Ed Mendel Talks About Ethics in Finance and Business

and wrapped an entire business model around it. And while Ed himself is very humble and credits uh, Ned's genius for the success of the firm, really he is one of these um underappreciated UM people in finance who who took a great idea and found a way to turn it into a very very successful business. I don't think there would have been a Nit David's Research without Ed

Mendel's contributions. He's also very actively involved in philanthropy. He's one of the minority owners of the Atlanta Falcons and just uh an all around inspirational guy. I've relied on his insights over the years not just for helping to

put together the forerunner of Masters in Business. We discussed a little bit about how his contributions actually helped lead to this show, but also his insights about running a business and managing people, and managing capital and assets, and being able to think about the various ways that business has done properly intelligently, ethically, and and um just just being smart about how to run a shop. And so I have tremendous amount of gratitude to him personally for

for sharing his insights with me over the years. He mentors a lot of people. Uh and and he's just one of these people who are in a household name but have had an enormous influence on on finance and business. And even though you may not have heard of him, you probably should have. So, with no further ado, here is my conversation with Eddie Mendel. My special guest today is Ed Mendel. He is co founder of NED Davis Research as well as the brokerage firm Davis Mendel and Reeginstein,

which we're both founded in nineteen eighty. Collectively, they're known as the NID Davis Research Group. Ed helped to build one of the largest stock and bond research followings on Wall Street, working closely with ned Davis since nineteen seventy one. Their research is best characterized as an objective, disciplined approach to investing, focusing on risk management, primary trends, and avoiding major financial disasters. Ed has been associated philanthropically with numerous

national and Atlanta charities. He is also a minority owner of the NFL football team, the Atlanta Falcons. Edmundel, Welcome to Bloomberg. Thank you. So I've been looking forward to this for a while. I think I know you for more than a decade, maybe close to two decades, because of your work at ned Davis Research and and being a partner, Uh to Ned. Let's ask the first question.

You guys began in the middle of a bear market in the nineteen seventies in your work in markets, How did that impact your psychology the rest of your career? It's got as focused and uh, we really became an institutional research firm, and we were very fortunate that when

we started it was nanti five percent retail. It ended up being n institutional, and so it wasn't a matter of anything but being at the right place at the right time with the right product, and I just knew that Ned was a genius and that we would somehow be successful. The seventies, you guys were at a brokerage firm. How did you and Ned hook up? How did you guys find each other? I started at J. C. Bradford in Nashville, and Ned came home from Harvard and started

working for J. C. Bradford. I went and introduced myself to Ned, and we struck a friendship and uh and uh, you know, eight years later we left to start our own firm. You mentioned being launching your career in the nineteen seventies and Ned David's research in eighty. You started mostly at retail, but it eventually morphed two institutional Was that because the retail investor was not a participant? Was it the psychology? How did you shift to such a

heavily heavily waited institutional practice. Bradford, I don't think really understood what they had on their hands with Ned. So I was one of the first people to go out and market Ned in Texas, in the state of Texas, and in Houston, and going backwards, I was a retail broker. My career really got helped tremendously. By May Day, uh May one commission structures changed used to be you could, so I became really one of the first discount brokers. And so it was eighty two cents to sell a

hundred chairs of IBM. But Mary Lynch and Kidder and pain Webber would not let you discount. So I went around to all the wealthy people I could find in Atlanta and offered him at discount. So I became the biggest producer at Bradford. But then I started asking Med to leave, and we were going to leave in seventy eight, and we ended up leaving in nineteen eighty, which is another story which I'll get to later. Okay, well, let's let's get to it right now. You started in eighty.

Why why did you wait till that year? We were gonna leave in seventy eight, and UH Ned was going to move to uh Sarasota, Venice, Florida, and uh we were going to start the firm. But Bradford came to Ned and made him a partner and uh and he stayed. But then in nineteen seventy nine he went to Jimmy Bradford and told Jimmy that he wanted a computer, and Jimmy told him, I've seen computers that you're doing fine,

just the way it is. And so Ned went out on his own and spent thirty five thousand dollars on a Hewitt Packard computer that did graphics. And within the six months you could buy a chip that made it ten times faster, and within a year you could buy the computer with the chip in it. It was ten times faster for a total of seven thousand dollars. And

uh okay uh. And I recall Ned saying that he had pitched Bradford on technology and computerization and the ability to crunch a lot of numbers, and the response was sort of, hey, what you're doing is working fine? Yeah that Jimmy said, it's working. It's working just fine. But Ned, ned Is was a genius. And you know, among many other things, it was clean data. Uh you know, we cleaned data for Ibbotson and SMP and uh you know, we were known for our charts and our data among

many other things. But the other great story uh that came out of that is uh uh Ned told me I think the fourth biggest lie ever told. And he told me when we started that we were going to need a programmer, but just for a year. And I think when we sold the company we had fourteen programmers. So the fourth biggest lie is you we're going to get a programmer, but just for a year, just for a year. Let's talk a little bit about you guys hanging you shingle and in really the final inning innings

of a sixteen year bear market. How did you guys have the nerve to launch into that environment and how did you get clients? We started and Ned thought that within four months we would have the products that he had in his head up and running, but it was two years later. So we never took any money out of the business for two years and put it back into the business. Uh, completely and totally. And uh I had a big retail business, and so the retail helped carry us until we got up and running with the

institutional business. And that eventually morphed to almost all purely institutional totally, which uh's a blessing. Why do you say that the retail is h you know, where's my check? Where's my dividend? I'm gonna sue you. It's a it's just a it's just and so you know, if you're going to do it, you might as well get paid big. And we we were blessed that as far as the right time, in the right place. Um, we got paid in soft dollars and commissions. So I explained soft dollars

because a lot of listeners may not be familiar with it. Well, uh, we would go to the State of Texas and tell them we wanted twenty five thousand dollars. And if I went to you and said, I have this service, and you know you'll like it, but you had to write a check personally for twenty five thousand dollars, you go,

