Siegel and Schwartz on Stocks for the Long Run

He's always fascinating. You'll hear um him sort of zip in and out of focus like this because he's sitting on the chair, spinning around, just having fun telling stories. So if you hear's audio cut in and out, he's he's all but spinning in circles. He's just charming as is. Jeremy Schwartz is one of the smartest people you'll meet

in five and ance. Just a thoughtful, intelligent person who really understands what value is about, how to find investments that will outperform the broader markets with less risk, less volatility. He's been a big advocate along with Professor Siegel, of fundamental indexing, where you're focusing on things like earnings and diving and value, and they have some fascinating things to say. The latest version of Stocks for the Long Run has

just come out. It's It's sold ungodly numbers of copies and is on everybody's Best Finance Books of All Time list. I found this conversation to be so much fun. We could have gone for another couple of hours, but I had to stop and send them off to the New York Stock Exchange, uh to do whatever they're gonna do there. I think you'll enjoy this conversation. I know I did with no further ado my sit down with the Jeremy's Professor Jeremy Siegel and Jeremy Schwartz. Professor Siegel, you be

again at Wharton back in seventy six. Did you ever imagine a half a century later you're still teaching in the same place. That's well, I'm still associated. I'm meritus

Professor Barry. I actually left active professor in July one after forty uh five years of teaching at Ward, and I had taught four years University of Chicago before that, so forty nine years of university teaching, I've been as busy as because finishing as we're going to talk about sixth edition of the book, and and conferences more than

ever because now you can do him on zoom. So I can do San Diego at the nine am and at ten thirty, I can do New York, which of course never used to be possible modern technology and shorts. You went to Wharton, you had Professor Siegal as an instructor. Tell us what that experience was like, how was he as a professor? So I got to work in in ninety nine, which was the peak of the tech bubble.

I was coming into my own seeing the tech bubble, living through it had been some experience investing into those tech stocks and watching them crash. And he was on I got to meet him through who's now the Philly Fed President, Patrick Harker. I was on the thing called the Dean's Advisory Board. We organized sessions with the professor and I got to meet him through that. And then he got me into his class. Didn'tven know he had to applied with his class. He got me into his class.

And what do you think you just walking off the street, Professor see I'm here. It doesn't work. I didn't know that, but I was lucky to meet him. And then so oh one was when I was sitting in his class. So this is after, you know, March up two thousand, his famous outbed big cap tech socks are suckers. Bet I remember that vividly. So he's on CNBC all the time talk about this, and I needed something to do for the summer, and that was the third edition back

in oh two, we helped. That was my first product with him, was the third edition of Stocks Long Run. Really, so you have a twenty year relationship with Stocks for the Long Run as well as with Professor Siegel. It's great. So the question for you is you come out of Wharton, how do you end up at Wisdom Trade? Well, Wisdom Tree now I've been there seventeen years. The professor we

knew the founder, Johnathan Steinberg. He had a magazine. The professor was publishing for the magazine, and the Ceinberg family very involved in Wharton, so we're looking at their indexes. The second book, The Future for Investors, which we did, came out of five had a lot of work on dividend investing, value investing, and we helped validate their initial research,

which got the company funded to know four. The professor invested and joined as an advisor, and they saw I did all his research and now the second longest employee and have been there from the very early days. Just you're right behind Jonah, who remains elusive and is a fantom figure who I can't get to the studio, but we'll talk about that later. So, so wisdom Tree goes public the two you affiliated with it. But I recall vividly Professor Siegel as a traditional market cap weighted index

sort of guy. How did you find dividend waiting or valuating or other ways of looking at what some people terribly call smart data? But how did you find your way to those sort of indexing which is what wisdom

True has become known for. And as Jeremy mentioned, the tech bubble itself was quite instrumental in saying just a minute, it's cap waiting the very best and what jonnod Steinberg had called me up and said, you know, we were thinking of fundamentally waiting instead of by a just market cap, which is the assumption of efficient market hypothesis, by either earnings or dividends would you do historical research on stocks to see whether it gives you a better risk return

trade off? And that's where Jeremy came in, because he was my right hand man, to say the least in doing all this. We did it not only for the US, we did it internaturally. We wrote a white paper that was associated with it. And when we did it, I said, you know what, it is, significantly better risk return trade offs. It makes sense for me. I was formulating a theory called the noisy market hypothesis instead of the efficient market hypothesis,

where this sort of fundamental indexing would do better. And John Oh asked me, and I said, you know, I've I've spoken for dozens of companies. I've never really taken any official position, but I said I would be willing to certainly consider being an advisor on wisdom Tree. And I am a senior investment strategy advisor to wisdom Tree since that beginning. So let's not bury the lead. If market cap isn't the most efficient way to organize an index,

what is what is? Well? Fundamentals more specific more what we like dive it in and or earnings as the waiting procedure. So value with a dividend. Yes, and what it does give you is a is a value tilt. There's no question about that. And I remember telling dono Um, I'll go with you on this, but we have to be inexpensive. I don't want to to de charge a hunter basis points, and he said, I want as many people to use it. I want it to be and expanding. We came out with the lowest cost. Now became more

competitive since then. But when we came out with really lowest, definitely lowest cost of all, I think the fundamental we waited indexes and you guys prefer the name fundamental as opposed to smart beta. I think kind of smart beta has fallen out of semantics and branding. We actually use the term modern alfa now modern alfa, so it's you know, more in mine with what you're trying to achieve. You're

not just trying to be beta. You'r You can say you're being dumb beta, but that's just me, that's my preference. I don't it's so weird how these names sort of catch fire for a while and they go viral. We'll talk a little bit about your recent viral uh TV appearance, but before I get to that, I have to ask, so, how do you two guys meet. You're an undergraduate or a graduate student, undergraduate undergrad, so you're just pennsylvani walking around. Well,

you know, I have to tell you. Actually he invited me to be a talk to an some student group, and I was so busy it slipped my mind. Um and I felt so embarrassed. And he came up with a smile and said, oh, professor, to say a weekend we schedule And I said, this is a truly wonderful I was worried. Okay, yeah he was. I was okay, but I would say, and I repeat this in the

preface of this new edition. When he offered to work for me, we were working through some risk return type of analysis, and I said, listen, this is gonna take a little bit of time, but I want to get you familiar with the data. I know was a Friday, coming Monday, and you know, familiar stars with the data coming Monday, and we'll discuss how to do it to get the results. I know the answers to this keep going.

I love the story, I mean. And so he came in on Monday and I said, probably Saturday, Yeah, Saturday, probably you know, you know, I was in on Saturdays. It was a Saturday, all right, Jeremy remembers better than I. Um, and you know, I said, okay, let's talk about it. And he said, well, professor to go, I do have I think all the answers that you want. I've done this and you do. And we looked. I looked him over and said this looks right. And I said, okay,

I've got someone special here. Um. And I did you know, I know, I have a lot of business professors who listened to this podcast and assigned specific ones to their students. But that should be a lesson to somebody who says, hey, how do I stand out for the crowd? When the professor says, come in, we'll talk about the assignment, and you come in and say, I've already crunched the number, here's the data. Most of what you've written previously is right.

