How I Invest with David Weisburd
00:42:53 · David Weisburd, Christopher Donahue
[00:42:53] S0: CEO of iCapital, Lawrence Calcano, and he threw out a number over $100,000,000,000,000 in retail coming into the private markets, which would be the equivalent and, in some ways, larger than the entire institutional market going into the private markets alone. [00:43:08] S1: I have said, not recently because I get... It's too big. I said the private markets business at Federated can easily be bigger than the entire operation that's in Federated Hermes right now. And that's consistent with those numbers you're talking about. We should be able to grow that, that kind, and get it in. Oh, I didn't put a time limit on it or a time... So that's that's hard to say. You've to get a lot [00:43:35] S0: of things right in that business. And the rationale being that you have people's trust on the cash business, and you can now extend that trust into other products.
00:43:35 · David Weisburd, Christopher Donahue
[00:43:35] S0: of things right in that business. And the rationale being that you have people's trust on the cash business, and you can now extend that trust into other products. [00:43:48] S1: You can extend the trust. Yes. But you've gotta have good mandates products underneath that really make sense. If we only had the money funds and had poor performance on the stock side, you would get no money on the stock side even though you're you're doing great on the money funds. And so you've gotta have good underlying projects that really make sense. I'll give you an example. This year, we closed a private market, a private credit deal, 700,000,000 European. Now 700,000,000. The big boys say that's nothing. Okay. That's true. On the other hand, we'd have any problems with private credit. Why? The yield on is about three and a half over Euribor, so that makes it, you know, seven and a half, 8%, not 12, not like that. So you don't have yield chasers driving these products. The customers are insurance companies who know what they wanna do with the money and why they're in it and what they're doing. The investments are mid tier European companies, and everybody knows what everybody's doing. So it wasn't a lot of sport fishing. Most importantly, it's in a closed end vehicle. So everybody understands what it is. There's no, oh, well, you might get cash, you might not get cash if things go south type deal. So we're working on shining up another one, and there's no pause in our giddy up on that.
00:43:48 · Christopher Donahue, David Weisburd
[00:43:48] S1: You can extend the trust. Yes. But you've gotta have good mandates products underneath that really make sense. If we only had the money funds and had poor performance on the stock side, you would get no money on the stock side even though you're you're doing great on the money funds. And so you've gotta have good underlying projects that really make sense. I'll give you an example. This year, we closed a private market, a private credit deal, 700,000,000 European. Now 700,000,000. The big boys say that's nothing. Okay. That's true. On the other hand, we'd have any problems with private credit. Why? The yield on is about three and a half over Euribor, so that makes it, you know, seven and a half, 8%, not 12, not like that. So you don't have yield chasers driving these products. The customers are insurance companies who know what they wanna do with the money and why they're in it and what they're doing. The investments are mid tier European companies, and everybody knows what everybody's doing. So it wasn't a lot of sport fishing. Most importantly, it's in a closed end vehicle. So everybody understands what it is. There's no, oh, well, you might get cash, you might not get cash if things go south type deal. So we're working on shining up another one, and there's no pause in our giddy up on that. [00:45:18] S0: If you go back to 1972 and you could give yourself one timeless piece of advice that you could carry throughout your career, what would that have been?
00:45:18 · David Weisburd, Christopher Donahue
[00:45:18] S0: If you go back to 1972 and you could give yourself one timeless piece of advice that you could carry throughout your career, what would that have been? [00:45:28] S1: Back then, remember that it's gonna be a little different because by the time I took the bar exam in '74, we already had four children. And in 'seventy two, we had two. And so, when you ask me a question like that, I'd say it was, Get ready because it's quite a ride when you have eight children eventually. And my advice to myself that I gave later was when you're young, stupid, and indestructible, that's the time to have these kids. And that's one lesson that I would say young, stupid, and indestructible is a perfect combination for raising these kids. [00:46:20] S0: It's like their confidence, anticipation, and the David statue. [00:46:23] S1: Very good. Excellent. It is exactly that. And that's exactly what you need because the Goliaths out there are going to be after you, and they're bigger than you, and they're stronger than you, and they got more weapons than you. But on the other hand, a little confident anticipation goes a long way. The same lesson applies to taking risks in the marketplace. It's a confident anticipate. You've done your own work. Not a little of the work. We have stuff that doesn't work. But if you keep doing it often enough and confident anticipation, enough of
00:46:23 · Christopher Donahue, David Weisburd
[00:46:23] S1: Very good. Excellent. It is exactly that. And that's exactly what you need because the Goliaths out there are going to be after you, and they're bigger than you, and they're stronger than you, and they got more weapons than you. But on the other hand, a little confident anticipation goes a long way. The same lesson applies to taking risks in the marketplace. It's a confident anticipate. You've done your own work. Not a little of the work. We have stuff that doesn't work. But if you keep doing it often enough and confident anticipation, enough of [00:46:59] S0: the work that you get ahead. I'm wondering whether this beginner's mind or almost this ignorance early in your career could be an asset. Do you think there's something to that and that the ignorance itself gets you to take the kinds of risks that people later that don't take?
00:46:59 · David Weisburd, Christopher Donahue
[00:46:59] S0: the work that you get ahead. I'm wondering whether this beginner's mind or almost this ignorance early in your career could be an asset. Do you think there's something to that and that the ignorance itself gets you to take the kinds of risks that people later that don't take? [00:47:13] S1: I would say, first of all, getting married is a huge risk. And if you really knew how many people would actually... If you were told what was gonna happen, it's not perfect. Okay? But it's beautiful and well worth it. And not knowing is better than knowing. And what does an entrepreneur do? Takes risk. You put money out. You do not know what's gonna happen. So you have to have some anticipation. That's the way the whole free market works. The only reason people make lots of money, whether it's these AI companies or anybody else, is they're getting stuff to people that they want. But they didn't know that in advance. They thought it would work, and so they had to take the risk of doing it. And I wouldn't have called it bliss. I would have called it risk taking. And that's what entrepreneurs do. Then if you really ask me what I call it, it's entrepreneurial splendor at the end, that's the goal. That's what has to light you up because that one doesn't work and you're back down. Now you got to go back up again. And it's entrepreneurial splendor that's the right term. [00:48:27] S0: Well, Chris, this has been an absolute masterclass. Thanks so much for jumping on. [00:48:30] S1: Oh, I'm delighted to. I'm delighted to, David. Thank you very much.