Free Money with Sloane and Ashby

Wow! We were fortunate enough to have had Joachim Klement join our most recent episode. This one is jam-packed with a variety of topics which range from structural differences in growth between Europe and the U.S to Joachim's fascinating concept of industry "Cassandras". Plus, we have even more Free Money to offer, including the usual beloved banter, industry updates, and burning questions from listeners just like you. Tune in to cash out!

This carbon special featuring Mark Campanale is one you don't want to miss - we discuss peak oil, Mark's vision for the carbon market, and whether it's reasonable to rely on the carbon market as the catalyst for change. Definitely one for the books. We also answer some exciting questions from our lovely listeners, offer gardening tips galore, and share developments both fun and fund-related!

What an exciting show for our LAST episode of the year! We were joined by Bahar Baharloo, who was Sloane's roommate during her time in the McKibbin lofts of Brooklyn.Their experience as an intimacy coordinator gives us some amazing insight into consent and how it applies to the governance and approval we encounter in investment decision making. Ashby's head explodes multiple times, and we're quite confident yours will too. Happy New Year from the Free Money Fam!

Hop in folks, this train is headed to Brakkestan! We were fortunate enough to meet up with Tom Brakke, one of the keepers of the flame in active independent investment management. We talk about what innovation really is, due diligence in the manager selection process, and more. Ashby's whereabouts on January 6th are also discussed, and if you'd like the answer to that burning question, you'll just have to tune in! Thanks for joining us - we genuinely appreciate each and every one of you.

Today we're joined by Bill Burckart and Meg Kashner of Colorful Capital, both of whom are professors of impact investing (Columbia and Northwestern) as well as co-founders of the venture fund focused on the LGBT community. We hear from them on why the fund is necessary, how they've gone about trying to access the people they're trying to reach, and then discuss what the fund creates. Don't forget our typical helping of banter - this episode's topics feature new sovereign wealth funds, guns, and a roast of burning man. Ya know, the usual.

This one's nearly a year old - but still filled with the usual gold.It honestly didn't come as a shock to us that modern American accounting practices are deeply rooted in slavery (nothing shocks us anymore). But in order to further wrap our heads around this insane concept, we spent some time chatting with Caitlin Rosenthal, historian of business and slavery.

Perhaps this episode could be a great business case for not hating yourself. It's amazing when you look at what you bring to the table at work as a truly happy person, which in Maeve's case was a result of coming out. Join the crew as we discuss what it was like for her coming out at Goldman Sachs, real experiences of what it's like to be trans in finance, and Maeve's expert advice for communicating around innovation in the industry.

AI, research, and farming? Oh my! On today's episode, we're joined by Ruchit Garg, who is working to build a much more efficient market for agricultural goods in India. We also discuss ancient spreadsheets, whether or not AI will ever have a material impact on institutional investment decisions, and the general vibes this lunar cycle.

See - we told you we weren't dead! Our guest in this episode is...nonexistent (thanks to a typical tech error). That said, we're thrilled to get back in the swing of things and to be able to offer our listeners the usual flow of banter, news, jokes, and as always, a gardening tip. Our conversation in this episode touches upon an exciting change in Sloane's life, the explosion of crypto, growing pains, and more.

Some things are more important than beating the market. That's particularly true when it comes to managing a pension fund. In this episode, we chat with NYC BERS' Sandy Rich about what he's done over the past seven years to streamline decisionmaking, clarify the term structure of his fund's liabilities, and build a talented internal team. Note: This conversation was recorded on September 1st, 2021.

Our guest in this episode is Mary Childs, The author of The Bond King, a look at the life and legacy of PIMCO founder, Bill Gross, the unusual organization that he built, and the fixed income market that he came to dominate. Our conversation starts by talking about why stocks are dumb, the elements of operational alpha that made PIMCO what it is, and what Bill Gross's success means for the neurodiverse community. It starts about 13 minutes into this podcast.

How much money is needed to keep climate change under 1.5 degrees celsius, how much is currently available, and how much more money needs to be found after the passage of the inflation protection act? We talk with Dimitry Gershenson and Erin Davis, co-founders of the climate-centric lending platform Enduring Planet, to get the skinny. The conversation starts about eighteen minutes into the episode.

Franklin Templeton's Ben Meng joins us to talk about why capital markets need carbon pricing to function properly, how litigation risks prevent companies from making certain disclosures, and why investment professionals need to use their imagination to get ahead of the climate crisis. That conversation starts about seventeen minutes into the episode.

If you're like most people, you may not have realized that fish farm finance is somewhat unfixed at the moment. We talk with Scoot Science CIO Grant Cavanaugh about why that is.

What could a new mechanism for municipal funding unlock, and why is it neccessary? We speak with Tammie Arnold, a fixed-income veteran and the founder of AlphaLedger, to find out.

On this episode, we're joined by Delilah Rothenberg of the Predistribution initiative. Her work focuses on reimagining investment structures to promote sustainability through stronger long-term alignment between asset managers and their clients. That conversation starts about thirteen minutes into the episode.

Plenty of institutional investors are making net zero commitments, but what do they actually mean? In this episode, we chat to Kristy Jenkinson, CalSTRS' Head of Sustainable Investment and Stewardship Strategies, about what these commitments mean to an organization that has been a recognized leader in the ESG movement since 2004. That conversation starts about 18 minutes into the episode.

How can financial advisers figure out what clients really want? We're zooming in on that question in this episode with Stacey Kline of Otto Intelligence. She's built a behavioral questionnaire that helps advisers discover their clients' detailed preferences and build portfolios that suit them. That conversation starts about 17 minutes into this episode.