I really like a lot of money. But the State of Texas was going to buy a million shares of Boeing through one of our clearing frooms, pain Web Goldman sacks are especially bear Stearns, And so they'd buy a million shares and ten sents a share back then or fifteen and give us ten or fifteen thousand dollars. And it's another word. You guys set up the broker dealer

in order too. Hey, we're gonna spend the money on the commission anyway, it might as well pay for the It was other people's money, and so that's what made the business very successful. Were you ever actively involved in trading yourself? Were you mostly doing institutional sales? Mostly institutional sales? And um, so the business was sold in. Do you still have any involvement? Because I know Ned still does. So you're you're free and clear for seven years now,

that's right. The falcons and grandchildren is what's keeping you busy? Um. So when you guys launched the Night, who are your competitors? Who was out there selling the sort of quantitative technical research that that you guys were doing. Again, we were just at the right place, at the right time, with with the right product. And one of the products though we ended up by accident, um, was the chart service.

We did the charts for Ned, and UH, as long as you're doing it for him, you might as well make we had we really didn't have an idea that that would be such a huge hit for client presentations, for marketing and meetings and brochures, and so we had a huge, uh publishing complex by sending out these huge chart books that were three or four inches thick. And

then we got into customized research. So let's talk about customized research because at present and for the past decade or so, ned Davis Research generates two thousand custom research projects a year. Am I getting that right? It's been six years since I've been there, but a lot. So what's a typical request? How is this ramped up over time? That sounds like a lot of specific, individualized research or

is there a ton of overlap from one to the next. Again, some of the best projects and ideas have come from our clients, and so NED is just incredible about devouring data and information and studies. And so we had a whole research department of people that would do projects that other people thought of doing or uh, they would want the models or stuff built just for them on a proprietary basis. So we once we got in their back pocket,

we stayed there. So let me let me share one of my favorite ned Davis quotes and you could perhaps give me a little color on it. We are in the business of making mistakes. The only difference between winners and losers is that winners make small mistakes while losers make big mistakes. Discuss well, you know, Ned's also famous for saying they're the only thing worse than making a forecast is sticking by it. And he wrote famously wrote a book would you Rather be right or Make money? Yes?

Being right or making money? Title? And uh, you know, risk control? Uh you know, I'm reminded of one of the biggest hedge fund p pole here in New York once told me he puts on a trade and then it starts worrying about everything that can go wrong. But uh, having a stop loss and controlling risk and not letting a little mistake become a disastrous mistake is incredibly important. The version of that I learned when I began in the business was it's okay to be wrong, it's unforgivable

to stay wrong. And I think there's a lot to that. UM. So the I keep coming back to the risk management side of this. How much did really making your bones in the nineties seventies, in the midst of that horrific bear market plus inflation plus uh twelve risk free treasury yields? How much did that impact the psychology of what you guys were doing? Because you keep talking about um and everything I've read from both of you is manage your risk,

don't let disasters happen. Pay attention to the primary trend. How formative were the nineties seventies to to Ned David's research. Again, Ned, Ned's genius is what I what I banked on. I realized very early that it wasn't Ed mental research. He was Ned Davis research. So you were, you were, and I appreciate your humility, but you were instrumental in taking

his brilliant insights and building a business around it. Because left to his own devices, I get the feeling that Ned would be very happy to just stare at the computer crunch numbers, but perhaps not monetize that in the ways that you've managed to. Well, yeah, I had to

go out on the road and hire the people. Ned did not want to deal with lawyers or accountants, and uh, he wanted to do research, which it was is that's his forte and uh he did it unbelievably well, and he wasn't distracted, and so he did not go out on the road a whole lot. And uh so it was left up to me to to to do the marketing and build the firm, and that started in nineteen eighty and then thirty years later the firm was sold

to your own money. You guys built a reputation for being fact based, quantitative and really one of the first major technical analysis firms. So, so let's talk about that a little bit. You're an institutional salesperson, NED is looking at charts. How did you perceive the value of technicals for for your institutional clients way back in the seventies and night when you launched, NED would be the first to tell you that technical analysis doesn't work half the time,

but neither just fundamentals. And so the genius which NED has is to be able to mesh and look at everything. And so we also, did you know, a incredible deal on on sentiment and uh so we had some of the best ciniment charts you know around. So Ned's geniuses that he looked at everything and he just didn't hang his hat on technical analysis. So, but you were out

in the trenches selling the product to institutions. Did you find that when you were discussing charts, sentiment, everything else, that all the work that was being generated in house. Was there an advantage to working with charts and technicals? Was it different than what everybody else was selling? What what made this so successful? Because it's easy to say

in retrospect, well, we were more wrong than right. But at the time you're the guy who's selling it and you don't know how much wronger or writer it's going to be. Ned had incredible historical perspective on the market and everything, and so we we we we went out there.