Here's a couple of little mistakes I caught that has to impress you, right, Uh, definitely, it definitely impressed me. I mean all through our relationship, you know, you know, I mean it's amazing because he you know, travels back and forth, you know, living in Philadelphia and and working in New York, although he doesn't sertily have to do it as much now because of you know, how much are you splitting your time? So we with some treaty

went to be a fully remote first organization. And you talked about John, he was the most New york In person. I mean I tried to move to Miami called twelve thirteen years ago. He said, no, you can't move to Miami. That's where I grew up. And we're now completely remote first. We find it to be very productive. We are you know, we have a global team of a team in Europe.

My research is almost thirty people and almost half you know, half them in Europe, and we can be more interconnected doing talking to them weekly in a different format resoom or teams that were on you know, it's it's a so I don't come up as much, but you do find the benefits that I was in the office yesterday we had six our team members in the opposite You do find little things. There is the benefit of the collaboration that you find things you wouldn't have found on

a zoom call because you're bantering. That's the keyword those collaboration. To have everybody slep into the office to sit and stare at a computer or worse, do zoom calls from the office is kind of pointless. But when you could get together face to face and have conversations, that's a very different experience. So let's talk a little bit about

this book, which is really become a classic. The really the first question I gotta ask is how do you go about updating and editing a book that really has stood the test of time. For jeez, it's it's almost thirty years. It's on everybody's must have list, top ten finance book, best investment books of all time. Do you roach updating this with a little bit of trepidation? What's

the experience? Well, you're right, the first edition came out in May of using data up through two, so we have thirty years more so now it's really stucks for them. And now, of course it is the sixth edition, but it's also the fifth edition was written just after the Financial christ a couple of years after the financial crisis, and a lot of things have gone. I'm in a huge bull market. UM the COVID, which is a whole

chapter on UM. It's very up to date. I mean, it even includes some data on the recent bear market, which most general books can get as far as as we got bear marks. A little bit is in there, Yeah, a little bit is in there. Um, you know, we don't know if it's exactly over yet. We'll certainly talk about that later, but um, Jeremy, yeah, we'll nail We'll try to nail that. But there was so much more. I had to say. This is the biggest revision and

the most new material of any of them. There's there's been almost five new chapters that have been added, and there's been parts that have been added of others. I mean, obviously I deal with cryptocurrencies and bitcoin, which was not an issue ten years ago. You can feel how heavy it is. I know, this is this is vaccinated and boost days. This is really uh not that the other books were skimpy, but you could tell this has a

little bit of a he to it. So we have we were for instance, um, in the past, I had one chapter basically on value and growth. There's four chapters that are directly related to value and growth really, I mean and other factors investing, which became very popular in the last ten years. Uh. One section I added to another one was on real estate I've never had anything on real estate returns before. I mean, and these are just some of the changes that I wanted to put

in to make it more complete. So let's talk about some of these additions that you added. We'll start with real estate. Yeah, your friend, professor Bob Schiller over Yale puts out the case Shiller Housing Index, and I believe if you look at housing for the long run, doesn't do much better than inflation, does it. So this is the interesting thing. The price doesn't do much better than inflation, but there's a return. Well, you gotta live somewhere. Start.

First of all, there's two types. First of all, your it's your own house residential. And then we now have and this is the research we have. We have fifty years of reat data that we never had before. So I felt it was long enough. I mean, it's not the two twenty years of stock market data, but fifty years is still a good time. So I did a very complete analysis on that, and let me just summarize. I think the most interesting part. The return on the

read index is virtually exact. Wait, the same as the S and P five. Most people, Oh my god, it's the same. And it's so much more stable. No, this is the interesting thing people think were the state is more stable than the stock market in every recession except one, and that was the tech bust of two thousands. The draw down of reeds was greater than the SNP. That's really interesting. You know, people don't get a print on their house everything every second, so it feels stable because

you're not seeing prices. But in reality, any day you want to put your house up for sale, you might get a different if you I mean, you know, if if the times are bad and then you say I got to sell it in the next five minutes, you don't want to look at that Price's so you mentioned you have a couple of new chapters on value and growth. Up until this year, values seem to have been struggling against growth, certainly in growth wildly up page. That's euphemism,

very struggling. I'm being played. Well you know, okay, so I could say that, right, yeah, it is my it is mightily struggled. Why do you think that is given the historical advantage of value over everything and and and and you know, I mean, I mean everyone has has said this way before me, and it was the worst ten years. Um. Actually, the worst fifteen years in history, and when we we have value and growth back to there's never been anything that has has approached the underperformance.

And I would say the major reason for that was the boom of the giant tech firms. So it's Apple, it's Amazon, mean, it used to be called fangs. Some have gone out of favor obviously with the bear market, or or have shifted, and arguably they went from an under priced position in two thousand and UM four I'd say UM or two thousand six seven eight, they were under priced probably at that time given their tremendous further growth, and as as usual, they got overpriced at the top.

But that I'm not gonna say the word hijack the market because that sounds like they did something illegal. They had they had a lot of a lot more minds, you know, the percent that was wrapped up in that, and then of course we were recapuated index you were there in that, and UM it's been virtually impossible for any value strategy to have overcome the great bull market of the big tech companies of the last fifteen years,

which probably ended when you know, early twenty late. So so the obvious question for both of you is what does this suggest about near term future performance? And by near time I mean the next decade because I'm talking to you guys, which normally we're talking about centuries. But for the rest of the ties, what does this say about value versus growth? Interestingly, this year you've had a big correction and a lot of the mega growth stocks,

the unprofitable tech stocks collapse the hardest. It's interesting, unprofitable text, unprofitable tech. What's interesting. Even within value there's been a big dispersion, so values being growth by like in the Russell value versus growth they call it almost two thousand basis points, but that's giant. But there's even still high dividend stocks versus the traditional price to book value has

got like another thousand basis points. It's it's so high diving stocks are definitely doing well relatives, so some of that is, well, what is the high divent stock that's not in the price to book indexes? Overweight energy stocks which have been the past year, and then S and PA got down to three percent, right, it was double digits fifty. This is the challenges of cap waiting. It rides things down, will never add to the weight. But

high divn stocks. You know, in one of our baskets of high divns DHS is eighteen to twenty percent energy and that restorts rebalances every December. It's going to stay that way. So a high dividend index, how has it something like that done in It's up about two thousand bases points ahead of the SMP. I mean, it's basically large, meaning if it down depending on and still where you say,

well have you have you had all your performance? And so what it's at eleven times earnings and nine percent earnings, so it's still cheap nine percent earnings before rebalancing and a few you know, and nine that's a that's a pretty substantial earnings shield, isn't versus the one pe and a half percent tips rate with a real yield bond yield almost an eight percent equity probably eight percent equity

premium on this basket. And so for the volatility of the markets, I do think it is still you know, you can say decade ahead, all right, but the next three to five years I think it is a very attractive place to So the product that focuses on high dividend yielding value stocks at Wisdom Tree, which funds would be covered by that. DHS is the US version, there's

a whole family. DHS is the U S, d t H is the international, d e M is the emerging you know, you go to the emerging markets, which has been way out of favor for years and years and year. This is like a five five pe type stocks. Now this is now you're going to China, China banks, You're going to energy, materials, commodities, cyclical stocks. But you're getting close to double digit yields and what is the dividendal now on something like the average yields of the stocks.