Are carbon offsets a viable tool to help us build a more sustainable world? Lars Kroijer says so. He's a recovering hedge fund manager who got mixed up in the carbon offset market a few years ago. The conversation starts after the news (about 22 minutes into the episode.)

12:50 - THE NEWS! CalPERS is getting closer to hiring a new CIO and other big developments that will come in the new year. 24:59 - Trend #1 - 2022 should be the year when fiduciary investors' commitments to go net-zero and fossil fuel free actually get some teeth. 29:36 - Trend #2 - Robinhood's acquisition of Say Technologies might herald a new era of retail-driven shareholder engagement. 33:01 - Trend #3 - Tools and techniques for facilitating long-termism go mainstream thanks to the Long-Term Stock Exchange, Sequoia Fund, and growing adoption of ESG among long-term investors 36:44 - Trend #4 - Earth gets a black box to trace earth's unfolding climate crisis as it unfolds, recording data that future civilizations can find and learn from about how we reckoned with existential threats. 40:40 - Trend #5 - Investment decision-making shifts formally from a process-based model to a data-driven decision model (and Ashby explains what that means). 46:41 - Trend #6 - Sustainable investing starts getting real (and Sloane explains what that means). 52:30 - HARD THINGS - Sloane and Ashby talk about the challenges they've encountered in their respective projects 1:01:17 - Listener question #1 - Did you change your mind about anything big this year? 1:05:30 - Listener question #2 - What's your favorite desk toy? 1:07:10 - Listener question #3 - If you could go back in time and kill the person who ate and/or had sex with a pangolin to start the pandemic, would you? Nobody would know you did it.  1:11:02 - THE GARDEN TIP

On this episode, we're talking with cryptocurrency entrepreneur Martin Froehler about what's possible in the realm of decentralized finance. His company, https://www.morpher.com/ (Morpher), operates a 24/7 trading market that allows users to trade hundreds of stocks and cryptocurrencies with zero fees, infinite liquidity, and up to 10x leverage. 

True long-term investing is profoundly different from the sorts of rationalizations that people make when investments don't play out. But how, exactly? We dig into how adopting an identity as a “long term investor” affects the way one relates to the rest of the investment community, determines what you focus on, and colors the way you evaluate performance. We also talk about the great work Anne Marie is doing to bring more women into the investment industry at https://www.gainuk.org/ (Girls Are Investors).

We hear from John Bowman about why it's time to move past the ESG label, what the investment portfolio of the future looks like, and how allocators are looking past traditional asset class delineations and embracing more functional approaches to asset allocation.

We chat with Andrew Behar of As You Sow, a titan of shareholder activism, about how investors can use their proxy voting power to push their portfolio companies to make positive changes.

We chat with Anna Marie Wagner, the SVP of corporate development at Gingko Bioworks, a synthetic biology company that recently came public and is part of Invest Vegan's flagship strategy. We chat about how Gingko evolved its funding sources over time, the firm's decision to pursue a horizontal/service provider business model, and how she'll judge the success of her company and the broader synthetic biology industry going forward.

We're joined in this episode by Paul Smith, CFA, a co-founder of SustainFinance and the former CEO Of CFA Institute. We chat about: His favorite experience leading CFA Institute, which is global beyond simple comprehension. How prepared the industry is to navigate the climate transition Whether ESG Investing is just a new form of colonialism We also discussed his outlook for Hong Kong as a financial center and, as always, took questions from listeners.

This is a very special episode of Free Money. Our guest, Jason Voss, is a close collaborator of both of ours and the Founder/CEO of Deception and Truth Analysis, or https://deceptionandtruthanalysis.com/ (DATA). And honestly, if you like this show at all, you're gonna love this one. We talk about identifiable blind spots in active management processes, the difference between deceit and lying, and all sorts of other good stuff.

Sustainable investment strategies are traditionally long on glossy marketing materials, but a little light on clear outcomes. Like, what happens as a result of making the investment? Our guest in this episode is Sam Duncan, CEO of NetPurpose, an impact measurement platform based in London that helps investors source, share, and stay abreast of the latest data associated with their strategies. We talk about the regulatory crackdown into greenwashing, the opportunities to converge ESG reporting frameworks, and more.

What if it turned out that the best way to actually “do” philanthropy and impact investing was by letting go of the outcome? Our guests on this episode explored exactly that question in a recent book: https://lettinggobook.org/ (Letting Go). How philanthropists and impact investors can do more good by giving up control. They are Meg Massey, a journalist covering social impact and social justice in finance, and Ben Wrobel, the director of communications at Village Capital.

In this episode, Sloane and Ashby talk about sex work. In particular, they talk about why the finance industry is so skeeved out about it and what that means for platforms like Onlyfans, which now seems likely to pivot away from a dominant position in adult entertainment due to various operational impediments we'll examine.

Is it worth building a master narrative about institutional investors as a whole? How much progress has been made on racial equity and inclusion since the murder of George Floyd? And does financial advice reinforce destructive social norms? We speak with Institutional Investor's Alicia McElhaney about this and more. We also answer listener questions and talk about Sloane's new investment advisory firm. Also, here are links to https://shespends.org/ (She Spends) and the https://confirmsubscription.com/h/d/EEDB9AF2C4B7E5AA (Essential Allocator).

