Billionaires Dalio, Gundlach, and Schwarzman talk millennials, social media and business

Well, I want to

talk

about my generation, the Millennials. We were really coming of age during the crisis. So how would you advise us to prepare and what would you say to our generation? We feel marked by the crisis. Yeah, first of all, I think one of the problem is that the experience you had is the last experience that's going to stick in your mind and it's probably not going to be the one that grabs you, so the next experience is going to be very, very different. I know my parents. They went through the Great Depression and then they missed the booing because they were always thinking about that and I think what they need to do is look at all those crises, that's why you can look at the inflationary ones and see all those crises.

Those, and once you have that perspective, I would say three things to your generation, okay, three recommendations, the first recommendation is to think about your savings and how much money you have to save, and the best way to think about that is to think about as. How much money do I spend each month and how much money do I have saved to be able to do it? How many months will I be fine without it? And value the savings well and calculate it because saving in that is freedom and security and think about what that is so that is the first thing: how much do I have for that?

The second thing is how I save well, what should I put my savings in and when you think about what you should put your savings in, keep in mind that the lowest risk investment is you think that volatility is the lowest risk investment, which is cash, which is the worst investment over a period of time and you could judge that by judging the inflation rate in relation to the after-tax income that you are going to earn, so if you have a 2 or 3 percent inflation rate and you are earning 1% and you have to pay taxes on that 1% or 1 or 2 percent that you are going to get, you will be taxed essentially at 2% one year and that is going to be a problem, so you have to move on to assets that are other assets that they are going to perform better over a period of time and when you do, the most important thing I can convey to you is that you diversify well because I can guarantee you that one of those assets and you will not be able to choose the right one will be disastrous in your life, you will lose half of those savings if you're in the wrong one and you won't know which one is right is to choose different countries choose different asset classes and it could probably take too long to explain how you could do that, but that would be the second thing to learn, the first thing is think about how to save, be careful with debt.

When you think about debt, think about whether that debt will help my savings or produce an income. Sometimes debts like buying a house or buying an apartment or buying an asset produce forced savings. Forced savings are a good thing o If you are going into debt and you are thinking if I am going to have that debt on an asset, it is better that that asset produces more income than the asset, then the cost of your debt, if you are using the debt for the consumption, that is not a good thing. To do it right, you're giving up that security, so the first thing I want to do is think about how much you save and think about whether that should be the case and how to borrow.

The second, make sure you think about diversifying that, not Cash and the number three do the opposite of your instincts. If you're going to play, it has to be the opposite of what your instincts say in the crowd because the market reflects the crowd, so you want to buy when no one wants to. buy and you want to sell when no one wants to sell properly and that's emotionally difficult and you're probably not going to play that game well because it takes a lot of resources to play and we spend hundreds of millions of dollars. every year to try to play that game well and it's a difficult game to play well, so I would warn them about the market timing game, but I would tell them that if you're going to do it, do it in ways that are uncomfortable because your Against your instincts, that's really good advice.

One more thing that really resonated with me in the book was whether in the next recession some of the implications could be the impact on pension obligations, healthcare, my generation will be affected by That's right, we pay a lot of attention to debt and we should, but pension obligations and healthcare obligations are like debt, there are obligations that require cash to fund those things, and if you think about it, we don't have enough money to fund them. those things and then there will be a contraction and I think that is also part of this political conflict because when you tell someone that you are not going to be able to fully fund their pension or how you are going to fund it, what are they? you're going to take it away to fund it or if you think about the health care issues and so on with demographics and that requires taking things away from people that have been promised to people or you print the money, these are issues that are going to be important to your generation and you know that not only is he an incredible money manager but he's also a great philanthropist and when he

talk

s about the next recession he's also bringing up some important

social

issues: the wealth gap how do you think about that?

How do we address this issue? Because it seems like it's going to be a very big problem. Yes, I think capitalism has to work for all people and democracies have to work for everyone and we are in a situation right now because of a lot of things that is not working for a lot of the bottom 60%. I separated the averages of the bottom 60% from the top 40%. I could have done 80% or even 95%, yes. and it is not working for a large percentage of the population we do not have adequate education we do not create funds in many cases my wife works in Connecticut to try to help what is called discern disconnected and disconnected youth give you a picture of the label that is the richest state in the country or equal to the richest state in the country has 22 percent of its high school students are disengaged or disengaged They don't even know where they are 22 percent those students those people are going to be on the street that's a problem there are school districts where they have to share books or in some cases even after sharing pencils they literally break a pencil in half and close it , sharpen it at both ends or pass it back and forth, etc., and those who care about opportunities in terms of education or even income opportunities, there is a population where in that bottom 60%, opioid use is increasing and and suicides are increasing, I think it needs to be considered a national emergency where we create metrics, what those conditions are and that needs to be addressed.

I think these things can be addressed much, much better, but they have to be treated in a way that is addressed and that makes them productive, I don't mean giving money or providing

social

assistance, but doing certain things, probably in public partnerships. -private ones where the private sector, which could be the

business

sector along with the government sector can function, can do the checks and balances to make those things productive. I see many of these cases. I finance, for example, microfinance. Grameen America is one of them, but several of them and the ability to lend someone a thousand dollars and not get the money back.

Recovery rates of 99% to 98% and that thousand dollars can generate the purchase of a piece of carpet cleaning equipment and that person is in

business

to be able to be productive, those types of things must be considered because if we do not have capitalism work for the Most people are not like that and the same is democracy, democracy is based on the notion of commitment to be able to unite people, etc. I think if we have too much fragmentation, I think these are I think the biggest risks of the debt crisis can be managed, but when you get into bad situations, as a basic principle, you have rich and poor living together and they have to decide how they go. how to spend the budget and how they divide the pie. and if you have an economic recession, you're probably going to have a conflict and I think you have to deal with that by really criticizing how much money we spend on seniors in the United States government system, as opposed to how much we spend on young people. people and in that article the ratio was seven to one how much of the budget we allocate to paying for things for people over 65 compared to paying for things for people under 21.

I came first 21 or 25 whatever, but young people and yes By investing in dying people and not investing in the future, you don't have a very bright future, so in the middle segment they are beginning to understand that babies Boomers have all the wealth and Millennials, I don't really want to say they can. They can't afford a house. You know they have student loan debt. I'm starting to believe that they're starting to believe that they finally got screwed by the system when you see a figure like 22 trillion for the nation's debt. Have we passed the point of no return?