We had a broad based service. We had like ten different services and so uh, we did just didn't hang our hat on you know, the bond commentary or the stock rankings, but between Ned's hotline, which is probably the best historic perspective and FED watching around and then the chart service where we got you know, people really dependent on us for their client presentations, marketing and meetings, uh and brochures. And then we added to that we were

doing all this customized research. So it's a service business. So you know, I came from a southern town retail and in Little Rock, Arkansas. But the customers always right, and we did we tried to do more than our share in a relationship, and we tried not to goug the customers and for value received, we we gave them a great total product. But we were very lucky that the soft dollars we're able to cover the course and

it was painless for them to pay us. And by the time you guys ended up selling in I want to say NED Davis Research was institutionally one of the most widely followed institutional services out there. Is that a Is that a fair statement? Fair statement? We know that the early days NED was attracted to computers, but here we are in TV computers are running everything from high frequency trading to analyzing SEC filings too, just about anything you could think of. How have computers changed the game

of institutional investment? Again, I've been out of the business for seven years, and the you know, it's the E T F s and the trading that have diminished everything. And the it's it's what made it wasn't the computer. It was Ned's uh interpretation of the data and the information and so uh you layered upon you know, the computer you had needs needs, historic perspective and uh economic view,

monetary view, and that's what made us different. We had to differentiate ourselves and so the computer, you know, and this goes back to two. Reagan deserves a lot of credit for things that he did, but he was very lucky. The personal computer came along and created twenty six million jobs that it also made us unbelievably productive, I mean unbelievably used to take us all day to do a mailing list literally, and once you started working with the computer,

it was seconds. I mean, you know, once we got everything up and running. So it's the productivity that made us unbelievably successful. Also, but the pushback to that would be, well, computers were available and they can make everybody productive. Why were you guys able to take advant antage of it when others didn't. Well, again, I alluded to the data.

Ned was the first with data and clean data, and so he uh I could look at five charts to day and with a red pen and knows knows when when a chart is six or the slightest bit off, just by eyeballing. Yes, So his one of his many genius things is but we we we were a freak about clean data. And there's a lot of it was a lot of or probably still is a lot of bad data out there. Let's talk a little bit about

the modern stock market. How did you guys think about managing risk when you uh launched the firm in in the early eighties. You know, I was thirty years old, and uh I was too naive or stupid to really worry. I knew it would be a big success, and so there wasn't any question that, you know, between my retail business and having Ned as a partner, that it was going to be successful. So it wasn't a question of managing risk. It was it was about putting money back

into the business and building it. And so not taking money out for two years and hiring salespeople and hiring people and programmers. Uh and and uh you know that's wold help laid the foundation for the thing to be successful. So you said you didn't take money out for two years, and basically the revenue was coming from the high net worth side, but you guys had to be taking salaries. You weren't just doing nothing, no nothing, not an every dollar went back into the business for two years, and

so you were really paying your dues in in that period. Yeah, I remember writing checks for thirty five dollars and seventy dollars and cringing and cringing. So at what point did the firm begin to be able to allow the two of you to take a salary in two years? Took two years? Two years? And what was it that changed the launch of the new products? You know, we were building an institutional base that that was taking off, and

we started clearing through bear Stearns. Greenberg was very helpful and convincing the that you know, he took us aside for his eight seconds and said, just come here, we'll take care of everything. That They had an unbelievable clearing operation.

This is bear Stons in the early eighties. At the time they were the third or fourth largest broker's farm is that, but they were probably the biggest clearing firm for for what we did, institutional institutional trading, and so we didn't have to have floor brokers or clearing or back office. So you know, the banker New York would call up bear Stearns and buy a million chairs of Boeing for a dime, and they would credit and gave credit that this one, this one, and this center at

Davis Research. So so that's a hundred thousand dollar commission on that transaction back then, whatever it was. It made it so easy for people to pay us. So in other words, they would pay for the research via the institutional trades, which they're gonna do anyway, and really, what the heck is tanking? It did not cost them anything ten cents on on bus share of Boeing then, but even then it wasn't their money, so because it's institutional and other people fund of but what they spend I

guess it doesn't really matter who there trading for. What matters is who they're UM executing through and where the money man. In other words, whether they paid a nickel or adam, the fifteen cents didn't affect their bottom line. That's right. So o PM and big institutional trading made it easy. But you guys are fairly full service. You guys were, and ned Davis still is a fairly full service UM research shop. What does if I go to nd R and say I want everything? How much can