You may have heard that a teeny investment fund managed to force Exxon to take climate change seriously. In this episode, you'll hear from one of the people behind that successful campaign: Jennifer Grancio, the CEO of Engine #1 Asset Management. We talk about how a myopic fossil fuel focus left Exxon with underperforming investments, and about the ETF they recently launched to power the next proxy battle.

This week we talk with Rachel Freeman, Adasina's director of investor services, about what it means to build a bridge between social justice organizations and the capital markets. We also touch on issues like: Ending forced arbitration for sexual harassment, which have historically been left out of the ESG equation. Starting a new investment fund as a minority and queer-led firm. Why Adasina decided to start an ETF instead of a data company. After discussing the peculiar difficulties Adasina encountered when starting a new investment firm, Rachel mentioned some allocator-oriented suggestions to make their due diligence process less onerous for startup managers, which are available here: https://www.duediligencecommitment.com/

A portfolio manager turned activist, Ulf takes us inside some recent fixed income transactions that imply some banks (and some pensions) are taking their commitments to ESG less than seriously. He then disaggregates the "yield pickup" that buyers of fossil fuel debt have been feasting on, explains how his activist ESG strategy benefits from fixed income trading's nature as a primary market, and talks about how pensions can profit from sustainable fixed income strategies. 

Yale's CIO David Swensen passed away last month. He left behind an unprecedented track record, a whole new way of doing things, and a much better-funded university. How did he do it, and what can we learn from him? We explore with Capital Allocators podcast host and Yale Investment Office alum Ted Seides.

What does it mean to invest in infrastructure? How do you do it? And what happens when you do? We reached out to Ross Israel of Australia's QIC to learn more.

We chat with Marcel Prins, the COO of ultra-innovative Dutch pension APG, about the blockchain business his team built to maturity and spun out into a standalone company.

Gamification is the financial villain du jour after the whole "WallStreetBets" thing. But it's not all bad! In this episode, we talk to a startup founder who has found success using games to encourage saving. 

You’ve probably been hearing a lot about a place on the internet called WallStreetBets. Depending on who you ask it’s the epicenter of a revolution, the biggest threat to financial stability since COVID, or a fun place to post memes. We were tired of baseless hot takes about this, so we decided to call my friend Liz Zhang for an insider view. She has been active on the forum for three years or so, and has been trading options for fun for about that long. She’s a software engineer by day and a part of my “bubble,” which means we were able to deliver something unprecedented on this episode of Free Money: an in-person interview. Liz experienced the growth of interest in GameStop stock firsthand, and she tells the story of how one disciplined poster managed to gather unheard of interest in a stock that most investors had left for dead. And now, “his position is worth tens of millions, and he’s treated in some ways literally like a god.” She also shared some of the biggest legends of WallStreetBets with us, like the time a user exploited a glitch in their Robinhood account to gain something close to unlimited leverage. And of course, we talked about what comes next for this group of redditors. She shared that recently “they have become an almost socialist ‘let’s take down the hedge funds’ group. But that’s more recent and honestly I don’t see it lasting.” This is one of the few opportunities to hear someone talk about the ongoing short squeeze from a place of experience. Don’t miss out. Get on the email list at freemoney.substack.com

Pension accounting is a cursed subject. It’s a crucial one though. Because how do we know if a pension fund is doing well? Like, obviously we have to count the money and we have to figure out if it's enough money. But how are people actually doing that? To answer this question, we needed to talk with someone who understood the politics of governance, investment processes, and actuarial sciences. Many of the people with credentials like that are afraid to go on anarchic podcasts like ours, because the subject matter is inherently somewhat controversial. So we called Hugh O’Reilly, who was happy to wade into the discussion with characteristic Canadian politesse. He has loads of experience putting this knowledge into practice as the former CEO of OPTrust (One of Canada’s largest pension funds) as well as a pensions attorney. We’ve excerpted a couple of choice quotes from him to get you excited. Here’s Hugh on the mechanics of setting an appropriate discount rate: “the higher your discount rate, the lower the value of your liabilities, the less money you have to put into the plan. That's where it comes from. The way the discount rate is established, in theory, is— well, here's how the actuaries do it. They look firmly backward to predict the future.” And here’s how he did it while he was working at OPTrust: “In the investment world, there's this concept that returns will revert to the mean, so in good times, bad times could happen, and in bad times, good times would happen. So what we would do, is we would lower the discount rate as far — subject to actuarial principles and the rest of it — as we could to maintain the fully-funded status of the plan, but to preserve a margin such that in a bad year, you would be able to raise the discount rate, release the surplus that you had preserved by lowering the discount rate, and it would be keeping with investment theory, because returns to do go back up over time. And that way, you're protecting the members. Because the fundamental issue for members is, they don't care what you earn in a year. What they care is, are you going to keep your promise and will there be sufficient funds to pay me when I retire? Here’s the way he evaluates the health of other pensions: “What's it's funded position? Is it fully-funded, is it underfunded, is it over-funded? And then second— and this is where the rubber hits the road on a going concern assumption— is, what's the discount rate? So if the plan is underfunded and has a high discount rate, you've got big problems. If it's underfinanced, got a low discount rate, you may have some room to maneuver. And in an ideal world, it's got a lower discount rate and it's fully funded.” And his take on why American pensions haven’t had the same successes as their neighbors to the north: “So the issues you have in the US are one: politics. The legislatures, by and large, set the contribution rates, or the legislature asks for the government contribution to be as low as possible. That's problem number one. Problem number two: no independently governance. Problem number three: they’re not assessed in accordance with, I would argue, appropriate actuarial principles.”And in closing, here’s what he’s working on building now: “You need a new long-term asset class where the long-term investment strategy promotes innovation, promotes— this word's overused— but resilience, so that these companies can withstand the disruptive elements that are coming their way, that they invest in R&D, they invest in technology, they stay on top of it, they treat the people who work for them well”As always, we took questions from our listeners at the end of the show. You can ask a question easily. Just email freemoney at gmail dot com with whatever’s on your mind. Simple, a widely loved bank that provided its customers budgeting tools and other personal finance aids, announced it was shutting down last week for “business reasons.” Why is it so hard to make a good bank? If you were a software engineer, who wants to work somewhere that contributes to the world in a net positive way, where would you want to work right now (companies, not locations)?In honor of Donald trump getting banned from Twitter, who would you bring back to Twitter (from getting banned or beyond the grave, etc)? Get on the email list at freemoney.substack.com