What is the day of judgment? I think we're really at that tipping point, so given that the registry is going to do something about it in the next few years, it's almost certainly I think once we get to 2020, 2021, I think. you will have passed the point of no return and then you will have to deal with it and one of the problems is that we have twenty-two trillion of debt and it is growing very quickly, but we also have $123 trillion in unfunded liabilities. America's state and local pension systems, on average, are 50% underfunded, so if you look at Dillon Oi, there's no chance Illinois will be able to meet its pension obligations to its public unions. and can't do it, then what is the solution?

You have the solution. to cut profits when you have $123 trillion of unfunded liabilities you have to dig deep, you have to free them up to fund them, it would be incredible, I mean, we would have to resort if we funded $123 million of future liabilities, that's six times GDP, if we did That over a 60-year period, we would have to take 10% of our GDP each year and set it aside to finance these liabilities, so we would go from an economy with a 6% deficit to one that has a 10% surplus. % so there would be a 16% change from where we are today, so we can't fund these liabilities, so it has to happen: we have to raise the age of eligibility for benefits and we're going to have to Exclude people even though we told them they were paying into the system as a kind of insurance program for Social Security and that will happen and it will happen very easily.

Do you think politicians will do that? No, they have made all these promises. It's okay, because path awareness will become too obvious and then people will say, "You know what I know, I was supposed to get Social Security when I was 65, you know what I guess, it's okay if I get it when I'm 72". Millennials will have an eligibility eligibility that's probably 75 and some people like me won't get anything because actually when I talk about you and DoubleLine, this is your 10th anniversary, I think it's 10 years of running Double Line, um, you've been in business. For over 35 years, you are the king of bonds, now you are, that's what people say.

I never, ever invited that, but it would be dramatic if the

media

liked that you were a prominent bond investor. Most double line strategies are in fixed income. but I've noticed that they've been branching out a lot lately, so I'm curious to know where they're finding opportunities and what they're interested in. Well, we've been diversifying in the first place because we could. We were approached by Barclays Bank to manage the smart betta. capital fund using some of what they were working on with Dr. Schiller, the Nobel Prize winner, on the Rail of Cape Ratio and it turned out that strategy was tremendously successful.

I think it's the best performing large cap strategy in the country since we launched it and it's That was good because it was a success, it's worth over ten billion dollars and we started a liquid real estate fund that I think is really interesting with Colony Capital, which we just started launching and which actually invests in all types of REITs that are traditional types. but it also includes digital assets, it's not just the feelings of shopping centers like malls and nursing homes that are part of this, it's much bigger than that, almost like a newer economy, yes there is love for your new economy , like satellite towers and stuff, and that uses a smart bait approach.

Let's start, we'll see if it works. We launched it at a good time. I mean, it was like finishing our last year, which is a good time to launch anything because the markets have shot up, but right now, in the fixed income market, the strange thing is. I think the most exciting thing is the two-year Treasury bond, not that it's great, but its yields are about the same as the ten-year Treasury, you know, it's two and a half years, which is nice. I simply believe that interest rates have a tendency to rise in the future. long ending and I think it's late enough in thecycle with enough leverage in the corporate economy that if we continue forward with attractive earnings and risk assets, I'm pretty sure it will be at the end of the game and you'll be better off waiting and giving up on those earnings because your opportunity set will be much better when it comes. the next recession and, as we said before, we really can't see a recession in the middle of this year, let's say, we are always surprised, but our indicators don't show it, but once they roll, but they are starting to show signs of cracking, we don't convincingly, you have to act today, if not when the next recession hits.

When it comes, there will be an outrageous opportunity in corporate credit and I think you don't want any right now and instead just say you could lose a few percent compared with playing that game, but when everything goes well, we saw what happened on October 3rd. On Christmas Eve, I mean, there was a pretty big drop and I think that's just a taste of what's to come. You called it the housing crisis and you were one of the first to put capital to work. That's the kind of what you're seeing. when it comes to corporate 3, yes, I called it, but I wasn't buying the first capital workbook.

I actually raised a distressed fund starting in February 2007 and it was an interesting period because the institutions that I was suggesting this idea to were debating whether I was right, more than anything they were saying, well, what no one else says, this you say house prices will fall 35%, which I said at Barron's in December 2006, when they were down 1/2 of 1% so far. It is a long story. I won't get into it for a while, but I knew what was going to happen in the real estate market. It took a little longer than I thought, maybe 6 or 8 months, but then I made a name for myself when I spoke at a very prominent conference in June 2007 and went on stage not being entirely sure what I was going to say.

He had notes or something. It had a few slides and suddenly it became a symbol. The time was right here and I made the statement that I will address later in this talk about the credit markets, but I'll just give you a hint: subprime mortgages are an absolute disaster and it's going to get worse. That phrase was captured in the

media

on five continents and in At that time, the high-risk sector, the triple A, the double A, were still trading at one hundred cents on the dollar, they had not fallen to zero at all and They really started to fall in earnest in the first part of 2008, at the end of 2007.

I didn't really start putting money to work until March, after the Bear Stearns collapse, because by then prices were low enough that it was quite sure to get more than your money, but if you invested your cost, you'll probably get that back, but you knew it was going to go down. In fact, I made a. I announced it to my investor in March. At that moment. March ovate. Said. I just want you to know. I value transparency. I'm going to start buying credit. I realized that this was it. This is going to happen. I said prices were going to crash.

I think that's enough time to start buying them, but I want to buy so many things that it will probably take us like a year to get them and we really don't fully invest. until March 09, which luckily would be the bottom, so yes, I think something like this will happen, but it will not be in the securitized markets, it will be in the market that was lost. assaulted today when you look for distressed and fixed income opportunities, the best ones come from things that are poorly qualified in addressing the problem because people who buy investment grade corporate bonds are looking for security, they believe they have security when you buy a triple -a float with high risk rating, you're a triple person, you didn't sign up for a big risk, you signed up for a small reward hoping the risk was de minimis, but then it ends up being a big risk and so it's not surprising that the People who sign up for security sell when the market goes down because their eyes have been opened and they now realize that they were deceived, they thought it was safe but they were wrong or they were lied to and then they decided that I had never signed up for this.