I spend a year with them? Again, I've been out for six years, give me a ballpark from ten years ago? Um, you know dollars? Okay, So that's a lot of data, a lot of charts, a lot of custom research. But you know, Goldman Sachs used to have six hundred cash traders. They have now to the soft dollar business has diminished two from six hundred to two. Yeah, and that's computers essentially well, and also now eat heat. Everything is going to E T F s and UM volume is actually

way down. It's it's a very different business. So we've seen a move towards passive investing from a lot of the mom and pop investors as well as on the institutional side, we've seen the rise of ETFs. And as these two things have happened, we've seen a huge decrease in trading volume. What does this mean for what used to be called institutional training and now is called I don't even know what what do you call it these days? Is it just by side research? How do how do

you describe it? If you have to pay hard dollars for a service stuff, it's tough and you have to justify and it's tough. So, uh, you know people that used to pay us one hundred thousand. I just heard of somebody you know, going to forty thousand. So it's it's the margins get squeezed, and uh, you know, everything was wonderful and you could pay with other people's money

no longer. Well, there's still some of it out there, but you know, Europe is going to the m F m F I D and that's gonna you know, that's a hard dollar squeeze as well. Yeah. Well but the SEC let people off the hook here. But still black Rock I think went from two hundred and twenty providers down to a hundred And what does that mean in terms of hard research dollars drying up? Drying up? So you're no longer in in as involved in the business as you are, You're doing other stuff. How closely do

you watch the stock market? Um? As a retiree. You know, I get up in the morning. Uh, and I love reading, and so I'm somewhat addicted to the market. So I get up very tough to pull that needle. Yes it is and it's still the greatest game ever and so uh, you know, I love the game and I love reading. Uh and uh, the market is still my number one love. Are you still invested in the market or have you moved more towards a fixed income portfolio? Third? Or third

or third? And uh? Stock spawns cash? Is that real estate? Real estate? Well, the Falcons are a very big investment all sud but uh and we have a big, big stadium that's that's really nice. Um so uh uh. I I'm very big on having goals and uh meaning investing towards goals, just personal personal goals. Years ago, I always had something in my wallet of all the goals and it changes because at thirty, it's very different than its

sixty or forty and uh. And so you know right now, you know, accumulating great more wealth, it won't make me any happier. Maybe give more money to charity, but I really don't want to accumulate any more things, uh, except a Super Bowl ring. So let's talk a little bit about the falcons. How do you like them? And what changes are coming to the NFL. You know, I'm from Arkansas. It's a razor. Back then it was always wait until

next year. And you know, you don't appreciate how hard it is to get to the super Bowl and to win it. Uh, it's the most competitive thing in the world all to reach that level. So many things have to go right, plus you have to get lucky. You just appreciate the good times and h if if if everything breaks right. But again, two or three key injuries and it's it's problematic. So the big issue we won't even talk about. We'll save the kneeling and the football

anthem stuff for for later. In general, we've been seeing sports see a lot of pressure with cable people on bundling and moving to the internet. What is the future of sports broadcast? Look like is it going to be mobile and internet is because the idea of television and cable and saying here, I'm subscribing to cable and I have to get these two channels whether I want them or not. Is that going to change? How rapidly is that going to change? We know it's changing. What what

do we think happens? But again, jeff Nis and Baron's basically talks about that, you know, the sports entertainment, it's just still one of those things football it's in h L is something that you want to see live, right, you can't you can't read about it afterwards, but you can. But it's not it's not the same. It's not the same.

And so you know, we we have a product that uh people want to have and uh, you know, I had a partner named John Emily who died recently, but it it was one of the most successful venture people in in Atlanta and he always told me since Eddie, no matter whether we win or whether we lose, the value of the franchise goes up every day. That's that's a pretty interesting point. We have been speaking with Edmundell of Ned David's Research and the Atlanta Falcons. If you enjoy

this conversation. Be sure and check out our podcast extras, where we keep the tape rolling and continue chatting about all sorts of interesting things. You can find that wherever find podcasts are sold iTunes, Overcast, SoundCloud, Bloomberg dot com, etcetera. Be sure and check out my daily column. You'll find that on Bloomberg dot Com. You can follow me on Twitter at rid Holts. I'm Barry rid Holts. You're listening to Masters in Business on Bloomberg Radio. Welcome to the podcast, Eddie.

Thank you so much for doing this. There are two things I have to thank you for. One is when I first had the idea a decade ago, for hey, let's not ask people what's their favorite stock or where the Dow is going to be in a year. Let's find out who they are and how they got that way. Let's find smart, successful people and say, so, what can we learn from you. One of the very first version of this show was Ned Davis. We did on the phone. You helped to arrange that. I want to say, that's

almost ten years ago. Am I am? I ballpark with that so that that was a fascinating conversation and it was so clear after we did it. Even though it sounded terrible, it was on the phone and I had no idea what the hell I was doing. It was clear to me that Wow, not doing four minutes and then a commercial, but letting people, hey, tell me about this, and letting them speak and share their history, their anecdotes,

their experiences was really valuable. And that's led to a whole run of fascinating people telling me really amazing stories. And I have you to help for sending that up to begin with. Um, the other thing I had to say is when I was thinking about launching my shop, I came to you and said, Hey, I'm I'm wrestling with these ideas, and you gave me a lot of really good advice and I wanna thank you for that. It was it was very very help remembering. Oh, I

trust me, I remember everything. UM So so let's talk a little bit about about football. Um, are we going to ever see live football on Facebook, Twitter, etcetera. I know there have been some contracts and some announcements made. Are we going to ever be in a situation where I don't need to be home in front of a television. I could just pull up my phone and watch a game. I'm a minority owner, but you have some insight. Is that?

