public speaking or this type of thing. But standing in loose show shoes for a four power show. Uh. And it was, you know, quite a few years ago, so I was much younger than I am now. It was it was daunting but fun.

I tell the story. You you actually play a role in my media career because I tell the story the first time I did you and I the first time before, I had just finished a diet coke in the green room and I was heading to the bathroom when they tapped me, Hey, we're on the let's go, and they bring me in and it's I'm sitting here. It's a small round table. Next to my left was Larry Caudlow. To my right was you and a friend of mine who was a strategist at a at a firm I

had worked at previously. I got a gentleman named Barry Hyman had said to me, look, don't look nervous, don't dart your eyes back and forth. Find something to look at. And I was looking for something to go. Liz Anna Sanders has the whitest teeth I've ever seen. And I swear this every word is true. That was my focus. I was just looking at you. Think about the conversation we had before we walked down into the studio. What was it about. Oh I don't know them so long ago.

Oh that's right. Oh that's hilarious. That's absolutely hilarious. No smoking, no cost never never had a cigarette, Never had a cup of coffee. Don't drink, don't smoke, um, well, drink

other stuff, just okay, no coffee. So um So that was my first show, and I remember it was a glass table, which was the only thing that prevented me from throwing up, because I remember thinking, if you puke on this table, it's just gonna skitter it in my lap, all over my It was just, you know, my father in law, who's no longer with us, was the only person who was honest with me. I go back into the office the next day thunderous applause, or at least

that's how I remember. There were five standing ovation. It was just great, and everybody, my supervisor in the head of everybody loved so I called Harry. So, Harry, what do you think. I don't know. You looked kind of nervous. You you would your lips would draw. You was smacking. So every time, this is absolutely true, every time I the first three or four times I did television, everybody loved it, and Harry was the only guy give me

the straight dope. So by the fifth or sixth appearance, how was that, He goes, I have to tell you, you looked very comfortable. You were articulate. You sounded like you knew that was That was when I said, oh, okay, So I really appreciated him, not sugarcoating it. You gotta work a little bit. You You looked very uncomfortable. All I guess I gotta I gotta work on that. So this isn't about me, though this is supposed to be

about you. You were the there at the first and I remember thinking, God, she is just so smooth and effortless. Can I tell you the best tip I got ever that I have I've It's always in my mind when I do something like this, or I do a TV appearance, or I get up in front of a room. Came from Lewis Ruckaiser. So the very first time I was on the show was as a guest. So I was doing the ten minute interview after the discussion around the table with the pans. Were you working at the time

at Gavatar? And I had not met lou before. I was a huge fan, but I had not met him. And just before he came out to do his monologue, I was behind the scenes and that was when I met him literally for the first time, shook hands. He said, thank you for being on the show. Are you nervous? I said a little bit, he said, and he asked me what I thought wasn't an odd question at the time, two part questions. He said, are your parents still alive? Are they still with us. I said yes. He said,

are they in the business? I said, uh, television, business, finance? He said, no, your business are they? Are they Wall Street people? I said no, no, no, are from it. My my my mom was largely a stay at home mom. She had some jobs, but not certainly not in finance, and my dad was an ad sales person for a trade magazine. He grabbed both of my elbows and said, Okay, I want you to do me a favor when you come out here to do the interview with me. Get

them to understand what you're talking about. And I have always taken that to heart because I think even though what we do is fairly complicated, what's going on in the world is often fairly complicated, there is a way to explain it and talk about it to investors that

is much less complicated. And I find that the people who have come up to me and said thank you for speaking in in plain English and not using a lot of jargon and making it easier and understand more often than not, those are people on the more sophisticated end of the spectrum than they are on the lesser end.

And I find I'm almost thirty years in this business. Now, to me, there's nothing that's more of a turn off than when I hear somebody get up on stage or on TV that one wants to sound like the smartest guy in the room and is throwing all sorts of jargon, and they're very William F. Buckley like in there in the way they speak. And I just much more appreciate somebody who just speaks in plain English, doesn't try to get overly flowery in the language. And and I that's

always in the back of my mind. Okay, get your get mom and dad to understand what you're talking. But it's funny you say that because my mother is now retired, was a real estate agent. My wife is an art teacher. And that's the same concept in my head. That's my tale. You do the same thing. Speak to mom, speak to my wife. So neither of them in the business. Although my mom was kind of a she's the one who