I'm going to get out before it gets worse and that creates another layer of sales. So, for example, there was a lot of stock buying and at the end of December, and by all appearances, it seems to have taken it 20:19 I think that the people who bought at the best levels of the end of December, I think they will sell at a higher level. lower than what they paid what they bought in it for that same type of thing that they bought. When they thought it was a purchase, they felt emboldened by it. So far they have gotten a financial and psychic reward, but once that purchase sinks in, it will accelerate the sale because those people will become sellers, I think, and that.

This will also happen in the corporate bond market. Another bearish stage is coming. Do you think we are in a bear market? Yes, yes, it is a bear market. I mean, this is a bear market. There is nothing to do with this arbitrary 20 percent. Which has to do with something crazy happening first and then the crazy guy gives up and yet the more traditional things keep moving forward but one by one they abandon him, so what was the madness of Bitcoin? Bitcoin was the Bitcoin craze. Zero to twenty thousand in a straight line was crazy and you knew it was crazy because other things started happening that were really crazy.

There was something called crypto kitties. Yes, it was not a cryptocurrency, it was a collector's item, but it had the word name. crypto in it and each one was unique but there were cartoon cats and there was actually a time where one sold for over a hundred thousand dollars, of course today there was zero but that's a sign that the pets calm down in the past. late 90's that's like getting negative amortization 120 loan LTV in 2006 Bitcoin was crazy and crashed starting in December 2018, then the global stock market peaked a month later, then transportation peaked peak, Utilities peaked, then Dow Jones Industrials peaked, then S&P Pete finally peaked Nasdaq, then dropped to five stocks, so it dropped to four stocks, then two Amazon and Apple and then on October 3rd it ended and that's how a bear market develops and I think it's been saved by the feds pivot, it's been saved by the bond rally which has taken some pressure off the market of securities, but if the long end of the rate begins to rise as I expect and if we exceed 350 on the thirty-year bond, I think it is because it is believed that the competition of the bond market, particularly in a climate that limits one of The drivers of stock price appreciation, which are buybacks, are potentially in jeopardy.

I mean, it's interesting that a Republican is proposing legislation to curb buybacks that shows Marco Rubio wants to address this problem before someone on the other side claims it as their own, so support for limiting buybacks seems pretty high. . Then you mentioned Bitcoin, which was the craze. Do you think there's another hobby I'm thinking of? crypto cannabis current crypto, that's the one people are talking about now if you haven't, yeah. I have young guys working for me who are big believers in cannabis and they say it's about getting shelf space and branding and getting bought by another big company which is like gambling.

I mean, it seems plausible to me, but I don't know. I'm quite simplistic. I don't know why there isn't a corn mania. How could this in a corn mania grow corn - right, I don't understand why just because it used to be illegal and you know it somehow has this special magic, but you know it's interesting that cannabis seems like some kind of mania, I mean , people probably make a lot of money in some parts, but that's not for me. I have no interest in manic stuff. I'm just watching, but musically from the sidelines, what I do find a little scary is that I saw a statistic this week. that the increase in smoking among high school students year over year is 38 percent due to vaping.

Wow, there's an explosion in smoking, which I guess is probably like a gateway to the cannabis industry, so maybe there's something there, but I think that would be an incredibly scary statistic in a year, an increase 38 percent and now over 50% of high school kids smoke, mostly vape, I think it's probably much worse, much worse than traditional cigarettes. I don't know, I've never been in I'm a cigarette smoker, but I wouldn't go near any of this chemical concentration stuff. You know, one thing that's always been interesting to me, Jeffery, is that you're here on the West Coast and people seek you out for your various callings and points of view.

I wonder how you filter through the noise, how you get your information, what you look at. I watch the news more than anything else and I try really hard not to pay attention to what other people think sometimes people do things they say like name someone you admire or something and I thought about it and the person I really admire is someone that nobody, most people don't know the person's name, his name is Donald Judd and Donald Judd was one of the greats. Call him a sculptor if you want from the 20th century, he broke the rules and made people angry because he didn't actually make the sculptures himself, he designed them and then sent them to machine shops and this was back in the '60s when he started. and it was considered that this cannot be art because it does not have the hand of the artist, but Donald Judd was an art critic in New York City and then he tried his luck with painting and as an art critic he was very involved in the art scene that It was very vibrant in the late 50's and early 60's, New York was the art capital of the world after having moved it from Paris and Donald Judd became very involved as a critic and then as a painter and then decided that being in the art scene of New York was detrimental to his own artistic vision because he was too influenced by Willem de Kooning in any Warhol and Eva HESA and all these other luminaries of the time and it distracted him from the fact that other people's ideas were confusing him and taking his vision from his own art and diluting it further so he did something very radical he stood up and thanks to the generosity of the DIA Foundation who bought a former Korean army base where he had served in Marfa Texas and which is the definition of In the Middle of the Nada set up his art studio there in the old barracks and the old artillery sheds and he understood that he wanted to get away from all the noise and by far his best work is in Marfa Texas, it's the largest art installation I've ever seen. had.

I've ever seen that it's hard to get to, it's like 300 miles from any commercial airport, you can fly and drive or fly to the runway there and that really spoke to me a lot because I realized. I have to do things like there are some events that I get invited to all the time, like groupthink events, they call them titan dinners and stuff like that and all these big shots are there, all these names of people that we all know in this business. and they are all complete. Most of all, he will be there and you can sit there and he will share ideas.

I did it a couple of those years ago and I would sit there and here's mr. Great, you know, number one and he's hugely bullish on Apple and then they turned to Mr. Big number two and he's hugely bearish on Apple and both arguments sound great to me so I don't know what I think about Apple now. I walked into the room thinking about something positive. or negative, but now I'm confused and I think the important thing is to observe the flow of news and be attentive to those moments when the news does not change but the interpretation does, or the news does change and the interpretation does not.