Is that something that we're thinking about constantly. Yes, you know they're looking at all aspects of of of everything to monetize this, and you know, to keep millennials and keep people interested in in uh in football. But you know, UH, we have a lot of people at the NFL home office, and they're constantly working away, working away. So there's a

couple of really interesting things going on in football. UM. And I know you don't speak on behalf of league of the team, so I'm being circumspected in what I can ask you. You're not an authorized spokesperson for NFL, but you're certainly an astute observer. Um. Three things that I've been thinking about aware of. The first is, uh, the idea of people's phones being the most important screen

in their life. I have to think we're going to see Netflix or Twitter or Facebook eventually doing a regular broadcast. The other thing, which we haven't heard a lot about this year, but was pretty big the past couple of years, UH, and I've been reading about some of the new technologies, was the concussion issues. And I've been reading about these new helmets that supposedly lighter, stronger, more dissipating of energy.

How much is technology going to be the basis of a solution for you know, keeping players safer over time? You know, we recognize it as a big deal. And I think that this is a year, a couple of four million dollars a year. I think we were spending on research to come up with safer, better, you know, helmets. But you know, it is, it is. It's a big issue in uh uh, you know, it's a major concern. The most recent piece of technology I was reading about

is this new helmet. A couple of I remember was M I T or cal Tech, but a couple of professors developed this helmet. If the standard helmet is three hundred dollars, this is nine hundred dollars. But supposedly, the the physics underlying um impact energy dissipation has progressed to the point where there's we should really expect to see some significant changes going forward. Is that I know you can't speak public really officially, but is it fair to say that technology is going to be a big part

of the solution. Just about has to be. But you know, they're they're founding from junior high school, high school, college. You know this, this is a cumulative effect. It's not just it's not just the NFL. So that that's an issue that um, uh kind of got overwhelmed this this year by by other stuff. Um, what else do you see that's interesting taking place in football? I I just read a fascinating review of of the the commissioner, Um Goodell,

and he's about to re up his contract. Basically the owners seem to think he's doing a tremendous job in a very difficult environment. Is that a fair, fair assessment? You know again, I'm not I'm still the minority partner from fifteen minutes ago, right, So so you're not, um turn around to uh to say anything. If you google, there was a recent story about on ESPN and a handful of other places. The consensus seems to be very

challenging couple of years, especially under this president. Um, but he's done about as good a job as anybody really is can expect of him. Fair fair assessment. But like you know this better than anybody, everything changes, So you know, there's never been a time when that when there wasn't something to worry about. Of course, and the marketer in life, so we were. We were just discussing this the other day,

that we are biologically programmed to notice bad news. And one of my colleagues in the office, Mike Batnick, wrote a piece why good news is overlooked. Good news is never a threat, but bad news is a threat, and that's why we basically place such disproportionate weight on that. Well, except for right now, I think good news in the market is good news and bad news just isn't true. Well, what sort of bad news in the market isn't true? What what do you see as as the memes that

are out there that are negative for the market. But we're over emphasizing, we're putting too much weight on We'll get back to black swan events. I'm not big on, right, but they're in Japanese folklore. There's a thing called white swans, and a white swan is something right in front of you that you just can't see. We don't just stop paying attention to and so uh, this next time around, just like in O one, the dot com was right in front of you, and I said, didn't see it,

and they saw it. They just said, what can we do? It's easy to clean up after O eight, No money down, pay what you want, interest only, no documentation. How can anybody not be surprised? But it was right in front of you, and so this this, in fact, I have to again give kudos to Ned David's research. One of my favorite charts that if you looked at you couldn't help but not see something coming. There were three charts that I tracked in the early two thousands, some of

which came from you. One was cost of owning versus cost of renting. That was a pretty standard chart. The one that I first noticed from ned davis research was median income versus median home price. Ned was putting that out and for decades it you know, moved up and down a little bit, and then in oh four oh five it went straight up through the roof and it was clear something strange was going on. There was no

other way to describe that. UM. And then the third one was, and I think this also might have been you guys, was total value of the UM total value of the housing stock, meaning all the homes in America relative to g d P and some really it was, you know, pretty steady for decades, and then suddenly three standard orders of magnitude. If you were I called the financial crisis the jumping dolphin of crises. Do you remember

the three D paintings that people used to have. If you stared at it right, suddenly you would see the leaping dolphin. Those charts with the leaping dolphin. If you saw those charts, it was obvious, hey, this is all going to blow up. Um. But if you weren't looking in the right place, well, the market keeps going higher. It must the market must know that this is an important I heard over and over again. Well, getting back to the the white swan, Uh, you know, things are

really great right now. There's no economists not saying, you know, there's no recession for a couple of years, and uh, you know, earnings are record highs growing, and so the white swan that's out there is that maybe things are too good and you're you know, you're gonna have a blow off that's gonna tighten economy. You can't lower unemployment any further, can you? Again? Uh, you know there's laves

damn license statistics. Uh uh, nothing would surprise me. But uh, you know the you know this thing is somewhat manipulated EU, especially jan and Japan. You know they owned sixty of all the e t s and sixty percent of the topics, and Switzerland owns two billion dollars worth of stock out of thin air. Mother nature doesn't like to be fooled. So whatever happens will come out in inflation or currencies or the bond market. Uh So let me push back.

If I had to guess the white swan that's right in front of us, it's just everything is good, maybe two it. So let me push back against that. Every time there's some sort of financial crisis, be at O eight oh nine or two thousand or seventy four or twenty nine, or pick your crisis. In the United States, the government always steps in to do something. You know, we created the SEC, we created the fd I C.