I mean, you wanted stock to look at Petro brass in Brazil almost at dividend. The problem is it's in Brazil and people are nervous. But energy is you know, they're paying out a big percentage of their earnings is dividends. This is a well covered it is. You know, it's a very interesting dynamic. Yeah, I think what is the pe of Brazil like six or seven? And whose curritty is up on the year. It's it's, it's it's and it looks like I think Ja Silva is gonna win.

Who's uh? I mean, you know we could have opinion Bossonaro versus da Silva. I mean they both have deficiencies, obviously, but I mean, you know, DeSilva was UH president for quite a long time, and although he was considered a socialist at one point, let the markets work and evaluations were much higher under da Silva than they were in their Bolson Arrow um on On. I mean, I'm not advocating Brazil. I'm just kind of commenting on what, you know, commenting on Brazil. But I mean we could talk about

other countries. The countries I mean, I mean what we were forced to mark wall Russia down to zero is yeah, correct. But we're with a few index providers and actually your Bloomberg colleagues like love me talking about this, but we're the only index ruder hasn't kicked Russia out of the index, and we're going through the index rebounds this week. Actually, and I'm still not kicking out the index. I'm marking it at zero. What's the downside, It's already marked at zero,

so the investment downside, it's the political fallout. But my my point, I'm trying to run these funds in the best interests of shareholders. I mean, not that you could sell your Russian holdings anyway, there's no more. But so the day that you're allowed to sell it, should I sell it to day? The government requirement? Was that an sec requirement? It's all a political statement, right, So there's now it's a very There is no place to sell that,

so you market it to zero market zero. We keep it in the index, and if it ever has value, we can recoup the value for shareholders. But you know, we're not forcing it out right today because there's no real point to doing that. Why why, I mean, we don't love Russia or Putin's it's horrendous, no one does. But at that particular point, the Russian stocks will probably be re allowed into the index. Once Putin has gone,

Russian stocks become attractive. Is that a fair state? Well, smart money would maybe be snatching them up before that. I don't know if they could. You can't get executed, and you can't trade in anything, you know what. I don't know if you can trade and derivatives to get

there and do private transactions. But but throughout the entire emerging markets, not with the dollars so high, with interest rates going up, fear the the debt, I mean you're getting what is the average P ten of the emerging markets so well, in this high divn is five, but in the in the broad in the broad end, so

pretty reasonable. Don't forget. I mean, up until very recently and even today, the GDP growth of those countries is higher than the United States in the developed world, I mean still several points higher, even with all the problems that they have. Not that that always, you know, means the difference. We talk a little bit about not not paying that much attention to GDP growth, you know, in in the book. But um, I also want to say, because you you started out on value and growth, and

we point this out in one of the chapters. But a couple of things that come to mind right now. We have had these growth spurts of over evaluation through history, and it appears, at least in the post World War two period had come about every twenty five years. Uh, the nifty fifties, which was a period where institutions a pension fund spot just growth stocks late sixties, yeah, late

sixty seventies, no matter what their pe ratio were. I mean, they bought such beauties as poloid at ninety times or any smith Kodacs, hears in robot and and they paid astronomical price. They all collapse later. Some did better, IBM was on thes and a few others, but many did not. Then twenty five years after that, in two thousand, well we all know the dot com burst and then bust. Then we had one another, not quite twenty five years,

but two years. I mean, it seems like I'm not gonna say in five or fifty we'll get another one. But it seems like there's a cycle where people investors get over enthusiastic about a group a group of stocks that have been growing fast, and then inevitably overpriced them all. I'm gonna take that bet with you. When they're their thirties, they're gonna be getting their capital. Well, I'd be very thankful to be around there that tell you what I got.

I got a hundred bucks, says you're wrong, and I'll pay you in how about that? So one of the things you bring up in this that is so interesting is if we have these speculative excesses and they seem to come along once a generation or so, is it really just a question of the new folks coming through the system just haven't read their history, and maybe it's a generational thinking. You're right, once it is a generation

usually considered I need to twenty five years. I've been through several so maybe I have more institutional memory or whatever of going through what we went through. But in the postwar period, we've added these cycles. Um. Now, what interestingly enough is that oftentimes the bust brings them to undervaluation. Eventually, when I look back at two thousand five, six seven, Yeah, those growth stocks that collapse from way too high probably

were too low. I mean, the growth index and the value index ten years ago were almost the same multiple they made compressed, and the high dividend stocks had a PRATIO higher than the market. There's a lot of people writing about that back in that they started selling it a premium multiple to the market, which is very obviously not the case today. So here's the question about and

we could talk a little bit about the pandemic. When you have an event from outside the market sort of feels less like the dot coms and evaluation issue and more like the meteor that killed the dinosaurs. It's totally outside of the system, right, But a lot of these things were building before the pandemic. The pandemic probably accelerated because people said, okay, it's technology, you know um and and then they fell in love even why not. Now there was the Pelotons and the docu signs, I mean

all the work from home stuff. Yeah, that they were the work from home stocks, many of them using technology, some of them less than some of them more. That really took the boost. But the surge I mean you know a Netflix, Facebook, Meta, I mean they took root and began soaring before the pandemic, but that seemed to accelerated because people said, oh well no, no, no, face to face technology is going to be the way of

the future. And with all the money that was created by the Federal Reserve, it just could go right to those stocks. And stocks are becoming value stock. I was going to say, number them are getting added to value indexes that number of them and are earning zick Tex are being overweighted. Now Meta as an example, Well, Facebook is cut in half. Netflix even though they had a good quarter their way off their lows. Peloton got Shelac, Docus signed Telehealth. You could go through all these Yeah,

that's many of them. Talked about them. I mean the ones that are really significant like Apple and Microsoft that much. They were too high, but they were not They were not crazy, you know. And I mean some people consider Apple to be the conservative one, um, although you know years yeah, I mean, yeah, Warren Buffoot his first real tech stock it was was Apple, and he still looks at it as a more conservative and they're multiple has been all the time, I mean, and it never got

up to be fifty six seventy. Ever, even at at the height of enthusiasm for it, were not quite a value played more reasonable Before we digress back to stocks for the long run. You recently were on TV where you had quite the rant about the FED. And not only was it a bit of what is the FED doing? They're late, they missed inflation and start, they missed the peak of inflation, they're overtightening. It went totally viral, Um.