There are times when there is an opportunity gap and I think my main skill has always been to live in that gap in a faster way, maybe just because the way I operate I don't know it better than other people, so that's the real key is to look. For omens and cusp of change cases, we actually have a time when you can act on them. I mean, it's weird things happen. I remember Ben Bernanke when things were looking pretty bleak there in 2011 or so, he said we're going to keep short-term interest rates at zero for at least three years he previously announced three years of zero interest rates and surprisingly , a lot of instruments in the bond market that would surely benefit greatly from zero interest rates for three more years didn't go up in price for about half a day and I bought them all and it's like why people buy, I don't know, but They should be like 20 points higher and they were 20 points higher about two weeks later, but they were actually there to get. because people want to see the idea that they have been ratified or corroborated by a tracker in some financial program and, oh, I see that it is safe to do this because everyone else says that this is the conclusion that they are supposed to draw, but to then we value the opportunities for when it is safe and you have aconfirmation that your idea could be widely accepted, that's too late, so that's really the key and also trying to find relationships.

I have a whole team and what we do is we just look for correlations that might be common sense, but then you've checked them, some things that just correlate well, like things like the feds' core inflation gauge, which doesn't get enough attention and correlates incredibly well with the core CPI. every 18 months has a correlation of around 80 percent, no one knows about this, well, unfortunately, I talk to people like you and give them my ideas, but it's okay because relationships don't last forever, if the world changes. variables change, coefficients change, that drives things, so it's very important that you stay on top of it, that's why I do what I do.

I mean, I could have retired a long time ago. I find it very interesting as a form. of processing human behavior in society and simply understanding what makes the world tick. Keep track of a couple of things here. You mentioned that your team here and I met some people from Dublin in the last few years how do you think about talent? What do you look for when you hire someone? I generally like to hire people I know or who don't know anything. I don't like bringing people from other firms that I have about eight years of experience because they have learned another way and it doesn't mean that the other way is wrong, but it's not the way we do things and it's not that we do everything perfectly.

There's only our way, but I like people who are fresh out of school because they don't have to be like that, but you know, they're not trained by what they thought they learn somewhere else and I like people who would know how. They think, so we like people who are very political, we like people who believe in shared success. I tell people and I start working here in many companies. You succeed by killing the person next to you. If even if you go in that direction, you will leave. I want people to want the person next to them to do it. do well because the next person who does well means that the company does well and that is why we have a shared philosophy of success and in a way it comes from the top because I never shout at anyone my philosophy is everything that goes well the team the team did it and everything goes wrong it's my fault and I think people appreciate that you mentioned that you could have retired.

I'm sure people ask you the right questions. You know you are successful. You can withdraw at any time. What keeps you active? What is it? that drives you really isn't working is what it would do. I simply processed the world through human interaction which in this particular case is revealed through the movements of the financial markets and that is why I like it and am also committed to a couple of terrible companies. that basically takes a lot of money, so that's a good reason to work so that it can be funneled not only to the Internal Revenue Service and the United States Treasury, which I'm a very important contributor to, but also something that I think matters quite a bit.

It's just a mousetrap of administrative waste, so I don't really mind the fact that paying so much tax is kind of a privilege in a sense, but I also want to be able to see results for the money I have. I'm giving away impact, you know, and it's a very big impact that doesn't go through a bureaucratic machine. How about when people say you know they should have a 70% marginal tax rate for the richest? My marginal tax rate is currently combined. California and USA 52.6% I feel deeply offended when people tell me no, it's not. I actually have pets.

People tell me that, no, it's not that rich people like you only pay 15%. I'm telling you it's 52.6, okay, so that's it. because California has 13.3 and then there is the federal level and there are other things, so if they increase it to 70% it would be a 33% increase. I would go for eighty-five point six percent. I really think I would stop working. Yes, who would you work with? they I think I really think I would stop working at eighty-five point six so tax policy is very strange because a lot of people who are in my financial situation actually pay low taxes.

I remember Mitt Romney. I think it had a 14% tax. rate on a tax return that he disclosed as part of his run for president, I mean, 14, is incredibly low. I agree, it's ridiculous, but instead of me increasing from fifty-two point six to eighty-five point six, I think the 14 errors should go up to fifty-two point six that's what should be happening, but I guess I'm in a very small minority and the others protect the potential fourteen, so tax policy is really strange, it's really strange to me that people earn exactly the same amount of money pay very different tax rates.

Well, you know, I know that one of the areas that you really focus on when it comes to completing three is art and that you are a passionate art collector. How do you think art influences your career? Your investing career. I really don't think so. I think it's just very different. I mean art. You know, it's very subjective, so I think it's a balance more than a link to what I do. What I do managing money. Other people's money is incredibly. at the end of the day it's not objective as to whether you've done a good job or not, it's actually painfully objective because it's a number to two decimal places or more like your number versus that market number versus other investors' number and there's a You kind of can't escape that, it's that it's incredibly easy to judge, whereas art is incredibly subjective and you can't put any kind of definitive number on it, so I think it's a yin, yin and yin thing. yang.

One thing I like is when you get out of the elevator you see double line you see the meaning he actually told us a story what does the name DoubleLine mean well it's staying I, for some unknown reason, around 2005 I woke up in middle of the night which I almost never do. I'm not one of those people who can't sleep at night. I'm often asked what keeps you up at night and I don't say anything, I don't want to say anything, yeah, so I woke up and I knew I had another reason to do it. I was obsessed with this idea I'd never thought about before: If I started a money management company, what would I call it?

And I thought it was kind of a fun thought experiment and so many names don't make sense that they're named after an intersection in a city or a Greek god or some kind of gibberish that you know like financial first or not, if there is one. I'm not trying to insult them, but you know, names don't really mean anything or rivers or anything like that. Geographic locations of the lakes. I thought I wanted a name that meant something and what would be a good name. I just bought my first Mondrian and it is his last great classical painting in which two devices are used, one was an early device called a progression which are basically rectangles that progress, another was a device he came up with in 1931 called a line double and the double line is a further ambiguity between the line and the plane because if there are two lines that are close enough to each other that they look like two lines but they could also be interpreters that define the negative space of a rectangle by bordering them, so that I had this image that has this double line, I was just thinking, you know, it's a double line, yeah, that would be a really good logo and then I realized that it had a meaning, that the meaning was that in everyone's life We experience more often than a double line, there is a double line in the middle of a road and by law you are not supposed to cross it, but it is actually there for you. protection at least you like to think it's there for a reason and the reason of course is that it's not safe so I realize that's pretty good because I'm very risk averse.