first turned me onto equities. Okay, so she was an investor in the eighties and and and nineties, and but she was really she was a real estate agent by profession. That was what she did. So the issue was always get her to understand these complex economic issues or the sentiment issues or any of the technical shoes. If you could get somebody who's not a Wolf Street professional to

get it, hey, then everybody should be all right. So in the last few minutes we have and I'm really enjoying these digressions, but I know our time is only finite. Let me ask you a few of the standard questions I'd like to ask people. Um, and there are a whole bunch of other questions. So we discussed investing books, we discussed investors, we mentors, and who the other investors were. So so let me ask you these last two questions. M M, I really don't love that question, and I

don't like this question. We you know, can I tell you something? I write all these questions down and we got a conversation through. So there are two questions I always ask people, and let me give you these. The first one is, we've seen a whole lot of changes over the past your twenty nine years in the market, every thing from decimalization to market crashes to high frequency trading. What sort of shifts do you see coming in the not too distant future that you think are significant for

investors thinking over the next several years. So call it a medium term time horizon, I think we will continue to see greater access to a variety of asset classes, so further democratization of investing for many individuals, I think, whether it's through E t f s or or other avenues through which individuals can take almost an endowment approach to their own portfolios and further moving away from that

traditional stocks, bonds, cash. But I also think we're in a period of likely greater volatility in those asset classes, so not necessarily a smooth ride for investors trying to navigate that, which means that I hope there's an additional place for education. And we're also at SCHWAB we are big proponents of investor education, and I would like to see more coming down the pike on that front. And I'm not just talking about seminars for investors of an

older age. I actually wrote a letter to the principle of my kids high school, my my son's now out of high school, my daughters in high school, um, just asking whether they had ever considered having some sort of course, not in the stock market, but something that I would call life economics. How absurd is it that at that level, or even before we don't teach the basics of how a credit card works, and how compound interest works, and how to balance a checkbook and how taxes are taken

out of our paycheck. I'm all for the arts, and I love when my daughter has to do a map of what ancient Greece look like, But I think shouldn't that also be in conjunction with the way money works in our economy? You know, we what a four oh one k is, what an I ra is, all these basic things that that we sort of get thrown to

the wolves. So I would like to see we're we're as a firm sort of on a mission because it's it's a it's a big part of what we do it at shua But I'd like to see that become more pervasive, so that we start the education about money at a much younger age than we do now. So that's my longer term hope. That's that's really fascinating. That's um.

You know, we talked about the lack of civics. You know, it used to be something on a civic Here's how you learn how to be a citizen and in a complex modern world, here's how you learn how to handle your own money. That would be a fantastic Uh, it should be. It should be a required course at least in high school. So we're gonna have to nominate you

for the Board of Education. No politics. And so the last question I I always ask people and I get a variety of really interesting responses, but let's see yours is, so, what do you know today about investing, markets, finance that

you wish you knew when you started your career. I think I wish I truly knew, even though when I started my career was working for somebody that spent a lot of time focusing on the behavioral side of markets and crowd psychology and the sentiment around peaks and valleys in the market. It's not until now that I realized

that that really matters more than anything else. And if you can figure that out, you can maybe not nail perfectly tops and bottoms, but that I think is generally what keeps you on the right side of things, and which often means as as someone who's doing the investing, you know we we we observe the world of investing, but we're also investors. Um some of the best decisions are often some of the most uncomfortable ones. So I

I wish I would have understood. I think I probably would have been made better calls and decisions around the peak in two thousand than I did. UM, but it certainly helped me and some of the more recent inflection points in the market. Liz, thank you so much for being so generous with your time this. This has really been great for those of you who are joining us late. I don't know how that's possible. UM at Liz Anne Saunders or schwab dot com for all of the various commentary,

research analysis she puts out. If you enjoy this conversation, you're probably looking at it on iTunes, so look up an inch or down an inch and you'll see the rest of the series. This may actually be the fort show we've done. We started almost a year ago, and UM, you may be looking them with forty. That's right you when you said twenty nine, I'm like, you're twenty nine a year or too older than twenty nine. You look fantastic for whatever age you were at. So that's UM.

I'm gonna stop there before I take a hole. Um, you've been listening to Masters in Business on Bloomberg Radio. I want to thank Charles Moulmer, my engineer, Michael bat Nick, my head of research. I'm Barry rit Halts. You're listening to Masters and Business on Bloomberg Radio.