I think not just because people agreed with you, but you were very passionate, you were very excited about it. Tell us a little bit about what led to that and what your thoughts are on where we are with the federal result by it. You know you I interviewed me how many months ago I forgot it was, Yeah, No, that was right after the pen and I told you that they're gonna be huge amount of inflation. You said,

you said, both fiscal and monetary. We're gonna cause this, sir. Yeah, And um, and I was youlling about it through all one And the fact that they didn't begin to pivot until the November of one, and he didn't start doing anything until I'm still getting excited about this until March is unforgivable my opinion. Um, it's gross negligence as the

steward of our monetary system. And uh that it makes me emotional because I've taught this subject for half a century and UM, I'm not saying that anyone that's at the FED now was a student of mine, but I talked, but we would have been better off if they were maybe well they I hate to say it, but the answer is yes they were. So I had a chance that put him as part of the FED, and they

didn't take them up on that. Well, it's a very interesting I mean actually under Bush I was nominated as the FED, and then I got we started the process and then they got a call and say, um, Jeremy, the Democrats gonna hold it up because it's gonna be a presidential election. They think they're gonna take over, and you know, so let's wait and see what happens. You've done more good from your post at war, Yeah, six year persons, And you know, it's just it's it often.

It's like Milton Friedman who refused to take a post in Washington. He said, it just compromises you. I'd rather be a critic from the outside. And he was from the outside and an effective and an effective critic from the outside to do that. But so I was yelling and screaming. I said, is um J Pow behind the curve? I said, he's so far behind the curve? Is he's up in the bleachers the pictures throwing the catcher at home plate? That's how far behind the Curby was. So.

The FED has a giant research departments. They have wonderful economists, really smart. Well, I don't know how wonderful they are, Barry. I'm they're not so wonderful. I don't know. I mean, because they were the ones that kept on saying this is temporary inflation. They fed that, I'm sure to power and the others, and they bought it hook line and sinker. Uh. And you know what also upsets me is the FED

was designed nineteen four. It only has eighteen members of the Federal Open Market Committee, and it's supposed to be diverse opinions. Uh, there is virtually no diversity opinion. You would think that, you know, at least out of those eighteen, three or four would say, hey, we're just way over stimulating here. We're gonna have trouble if we don't stop. Not a word that upsets me too. They're not being constituted. It's group think. It's group think that's totally dominating the FED.

All these things are happening at once, and that's why I gazed around. But let's go on. So before before you move on from that, I just have to point out that this isn't hindsight bias. You were saying this in early a year before inflation really started to rear its head. You were lots of fiscal stimulus, lots of monetary stimulus. Guess what happens? Yeah, and I knew it was going to be inflation. And as you know, I said, the increase of the money supply in was the greatest

in history. Um. I mean, we have a chapter in the book on COVID I point out the long history. I talk a lot about what should have happened, but the facts should have done what it did wrong? And why what happened happened. Um And I was really in a way when I started thinking about the book. This was before COVID, so I there was no such thing

as a COVID chapter. But once COVID hit, I wanted to put there's a chapter on the Great Financial Crisis now that was put in on the last edition, and there had to be a chapter on COVID and the monetary response that came from that. So here we are. The Federal Reserve is belatedly recognizing inflation. They've they've raised

rates several times bis at a time. We're now three and a quarter on our way, if you believe consensus to the November meeting taking us to four to four and a quarter or whatever that ranges, and arguable another seventy after that, so we'll be at five. So two questions and funds So five percent funds rate? What does that do to the economy? And are we already sufficiently passed peak inflation? Like they say, that's that's the thing. They're looking just at the interest rates. They say, well,

I gotta get interest rates way above inflation. They're failing to look at a number of other indicators that show how tight they are. Look at the dour starring to all time highs. Look at the money supply, and that's something that is you know, I've been looking at for fifty years, and the money supply has shrunk since March. Now that is unpressed, almost unprecedented, mean gone back. I think there's only one other episode in the post war period where over the next five months we've had the

money supply. Is that because of the end of quantitative easing or there it's more I wanted to know, it's actually because the rise of interest rates has slowed down credit and it's moved funds out of banks so much that the liquidity is actually declining in the system. And that that was the first thing that said, whoa you know I've written and in fact in the chapter I talked about what is consistent with a two percent inflation

rate is five percent money growth. Now, they grew at twenty five percent in twenty and about eighteen percent in twenty one, but doesn't mean now you slam on the brakes and go to zero, because that could really precipitate a recession. I want them to go back to a five percent growth. I think that interest ration. By the way, there's a whole new chapter on interest rates and stock prices and the downward trend of interest rates over the last five years. Something we talk about forty years from

from Vulgar in nineteen forty years. Yes, and and and real interest rates. I mean the early part was a lot of reduction of inflation. Inflation has remained pretty good. It's been a reduction of those real rates. I mean tips in the ten year tip was nearly four and a half percent. At the beginning of this year was minus one. Now it's ratched up to one and a

half because of the FED tightening. But this long we talked about this long decline, but it's caused by a lot of people think it's caused only because the FED has been easy. That's not true. There's a lot of very fundamental reasons that I discussed in that chapter why these real interest rates are declining. What that means there's stocks, and what that means for the fat and what that

means for the markets. So let's talk about that, because we've previously discussed things like how much more productive we are in the impact of globalization and software and technology. What does that mean for the long term interest rate? Once we get through whatever's going on post COVID with with this inflation spike, do you expect us to return back to, if not zero, a historically low. This has been the biggest surprise of all. I actually thought we

would have a spurt of technology. I mean, I think zoom does replace a lot of things that don't need to be face to face and other things, you know, docu sign not. I mean, we can go on and on. The biggest shock has been that productivity has collapsed. The first two quarters of this year has been the slowest productivity growth we've had since World War Two, and not only by a small amount, by nearly twice as great as any other collapse of productivity. And I'm rather upset

the FED has not addressed this. You know, what does this mean for the markets? Are people saying they're working at home and not working at home? Did you did you see the Liberty Street Economics research paper. So previously a lot of data was showing during the pandemic work from home. People weren't commuting, they were working longer hours they were they had substituted their commute for more work time.

This recent paper at Liberty Street Economics Blog, which is the New York Fed research blog, said, Oh, it turns out that people have adjusted to work from home, and they're not only are they not working more hours, they're working less hours. They're spending more time with the family, and they're actually sleeping more, which is unprecedented. Fort But are they putting out what they need to put out?