I think more about what you shouldn't do and what you should do. what you should do and what you shouldn't is take fatal risks, that's what particularly kills fixed income investors, if you buy a lot of junk bonds and they don't meet your obligations, your money will disappear forever if you buy a lot of mortgages and they refinance them at the wrong time. of money lost forever, but it's what you do what you don't and I thought it's perfect because it defines things that we won't take certain fatal risks. I was giving a speech years ago.

It's been a long time since we're in our second year of business or something, it's giving speech after speech in one day, one was in Bakersfield and moments in San Luis Obispo and in Bakersfield it's really interesting, it's a very rich community, you wouldn't believe it , but there are a lot of farmers and there are a lot of There was oil there and I went to give the speech and a lot of guys in overalls showed up, there were farmers, there was a guy who was like the number two potash guy in the world or something, they're

billionaires

and they showed up with overalls and I said, hey, you know? there I look at my map I have to go to San Luis Obispo there are two roads and I really can't tell which is the most efficient route and the guy says whatever you do don't take this why didn't he say it's called blood alley.

I said it really says: yes, there are more fatal head-on crashes on that highway than any other in the state and the reason is because it's tractor country and it's very windy and it's one lane each way and the tractors go slow and the people are impatient and they just decide they're going for it and their trucks come in the opposite direction and annihilate them and that's why it's called Blood Alley and I said that's great, that's exactly it and I start talking about the name of the road and everything that the printer said like this, so we took the other road, it was obviously very good, we went over the San Andreas Fault, where the road has this kind of huge whoop, it's really amazing and I was like what was it because I thought what was it That and that was Andreas' fault?

That's right halfway between those two, so anyway that's kind of a double line if it had really come to life with that guy in the monkey long before he let you go. I saw you on Twitter last time no, when did you join?, it was said that you were sewing, that's right, what's your opinion on social media now that you have something of a present? I don't have a presence, I don't follow anyone, you get a lot of retweets Well, I don't tweet a lot, but sometimes I do. I'm just trying to give people an idea of ​​what I'm really thinking.

I receive a lot. There are many erroneous reports in the financial media. Many people. that report about but someone reported about someone reported about and like that old telephone game you play in first grade or go through class, he ends up starting to be, you know the sun is shining and the last person says the cow was in the hotel and you can't understand how the message was altered so much, but that happens when it is re-reported and I like to tell people what I really think, so I like live interviews or ones where I do a written statement because I find when I webcast, for example, the things that are reported more than half are wrong.

I mean, oh, I didn't say that, I don't like it, I don't like leaving out the word no and reversing the meaning, so I like having the Twitter account where if something like that happens I can say you know this is really who I am. , this is really where I'm coming from, we'll never see jeffrey gun lock on facebook never ever ever on facebook I don't know what Instagram is I've never downloaded an app in my life, you still have an opinion on Facebook. I remember you talking about it being a peer exchange, so yeah, and you know it fell a lot and bounced back.

I just think Facebook is their The big problem is obviously their business model and I talked about things that are secure and not insecure. I think it's Facebook. I mean, they sold themselves as comfortable and safe, but in reality there is an evil data collection monster and they don't do it. They don't regret it. And I just saw yesterday that they are talking about more regulation in Europe in the UK and when the regulars appear, usually the share prices go down like a meteoric rise in the healthcare sector until the regulators appeared a few years ago and then there was a Great fall.

I don't really trust Facebook, so the fact that I don't trust them makes me dislike them and the fact that I don't like them makes me want their stock to go down well Jeffery Gundlach CEO of DoubleLine Capital has been a pleasure. Thank you very much for his time. Thanks again for coming. Ray Dalio, the founding co-CIO and co-president of Bridgewater Associates. Thank you very much for joining us today. It's a pleasure to be with you. Yes, so we are here. at TechCrunch Disrupt and you are now the face of an app with the right principles and has been getting a lot of attention and traction in the last few months.

What is the success story behind the principles and why do you feel it has worked well so you know how? fail, you know, I realize that it is the path to success to know that knowing how to deal with those who don't know is more important than anything one knows knowing how to have an idea meritocracy and knowing how to have fun and go after your dreams and make that happen , it is a pleasure to transmitthat, so it's really interesting the app itself, you're giving people the opportunity to craft their own principles properly and follow yours, it's almost like okay, this can be your vision board too.

What would you say are the most creative types of principles you've seen others contribute to the platform? Well, we're just starting to put together the principles, so you know there are themes that you see over and over again and they're true, yeah, so I wouldn't make generalizations. I can't size the ones that I would say are the most creative, but they're mostly about overcoming pain and all that, so I'd say maybe those are what they look like. Personally, what is the most difficult for you to adhere to or do you feel like you face the most obstacles in trying to ensure that you consistently adhere to that principle?

Why is it not the most valuable? One is to meditate. I would say it's not the most challenging, but I want to do it more because that gives me the equanimity and creativity that really helps a lot, so I would say it would be one of the most important ones that you've definitely implemented. Also some new tools to really help entrepreneurs and leaders. Can you explain well the new momentum here? I want to pass on all the tools that have been useful because the tools create a framework that allows all of these principles to take place.

I really want an idea of ​​meritocracy which is the most important thing and the tools allow it, so I will first pass the points collector to you so that everyone is available so you can use the points collector. I think it will be fantastic, it is our most loved tool and most impactful, and what would you say is the success story? What is your vision for the principles as you look ahead a year or two? How would you define success in each phase of the process? in anyone's life there is a difference in what one defines what one defines success for me at this stage my definition of success is helping people succeed without me in other words passing on and seeing beauty happen I feel like I'm 70 years old, I don't want more success, I just want to help pass it on and if I can do that, it will be a success for me and then I will remain silent.

I will go silent in about a year. and a half I think you know some of the pillars of the concept of principles and a water bridge are really radical transparency radical open-mindedness when you look at Silicon Valley, where we are now, what would you say are the professionals or some of the startups ? and companies here that are doing well, can you name some leaders that come to us? I'm not going to be all personal and keep it private, so I'm not going to name leaders, but I will say that some of the most successful innovative companies and some of the new companies that are just starting out have an open mind and think about new and better ways of doing things, so I love Silicon Valley because they really resonate with the idea of ​​meritocracy to know one's strengths and weaknesses to work with. in a community where there is meaningful work and meaningful relationships, this resonates here, so the receptivity is really big here and you know that you personally have taken to social media platforms like Twitter and LinkedIn to really be an author in addition to your book and you .