It’s the time of year when Wall Street analysts take out their Ouija boards and attempt to divine the future. There are a million reasons not to do this, ranging from “it’s a performative waste of time” to “it’s devil worship” depending on the particular method employed by the prognosticator. So we prefer to make sense of what’s already happened. In this episode, we touch on:What the rise of the adult content platform OnlyFans tells us about investment management.Why pensions should employ a chief resilience officer. Why so many organizations are “all talk” when it comes to diversity and inclusion. And lots more! But I’ve got a cold at the moment, leaving me way too fatigued and sneezy to write them all out here. So you’ll need to listen to the episode to hear more, as well as Ashby’s answers to these three listener questions:What's the most loco thing that happened this year that you forgot about until answering this question?What dubiously plausible thing do you think could happen in 2021?What would you say is the most amusing prediction of all time? Get on the email list at freemoney.substack.com

It’s a Free Money tradition to answer questions from our listeners. We generally do this in the Dear Ashby segment at the end of each episode, but upon receiving the very special letter below, we realized it needed a response immediately and in writing. But first, we must express our deepest gratitude to each of our readers and listeners who have made this year so special. And also to an editorial from 1897 in the New York Sun that responds to a letter from Virginia O’ Hanlon, eight years old. Her letter asked a simple question: Is there a Santa Claus?We also ought to note that you ought to subscribe to our emails if you haven’t already. Earlier this month, we received the following missive by mail at Free Money world headquarters. Dear Sloane and Ashby -I am sixty-eight years old. Some of my little portfolio company friends say there is no such thing as ESG. Papa says, “If you see it on the Free Money podcast, it’s so.” Please tell me the truth: is there such a thing as ESG? Sincerely, Larry Fink40 East 52nd Street, New York, NY, 10022. Larry, your little friends are wrong. They have been affected by the skepticism of a skeptical age. They do not believe in anything unless it accretes to the bottom line in this quarter. And they think that if their little minds do not comprehend something, it cannot possibly be. All minds, whether they belong to investors or management teams, are little. In this great universe of ours, human beings are mere insects - ants - in intellect compared with the boundless worlds around us. We could never hope to grasp the whole of truth and knowledge. Yes Larry, there is such a thing as ESG. It exists as certainly as love and generosity and devotion exist, and you know that they give your life its highest beauty and joy. How dreary this world would be if there was no ESG! It would be as dreary as if there were no Larrys. There would be no childlike faith then, no poetry, no romance to make this existence tolerable. We would have no hope that capitalism could be a force for good, not just good investment returns. The eternal lights that innovation and social entrepreneurship fill the world with would be extinguished. Not believe in ESG! You might as well not believe in earnings! You might get your army of analysts to watch all the corporate filings each quarter to catch a glimpse of ESG in the making, but what would it prove if they were to see nothing? Nobody sees the whole picture with ESG. But that is no sign that there is no such thing as ESG. The most real things in the world are those that neither children nor adults can see. Have you ever seen companies consistently deliver shareholder value? Of course not, but that’s no proof that it’s not there. Nobody can conceive or imagine all the wonders that are unseen and unseeable in the modern market economy. There is a veil covering the unseen world that not even the strongest person, nor even the united strength of all the people that ever lived, could tear apart. Only faith, fancy, poetry, love, romance, can push aside that curtain and picture the supernal beauty of ESG fully implemented. Is it real? Larry, in all this world there is nothing else so real and abiding. ESG is here in our hearts, and a thousand years from now it will continue to make the hearts of all market participants glad. Sincerely, Sloane & AshbyA few programming notesYou may have noticed that we have released an episode alongside our response to Mr. Fink’s letter. It’s a great one, featuring a discussion between Sloane, Ashby, Shawn Wooden (Treasurer of CT), Daryn Dodson (Illumen Capital), and Jean Rogers (SASB/LTSE). It was recorded a little under two months ago at SOCAP. You’re gonna love it. It has also come to our attention that the Free Money Atelier has been closed by Etsy because our products are “too good.” Well they can ruin Christmas, but they won’t get Easter too! We’ll be back before you know it.And oh yes, before we forget, if you enjoyed the letter above you might also appreciate Frank Sullivan’s classic: Is There a Republican Party? Sincere best wishes to you all. We’ll be back again before you know it. Get on the email list at freemoney.substack.com