Isn't that standard that? Uh, some disaster befalls us and and uh the free marketers suddenly become maybe we can manage this a little more aggressively. Well again, I had breakfast with the president of the Doubt of the Atlanta Third and uh I asked him the next speed bump,

what are you gonna do? This is last year at breakfast, and he says, we're just gonna do more que And so that's now the solution to everything that it must be because they don't they don't ask if there's a plan B. There is there isn't a plan B. And so you know you so they'll buy real estate in E T S or whatever this next time. But they're already doing that in Europe. So every general fights the last battle. QUI worked fine when the issue was a

frozen credit market. But if you just have a cyclical slowdown in a recession, what is quigan? That's that's the that's the question, and uh, it's going to be very interesting. Yeah, to say the least, I want to get to our favorite questions. But there's one thing, Um, I have to ask about sentiment. You're raising that issue. Um, things are too good? Do you think the investing public thinks things are too good? Because up until recently they did not

embrace this rally. They were not The market tripled since the March O nine lows, and they seem to constantly be waiting for the black swan, not the white swan. You know, but you have record low mutu fun cash and you know the markets tripled, revenue is only up, and so there's but profits are higher, Yeah, No, profits are higher, but some of that's financial engineering, meanings share by backs like that. Yeah, I just read the two

and a half trillion dollars overseas. You know, Apple and Oracle on all these companies already spent five hundred and sixty big and yeah they still have stellar balance sheets. But uh, you know the it's but it's not the public, it's it's but the public or whoever is buying twenty billion dollars at the e t s a month and the sixty four threeon dollar questions, who's gonna when they want? If they ever start selling the ets, it could get ugly very fast. But you know, uh, you know, you

you know, in the bullmarkt be bullish. So this is this is just a good time to be bullish the least. Let's jump to our favorite questions. These are what I asked all of our guests tell me the most important thing people don't know about your background? Um um. I had a grandfather who got me interested in the market when I was seven, and I started buying stocks when I was seven, and he gave me a healthy disrespect

for the banking system. Yes, and uh, he had all his money in a safety deposit box when the when the when the crash came. And he also taught me about being a scavenger buyer fixed income because he made his money buying railroad, mind's opinion and nickel on the dollar. And then he thought he invented uh text rattles back in the thirties, Did he or he did it? So he was way ahead of his time. He also was a socialist and uh a socialist market trader, Yes he was.

And he claimed he was secretary treasurer of the Socialist Party between nineteen fifteen and nineteen eighteen and booty for Eugene Debs five times. And he said they disbanded the Socialist Party when FDR was elected because he was the biggest socialist that ever lived. Well, we created we created social scar We did a lot of things under under FDO, medicaid um, certainly the sec There's a ton of stuff

that that he did. I find a lot of people who have been successful in the market and have accumulated wealth are starting to get pretty concerned about inequality because they would rather the public be fairly satisfied and not calling for revolution. If you asked me for the one thing that you know bothers me is that this this has not been distributed. It's been great for wealthy people. I think, uh, blue collar, middle class people are struggling.

And you're you're this is the white Swan that you saw it in Trump being elected, but you saw it in the British exit, sat in Spain, but last week in Calonia. Absolutely, Czechoslovakia and Austria, but you saw France the two major parties were cut off. Even Merkel had her niece buckled and so and then nationalism is out there, and uh, you know, bad things happen when you know that. And you're tracing this to income inequality, and you know, I'm just tracing it that. I think that that just

what you said. The whole there's a whole class of people out there that haven't participated and are not happy. And if the numbers are right of fifty one or something, can't you know, come up with two d dollars or whatever. It's it's there. You know, there there's a problem out there, and uh, you know, I haven't got the answer, but you know you're seeing something right in front of you.

And you know, you got the people in Brussels, unelected bureaucrats that are sort of like Monty Python Black Night that lost one arm, one leg, the other arm the other leg and says it's just a no, he said, it's just a flesh with But they're not paying any attention that right underneath. What's what's happening right underneath their noses? But you de Greece and Italy have these parties in

the pin nationalism, popularism, nationalism. People are pushing back against globalization and the loss of jobs to low cost providers. It's not just China, but it's Turkey and Vietnam, and els and the computers and and shobots and no, it is it is. If you had to pick one thing that is worrisome, is you hit on it that it's it's, it's it's This has not been a broad based, wonderful thing for everybody, and and that is a of a concern. So that may perhaps that's the whites one you talked about.

Let's let's talk about your early mentors. Who were the people who affected the way you think about business and markets. Well, first was my grandfather, and then you know, second was ned and U Marty's wag. What was your relationship with