You are finding ways to express yourself and interact with clients and people who are interested in your words. Would you say that LinkedIn is the best portal? I want to clarify what I'm doing. I can be fine. I was a little hesitant. I'm going. on social media and I don't know, I don't and I don't do it for most of those reasons. I do it because I have quality exchanges with people you meet every day, we exchange thoughts on principles and We are having exchanges and people are very kind and very grateful and I love communicating with them, so you know I like that we communicate in a way very honest, but the most important thing is its quality, like what you face and how.

Realize that whatever you're facing, there's a principle to it, yes, not seeing each of these individual things as individual things, but part of that principle that the back and forth exchange has been very Well. I love communication which I want to briefly address. your latest post on LinkedIn where you specifically address the administration that could curve some of the investments in China and the capital flows there, would you say that the optimal scenario is that the way the US government should approach relations with China? No, I would. I'm not saying I am, you know I am, so there are four types of wars, there is a trade war, there is a capital and currency war, there is a technological war and then there is a geopolitical war and I am seriously worried. about the nature of those wars, so you know that this exchange has to be made about how you're actually going to accomplish things.

If we shouldn't even use the term war, we're using it too easily, we should use the term negotiation, I think. So you know, the question is: to what extent will this be a fight where they hurt each other? Will it be a victory or a defeat? However, we can reach a win-win situation. That's what I'd like to see most. art of thoughtful disagreement and how you create win-win situations, which I would like to see in most of them, so I would say there is more concern about the conflict than the way we are having it and when you think about that scenario win-win, what do you seem to know because the US and China won't see that kind of engagement happening?

I don't think it's just a US-China issue. I think it's an American-American thing, in other words, I think when we're trying. with conflict we are now saying can we get over it so it doesn't turn into a lose-lose so we know how to get what each of us want through exchanges like you tell me what you want and let me see if I can help you get it and Let's do the same so we can build on a win-win basis. I think we are having the same challenges nationally, there is a wealth gap and an opportunity gap and then there is a conflict between increasingly extreme extremes and a fight that can turn into a really dangerous fight and produce a situation where everyone loses, so I think the question is to go further if we can get past it and say how do we get the best collective benefit and work on that, and there are many ways we can do that, but I think that's the most important thing because if you look what we can have, there is enough, okay, there is enough of everything and there is innovation and there is capacity, but very often there have been losses that can then be very damaging, so I am concerned about that, as well as the wealth gap, like the opportunity gap, the idea of ​​coming together and working together and understanding the art of thoughtful disagreement, principles would go back to principles, what are the principles that bring us together?

Are we clear? about those, what are the principles that separate us, so I think we have to think about how to do this together before we really harm ourselves because it can become so extreme that it can be harmful and at that point, when you think in unity Within the United States, of course, there seems to be a lot of division within American politics when you think about the impeachment inquiry that Nancy Pelosi launched against President Trump. Do you think that will be a headwind for the markets when you think about the next two? For months I read history and I find that the same things happen over and over again and what I see is that there is a political system that normally has the ability to debate things and overcome them and I worry that this is a war that in which, and the The damage and pain of that war can be so great that it undermines the effectiveness of the system, history has shown that if you look at the 1930s, for example, the polarity between the haves and the have-nots, the wealth gap was Analogously, the opportunity gap was analogously and the ability to overcome that, so I'm more concerned about that.

I think there are three big forces at play: the domestic economic divide and the political divide, which is becoming extreme and I'm worried about a recession. in what number monetary policy will not be as effective in the next disaster if we are facing each other from time to time there is a recession and it will be worse and if we and then we have the conflict in terms of the emerging country of China with the United States as an established country and therefore working on that in the right way with wisdom to understand the art of thoughtful disagreement and coming to the right aggregate instead of everyone losing the situation, that's what yes, that's .

What worries me, I hope we can narrow it down soon, Blackstone Founding Chairman and CEO Steve Schwarzman sat down with Yahoo Finance's Julia LaRoche for our Yahoo Finance Presents series and Julia joins us now to discuss Julia, what? how did it go? What did she say that made her stand out? Well, you talked about so many different things with Dan and one of them was whether or not Steve Schwarzman would get a job if Blackstone applied to run today and guys, the answer is no, so listen to why I'm trying. feel how smart they are, how stable they are, how curious they are and usually you can do that just by looking in their eyes and sometimes I'll walk into a room and talk about what I was doing if it's exciting and if stand back in fear because it's a different situation, they probably won't be able to handle things that come their way unpredictably, what you want them to do is hold the table so they're pretty much equal because they're only equal because you're older, well, the only thing What it means is that you have had more experience, it does not mean that you are better than anyone you know.

I know it's very difficult to get a job at Blackstone. I was reading some of the statistics in the book so I could ask you this: Do you think that if you were applying for a job at Blackstone they would hire you well? This is what worries me because I don't think they would do it, why not? Because my grades weren't good. a summa laude or magnet, I wasn't even a laude and you know, there are different ways of learning and you know I'm not that bad at some of these things, but it's not because I test to a certain extent.

Many of the people we hire think it is important that we analyze different factors here in the company. The conservative way is to always hire the brightest person. I think it's important to be involved in student government for some time for a club or something where you demonstrate leadership. I tend to like people who are athletes just because you can handle the pain. You know if you're a good athlete and you push yourself to a point where it's not enjoyable, please welcome Julia LaRoche and Stephen Schwarzman. Steve Schwarzman CEO of the Blackstone Group and author of the best-selling book What It Takes is great to be back with you it's good to see you again, great Steve, the last time we spoke you gave me an answer to a question I asked you that I didn't You thought you'd be hired at Blackstone if you applied today, so my follow-up is: Are you worried that Blackstone and maybe other firms are missing out on the next Steve Schwarzman?