Profits are still doing well. So the profits are are still doing well, but real wages aren't doing probably because don't forget a lot of people have been locked into a lower real wage situation. Don't forget a lot of firms that locked in their dead two percent too and a half and three. I mean, this is golden for them. They've been raising prices, their debt prices are there saying they're only now are they're beginning to get the pressure

on the employee prices. They've got a lot of left ridge. Uh. So profits are are doing okay. Although profits in the first half of this year we're pretty sluggish. But we had negative GDP growth. Um, you know, I keep on going on and asking, how did we have four million new people hired in the payroll reports this year and have negative GDP grow well, negative real GDP but in in nominal terms. Yeah, but negative real right, I mean you're more more, more hours. I mean, we've got four

million new workers that are producing less real goods. So that's telling us the negative numbers the role inflation driven. Yeah, but why are firms hiring? What are these people doing? I mean, I'm arguably they're they're the real numbers strip away inflation. It's so we're producing less goods now with four million people than we did in December. Is that right? Because when I we look at consumer spending, no, real

real GDP is lower. Not now, We're gonna get g d P at the end of this quarter for which is likely to be positive. Yes, so two percent, but we were negative first two. So we're basically unchanged four million. Yeah, I mean, man, maybe slightly digat four million new workers the same number of goods. So Care's Act one was two trillion dollars, the second Cares Act was another trillion, The third one that one under Biden, the first two one the Trump was another trillion. You give can give

Americans four to five trillion dollars. We're gonna go out and spend it. Well, they did, and that produces the inflation. And the game measures GDP measures the amount of goods that are produced, so it has always been linked with the amount of labor because labor is the three quarters of the value of input. We hired four million more, we have the same capital as before, four million more, and the only thing that we then record is a drop of activity. We've hired four million more, but they're

just not working. So how much of this is just the velocity of the money moving through the system are we seeing We're seeing faster money or slower money with all this fiscal stimulus? You know, is the montage whom is responsible for the inflation. GDP strips out the inflation and says, how much goods are you producing? Why are we producing less goods with four million more people only because people are not working as hard. It is not

as productive. Now we could get a bounce back of productivity. And if we get a bounce back, Wow, that will put downward pressure on prices because what will replenish the supply chain? Uh, And that will put downward pressure on prices. If we get a bounce back. It's it's very interesting to see like this question of what are these workers doing? When we posted that question on our podcast to Don Cone, the former FED vice chair, and Don that maybe we're

under counting GDP. Well, future revisions revised GDP higher. Isn't it affair him to say our measurement of productivity has always been terrible. We wildly undercount productivity. And what's the old joke the computer advantages are everywhere but the productivity. Yeah, well it was it was actually Robert Solo who who said I might see computers everywhere except in the productivity statistic.

That was his quote. But I want to follow up on what Jeremy was saying because we did interview Don Commune. He said, oh, I expect him to the revision. Well, believe it or not, we did get the revision and it didn't change. So what does that We did get that a revision, and believe it or not, it actually moved one measure of GDP, which is called gross national income right and going down to product another way of

measuring it down. So it did not at all eliminate the puzzle of why was this productivity collapse in the first half. So again we might get a bounce back. Let's hope it is. Because the standard of living depends on productivity. Productivity is the measure of standard of living. It's output per unit our work. So it's like your real wage drip away from inflation, and um, you know, real wages are down, productivity is down. What is going on?

I've positive this question to a number of economists, fed researchers, and others because I have consistently said, I feel like myself, my firm has just gotten more and more productive. We put out more and more output with the same we're marginally more people. And the pushback was, you're in a white collar content and creative business that you get to take full advantage of every new tech innovation. Most of the non white collar jobs don't have that same You've

got to go to the bus and drive. You can't do that remotely not Yeah, and there's no productivity gains taking place with that. What about industry our industry not manufacturing that Well, they're both. I mean we you know, we've always divided new machines that do things faster and better, I mean, go through you know what it is, and that has been productivity. In fact, productivity and the goods producing sector historically has been much better than the service

because the services, are you ever going to be more productive? Really, like you know, a haircut and the barbershop, I mean it takes what it does, or that they say the orchestra. There's no productivity in the orchestra. You know, back to the barbershop once since the pandemic, although there's creaking up everywhere, these fancy barbershops haircut So here's like you could use

a flow by, right. But but here's the real question is have we been mismeasuring productivity or do we genuinely have a problem with slackers and people working from high Like yeah, I think economists, I mean, this is very new data. Don't forget the first two quarters was a shocking drop. We're gonna see the third quarter looks like mediocre productivity at past two percent GDP growth, maybe zero protein.

It's not going to be as bad as it. But I think as we collect more data, it's going to be a major topic, and I think in three will have a better handle on this situation. I've just been a little bit surprised that the FED, etcetera. Has not been trying to address this, because how has it become so vigorous on pressing monetary policy when what is really

happening in the real economy. I want to just mention and ask you about some of just the key points within the book that through all these editions have not changed, they have been consistent. Starting with what is the long run return for stocks, both the nominal and real inflation adjusted terms. Well, I mean that was the first edition data through from de biding in nineteenth century six point seven percent. That's real real dividend to return six point

seven percent stocks compound annual. You add thirty years, and we went through to June of this year to make sure we got the recession in six point seven percent changed the same exchange. Given everything that's happened in thirty years, the financial crisis, the COVID crisis, the dot com boom, uh yeah, and bust, I mean, through all of that, the real returns remain the same. And bonds were about half the lawns were half, but are much less now.

I mean the real returns on well, when bonds interest rates peaked in two thousand, it was a great twenty thirty year period for bonds, and I remember saying on all the networks that the forty year bowl market, because it started the peak Throe was over and all that's over with a vengeance, even more of a vengeance than I thought it was gonna be over with with a vengeance.

And the real return on bond has been absolutely terrible, as we know, on a comparative basis, even worse than stocks since it actually um not since the bullmarket ended, but at that point, but from the low point in so I said something at an event where um I had sent to a group of young people, Hey, if you're in your twenties, thirties, forties, you really don't need bonds in your portfolio. You have such a long horizon

you don't need that ballast. You go even further than that and say most portfolios could be fine if they're equity only. Yeah, I mean, you know what we show. I mean, and that's hasn't changed over thirty year periods. In real terms after inflation, stocks are less valuable than bonds. That's wild. So now you have the tenuere four percent or so depending on when this broke out, At what points are we with Tina there is no alternative two stocks? At what point do bonds get cheap enough where they

start to look attractive. Well, a lot of people, it's interesting, are talking today and they say, look at four percent, I can lock that in for well even two years to a four half. I said, yes, you can lock that in. But you know after two years, I mean the stock park is gonna be higher than is Really that's a bold move from me. Holding let me just see if I could buy some out of the money call off the street. It has to be two years.

You can get out years. And by the way, when people tell me four and a half percent is good, it certainly is good. Zero zero, But let me ask you. That's before inflation, and when the long run on stocks is six after inflation, tell me how you're gonna be better off in the long run. It sounds like you're not. You should write a book about that's right. So the one question I always forget to ask, and I wrote it down, so I'm not going to forget to ask.