Hello and welcome to Free Money, a podcast/newsletter from Sloane Ortel and Ashby Monk about how long-term investors can free themselves from the shackles of short-term thinking.If you’re new here, thanks for signing up!If someone sent this your way or you found this post through Twitter or some other channel, be sure to sign up below. We publish most Tuesdays.And now, a look at the world of impact investing. Your money does something after you invest it. What is that, exactly? At some level, the most salient answer is “produces a financial return.” We tend to structure investment programs around such things, since growth in principal is the primary reason people go to the trouble of investing in the first place. But it’s not the only thing that matters. Investments are the engine that turns abstract concepts into actual undertakings. And sometimes getting a certain type of enterprise off the ground is what matters most. That’s where impact investing comes in. Defined as an investment intended to produce a measurable social or environmental impact alongside a financial return, it sounds absolutely wonderful on paper. And that’s kind of the problem. Remember: this is finance we’re talking about, an industry that’s known to exploit good ideas so much that they produce bad outcomes. What’s to stop someone from saying their initiative produces outstanding social and environmental impact, raising a bunch of capital, and actually producing an outcome more akin to the image above where an asteroid permanently and profoundly restructures earth’s surface?Third-party verification, we hope. There’s not much of it at present, but a few groups are organizing to give allocators greater transparency into the impact of their allocations. So we reached out to the CEO & Co-founder of one of them, Christina Leijonhufvud, for her take on how the market is evolving. Her company, BlueMark, is an independent impact verifier. So we asked the natural questions: how exactly does one do that? What elements of impact are even verifiable? Is the issuer-paid research model truly aligned with investor interests? How does one ensure that the investment’s outcomes align with community needs? This being Free Money, we also answered three questions from listeners. If you’d like to ask one for an upcoming episode, please don’t hesitate to reach out to freemoneypod@gmail.com! NYC comptroller Scott stringer is facing sharp criticism from progressive democrats for investing in Blackstone PE funds. Has this been an issue in other campaigns? How often? JP Morgan is saying that their full year earnings could swing +/- 15 billion based on the effectiveness of govt stimulus. Should we interpret this as posturing? Their bottom line is helped by stimulus, after all. Zeisberger et al are arguing that venture capital funds are under-performing because they over-diversify. Is a five position vc fund a workable vehicle? Isn’t it just a co-investment at some point? Get on the email list at freemoney.substack.com

Hello and welcome to Free Money, a podcast/newsletter from Sloane Ortel and Ashby Monk about how long-term investors can free themselves from the shackles of short-term thinking.If you’re new here, thanks for signing up!If someone sent this your way or you found this post through Twitter or some other channel, be sure to sign up below. We publish most Tuesdays.And now, a look at the world’s newest stock exchange. If you build a better market, will the world beat a path to your door? You’d hope so. Stock exchanges are the heartbeat of most modern economies. They provide crucial liquidity, and help enterprises raise capital at sufficient scale to undertake the sort of complex projects that large corporations are known for. But our circulatory system for cash could use several upgrades, because it hasn’t been built with the long-term interests of society in mind. Stock markets are famously amoral entities, unable to distinguish between ethical and exploitative earnings.What if we were to change that? You’d have to hope society would look a little bit different. Today’s marketplaces are entirely unable to distinguish between short-term and long-term activity, which means that speculators have as prominent a voice in corporate governance as long-term shareholders do. It also means that companies which focus on building shared value with stakeholders get lumped in with those that don’t. And that stinks. So we decided it was time for a conversation with someone who’s working on changing that. Our guest on this episode is Michelle Greene, President of the Long-Term Stock Exchange, which opened for business earlier this month to some fanfare. We talked about what they’re doing, why it’s different from the model employed on existing exchanges, and how their listing standards differ from their competition. We also talked briefly about the Free Money panel on rejecting racism and realizing returns at the upcoming Social Capital Summit. It takes place on October 20th, and will feature Michelle’s colleague Jean Rodgers as well as Illumen Capital’s Daryn Dodson and a top secret mystery guest. You can get 20% off your registration with the code SPK20. And as usual, we also took questions from the audience:The culture and execution abilities of some Canadian pensions haven't lived up to some listeners' expectations. How does the "Canadian Model" need to evolve? We've gotten used to the periodic news stories that dissect the returns of various pension plans and the subsequent "hot takes." What's the constructive way to interpret these news stories?The CME and the Nasdaq are launching a water futures contract. Are you a buyer? More broadly, how have investments in water paid off in the past? Get on the email list at freemoney.substack.com

Hello and welcome to Free Money, a podcast/newsletter from Sloane Ortel and Ashby Monk about how long-term investors can free themselves from the shackles of short-term thinking.If you’re new here, thanks for signing up!If someone sent this your way or you found this post through Twitter or some other channel, be sure to sign up below. We publish most Tuesdays.And now, a look at how to get hired on the investment staff of pensions, foundations, and endowments.Looking for work is no fun at all. This is Sloane, and I know because I’m doing it. My consulting business has slowed down dramatically since COVID hit, which means I’ve gone from outright thriving to just surviving. Please do reach out if you’d like to chat about a project. But it’s not just my story. Everyone seems to have lost something during the pandemic. And the notion that tech companies are thriving under these conditions doesn’t make much in the way of sense. For instance, the startups Ashby is involved with building have variously had to pivot, shift priorities, and postpone investments. There’s just less money out there to buy data, and now that it’s near impossible to make sales in person that problem is compounded. None of that shows up in headline unemployment statistics in the United States. These necessarily simplified numbers do not purport to measure underemployment or changes in business’ investment plans, but they do tend to define our perspective of the labor market. So after a listener wrote in wondering how to get a job at a pension fund, we felt it was important to respond with a big picture perspective. That’s why we called Charles Skorina, a longtime recruiter of investment professionals and observer of hiring trends at endowments, foundations, and public pensions. After talking about a paper Ashby wrote that examined this from the pension’s perspective, we asked the obvious question: how does one go about getting hired at one of these organizations? And we got an empirical answer, rooted in Charles’ study of the various CIO resumes he’s come across in the course of doing his business. We also looked at how career stage, job history, and the power of example can influence this search process.You can check out the transcript here or click above to listen in your favorite podcast app.We also touched on the lovely goods available at the Free Money Atelier. And as usual, we answered questions from listeners:You two talk about the rise of ESG investing like it's a good thing. And I'm sure that's overwhelmingly true. But are there any dystopian consequences of esg's growing popularity? This is 2020, after all. The "active ownership" theme is really interesting - how long has it been going on? What's the first action by a long-term investor you're aware of that you would classify as "active ownership"The giant "nasdaq whale" that has been hoovering up equity options with a highly unusual appetite was revealed to be... Softbank. Doesn't this prove that asset managers should be more closely regulated? If you’d like us to answer a question from you on an upcoming show, write to freemoneypod@gmail.com.Thank you for reading & listening!Nothing contained in this website or podcast should be construed as investment advice. Get on the email list at freemoney.substack.com