Well, I think it's always hard to know exactly who to choose when you have a qualified group. I'm pretty sure that unfortunately they wouldn't choose me because I wasn't Magne or Suma and we talked in our management committee about this topic and I asked how many of you were just like eight people nine people how many of you were magneri sum one hand went up how many Of you were laude no other hand was raised so the rest of us were like generic people and we are quite flexible and you know how organizations grow, you end up, you know, sometimes hiring very bright people, but I think that people who have a balance you know it's good to be smart, obviously, but having leadership skills is really important and playing sports is also good and the reason for that is you learn to endure pain and it's not easy to be successful you know it takes a lot of effort there's a lot of setbacks it's a bit like sports knock you to the ground you have to get up so we hire less than 1 The percentage of people who apply is surreal and we have amazing people but we always make sure we have a few of them like me with more generalized skills and it's something we are always perfecting.

Well, you've been in this business for a long time. decades I want to go back and revisit some of your early years in your book, you wrote that at DLJ I never received proper training. I would cower in my office hoping no one would notice me, scared that I would be discovered as ignorant or incompetent. He must have been the biggest buyer of antiperspirants on the east side of Manhattan, and then when he was at Lehman Brothers, he told this story about how he worked for months on this unbiased opinion, submitted it, was very proud of it, and then got this phone call. from your boss that there is a typo on page 56, so I have to ask you how formative those experiences were and how they influence the way you built the culture atBlackstone.

Yeah, well, everyone knows that sometimes when you start, it's a tough road and it was definitely tough for me. I had no training and was like the person in a class at school who every time someone was asked to open the class, you tried to position yourself behind someone else's head so you wouldn't get called on. and that was because I wasn't trained and then what happens is that when you have these bad experiences you don't forget them and when you make a kind of promise to yourself in that way that if you ever got into a position of authority you wouldn't make him that to no one else one thing you want people to be as prepared as possible you want an environment as low as stress for them you want them to understand that they can ask questions I mean I'm in the financial business and almost everything was invented before you did it, You know this for sure in your early years, so let's not make you struggle, it's absolutely fine to ask questions too as a shortcut that you can't do. the same question over and over again, which means you've learned something, but the idea that you have to fight, let's eliminate it and so every one of these unhappy experiences, now we have a great training program because I want everyone to be trained.

I want that all. For the sake of comfort, I also want to talk about the fact that you stood out from an early age on Wall Street. I think I was one of the youngest mansion directors at Lehman Brothers when I was 31, but fast forward to today and then we even look outward. the future, how do you think the financial services industry has changed? Is it still a viable place for young people to go? Yeah, it's a financial business that's still really good, it's just changed and as long as it's printed in the United States and more. trillions of dollars a year of money above what you would normally make with these deficits, there is always a lot of money and a lot of new things you can do.

Places that are bigger. Our place has 2,500 people, so it's not that big. You design people's careers in a way that so if you're really great you move faster. The idea that the world has to be rigid to make life easy discourages people from meeting you with great talent, and I love people who are talented. I always felt a little frustrated with being held back and why should we do that? You don't have to be a big thinker, you just look at things that don't make sense and say I'm not going to do that. I also think it's interesting.

You have these rules for life. You talk about finding problems and solving them. You say that there is nothing more interesting to people than their own problems. They think about what. others are struggling and trying to find ideas to help them. I mean, it makes me think of when you were in high school, you brought a cool rock band, you changed the rules at Yale so women could spend the night in the dorms, you too We make sure the people you're with in the army they were fed, they were not given breakfast when they made their morning rounds.

We also saw problems, whether it was at the Wallstreet Business School, so what was the turning point for you that you were looking for? Solve problems in your life and realize that this is really good for success whenever you find yourself in any type of situation, the reason why you are there is that something is happening and what you really want to know is what the problem is what do you have. You're figuring it out and the only way to learn is by thinking you have an idea, but actually it's the other person you have to understand and what they think and how you approach their problems if you're like a long young man. pretend that you are in an advisory capacity, all you want to know from your client is what are you worried about, what are you thinking about and once you understand that, it is quite easy to create solutions if you are just guessing what is on their mind, they will waste a lot of time and maybe they don't get the right thing.

I want to talk about the problems that this generation will face right now, we are in the middle of trade negotiations and I know you wrote about them. This, you're involved in that process, it's been ongoing, you write that these are some of the most difficult negotiations you've ever experienced, so Steve, are we going to see a deal soon and what has to happen for us to see a deal? It's almost an unfair question because the Chinese are sitting in a room right now or they just broke up with the Americans so it will be announced and what I think might happen today doesn't really matter because today is almost over and we will all know. where things are but fundamentally what we are asking the Chinese to change their system in their system was brilliantly designed as an emerging developing market with a market economy so that, like the Americans in the 19th century, people forget that we have many tariffs, that we were a small country.

We had the ability to protect our nascent industries and China only started doing this 40 years ago and they got an amazing result. Forty years ago they had a GDP per capita of a few hundred dollars. now it's ten thousand dollars and it's rising to a thousand dollars a year, so China has done some notable things, but it has done it in ways that are inconsistent with the developed world and has very high tariffs and taxes three times as high to bring a product to China as it is for China to sell one in the United States.

You might assume that if that were the case, the person who gets in at a very cheap price would do better and do it the same way. with the opening of the markets it is selectively open, but not like the United States has been, so I think it is a moment of adjustment, the question is how quickly an adjustment will occur in what time frame and how dramatic in every point, because no one would give up their entire system because someone else is asking them to do it, so we're the ones asking them to and they have their own internal politics, they have their hardliners, which basically means that the things have been very good for us and also we don't like to be pushed around, which They were, you know, but from the developed world for the last hundred or two hundred years and they don't like it, on the other hand, you have their reformers who say , look, we realized that we should be more open, what we will learn better. practices of the West will be good for us, so in some ways these negotiations are in some ways hostage to what China wants to do and there are two elements in China, just like we have domestic politics in the United States, our view that they are a monolith and no internal views is wrong, so we'll see what's happening.

It's an exciting time now. Are you optimistic? It depends on what criteria if you are looking for a complete solution to the differences between the US and China, that is not going to happen if you are looking for anything less than that, we will have to see what China is willing to put on the table. Well, Steve, you're no stranger to the White House. I know you've been engaged with Over several administrations and you wrote about this in the book you cite from the moment Donald Trump was elected president, he had been getting calls from people who didn't know what to do with him, they had heard it during the campaign and they were nervous about what he said.