Is gold? Yeah, tell me your thoughts on the long run on gold is less than one percent above inflation, so it's basically an inflation hedge long run. Now, what's happened with gold? It hasn't as it is failed so to speak, as an inflation hedge. I mean, does that surprise you? You would have thought two should have been the year gold exploded. But I think the big difference is I mean, I think that in the early part of this inflation, bitcoined usurped the role of gold, millennial

digital gold, digital millennial gold. They wanted to go to that, and it was sold as an inflation hedge. And that's another thing that made it go up too high. Um you know what bitcoin, bitcoin, But bitcoin ran up when inflation was under two, right, yeah, But that was the innovation and all the rest, and then it was being sold as the inflation hed because the truth is there is going to be a limited number of bitcoins, is not a limited number of dours. So there was some

logic to that. Now it shouldn't go up as much as it did, But the logic was it is the new inflation hedge, the bitcoin it serves as the gold. Where in in nineteen seventy eight, seventy nine and eighty people rushed to god there was no bitcoin. People, now we're rushing to bitcoin and the younger people don't care

about gold. Um uh. And it wasn't driving them, and we need to do a disclosure on this because my firm and your firm, Wisdom Tree and Retals Wealth Management worked together on the tell us Jeremy, give us the full an r w M Wisdom Tree Crypto Index or the basket of we bogalized crypto which he would size anything more diverse fight exposure than just bitcoin or so so full disclosure that's out there. But you're gonna say

something about bitcoin, I wouldn't say something about gold. Also, I think golden dollar terms has been a big failure. Golden end terms has been great. Golden euros are now. I hate that argument. You know why because people always tell me you should have gone back in time and bought golden fill in the blank two years ago. Well, nobody said that back then. It's easy to look after

the fact. Isn't that just a currency beat? Well, the point is our team does a lot of work on gold because we're big commodity players in Europe and we have some modeling on what drives gold prices and certainly negative interest rates. Like you know, gold had this cost of carrier, had to compete with bonds. Then you had all this negative interest rate debt in Europe, and that was obviously a positive carry versus negative rate that went away. That was one of the things drives. So real rates

was a big factor in gold. So the fact that real rates went up two or fifty basis points, that's a big headwind to gold. The dollar surging, big head head So in other words, it's not just inflation, it's inflation this rates, real rates being from negative point, moving real rates, you could say, wow, gold is really doing much better then then stocks and bonds. I mean it is, well, it's only down nine percent this year, but not what I would have expected given and the moving real rates.

It's actually it's surprisingly doing even better than that, giving for the modeling. Yeah. Yeah, And we talk about inflation, and I do want to get this in out inflation because it's part of what we were talking about in earlier about the rant on being too tight. I have maintained and now there's finely papers and talk about this that the inflation data that we're getting today, particularly core inflation,

is over overestimated and inflated. And so to speak, on the services side versus the good side of owners and equivalent rent is probably not owners equivalent rent and housing costs and rental and even not owners equivalent, just the rental part of that. We basically, because of the way the Bureau Labor Statistics computes it, it's very lagged in housing prices. So we didn't record enough inflation for the last two years, and now we're overgoing to overrecord inflation

and are today in the next couple of years. Something very similar had happened heading into the financial crisis, like oh four, oh five, oh six BLS was behind on the inflation reporting because it was embedded in housing, and then once people flipped from buying to renting, suddenly they overshone on the other way, which raises an interesting question.

If the FOMC is raising their rates, which is helping to drive mortgage rates higher, which is sending all these people to rent, is the Fed indirectly making inflation higher? First of all, they are responsible for the inflation. They are responsible for the fact that the case Shower housing indicts from the month of the pandemic through the spring of this year was up forty percent. That's a big number, isn't it. Yes, for now that's off the pandemic lows, or is that this is from March and then it

went down a bit during the pandemic. So but I'm taking it from March before the pandemic brought it down. National housing index, rental indexes, and this is before the FED tightened. We're up thirty percent. What is the core BLS never Yes, the government's inflation housing index is up like eleven or twelve percent, So they're way behind. And they're still showing an accelerating while the real housing press

are going down. Now even with the limited inventory, prices are gown over, their discounts are are people are now really worried if they have to sell? So the question is is the FIT aware of the fact how behind the curve their housing data is? I hope. So they're writing some papers on it, but they reflect these department in the FOMC don't seem to communicate. I mean, I hope, so, I mean, you know, but and then second, if they are aware of this, at what point do they should

be pivoting? And now we're at what point do they declare victory and say should be saying I say, maybe do another fifty but they won't November and then stop and see what happens. Um now Boward is talking about and waiting. I think that's too aggressive and we'll accelerate the downside too much. That's my position. I think a lot of people agree with you, and I think that's

part of the reason. If you live in the real world and you look at copper, you look at lumber, you look at gasoline prices, what do we have nine consecutive days of falling gas prices and gases now below where it was a decade ago. I think a lot of people agree with you. The fetch of declare victory and go home. Well, you know you're always on alert, but pause. And you know what surprising me bury is that you know they exploded the money supply in twenty

When did we start really seeing inflation? And now all of a sudden, we're we only are six months into this signing cycle. And there said, oh my god, I'm not seeing the results. Iiwana what tighten time? Well, it doesn't happen in six months, and in fact you are seeing if you're goods, good prices are way down and service prices take even longer. So this idea, oh my god, it's not working, it's not working. We gotta keep on hiking,

is to me. I'm flabber gassed. I mean, it's it's totally different from what they were just saying on the other side when inflation was building, and they say, oh, we don't see any inflation despite the fact of floating credit and and uh easy money policies that we petitioning Siegal for the FED or just j Pal have have Professor Siegel show up, and I would be happy to debate him. No, no, no, not. I want to send you to the FED and you school them. Hey, here's

what you guys seem to have forgotten. Since I wish there were another voice there, and I'm doing my best to bring some voices there. If it isn't me, maybe I can convince some of the FED governors or presidents bring that argument to FED governors. I'm not a FED watcher. I don't feel the need to hang on every speech

on everything. But the two FED governors that seemed to be closest to making that pivot, the one you just mentioned earlier, and then Lyle Brainerd also seems to be saying, well, you know, we're beginning to make some noises, but most of them are saying we're gonna be tough through car Yeah, I mean crazy. Yeah, I mean to keep at these rates three will cause the second worst collapse of the housing market in the post war period. I actually think housing prices from their peak are going to go down

ten to still leaves them up. Remember they were at But if they continue this up higher, you know it, Uh, it's going to get even worse. And it's not just how far they fall, but it's how long If they're down ten percent and there's no improvement over five or ten years on on a real basis, to go down and uh, you know, it'll crimp the housing industry, which

is one of the most important industries. And you can see that in the auto industry, and the loan situations are going to get very hard to get alone on on that credit cards. In general, we haven't seen it in the real statistics, not yet, so are you how saying it in some of the statistics. The housing statistics are absolutely terror right. I just showed in the middle of October the prospective homebuyers traffic is almost as bad as the worstern Art Association of home Buyers and is

one of the biggest collapses we've ever seen. Yeah, it's almost as bad as the middle of the pandemic, the early parts of the pandemic. So I I hate asking the recession question, but I feel I have to ask you. Do you feel that if the Fed continues on this path, we will find ourselves into recession? And how bad potentially could it get? Well, it could. The longer they continue on this payoff the way keep on hiking or stay We're gonna stay high for longer, I think the recession

becomes a real possibility. I still think they have a chance to avoid one, but the right now and we avoid or or or or you know, if they just put a ceiling for the market and saying we're seeing progress and we can soon begin to pause, you know, that is what the market it is looking at. What the market is so scared about is there seems to be no limit to their talk. Hi kai kai kai, Because if they're gonna wait for that core rate to go down to two percent a year, given the distortion

of statistics, we are in for big trush. So you raise a really interesting point there, which is some people believe that Jerome pal thinks markets are too high and he won't be happy until he sees markets TA can talk about that. I mean, what do you think about that. He's like the anti green span, and well, you know used talk about green Span. Put if there's disruption in the market, which I don't expect, um, then you know he will step in. I mean that's what the central

bank really disruption of the market. Something really bad happens, and he wills having But if the market goes down another ten percent, because how you're not coming in, And if the market goes down another ten percent, I suspect you're a buyer. I'm definitely a buyer. Well, I'll tell you, when the Fed pivots look at you, you'll see a thousand point you're saying this because we were just talking about this. It feels like the risks are very asymmetric.