Hello and welcome to Free Money, a podcast/newsletter from Sloane Ortel and Ashby Monk about how long-term investors can free themselves from the shackles of short-term thinking.If you’re new here, thanks for signing up!If someone sent this your way or you found this post through Twitter or some other channel, be sure to sign up below. We publish most Tuesdays.And now, a look at how state finances are weathering the COVID-19 Pandemic. Imagine governing a state right now. The best positioned public schools, parks departments, and police forces are merely contending with unprecedented times. For most, they are unpredictable as well. And neither condition is helped by a near-universal problem: there is not enough money. America’s national government can deficit spend thanks to the Federal Reserve’s money printer, which famously goes “brrrrr.” But forty-six states and the District of Columbia have balanced budget requirements. So in the face of falling tax receipts, each must contend with an unpleasant question: how much spending to cut? This is a classic no-win scenario. In a time of economic scarcity, forced austerity is perhaps the worst thing that can happen. Without a spender of last resort, the snowball effects of recession roll on unchecked. And as mentioned earlier, that is bad. We called Tobias Read for a practitioner view of the crisis. He’s the Treasurer of Oregon State, which means he’s responsible for debt management, economic policy, investment management, and acting as a central banker for the state’s agencies. We’ve seen requests for state-level aid packages that range from a billion to a trillion dollars, so we started by asking him to clarify what is needed and the creative strategies Oregon has been using to raise funds. Then, as you might expect, we started talking about pensions. We went through what the state has done to steer its ~$111 Billion investment portfolio through the COVID crisis, including organizational changes and a potential new emerging manager program. We also talked about why he hates his Ford Focus and loves #FAnon, the evidence-based conspiracy theory popular among Free Money listeners which involves wide-ranging deep state efforts to design effective policy and serve the interests of ordinary citizens. You can check out the transcript here or click above to listen in your favorite podcast app. We also touched on the lovely goods available at the Free Money Atelier. And as usual, we answered questions from listeners: I've interviewed at some public pensions over the years, and my impression has been that (at least for mid-career/non-CIO investment positions) there is a pronounced preference for promoting from within. Just curious if this impression is accurate, and if is it another manifestation of the organization-wide risk aversion? What are the characteristics of plans that seem to have a greater willingness to hire from outside the organization?There's some contention over whether having operations in the west bank - a contested region claimed by both Israel and Palestine - is an ESG issue. What's your take? The federal reserve has decided to allow inflation to go higher than the fed's 2% target during a boom period, which effectively means rates will be lower for even longer. Would enough inflation effectively solve the student loan and debt crises? If you’d like us to answer a question from you on an upcoming show, write to freemoneypod@gmail.com.Thank you for reading & listening!Nothing contained in this website or podcast should be construed as investment advice. Get on the email list at freemoney.substack.com

Hello and welcome to Free Money, a podcast/newsletter from Sloane Ortel and Ashby Monk about how long-term investors can free themselves from the shackles of short-term thinking. If you’re new here, thanks for signing up! If someone sent this your way or you found this post through Twitter or some other channel, be sure to sign up below. We publish most Tuesdays. This is the 23rd episode of the podcast since we launched last July. More than 380 people tuned into our last episode, which we hope will continue to grow over the coming weeks, months, and years. So if you like what you read/hear, please share this episode and tell your friends. And now, it’s time for the episode. Where do innovative products and services come from? You might imagine that we have the “invisible hand” of the free market to thank. But in lots of cases, the answer is government-supported research. Consider your smartphone. It uses technologies like GPS, advanced transistors, active-matrix liquid-crystal displays, voice recognition, and graphical web browsers. All of these began their lives as government projects. But not all government agencies are natural innovators. Public pensions, which we talk about a lot in these pages, are notoriously stuck in their ways. In fact, Ashby shared at the beginning of this episode that “the only way you get fired from a public pension plan is if you innovate.” Clearly, this sucks and is bad. Is there any hope for these organizations? Our guest Tom Kalil offered plenty. He spent sixteen years at The White House leading science, technology, and innovation oriented policy programs under Presidents Clinton and Obama, and now works as the Chief Innovation Officer at Schmidt Futures, the group led by former Google CEO Eric Schmidt and his wife Wendy. He shared why he identifies as a Meliorist, talked about various mechanisms the government has employed to boost innovation in the past, and the extent to which the work he and his colleagues did has survived the Trump Administration. You can check out the transcript here or click above to listen in your favorite podcast app. We also talked about the many delightful things available for sale at the Free Money Atelier. And as usual, we answered questions from listeners:Given the rise in "SPAC" issuance, should we expect to see the Free Money podcast float a "blank check" IPO of its own anytime soon?Is it true that a pension funding debate plays a significant background role in the ongoing US Post Office debacle?It's been a year since that famous/infamous business roundtable statement about the purpose of a corporation. How are firms doing? Is there a meaningful difference between corporate social responsibility and corporate actual responsibilityIf you’d like us to answer a question from you on an upcoming show, write to freemoneypod@gmail.com. Thanks for reading & listening!Nothing contained in this website or podcast should be construed as investment advice. Get on the email list at freemoney.substack.com