Marty's wife? For you young uns, listenings. Wig was a very famous technician owned I think it was the most expensive home in America at one point in time, the top of room and regular on Rukaiser and he had all the Beatles outfits and Marl Monroe's outfit and uh was quite a remarkable individual. And how did Marty uh

affect you? Just just his studies and you know, he was just brilliant and you know, uh also I was would tell you that this is under Ripley's believe it or not that uh talking about failures, that I was partners with Marty and ned and not one but to retail letters and both went south, really, which I would have thought would be impossible to do. Let me tell you that's a that's question number seven. Let's ask it now. Tell me about a time you failed and what you

learned from it. Marty's wide and that Davis two of the most successful technicians in history. How did you not make a go of those news letters? Uh? Good question? But I think you know one was a bond letter and it goes back to you know, no, well Einstein has it goes up to heaven and Holy One calls him in and says, can you explain the bond market to me. So I don't think anybody can explain the bond market. NY, we had a bond letter and uh, for whatever reason that I think ned Marty's Forte was

not in bonds. But I don't, I really don't remember. I tried to, you know, suppressed suppress it. But I think more importantly, I think it was the retail is a much more difficult market than selling two institutions like So, you know, I learned. The one lesson I learned from that is that, uh, you know sticks, you know, dance with them who bring you. That's a that's a fair question. Um, what about investors, Any investors affect the way you look

at business or finance. Um, you know, I'm a big believer in blink going out and finding people that can do things that that you cannot do. And uh, and there's plenty of those. But I'm not a big believer in hitch funds at eight or nine at one time, but meaning money invested in not running. Yeah, but they they can't. They can't perform now for whatever whatever reason, the conditions have changed. At one point in time, some of them were creating alpha. Very few these days, very few, Yeah,

maybe two or three percent. Wow, that's fascinating. Um, let's talk about books. This is everybody's famous favorite question. Uh, tell us about books that you've you read? What what sort of stuff do you like? Fiction? Nonfiction? Well? I read three or four hours every day, but really I don't read fiction and nonfiction anymore. So what are you reading? But I do? My favorite Arthur is Malcolm Gladwell Blink and tipping Point, and the tipping point is AIDS, epidemics,

syphilis epidemics, crime epidemics, stop market, bond markets. Everything goes to a tipping point, and life goes to a tipping point, and it's always good to remember that. Uh, you know, it's there. There's a tipping point out there, you know, at some point for everything, for everything, for everything, things that cannot go on eventually stop stop. And then Blink

is getting one of my favorite books. But whether it's an electrician or car mechanic, finding these people that can do things and they know things in a blink and they're keeping them dear, you know, is really real. Make makes your life a lot easier. Have you have you read Outliers yet? Yes? I have. That was a really

interesting everything he does is great, always, always fascinating. Although I WI will tell you, yes, the Beatles played the Cavern Club eight hours a day for a year, I can play the Cavern Club eight hours a day for a hundred years. I will never be the Beatles, and vice versa. There are people who pick stuff up so rapidly that they're just built for certain things. But I find all his books thought provoking and interesting. And he's an excellent writer. I mean, his pros is just lovely.

His podcast from last year were great. Only maybe two of the ones this year were the ones from last year was um, a history of what what? What's the name of his podcast? Revisionist history. Revisionist History, That's what it was. Yeah, I listened to a few of them. I thought they were very interesting. He's always interesting. Who else do you read anybody else? I read you at think that you have the best service out there, and especially like your ten A m Reads The Morning ten

things each day the Morning Reads. Thank you for saying that. Um, they're usually out seven seven thirty in the morning. I try and get them out as early as possible. I I sift through a lot of jump to get to that. Um, there's a long story behind the reeds. I'll have to share them one day, but thank you so much for saying that it is um. It is an interesting thing that forces me to realize how much of what's produced is just noise, and finding something that is insightful, educational

and and helpful is is hard. So out of the thousands of things, identifying those ten things each day is a little bit of a challenge. Well, I appreciate. I appreciate the kind words. What do you do outside of the office to uh stay either mentally or physically fit? Well, the mental part is eating. But you know, in the morning, I all the CBS sports uh, Bleacher Report, you know, I'm a I'm a sports junkie. But also no surprise and so. But also there's lots of things that I

like reading in the morning. What else? What else do you read? The Wall Street Journal? You know? Barons Zulov? Uh. You know there's ten or twenty people that you know, I really like getting their stuff Zuolov, give me a couple of other names. Who else do you would like to read? I like to read the Pimco people. Um. The one person that is is brilliant and uh uh is um double line. Uh, Jeff fascinating, fascinating, Uh fascinating and uh uh he's uh he's out there thinking on

another on another level. He he definitely is. And every now and then I'll read something of his and I'm like, Wow, he's not afraid to really put it all out there, and as often as not, he's right on some of these real outlawyer calls that you would think is a much lower success. He was one of the first people come out on Trump. That's exactly right. I remember saying, Hey,

you're ender. I remember reading him saying, you're underestimating the anger in the country, and you're underestimating, uh, the potential for a change candidate to win. And Trump is a change candidate. And he wanted to buy the Buffalo Bills and uh they didn't let him. He I don't know what what happened, but he would be a fantastic owner. But he he uh to two things. He uh he forecasts that they wouldn't win many many games this year, which has not been true. They have a good team.

And the other most fascinating thing, which we could have a whole another segment on he talks about his autism. Uh huh uh and I found that lots of the really unbelievable people on the street, just like in the Big Short, have Aspergers as Bergers are somewhere on the spectrum across across the board. Um, I've heard that about Ken Fisher mentioned his dad was, you know, pre diagnosis,

he thought he was Asperger's. Ken himself very easily could be go down the list of of of people who have the ability to remove their emotions from the decision making process. And if you could do that, there might be a little spectrum going on with that, for sure. That's and that's what you need to do to be to be great, you know, you need to be different from the average human and information completely and totally different than than than than a normal person. Not to name drop,

but I'm going to name drop. Marc Andreessen had has pointed out that Mark Zuckerberg at Facebook is a learning machine. He said he's never met anybody who learned as aggressively as him, constantly reading, constantly assimilating data and and your description immediately made me think of him though the jobs socially totally. But he didn't have any committees and he did all those things him, but he knew things other people didn't didn't know any knew it in a blink.