That the Fed could overtighten, that we can miss earnings, that we could have a recession, and we could grind five tent lower. But heaven forbid the war in the Ukraine ends, we get some decent earnings, or the FED says, okay, we you know, we see a five hand weight, we can do one more and wait, um, look out, look out above, look out above. As I say, I think stocks are quite undervalued, not that they've been the most

undervalued by history. Obviously we have had worse, but I would say in the if you buy stocks in a couple of years, you're going to be very happy. Today's special edition of Masters and Business is brought to you by confirmation bias Barries. Confirmation bias what this show is all about. You're you're just talking my game. Everything you're saying is what I want to hear. And oh, I feel like I have no objectivity and I'm just like ready to stand up and start waving a flag. Jeremy

Schwartz tell tell us why the professor is wrong. Well, I mean it's interesting. Twent percent valued even with the fear that the fag keeps doing what they're doing. And we talk about the S and P at sixteen and a half times earnings items pretty reasonable. Yet some of these international marks we're talking about the emerging markets at single digit ps, but even broad developed markets get at half the valuation of the US too. Europe has looked

terrible for a long time. Europe is telling a ten right, and and yes, with a fundamental screen, it's gonna have even lower number even I mean that's unbelievable. I mean, you know, aren't on a fundamental screen. If you do fundament we waited and we just tilting under value divator. Yeah, you can get very low. So the pushback to that is, well, Europe is a mess and the Russian gas and the

threat of war. US small caps at nine to ten times earnings, and we have three different small cap btfs David and based earnings based all of them are nine to ten times earnings. That small cap discount. Well, cap value is as cheap as we've seen a long time. Right, small caps generally have been cheap relative to large caps. You're at sort of the bottom that you know, bottom few percent in the last thirty years. And and Fords have been very good from these levels because I mean,

you can't get worse. But if you're looking out at five years or ten years, so when you when you get these prices and dividing yields and earnings deals so high, you don't even need much appreciation to get great returns because earnings real is a real yield prices and even if ten years from now they're ten you're getting ten percent after inflation in the meeting, it's amazing. So I mean, you know, you don't even need them to move up

on evaluation if you hold on to stuff that. So before I get some of my favorite questions, I gotta ask one last question about the book. So you know, hundreds of thou and a half a million copies of this have sold. It's the sixth edition. We now have a with with Jeremy Schwartz. Are we gonna continue to see future updates every what? What has this been updated times? Over thirty years? Six times? So it's not every five years though, I mean this was the longest period I

said eight or nine years. I think his wife thinks this is his last she is she looking for you to kick back and slow down a little bit, Slow down a little bit. Why do I sense going to happen? Are we passing the torches? The next edition going to be Jeremy Schwartz with Jeremy Season? Is that what's going to That's a possibility. We actually have not had any formal discussion. Um, we don't need one right now. But Stocks for the long run is gonna be here for

the long run. This is going to continue. I think it's going to continue. Stocks for the long run for the long run. Is that is that? It? So? Let me just try and touch so some of my favorite questions that I ask all my guests, but I'm going to ask them to you both at the same time because I want to see how that works, having never done this before, out of curiosity. During the lockdown, when you weren't ranting about the FED, what were you guys doing?

What were you watching? What was keeping you busy? What were you streaming on Netflix or Amazon? Wow? What were we doing? Yeah? I mean we began obviously watching a lot more than I did before. Right, you know, I love The Crown. I loved um Succession, but are not People say, do you really watched The yellow Stone? I said, yeah, I know people who love Yellows. I love it. It's it's like the Western version of Succession. What were you doing? I'm gonna say, like, I'm not that good with pop culture?

You have girls? Three girls? Right? I have two girls, two girls. Um, I would say I'm one who took the work. I was working more from home. My podcast consumption went way down, actually, which is was That's one of the things I missed because I did it all on the plane in the commute. It's funny you say that because I watched our numbers go up and I was the opposite what I was expecting, because on the train is when I listen to podcasts, and so I my my personal went down a lot. But as we

start geting back into it, I'm getting back. What did you watch with the girls? I honestly, they do their own thing. My my seven year olds on YouTube, like you can't get her off YouTube. My ten year old is less on all that. So they're on their own little devices. And when one thing we did, we kind of formed. You know, we stayed away from each other from March until a Memorial Day, and then we decided

to listen. We formed a pod of the family and and we started spending a lot of time together, um, go outdoors and and we said, you know, believe it or not, I've been in four international trips then too to family trips abroad. Um since then, so uh, you know we've Yeah, I mean a lot of people are surprised, but we decided, hey, you know, we're all pretty healthy, and you know, you know, we all got vaccinated, and you know we're gonna get it. It's gonna be mild

and hopeful. Who knows how many years you have left advantage of right, you can't you can't hide. You cannot forever because there's dangerous everywhere everywhere. And he does go out and travel even way more than I do. But the I mean the work from home. I guess the other thing that we did, I mean I got to be more involved with the girls, like I was able to coach my ten year olds basketball team. We did it in No Kid Hungry, or Michael uh and and and Ben did their n f T for No Kid Hungry.