Standing by while others suffer is bad. Profiting from their exploitation is worse. And unfortunately, it’s relatively easy to do by accident. Take real estate investment as an example: investors who hold a diversified portfolio of Real Estate Investment Trusts (REITs) are likely to hold shares in GEO Group (NYSE: GEO) and CoreCivic (NYSE: CXW). GEO describes itself as a “global leader in evidence-based rehabilitation.” CoreCivic says it’s a “diversified, government-solutions company with the scale and experience needed to solve tough government challenges in cost-effective ways.” But they both do the same thing: operate prisons for profit. And they’re both members of the Russell 1000 and the S&P 400 Midcap index. Which means you might own them right now. How many other problematic companies might have snuck into your portfolio? We reached out to Jay Lipman, a co-founder of sustainable asset manager Ethic, to hear more about what’s out there and how to stay away from the worst of it. Our conversation starts at 11:43 if you’d like to jump right to it, but if you listen to the whole thing you’ll also hear about how Mario Kart almost ended Ashby’s Marriage, Goldman Sachs’ massive $3.9 billion settlement, and what we’re reading to take our minds off of the ongoing collapse of civilization. We’re pleased to announce the launch of the Free Money Atelier, which makes beverage and apparel solutions previously reserved for only the largest institutions available to the general public.Our products include:Underwear (now 40% off!) Bibs (for infants or messy, small-necked adults)Our signature Portable Alpha strategiesBut wait, there’s more! Purchases over $35 ship for free, so an excellent trade execution is assured. Get on the email list at freemoney.substack.com

“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity….”Charles Dickens, A Tale of Two CitiesTrue classics never seem to age.Think of Pride and Prejudice, The Iliad, and the observation that the general state of things is both bad and good. We also have Macbeth, Jane Eyre, and the assertion that markets hate “uncertainty.” But they have plenty of it now. Our hope in this episode was to gain an understanding of the American consumer. Which really means the American Debtor. We hear from BCG that Chinese Consumer activity seems to be changed, but recovering. That could inspire some optimism for the future if we didn’t have to balance it with the fact that “it would take something on the order of divine intervention” to quell the rent crisis in New York City. So we asked an expert to help us sort it out. Perry Rahbar is the founder of dv01, a data startup that offers investors access to accurate loan-level information and the tools to turn that information into investment decisions. Their latest written take on loan markets in the era of COVID is available here, but it’s worth listening to Perry explain it. He paints a fascinating picture of a marketplace in the midst of profound transition, where upstart online lenders are running circles around their more established competition. Read on for a few choice quotes after the break. We’re pleased to announce the launch of the Free Money Atelier, which makes beverage and apparel solutions previously reserved for only the largest institutions available to the general public. Our products include:UnderwearBibs (for infants or messy, small-necked adults)Coffee mugs and water bottlesBut wait, there’s more! Purchases over $35 ship for free, so an excellent trade execution is assured. “If you went back in time and described the scenario that we would encounter through COVID and then asked people what would happen to consumers and how would they respond in their loans, you would have gotten some pretty draconian responses. And I think what we've seen has been surprising to everyone, but then when you step back and think about it you know, it's not that surprising. If you kind of go back to March, people are starting to get tax refunds. All of a sudden COVID happens, and they're locked in their homes. They're not spending money on anything. They get a $1,200 check and then even if they do lose their jobs they're getting these unemployment benefits (15:02) “It wasn't actually a credit problem with the product. It was just the whole market got broken.” (27:42) “You had this two to three week distress period that destroyed the whole mortgage origination machine and then left no real opportunity.” (28:20)“Here was a vibrant non-agency market finally that was going to probably pump out $20+ billion in securitizations this year and maybe north of $50 billion next year. And you just saw some of the rule changes from the CFPB around the [Qualified Mortgage] rule and so forth, which would have been another positive tailwind for the market. And then, you know, this whole thing happened.” (29:19)“We're still spot checking every loan with the servicer. Find a loan. It didn't make a payment, not delinquent, but there's no modification reported. And it's like, it's obvious something happened. I mean, it's just crazy how there's still a lot of auditing and going on. And then you look at the trustee report and we know that number's wrong. And then, you know, but it's just, there's a certain level of apathy when it comes to these markets that have been operating a certain way for so long, no one, no one has that vested interest.” (36:36) If you prefer reading to listening, you can click here to read a transcript of our discussion. Or you can listen to the full episode and hear: Tales of a birthday caper involving trampolines and gummy bears. Three mind-blowing facts about the role of Sovereign Wealth Funds in the United States. How this little guy wound up being named FICO (like the credit score). Our header image is adapted from Hokusai’s Tsunami by Grook Da Oger and used under creative commons licensing thanks to the wikimedia foundation. Get on the email list at freemoney.substack.com