I could do what I tell people where people are wrong about President Trump, well, that would take a long time to answer that question, but if, of course, you could see what you know, boiled down to one thing where the people are wrong, well, I had a lot of people from foreign countries, as well as local people, approach me, you know, Donald Trump lived in New York, you know, his whole life, and now we're in New York and New York is not a city ​​as big as it seems. abroad and a lot of people knew you knew Donald Trump and no one knew what he would be like in a presidential position so they basically had no knowledge and they had a lot of concerns about it so you know I met with them and see what they had in mind. mind and see if I can solve some of the problems, but you know what the thing is that all this candy is not worth listening to and for some reason everyone is focused on it. and I've never been, you know, some of them are just indicative of a general area of ​​concern and should not be taken literally and you know with today's media it doesn't matter if it's left or right, people just hang on every word, I always thought that would drive them crazy and that's where they ended up as a society and you know, I think you have to wait to see something of real importance that is more thoughtful, but that's not what the media is doing and then it comes out all this confusion and it's focused where it probably shouldn't be focused, but it's just my point of view, well, we're approaching the 20/20 election and you're the son of a dry goods salesman, you're the American dream, now He is the 100th richest person in the world according to the Forbes list, but as we get closer to the election, you see more and more candidates proposing a wealth tax.

He has one that says

billionaires

shouldn't. It doesn't exist, you're also seeing polls that are more favorable to socialism, so what's your response to that? Well, there are a lot of different answers to this billionaire thing. You know it shouldn't exist. If you look at who they are. people didn't become prosperous by sitting and just watching TV, these are people who started businesses and every place where everyone worked was started by someone and that's how the world works and people who take that risk and start those businesses and end up, You know, or you're hiring ten people, a hundred people, a thousand people, 10,000 people, a hundred thousand people, yeah, that's where people work and those people make the most money, and what happens is they get rich, most of them.

They fail, by the way, nine out of ten. Businesses that are started result in failure, so if you're one of the people that makes it, you're providing employment and prosperity and actually tax revenue and you have a lot of it compared to other people and then you get old and you die and and and the laws , you know, they kind of wipe out most of what you've owned, it's already been taxed once, usually, and then that gets dispersed and then that wealth disappears, and that's what these people get. created and you know in terms of a wealth tax.

I don't remember if there are 210 or 220 countries in the world and only four of them have a wealth tax if it was such a good idea and it was so easy to raise money. you would have many of them, you have had more than four and they abandoned it, so why did they abandon it? So Google is targeting a lot of younger people who want to start businesses and here's how this would work if you were Trying to start a business and get venture capital money, you can pretend that you were successful and that your company made it a really good one. success, it was worth a billion dollars in terms of valuation and you started it so you had three hundred million dollars out of the billion, but you probably had a salary of around three hundred thousand dollars, so what would happen is you would end up with a hundred fifty thousand dollars after taxes and if you had a 1% tax, you know another three hundred and three million dollars, how?

Are you going to pay three million dollars in taxes when you only have one hundred and fifty thousand dollars? It would be a terrible situation to have created something that was successful and hemorrhaged financially. This is how an estate tax works and what would happen to that person. is that they wouldn't want to stay in the United States, I think they would leave, but what's more important is that the people who would come here to start businesses wouldn't come because success would be taxed and the wealth tax would end, so would they? what is logical? is that those people would find somewhere else to go and another ecosystem would develop in it, I think there would be countries that would offer them tax-free zones to do their business and it would basically create a huge dislocation for the United States, so I think there are reasons. why estate taxes don't exist and I just gave you one of several, long before we let you go, you are a problem solver, you look for big problems and you want to find solutions.

We're starting to see some of your peers and Thinking of Ray Dalio, sales forces at Bridgewater associates, Marc Benioff, come out and say the current capital system is broken, so using that problem solver mentality, Steve, how would you advise we fix it right? I think it's pretty clear that as a result of a study done by the Fed. Two years ago, the Federal Reserve said that 40% of Americans couldn't write a $400 check in an emergency, so what that What it means is that this 40% of the population basically has no savings and is going through a very, very difficult time, which is why Our politics has become poisonous because we have a large percentage of our population that is not doing well and I think that You have to address that first, you have to provide more money for these people and I think there are many different political approaches.

I think a good starting point is to increase the salaryminimum up to $15, which is actually a tax on the business community, you know, because you are taking profits from them to give them to the workers, which is responsible for significantly increasing the money. for 15% of the population, but what happens is that the people who used to receive more than the minimum wage have to receive a raise when it is close to doubling, so this ends up affecting about 35 percent of the population and it has a lot of knock-on effects, that's the first thing, but capitalism is not broken per se.

What's broken is our education system, so when I was younger, which was apparently a long time ago, but I didn't get to the word. On the basis that the United States was one of the two or three best educational systems in the world, we have now fallen between 25th and 30th, and in mathematics we are solidly in the 30s, if you produce a workforce that is dramatically inferior to We editors on a global scale are going to have many problems. I was in China a few weeks ago and I met with one of the few most important people in his government and he said to me: you know what? we're going to do and in education we spend an hour on education and he said we're going to require all students in China to take computer science and I'm sitting there saying oh em, wow, in the United States we probably have five percent percent of our primary and secondary students study computer science, it is not capitalism that is ruined, let's imagine that we are competing with a country where everyone has computer skills and we have almost no one, this is not a recipe for success. long term and it's not about capitalism we have to put the best possible individuals and training on the playing field that's how the game is won and we're just not doing what we need to do in that area and if you deliver to those people to a workforce, We are really at a disadvantage, so I have a slightly different opinion.

You know, these are government problems, by the way, they're not business problems, but there are a lot of things that companies can do to help train people that we have to do and that you know we have. to make sure that students who are not necessarily university students do things like they do in Germany, where the business community that you know trains those people for real jobs, brings them on board and gives them good careers, so we have a lot of levers that we can play to have better results for the people of the country and we have to make this not optional, well, you know, I think they sound like generational opportunities.

Stephen Schwarzman, CEO of Blackstone Group, thank you very much for joining us for the Yahoo Finance All Markets SummitHello investors, Zach Guzman. Interested in learning more about the markets and receiving the latest financial news? Then click here to subscribe to our you Finance YouTube channel and get the latest up-to-date market analysis. Great interviews in the world. of finances and information on how to manage your money every day wherever you are