We've all come around. That organization raised a lot of money. That was our team raised the most of our basketball league as well. If we got to go play in the Sixers court because our team for in the Forum, well, well what is it called these days? To me, it's the Philadelphia Forum. But that's old spectrum spectrum, that's right. Um. So normally I asked this question right here, which is

who were your mentors? But I this is the first time I've actually asked somebody that question with their mentor. So I'm gonna flip the question on Professor Siegal and say, tell us about some of your mentees and who helped shape your career. Well, clearly I would mention Professor Milton Freedman at the University's card, and I also mentioned Professor Paul Samuelson from m I T where I got my PhD. And I yeah, I mean I regarded those as probably

the two. I mean, I was honored to be able to be able to be so close to them, and Protestor Samuelson was on my thesis committee. Professor Freedman was a colleague of mine My first four years of teaching, was his last four years before he retired. We became very close friends. I saw him a lot after he retired. He lived in San Francisco, whenever my wife and I went there. Uh, they've really made a tremendous difference. That's

some combination. And then I always feel like I have to bring this up when I speak with you, is that you and Professor Schiller are buddies, and you guys socialized and out together. It's amazing. Is tomorrow I'm going to the Poconos and Bob Shiller and his wife Jenny are going to go down there. We used to do that every summer. This is the first time in probably thirty years that we're going to be spending the weekend together. We've we've been friends for fifty five years. It's fifty

five years. Five years. I met him as a first year graduate student nineteen sixty seven at M I T I've got a story about their vacation. That's a pretty good one. Go ahead. Let's say the first year I'm working for the professors the summer of a and the New York Times was coming to do a profile of the two professors, and it was a great cover. David Leonheard,

I think, was the author. And I just started dating my now wife, Bonnie, and she had in her class in economics, she had to write a contrast irrational exuberance with stocks for the long run. She had to take off to go to a barbecue with them, and we, uh the professor could come and uh so anyway, she she got to go to the barbecue with them in the Ocean City. They're doing it at Ocean City to

rent a place all the time. We now own it to short but you know, near Ocean City, but at that time we rented and he came over to spend the weekend and and um, you mentioned my poker playing. But she actually in her paper she got an A plus on the paper. I would hope she I hope there's a photo everybody to get there's a contrast of We actually went to Atlantic City and Bob didn't want to play blackjack, and the professor was playing cards, and

she used that as an analogy of the risk christ conversion. Oh, come on, Bob, you know, let's let's let's play. Yeah, he's very much It's just the difference in the psychology is very much more risk converse. So it's funny, love we we we have so much in common. We get together. We just talked about so many issues. So when I had Bob here for the show and he had his next appointment was a speaking event across town, it was the same direction I was heading. So I'm thinking, well,

here's Bob Schiller. I'm not going to stick him in the subway to go downtown. Hey, listen, we'll get a car and I'll have a car take you to your next event. So we were getting this, you know, a cab, and he puts on his seat belt in the back seat, and I'm like, well, Bob Schiller, hang on a seat belt. Maybe he's done the math. Maybe I should be wearing a seat belt in the back of the car. And uh,

he's very queeous. I remember when I love heights. And I remember once it was a bridge and it was alleged that you could walk on it was wide enough, and he said, Jeremy, don't go up there, and said, oh, top hob and I walked across. And now he's you know, he was. He was so scared of doing that. He said, oh, you might trip, you might fall, you might fall un And you guys still spend that much time with each other on a regular basis. We just love each other. Um. Alright,

So down to my last couple of questions. Let's talk about books. What are you reading now and what are some of your favorites. This has really dominated so much of what I've done and recently. And there is one book that I have read recently, and I'm sorry that it's really quite interesting because it has nothing to do with finance. Russ stuff Out's book from the Times. From the Times, and he wrote about his journey into a

severe lime disease situation. And you know, I've had some medical issues myself in the past, and I was fascinating how he dealt with it and how the medical establishment felt with it. And he had written several articles about how that affected his feelings about medicine and the government and all the rest the deep places, deep places, you've got it. That's very interesting, and so I it's a

fast read. He moves to Connecticut because it's something he loved all the time, and within like two weeks he gets it and no one can cure it, and it gets worse, and he goes to all these extremes and what he learns and thinks about. I thought it was a fascinating book, and it was, you know, I tried to read a couple of things that aren't just economics, but that was that was. There was one other book, but I can't think of that one either, But I'll say like it's a sort of a similar story to

my podcasting. I used to do more audible because I got into podcasting and that was how so I actually have twelve audible credits to my point on it. It's been a while since I've been doing a lot. But the last one I read was Hot Commodities from Jim Rogers, which people I remember he wrote investment Biker didn't and I remember reading that of many people, commodities were coming back for the first time in fifteen years. His book was about fifteen years early. But like everything he was

talking about, it's coming together more today. There's another very interest I like history, in particular story about the war. And yes, the book was entitled The Newspaper X and it had to do with both in the United States and in Britain. Some of the most major newspapers were big supporters of Adolph Hitler and made excuses for him and all the rest. Um and and mentioned some of the biggest editors. Some of it might be people who supported Trump today, but it was. It wasn't just a

right wing media. These were dominating media's that were very sympathetic. It was a pretty shocking book. What was this a unction of who owned those papers? Yeah, I mean it was the editors of the McCormick and the Chicago Tribune, beaver Brook. Was it the Guardian or the Telegraph in London? Who was an amer of Hitler although once the war started he really went to the side of the British. The newspaper access six press barons who enabled Hitler is

the title. And that's another one. Um, what sort of advice would you give to a recent college grad who was interested in the career in investing in finance? Where the investment bigs. Go find something of your passion. Everybody thinks they got to go to the investment bank. So don't don't start a Goldman or Morgan Stanley because such a routine. And I obviously followed a different path. I

found the professor. We found more interesting things. Um, I mean, certainly the world is getting quant So python as like the language program, get into data data sciences where the financial engineering program s are hys and demand people from from my son and I would say, you know, a more general thing, and everyone said to do what you love. Um,

do what you're good at. You know what you're really good, you think better than others, you know a lot of Oh yeah, I think about that really well, pursue your comparative advantage, as an economist would say, and do what you feel good about, not what someone else, your parents or others are saying. You got to find your own thing. But also know what you're good at. You know, Hey, I'm pretty good at that, and that's where you should go.

And our final question, what do each of you know about the world of investing that you wish you knew fifty years ago? Well, I probably would have not had any bonds in my t I a craft University account, no bonds at all, you know, I had I started, They always said, oh Jeremy, you gotta be fifty fifty okay, back then, you know I was even yeah, I mean, uh, you know I wasn't you know when I started. Don't

forget I started an economist. I getting gone finance. Actually later so and until I studied myself and I said, what am I doing this for? Um? You know, I started shifting away. But uh, you know, if you got that long arizon and you're young, and you're young today, this is a golden time. I mean, you're not buying at the top, you're buying near the bottom. You are going to be guaranteed great returns when you retire, not

a bunch just just to make self. Jeremy Schwartz, what what do you know today that would have been helpful years ago? The remote first world, if I would have known how remote it was going, might have moved into different places. There you go, that's really interesting. We have been speaking with Professor Jeremy Siegel of the Wharton School of Business and Jeremy Schwartz of Wisdom Triosset Management. Thank

you guys, for being so generous with your time. If you enjoy this conversation, be sure and check out any of our previous four hundred and twenty five conversations we've done over the past eight and a half years. You can find those at Bloomberg dot com, iTunes, Spotify, YouTube, wherever you feed your podcast fix. We love your comments, feedback and suggestions right to us at m IB podcast at Bloomberg dot net. Follow me on Twitter at Rid Halts, sign up from my daily reading list that's at Rid

Halts dot com. I would be remiss if I did not thank the crack team that helps with these conversations together each week. Robert Bragg is my audio engineer. Paris Wold is my producer. Atika val Broun is our project manager. Sean Russo is my head of research. I'm Barry Hults. You've been listening to Masters in Business on Bloomberg Radio.