And you can't teach that. It's just that's intuitive a curse. Why your socially inept? And uh, you know the big, the big short, big short life is I don't do this, I don't do that, I don't shave, I don't. It's just kind of man, I'm looking for. Michael Lewis is another one of those writers who was just unbelievable. So any any favorite Lewis books. While everything he's put out everything,

he's everything. So it's Lewis and Gladwell and those are your favorite, But I'm more I'm more interested in life, in infects life. Did you read um The Undoing Project by Lewis? The book about Oh well, I'm gonna give you a book recommendation. Lewis wrote about Danny Khneman and Amos Tversky who discovered all of these behavioral issues that not just economists and economic behavior, but across the board the way humans behave. And it's a fascinating story. If

you like Michael Lewis. It's a little different than some of his other books, but it's just as fascinating. It's really a fact, I now envy you for not having read it, because you get to read it. I've already read it. So let's get to our last two questions. My favorite questions. So if in then a millennial or someone who just graduated college came to you and said, Hey, I'm looking for some advice on career and finance, what sort of advice would you give him? Well, I actually

try to mentor millennials, and I have a packet. I have found that most do not have a clue about interviewing. So I give him a packet on how to interview, and I try to take into the lunch or dinner, and I can tell you there's five or ten things that I reinforce that they must do to make a good first impression. And then there's three or four or five questions. I try to teach some of the questions

they need to ask. But helping them in the interview processes is very, very important because they really do not show up ready to make a good first impression. Give us an example of each what what do you suggest they do on their interview and what sort of questions they need to put their resume on slightly thicker paper? Um, they need to have at the bottom like nice bonded linen paper that fuel substantial. That's right, it's noticed. And then that they need to have community service at the

bottom of the resume. They have to have no spelling or punctuation or grammar zero, no errors whatsoever. They need to walk in with a briefcase. Open up the briefcase. Here's my resume. Well, it has to be organized. They walk into the left hand and shake a firm handshake, which a lot of them don't know how to handshake with a with a hand with a firm handshake. Uh. If they go to lunch or dinner and no, but yeah,

I don't order spaghetty. But uh if the boss orders fish and chips and scotch on the rocks, you order the same exact thing. Commonality, it's the most important thing. And so you want to learn everything you can about that person in the company. Everything. And if you walk in and see that he's a tennis player, you're love tennis and uh um, and then you know the you know the the the process. Also the second thing is you want to ask them why is this position? Open um?

How do you measure success? Um? Um? Good questions? Yeah, and what's the next what's the next stage in the process. You also want to take a card when you leave and write them a personal thank you and telling them you want to be part of their team and how impressed you were. And even if you get rejected, you want to go back again send the thank you note for being rejected and please keep me in mind in the future. But persistence pays off. Good good advice for

any millennial. And our final question, what is it that you know about the world investing today that you wish you knew forty years ago when you were first starting. That's that is a good question, isn't that? It's my favorite question? Is it really that? That is my encore? After the everybody cheers, you come out, you do the song that's my last song. Well, you know, forty forty years ago, I think I was too naive and stupid to to to know how much risk I was taking,

uh you know, at the time. But you know, it also goes back to uh the women neuronet at twenty five and men at thirty, and so thirty is just a wonderful aged too matriculate and to to to do things. And so I'll tell you one final story about Jesus. Uh, Jesus is the Son of God. Average life expectancy back then it was thirty two years of age. It's a misnomer because half the people died in childbirth two So

did you ever wonder? Uh? They don't they know anything about it between the age of three and thirty zero. Why at thirty all of a sudden did he emerge Because he picked at thirty quite but he Jewish people do not allow you to become a rabbi until your twenty nine or thirty. You cannot teach life until you've experienced. Same thing with the medicine. Okay, you don't want a doctor that was no doogie howser you do him? So you know the third thirty you know lots of things

and Judaism are well thought out. And this is why at thirty he emerged because nobody would listen to him until he was thirty. So I tell millennials also that college is the time to grow up and mature and then go out and get your and be men. Beach you know, in experienced life before you go out and and try to do something. So wait, so eventually you're you're team yourself up to become somebody a thirty when you can have a more successful chance of being successful.

I think this is just me. I like that. That's fascinating. Ed's thank you so much for doing this. We have been speaking with Ed Mandel. He is a co founder of ned Davis Research as well as minority owner of the Atlanta Falcons. If you enjoy this conversation, be sure and look up an introd down an inch on Apple iTunes, Overcast, SoundCloud, Bloomberg dot com wherever final podcasts are sold, and you could see the other hundred and sixty or so such

conversations that we've had previously. We love your comments, feedback and suggestions right to us at m IB podcast at Bloomberg dot net. I would be remiss if I forgot to mention our crack staff that helps put together UH these weekly podcasts. Medina Parwana is our audio producer, Taylor Riggs is in charge of booking UH, and Michael Batnick is our head of research. I'm Barry Riholts. You've been listening to Masters in Business on Bloomberg Radio. Take a tablet in days