There are durable returns to be found in deep research. So if you're taking the time to integrate a full understanding of environmental, social, and governance issues in your investments, you will tend to end up with innovative and enduring solutions just by doing the work. So in this episode, we decided to spend some time with a significant, oft-neglected issue: food systems. We were fortunate to have Ambassador Ertharin Cousin on hand to direct our exploration. Named one of Time Magazine’s 100 most influential people, she was previously Executive Director of the UN World Food Program, which is the world’s largest humanitarian organization. She is also a visiting scholar at Stanford and the Founder/CEO of Food Systems for the Future, which invests in and provides services to market-driven food and infrastructure enterprises to improve nutrition outcomes for low income communities. We’ve excerpted some of her comments after the message below, but you should really listen to the whole thing. We’re pleased to announce the launch of the Free Money Atelier, which makes beverage and apparel solutions previously reserved for only the largest institutions available to the general public. Our products include: UnderwearSnapbacksCoffee mugs and water bottlesT-shirtsTote bagsBibs (for infants or messy, small-necked adults)All purchases over $35 ship for free, and you can get an extra 20% off until July 5th by using the coupon code FIDUCIARY at checkout. Here are a few choice excerpts from our conversation. You can also read the whole ai-generated transcript by clicking here. On the aggregate size of the food system and its economic value: “Let's look at it from an economic standpoint. FAO estimates that the gross value of agricultural production is over $5 trillion. The World Bank says it's closer to $3.2 trillion. Whichever number, it's a big number. And the world bank also suggests that the system generates two to five times as much value off-farm between farm and consumer as it does on-farm. In the United States for every dollar spent on food by the U S consumer 11 cents, is accounted for in farm activity. And all of the other value is in the middle. So the estimated value of the global food system post farm to consumer is about $8 trillion or 10% of the $80 trillion global economy.” (26:52) On the types of investments that might be attractive to pension funds: “We know that we need investment in more foods that will meet cultural demand, but also healthier outcomes for populations. And there we have seen how how plant based proteins coming online have brought in additional have brought in significant revenue to those asset managers who have invested in that space. But those products are not coming online in support of the consumers that we are most concerned about who are most detrimentally impacted by the food system today.” (33:23)On what individuals can do to address food insecurity: “Many of your listeners are high net worth individuals, we need their support to invest in organizations like FSF, like Root Capital and Acumen and others who are working to address these challenges with new market based tool that will deliver evidence that is required to grow the agricultural productivity of our food system in a manner that is sustainable. And as I said, not just for the affluent, but for everyone.” (37:10) Get on the email list at freemoney.substack.com

How have pension funds handled the last few months? We’re told markets are in turmoil. But they’re also just an inch away at all-time highs. Retail investors are racking up triple-digit returns, and seem to be making an attempt at necromancy with the bankrupt husk of Hertz, the rental car market’s onetime global leader. So we called Marcie Frost. She oversees a team of 2,800 professionals as CEO of CalPERS, the agency charged with managing roughly $400 Billion on behalf of California’s public employees, retirees, and their families. We’ve highlighted a few of her choice observations below, but you should really listen to the whole thing. One quick programming note before you do: we’ve partnered with Columbia University’s Center on Sustainable Investment and Beyond Alpha research on a study of the investment industry’s role in meeting the UN Sustainable Development Goals. If you are interested in participating, please fill out this form. On COVID-related volatility: “Our liquidity position was much better in this pandemic than it was in '08-09. So we didn't have to sell assets to pay benefits. We didn't have to sell assets to make capital calls. And I think even more importantly, we had liquidity that we could actually take advantage of the market dislocation with opportunities, and we were able to do that. So we have to think long-term, we plan on being here for decades, paying benefits out over a member's, lifetime and their beneficiaries' lifetimes.” (11:16)On operational changes stemming from COVID: “It is likely that, so we will have half of our workforce working remotely from this point on. We don't see a need to carry the cost of having, you know, an office or a workstation or having two sets the desktop computer. If you all having a docking station, there'll be times that we'll need people to come into the office. We'll have hoteling available for those individuals then.” (15:00)On meeting a 7% return target: “it's a really strange group of expectations that we have, if you will, that it's expected to get the 7% return, we're expected to pay out 24 billion. And while we do that, we want to find opportunities where we can do well while we can also do good for the environment and for governance issues.” (21:00)On recent pressure from Congress to divest CalPERS’ Chinese investments: “it wasn't any different than any other requests that we get from any other entity. It just happened to be a member of Congress. It happened to be on a television channel and it was done in a really horrific way.” (30:14)On her career path: “the traditional way is you graduate high school, you go to college, you start working, and then maybe you go in for an advanced degree. I really didn't have the means at the time I, I grew up in a household that didn't have many financial options. I started working right out of high school. I started a family when I was quite young and those were my priorities. And I was able to work my way through these systems, if you will. I started as a typist in October of 1985 and worked my way through until starting here at CalPERS in October of 2016.” (41:38)A computer-generated transcript of our full conversation is available by clicking here.As is tradition, we also took questions from listeners at the end of the show. If you have a question, a comment, or just a wry observation, please write us at freemoneypod@gmail.com. This week, we answered the following: A leaked British Petroleum brand document made headlines recently for asking how the company can be more like Greta Thunberg. How can they? Private equity funds are often proud to mention that their investors include police pension funds. Should we expect that to change in the future? What adjective describes your preferred form of capitalism (I.e, conscious capitalism, Subaru capitalism, Camus capitalism…) Get on the email list at freemoney.substack.com